Economists are trained to work in "think tanks", in universities, consulting companies, national and international institutions and other organizations directly or indirectly subsidised. If ever they are never discussed or discussions papers are read by someone; these are people like them, who need some discussion papers they can quote in discussion papers. In general, these discussion papers are needed to present a mere opinion as a scientifically proven truth. That's the reason why millions of these papers are produced every day.

The world where economist works is a parallel world. Their discussion papers are accepted in this world because the reader has the same socialisation as the author.

There is a lot to say about Milton Friedman, but there is no doubt that he was able to put some real problems on the agenda. The series free to choose attracts a broad audience and put some crucial topics on the agenda. The answers given might be wrong, but he initialized a useful debate on important issues. See as wellThe journaille and economics.

Economists should be able to do things like that. Reach a wide audience for any topic on different levels on any channel and any format. What they actually learn and trained for is to reach a very restricted audience, about a few topics on one channel: Discussion papers.

Well, researched contributions in whatever channel and format about relevant issues can reach an audience as big as a contribution to a love affair of a royal. Opinions about Michael Moore may differ, but there is no doubt that he has a massive impact on the public discussion.

There is an extensive debate among people who consider themselves as intellectuals about the work "We amuse ourselves to death" from Neil Postman. (Actually, the problem is better described in The Culture Industry: Enlightenment as Mass Deception of Adorno. The link leads to the authentic text. Worth reading.)

The description of the situation might be true, but what we actually need is a solution. The Culture Industry doesn't care if the make money put on the relevant topics, with an impact on people's live, or irrelevant topics, like love affairs of royals. If they make more money putting relevant issues on the agenda, they will do it.

The problem is that in the academic world in general, that no only applies for economics, that applies as well to humanities, nobody is aware that graduates must be able to use any channel and any format if they want to have an impact on the public discussion. They only channel and format they know are never discussed discussion papers. It is not surprising therefore that people trained for producing content, on the Internet, for television, for the radio, newspapers, etc. dominate public opinion, although they have no clue of the issue they are talking about.

The lack of interest to communicate their point of view can be as well due to the simple fact, that economists have the impression that they have nothing important to say. In this case, it would be better to abolish the faculty of economics and to spend the money in more practical studies.

Another possible reason is that relevant information are seldom easily accessible. It is in the nature of things that the really interesting information are those someone has a strong interest to impede that they are published. That's why the market is flooded with information someone wants to get published or which are at least easy to obtain, mostly through news agencies like Reuters, AFP etc.

To obtain them requires obstinacy, a high level of frustration tolerance, creativity and self-confidence and very little public recognition for a long time. In the end, that must be presented to a large public through all or the best channels. At least, the last task has been greatly simplified by the internet, see internet and economics, although in the long run there must be some kind of financiation of the project.

These jobs, very often as an individual entrepreneur, is not the world of a public employee. Actually, it is joke that people who have no experience with a market economy and never worked as an entrepreneur want to prepare people for a market economy. That's something they can't do. If they think about the perspectives of their graduates they think of jobs like the ones they have themselves, very far away from anything similar to an entrepreneur. In the real world and especially on the internet it is crucial to reach an audience. If a website is profitable or not, depends on the visits it has.

The strategies used by traditional mass media, newspaper, television on the internet are the same they use in their genuine channel. They try to spread easily consumable news, which can be produced at low costs, to a maximum of people. This market is saturated. If thousands of newspapers and television channels are accessible through the internet all of them telling the same things, the vast majority of them are going to disappear in the long run. That's what we actually see.

Economists trained to write and speak to a broader public specialised on certain topics, for instance analyzing the public budgets in a straightforward, comprehensible way can easily make a living out of that and that would be more helpful than writing never discussed discussion papers.

There are several reasons for that. Economists are looking, as everybody, for a secure lifetime job in a prestigious, in other words, governmental or something similar, institution. Their whole thinking revolves around that. This kind of jobs can only be obtained through publications in "scientific" journals. The academic staff only know this parallel world and train their students for this parallel world.

The second possible reason is the idea that the economy is kind of machine that can be controlled by operating some levels. This thinking leads to the idea that governmental institutions can resolve the problems, and there is, therefore, no need to advise the public, see politics and economics.

The difference between a professional presentation of economic issues which reaches a broad audience and irrelevant discussion papers is easy to understand by watching the series free to choose from Milton Friedman. The content of the series is bullshit, see Milton Friedman, but there is no doubt that he puts relevant topics on the agenda and that he succeeded in initialising a necessary public debate. That's an entirely different approach than the one usually followed by economists. He tried to reach, successfully, the public.

There are two different ways to get the conclusion that a public debate and a democratic decision process is not needed. The first one is the neoclassic thinking. (Concerning the problematic use of this term see neoclassical theory.) In the neoclassical theory, we have economic laws as stable as physical laws. These laws works independently from any human decision; we have no decision-making human beings in this theory. The economy is kind of a machine, or something like the universe, kept in balance by universally and eternally valid laws. There is no democratic decision-making process necessary or useful. We can't vote on the time the earth should turn around the sun, and we can't vote about the total equilibrium of Léon Walras. The total equilibrium of Léon Walras is objective optimum and is automatically obtained.

The case of Marxism is similar. Actually, there are more similarities between Marxism and neoclassical thinking than differences. In Marxism, we don't have a total equilibrium, but we have the objective economic laws of socialism, and the only thing human beings can do is to use their force, but it is impossible to work against them. That is something like sending a probe to the Mars. This probe can use the gravity of the other planets to get there, but it is impossible to work against the physical laws. In this case, the need for a democratic decision making is very small as well. The fundamental development of the economy is already fixed by the objective laws of scientific socialism.

Through an entirely different approach, the neoliberalism and the Austrian school gets to the same result. Neoliberalism stresses the importance of "free" cooperation and states that this free cooperation is only guaranteed in a free market economy. Therefore, everything should be decided by the mechanism of a free market society and what cannot be determined by the market, should not be decided at all. Democracy is seen as coercion, because there are always some people who disagree with the majority. In this system, there’s no need for a democratic decision-making process neither.

It is not very clear in which world economists live, but the error is obvious. They consider themselves as kind of engineer. An engineer produces a concrete product or service. People decide in a democratic process to keep him alive, buying his products, or eliminate him, not buying his products. There is no need to understand how the product works, nobody knows in detail how a computer works or, even worse, if someone have problems to understand how it works, it is a bad product and fewer people will buy it. The task of an engineer is not an enlightenment of the public.

The case of an economist is different. He produces nothing actually. His "product" is the enlightenment of other people. It is, therefore, crucial for him to be understood and to be able to communicate on any channel and in any format and especially he must be able to address a larger public. Advising the government or governmental institutions is not very helpful in a democracy because even the best advice will never be put in practice if the electors disagree. Second: Even if the advice is put in practise without the explicit agreement of the voters, for instance because the government has been already elected, it doesn't really help, because only if a measure is really understood its efficiency can be controlled. There is no learning process without understanding. If the right thing is done only by chance, there is no guarantee that in the next election people vote for the wrong thing.

It is a curious phenomenon that economists think a lot of things like the monetary transfer mechanism (for instance the central bank lowers the interest rate => that make it easier for banks to get money =>the interest rates for loans is reduced=>investement increases), but never about the transfer mechanism of their discussion papers. They just write them and don't care what will happen to them.

Economists use to say that economics is very complex, and, therefore, they did not get any concrete results in the last 200 years, and more research is needed. We understand very well that they want to continue writing discussion papers, that is a nice job and not very taxing. Nevertheless, it is a problematic affirmation.

A free market economy is not complex at all. It is very easy to understand because everybody only decides on the issues he understands well. Free market economy is a drastic reduction of complexity. Things became complicated only if the government intervenes and there are a lot of good reasons for governmental intervention. However, if we reach a point where the governmental intervention increases the complexity at a level that nobody understands what's going on, we need to find a solution to that problem: Reduce the complexity or improve transparency.

The financial crises of 2008, for instance, would not have been very complicated to understand if the governments had allowed to let them go bankrupt. If they had gone bankrupt, it would have been revealed which bank worked efficiently and which bank not. Now we have to think about the consequences of a major public debt, about the consequences of an expansive monetary politics if the systemic errors that led to the crises still exist and so on. We don't say that it was a bad idea to intervene. We only say that this increased the complexity.

To take another example, there is a broad discussion about the minimum wage. A free market solution without governmental solution would be easy. The workers get what they can get and what the employer wants to pay and can pay. If we don't care about the possible side effects of this very simple "free cooperation", in the words of Milton Friedman, things are very easy.

If the government fixes a minimum wage, things become complicated. Then it must be discussed if there are different minimum wages for each sector of the economy, if for some groups, low qualified groups who have been unemployed since a long time, the minimum wage is not valid, how the minimum wage relates to the wages negotiated by unions, if the wage bill of all the workers should be maximised or the wages of a certain group of workers and so on.

Complexity in economics has to do with the goals we want to achieve. Their ambitious are the goals, the more complicated it gets. That's, by the way, a general rule. Economics is not complicated itself. It becomes complicated if the goals a society wants to achieve are complicated.

It is well possible that the goals are too ambitious, and we get a system which nobody understands. That happens for instance with tax laws. Governments tends to achieve more or less any goal with tax laws. Redistribution of the national income, allocation of resources, protect the environment, health promotion, technology development, subsidise the national economy, promote saving, promote investement, etc. They do that with an infinite number of taxes so that nowadays nobody is able to do his or her tax declaration without the help of a tax adviser. This is a case, where reduction of complexity would be useful even if some goals are not attained.

return to the top of the page ...


ES        DE


Economists should be able to communicate through any channel in any format with the public.

It is not absolutely necessary to know the Cobb-Douglas production function, but it is important to know how media work.

The Cobb-Douglas production function is not needed to get a job, but a better understanding of media can be very profitable.


infos24 GmbH