Economics (is) for Dummies

Note: This was submitted to Indie Bloggers a while back, but for some reason I didn't post it in its full gory glory here.

Or, Reason #14 Why I Might As Well Stop Pining Over That Shiny Table Saw

In my daily life, I'm an economist. Well, kind of. I don't have a PhD or anything, but that doesn't stop me from putting my education to work. And so I have little ammunition with which to drool over expensive power tools. Sure, I can build and fix the most basic things (birdhouse, wobbly table, install a chandelier, install baseboards) -- but that's where it ends. You see, my decision to specialize in economics leaves me economically... well, value-less.

The topic at hand is one that people outside the "trades" know all too well, and it's something I continually run into.

In short, if I'm not good for nothing, what am I actually good for?

Smacked By The Invisible Hand
A little background that people probably know already: Most "specialized" economies graduate from the barter system to one where money becomes "currency" for trade because:

1. people need to obtain goods, and;
2. not everybody can be good at everything.

And thus,

3. There arises a need for a standardized means (namely, money) by which to value goods and services and provide a basis for trade.

In the olden days (a long, long time ago, possibly even before the event of my birth), if you wanted a fence built, you'd go talk to the fence builder in town and see if that person would require anything of your expertise -- say, accounting services -- as trade. If not, perhaps you two could find someone else who might require your services but who would also provide something of value to the fence builder. Like, maybe plumbing repair. Thus, goods and services are traded based on specialty, and the accountant doesn't have to also be a plumber or fence builder. In most cases, doing your own fence building and plumbing repair might not be the best idea anyway, so it all works out.

Global context: this means that certain people/countries/industries know how to make widgets and whatnot better, faster, and cheaper than others. But as the exchanges become more complicated and involve more and more people who do their own thing better and more efficiently, there comes a need for a standardized product of exchange. And so, money came to be (I'm simplifying and making a few leaps in history here, but stay with me). With money, and a way to put value to products*, anyone can sell and buy their wares on the open market.

Today, the world is full of specialists, and dotted with people who are multi-talented and can get most of what they need by doing it themselves.

Okay, you can wake up now. Here's where I stop talking about the economics so much.

All Supply, No Demand
I majored in Economics (last time, I swear) -- which gave me some skills, no doubt of use to others in the world, but it doesn't help me to get some of the stuff done around my house that I would undoubtedly lose a finger or cause a fire doing by myself. Having a new (to us, but 20 years old) house that needs tweaking and improvements now and then exacerbates this issue. My life is chock full of friends with "tradeable" skills: able to fix my electrical problems or build a front porch -- and I have no way to repay them. They're helping me out of [not pity, don't say pity] general friendship and kindness, and try as I might, I cannot figure out a way to repay them, other than perhaps with beer.

If I had gobs of money, this would not be a problem. I would invite my friends over for dinner and to watch the game, and hire other professionals to handle those things beyond my abilities. But who doesn't want to save a little money? On the flip-side, who doesn't want to have really cool power tools in their shed/garage/ workshop?

Handy friends of mine continually take advantage of the barter system: trading kitchen cabinet design or computer repair for legal services, financial advice, or even works of decorative art. My "training" affords me precious little to offer in exchange, and I find myself digging into my wallet for minor and major purchases. Sure, I could ask them if they require any consulting services, but I suspect I already know the answer to that. I could help them frame their unfinished basement, but they probably know somebody that does it better than I could for a living.

My wife is in the same boat. We're liberal arts types turned consulting professionals, specializing in areas of little use outside of the 9 to 5. And so we're often indebted to friends and neighbours with actual skills, who need nothing of what we could offer (Can I interest you in some consulting services? Need me to make a few phone calls and find out how many tonnes of snow crab were processed in the East Coast fishery in 2004? No? Okay then.) We'd love to do something to repay them, but nothing really comes to mind, and the less we can do for them, the less inclined we are to call upon them again to help us out.

And it's not like I'm making more money than your average finish carpenter or heavy duty mechanic (especially not a heavy duty mechanic), and I'm probably not enjoying my job any more than they are. And I definitely don't get to justify having cool tools. So where again are the benefits I'm reaping?

Perhaps I need to learn a second trade (or a first). Anyone need me to blog for them? I might be good at that sort of thing. Just don't ask me to be too good, or too interesting. Or too funny. Oh, never mind.

*Further discussion on this topic is reserved for the economic-minded and the severely insomniac.

Afterword: Tonight's re-run of Corner Gas involved Hank (aka the dork) who, upon realising he's not a Virgo as he believed he was, decides that to embrace the new "him", he should become something professional, like an economist. Whatever, pal. You're better off learning how to drywall or change a head gasket.

Posted bythemikestand at 12:06 PM  

7 stepped up to the mike:

Brianna said... 2:52 PM, June 22, 2007  

my dad totally paid for my braces with a new deck.

themikestand said... 2:55 PM, June 22, 2007  

I hate you and your straight teeth.

Brianna said... 2:56 PM, June 22, 2007  

but look at them up there -- sooooo pretty ;)

Erik said... 4:43 PM, June 22, 2007  

As a self-proclaimed generalist, I understand where you're coming from, Mike. There isn't a lot of demand to swap my Africa/IT/Technology project management skills with someone who can shingle my roof.

It might be an age thing too. I find myself envying those people that can actually fix/build a car/house/deck and I'm still not used to paying some young punk to do something that I feel I should know how to do.

Megan said... 1:15 AM, June 23, 2007  

Haha. Well, you can always offer unskilled services- kid watching, lawn mowing, etc. :)

themikestand said... 8:43 AM, June 25, 2007  

erik: you and I will have plenty of time to tinker around the house when we retire, right? And not being the expert perhaps means expectations of our results will be lower :)

megan: I would prefer lawn watching and kid (doing the) mowing.

SRH said... 9:50 PM, June 25, 2007  

I make maps for a living. Maps and economics are pretty close in the barterable scale of everyday activities.

No one has ever said to me, "Could you generate a probability surface for accident rates of Topeka, Kansas. All I have in return is the ability to remodel your kitchen."

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