Economics: A Waste of Time


Image result for EconomicsStudying economics may seem a waste of time to the careless observer, but is it really so, In the words of Joan Robinson, one should become familiar with economics in order “to learn how to avoid being deceived by economists.” Though probably said in humor, the idea is probably not too far off from the truth.
Economics deals with a number of basic questions about how society produces and consumes goods and services. It also explores how a society answers those questions.
Economics strives to answer, at minimum, the three basic questions of every society: 1) what should we produce, 2) who should produce it, and 3) who gets to consume the products of production. Every society must face these questions and answer them in some way-and the answers are many. We can visualize the range of possible answers as lying on a spectrum, with total individual control at one end, and total government control at the other.
Between both of these extremes lie a number of stages, leaning to more one extreme or the other. Total government control systems are police states, where government alone decides the answers to the three basic questions. Individual control systems are quite the opposite, where individuals decide for themselves what to produce, who will produce it, and who will get those products and services.
Few, if any, economic systems are all one or the other. Most fall within in one the stages in between. If we picture total individual control as being on the far left of the spectrum, moving one step to the right would bring us to a Stage 1 or ‘night watchman state’. Stages 2, 3, 4, 5 and 6 gradually shift from control that is more individual to more governmental, until we reach the stage where government controls all.
We know systems that lean towards total government control as command mechanisms. A command mechanism is method which determines by whom, how and for whom goods are produced by using a hierarchical chain of command. Economic systems which lean towards total individual control are known as market economies, and determine “the who, the how and for whom” of production by coordinating individual choices in the give-and-take of the markets.
In the real world, most economies use both command and market mechanisms. We have a word for these too. We call them mixed economies, such as those of the United States, Canada, Australia and the United Kingdom. Such an economy relies on the market mechanisms for coordination between household and firm decisions, and command mechanisms to control the army, for example.
Managing an economy is never an easy task, whether it’s the economy of your home or the entire nation. We make that task is made even harder by remaining in the dark about how it works. Understanding economics shows you why you economize, teaches you how to economize more efficiently, and protects you from inevitable onslaughts of economic deception.


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