The Importance in Understanding the Economy
By: Jadyn Hanson
Economics is essential to understand in such a fast changing economy. In the United States, the economic system is regulated through a complex series of laws and agencies at the federal, state, and local levels. These laws and regulations can have a great impact on our everyday lives. Given how fast change in the economy, it is surprising to see how little most people know about the process. It is important to know who creates regulation, how they create it, and the possible effect it may have on consumers and the economy. It is important that the American people have a desire to know about the economy, and it should be more encouraged in schools and places of work.
It is important to understand what the economy is and how regulations play into it. In today's culture it seems the economy is changing at a rapid pace. Because of this there have been more people interested in understanding its origins. This can be very beneficial. There are many different factors that play into the economy. Additionally it is constantly changing, and has an effect on human life. As referenced from (Per L. Bylund, 2022). The economy is a process, not a factory. This helps get a basic understanding of how someone should view the economy. They can then better understand the dynamic of how it works.
Thinking carefully about the economy is not only beneficial, but also necessary. Bylund does a great job informing the necessity of understanding the economy in chapter four. He states: “Economics is the science of human action. It is the branch of knowledge that studies human behavior as a relationship between ends and scarce means which have alternative uses”(Bylund 2016, pg. 16). By understanding the complexities of the economy, we can make better individual and group decisions to ensure that our lives are more productive and successful. In addition, an understanding of economics is necessary to make informed decisions on issues such as taxation, regulation, and economic policies. This is where it is very important that citizens know regulations in the economy.
Due to the current events taking place around the world, some people have become more curious about the economy. The impact of Covid 19 on the economy left people feeling scared and confused. Those who understand the balance of the economy could have predicted some of the outcomes we have seen. The lockdown completely changed jobs and careers for a temporary time, yet the effects are still lasting. A factory can close down, however the economy cannot. Through these articles I saw how beneficial it would be if the world all viewed the economy through the same lens. People need to spend more time learning about the economy. This will help direct their votes, and benefit the relationship between the output and input in the United states.
Understanding the economy is also incredibly rewarding. By studying and understanding the economic system, we can gain insight into the ways that humans interact with one another. We may also begin to understand why they interact the way they do. Bylund states: The dream itself makes no difference in the world; merely wishing does not make it real. (Bylund, 2022, pp.22-23) I think what he is trying to say here is that we can not wish something into existence. Large rewards take large amounts of work. Also human decisions affect each other in complex ways. It is important to gain a better understanding of the way that the economy works and how it is affected by changes such as technological advances and government policies. This understanding can help us to shape the economy in the ways that we desire and to make decisions that will benefit our lives and the lives of others.
Regulations
The regulatory process in the United States is designed to protect the health, safety, and welfare of citizens by placing restrictions on businesses and individuals. No matter how small the regulation may seem, it is always backed with some sort of punishment. Without rule and order, the economy would become unstable very quickly. The regulations have effect on everyday lives, and the overall economy.
Through reading these articles I found that thinking about the economy is not just an academic exercise, but a way of engaging with the life of the mind. Economics, like all of the social sciences, is a discipline that requires an intellectual engagement with the world and its complex problems. So by thinking deeply and critically about the economy, we can engage in thinking that forms the basis of our understanding of the world. This can help us to better understand the economy, and to make informed and meaningful decisions about our economic roles and responsibilities.
References
Bylund, P. L. (2022). Chapter 1: What Economics Is. In How to Think About the Economy: A Primer (pp. 15–20). essay, Mises Institute.
Bylund, P. L. (2022). Chapter 2: Economic Theory. In How to Think About the Economy: A Primer (pp. 21–26). essay, Mises Institute.
Bylund, P. L. (2022). Chapter 4: A Process, Not a Factory. In How to Think About the Economy: A Primer (pp. 41–50). essay, Mises Institute.
Great response! I completely agree that for citizens to understand our ever-changing economy, they must first understand the principles of economics. However, while yes, our economic system is regulated through, “through a complex series of laws and agencies at the federal, state, and local levels”, Bylund argues in his piece,
The economy may operate through laws and agencies. However, it is built by the decisions and exchanges made by citizens every day. The people of society are constantly purchasing different products and services which directly influence a company's financials. Any given company may have the market lead at a specific moment, but if the mass of their consumers changes to purchasing another brand, then that competitor will ultimately gain the market lead. To avoid or gain this edge in the market, companies are constantly offering promotions, discounts, and other purchasing tools to maintain their target audience. This perpetual market exchange between consumers and business directly correlates to the ongoing change in the economy at a rapid pace.
I love your inclusion of COVID-19, as an example that illustrates the power consumers have over the economy. During the pandemic, many companies went out of business due to their consumers no longer treasuring their product or service. Because of dire living conditions, customers deemed many of their normal purchases were no longer as valuable as essential goods. As a result, businesses were forced to alter or change their entire line of work to fit their consumers' new living circumstances. Those who were not sufficient at making these adaptations were not able to survive this short recession.
Ultimately, like you stated, understanding the functions and the importance we, as consumers, have in our economy is crucial. Human and business interaction are what dictates all industries and directly impacts the economy. To fully understand these interactions with one another, we must recognize what causes individuals to make their decisions. This is why I tied the concept of economy to psychology in my response. Psychologists study cognitive, emotional, and behavioral methods of individuals in response to their environment, and their surroundings. Those who fully understand what makes consumers behave in a particular fashion, can predict, and influence their future decisions.
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