Economics is a tool for managing human wellbeing through financial transactions.
Notes
A very readable summary of the basics of our economic system has been published by Larry Hannigan.
A technical definition of economics is the management of scarcity but social and environmental needs have eclipsed this. We are now affecting the environment but the environment does not participate in the economic system. Modern economics is based on specialisation and production lines but this needs a balance of ethics and regulation. A wider approach is needed. The financial crisis has shown that Reaganism has failed and that strong Government participation is essential.
In Costa Rica, the environment’s economic services set the basis for economic planning. In Portland, Oregon, community-based micro economies are being developed. Alternatively, email & web-based neighbourhood exchange can almost provide a lifestyle. Since the financial crisis, government management is being recognised as sometimes more efficient than private, e.g. in health care. Sometimes social signals determine the direction of the economy. Even non-profit economies can be viable.
Non-economic initiatives are essential for its success. For example a new study by McKinsey shows that basic improvements in education would have a massive impact on the GDP.
The Report by the Commission on the Measurement of Economic Performance and Social Progress identifies 8 key areas of wellbeing, most of which are missed by traditional economics:
- Material living standards (income, consumption and wealth);
- Health;
- Education;
- Personal activities including work
- Political voice and governance;
- Social connections and relationships;
- Environment (present and future conditions);
- Insecurity, of an economic as well as a physical nature.
