Take a walk The economy must be a very complicated, volatile thing. At least that’s how it seems in the business pages of the newspaper. Mind-boggling stock market tables. Charts and graphs. GDP statistics. Foreign exchange rates. It’s little wonder the media turn to economists, the high priests of this mysterious world, to tell us what it means, and why it’s important. And we hear from them several times each day – usually via the monotonous “market updates” that interrupt most news broadcasts. Company X’s shares are up two points; company Y’s are down two points; the analysts are “bullish”; the analysts are “bearish.”
But is all that fi nancial hyperactivity really what the economy is about? Is economics really so complex and unintelligible? Should we trust the “experts” with it all? Maybe we should fi nd out what’s going on for ourselves. Forget the market updates. Here’s a better way to find out about the economy – your economy. Take a walk. And ask some questions.
Start at the front door of your own household. How many people live there? What generations? Who works outside the household, and how much do they earn? How long have they been working there? How long do they plan to keep working, and how will they support themselves when they retire? Who performs which chores inside the household? Are there any children? Who cares for them? Does anyone else in your home require care? Do you own your house or apartment, or do you rent it? If you rent it, from whom? If you own it, how did you pay for it? What shape is it in? Now walk through your neighbourhood, and the next neighbourhood. Are the homes or apartments all roughly the same, or different? Does everyone have a home? Do most people have jobs? What sorts of jobs? Are they well off? Can they comfortably pay for the things they and their families need? Watch your neighbours going off to work, school, or other destinations.
How are they travelling? In their own cars? On public 17 Stanford 01 intro 17 9/4/08 18:04:06 18 Economics for Everyone transport? Walking? How much money, time, and physical space is devoted in your neighbourhood to “getting around”? Is there a school in your neighbourhood? A hospital? A library? Who pays for those buildings? Who works there? How do those facilities compare with the private homes and businesses around them? Are they newer, or older? Nicer, or shabbier? Is there a park in your neighbourhood? Is there anywhere else a person can go without having to pay money? Are the streets clean? If so, who cleaned them? Is the air fresh or smoggy?
Are there any parks in your neighbourhood? Can people in your neighbourhood safely drink the water from their taps? How much do they pay for that water? And to whom? Walk through the nearest shopping district. What kinds of products are displayed in the windows? Were any of them produced within 100 miles of your home? Elsewhere in your country? In another country? Can your neighbours afford most of what is on display? Are they usually happy with their purchases, or disappointed? Do they pay with cash, bank cards, or credit cards? Can they afford what they buy? Everything that makes up the economy is right here: work, consumption, investment, finance, and the environment. Sure, but where can we buy a beer? Stanford 01 intro 18 9/4/08 18:04:06 The Economy and Economics 19 Now walk to a local bank branch and see what’s happening inside.
Compare what you see (deposits, withdrawals, loans) with the activities you read about in the business pages of the newspaper (leveraged buyouts, fi nancial speculation, foreign exchange). Which matters more to day-to-day life in your neighbourhood? This is a good time to stop at a café. Pull out a pencil and paper. List your approximate monthly income. Then list how much of it goes to the following categories: rent or mortgage (including utilities); income taxes; car payments or public transport passes; groceries; other “stuff” (merchandise); and going out (entertainment).
Can you comfortably pay your bills each month? Do you regularly save? Is your income higher than it was fi ve years ago, lower, or about the same? If you had a little more income, what would you do with it? If you walked back to that bank and asked for a loan, would they give you one? Apart from the places we’ve mentioned (schools, stores, and banks), what other workplaces are visible in your neighbourhood? Any factories? What do they produce, and what shape are they in? Any professional or government offi ces? Other services? Can you see any offi ce buildings from your neighbourhood? Who works there? Can you guess what they do? Imagine the conditions in those offi ces (spaciousness, quality of furnishings, security, caretaking), and compare them to conditions inside your local school.
Have any new workplaces opened up recently in your neighbourhood? If so, what do they do? Did you see any “help wanted” signs posted in local workplaces? What kinds of jobs were they advertising for? Now you can return home. Congratulations! You’ve done a lot more than just take a stroll. You’ve conducted a composite economic profi le of your own community. It has no statistics, charts, or graphs (though you could add those if you wish, with a bit of work at the local library). But just by walking around your neighbourhood, you have identifi ed the crucial factors determining economic affairs in your community: •
work Who works? Who works inside the home, and works outside the home? Are they employed by someone else (and if so, who?), or do they work for themselves? How much do they get paid? Is it hard to fi nd a job? Stanford 01 intro 19 9/4/08 18:04:06 20 Economics for Everyone
• Consumption What do people need to stay alive? What do they want, to make their lives better? How do they pay for it all?
• Investment Private companies and public agencies must invest in maintaining and expanding their facilities and workplaces, or else the economy (and your neighbourhood) goes quickly downhill. Who is investing? How much? On what types of projects?
• Finance Most economic activity (but not all) requires money. Who creates and controls that money? Who gets to spend it? What do they spend it on?
• Environment Everything we do in the economy requires space, air, and inputs of natural materials. Is the natural environment being run down by the economy, or is it being sustained? These are the building blocks from which the most complicated economic theories are constructed: work, consumption, investment, fi nance, and the environment. And they are all visible, right there in your neighbourhood.
Don’t ever believe that economics is a subject only for “experts.” The essence of economics is visible to everyone, right there in your own ’hood. Economics is about life – your life.
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