Sunday, 9 February 2014

Economics for masses

A shame economics is not widely taught at schools during the ‘general education’ stage. The high-school curriculum includes a course in ‘basics of entrepreneurship’, which gives brief overview of rudimentary economic concepts to teenagers, but attention the course receives from both teachers (who often deem it to be a ball and chain to do everything to tick it off) and students seems inadequate. The upshot is that understanding of economics among ordinary people appears insufficient.

Basic grasp of economics (as well as of any discipline, ranging from fine arts, through physics, ending on medicine) is essential to function well in the contemporary world and to understand how it all works. I do not posit an ordinary man should be familiar with all the concepts a first-year student of economics should know inside out to get a pass in courses in basic micro- and macroeconomics or finance. An average man should not learn by heart formulas, solve equations, nor drill down vague concepts. An average man should recognise some causations and be aware how some phenomena affect their own personal finances.

Command of basic economic principles, from what I have observed, gives you one ultimate benefit in life. If you are well-versed in economics, you are less likely to be deceived by other people. And those who are most likely to trick you come usually from three groups: politicians, journalists and self-styled financial advisors. Politicians tend to over-promise, but an economically literate voters should be able to assess whether the promises are affordable for the state. Journalists in Poland too often have too little notion on topics they write about, or do not carry out extensive research before spewing out an article, but economically literate readers should be able to distinguish substantive piece from a bullshit (pardon the foul language). Financial advisors are those who try to appear as wiser than you when it comes to managing your personal finances, while in fact they are just fee-oriented salespeople, who advise you what is good for them. An excellent example of a man who fell victim of their “advice” was a guy who in 2007 looked for a loan to buy a flat. Property prices at that time were sky-high, but paradigm that they will double over the next decade was still widespread and risk tolerance excessive. Prompted by a financial advisor, he took out a 110% CHF-denominated mortgage to finance a flat purchase for 400,000 PLN. The remaining 40,000 PLN he invested in aggressive investment fund at the peak of stock market bull market. In 2007 his assets equalled liabilities and stood at 440,000 PLN. After the financial crisis: value of his flat dropped from 400,000 PLN to 300,000 PLN, half of his contribution into investment fund evaporated, his mortgage debt, converted into PLN, mounted to 800,000 PLN. A few years later the guy’s assets were 320,000 PLN, while his liabilities were 2.5 times higher.

The approach in which you focus on outcomes of economic processes, without exploring details, is far too rare in today’s economic discourse. Those who propagate speaking about economics in simple words, intelligible for an average man, deserve the biggest accolades. Tadeusz Mosz, who departed last Wednesday, was one of such men. His TV and radio programmes have done a superb job in terms of promoting economic literacy among masses. He had his own unique style and his guests had to conform to it. In his programmes there was little room for economic jargon; meanders of economics were straightened out into plain language and outcomes were favoured over the workings. Mr Mosz was facing a huge challenge, since in economics “it depends” is the answer to too many questions. For example, if you ask, whether it is good for an average Pole, if PLN appreciates and bad when zloty depreciates, or the other way round, there is no straightforward answer. It depends on a variety of factors. And you can go on for hours about them… A mediocre economist could witter on about exchange rate movements and their whys and wherefores endlessly. A clever economist, appearing in Mr Mosz’s programme before audience made up of ordinary people, would have to squeeze the answer into a few straightforward, informative sentences in plain Polish.

For many months I have not followed Mr Mosz’s programmes. I would not be even able to tell you how long before his departure he had ceased to turn up on air. Some four years ago, as a student, I would follow his “Plus Minus” programme in TVP Info on day-by-day basis. I used to watch it, but I was not fond of it. As a student fascinated by complexity of economics and financial markets, I found the discussions moderated by Mr Mosz over-simplified, far over-simplified. I craved for splitting hairs, touching hearts of problems, while Tadeusz Mosz’s guests focused on what economic phenomena mean for ordinary people. With hindsight I see at that time I was out of his league.

Mr Mosz’s style of presence in the public discourse bears out, again, the paramount importance of linguistic clarity. To be an expert in a specific area, you need to have extensive knowledge, but to be an outstanding, widely appreciated expert, you must be able to share your knowledge with ordinary audience in simple words. The ability to convert intricate issues into plain language is the skill that ought to be fostered.

Tadeusz Mosz’s death came as a bolt from the blue. He had no makings of a celebrity, so no one could keep track of his struggle against cancer in gossip columns. For the last weeks he suffered in silence and passed away in silence, with dignity. His departure is a great loss for economic journalism in Poland, as I dare to claim no other journalist has done so much to bring economics closer to people and help them understand for it affects their lives. His work should be carried on, but is there any successor who could take it over?

No comments: