Suspicious Economics

Do you have trust issues? Well, as an economist you certainly should! The validity of every theory and statement should be checked and verified before you can use it as your source or let it influence your personal opinion. And the recent article that I read in the Financial Times highlights this issue.

The article defends Gordon Brown’s decision of “selling off national silver (gold)” between 1999 and 2002, underplaying potential gains which could have been realized if UK gold was sold at a later date. However, it is not the actual content of the argument but the following discussion by the readers that drew my attention. Almost every single comment disagreed with the article and pointed out to other important issues that needed to be looked at. Overall the comments provide you with much more diversified information than the article itself, thus representing a less biased view of the issue. This allows us, students, to look at an issue from different perspectives, which is crucial for the study of economics.

Despite the fact that the columnist represented a highly biased view in well-respected newspaper-Financial Times, it is important to note that it is purely his opinion. FT columnists are free to express their opinions on economic issues, even if some may not necessarily agree with it. Economics allows almost every question could be answered with “It depends...” However, us as students (due to the lack of expertise) rely heavily on opinions of established economists, and if those opinions are not questioned properly they might be misleading. So even in such quantitative subject as economics different subjective opinions must be considered before you can make your own judgement.

However, the extent to which economics can be “subjective” is debatable. Expressed opinions of some people might have the power to move markets and manipulate animal spirits of the investor. For example, in the midst of the recent financial crisis leading rating agencies attempted to shed their responsibility for ignoring potential threats from overrated CDOs by emphasizing that their ratings merely represents their opinion and should not be solely used for making important financial decision.

If you are interested in reading the article and the following heated debate, follow the link: http://on.ft.com/kAhovE

Written by Daria Rusanova - 3rd year MA (Hons) Economics and Economic History