The financial melt-down is complicated. Credit Default Swaps. Collateralized Debt Obligations. Trillions of dollars of wealth disappearing and going exactly where? The causes, effects and potential cures are well outside most people's every day experience. The economic vocabulary is unfamiliar and the concepts are confusing at best.
It would be great if someone did a short, accessible introduction to the economics of wealth, growth, stimulus and inflation.
George Mason University Economist Russ Roberts has done just that in the EconTalk podcast. This week's podcast answers the core questions of this melt down:
Where did the wealth go when our houses lost value?
What causes economic growth? What retards it?
How do changes in price affect our well being?
How do stock prices differ from other prices?
Should we be more or less like France?
And all in just 51 minutes and 18 seconds.
I'm a big fan of Roberts and EconTalk. It's a great resource for understanding economic news. Each week he interviews guest economists about current events. The guests are experts in the relevant fields, but Roberts keeps the podcasts accessible by covering the basic issues before going deep and asking for clarification when the subject gets too thick.
Roberts and I also share the view that the foundation of Economics provides a very powerful set of tools for thinking about complex social problems, but that we must be humble about the limits of our knowledge
"We econmists should... not over sell what we understand and don't understand. We ought to be honest about what we know and what we don't know."
and suspicious of ideology seeping into economics
"When you see Noble Prize winners on each side disagreeing about something incredibly fundamental, you have to doubt that it is a scientific dispute and start to wonder if it is a philosophical dispute masquerading as a scientific dispute."
Roberts, like most of the George Mason Econ department, is a free market, libertarian guy (so you can guess where he stands on the France question). But he's very even handed when interviewing economists from other schools of thought. For example, when he interviewed Keynesian Economist Steven Fazzari, Roberts let Fazzari dig into the core of Keynesianism without injecting his own free market beliefs or arguing over ideologies.
Everyone should know the basics of economics. They are the reality check that can help you avoid serious mistakes.
EconTalk is a great resource for a layman looking to deepen his economic knowledge.