This book attempts to change the popular understanding of what economics and the economy are all about. It seeks to undermine the popular association of economics with commercial activity, necessity, quantitative dollar flows, and the production and sale of goods. It seeks to document the fact that it is actually discretionary qualities -- subjective, disputable, aesthetic qualities -- that both motivate economic activity and provide its primary inputs.
Changing this popular perception of economics is important because, increasingly, the determinants of our economic well-being are not produced by commercial businesses and automatically evaluated by the commercial market. Instead, they flow from diverse, noncommercial sources. If we are going to protect and improve our economic well-being, at the very least we need to know where we should focus our attention. Current popular economic perceptions mislead us.
This book is aimed at the informed noneconomist. Economic jargon and mathematical formulations have been avoided in favor of plain English, and professional economists will find little that is new or original except the emphasis. This might surprise noneconomists, but the fact of the matter is that there are two quite different types of economics in use in policy discussions. There is professional, academically based economic analysis. And then there is a popular folk economics. Only a very small part of the population has much regular experience with professional economic analysis. Economists keep it that way by speaking in a private language and hiding behind nearly incomprehensible mathematical models. The folk economics, on the other hand, is closely tied to the world of business and to people's experiences in the commercial world, and is regularly reinforced by the business community, local political and civic leaders, and the mass media.
The misconceptions of this folk economics are the target of this book. These widely held beliefs seriously distort economic policy, especially local economic-development policy. The book seeks to correct that by drawing on the more critical professional economic analysis. This is not to suggest that professional economic analysis is without its own faults. It too can distort and mislead, and this book also tries to underline its limitations in guiding our pursuit of improved well-being. Professional economists will wonder about what they will see as an unnecessary, repetitive emphasis on the guiding role of subjective preferences and cultural values in economic activities. I can only say in defense