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Monday, May 29, 2017

If the national economy were run as a football game…

Posted by steve on November 16, 2010

The modern economy has undoubtedly given millions better lives.

However, despite years of experience and development of macroeconomic theory, despite decades of Nobel prizes in Economics, there still doesn’t appear to be a way to run an economy without putting severe hardship on a large percentage of the population.

And this state of affairs is generally accepted.

Especially women, wives and mothers. It is women who end up suffering take from this hardship.

The other thing that I know that women particularly care about is the environment. Again, it is also generally accepted that pollution is unavoidable and depletion of natural resources the unavoidable price for economic stability. The costs of pollution and depletion are not paid for directly by the producers or consumer, but by society as a whole. They are called externalities. Externalities, it seems, are unavoidable if we want a stable economy.

But let us not just give in. Let us look at possibilities.

I would like to explore ways of stabilizing economies, making sure demand – and thereby prosperity – remain high whilst responsibly stewarding natural and mineral resources.

Let us take a step back a moment and question our assumptions. Let us look not through the eyes of a business economist, but through the eyes of a macro economist. To see a nation not as a collection of competing businesses but as a functioning economic entity.

We see the national economy as one household. In this household everyone should get fed, and the money coming in is enough to cover the bills. Simple.

Or could we see the economy as a patient in hospital. If we are the doctors, is it possible to treat it in a way so as to keep it comfortable, to keep every healthy cell, every limb alive and healthy, to nurse it back to prosperity?

Maybe we could see the national economy as a football match.

Of course there are winners and losers, but the footballers on both sides are doing what they love, the spectators have a great day out and everyone goes home to a good meal.

Of course, in a football match the rules of the game must stand. We could not have a bunch of football rule lobbyists having the goal posts moved or even lobbying for the pitch to be sloped.

We would need a level playing field. And we would certainly not accept a situation where the losers ended up in hardship just for losing. Ok a bit of verbal abuse but nothing serious.

And after the game the pitch should still be standing. OK a bit of turf that needs tending but nothing serious.

So what does this football analogy tell us about the national economy?

1) We need a level playing field and lobby-proof governance

2) Whatever outcomes basic needs should always be met

3) The economy should be handled in a spirit of joyful competition and transparency of rules and players.

4) Economic activity should preserve natural resources.

When you think of it like this it looks quite easy, doesn’t it? But then it requires governments to govern.

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