One of the core aims of Progressive Pulse is to increase economic literacy and in particular macroeconomic literacy. To help in this you may have noticed that some posts are being labelled “Economics 101”. you simply need to click on the “Economics 101” tag at the top left of this post (under my mugshot and date) to get the full list of posts. Eventually the hope is to put an Economics 101 tag on the main menu.
Many years ago I was very interested in economics and an avid reader of for example books by John Kenneth Galbraith and thought Keynesian economics made very good sense.
Around the time I was finishing my PhD however neoliberalism somehow took over. I was in the US at the time at the Harvard Smithsonian Centre for Astrophysics, desperately hoping Ronald Regan would not get elected. He seemed to me at least a complete fraud and would put corporations ahead of people. I gave “Trickle down Economics” for example almost zero chance of working. Sadly Regan got elected as president and indeed Thatcher became PM in the UK. Between them they brought about a neoliberal revolution. Countries are like supertankers and I can’t help but worry that the rudder has been trimmed incorrectly over much of the last 40 years in both the US and UK. Indeed I pretty much lost interest in neoliberal economics and economics in general as it felt somehow repellent.
Thatcher and others however have been very adept at pushing for example the “household model” which is completely inappropriate for a macro economy. Indeed the level of economic literacy (and in particular macroeconomic literacy) seems to have decreased rather than increased over the past 40 years. Someone of a suspicious mind would be forgiven for thinking this “dumbing down” was deliberate.
If the economy were doing well possibly the specific economic theory in use would not matter so much. Since 2008 however the UK economy has been growing very slowly (growth rate is the neoliberal benchmark) well below its 3% trend. It would be interesting to calculate that if you removed the effect of immigration (a very strong positive) and the top 1%, whether there has been any growth at all.
Thomas Clark of the blogspot Another Angry Voice identifies ten questions to put to the general public:
- What is a fiat currency?
- How is money created?
- What is the difference between a debt and a deficit?
- What is the difference between fiscal and monetary policy?
- What are capital controls?
- What is a transfer pricing strategy?
- What does fiscal multiplication mean?
- What is a derivative?
- What is a “naked” trade?
- What is Quantitative Easing?
He is of the opinion that less than 5% of the UK population could answer four of these with any depth of knowledge, let alone all ten of them. Sadly I can’t say he is wrong.
I’m not sure I fully understand Quantitative Easing for example. There seems to be a bit too much “smoke and mirrors”.
How many of these do you understand fully? Are the other questions which are equally or more important?
We intend to answer these and other questions over the next few months. Indeed some of these have been already addressed but possibly it is worth addressing these questions directly?