Economic Literacy

Everyone’s got their own favorite form of literacy: emotional, mathematical, computer, or cultural. But I think economic literacy needs to get a lot more attention. A good critical thinker can tell shit from shinola, and you can’t do that in a capitalist economy unless you understand something about economics. I’m not talking about the intricacies of macro or micro economics as much as I am about the basic assumptions that underlie our particular dismal system.

It’s important to see the assumptions as assumptions rather than facts. Economics, as they say, is an interested subject, profoundly shaped by the underlying interests of the economist. That’s why this piece by Henry Banta in the Nieman Watchdog, despite its partisan-sounding title, is so helpful (“Republicans are locked in a passionate embrace with a corpse and won’t let go“). Banta provides a road map rooted in the particular purposes of various strains of economics.

The media rely heavily on, “those employed by Wall Street and various commercial interests,” whose job is to try to assist their employers in making money. There’s no shame in that task (at least not necessarily) but this group’s perspective is necessarily limited by their pragmatic goals. Banta’s more interested (rightly so) in the academic economists, whose perspective is, at least potentially, much broader. It’s their economic theories that have the widest impact.

Banta focuses on the idea of rational choice, and the “efficient market hypothesis,” an economic theory that has driven conservative economic thought (not all Republican) at least since the 1970s. Arguably, the first great rational choice policy maker was Ronald Reagan. Our current mess, Banta says, is rooted in the failure of these ideas. It’s a persuasive argument that’s worth reading. He also mentions several other pieces that help flesh out the emerging critique.