Nobel laureate Milton Friedman 
What is economics?
Do you suppose you know about economics? What, for example about the economics of health? That may not sound as though it should be an economic decision. People have illnesses and should be cured, right? If they're not there will be a scandal in the tabloids about postcode lotteries or some such. Any individual case results in suffering for the patient, relatives and friends, and probably losses to the country as a whole. But what if the demand for treatment exceeds the resources available? How do you choose who should be treated and who should not, when it may be a case of life and death?
The textbook definition of economics doesn't make clear that these are the sort of decisions on which economists have to advise. Scarcity and choice, the books recite drily - it's all about scarcity and choice. Well it is, but these are real choices that crucially affect the lives of real people.
Economics at the Academy
Economics is taught as a separate subject at Higher and at "A" Level, in addition to being combined with Business Studies for GCSE. Students come to the subject either from GCSE or as newcomers to the subject in the sixth year.
We consider it important that any student proposing to read economics at university should study the subject at school, even when there is no formal requirement to do so. Experience suggests that economics taught in schools is often old fashioned neo-classical theory of little relevance to contemporary economic thought, or indeed to the modern requirements of examinations. Academy staff however attend in-service training to familiarise themselves with current thinking, and take pride in presenting courses which are both accessible and relevant to today's citizens.
For example, economics text books date very quickly. We have pioneered the use of an on-line text, making use of the school's intranet, which can be up-dated to take account of the latest developments. The webtext also contains self marking tests that enable candidates to check their preparedness for internal assessments.
To give you an idea of what we mean
Economics is about choicesWhether you're rich or poor, you can't have everything you want. Choosing to spend your money one way means deciding against all the alternatives. With your personal finances you may simply reply, "Well, I know what I like." But what about the country as a whole? Without an understanding of Economics the citizen today is ill equipped to answer the political questions which he or she is going to be asked. This is a particularly exciting time for questions of this type.
If these are the sort of questions that interest you, maybe you should consider studying economics with us. On the other hand, if they don't interest you, too bad, because they're going to affect you anyway! |
UK economic growth
The severe recession precipitated by ERM membership combined with the subsequent export growth to squeeze inflationary expectations out of the system, and since then the UK economy has followed US trends more closely than the Eurozone. However the bad news is that we are in danger of complacency. A mountain of debt has been taken on by young people who have no experience of interest rates above five percent. Now that rates are rising, watch out for catastrophic defaults if they should approach 7%. Remember you read it here first. (Please note, this piece was first published in 2005, well before the Equitable Life or the the Northern Rock Crises. The problem of excessive personal debt feeds over into the housing boom which enables high current spending because of perceived real estate wealth. A combination of debt retrenchment and a house price slump could still have very unpleasant consequences - 21.9.07) |
Does a minimum wage cost jobs?In theory this depends on whether the new minimum wage exceeds the old marginal wage. If it doesn't, jobs could even be created. In practice of course, there are many labour markets, not one, and in the lowest paid of these £5.20 is quite likely to be the equivalent of MIN2 in this diagram rather than MIN1. If the impact overall is neutral, is does not mean that no jobs have been lost; more likely that roughly the same number of jobs have been lost as have been created. The impact of the proposed increase in the miniumum wage is likely to be minimal in real terms until such time as the faster increase in minimum than in average wage compresses differentials to a point where inflationary pay demands begin.. However labour markets that only clear at wages below the poverty line are going to require some form of state benefit anyway. |
Despite protestations to the countrary, the record period of economic growth currently being enjoyed by the UK dates back to the second half of 1992. The ejection of sterling from the ERM in September of that year confounded the economic policies of all UK political parties, not just the government, since all had agreed on ERM membership. However the new flexibility of the currency combined with deregulation of the labour market to make the UK attractive for inward investment and a good place from which to export. 
This page is: Edinburgh Academy / curriculum / economics / index.htm
