Tim Harcourt | The Airport Economist

Once upon a time when I went to my publisher, he told me adamantly “Economics doesn’t sell.”

I was gobsmacked! “Economics, that tells us all about supply and demand and how to run a business or a household doesn’t make a quid?  How could that be?” I asked the great man of Australian publishing.

“Well, you see, my friend, “it’s the dismal science” explained my publisher.

Not to be deterred I had a look at the origins of this term ‘the dismal science’ and whether it was an albatross around the neck of economics and its popularity. In my historical voyage of intellectual discovery I found out a few interesting things along the way, and some myths and realities about the history of economics and how it has been perceived in past times and in the modern day.

First things first about economics, it’s not dismal it’s gay. When I looked up the term “dismal science” I found a fascinating history of how the label became associated with economics. It was found that the British historian Thomas Carlyle used the term in his debates with the Quakers and Baptists over the emancipation of slavery in the West Indies and his fears about what had occurred in the Irish famine.

Carlyle was debating the ‘Exeter-Hall Philanthropists who called for emancipation of black slaves in the West Indies whom he feared be worse off under the laws of supply and demand as free man, as had happened to free agricultural labourers in Ireland who perished by famine.  Carlye is reported to have said in 1888:

“Truly, my philanthropic friends, Exeter-Hall Philanthropy is wonderful. And the Social Science – not a ‘gay science’, but a rueful – which finds the secret of this Universe in ‘supply and demand’ and reduces the human governors to that of letting men alone is also wonderful. Not a ‘gay science’ I should say, like some we have heard of: no, a dreary, desolate, and indeed quite abject and distressing one, what we might call, by way of eminence, the dismal science.”

In an absorbing analysis of the debate by the historian of economic thought, Peter Groenewegan, Caryle’s main contention is that slavery was better than the forces of supply and demand that had impoverished the Irish farm worker. Carlye further thought that slave owner had a mutual obligation to look after black slaves in the West Indies and thought that any move to emancipate them into a free labour market would make the West Indies a ‘Black Ireland’ in terms of economic misery. In fact, the whole debate about the West Indies and Ireland reminds me of Roddy Doyle’s film ‘The Commitments’ when the fledgling band manager Jimmy wants his (lily white) band to say: “We’re from Dublin, we’re black and we’re proud!”

Who would have thought a popular movie about a fledging rock band would have had its historical roots in the history of economic thought?

In any case, as a result of this chequered history, several myths about economics developed. Some are still hanging around today, like a dead cat in the middle of Anzac Parade, stinking to high heaven. Its troublesome origins have made a bit of mud stick.

Myth one: ‘economics is not ethical’. It’s all about profit and welfare maximising, that is how to be selfish and what it means as a result. Hence the term ‘homo economicus’ about rational decision makers individually pursuing their own ends. Or as my grandpa who was a professional punter at the Randwick racecourse used to say: “Always back the horse called ‘self-interest’, it doesn’t always win but you can guarantee that it will be a trier.”

However, the real story is more complicated than that. It needs to be recalled that early political economists were moral philosophers like Adam Smith. Smith’s ‘The Theory of Moral Sentiments’ was in some ways a much more important treatise in the early development of economic thought than the ‘The Wealth of Nations’. Smith was a theologian, and he was interested in ethical behaviour and what was better for society as a whole as well as the individual.

In fact, in Australian economics today, many of our leading thinkers such as UNSW’s own distinguished emeritus professor, John Nevile (whom my fellowship is named after) and the likes of Ross Gittins (the son of a Salvation Army chaplain in Newcastle), Ian Harper and Nevile Norman have a strong ethical and religious roots in how they think about economic issues.

On the other hand, some economists, of the neo-classical variety, take a different tack.  For instance, Milton Friedman, the father of the Chicago School once famously said about ethics and economics that: “The only ethical obligation of a business is to make a profit.” So the debate rages on.

Myth two: ‘economics is not accurate’. Many engineers and members have the natural scientific community have sneered at economics for ‘not getting its forecasts right’ and make the famous jokes about ‘when you get 4 economists in a room you get 5 answers.’ This seems to forget that economics is one of the social sciences, predicting human behaviour, so it’s like psychology, history or sociology rather than a ‘hard’ science. Of course, economists themselves have acted like ‘social science imperialists’ and have tried to make their discipline closer to the hard sciences and more mathematical. The risk they have run here is that distancing economics from the social science and closer to the hard science rather than becoming a rich man’s sociology they will make economics a poor man’s mathematics.

Myth three, ‘economics is dry’. You hear this all the time, that it is a dry subject and/its proponents are dry. Well it’s a difficult subject but dry? Whether it be the economics of being a child, growing up, getting a job, getting married, working out super, economics is about everything that touches our lives. As the Cambridge economist Alfred Marshall says “Economics was the study of mankind in the ordinary business of life.” And its ‘big picture’ too, whether we are talking war and peace, free trade and protection, or global warming all these issues have an economic dimension.

Myth four, ‘economics won’t get you a job’. When I was at University nearly everybody was advised to do accounting as you can always “fall back” on an accounting qualification. Economics was warned to be ‘too risky’. Two decades of full employment on I have found economics to not only be in great demand in the labour market, but also a means to a number of very stimulating and interesting jobs. Furthermore, I have found that many of my colleagues at Austrade, DFAT, the ACTU and in the private sector had ‘secretly’ got economics degrees but didn’t tell people they were economics graduates (at Austrade I was the only one ‘out of the closet’, so to speak, with economist officially in my title). I think this shows that in many profession with a business dimension, whether it be accounting, politics, journalism, marketing, engineering, or general management, economics is a useful discipline to have as a way of thinking. Just as Dr Karl Kruszelnicki, the Julius Sumner Miller at Sydney University (or ‘Dr Karl’ fame on the ABC) says all scientists should have a background in physics as a way of thinking and solving problems, all business professionals need to have economics in the tool kit as they embark into the big wide world.

Myth five, ‘economics books don’t sell’. Well we are no Stephen King or JK Rowling but we economics authors have actually done ok. In fact, my own publisher had a change of mind, after he saw the success of Freakonomics and told me to “Hurry up and get that manuscript finished,” and hence The Airport Economist took off thanks to the success of Freakonomics and The Undercover Economist by Tim Harford.  (In fact the British based Tim and I often get confused for each other, which is great for business on both sides of the world!). In addition, there’s Ross Gittins’s The Happy Economist, Zombienomics by John Quiggin, Parentnomics by Joshua Gans, Disconnected by economist turned Labor MP Andrew Leigh and the new contribution by Jessica Irvine titled Zombies, Bananas and Why There are no Economists in Heaven: the Economics of Real Life. In fact, my publisher (Allen & Unwin) has been a publisher of most of these titles in Australia and have now become the ‘true believers’ of the new economics literature.

In conclusion, maybe economics is the gay science rather than the dismal one after all. So in that vein I should conduct some research into the economics of gay marriage and its impact on the economy. If the Tasmanian gay marriage act gets up maybe it will provide some lucrative stimulus to the local economy. And then we can start research on something even more potentially economically lucrative – gay divorce…

Tim Harcourt is the JW Nevile Fellow in Economics and an adjunct professor in International Business Strategy, at the Australian School of Business, the University of New South Wales (UNSW) & author of The Airport Economist:  www.theairporteconomist.com.