by Ernest Lilley

Alex Pournelle and I were hanging out in a Manhattan Bar down by 17th st having a beer. We didn’t really need a beer, what we needed was sleep because we were in town to do a network installation for a trade show, which means the following morning we’d signed up for a non-stop sixteen hour day full of debugging switches, dragging cable, tracking down unauthorized wifi access points and soothing frayed nerves. It just seemed like a good idea to get a beer. At the time. But I digress.

Down at the other end of the bar two guys in nice suits were also having a beer, and engaged in a somewhat heated debate. Suddenly, it overflowed into the epithet from which this post’s title springs.

“Your problem,” the taller and better dressed of the two proclaimed loudly, “is that you don’t understand micro-economics.”

Silence ensued throughout the bar. At least until Alex raised his glass in their direction and offered (in what a Pournelle thinks passes for normal volume, but in reality reflects having been raised by a former artillery officer), “I’ll drink to that.”

Alex, FTW. Pournelles aren’t always easy to have around, but they’re always dead on the facts. Get’s in the way of the truth from time to time, but that’s another post. A lot of people’s problem really is that they don’t understand micro-economics, if not economics in general. You know this is true, though probably don’t want to admit it to yourself because it sounds painful. No? Really?

When the tired cop/seedy private eye/secret agent stops to unravel the maelstrom of human tragedy that makes up the movie they’re in the middle of, what single guiding principle do they offer up to their less knowledgeable partner?

“Follow the money.” Which is just another way of saying “Your problem is that you don’t understand micro-economics.” More or less.

Since then, when faced with an intractable problem, Alex and I will look across at each other and repeat the phrase. It seems to help.

So may this video by “Standup Economist” Yorum Bauman who explains both micro and macro economics in words anyone can understand. As he tells us, micro-economics is the “science” of getting specific things (involving money) wrong, whereas macro is the “science” of getting general things (about economies) wrong. Macro is easier than micro, in the same sense that a mechanical clock that is broken is more accurate than one that loses a second a day. Every 24 hours it’s correct, but there’s no way to tell when that’s going to happen.

So your only hope is to understand micro. This should help.

…and a tip of my fedora to David Hecht, who pointed me to the video.

Links:

• Yoram Bauman, Standup Economist: www.standupeconomist.com