A Little History of Economics by Niall Kishtainy

CHAPTER 1

Cool Heads and Warm Hearts
The fact that you’re holding this book in your hands puts you in a special
position. For a start, you (or whoever gave you this book) had the money to
buy it. If you were from a poor country, your family would probably be
scraping by on a few dollars a day. Most of your money would go on food
and there wouldn’t be any left to buy a book. Even if you did get hold of a
copy, chances are that it would be useless to you because you wouldn’t be
able to read it. In Burkina Faso, a poor country in West Africa, less then
half of young people can read; only a third of girls can. Instead of learning
algebra or languages, a 12-year-old girl there might have spent the day
heaving buckets of water to her family’s hut. You might not think of you
and your family as being especially rich, but to many people around the
world spending money on a book and being able to read it would seem as
likely as a trip to the moon.
People who burn with curiosity – and perhaps with anger – about this
vast difference often turn to economics. Economics is the study of how
societies use their resources – the land, coal, people and machines that are
involved in making useful goods like bread and shoes. Economics shows
why it’s quite wrong to say that people in Burkina Faso are poor because
they’re lazy, as some do. Many of them work very hard, but they were born
into an economy which as a whole isn’t very good at producing things. Why
does Britain have the buildings, books and teachers needed to educate its
children when Burkina Faso doesn’t? This is an incredibly difficult question
and no one has quite got to the bottom of it. Economics tries to.
Here’s a stronger reason to be fascinated by economics, and perhaps to
come up with your own ideas about it. Economics is a matter of life and
death. A baby born today in a rich country has a tiny chance of dying before
the age of five. The death of a young child is a rare and shocking event
when it happens. In the poorest countries of the world, though, more than
10 per cent of children never make it to the age of five because of a lack of
food and medicine. Teenagers in those countries could count themselves
lucky to have survived.
The word ‘economics’ might sound a bit dry, and make you think of a
load of boring statistics. But all it’s really about is how to help people to
survive and to be healthy and educated. It’s about how people get what they
need to live full, happy lives – and why some people don’t. If we can solve
basic economic questions, maybe we can help everyone to live better lives.
Economists have a particular way of thinking about resources – that is,
the bricks to build a school, the drugs to cure diseases and the books people
want. They talk about these things being ‘scarce’. The British economist
Lionel Robbins once defined economics as the study of scarcity. Rare
things like diamonds and white peacocks are scarce, but to economists pens
and books are scarce too, even though you can easily find them at home or
in your local shop. By scarcity they mean that there’s a limited amount, and
people’s desires are potentially unlimited. If we could, we might go on
buying new pens and books forever – but we can’t have it all because
everything has a cost. This means that we have to make choices.
Let’s think a bit more about the idea of cost. Cost isn’t just pounds or
dollars, though they’re important. Imagine a student choosing which subject
to study next year. The options are history or geography, but not both. The
student chooses history. What’s the cost of that choice? It’s what you give
up: the chance to learn about deserts, glaciers and capital cities. What about
the cost of a new hospital? You could add up the prices of the bricks and

A Little History of Economics by Niall Kishtainy