What is the Economy?: Everyday Economics and Why it Matters to You

## Special thanks to The many citizens that shared their economic stories ## How to use this book We designed this book to be flickable, which means you don't have to read it in any particular order. Having said that, we do recommend reading Chapter 2 before embarking on any of the others, as this will offer you a framework for thinking about the economy and imagining the one you live in in different ways. There might be some bits of this book that you understand already, and some bits that might be new to you. Feel free to skip over the parts that feel familiar, but also challenge yourself to look twice at any sections that feel really obvious: you might find that some economists have thought about the topic in an alternative and surprising way. ## Is this book 'political'? Yes and no. Yes in the sense that it calls for a different way of talking about the economy, but no in the sense that we aim to be inclusive of all different kinds of politics. Everyone's experiences of the economy are different, and as such not everything in this book is going to feel relevant to you or explain your life or the world around you. The hope is that at least some of it will resonate. This book is designed to be provocative, and may ruffle some feathers amongst those that have very set definitions of what economics is. However, we believe most economists are supportive of the idea of opening up the profession, especially in the name of building trust and efficiency. As authors we of course hold our own political opinions, but our aim with this book is to have better conversations about the economy, not influence what a better economy might look like. We do, however, believe that better conversation will lead to outcomes that more people will see as beneficial. While economic decisions inevitably involve trade offs and benefit some perspectives or lives over others, our hope is that by encouraging reflective conversation we can find more ways to 'do' economics that means almost everybody is better off. In that sense, this book is inherently political, while purposefully refraining from taking a partisan position. ## hapter C 1 How did we end up here? ## Welcome The economy is confusing. We didn't use to understand it either. How did the world come to be so organized without anyone intentionally organizing it? The economist Milton Friedman once remarked that 'not a single person could make a standard lead pencil'. He saw that 'literally thousands of people cooperated to make this pencil, people who don't speak the same language, who practice different religions, who might hate one another if they ever met!' Understanding the economy helps us get to the bottom of how this works and also why every now and then a seemingly organized system descends into chaos. It shows us why a world filled to the brim with all sorts of stuff still can't always feed, house and employ all the people that are in it. As we go about our day, we are governed by a set of rules, though we're not always fully aware of what they are or even sometimes that we're following them. We are part of a system that both decides what we can and can't do and asks us to decide what we do or don't do. The lives we lead and the paths we each take are all defined by this system and its semi-invisible rules. And that system -as you are about to discover -is the economy. But where did this system come from? Is there a map to follow, and who's drawing it if there is one? That is the work of more forces than one and -guess what? -you have your part to play, too. Understanding economics means understanding the way we humans live, and so it naturally follows that 'doing' economics (or making economic decisions) means nothing less than shaping the future of humanity. If all that sounds like a rather massive task, that's because it is. But don't worry! This book is here to help you make sense of it along the way. 1. Indeed, in 2020 an estimated 821 million people did not have enough food to live an active, healthy life. Half Title Title Page Copyright Page Dedication Contents Figures Preface (and a general warning) Acknowledgements How to use this book Chapter 1: How did we end up here? Welcome So, what is the economy? What is economics? How did we get here? Economics the system: A great economic contradiction Economics the science: Putting the world under a microscope Economics the conversation Chapter 2: What is ‘the economy’? From value to values: What makes up an economy? The science of power and fairness ‘The economy’ doesn’t really exist Let’s take a closer look Skills: How can I have better conversations about the economy? Chapter 3: What’s an economy for? Current measures What else could we prioritize? The ends versus the means Chapter 4: You (and everybody else) Micro versus macro The different roles you play Your values Your circumstance Your needs and wants Your choices Homo economicus All of us: Macroeconomics Chapter 5: Your high street What is the cost of living? Markets and exchange From wheels to whizzy things: Technology Chapter 6: Your home What are houses for? Who is responsible for building homes? Why is housing so expensive? But are high house prices really such a bad thing? What is a housing bubble? How do we know if we are in a housing bubble? Expensive housing markets: Who loses most? What do we mean by affordable housing? Making all that expensive housing more affordable Renting versus home ownership Chapter 7: Your work What do we mean by ‘work’? Wages: What are we worth? Power in the workplace Equality in the workplace Unemployment: The world of (no) work Chapter 8: Your money Coins, bills and symbols on a screen: Let’s talk about money Everybody’s money: The financial system Money in the bank Chapter 9: Your society What makes up the foundations of society? The role of (in)equality in economies Climbing the economic ladder: What is social mobility? Chapter 10: Your government Economics versus politics Rules of the game: Regulation Raising money: Taxes and more Spending money: Budgets Chapter 11: Your world How do economists look at the world? Globalization Trade and immigration International development The environment: Thinking about the Earth and the economy Chapter 12: The world needs a new language Without a common language, we’re having poor-quality conversation A new language What does this look like in practice? Bibliography Index "Why are houses so expensive? Is our banking system going to collapse again? Should we be worried that robots are going to take all our jobs? And just what exactly is the economy anyway? Economists and politicians would have you believe it is a rarified topic best left to 'the experts'. The experts are wrong. This book uncovers what people really mean when they talk about 'the economy', taking the word off its pedestal and showing that it's just a lens for seeing the world around us. That, at its heart, economics is about you, and the society you're a part of. Explaining key concepts in economics in relation to how they directly affect your life - from your money to your home, your workplace to your future - What is the Economy? drags the obscure world of economics kicking and screaming towards the everyday and equips you with clarity and understanding"-- Provided by publisher