Saturday, June 15, 2013

Why everyone should know some economics


Everything you do affects others. More importantly, everything others do, eventually affects you too. For example, if others believes policy x is good, and they support that policy, that policy will more than likely affect you. If other people don't actually understand the consequences of that policy, they may think it is a good policy when it may actually not be as good as they thought it would be. In fact, the policy may achieve quite the opposite of its intended goals.

People who do not understand a policy may cause unintended consequences by supporting it. This is why you should be interested in understanding at least the basics of economics. And, once you understand these basics, if you want to prevent others from harming you by trying to help you, you will probably want to share your knowledge with them. These are some of the commonly misunderstood (or, not understood at all!) policies that would find their place on my list of policies that everyone should understand:

1.  Minimum wage laws:
- Do minimum wage laws help the poor?

2. Immigration policies:
- Do immigrants take "our" jobs?

3. International trade:
- Does importing mean fewer jobs for "us"?

4. Illegal employment:
- Is illegal employment bad for the economy?

5. Environment:
- Is government legislation the only way to protect the environment?

If your answer to any of these questions is yes, you may be one of those that will hurt others by trying to help them. Why? Because basic economic theory teaches us that minimum wage laws may in fact hurt the poorest members of society; that immigrants create new jobs for everyone; that importing means more of some other jobs for us; that illegal employment is a way of saving resources; and that government legislation is often inferior in protecting the environment compared to market solutions. You don't believe me? Excellent! I dare you now to do some research (on the internet or wherever) and prove me wrong. Good luck!

You do believe me? Excellent. I now dare you to explain this to someone who doesn't agree with my claims! If you are not sure you can explain, you don't understand the economic rationale behind the explanation well enough. In that case, I dare you to do some research and see if you can then explain these concepts to others. If you change your mind in the process, then you can use this knowledge to prove me wrong. Remember, you are doing this for your own good. You want to protect yourself from being harmed by those who think they are helping you when in fact they are hurting you because they don't understand the consequences of their actions. Good luck!

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