Economics can be a confusing subject, so I wish to pass down my wisdom from university in an easier to digest format.
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Economics is based on supply and demand. If people want a widget, they will trade for the widget. The amount of widgets available(supply) and how much people want the widgets(demand), will determine the value/cost of widgets. That's the first basic and fundamental lesson.
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Economics is limited by scarcity. All resources(materials/time/labor) are finite.
• Imagine that the economy is a flowerpot filled with soil. In order to grow a potato, the pot and soil will provide the needed resources at first, but the water and nutrients will eventually run out. Water and nutrients are a scarce resource needed to grow potatoes. Resources of materials, time and labor need to be given to the flowerpot to produce the product of potatoes. This cycle of input and output of resources is important to the health of the potato plant, but there are limited resources inside the flowerpot at anytime and those will eventually dry up. The fertilizer and water doesn't magically appear out of nowhere.
• “Infinite economic growth” is complete lie. Infinite economic growth is the belief that without any resource input, no watering or fertilizer, the flowerpot can produce an infinite supply of potatoes. It's the magical thinking of creating something out of nothing. Economic growth is a good start, but economic stability and sustainability is far more important for the long term.
• Amateurs will talk about economic growth, while experts will talk about economic sustainability.
- The health of the economy is NOT determined by how much money/resources people have. The health of the economy is determined by the flow of resources throughout its entirety.
• This time, the economy is a human body and the money and resources are the blood. In a healthy economy, the blood will flow properly. Some organs, like the liver and brain, will get more nutrients and oxygen from the blood while others will get less, the cartilage and ligaments, but they all get what is necessary to thrive. Cells of the body grow and die, as is the normal condition, but occasionally some cells will go rogue. These rogue cells are supposed to be checked by the immune system, but the immune system is compromised. These cells grow beyond their means and start sending hormones to steal and hoard blood from all the other healthy cells. This behavior weakens the most vulnerable cells and creates a blood clot of money. The pooled money clot is manageable while small, and if it can be released back into the economy it is relatively safe. The problem arises when the money clot keeps getting bigger, refusing to move until it inevitably causes necrosis of a limb(death of small business and labor), or a heart attack/stroke(recession/depression).
• It's okay for some people to have a bit more money than others. What is not okay is a tiny minority sitting on massive wealth and not sending it back into the economy. They are malignant tumors, creating blood clots in the economy, threatening an economic collapse.
• The stock market is the worst litmus test of the economy. It only measures how much more profit the top makes and never touches on the velocity of money changing hands.
• A healthy economy will have money passing at regular intervals through everybody's hands, similar to a heartbeat. It can speed up and slow down, but not for extended periods of time and eventually return to a regular rate. Money that is moving too fast or too slow for extended periods of time is not a good sign.
If you read and understood all that…
CONGRATULATIONS!!! You now have a basic, but essential, understanding of economics! You are also equipped to explain some concepts to others with a flowerpot and human body.
Knowledge is important.
The pen is mightier than the sword, or something.
Arm yourself with facts, you lovely folks of antiwork, and keep up the good fight.