Why economics is so important!

There is a story that once upon a time, there was a lucky man who was taken by God to visit heaven and hell.

They first came to hell and saw a group of people surrounding a large pot of broth, but these people seemed to be malnourished, desperate and hungry. Upon closer inspection, each person was holding a spoon that could reach the pot, but the handle of the spoon was longer than their arm, so they couldn't get the food into their mouths. They looked very miserable.

Immediately afterwards, God took him into another place. This place was exactly the same as the one before: a pot of soup, a group of people, the same long-handled spoons. But everyone was happy and had a great time eating. God told him this was heaven.

This visitor was confused: Why do two places with the same situation have very different results? Finally, after careful observation, he finally saw the answer: It turned out that everyone in hell was thinking about scooping broth for themselves; while everyone in heaven was feeding the other person opposite with a spoon. As a result, people in hell are hungry and miserable, while people in heaven are well fed.

This fable helps illustrate what economics is. Human beings cannot survive without the production of material wealth. However, different social organization methods, different interpersonal arrangements, and the efficiency of wealth production are very different. Economics is the study of how human society is organized to produce wealth efficiently.

Economics can explain why Americans are rich, the same labor is paid higher in the United States, and people want to immigrate to the United States. Superficial people often think that it is because of the advanced technology in the United States, but people who understand economics will have different answers. Economics not only answers the current wealth gap between countries, but also answers why human history entered a period of rapid growth in wealth after the 19th century. Of course, it can also answer questions about how my country’s per capita income has increased four to five times in the past 25 years of reform and opening up, and how much potential there is for future income growth, etc. The importance of such a subject is self-evident.

From the content point of view, economics is mainly divided into three aspects:

The first is microeconomics. As long as the market exists, prices rise when supply exceeds demand, and prices fall when supply exceeds demand, we can always buy things at reasonable prices, and no one will ever starve to death (except for penniless people). If people starve to death on a large scale, it is because the market is destroyed. Either because of war, or because of human stupidity. A few people starve to death because they have no money, not because they have no food. Because of price fluctuations and the nature of human beings pursuing profits, various resources will flow to where they are most needed as prices change. Each kilowatt-hour of electricity produced by a power plant can be used in many ways, and it will be used where it is most urgently needed under the guidance of price. At the same time, due to the possibility of substitution, food can be replaced by fruits and meat, oil can be replaced by coal, atomic energy, etc. The production and consumption structure of society is flexible to adapt to the constraints of the earth's resources.

The market is very important, it ensures that we can buy what we need at a reasonable price. Through market competition, production and demand can be matched, and the economic structure can be constantly adjusted to adapt to changing populations, resources, preferences, and technological advances. Market competition can eliminate inefficient production and consumption and keep society completing economic activities with high efficiency. Since markets are so important, we need to further study how markets are established, maintained, or destroyed. This experience can be discovered from human history, and can also be understood from the comparison of reality in today's world.

What are the difficulties in establishing a market economy? The first is the equal status of people before the law. In a powerful society, rulers do not need to abide by the law; they can do whatever they want and bully the people. The rights and interests of ordinary people are not protected, and the wealth they have worked so hard to create can easily be taken away by the powerful. People strive to be powerful and engage in production only when they have no choice but to do so. In the future, it will become increasingly difficult and costly to deprive others of their wealth, and people will turn to producing wealth rather than striving for power. However, the market economy divides people into rich and poor. Money can exchange rights, so legal equality is not easy to achieve. The rich often receive more legal protection.

The second is the establishment of property rights. Privately owned property should be strictly protected from intrusion by any powerful person, especially by the government. If property rights are not protected and you can take other people's things as your own through plunder, what's the point of exchange. The government often has a high-sounding reason for invading private property, but in fact this undermines the establishment of a market economy. If you can find a reason to infringe on property, there will be endless troubles in the future, and society will fall into chaos and disorder of dispossession and counter-deprivation, revolution and counter-revolution. Then there is the recognition and assurance of personal freedom. Individuals have the right to start a business, engage in things they are interested in, choose a career they like, resign, choose exchange partners, and bargain. In a powerful society, the powerful often restrict the freedom of others in order to expand their own freedom, and use various specious slogans to find excuses for the extra freedom of the privileged.

It can be seen from this that whether it is equality before the law, protection of property rights, or freedom, the only obstacle to all of these is privilege. Comparing before and after the market economy is the restriction of privileges. This is a fundamental sign of the progress of human society and an important conclusion of institutional economics.

Then we have to learn macroeconomics. Although from a micro perspective, supply and demand are often in equilibrium through price fluctuations, and there is no shortage of things to buy or sell, but if household savings are not equal to social investment, supply and demand will occur in the entire society in total. imbalance, resulting in depression or overheating. At this time, prices cannot play the role of balancing aggregate supply and aggregate demand, and must rely on forces outside the market, that is, the government. This is the macroeconomic theory proposed by Keynes after World War II. In 1929, the Great Depression broke out in the United States and later spread to the world. The nearly ten years of depression caused as much wealth as was lost in a world war. At that time, everyone did not understand Keynesian theory and implemented many perverse policies, otherwise the situation would not be so serious. The Great Depression similar to that of 1929 is now unlikely to happen again (but other dangers still exist) because countries around the world use Keynesian theory as a guide for macroeconomic adjustment.

Economics is the most practical, mature and studied subject among the social sciences. It is both very profound and easy to understand, it just depends on how we learn it. A person can understand general economic laws without studying economics. For example, rare things are valuable. This is economics. But if you study economics, you will understand it more deeply and see the problems more clearly. And you can use the laws of economics to explain the world, judge the rights and wrongs of things, and estimate the development of the situation. We can also find that because the ancients did not understand economics, human development was greatly delayed, and similar mistakes are still made again and again to this day. This shows how important it is to popularize economics knowledge.

Economics also helps us understand life, establish a good outlook on life, handle the relationship with the people around us, and understand personal social responsibility. Learning economics well will not only enjoy life yourself, but also help others enjoy life; know how to make money and how to spend money, and be the master of money, not its slave. But economics, like other social sciences, is also about learning. There is a big difference between learning deeply and learning shallowly. When primary school students read Confucius' Analects, "it is a pleasure to learn and practice them over time" and the feeling when adults read them is completely different. On the one hand, a thorough understanding requires life experience; on the other hand, it requires in-depth thinking. Among people of the same age, some appear superficial and others are profound. The difference lies in whether they can think.

Teenagers are a group of people who are in the most important stage of their lives. Their outlook on life begins to take shape. They observe society and learn how to deal with relationships between people. However, current schools do not have good courses on outlook on life and correct understanding of social relations. It’s not that the education department doesn’t want to, but it just hasn’t found a suitable starting point to discuss how to establish a outlook on life that meets the needs of society. I think studying economics might be a suitable entry point.