- Education and Science
National Economics Made Simple
We talk about the application of mathematics and statistics to the study of economics. Academicians have it all figured and the digital geniuses have written elaborate computer models to tell us that the major economies of the world are…flat broke.
And the more experts we put around a table the more it costs just to find out that a Coronation Market higgler is far smarter than the Governor of the Bank of Jamaica, the entire Cabinet, and the so-called business leaders, all put together. She can teach them how to live within their means; how to buy cheap and sell dear without hurting the entire community; and how to add value to indigenous goods and services.
Time to apply this to National Economics Made Simple!
Now being me, I must insert one caveat, the following example is meant to be a light look at a serious issue. The exception to the model is the case of structural underdevelopment as is the case of former colonies that are still tied to the North in relationships of dependence or for one reason or the other have not yet escaped the debt trap.
With that said there is still a lot we can all learn from simple economics.
Let’s assume two families, the Sunni and the Spendi.
Mr and Mrs Sunni are thrifty, wise and productive. They are too busy minding their own business to get caught up in the neighbours business. They spend only what they earn. The save enough for a rainy day, and take calculated risks in their investments. In the real world some of the investments will succeed, and some will fail. That is the cost of doing business in the real world. They educate their children, are loving and kind to each other, refuse to borrow, and are very reluctant to lend.
They are willing to put in the hard work to increase their wealth. They see expenses mounting and being unable to minimise the bills they make plans to increase their income, which involve longer hours and even doing activities that people of their income and education would look down on. The Sunnis do not drive the latest cars. Their kids do not own the latest gadgets. And Mr Sunni make time to play ball with his boys.
Now let’s take a look at the opposite. Mr and Mrs Spendi are very theoretical, full of learning and the latest knowledge of banking and commerce. They must have the latest cars, the latest fashion, and take annual vacation by running up their credit cards. They take one loan to pay off another. They can explain to you in precise language the reason they are always three months behind in their financial obligations, and how dare we expect them to live within their means. And they are in no hurry to increase their productivity or income. Whenever they seek to improve their lot it is usually tied to a project which is short lived. They have no decent plan for retirement, and must borrow incessantly form their successful relatives.
The countries that live like the Sunnis will have growth and prosperity. The countries that manage their affairs like the Spendis will be in economic problems in good times and in bad.