Because Economics Is a Dark Art
For all too many people, economics truly is a dark art. Not just the big questions of high finance, with all that advanced mathematics and all those confusing terms, but just the ordinary economics of running a household.
Unfortunately, it's not just a lack of formal education in money management that leaves money as such a confusing and fraught subject for so many people. Money has become an intensely taboo subject in our society, to the point we don't talk about it. Because of that taboo against discussing money matters, children don't pick up basic skills such as budgeting or living within their means, since they have no idea what relationship their experienced lifestyle may have to their parents' incomes.
In many ways the current economic downturn is a result of economics having become a dark art within our society. There is of course the obvious issue of the mess with mortgage-backed securities and the massive frauds perpetrated by the banks who could hide behind the sheer complexity of the derivatives market. But we also had ordinary homebuyers who had so little grasp of their own personal economic situation that they had no basis by which to judge whether their dream homes were within their means, so they bought on the basis of wishful thinking about future raises and ended up with monthly payments they couldn't afford.
Even families who've avoided the nightmare of underwater mortgages and foreclosed homes are often in trouble. The easy credit terms of the 90's and the first several years of the twenty-first century meant that many of them bought on credit without really thinking about what it meant. As long as they were able to make the monthly minimum payments, they didn't worry. But when their financial situation suddenly changed, whether due to layoffs or mandatory reductions in hours or other problems, they suddenly found themselves over their heads in debts. Due dates began to slip as they played bill roulette, paying only the most critical bills each month and scanting the ones that could slide, or trying to make partial payments to everybody.
Some people are even beginning to talk about the complete collapse of the US economy, with consequent social disruptions including complete lawlessness. Yet it may not be too late to recover, if we can begin to educate ourselves on the economic issues that nobody ever wanted to talk about when we were children.
Last updated October 15, 2010.