The Pleb Economist #1: The Art of Economic Communication1
Economists do not have the best reputation as communicators. They seem to derive perverse pleasure at being the asshole in the room, always pointing out the selfish motives behind this or that phenomenon, and they delight in highlighting the tradeoffs that other people don't want to hear about.
It's unsurprising then, that economics has been called the dismal science. "Economist" might be one of the most maligned professions out there, after lawyers, congressmen, and (these days) journalists. Paul Bloom once said, "The problem is not that economists are unreasonable people, it's that they're evil people."2 At the height of COVID, health economist Jay Battacharaya, who opposed the lockdowns, was accused of caring more about money than about lives.3
In truth, the poor reputation is somewhat deserved. Too many economists are too happy to go on camera and make declarative statements with authority that isn't justified. And many economic prognosticators have gotten things horribly wrong, like Krugman's infamous quote about the internet having no greater impact than the fax machine.4
Nevertheless, I think it's a mistake for the public to tune out economists entirely. A lot of bad policy is made because of poor economic reasoning. Thus, I think it's important for economists (and anyone interested in economics) to communicate basic economic ideas in easy to digest, easy to remember, and inoffensive ways. The more people can absorb some basic economic lessons, the more likely it is that they will support good economic ideas and reject bad ones. One of the best ways to use short, pithy sayings or questions that highlight important economic concepts.
Here are a few ways I like to communicate about economics that my non-economist friends have found helpful. The sayings are targeted for people who have little to no economics background. For someone with an economics background, these may seem a bit too obvious, but it's still useful to think about how we phrase and communicate these ideas.
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"Stop thinking about price and start thinking about quantity."
- This is a short pithy saying that's easy to remember and highlights an important point whenever anyone thinks price controls or subsidies are a solution to things being too expensive (e.g. rent control or universal basic income). You can say this and then ask, "If the problem is not enough housing, do you think rent control will cause more housing to be built?"
- By bringing up this point, you remind people that price control policies are simply redistributive (or worse). They do not enhance the overall prosperity and only benefit a lucky few while harming others.
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"If the government hires a thousand people to dig a hole and fill it up again, how many jobs did that create?"
- This question attacks the "jobs fallacy", which says that the goal of economic policy is to create jobs. The fallacy is attacked by highlighting the uselessness of certain jobs, and it redirects the hearer's attention to the idea that the goal of economic policy should be to foster value creation, not job creation.
- Simultaneously, it reminds the hearer that such a crazy idea could only come about by government spending. No private company would ever pay anyone to simply dig a hole and fill it again.
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"If we generate more trash and thus build more landfills, and we pay landfill providers and trash haulers $100m per year for their services, how much did our trash add to the GDP?"5
- Once again, this question reminds people to think in terms of value creation, and not simply monetary value.
- It also highlights some weaknesses in GDP accounting that many people are not aware of.
- Lastly, this question can be extended to critiquing the size of the government. Government spending accounts for almost 40% of GDP in America, and even higher in Europe. How much of that spending is actual value creation, and how much is useless rulemaking that requires lawyers and accountants to get hired for compliance, but generates no real value?
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"Who are you to say that an employee and an employer can't agree to whatever wage they wish? Instead of setting an artificial price, why not ask why some workers are willing to work for so little?"
- This attack is specific to minimum wage laws, but it highlights a broader point which is that most economic laws are trying to restrict the freedoms of people to transact. The question reminds people that there should be a high burden of proof for restricting freedom. It also gets them to think more deeply about the underlying economic forces, and not simply look at surface level things like prices.
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"Businesses take lower valued inputs and transform them into higher valued outputs. The difference in the input value and the output value is the profit."
- Many people view the pursuit of profit as a moral failing. This reminds people that the pursuit of profit plays an important social role. Without the pursuit of profit, no one would identify these opportunities for value creation.
- An economically astute person may start talking about market power, but this will lead to a productive discussion on the extent to which price reflects value.
- Nonetheless, too few people understand this basic point. Profit is the difference in value between outputs and inputs, and value is determined by what people are willing to pay.
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"Bitcoin is just a public ledger of transactions that no one controls, anyone can write to, and yet somehow everyone trust. And it's been operating for 16 years and no one questions the legitimacy of the ledger."
- I'll throw in a Bitcoin one too. This sentence has been the start of many great orange-pilling conversations because it encapsulates what Bitcoin really is, in a way that invites more questions.
- One question it can lead to is, "So what? Why should I care?" To which you can discuss the monetary aspects of Bitcoin.
- Another question it can lead to is, "How does Bitcoin do that?" To which you can discuss the idea of Proof-of-Work and teach them what Bitcoin mining really is.
I hope these ideas were helpful to you, either in understanding economics better or in communicating it. Let me know in the comments if you have other ideas.
Footnotes
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The Pleb Economist is a (hopefully) weekly column where I share my thoughts as a mainstream economist who is slightly jaded by mainstream economics. I also have a somewhat libertarian and rebellious bent, as well as a deep conviction in the utility of Bitcoin. ↩
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This is a variation of Bastiat's broken window fallacy ↩