economics - where to begin?

or should i just accept that, like, i don't have the right brain to understand economics? i don't beat myself up for not understanding physics, i never see anyone feel bad about not enjoying literature. it's only cuz economics interacts with politics and current affairs that i ever feel the lack.

i took two economics classes in college, got As in both, have read a couple books on economics on my own, and i feel like i'm starting over every time i try to think about the subject. i think the difficulty largely comes from the way it mixes incredibly airy, abstract concepts with real-world figures and statistics -- you have to think in two different 'modes' at once.

the other challenging thing about economics that you don't get so much with other sciences is that there are several schools of thought, and they all start from completely different places, so depending on what commentator you're reading you get a completely different version of what's going on (e.g., economists from different schools won't agree on the cause of a recession).

i found this pretty lucid and interesting: http://www.amazon.co.uk/Long-Short-Investment-Normally-Intelligent/dp/0954809327/. it's kind of about personal investing rather than macroeconomics, but he has to go through some of the big and fundamental stuff before he gets into, e.g. the markets.

the investing/markets stuff in that book is uk-centric btw.

http://www.guardian.co.uk/commentisfree/2011/aug/05/financial-greek-debt-market-eurozone

this fn guy used to edit the new statesman (well known left-wing magazine) and among other things hired johann hari and put on the cover an image of the star of david impaling the union jack. anyway, he admits to being ignorant of economics. which is fine, because why should the editor of a major political magazine understand economics.

How many editors of news outlets understand it? Or politicians and civil servants?

i think it is kind of impossible not to feel this way at least to some degree unless u are just really stubborn & probably explicitly ideological and think u have it all figured out, or have like a masters degree. i think the reason is the econometric arguments economists use when debating empirics are thoroughly inaccessible to just about everyone in the world, & when translating them into plainspeak a lot of the essence of the argument is lost, which results (ime) in a vertiginous read, especially when reading conflicting viewpoints. it feels as if there's no common logical interpretation of data grounding the debate, and without a strong familiarity with systems of models economists use the whole "this went up, causing that to go down" is very confusing. think this is partly due to conspiratorial ~special interests~ legitimizing supply side arguments (that are often shrouded in fancy complicated theory & econometrics) but also just bc economics is not very advanced as a field yet

my advice is pick a couple writers you feel are reasonable & follow them. paul krugman does
a pretty good job explaining concepts every time they come up on his blog, tone a bit 2 strident though

think this is partly due to conspiratorial ~special interests~ legitimizing supply side arguments (that are often shrouded in fancy complicated theory & econometrics)

& thereby prolonging an unnecessary debate abt basic macro policy

but also just bc economics is not very advanced as a field yet

I think this is a strange way of looking at it. economics is prob the most advanced social science - but it's ultimately a social science, which means there isn't going to be 'a right answer' a lot of the time.

are the economic models that drive "policy" really the most advanced and up-to-date (whichever ideological interest they seem to serve) or is still REALLY just Keynes vs. Hayek? I have had a sneaking suspicion that what's up with the economy is pretty much over everyone's head (or at least over the head of anyone in a position to do something about it). not sure we even have a good model for what's actually "going on" at any given moment.

hayek is a fckn loser

(apart from certain branches of cultural theory but at some point i realised those were total bollocks anyway and stopped beating myself up over it.)

same is true of much economics, no?

larry summers mentioned that when in office he used is-lm models - stuff taught to undergrads but considered to simplistic to even be touched on the graduate level - as his reference point.

when it comes to fiscal policy, you can be pretty certain that models have nothing to do w/ anything.

i've always taken a relatively ignorant Marxist sorta view (every response to a "crisis" is basically laying the groundwork for the next "crisis," ad infinitum) but it has seemed from my layman's perspective (and not really reading the ultra-technical stuff) that the basic theoretical models are still derived from a reaction to the Depression--ie, that our idea of what the Economy is and how it behaves is historically static since the advent of Capitalism.

using metaphors to explain economics actually makes things worse, i've realised

god i can't even get three fucking paragraphs into an apparently "very clear" galbraith article without the words starting to swim

i like what flopson says a few posts above but how, if it's so hard, are so many people apparently so comfortable with the subject? not all of whom have masters degrees and not of all whom are actually that smart outside of understanding economics

"they're just bullshitting" yeah yeah i've heard that but i can't even get to the basic level of comprehension necessary to bullshit

lex how comfy are you with diagrams, models and algebra -- what yr describing sounds like classic maths anxiety, where ppl perfectly capable of grasping something complex and practical get thrown back into classroom nerves by bad association

it totally is that, it feels completely irrational and panicky.

maths was a weird one, i ended up with an A at A-level without ever really understanding it (and at intervals this blew up into freakouts that my #chinesetigermother remedied with EXTRA TUITION) - the big exception was algebra which i clicked with right from the start and never felt uncomfortable with right up to A-level pure maths.

i'm not that comfortable with diagrams or models, they feel like simplified metaphors that disguise the ACTUAL THING from being understood (i don't know what this ACTUAL THING is w/r/t economics, at all)

i somewhat agree that metaphors for economics are a problem, actually: the way money works is not "like" other things, and you have to get a grip on its own models -- or better still competing systems of models -- to grasp why not :(

and that galbraith piece is not AT ALL entry-level: it assumes a lot of prior knowledge of terms, and intuited effects (right and wrong), and a working knowledge of US politics (the last you probably have)

haha bad association, yeah well my year studying economics at oxford was a disaster (jesus i still can't believe i received such useless tuition at a supposedly elite institution)

One of the things that is frustrating in political discussion re:economics is the reification of "the deficit" as this thing which must be appeased at all costs, plus the fact that money is created in the form of debt so paying off debt would remove money from circulation which would cause huge deflation, no?

yet "we cannot continue to spend what we haven't earned" continues as a thing, when surely the opposite is true - capitalism requires we spend what we haven't earned yet

http://www.amazon.co.uk/Grip-Death-Slavery-Destructive-Economics/dp/1897766408

Despite the rather lurid title this is a readable and interesting book - esp re:debt - interested in others views on it if they have read

This is a very well written and very concise primer, I highly recommend it.

http://www.amazon.co.uk/Concise-Guide-Macroeconomics-Managers-Executives/dp/1422101797/ref=sr_1_1?s=books&ie=UTF8&qid=1313584460&sr=1-1

the reification of "the deficit" as this thing which must be appeased at all costs

one of the reasons i feel i can't argue fully about ~our current politics~ is that i have no idea how scary the deficit is, or should be, and i assume everyone on both sides is just lying

lex this is a pretty great little film about debt and modern economics. if you have 45 mins available at some point i really recommend it.

https://www.youtube.com/watch?v=Dc3sKwwAaCU

my maths experience was similar: i can be taught to deploy any set of formulae and system of rules of deployment, and get excellent marks -- i actually associate this with my skill at proofreading, it's a mix of excellent visual memory and conentrated precision -- but i never felt i "understood" anything after calculus

it was only once i was teaching maths to 13-yr-olds that i began to realise this is what "understanding" maths pretty much is: there is no ultimate there there to be touched or tasted or smelt, and people who "get it" just have a far wider palette of techniques of rival systems of models they can bring into play, and plus an intuitive sense of where "likeness" operates (as in, this model is "like the situation" bcz x, that model is "not like the situation" bcz y)

x-post: absolutely re reification, it's the curse of the discipline in ANY of its political forms

ed that is one of the actual textbooks we used at oxford! it...got me nowhere :(

[one of the reasons i feel i can't argue fully about ~our current politics~ is that i have no idea how scary the deficit is, or should be, and i assume everyone on both sides is just lying

― lex pretend, Wednesday, August 17, 2011

Want to read more here about Andrew Jackson and 1837 - when the US actually paid off its debt (for the only time in history?) - and what followed wasn't so good, right?

but not sure what the best thing to read on that is!

i can be taught to deploy any set of formulae and system of rules of deployment, and get excellent marks

where this led to freakouts was when this suddenly stopped being true and this cruise control mode, like, crashed into a tree - it felt like there was no "deeper understanding" to fall back on and work things out logically when things went wrong because i hadn't been doing that anyway.

there is no ultimate there there to be touched or tasted or smelt

hmmmmmm i think this makes it less likely that i'll understand economics but more likely that i won't feel bad about it

i was recently recommended "finance: plain and simple -- what you need to know to make better financial decisions" by sebastian nokes, which was said to cut through a lot of the jargon-y bullshit (it's aimed at small business-y people intimidated to financial advisor types), and to lay out a lot of "what they're actually saying" versus "what they're disguising and obfuscating")

however, since i bought it my time and focus have not exactly been my own, w/martin, and w/riots, and w/a vital life-changing career interview next week (if i don't make a fool of myself and no one else is better), so i have barely started it

yes i didn't get freak-outs, i just gradually lost interest in pursuing it at university level (haha bcz CORRECT CHEATS not HANDED ME ON A PLATE i suspect): twice i got excellent marks on a paper by spending the days before frantically memorising formulae and proofs in an area new to me, and just as quickly forgetting everything i'd absorbed after the exam was over

I hate the term "fiat money"

xpost to hand's video

yah seriously.

not surprised to see sanpaku use it tbh.

Ed yes that video has a suspicious goldbuggist undercurrent to it, but I think it does a good job making sense of things

agreed. I prefer "unit of exchanged" or "shared fiction" to "fiat money". Money only has value with the content of the people, otherwise they stick it in Gold or other assets.

...

what on earth does that mean?

http://www.threadbombing.com/data/media/2/paulownsmccain.gif

i don't entire understand ed's second sentence either: does "content" mean "that which is contained" or "happy approval" -- it's true that value requires a big element of agreement, including the explicit agreement to agree, but it also includes necessarily disagreement -- if people didn't want things in different degree, "they" (ie we) wouldn't need to explore systems of exchange, and ways to stabilise how these exchange rates operate (should a beer costs more than a potato etc), and also to render them fluid when needed too

i think it means: when everyone is too anxious to negotiate about value in good faith, relative to their immediate situation, on an assumption of shared givens and (moral) values, they flee to hoarded piles of value-that-never-changes (which gold has long been a symbol of): but actually its value does change, so this is a phantom

actually most of the issues we face relate ultimately to predictions made -- and how they get made -- about what people WILL want: and how to facilitate, or indeed not facilitate, this

haha we are all mccain now :\

i think it's a typo and he means "consent".

basically people who aren't comfortable using "fiat money" and "money" as synonyms tend to be nuts.

WRT the OP, I started the last decade largely ignorant of academic economics, but made my way through a std text (samuelson?) with the aid of Steve Keen's Debunking Economics. Being aware of the numerous unjustified assumptions behind neoclassical microeconomics will make the parlous state of mathematical econ as a predictive tool evident.

On a similar debunking note, I've just started Ian Fletcher's Free Trade Doesn't Work: What Should Replace It and Why, which, while a serious work for laymen by a proper academic, is just $0.99 on Kindle.

lex, galbraith's more famous dad has written some very accessible books about modern economics which are actually great fun to read. The Affluent Society is probably my favorite but there's also The Great Crash, about 1929.

http://www.amazon.co.uk/Affluent-Society-Updated-Introduction-Business/dp/0140285199

"Money: whence it came and where it went" <-- best title evah, and jgk is an extremely funny writer, but i still think you have to be ready with a notepad to look stuff up quite often (and be aware that there's a reason such a lucid writer stopped being someone mainstream economists read and believed)

(i'd say that reason isn't that he was wrong; but THEY would -- and the technicalities of this disagreement have to be understood, as well as the politics)

Attempting to explain the causes of the financial crisis to the Lex in the pub was really frustrating but also illuminating because he kept asking really pertinent questions like "why were they doing that? Isn't that really stupid? What happens when these people can't pay?". Clearly knowing nothing about the subject is an advantage.

nothing wrong w/ a neophyte asking neophyte questions. esp. since the folks "knowledgeable" about economics are the ones who got us into the economic pickle we're in and are incapable of getting us out of it.

i'd recommend an Intro to Econ. textbook -- Samuelson and Nordhaus was standard when i was an undergrad during the late 80s/early 90s, so if they still use that that would be the one i'd get. also, seek out robert heilbroner's the worldly philosophers for a readable synopsis of economists from Adam Smith up to John Maynard Keynes.

heilbroner's book is devoid of math, BTW, if anyone has a phobia about math in economics.

tad llamasfur! you said exactly the same eight years ago on this very thread