The word economics comes from the Greek word oikonomos, which means ‘one who manages a household’ (Begg, Fischer, Dornbusch, and Dornbusch, 2000). Any student who is pursuing or is aiming to pursue his degree in economics must be curious about what sort of subject it is. What are the things that they would be taught in the new courses of economics?
While any student who has a genuine interest in this field must have already acquired all the essential knowledge about this subject, there are a few things that you still might be unaware of. Following are mentioned ten facts about the subject of economics that your teacher would not tell you in your regular classes:
Economics was not initially known as economics
Earlier, economics was known as political economics. This is because it was regarded as politics and not as a discipline of science. Later, the neoclassical school changed it to simple economics. This school of thought was dominant and hence was able to bring about this change at the end of the 20th century. They promulgated the idea that economics was science. But economics involves subjective value judgments which is why is had political connotations.
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Singapore’s economy and economics
The field of economics has several theories to explain the economies of various countries, but none of them can explain the economy of Singapore. Singapore is quite successful in terms of its economy. But this success is difficult to be explained in terms of a single economics theory. This is because the economical success of Singapore resulted from mixed of endeavors of capitalism and socialism. Theories of economics show partiality. Hence they cannot describe the complex system of Singapore.
The majority of poor people do not reside in impoverished countries
Over 70% of individuals living in absolute poverty are in middle-income countries. Approximately 1.4 billion people, or one in every five people on the planet, live on less than $1.25 per day, the worldwide poverty level (below which survival itself becomes a challenge). However, the majority of poor individuals do not live in impoverished countries.
Protectionism, not free trade, was invented by the United Kingdom and the United States.
In the late 18th and early 19th centuries, Britain had the most protected economy in the capitalist world. Much of this protection was offered to help British manufacturers compete against superior foreign competitors in Europe, particularly in the Low Countries (what are now Belgium and the Netherlands).
Taking cues from the British the United States went even further. The ‘infant industry argument,’ developed by Alexander Hamilton, holds that the government of an economically backward nation should protect and nurture its young industries until they ‘grow up’ and can compete in the global market. The US economy is still the most protected.
The reality behind the Nobel Prize in economics
The Nobel Prize that is granted in economics is actually not a real Nobel Prize. Alfred Nobel, who was a Swedish industrialist, established the Nobel Prize by the end of the nineteenth century. He established the Nobel Prize in various fields like physics, literature, medicine, chemistry, physiology, and peace. But he did not establish a Nobel prize in economics.
The Nobel Prize in economics was established in 1968 by Sveriges Riksbank i.e. by the Swedish central bank. The official name of this prize is the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel. The Nobel family criticizes this stance.
Free commerce was initially spread mostly through non-free means
Around the nineteenth century, free commerce developed throughout the globe. However, Colonization was a clear path to ‘unfree free trade,’ since colonial overlords pushed conquered countries to entirely open up their commerce. So the majority of its expansion was due to something you wouldn’t generally equate with the word ‘free’ – force, or at least the fear of using it. Many non-colonized countries, on the other hand, were pushed to accept free trade.
The world’s first welfare state was established by arch-conservative Otto von Bismarck
Originally, the welfare state was a ‘rightwing’ invention. While many people believe the opposite of this.
Otton von Bismarck, the arch-conservative, was the one who first proposed it. He found out that if you don’t provide a minimum safety net for workers, the socialists will persuade them. As a result, he created the world’s first welfare state to keep workers satisfied.
Between the 1950s and the 1970s, when there was a lot of regulation and hefty taxes, capitalism thrived
Between the 1950s and the 1970s, when there were many restrictions and heavy taxes, advanced capitalist economies expanded the fastest.
Even the United States, at the time the world’s slowest-growing economy, grew at an unprecedented rate of 2.5 percent. Between 1980 and 2010, when they lowered taxes on the wealthy and deregulated their economies, per capita income in these economies grew at a rate of only 1.8 percent per year.
Germany and Belgium are more unequal than the United States in terms of tax and social spending
Through progressive taxes and the welfare state, it is possible to profoundly reshape a country’s inequalities. Many European countries, such as Germany and Belgium, are more unequal than the United States before taxes and transfers. They become much more equal only after taxes and transfers.
The US government, not Silicon Valley, invented the internet
In the beginning, the Pentagon-funded computer development, and the Internet was born out of a Pentagon research initiative. The semiconductor, which is at the heart of the information economy, was first developed with US Navy support. Many people believe that private sector entrepreneurship has propelled the United States forward in frontier technological industries. It’s not the case. All of these industries were developed by the United States government.
It is with no doubt that many corporations and especially startups are investing in AI technology (help with dissertation, 2021). Hence perhaps the dynamics would shift in the future.
- Begg, D.K., Fischer, S., Dornbusch, R. and Dornbusch, R., 2000. Economics. New York: McGraw-Hill.