Economics

As I mentioned previously, I am currently taking a course in Economics and I am enjoying it immensely. The first six or seven meetings were devoted to Micro-economics and since then we have been studying Macro-economics. This has provided the perfect backdrop to the economic crisis in Greece, and today, amongst discussion of the Keynes multiplier, deflationary and inflationary gaps, we also talked a little about previous economic crises in Israel and what is happening in Greece.

I fail to understand what the people are demonstrating about. Obviously, they want to retain their standard of living, but they also seem unable to do the work necessary to maintain it. 14 salaries a year? Retirement at 55? Who wouldn't want these things? The only problem is that there is no money to pay for these things, and if the Greeks don't go to work and improve their productivity, then there will be no money whatsoever.

Israel went through a painful period in the mid-80s when there was tremendous inflation (400% in one year). I remember presenting balance sheets, and there wasn't enough room in the pre-printed sheets to write the numbers as they had suddenly grown so large. A package deal was put together between the government, the employers and the workers; everybody had to crack down and suffer in order that things would be better for all of us. Two years later, Israel was well on the road to economic recovery.

The Greeks have to do the same.

I am currently reading a book called "The undercover economist" by Tim Harford. This is a non-academic look at various issues in economics and so can be recommended to anybody who has an interest in the subject but comes out in hives when presented with equations. The book itself is very interesting and well written (although the author seems to be at home equally in London and Washington DC, which is slightly off-putting to me), and I take great pleasure in finding the economic principles which I have been taught.

At first, I though that the book would be devoted to micro-economics - why does a cup of coffee cost as much as it does - but there are a few chapters devoted to macro-economics. I am sure that in the syllabus of the Edinburgh Business School/Heriot Watt University there is no mention of corruption and bribery being factors in a country's economy (the example used is Cameroon), and there is also an excellent analysis of China's economy over the past 60 years.  Whilst this material in no way will supplant the material being taught, it is a useful adjunct which casts matters in a slightly different light, and may even be worth a few marks in the exam - which I was reminded today is only a few weeks away.