Wednesday, June 18, 2008

Economics for Dummies

I am taking a course called Economics for Managers in order to fulfill my MBA requirements at the University of Houston. I am a terrible math student and purposely avoided Economics. I figured it was about the laws of supply and demand, GDP and other boring topics. My course is very demanding. It is only eight weeks long which is half the time during the fall or spring semester. We have to write a group paper that is 16 pages long. Each week my professor assigns 20 convoluted economics problems that need to be put into graphs via MS Excel. But here's the thing: Economics is very interesting.

Economics is a behavioral science. Basically it is the study of the world around us and how it operates. I am the typical know-it-all type. I like to know everything that is going on around me. I am an avid CNN and MSNBC watcher. I spend most of my time on the Internet researching or blogging. I also like to be the first to obtain new products on the market. Two weeks ago, I lined up for an hour and a half at my local Best Buy to be one of the first to obtain the new Wii Fit. The Nintendo Wii is a textbook example of how the laws of supply and demand operate, but I will save that discussion for another blog. I am very passionate about politics. This presidential year has brought out a zeal in me for politics. I am a daily blogger on the Huffington Post, Politico, and various other political sites. I am now realizing that Economics can tie in all of my passions.

Economics is the cornerstone for politics. Politicians are policymakers. Before they decide to pass a bill, they need to have to have a budget. They have to figure out the opportunity costs, that is the most desided goods and services that are foregone in order to obtain something else. Everything has a price. Instead of blogging right now, I could be studying. Or watching television. Costs are not always monetary. Costs can include time spent or knowledge gained. Economics provides you with the framework to weigh the opportunity costs. What will benefit me more? Studying or blogging. Blogging helps me to develop my writing skills which are essential to obtain my degree. Studying can help me to earn a better grade. I can't do both at the same time. The opportunity cost of the time spent blogging is studying.

Politicians have to make decisions about how to spend our tax dollars. Do we invest our tax dollars in education by building better schools? Or do we invest our tax dollars in infrastructure such as new roadways? Once you spend $100 million dollars on schools, that leaves you with little money to do something else. Another example is the war. The Bush administration tied up a lot of our tax dollars on the Iraq war. So when a natural disaster like Hurricane Katrina happened, we were ill-prepared. Well we know the costs of that. Economists work with politicians to determine the best ways to use our money.

John McCain has said he does not understand economics. Unfortunately, it is scary thought to elect a president with no knowledge of economics. Sure he can have his advisors tell him what to do. But that is besides the point. The number one issue on most American's minds is the economy. You cannot fix the economy without knowledge of how it operates. Maybe he needs to take an Economics for Dummies course.

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