My answer on Quora:
Two key points stand out to me on this issue. The first is on what we know about the economy. The second is on how we talk about the economy.
We do know a lot about the economy, but we don’t always know what the best way forward is. This is where a debate of ideas come in – and that is a very healthy and exciting thing.
We don’t, in my view, do a good job talking about the economy. Economics is not for the experts alone. Economics is for everyone because we all have a stake in it. It’s not as complicated as the fancy Greek letters suggest, and it’s also not as simple as “trade deficit = always bad”.
On what we know: We do know a lot about what works and what doesn’t work in economics. Take the politically hot topic of fiscal deficits as an example. We know generally when fiscal deficits can be good or when they can be bad, but some cases are not so clear. When the cost of borrowing is super low, should the government rack up a lot of debt and invest it in productive assets that yield a return? That depends on how long the cost of borrowing stays low, if productive investments exist, whether the government can invest in them, what the impact on private sector investment would be, who would own the assets later, etc. A lot of “if’s” are involved, and that’s where a number of different approaches, policies, and schools of thought can lead to different opinions about what the best course of action should be.
Let’s say it is clear that a government can’t sustain its deficit and that we know it should take steps to reduce its deficit to restore “fiscal sustainability.” We know that much, but how should the government reduce that deficit? By reducing spending, or raising revenues? Two different approaches, and neither is always the right approach, or the wrong approach. So, judgments and ideas about how the economy works come into play.
On how we talk: The economy touches all of our lives in some way or another. Most of the world’s population works to make a living, be it in the formal or informal economy. Most have a stake in it. Therefore, most should be included in the conversation. Academic and professional economists, however, have tended to have a “leave it to the experts” approach to communicating with the public. Yes, the subject of economics can get complicated and we do need experts who can analyze data, test relationships, and call out sound logic from bogus logic. I’d rather have an expert run the central bank and finance ministry than a non-expert. Yet, experts can get it wrong and can forget that they do not have a monopoly on the subject. It is the ivory tower that says “I won’t listen unless you have a PhD.”
One major thing we can learn from the wave of populism (for lack of a better word) around the world today is that economics is not just for the experts. It is for all of us because we all have a stake in it. Equations, fancy Greek letters and academic vocabulary have their use, but that is not the only way to talk about the economy. Like anything, bad ideas can be popular. The best way to counteract them is with good ideas. We can’t leave it to politicians to translate these issues through their own filters. We need to broaden economics so that it does not sit in this mystical ivory tower, which results in a range of bad ideas taking over and mixing we don’t know with what we do know.