Economics: Coming in with a Problem-Solving Mindset

Building an Economics View:
The Purpose of the Economy
Problem-Solving Mindset
Production and Distribution
Motivations and Incentives
Inequality

We live in a time when it is fashionable for everyone to have an opinion about everything, and Economics is no exception. We are strongly pressured to have the “right” view of Economics, which is of course the same one as our friends and family and the news we watch. But we don’t do things like that here on A Scientist’s Fiction. Instead, we do our best to put our biases aside and acknowledge our assumptions, observe the relevant facts, and follow where logic takes us.

The first step in thinking about Economics is to shake the ideological mindset. When approaching the subject, the most tempting thing for most of us to do is to jump into the debate between Capitalism and Socialism. But that is the wrong question altogether, and just makes people angry at one another. We might also be tempted to come at it from the perspective of justice, of who rightfully owns what. While this is important from a values perspective, we must remember that it must be informed by our core economic values, which we talked about last time: to supply as many people as possible with their basic needs, so that they are empowered to pursue meaningful lives.

In order to accommodate our values, we need to understand how economies work. The economy is like a machine, built out of a bunch of different parts, all working together. We can look at the parts and see how they work and what they do. Only then can we build a realistic view of how a good economy can be built. It is impossible to build a rocket that will get to orbit without understanding physics. It is impossible to design a new medical drug that will heal people without understanding chemistry. Similarly, it is impossible to design an economy that will provide prosperity and freedom without understanding Economics. And like other sciences, we must be humble and remember that Economics is a complex field of study, and there is much about it that humanity does not yet understand.

Today’s discussion is very short, but it is important enough that it warrants its own post. Although it may seem like common sense that we have to look objectively at the mechanics of how something works if we want to make it work better, we humans so often forget this. Without a conscious effort to understand, our views are shaped by persuasive speakers, and we forget that good intentions are not enough to guarantee good outcomes. Unlike what many smart people throughout history have believed, we humans are not naturally rational. Rational thinking takes practice and effort, just like any other skill. Because Economics is an object of so much political rhetoric and propaganda, it is a high-level challenge for rational thinking. So it seemed appropriate to take a moment to remind ourselves of the mindset we want before we dig into the meat of the topic.