By Alex Mistlin
Adam McKay’s upcoming movie about the 2008 housing crisis, The Big Short, is notable for its awareness of the general public’s ignorance of economic concepts. And while I can only applaud the ingenuity of having a bathing Margot Robbie explain the meaning of “sub-prime”, I felt sad that this reflects the inaccessibility of key economic concepts. The complexity of economic terms only serves to alienate the average person from those policy debates which have a significant effect on the wellbeing of us all. In short, as our market economy creates a market society working people cannot afford to be excluded from economic discussions.
In 1992, Bill Clinton defeated incumbent President Bush with a simple campaign strategy that can be summed up by the phrase “it’s the economy stupid”. In the wake of Clinton’s historic win it is generally accepted that managing the macroeconomy is the most important undertaking of modern government. In light of this, our democracy is tainted by the fact that no matter who is in charge, government policy is not truly subject to public scrutiny. The media has a particular responsibility here to ensure that the electorate is informed enough to critically engage with political economics. This does not entail printing the complex graphs and models highly valued by professional economists but instead means dialling down the rhetoric and providing a less partisan take on those matters which can be illuminated with evidence from objective sources such as the ONS.
While I appreciate that there is a scientific dimension to economics that will never be truly interesting or comprehensible to the general public it would be naive to forget that economics is not done in an ideological vacuum. The respected Cambridge economist Ha-Joon Chang argues that: “Contrary to what professional economists will typically tell you, economics is not a science. All economic theories have underlying political and ethical assumptions, which make it impossible to prove them right or wrong in the way we can with theories in physics or chemistry.” For instance, with regard to rent controls, there might be consensus amongst economists that they lead to worse outcomes as a result of reduced housing supply but this does not mean that there is no merit in ordinary people criticising the government’s laissez-faire approach to the housing market.
In fact, I’d argue that a moral analysis of certain issues is just as valid as a rigidly economic one. If the current housing policy does not go as far as is possible to ensuring that everyone is housed then it is a failure, regardless of the other economic outcomes it preserves. It is often said that markets reflect the ethically neutral choices of rational agents however even this implies a value judgement about what the purpose of markets should be. Even though the electorate might not understand some of the finer details, it is of vital importance that debates surrounding the purpose of markets are as inclusive and democratic as possible.
If nothing else, it would be churlish to deny that non-economists can have economic insights. While to an economist, things like the percentage of the population that is in-work or claiming pensions is an abstract figure, something to input into a calculation, to someone in these positions they represent reality. An individual’s opinion about the best way to reduce the number of unemployed people is contingent on the individual’s perspective. Alternatively, while a bluntly economic analysis might make the case for globalisation (after all more liberal markets make for more efficient economies), someone who relies upon earning a reasonable salary in a low skill industry who is threatened by immigration might be a little less receptive to it. Clearly, both professional economists and politicians can only have limited points of view. It can only be a positive step towards making sound policy judgements if economics is removed from its ivory tower and debated from a wider range of perspectives.
For all The Big Short’s merits, I hope that the film Hollywood makes about the next housing crisis will not have to resort to such gimmicks to accommodate our lack of engagement with the economic discourse which increasingly defines the modern world.