Thursday 2 June 2011


I have this thing about economics.

I don’t understand the first thing about it.

As I’ve said elsewhere, I’ve never sat in an economics classroom, and when I bought a book on the subject I didn’t get far without my mind boggling and threatening a shutdown.

See, the thing that gets me about economics is that it doesn’t seem to square with what I call logic.

Of course I’m biased. Before I go on further, let me quite openly admit my anti-Economics bias. I’m biased because I live in a country ruled by a so-called “eminent economist”, who incidentally has never won an election in his life, and among his significant achievements has hugged George W Bush and told him that the people of India loved him. This same Eminent Economist runs a government full of corruption so mind-boggling the figures make absolutely no sense whatsoever, and claims he has no way of getting rid of the corrupt politicians because of the expenses of another election. This same Eminent Economist’s government increases fuel prices on a weekly basis, exports food items, and still claims not to know why prices are rising through the roof.


So I’m biased, but I still can’t comprehend this subject.

For one thing it seems to me that economics treats humans as robots. Take this thing called the trickle-down theory, for example. If you cut the taxes of the rich to the bone, they will allegedly use all that surplus money to buy extra goodies, which will stimulate the economy, and benefit everyone down to the beggars in the streets who will get more coins in their cups. So you cut the taxes of the rich to the bone.

So, what actually happens? How many chandeliers can the rich fit in their opulent homes? After even the loos have their own crystal chandeliers, what next? How much caviar can they eat daily? Will they actually spend the millions they’re now saving in taxes, or simply park them in bank accounts or stocks? Is it so difficult to guess the answer?

Then, think about the alleged virtues of capitalism compared to socialism. Apparently, the competition inherent in the capitalistic system ensures both efficiency and the consumer receiving the best deal. Is it just my failure to understand the brilliant simplicity of this idea that makes me think that the logical end point of said competition would be the elimination of all the firms that failed to maximise profit by cutting all expenses to the bone and by any other means, including bribery to government figures, necessary to maximise those profits? Am I stupid when I think that the logical end point would be a monopoly which could then do just as it wanted with a customer base who had no other alternative, who are henceforth enslaved to it?

Maybe I’m being stupid. Maybe not.
Recently I was talking to one of my specimens, who happens to be a professor of economics at the local university. I asked him about the idea that human wants – and hence, the economic activity designed to satisfy those wants – can be expanded indefinitely. For instance, I said, suppose we’re talking about the car industry. How many cars can a family own? One per member? Then what?

Well, he said, then the family will want better cars. “Better” as in what, I wanted to know. Bigger? We in India already have an unmanageable problem with traffic. How many cars can the streets accommodate? What about the fuel prices, and the pollution? At a relatively early stage, traffic will go into gridlock, and then what? How, exactly, will people use the five cars they own – and where will they park them?

No answer from the Doktor Professor.

The law of diminishing returns beats economics. Common sense beats economics. Human nature beats economics.

If it were astrology, it would probably be no less scientific.

But they take it completely seriously anyway.


  1. I agree with you on this, and thanks for writing it.

    Human values are never really worked into the equation with economics, where arrows pointing up are the highest good.

    Anything – no matter how horrific, counterintuitive, or inhumane – can be justified by “it’s better for the economy.”

  2. The only time economics makes any sense at all is when you're talking about a single sector of said economy ie, manufacturing. Then it becomes crystal clear, and usually has pointy edges and pointy hats in the same sentence.

  3. Katy is right; it's quite true that human values are never involved in economic equations; economic policies are made to sustain economies, not to provide goods and services in the most-efficient, stable manner to a populace.

    Economics has always fascinated me, because it appears (at least, to me) to be the history of humanity; getting in its own way.

    Any rational person knows that capitalism is at fundamental odds with basic democracy, and that it's destroying the planet; that communism doesn't work because it counts on human altruism and is too subject to the vagaries of human political greed.

    Perhaps the best system is one where we don't use money at all - of course, that would eliminate things like corporations, armies, standing governments - yeah; maybe that is best....

    A subject for endless commentary, though....

    Words of politicians have no place in sciences


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