If you’ve ever watched a political debate, then you’ve probably heard someone say “it’s basic Econ 101.”
“If you increase the minimum wage, then there’ll be less jobs… It’s basic Econ 101.”
“Welfare encourages people not to work… It’s basic Econ 101.”
“If you cut taxes, it’ll increase jobs… It’s basic Econ 101.”
Those statements aren’t necessarily wrong, they’re just misleading. Econ 101 simplifies everything down to a cartoon level so that freshmen and sophomores can understand supply and demand charts.
I imagine it’s very similar to physics. Physics 101 strips down the variables to something manageable for an English major. The big difference however, is that English majors don’t graduate thinking they understand physics. Unfortunately, people who have never even taken an Econ class still believe they understand economics because of something they heard on Fox News.
diet_shasta_orange says:
“I have degrees in both and that is exactly what happens. The difference is that in physics, you start out with a spherical cow, meaning you approximate everything to be a sphere in a frictionless vacuum, which is an obvious oversimplification to the point that people are surprised that it works at all. In econ you start out with a free market and perfect competition, which people assume actually exists. Also in physics the “externalities” are known, such as geometry, gravity, friction, resistance, and you just factor those in one at a time, in econ there are many more externalities and many of them aren’t even known.” [link]
I couldn’t have said it better myself.
The whole point is not to say that Econ 101 is useless. Far from it. The whole point is that Econ 101 is the first step towards actually understanding economics – something I don’t claim – not the last step.
Written 2015