RSA ANIMATE: Economics is for Everyone!

Summary

The speaker challenges the notion that economics is too complex for the layperson, arguing that common sense underlies most economic principles. They emphasize the diversity of economic theories, using Singapore's success as an example of the need for multiple perspectives. The speaker also discusses the role of economics in public life, advocating for skepticism towards professional economists, open-mindedness in debates, and the importance of challenging the status quo for societal improvement.

Takeaways

• 😀 Economics is often perceived as too complicated for non-economists, but the speaker argues that this is a misconception perpetuated by economists themselves.
• 🤔 People hold strong opinions on various topics without specialized degrees, yet feel hesitant to express views on economics, suggesting a need to demystify the subject.
• 📚 The speaker emphasizes that 95% of economics is common sense and can be understood without deep technical knowledge, advocating for accessible explanations.
• 🏛 The classical view of economics, as seen in the works of Adam Smith, focused on classes and their interests, contrasting with modern views that emphasize individuals.
• 🌐 Marketing strategies still categorize people into classes, despite the common denial of class structures in modern economic discussions.
• 🧐 Economics is not a singular science but consists of multiple schools of thought, each with unique strengths and weaknesses.
• 🌟 The success of Singapore cannot be fully explained by a single economic theory, highlighting the need for diverse perspectives to understand complex economic phenomena.
• 🔨 The speaker advises against relying on a single economic theory, likening it to a man with a hammer who sees everything as a nail.
• 🛠 The role of economics in public life is discussed, with the speaker noting that economics should not just be about utility maximization but also consider well-being and self-fulfillment.
• 🤝 The importance of challenging professional economists and not solely relying on expert consensus is highlighted as fundamental to democracy.
• 🌈 The speaker encourages humility in economic debates, acknowledging the complexity of the world and the limitations of any single theory.
• 🏆 Despite the difficulties in changing economic realities, the speaker motivates for continuous efforts towards creating a better economy and society, drawing inspiration from historical progress.

Q & A

Why does the speaker believe that people should not be intimidated by the complexity of economics?

The speaker argues that people often have strong opinions on various topics without specialized degrees, yet they feel economics is only for specialists. This perception is due to economists successfully making economics seem more difficult than it is, often using jargon and complex mathematics.

What does the speaker suggest is the main reason for the misunderstanding about the accessibility of economics?

The speaker suggests that economists have been successful in making people believe that economics is more difficult than it actually is, which discourages non-specialists from forming opinions on economic matters.

According to the speaker, what is the percentage of economics that is based on common sense?

The speaker states that 95% of economics is based on common sense, which is often obscured by jargon and complex mathematics.

Why does the speaker argue that economics should be more accessible to the general public?

The speaker believes that economics affects everyone's lives and that people should be able to understand and have opinions on economic policies, just as they do on other societal issues, without needing a deep understanding of all technical details.

What is the speaker's view on the relationship between economics and politics?

The speaker implies that economics and politics are intertwined and that different ways of conceptualizing the economy affect how we see the world, suggesting that it is not possible to completely separate the two.

How does the speaker describe the evolution of economic theories from classical to free-market economics?

The speaker explains that classical economists like Adam Smith conceptualized society and the economy as being made up of classes with different material interests, whereas in modern free-market economics, the focus is on individuals, ignoring the concept of classes.

What is the speaker's opinion on the diversity of economic theories?

The speaker advocates for the importance of diverse economic theories, arguing that no single theory can fully explain complex economic phenomena and that understanding requires considering multiple perspectives.

What is the 'Singapore problem' referred to by the speaker, and what does it illustrate?

The 'Singapore problem' is a term used by the speaker to highlight the difficulty of explaining Singapore's economic success with a single economic theory. It shows that Singapore's success is due to a combination of factors, including state ownership and intervention, which challenges the narrative of free-market economics.

Why does the speaker advise against being a 'man with a hammer' in terms of economic theories?

The speaker uses the metaphor of a 'man with a hammer' to caution against relying solely on one economic theory, as it can lead to a biased view of economic phenomena and overlook the complexities of real-world economies.

What is the speaker's stance on the role of work in people's lives and its impact on happiness?

The speaker emphasizes that work is not just about earning money for consumption but also fundamentally affects people's identity, self-worth, and fulfillment. This is why some people may be unhappy despite higher incomes, as work has become more stressful.

What are the speaker's three sets of observations regarding the role of economics in public life?

The speaker's observations include: 1) Never trust an economist completely, as they do not have a monopoly over truth; 2) Always listen to the other side, as all economic theories are partial and complex; 3) Acknowledge the difficulties in changing economic reality but maintain optimism and fight for a better economy.

Outlines

00:00

📚 Making Economics Accessible

The speaker challenges the common perception that economics is an overly complex field reserved for specialists. They argue that people often have strong opinions on various topics without formal education in those areas, yet hesitate to form opinions on economic matters. The speaker believes that economics is fundamentally common sense, obscured by jargon and complex mathematics. They emphasize the importance of understanding different economic theories, such as classical, neoclassical, and Austrian economics, to gain a comprehensive view of economic systems. The Singapore example is used to illustrate the need for diverse economic perspectives, as no single theory can fully explain the country's success.

05:02

👷‍♂️ The Human Aspect of Economics

This paragraph delves into the human element of economic theory, particularly how people are viewed within the neoclassical economic framework as consumers and workers seeking utility. The speaker discusses the impact of work on individuals' well-being, identity, and self-worth, noting the disconnect between increased income and happiness in modern societies. They critique the narrow focus of professional economists and advocate for the public's role in challenging economic orthodoxy, suggesting that ordinary citizens' judgments may sometimes be more grounded in reality. The speaker also emphasizes the importance of humility and open-mindedness in economic debates, acknowledging the complexity of economic theories and the world.

10:04

🚀 Overcoming Challenges in Economic Reform

The final paragraph addresses the difficulties of implementing economic change, recognizing the resistance from those who benefit from the status quo. The speaker points out that the market system, with its 'one dollar, one vote' principle, can limit the choices available to those with less financial power. They also touch on the phenomenon of 'false consciousness,' where people may oppose reforms that are actually in their best interest, using the example of the backlash against Obamacare. Despite these challenges, the speaker encourages maintaining a balance between intellectual skepticism and willful optimism, citing historical examples of societal shifts that once seemed impossible. They conclude with a call to action, inspired by Nelson Mandela's words, to persevere in the pursuit of a better economic and social system.

Keywords

💡Economics

Economics is the social science that studies the production, distribution, and consumption of goods and services. In the video, the speaker challenges the perception that economics is too complicated for non-economists, arguing that it is a field that should be accessible and understandable to everyone, much like other complex subjects such as theology or international relations.

💡Common Sense

Common sense refers to sound and prudent judgment based on a simple understanding of a situation or facts, without needing specialized knowledge. The speaker asserts that 95% of economics is based on common sense, suggesting that the complexity often associated with the field is unnecessary and that economic principles can be grasped by the general public.

💡Jargon

Jargon is the specialized language or terminology used by a particular profession or group. The speaker criticizes the use of jargon in economics, implying that it is one of the factors that makes the subject seem more difficult than it needs to be, by making it less accessible to those without specialized training.

💡Classical Economics

Classical economics is a school of thought that emerged in the 18th century, focusing on the role of the individual in the economy. The speaker mentions that classical economists like Adam Smith conceptualized the economy in terms of classes, not just individuals, which is a different perspective from modern free-market economics.

💡Free-Market Economics

Free-market economics is an economic system where prices for goods and services are self-regulated by the open market and by consumers. The speaker contrasts this with classical economics and points out that today's free-market economics focuses on individuals rather than classes, which is a shift from earlier economic theories.

💡Economic Theory

Economic theory refers to the study of how economic agents behave and how economies function. The speaker emphasizes that there are multiple schools of economic thought, each with its strengths and weaknesses, and that understanding the economy requires considering diverse approaches.

💡Singapore

In the context of the video, Singapore is used as a case study to illustrate the complexity of economic success. The speaker points out that Singapore's success is often attributed to free trade and foreign investment, but also highlights the significant role of government ownership and state enterprises in the economy.

💡Neoclassical Economics

Neoclassical economics is a school of economic thought that emerged in the late 19th century, emphasizing the role of utility and the marginal analysis of goods and services. The speaker suggests that this theory, which views people primarily as consumers and workers, may not fully capture the human experience in the workplace.

💡Utility

Utility in economics refers to the satisfaction or benefit derived by consumers from the consumption of goods and services. The speaker critiques the neoclassical focus on utility, arguing that it overlooks the impact of work on identity, self-worth, and fulfillment, which are also important aspects of economic life.

💡Status Quo

Status quo refers to the existing state of affairs or the current situation. The speaker discusses the difficulty of changing the economic status quo, which can be defended by those who benefit from it, and also by the broader public who may not realize that their interests are not being served.

💡Democracy

Democracy is a system of government where the citizens exercise power by voting. The speaker argues that the willingness of ordinary citizens to challenge professional economists and other experts is fundamental to democracy, suggesting that relying solely on experts undermines the democratic process.

💡Pessimism of the Intellect

Pessimism of the intellect is a concept that suggests being realistic about the difficulties and complexities of a situation. The speaker uses this term to acknowledge the challenges in changing economic realities but encourages optimism of the will, a belief in the possibility of change despite these difficulties.

Highlights

Dispelling the perception that economics is too complicated for non-economists.

People have strong opinions on various topics without specialized degrees, yet hesitate on economics, suggesting it's made deliberately complex.

Economics is fundamentally common sense, obscured by jargon and mathematics.

Economic theories are diverse, with strengths and weaknesses, and should not be viewed in isolation.

The misconception that free-market economics is a direct descendant of Adam Smith's ideas is debunked.

Classical economists like Adam Smith viewed society as classes, not individuals, influencing economic theories.

Marketing strategies still categorize people by class, contradicting the 'no class' narrative in free-market economics.

Economics is not a singular science; there are at least nine major schools of thought.

The Singapore problem illustrates the need for diverse economic theories to understand economic success.

Singapore's economic success cannot be explained by a single economic theory.

Advocating for a multifaceted approach to economics, likening it to having a Swiss Army knife.

Neoclassical theory's view of people as consumers and workers is critiqued for its limited perspective on human experience.

The impact of work on identity, self-worth, and fulfillment is emphasized, beyond just economic utility.

The paradox of increased income but decreased happiness in rich countries due to stressful work conditions.

The role of economics in public life and the importance of challenging professional economists.

The value of ordinary citizens' judgments, possibly more rooted in reality than professional economists.

The importance of humility in economic debates and keeping an open mind to different theories.

The difficulty of changing economic reality and the defense of the status quo by various means.

The encouragement to fight for a better economy and society, despite the acknowledged challenges.

The quote from Antonio Gramsci about the need for intellectual pessimism and willful optimism.

Nelson Mandela's perspective on the impossibility of change until it is achieved.

Transcripts

I try my best to dispel this widespread

perception that the konnex is too

complicated for non economist and

actually it's a very strange because

people have very strong opinions about

everything

Iraq war gay marriage does God exist you

know global warming you already have

very strong views on these things

despite not having a degree in theology

not having a degree in energy economics

not having a degree in international

relations but when it comes to economics

people say aria is for specialist you

know I don't know but why I mean if you

can have a very strong view on Iraq or

Afghanistan without a degree in

international relations you should have

a strong beyond common man economy

policy without the deep unique glory you

know I say that this is only because

economies have been fantastically

successful in making people believe that

it is actually a lot more difficult than

what it really is so they'll tell you

our you know I could explain it to you

but then you don't understand 95% of

economics is common sense of course made

to look difficult with the use of jargon

and mathematics and and even the

remaining 5% can be understood at least

in its essence if not in all technical

details if are someone bothers to

explain it to you in an accessible way

for example what is economics in the

ethical foundations of economic whether

you can separate the conex and politics

and how different ways of

conceptualizing the economy affects the

way we see the world you know for

example people think that today's free

market economics is a direct descendant

of Adam Smith but this is not true you

know in Adam Smith and other so-called

classical economists the society the

economy was conceptualized as being made

up of classes and not individuals and

the whole theory evolved around how the

way it is different classes with

different material interests be a affect

the way capital is accumulated the

economy grows income is distributed and

so on

today in free-market economics that is

only individual when you tell people

author you know isn't there

class they say no I mean that there's an

old Marxist concept but if that's the

case why do the marketing companies have

all these class categories when they do

marketing campaign strategy Hotel they

look at groups ABC c1 c2 you know target

advertising according to the type of

people now

many college will tell you that

economics is a science in which there's

only one white theory there are at least

nine different major schools of

economics and in this several more if

you count - schools or split the major

ones into soft schools each with is own

unique strengths and weaknesses and for

free market economics our Lord you have

three different kinds classical

economics neoclassical economics

Austrian economy so actually there isn't

one white theory and my contingent is

that we need all these diverse

approaches to economics in order to

fully understand our economy because

they all make certain assumptions they

all have different underlying political

and ethical values they have all sorts

of different theories about how the

economy grows and so on and to make this

point I give you the Singapore problem

or what I call life is stranger than

fiction you know if you read only the

financial newspapers like the Wall

Street Journal or the Economist magazine

you will be only told that Singapore

succeeded because of is a free trade

policy and it's welcoming attitude

towards our foreign investors this is

partly true I mean they did have those

things but you will never be told that

Singapore government owns nearly 90% of

all the land

85% of housing is provided by a

government-owned housing corporation and

a staggering 22% of GDP is produced by

state-owned enterprises so in talking

about Singapore I always tell my student

matter what it is neoclassical Marxist

Austrian Schumpeterian give me one

economic theory that can explain

Singapore well there isn't so you need

to know these different theories to

fully understand how

country like Singapore could succeed so

in this regard my advice is that you

should not be a man or a woman with a

hammer by loading only one kind of

economy theory because whatever that

theory is once you believe that one

theory is true like the man with the

hammer you will start to see everything

as an aim

so I say that you should get a swiss

knife in this dominant economic theory

that is up today that is a neoclassical

theory people are mainly conceptualized

as consumers and workers are considered

as what DS econ is called this utility

that you have to put up with so that you

can earn money with which you consume

goods and services and then derive

pleasure or what they call utility

that's your aim driving pleasure from

consumption but what happens in our

workplace are fundamentally affects us

not just our immediate physical and

psychological well-being but also our

identity and our sense of self-worth and

our self fulfillment this is why these

days in many rich countries a lot of

people are very unhappy compared to say

a couple of decades ago despite the fact

that they have higher income why because

the work has become more stressful but

then you know economists tell you know

you should be happy you know Britain

today has a 20 percent higher income

than in 1975 and why aren't you happier

you know my pockets are not just an

explanation of economic theories and

facts it's also a discussion about the

role of economics in public life and in

this regard I have three sets of

observations to make the first one is

never trust an economist and that

includes me yeah you know professional

economists that I like to say are you we

know what is correct you know no they

don't have a monopoly over truth I

already told you that there are nine

different kinds of economic theory so

the right our conclusion depends on

which economist you talk to him

and I argue that it is entirely possible

for people who are not proficient in

economies that who have sound judgment

Sonia Khanna issues

I even argue that sometimes their

judgments may even be better than those

of professional economists because they

may be more rooted in reality and less

narrowly focused and I argue that indeed

the willingness on the part of the

ordinary citizens to challenge

professional economists and other

experts is a foundation of democracy you

know if you really believe that all we

have to do is to listen to the experts

to listen to the professional consensus

of the experts why do you need democracy

yeah let self elected elites that

appoint each other and Wonderwall you

know this is why a lot of people aren't

happy with the European Union the second

point is the latin phrase that is

apparently written on the walls of the

city hall of gouda the city in the

netherlands which is famous for the

cheese and he says yeah i'm not even

going to pretend to speak latin so it

basically says listen even to the other

side and i argue that this is the

attitude you have to have in debating on

equal issues i'm not suggesting that you

should have no opinion of your own but

what i'm trying to tell you is that

given the complexity of the world and

given the necessarily partial nature of

all economic theories you should be

humble about the validity of your own

favorite theory and should keep an open

mind about it

finally a car even while i constantly

make reform proposals i emphasize how

difficult it is to change the economic

reality well sometimes the reason is

obvious i mean people who benefit from

this status quo want to thwart change by

any means you know lobbying bribery

video propaganda and even violence but

the status quo often gets defended even

without some people actively being evil

because I thought thing about the market

system is that the rule is one dollar

one vote you know so this means that the

ability

those with less money to refuse

undesirable options given to them is

highly constrained also we can be

susceptible to believe that against our

own interest and at the best that that

example is that what happened when

Barack Obama tried to reform the

American medical insurance system and

there were all these pictures of all

pensioners demonstrating against what

they call Obamacare with placards that

saying things like government hands off

my Medicare well except that Medicare is

a government program well this is what

the Marxist are used to call false

consciousness or also known as the

matrix the movie but acknowledging the

difficulties involved in changing the

economic status quo should not make us

give up the fight to create a better

economy and debt to society

yes changes are difficult but in the

long run if I you know people fight for

something hard enough many impossible

things can happen and I don't forget I

mean two hundred years ago if you

suggested America should abolish slavery

you would have been branded at least our

unrealistic and that they're probably

the loonie one hundred years ago that

the British government put women in

prison for asking for what a lot of

women actually said why do we need votes

that we have our husbands and brothers

to represent our views well this is why

I caught Antonio Gramsci D Italia

Marxist er who once said that we need to

have pessimism of the intellect but

optimism of the will yeah you have to

accept the difficulties of changing

these status quo but you have to believe

that this can be done

and finally as Nelson Mandela used to

say it always seems impossible until it

is done

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