Einstein said that to truly understand is to understand simply no simpler or to be able to explain even the complex in simple terms. This is done here. Chang is like most great thinkers, accepting of limitations, humble, and able to break down the complex to the simple. This is something Richard Feynman attempted to do with Physics in Six Easy Pieces. If you want to know the basics about economics, a text I use in my classes is Common Sense Economics (a title Chang would like). You can find more here: commonsenseeconomics.com (and no, I don't make any money off sales. But I do advocate all Americans read it, for like oxygen, a basic understanding of economics is essential for personal and political reasons. Good luck).
Interesting to hear an expert giving an expert view that only an expert can give of economics and only because he is an expert is the animation even made and outlini9ng that we need to understand multiple different models and then telling us not listen to experts! But the deeper message I agree with. The president of the European Bank was recently on record for saying that no-one knew what would be the outcomes of QE. Economics is still deeply flawed or uncertain. The variety of models suggests an important diversity of view about priorities - which is a valid area for citizens - but once the priorities are agreed we need a sound method for implementing them, and that we still lack.
Spend the first few minutes suggesting that everybody should have an opinion about economics because you don't need a degree to have an opinion about it... Spend the rest of the time name dropping and eluding to the complexity of economic theory. It was a very informative speech. I just think the introduction is antithetical to the rest. Instead of showing how simple economics can be, you showed how complicated it is.
This is an awesome video! Mark Twain had this to say about economists, "There are a great many curative baths on the Continent, and some are good for one disease and bad for another. So it is necessary to let your physician name a bath for you. As a rule, Americans go to Europe to get this advice, and South Americans go to Paris for it. *Now and then an economist chooses his bath himself and does a thousand miles of railroading to get to it, and then the local physicians tell him he has come to the wrong place. He sees that he has lost time and money and strength, and almost the minute he realizes this he loses his temper....*" - pg. 54-55, The Complete Essays of Mark Twain I keep on finding these recurring themes of economists being bad at business and money no matter how much time passes, which is why we need to heed Ha-Joon's warning about being deferent to experts. That being said, I agree with Ha-Joon Chang; economics is for everyone. The best book I found so far on economics was Home Economics by Wendell Berry. www.goodreads.com/book/show/207935.Home_Economics
It's more that US and the USSR represent what capitalism becomes when either deregulated or supercontroled by the state. Both spectrums, give you the same thing. In the case of the US, deregulation led to private monopolies and super banking cartels hijacking the state. In the USSR, state control led to the state becoming a monopoly which in turn grants monopolies to private (often foreign) capitalists. Meanwhile, in 19th century England you had super deregulated, super "free markets", which so brutalized the populace, that even super capitalists started to feel ashamed.State = must first exists to guarantee markets = sets the rules of capitalism = leads to capitalists profiting = power = monopoly = further state capture.A big loop.
Went to San Francisco and Las Vegas Last year Even visited the Grand Canyon and was overwhelmed by the sensation of space. Your comment has re contextualised my experience. Sobering thoughts.
Something I want to say about having nine different economic theories and none accurately explaining everything: that at least partially has to do with our brains creating reality by means of axioms (incompleteness theorem). We divide reality into pieces workable by our brains, meaning that we will be dividing and isolating the forces of the economy in different ways, leading to different working models that all align well enough with reality to be called true. So, his point of needing multiple models can be likened to looking at a figure in space. It appears to be a square. But how do you know it is not a cube, viewed from a perpendicular angle to one of the faces? To know for sure, you would need a second perspective to provide supplementary information about what you are looking at.
Something I want to say about having nine different economic theories. It really chaps our hineys to have unelected retool the economies across the planet, _on_ _theories_ , and then do nothing, when these theories are fiscally, ecologically, culturally and most recently biologically, bombing us.
If you read my comment above about the need for the application of the scientific method to what is actually a true scientific subject, you will find that there is a good response to this commenter's remarks.
He ignored the economic school that *does* explain Singapore (and Hong Kong and other Pacific Rim city-states where the land is leased from government). That is the Georgist school. It is closely related to the classical school, but with more emphasis on getting public revenue from land rents instead of from taxes on productivity.
Great comment. Generaly Looking at history common sense named as solid foundation or a ground is basing on Our responsibility and freedom hence my heart is close to free market economy teories.
If you check out the book, he does get into all of the major ideas of George and the folks who came after him, I just don't think that he would agree with you that Georgism explains every single aspect of Singapore's economic success. He would probably concede that it does a very good job explaining the land use and housing aspects of the economy, but that's only one sector. It is intertwined with all other sectors, but that does not necessitate it's dominance over those sectors in all contexts. I don't see how anybody can solidly refute the spirit of what Chang is saying, that no one school explains all things at all times and in all places. It would be rather silly to think otherwise IMHO.
Billy Randell maybe because its difficult to acknowledge that we're rampant on corruption and our main GDP is illegal money laundering, coming from china, indonesia, america and russia? academics and scholars will always have a hard time explaining things when they have no clue about the real actual underworld. cant really blame them tho. BUT, just do a google on the above topic, and you will be able to find some people willing and able to shed some clues.
Read his book, and he DOES talk about corruption and money laundering. Not just in relation to Singapore, but economic activity that does have a detrimental effect.
I re-edited Jay's transcript (thanks Jay!) ---------------------- I try my best to dispel this widespread perception that economics is too complicated for non-economists. Actually, it’s very strange. Because people have very strong opinions about everything, Iraq War, Gay Marriage, Does God Exist?, you know, Global Warming. You all have very strong views on these things, despite not having a degree in theology, not having a degree in energy economics, not having a degree in international relations. But when it comes to economics, people say 'Ah, Yeah. It’s for specialists, you know?… I don’t know.' But why? I mean, if you can have a very strong view [of] Iraq or Afghanistan without a degree in international relations, you should have a strong view on government economic policy without a degree in economics. You know, I said that this is only because economists have been fantastically successful in making people believe that it is actually a lot more difficult than what it really is. So they’ll tell you “Oh, you know, I could explain it to you but then you wouldn’t understand!”. 95% of economics is common sense. Of course, made to look difficult with the use of jargon and mathematics. And even the remaining 5% can be understood, at least in its essence if not in all technical details, if someone bothers to explain it to you in an accessible way. For example, ‘What is Economics?’, The ethical foundations of economics, whether you can separate economics from politics, and How different ways of conceptualizing the economy affect the way we see the world. You know, for example, people think that today's free-market economics is a direct descendant of Adam Smith. But this is not true. You know, Adam Smith and other 'so-called' classical economists, the Society, the Economy was conceptualized as being made of classes, not individuals. And the whole theory evolved around how -the way- these different classes with different material interests behave affect the way capital is accumulated, the economy grows, income is distributed, and so on. ------------------- Today in free-market economics, there are only individuals.When you tell people out[right] 'isn’t there class?'. They say 'No no. That’s an old Marxist concept'. But if that’s the case, why do the marketing companies have all these class categories when they do marketing campaign strategy? They’ll look at groups A, B, C, C1, C2… you know. Target the advertising according to the type of people… Now many economists will tell you that economics is a science in which there is only one right theory. There are at least 9 different major schools of economics and there [are] several more if you count minor schools and split major ones into sub-schools, each with its own unique strengths and weaknesses. And for free-market economics alone, you have three different kinds - Classical economics, Neoclassical economics, Austrian economics. So actually there isn't one right theory. And my contention is that we need all these diverse approaches to economics in order to fully understand our economy because they all make certain assumptions, they all have different underlying political and ethical values. They have all sorts of different theories about how an economy grows and so on. And to make this point I give you the ‘Singapore Problem’ or what I call ‘Life is stranger than fiction’. If you read only the financial newspapers, like the Wall Street Journal or The Economist magazine, you’ll be only told that Singapore succeeded because of its free trade policy and its welcoming attitude towards foreign investors. This is partly true. I mean, they did have those things, but you will never be told that [the] Singapore Government owns nearly 90% of all the land, 85% of Housing is provided by government-owned housing corporation, and a staggering 22% of GDP is produced by state-owned enterprises. So in talking about Singapore I always tell my students, “Look, give me one economic theory, it doesn’t matter what it is, Neo-Classical, Marxist, Austrian, Schumpeterian… give me one economic theory that can explain Singapore.” Well, there isn’t! So you need to know these different theories to fully understand how a country like Singapore could succeed. So, In this regard, my advice is that you should not be a man or woman with a hammer by allowing only one kind of economic theory. Because whatever that theory is, once you believe that one theory is true, like the man with a hammer, you will start to see everything as a nail. So I say, you should get a swiss knife In this dominant economic theory, that is of today- that is- Neo-Classical theory, people are mainly conceptualized as consumers. And work is considered as, what these economists call 'disutility' that you have to put up with so that you can earn money with which you consume goods and services and then derive pleasure, or what they call 'utility'. That’s your aim! (=) Deriving pleasure from consumption. But what happens in a workplace often fundamentally affects us, not just our immediate physical and psychological well-being, but also our identity and our sense of self-worth, and our self-fulfillment. This is why these days in many rich countries a lot of people are very unhappy compared, to say, a couple of decades ago, despite the fact that they have [a] higher income. Why? Because the work has become more stressful. But then economists tell you, “No, you should be happy.”. Britain, today, has a 20% higher income than in 1975. Why aren’t you happy? --------------------------------- My book is not just an explanation of economic theories and facts, it’s also a discussion about the role of economics in public life. And in this regard, I have three sets of observations to make. The first one is 1. ‘Never trust an Economist’. And that includes me. You know, professional economists [like] to say ‘we know what is correct’. No, they don’t have a monopoly over truth. I already told you that there are 9 different kinds of economic theory, so the right conclusion depends on which economists you talk to. And I argue that it is entirely possible for people who are not professional economists to have sound judgments on economic issues. I even argue that sometimes their judgments may even be better than those of professional economists because they may be more rooted in reality and less narrowly focused. And I argue that, indeed, the willingness on the part of the ordinary citizens starts to challenge professional economists and other experts is the foundation of democracy. If you really believe that all we have to do is to listen to the experts, to listen to the professional consensus of the experts, why do you need democracy? Let self-elected elites appoint each other and run the world. You know, this is why a lot of people are unhappy with the European Union. The second point is the Latin phrase that is apparently written on the walls of City Hall of Gouda, the city in the Netherlands, which is famous for the cheese. And it says, uh... I’m not even going to pretend to speak Latin, so it basically says 2. “Listen even to the other side.” And I argue that this is the attitude you have to have in debating the economic issues. I’m not suggesting that you should have no opinion of your own. But what I’m trying to tell you is that given the complexity of the world and given the necessarily partial nature of all economic theories, you should be humble about the validity of your own favorite theory and should keep an open mind about it. Finally, even while I constantly make reform proposals, I emphasize 3. “How difficult it is to change the economic reality”. Sometimes the reason is obvious. I mean, people who benefit from the status quo want to thwart the change by any means. Lobbying, Bribery, Media propaganda and even violence. But the status quo often gets defended even without some people actively being evil. Because the thing about the market system is that the rule is the one dollar-one vote. So this means that the ability of those with less money to refuse undesirable options given to them is highly constrained. Also, it can be susceptible to beliefs that are against our own interests. The best example is that what happened when Barack Obama tried to reform the American medical insurance system and there were all these pictures of old pensioners demonstrating against that what they call ‘Obamacare” with placards saying things like, ‘government hands off my medicare!’... Well, except that medicare is a government program! (Students laugh). This is what the Marxists used to call ‘False Consciousness’ or also known as the Matrix, the movie. (Students laugh). But acknowledging the difficulties involved changing the economic status quo should not make us give up the fight to create a better economy and better society. Yes, changes are difficult, but in the long run, if enough people fight for something hard enough, many impossible things can happen. And, don’t forget, I mean, 200 years ago if you suggested America should abolish slavery, you would have been branded at least unrealistic, and probably a Loony, a hundred years ago the British government put women in prison for asking for [the] vote. A lot of women actually said, “Why do we need votes? We have our husbands and brothers to represent our views”. This is why I quote Antonio Gramsci, the Italian Marxist who once said that 'We need to have Pessimism of the Intellect but Optimism of the Will’. Yeah, you have to accept the difficulties of changing the status quo, but you have to believe that this can be done. And finally, As Nelson Mandela used to say, “It always seems impossible until it is done.”
I can only conclude that the Nordic countries were able to apply eclectic policies and found an almost perfect balance between the two extreme positions.
they taxed mining industries and implement some of the best social democratic policies on earth. to say that this is balanced (the right, free market has something to offer too) is wrong, because they are considered to be advanced socialism
very attractive and creative visual as always done by RSA animate and the talk / advert for the author's book was interesting enough and I am even going to pick up a copy out of interest however I find it quite hypocritical that the author suggests keeping an open mind and listening to one another in finding solutions. However as the talk continues it becomes increasingly clear that the author is suggesting the rule of Marxist and Socialism philosophy over free market capitalism which is somewhat hypocritical not to mention the use of artwork at the end of the video. If was to weigh in I would suggest that the simplicity of this capitalism Vs socialism argument is becoming rather tedious. We all live in mixed economies where there is varying levels of state power vs corporations power...talks like this suggest that more state power is a good thing when we know historically this isn't the case and to be fair corporations not kept in some kind of check can cause problems too. However the difference remain that corporations (without government support) can be voted out by people not using them anymore and paying corporations that produce better goods and services. Government cannot be held as accountable as corporations can be. This doesn't mean that state owned enterprises can't produce good results its just that they are not held accountable as a non state owned enterprise would be. Truth be told the argument here is not about capitalism vs socialism but can framed very simply...do we want to live in societies with more or less freedoms and liberties that are reversely proportional to so called state benefits outside of traditional state roles. Personally I think it's better to live in a society where the government allows free market capitalism to grow and if government spend more time doing what it's meant to do brilliantly namely policing, justice system and defense and providing services such as energy and utilities etc... if government want more power in certain sectors and want society's consent shouldn't that be an earned status? If government administrations want more power they need to be completely transparent with their decisions and they have to be ready to be removed on non performance...this is of course something no administration would agree to because their motivation is more power without real accountability which is why free market capitalism remains a stabilizer to too much government rule... just my common sense talking ;)
great comment. It's incredibly easy for all of us to become narrative driven, rather than breaking up the pieces case by case . This animation is easy to digest at first, but it basically attempts, (after cleverly priming everyone with the importance of simple feelings about complex things), both to remove the teeth and excuse the dead weight of the economic schools to equalize them, and then in the smoke bring in socialism.
Can you put some subtitles in this video please? Even though I speak English it's not my native language and I'm having trouble understanding half of what he is saying because of his accent.
Subtitles in spanish please! Im a teacher and it would be very interesting to have this video with subtitles in order to explain some of the sustancial things the video remarks (sorry for my bad english).
I'd also argue that most of these "schools" or branches of economics, are just different versions of exactly the same thing, which is property/trade/currency based economics ... and that it's entirely possibly (not to mention desirable) to have NON-property/trade/currency based economics (see: www.open-empire.org), which is the kind of difference you need to get in order to really constitute a different economic paradigm or theorem ... free market & socialist economics are (when conducted within a property/trade/currency based economic framework) actually more political than economic perspectives.
it doesn't say much... just be open to all economic theories. while this is good, I think that the author should've insisted more on pros and cons for each theory. and where they were successful throughout the history.
+shapeshifter567 Sure. Point #1: the animation is good and mildly clever with a hand apparently sketching lists of complex but obvious things, such as tree roots. Personally I'd have used the left hand as left handed people are typically better at drawing. Point #2: It is a long winded way of saying very little of substance or theory, explains very little about economic concepts and / or the significance of human behaviour and psychology, whilst expressing repeatedly and somewhat enigmatic ally that "you can do economics yourself!" In short, this is another typical you tube 'self help' video which doesn't really help anyone.
DontTestTheX Hmmmm, interesting. I would argue that this video was not made for the purpose of in depth analysis of theories and concepts, but rather to make a broader statement about the practices of economics and the nature of economic thought. I'm not trying to disprove your opinion, i actually agree with your assessment of the attitude of the video which is another "self help" youtube video. I would like to explore this further, for knowledge sake. lol
I agree that what is said is very little. If I had to sum up the video in one sentence, it could just be "not everything is black and white", which I've learned as a teenager. Not very nourishing to the mind.
+Philip Loranger which goes back to my point about the purpose of the video. to produce a video of that caliber it would take a lot more time and effort.
What you actually need is to test multiple models to find which better map onto empirical evidence from reality. We can throw out models that really fail. Economics has too many variables for a simple model to work, and none of the "schools" of economics has a completely sound model. So he's really saying, "consider points from any of these models for consideration because we have NO good model we can really trust, so this mix of crap is the best we have, all of them fail in various ways to map onto reality."
SMP The social media party. A brilliant illustration of the way we are kept in line via our purse strings. Direct Democracy is about the only way to change this system. Join the movement to Direct Democracy
thanks for the vid :) is there a close up image of that table of the different economic systems? or its source material? looked like a nice and useful summary.
Dr. Chang is a hero. We don’t have to be ideologically bound to make economics work for the population at large. We don’t have to abandon the market system, we just have to be honest about its limits and what it can do
There will always be people willing to fight on behalf of their oppressor to continue their oppression, some will even be invigorated by this march toward their own demise.
You are doing great. You could have kept drawings much simpler though. Since the whole talk's aim is to simplify economics for non-economists, these drawings somehow weaken the concept of simplification.
Although I really enjoyed this talk, I still would say that economics is a science and there can only be 1 correct theory. Of course, economics is as much of a science as psychology is (i.e. it's really hard to do it right). But f psychology can be called a science, then economics (which's really just the psychology of consumption) is also a science.
Saying economics is the 'psychology of consumption' is highly debatable.Firstly, how do you account for the multiple parts of economic theory that deal with production? Secondly, how do you account for macroeconomics much of which cannot be neatly reduced down to individual psychology?
Adam Khan Firstly, production can be thought of as a product of the psychology of consumption. After all, u can't consume if there's nothing being produced! However, my original definition may have been a bit too narrow. Whilst it's not solely on consumption, most economics essentially deals with the effects of people's actions on the economy; and people's actions are ultimately influenced by psychology. Secondly, macroeconomics can still be explained of in terms of herd mentality (the psychology of how people make decisions in and r influenced by groups).
That's not how Science works at all though, or really any field of inquiry outside of mathematics. Even if we come up with a theory that marries Quantum and Relativistic physics, there's no guarantee that it would completely explain the physics at different dimensional scales, just like Newton's theories regarding the quantum scale. At best, all Science is simply an approximation that attempts to model actual reality (if such a thing can be said to exist). That's still better than any other form of inquiry humans have ever developed, but it will never yield any answers that could be considered "correct".
Billy Randell Even if u believe that science can never give answers that r fully "correct", scientific answers r still more "correct" than others. We don't say, for instance, that the typical person on the street's theory of what causes disease is more correct than that of a doctor. P.S. Im not saying that the experts always get it right. Just that scientific answers tend to be more correct than non-scientific ones.
I wouldn't say 95% of economics is "common sense", because 100% of property/trade/currency based economics is insane ... more accurately 95% is easy to understand, even if it's stupid.
You should not promote dismissing an expert's views. That sort of backwards rebellion is what led to Brexit and now not even the UK's leaders have a clue how to proceed or what's going to happen. Experts are experts for a reason, not purely to put everyone else down.
I think Ha-Joon is clearly advocating for people to listen to experts, however being open-minded to more than one school of thought. The goal is to help give the general population a better understanding of reality by empowering them to consider ideas from multiple viewpoints. I'd argue that the negative aspects of Brexit was entirely due to people not being able to fully grasp the complexity of the situation, not dismissing the viewpoints of experts.
I know what you're saying; though Ha-Joon does address the necessity of looking at all perspectives and that we have incomplete knowledge, I fear the sentiment is completely lost on anti intellectualists who will almost certainly ignore his second point and choose instead to create self validation for their ignorance with his first. It is an unfortunate reality that we must take care in how we phrase every sentence, as our world runs on sound bites, not whole concepts
I wasn't quite clear about where this guy is going... but when he mentioned Antonio Gramsci, Mandela and Obamacare, it becam e clear: socialism. (call it whatever: democratic socialism or progressims...) too bad... fooling people with cartoons.
Well, maybe that's the point he is trying to make. Don't trust economists regardless if they are neoclassical, marxist or whatever flavour you desire. The ugly truth is that all attemps to understand the complex world through simplified easy to digest or calculatable laws is a fallacy and we humans are doomed to fumble and stumble on, hoping not to create too large disasters of any kind.
Marc Kaptijn - No, that's not at all the point he's trying to make. He said that it's hard to classify successes, but he conveniently leaves out the one model which overwhelmingly describes failures - socialism.
+starrychloe The failure Venezuela has nothing to do with socialism or capitalism. People can still own means of production. Venezuela failed due to the sole dependency of oil as the source of income for social programs and the economy in general, when oil prices fell the government printed more money thus causing inflation. Price controls were idiotically used thus causing shortages. Socialism is simply the democratic control of the means of production, sure the state can be seen as "the community" but we both know that's not true thus the term state capitalism. Venezuela failed due to horrible economic policies, not because the means of production themselves were in the hands of the government. Venezuela has no means of production, it imports what it consumes; so its very hard to consider it socialism.
Power vs powerless, the powerful include the American govt and it's sanctions, corruption in the Chavez bureaucracy, lots of the people in the govt are shaving off from the state coffers, and a lack of workers rights in Venezuela.
Georgism is a semi-obscure theory that's subscribed to by a tiny group these days, mostly not economists. Although I love how the wikipedia georgist page is trying to claim figures like Joseph Stigliz. Note: "progressive taxation" does not actually necessarily (or even mostly) imply georgism.
The animation was great (as always) but the speech itself was horrible. It discuss the complexities of economic ideas while trying to say "It's simple." yet never actually explaining what economics is.
He says there is no ideal economic system, but he quotes marxists five times and the whole animation is full of neoclassical criticism. Where's that neutrality he's talking about every minute of the video?
Wow. This was fantastic. Well done, Ha-Joon Chang. I'm going to share this with my family and colleagues as an essential learning experience.
ha joon chang is one of the most gifted scholars of our time. glad that i bought and read his books. Thanks for making this RSA.
"Oh I could explain it to you but you wouldn't understand" means "I don't understand it either"
As Albert Einstein said, “If you can't explain it to a six year old, you don't understand it yourself.”
eli5
right??
***** good point
That was the best animation up to date... great talk too... 10/10
LOVE RSA Animate!!
Brilliant! It's like my mind was turned into an audio-visual presentation. Thank you so much. Love it!
Love these RSA animates, so creative and thorough
Einstein said that to truly understand is to understand simply no simpler or to be able to explain even the complex in simple terms. This is done here. Chang is like most great thinkers, accepting of limitations, humble, and able to break down the complex to the simple. This is something Richard Feynman attempted to do with Physics in Six Easy Pieces. If you want to know the basics about economics, a text I use in my classes is Common Sense Economics (a title Chang would like). You can find more here: commonsenseeconomics.com (and no, I don't make any money off sales. But I do advocate all Americans read it, for like oxygen, a basic understanding of economics is essential for personal and political reasons. Good luck).
Interesting to hear an expert giving an expert view that only an expert can give of economics and only because he is an expert is the animation even made and outlini9ng that we need to understand multiple different models and then telling us not listen to experts! But the deeper message I agree with. The president of the European Bank was recently on record for saying that no-one knew what would be the outcomes of QE. Economics is still deeply flawed or uncertain. The variety of models suggests an important diversity of view about priorities - which is a valid area for citizens - but once the priorities are agreed we need a sound method for implementing them, and that we still lack.
more animations please.......RSA
I simplistically liked the part about The Singapore Problem.
Great job! A great talk, and beautifully illustrated.
Excellent stuff! Both the lecture and the drawings! Thank you very much.
What an enormous amount of work! Amazing!
Spend the first few minutes suggesting that everybody should have an opinion about economics because you don't need a degree to have an opinion about it... Spend the rest of the time name dropping and eluding to the complexity of economic theory.
It was a very informative speech. I just think the introduction is antithetical to the rest. Instead of showing how simple economics can be, you showed how complicated it is.
Mind blown! 😁
This is an awesome video!
Mark Twain had this to say about economists, "There are a great many curative baths on the Continent, and some are good for one disease and bad for another. So it is necessary to let your physician name a bath for you. As a rule, Americans go to Europe to get this advice, and South Americans go to Paris for it. *Now and then an economist chooses his bath himself and does a thousand miles of railroading to get to it, and then the local physicians tell him he has come to the wrong place. He sees that he has lost time and money and strength, and almost the minute he realizes this he loses his temper....*" - pg. 54-55, The Complete Essays of Mark Twain
I keep on finding these recurring themes of economists being bad at business and money no matter how much time passes, which is why we need to heed Ha-Joon's warning about being deferent to experts. That being said, I agree with Ha-Joon Chang; economics is for everyone. The best book I found so far on economics was Home Economics by Wendell Berry. www.goodreads.com/book/show/207935.Home_Economics
I've come to a humble conclusion that US is as capitalistic as USSR was socialistic, meaning that neither of them are what they claim to be.
It's more that US and the USSR represent what capitalism becomes when either deregulated or supercontroled by the state. Both spectrums, give you the same thing. In the case of the US, deregulation led to private monopolies and super banking cartels hijacking the state. In the USSR, state control led to the state becoming a monopoly which in turn grants monopolies to private (often foreign) capitalists. Meanwhile, in 19th century England you had super deregulated, super "free markets", which so brutalized the populace, that even super capitalists started to feel ashamed.State = must first exists to guarantee markets = sets the rules of capitalism = leads to capitalists profiting = power = monopoly = further state capture.A big loop.
that's why so many people fled usa.
People flee USA's bombs. Some go to the USA, where they enjoy the space left thanks to Uncle Sam's wiping out of the natives.
Oligarchy.
Went to San Francisco and Las Vegas Last year Even visited the Grand Canyon and was overwhelmed by the sensation of space. Your comment has re contextualised my experience. Sobering thoughts.
As always, Dr Chang makes a great deal of sense.
these rsa animates are pure gold :)
I love these videos, the whole reason I'm subscribed =)
YAY! FINALLY ANOTHER UPLOAD!
Something I want to say about having nine different economic theories and none accurately explaining everything: that at least partially has to do with our brains creating reality by means of axioms (incompleteness theorem). We divide reality into pieces workable by our brains, meaning that we will be dividing and isolating the forces of the economy in different ways, leading to different working models that all align well enough with reality to be called true. So, his point of needing multiple models can be likened to looking at a figure in space. It appears to be a square. But how do you know it is not a cube, viewed from a perpendicular angle to one of the faces? To know for sure, you would need a second perspective to provide supplementary information about what you are looking at.
Something I want to say about having nine different economic theories. It really chaps our hineys to have unelected retool the economies across the planet, _on_ _theories_ , and then do nothing, when these theories are fiscally, ecologically, culturally and most recently biologically, bombing us.
If you read my comment above about the need for the application of the scientific method to what is actually a true scientific subject, you will find that there is a good response to this commenter's remarks.
Why in the world did my school making me watch this, I legitimately have no clue about any of this and yet I'm still supposed to learn this.
Where can we find the full drawing for download/purchase?
The print copy will be available here www.wearecognitive.com/shop very soon! Keep checking back or feel free to email Cognitive Media
Анонимус
He ignored the economic school that *does* explain Singapore (and Hong Kong and other Pacific Rim city-states where the land is leased from government). That is the Georgist school. It is closely related to the classical school, but with more emphasis on getting public revenue from land rents instead of from taxes on productivity.
Great comment. Generaly Looking at history common sense named as solid foundation or a ground is basing on Our responsibility and freedom hence my heart is close to free market economy teories.
feudalism, basically
If you check out the book, he does get into all of the major ideas of George and the folks who came after him, I just don't think that he would agree with you that Georgism explains every single aspect of Singapore's economic success. He would probably concede that it does a very good job explaining the land use and housing aspects of the economy, but that's only one sector. It is intertwined with all other sectors, but that does not necessitate it's dominance over those sectors in all contexts.
I don't see how anybody can solidly refute the spirit of what Chang is saying, that no one school explains all things at all times and in all places. It would be rather silly to think otherwise IMHO.
Billy Randell maybe because its difficult to acknowledge that we're rampant on corruption and our main GDP is illegal money laundering, coming from china, indonesia, america and russia?
academics and scholars will always have a hard time explaining things when they have no clue about the real actual underworld. cant really blame them tho.
BUT, just do a google on the above topic, and you will be able to find some people willing and able to shed some clues.
Read his book, and he DOES talk about corruption and money laundering. Not just in relation to Singapore, but economic activity that does have a detrimental effect.
Is it possible to download any of these graphics? Would really like to get a clean version of the full chart at 2:53.
I love the RSA ANIMATE's!!! wish there were more!
Excellent as always.
This is a great piece of speech for Economics and makes in inspired to learn more about Political Economics
Thank you so much!
This video is much better than his book
Great stuff. Illustration is awesome as well as the lecture
I learned a lot professor. It is one of the finest video on Economics and I am sharing with my students.
1:39 Dat lion.. BRILLIANT!
this was so beautifully said andd well put!!
I re-edited Jay's transcript (thanks Jay!)
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I try my best to dispel this widespread perception that economics is too complicated for non-economists. Actually, it’s very strange. Because people have very strong opinions about everything, Iraq War, Gay Marriage, Does God Exist?, you know, Global Warming. You all have very strong views on these things, despite not having a degree in theology, not having a degree in energy economics, not having a degree in international relations. But when it comes to economics, people say 'Ah, Yeah. It’s for specialists, you know?… I don’t know.'
But why? I mean, if you can have a very strong view [of] Iraq or Afghanistan without a degree in international relations, you should have a strong view on government economic policy without a degree in economics. You know, I said that this is only because economists have been fantastically successful in making people believe that it is actually a lot more difficult than what it really is. So they’ll tell you “Oh, you know, I could explain it to you but then you wouldn’t understand!”.
95% of economics is common sense. Of course, made to look difficult with the use of jargon and mathematics. And even the remaining 5% can be understood, at least in its essence if not in all technical details, if someone bothers to explain it to you in an accessible way. For example, ‘What is Economics?’, The ethical foundations of economics, whether you can separate economics from politics, and How different ways of conceptualizing the economy affect the way we see the world. You know, for example, people think that today's free-market economics is a direct descendant of Adam Smith. But this is not true. You know, Adam Smith and other 'so-called' classical economists, the Society, the Economy was conceptualized as being made of classes, not individuals. And the whole theory evolved around how -the way- these different classes with different material interests behave affect the way capital is accumulated, the economy grows, income is distributed, and so on.
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Today in free-market economics, there are only individuals.When you tell people out[right] 'isn’t there class?'. They say 'No no. That’s an old Marxist concept'. But if that’s the case, why do the marketing companies have all these class categories when they do marketing campaign strategy? They’ll look at groups A, B, C, C1, C2… you know. Target the advertising according to the type of people…
Now many economists will tell you that economics is a science in which there is only one right theory. There are at least 9 different major schools of economics and there [are] several more if you count minor schools and split major ones into sub-schools, each with its own unique strengths and weaknesses. And for free-market economics alone, you have three different kinds - Classical economics, Neoclassical economics, Austrian economics. So actually there isn't one right theory. And my contention is that we need all these diverse approaches to economics in order to fully understand our economy because they all make certain assumptions, they all have different underlying political and ethical values. They have all sorts of different theories about how an economy grows and so on.
And to make this point I give you the ‘Singapore Problem’ or what I call ‘Life is stranger than fiction’. If you read only the financial newspapers, like the Wall Street Journal or The Economist magazine, you’ll be only told that Singapore succeeded because of its free trade policy and its welcoming attitude towards foreign investors. This is partly true. I mean, they did have those things, but you will never be told that [the] Singapore Government owns nearly 90% of all the land, 85% of Housing is provided by government-owned housing corporation, and a staggering 22% of GDP is produced by state-owned enterprises. So in talking about Singapore I always tell my students, “Look, give me one economic theory, it doesn’t matter what it is, Neo-Classical, Marxist, Austrian, Schumpeterian… give me one economic theory that can explain Singapore.”
Well, there isn’t! So you need to know these different theories to fully understand how a country like Singapore could succeed.
So, In this regard, my advice is that you should not be a man or woman with a hammer by allowing only one kind of economic theory. Because whatever that theory is, once you believe that one theory is true, like the man with a hammer, you will start to see everything as a nail. So I say, you should get a swiss knife
In this dominant economic theory, that is of today- that is- Neo-Classical theory, people are mainly conceptualized as consumers. And work is considered as, what these economists call 'disutility' that you have to put up with so that you can earn money with which you consume goods and services and then derive pleasure, or what they call 'utility'. That’s your aim! (=) Deriving pleasure from consumption.
But what happens in a workplace often fundamentally affects us, not just our immediate physical and psychological well-being, but also our identity and our sense of self-worth, and our self-fulfillment. This is why these days in many rich countries a lot of people are very unhappy compared, to say, a couple of decades ago, despite the fact that they have [a] higher income. Why? Because the work has become more stressful. But then economists tell you, “No, you should be happy.”. Britain, today, has a 20% higher income than in 1975. Why aren’t you happy?
---------------------------------
My book is not just an explanation of economic theories and facts, it’s also a discussion about the role of economics in public life. And in this regard, I have three sets of observations to make.
The first one is 1. ‘Never trust an Economist’.
And that includes me. You know, professional economists [like] to say ‘we know what is correct’. No, they don’t have a monopoly over truth. I already told you that there are 9 different kinds of economic theory, so the right conclusion depends on which economists you talk to. And I argue that it is entirely possible for people who are not professional economists to have sound judgments on economic issues. I even argue that sometimes their judgments may even be better than those of professional economists because they may be more rooted in reality and less narrowly focused. And I argue that, indeed, the willingness on the part of the ordinary citizens starts to challenge professional economists and other experts is the foundation of democracy. If you really believe that all we have to do is to listen to the experts, to listen to the professional consensus of the experts, why do you need democracy? Let self-elected elites appoint each other and run the world. You know, this is why a lot of people are unhappy with the European Union.
The second point is the Latin phrase that is apparently written on the walls of City Hall of Gouda, the city in the Netherlands, which is famous for the cheese. And it says, uh... I’m not even going to pretend to speak Latin, so it basically says 2. “Listen even to the other side.”
And I argue that this is the attitude you have to have in debating the economic issues. I’m not suggesting that you should have no opinion of your own. But what I’m trying to tell you is that given the complexity of the world and given the necessarily partial nature of all economic theories, you should be humble about the validity of your own favorite theory and should keep an open mind about it.
Finally, even while I constantly make reform proposals, I emphasize 3. “How difficult it is to change the economic reality”.
Sometimes the reason is obvious. I mean, people who benefit from the status quo want to thwart the change by any means. Lobbying, Bribery, Media propaganda and even violence. But the status quo often gets defended even without some people actively being evil. Because the thing about the market system is that the rule is the one dollar-one vote. So this means that the ability of those with less money to refuse undesirable options given to them is highly constrained. Also, it can be susceptible to beliefs that are against our own interests. The best example is that what happened when Barack Obama tried to reform the American medical insurance system and there were all these pictures of old pensioners demonstrating against that what they call ‘Obamacare” with placards saying things like, ‘government hands off my medicare!’... Well, except that medicare is a government program! (Students laugh). This is what the Marxists used to call ‘False Consciousness’ or also known as the Matrix, the movie. (Students laugh). But acknowledging the difficulties involved changing the economic status quo should not make us give up the fight to create a better economy and better society. Yes, changes are difficult, but in the long run, if enough people fight for something hard enough, many impossible things can happen. And, don’t forget, I mean, 200 years ago if you suggested America should abolish slavery, you would have been branded at least unrealistic, and probably a Loony, a hundred years ago the British government put women in prison for asking for [the] vote. A lot of women actually said, “Why do we need votes? We have our husbands and brothers to represent our views”. This is why I quote Antonio Gramsci, the Italian Marxist who once said that 'We need to have Pessimism of the Intellect but Optimism of the Will’. Yeah, you have to accept the difficulties of changing the status quo, but you have to believe that this can be done. And finally, As Nelson Mandela used to say, “It always seems impossible until it is done.”
Excellent, have watched this a couple of times.
i love this including the reggie perrin reference
I was not expecting to see Harry Hill in this video
I can only conclude that the Nordic countries were able to apply eclectic policies and found an almost perfect balance between the two extreme positions.
they taxed mining industries and implement some of the best social democratic policies on earth. to say that this is balanced (the right, free market has something to offer too) is wrong, because they are considered to be advanced socialism
very attractive and creative visual as always done by RSA animate and the talk / advert for the author's book was interesting enough and I am even going to pick up a copy out of interest however I find it quite hypocritical that the author suggests keeping an open mind and listening to one another in finding solutions. However as the talk continues it becomes increasingly clear that the author is suggesting the rule of Marxist and Socialism philosophy over free market capitalism which is somewhat hypocritical not to mention the use of artwork at the end of the video. If was to weigh in I would suggest that the simplicity of this capitalism Vs socialism argument is becoming rather tedious. We all live in mixed economies where there is varying levels of state power vs corporations power...talks like this suggest that more state power is a good thing when we know historically this isn't the case and to be fair corporations not kept in some kind of check can cause problems too. However the difference remain that corporations (without government support) can be voted out by people not using them anymore and paying corporations that produce better goods and services. Government cannot be held as accountable as corporations can be. This doesn't mean that state owned enterprises can't produce good results its just that they are not held accountable as a non state owned enterprise would be. Truth be told the argument here is not about capitalism vs socialism but can framed very simply...do we want to live in societies with more or less freedoms and liberties that are reversely proportional to so called state benefits outside of traditional state roles. Personally I think it's better to live in a society where the government allows free market capitalism to grow and if government spend more time doing what it's meant to do brilliantly namely policing, justice system and defense and providing services such as energy and utilities etc... if government want more power in certain sectors and want society's consent shouldn't that be an earned status? If government administrations want more power they need to be completely transparent with their decisions and they have to be ready to be removed on non performance...this is of course something no administration would agree to because their motivation is more power without real accountability which is why free market capitalism remains a stabilizer to too much government rule... just my common sense talking ;)
great comment. It's incredibly easy for all of us to become narrative driven, rather than breaking up the pieces case by case . This animation is easy to digest at first, but it basically attempts, (after cleverly priming everyone with the importance of simple feelings about complex things), both to remove the teeth and excuse the dead weight of the economic schools to equalize them, and then in the smoke bring in socialism.
So well made!
Can we still buy the PDF for this video's drawings or not?
Mindmaping taken to the next level. Brilliant presentation, thanks RSA:)
Can you put some subtitles in this video please? Even though I speak English it's not my native language and I'm having trouble understanding half of what he is saying because of his accent.
Subtitles are coming soon!
Mb video on venus project
Subtitles in spanish please! Im a teacher and it would be very interesting to have this video with subtitles in order to explain some of the sustancial things the video remarks (sorry for my bad english).
Is it possible to get somewhere that table from, that shows the different schools of economics? Would be very helpful!
standing ovation
What a great talk....!
I'd also argue that most of these "schools" or branches of economics, are just different versions of exactly the same thing, which is property/trade/currency based economics ... and that it's entirely possibly (not to mention desirable) to have NON-property/trade/currency based economics (see: www.open-empire.org), which is the kind of difference you need to get in order to really constitute a different economic paradigm or theorem ... free market & socialist economics are (when conducted within a property/trade/currency based economic framework) actually more political than economic perspectives.
it doesn't say much... just be open to all economic theories. while this is good, I think that the author should've insisted more on pros and cons for each theory. and where they were successful throughout the history.
Where can I get the infographic comparing the 9 schools
Is this being done on Videoscribe?
The Ayn Rand bust was a nice touch
Who does your animations? I would love to hire them to help us! Love these videos
Good animation.
Superficial content.
Explain?
+shapeshifter567
Sure.
Point #1: the animation is good and mildly clever with a hand apparently sketching lists of complex but obvious things, such as tree roots. Personally I'd have used the left hand as left handed people are typically better at drawing.
Point #2: It is a long winded way of saying very little of substance or theory, explains very little about economic concepts and / or the significance of human behaviour and psychology, whilst expressing repeatedly and somewhat enigmatic ally that "you can do economics yourself!" In short, this is another typical you tube 'self help' video which doesn't really help anyone.
DontTestTheX Hmmmm, interesting. I would argue that this video was not made for the purpose of in depth analysis of theories and concepts, but rather to make a broader statement about the practices of economics and the nature of economic thought.
I'm not trying to disprove your opinion, i actually agree with your assessment of the attitude of the video which is another "self help" youtube video. I would like to explore this further, for knowledge sake. lol
I agree that what is said is very little. If I had to sum up the video in one sentence, it could just be "not everything is black and white", which I've learned as a teenager. Not very nourishing to the mind.
+Philip Loranger which goes back to my point about the purpose of the video. to produce a video of that caliber it would take a lot more time and effort.
Wow. It's like you need the heliocentric model and the geocentric model if you want real science!
What you actually need is to test multiple models to find which better map onto empirical evidence from reality. We can throw out models that really fail. Economics has too many variables for a simple model to work, and none of the "schools" of economics has a completely sound model. So he's really saying, "consider points from any of these models for consideration because we have NO good model we can really trust, so this mix of crap is the best we have, all of them fail in various ways to map onto reality."
SMP The social media party. A brilliant illustration of the way we are kept in line via our purse strings. Direct Democracy is about the only way to change this system. Join the movement to Direct Democracy
so helpful! thanks, the best one so far
what a great video!
So true and unaltered by recent world events
Is it possible to get a transcript?
great video, i love these
This is brilliant
What software is this made of?
thanks for the vid :) is there a close up image of that table of the different economic systems? or its source material? looked like a nice and useful summary.
It's in his book, which is a really interesting read, with lots of discussion around those concepts.
Are there any translations, for instance, in spanish?
mindblowing
fantastic!
Thanks.
This is great!
Such a shame they stopped making these
Is the audio from another talk? If so, which one? Thanks :)
Found it - "RSA Replay - Ha-Joon Chang on Economics"
Great
Is it somehow possible to get a high definition image of the final drawing in the video?
If you head to www.wearecognitive.com/our-products it should be available very soon!
Love it :)
very powerfull ! thanks
I haven't watched the video yet, but please tell me Steve Keen and his criticisms of Neo-classical economics is mentioned..
It's a 10 minute video - no, it isn't. I haven't got his book to hand, but he may well mention it in the references.
Dr. Chang is a hero. We don’t have to be ideologically bound to make economics work for the population at large. We don’t have to abandon the market system, we just have to be honest about its limits and what it can do
A lot of guys enamored with the term "false consciousness" were in love with Joseph Stalin. It's kind of an arrogant term, but it's okay.
Where can i get the poster?
The poster will be available here www.wearecognitive.com/shop very soon! Keep checking back or feel free to email Cognitive Media
Thanks!
nice...was going to ask also... that's some amazing art.
you have no instagram?
There will always be people willing to fight on behalf of their oppressor to continue their oppression, some will even be invigorated by this march toward their own demise.
why dont we "singapore" RoW?
You are doing great. You could have kept drawings much simpler though. Since the whole talk's aim is to simplify economics for non-economists, these drawings somehow weaken the concept of simplification.
Omg finally
Although I really enjoyed this talk, I still would say that economics is a science and there can only be 1 correct theory.
Of course, economics is as much of a science as psychology is (i.e. it's really hard to do it right). But f psychology can be called a science, then economics (which's really just the psychology of consumption) is also a science.
Saying economics is the 'psychology of consumption' is highly debatable.Firstly, how do you account for the multiple parts of economic theory that deal with production? Secondly, how do you account for macroeconomics much of which cannot be neatly reduced down to individual psychology?
Adam Khan Firstly, production can be thought of as a product of the psychology of consumption. After all, u can't consume if there's nothing being produced! However, my original definition may have been a bit too narrow. Whilst it's not solely on consumption, most economics essentially deals with the effects of people's actions on the economy; and people's actions are ultimately influenced by psychology.
Secondly, macroeconomics can still be explained of in terms of herd mentality (the psychology of how people make decisions in and r influenced by groups).
That's not how Science works at all though, or really any field of inquiry outside of mathematics. Even if we come up with a theory that marries Quantum and Relativistic physics, there's no guarantee that it would completely explain the physics at different dimensional scales, just like Newton's theories regarding the quantum scale. At best, all Science is simply an approximation that attempts to model actual reality (if such a thing can be said to exist). That's still better than any other form of inquiry humans have ever developed, but it will never yield any answers that could be considered "correct".
Billy Randell Even if u believe that science can never give answers that r fully "correct", scientific answers r still more "correct" than others. We don't say, for instance, that the typical person on the street's theory of what causes disease is more correct than that of a doctor.
P.S. Im not saying that the experts always get it right. Just that scientific answers tend to be more correct than non-scientific ones.
It's a SOCIAL science. It used to be called "political economy". And no, there is no one theory. There's no one theory in physics either.
built-in captioning. Be nice to hire a professional voice talent, imo. Very professional image/art talent makes this good, as it is.
I wouldn't say 95% of economics is "common sense", because 100% of property/trade/currency based economics is insane ... more accurately 95% is easy to understand, even if it's stupid.
You should not promote dismissing an expert's views. That sort of backwards rebellion is what led to Brexit and now not even the UK's leaders have a clue how to proceed or what's going to happen. Experts are experts for a reason, not purely to put everyone else down.
I think Ha-Joon is clearly advocating for people to listen to experts, however being open-minded to more than one school of thought. The goal is to help give the general population a better understanding of reality by empowering them to consider ideas from multiple viewpoints. I'd argue that the negative aspects of Brexit was entirely due to people not being able to fully grasp the complexity of the situation, not dismissing the viewpoints of experts.
+Aculem I completely agree, but being open minded has to go hand in hand with being well informed.
I know what you're saying; though Ha-Joon does address the necessity of looking at all perspectives and that we have incomplete knowledge, I fear the sentiment is completely lost on anti intellectualists who will almost certainly ignore his second point and choose instead to create self validation for their ignorance with his first. It is an unfortunate reality that we must take care in how we phrase every sentence, as our world runs on sound bites, not whole concepts
@@Kainte exactly
Or, Brexit happened because the economic theory experts don't check their theory's impact on the public
EL VIDEO QUE LOS ECONOMISTAS NO QUIEREN QUE VEAS!
who calls their own video "mind-blowing" in the description???
THIS
I wasn't quite clear about where this guy is going... but when he mentioned Antonio Gramsci, Mandela and Obamacare, it becam e clear: socialism. (call it whatever: democratic socialism or progressims...) too bad... fooling people with cartoons.
he mentions free market ideas too, just because he listed marx as one of the economic theories doesn't make him a marxist
4:20 Give me one economic theory which explains Venezuela. Oh that's right...
Well, maybe that's the point he is trying to make. Don't trust economists regardless if they are neoclassical, marxist or whatever flavour you desire. The ugly truth is that all attemps to understand the complex world through simplified easy to digest or calculatable laws is a fallacy and we humans are doomed to fumble and stumble on, hoping not to create too large disasters of any kind.
Marc Kaptijn - No, that's not at all the point he's trying to make. He said that it's hard to classify successes, but he conveniently leaves out the one model which overwhelmingly describes failures - socialism.
+starrychloe
The failure Venezuela has nothing to do with socialism or capitalism. People can still own means of production. Venezuela failed due to the sole dependency of oil as the source of income for social programs and the economy in general, when oil prices fell the government printed more money thus causing inflation. Price controls were idiotically used thus causing shortages. Socialism is simply the democratic control of the means of production, sure the state can be seen as "the community" but we both know that's not true thus the term state capitalism. Venezuela failed due to horrible economic policies, not because the means of production themselves were in the hands of the government. Venezuela has no means of production, it imports what it consumes; so its very hard to consider it socialism.
thenextrecession.wordpress.com/2016/05/31/venezuela-near-the-end/
Power vs powerless, the powerful include the American govt and it's sanctions, corruption in the Chavez bureaucracy, lots of the people in the govt are shaving off from the state coffers, and a lack of workers rights in Venezuela.
Economics is philosophy,..not science.
Animation is _far_ too information dense. Continually distracts from the script. A shame, because a lot of work has clearly gone into this.
25 people don't appreciate art, effort, or education.
This is a poor lesson. Where is Georgism? That is the school of economics that actually matters.
Georgism is a semi-obscure theory that's subscribed to by a tiny group these days, mostly not economists. Although I love how the wikipedia georgist page is trying to claim figures like Joseph Stigliz. Note: "progressive taxation" does not actually necessarily (or even mostly) imply georgism.
You should learn about subjects before offering assertive opinions.
The animation was great (as always) but the speech itself was horrible.
It discuss the complexities of economic ideas while trying to say "It's simple." yet never actually explaining what economics is.
He says there is no ideal economic system, but he quotes marxists five times and the whole animation is full of neoclassical criticism. Where's that neutrality he's talking about every minute of the video?
No contradictions on it.
He criticizes neoclassical because it is the overtly dominant economic theory and the assumptions leads to all sorts of mess.
Lol, what superlatives exist to describe the current neoclassical status quo? I thought pretty much everyone understood things suck
Too bad this guy doesn't understand economics.