Economics in simple terms

The integration of economic principles into our daily lives and the increasing relevance of international economic factors due to globalization has encouraged individuals and policymakers to be mindful of these principles and global economic realities when making economic decisions. Dr. Atiur Rahman, an esteemed economist and former Governor of Bangladesh Bank, discusses the economic principles, as outlined in texts like the Arthashastra, that play a crucial role in our daily lives. 

As scripture says, the link between economics and our lives is on a daily basis. Consciously or unconsciously, in personal or family life as well as in national life, our success and ability to face challenges depend largely on the proper application of the principles of Arthasastra.

And the calculation of the global economy is gradually becoming a daily matter in this globalisation era, so national economic planning, even in making family personal economic decisions, sometimes has to take into consideration international economic realities.

Let's give an example: Due to the recent unrest in the Middle East, the price of fuel has started to increase again in the world market. This will increase the transportation cost. And the price of all kinds of imported goods will also increase. As a result, fuel and living costs will increase in Bangladesh too, which is already under macroeconomic pressure. The heated political unrest is another big concern. As a result of this, rallies and blocks are being held. Because of that, the supply of needy products is being disrupted. And the price of daily necessities is increasing by leaps and bounds. So inflation is also growing. So those who keep this calculation in mind in the family costing plan in the next few months will be able to take more strategic initiatives than the rest of us. And for those who ignore this calculation, it will not be easy for them to meet the big shortfall in the family budget.

The point is that economics is the branch of knowledge that deals with balancing the aspirations we have from the individual to the national level and the challenges we face in meeting them. This classic definition of economics means that “Economics is everyone's business." The matter is intimately connected with lifestyle. So it's not as complicated as economists try to say. In fact, it is a matter of common sense. Economists overcomplicate it unnecessarily to maintain their professional crookedness. Of course, there are exceptions. Many economists also express the difficult issues of the economy, including budget, monetary policy, and the foreign sector, in a very simple way.

And since economics is everyone's matter, it is surely the intellectuals' main responsibility to present it as a science understandable to everyone. In that point of view, Virupaksha Pal’s book “Sahaj kothay Orthoniti” is very important and useful too. I said these things at the publication festival of his book. I also try to express the word economy in a simple way. I said these things during the publication festival of his book. I also try to express economic words very simply.

I myself started writing to simplify the subjects of economics, which are claimed to be difficult for the general public. I started writing economics in Bangla in 1972. At that time, I used to write for the Daily Purbadesh, Dainik Bangla, and the Daily Ittefaq. I started this type of writing more than fifty years ago. Since then, I have always tried to make it easier to explain economics to everyone. So the book titled “Sahaj Kothay Orthoniti” inspired me especially.

The author, Virupaksha Pal, has pointed out the basic issues of micro and macroeconomics in simple language in different chapters of this book with examples. That is expected. Anyone who is seeking to stand on an academic foundation in political economy will undoubtedly benefit from this simple language description.

But for me, especially in the context of Bangladesh’s current reality, the author's analysis of the commodity market, currency market, and labour market and the combination of these three markets seems more relevant in this book. The interrelationship and interdependence of these three markets are rarely discussed publicly. And now that the kitchen market has become unstable, this book has become even more relevant.

An academic understanding of the action-reaction of these three markets is essential to properly understanding the economic modelling-related advice we provide in our writing in newspapers. In that case, I think that reading this book with concentration can play a kind of guiding role in understanding the writings on economics.

On a relatively short scale, the book discusses the roles of the government and the central bank in the economy. The government in fiscal policy and the central bank in monetary policy had become necessary to discuss the 'accelerator and brake' role. Here the discussion begins. Hopefully, this discussion will come out more in the future. I hope the writer, Virupaksha Pal, writes more about this in simple language. Because it can’t be said strongly that policymakers can understand well this deeper relationship between fiscal and monetary policy. And due to a lack of understanding, one has to bear the burden of another. Especially when the budget deficit increases, many people do not want to understand the pressure of printing additional money on the shoulders of the central bank to meet it.

It is useful not only for economics students but for everyone. I want to give an explanation of why I think it is useful. A few days ago, I said the same thing in a meeting with the top officials of the central bank. To prevent depletion of reserves or curb inflation, our policymakers often take initiatives or measures that may have some adverse impact on daily life in the short term but ensure the safety of the economy in the long run. But everyone is eager to resolve the difficulties of the moment. They don't want to realise that this may cause even bigger problems in the future.

I therefore requested that policymakers at the central level continue a strong communication campaign to convince the larger public that these drastic measures are being taken for the sake of long-term welfare. This will reduce the risk of people's misunderstandings. Perhaps in the near future we will see more mass-oriented communication from the country's central bank or other economic policymakers. However, the opposite idea is also ongoing. Some people think that if these things are more open, speculations or rumours will increase. Despite this fear, inflation or exchange rate expectations cannot be allowed to take root in the public mind. So the policymakers have an opportunity to provide some forward 'policy guidance'.

But at the same time, demand-side participants should also understand the economy. That is why they need to have an idea about the purpose for which any macroeconomic decision is taken. And that's why these issues should come up more often in the discussion of economics. I think that effort is present in Virupaksha Pal’s book to an admirable level.

We have passed more than one-fifth of the way into the new century. It is now established that economics must work not for the few but for the many. Harvard University economist Claudia Goldin won the Nobel Prize this year for this type of work. Bangladesh is also working on this.

The writer is Emeritus Professor of Dhaka University and former Bangladesh Bank governor