Economics confuses when you don’t ask the right questions
The title is deliberately misleading. If understanding economics was really that simple, thenI would not have been graced with a platform across the Diaspora. Sadly, if you knew my history, you’d think that I truly have no place in being quoted by the media. I have no grade ones from my time in secondary school. It is something that took quite a long while not to be ashamed of. I ,however, was quite a talkative and inquisitive person, especially when motivated. History shows that I read for a BSc. Economics, graduating with First Class Honours. I am also a Commonwealth Scholar with a Masters of Science in Finance from one of the top 10 universities globally.
Now, I did not mention anything to make it seem as though what I did was easily attainable. No! It isn’t worthwhile to willfully insult the intelligence of the reader. What is useful here is to ask yourself why this preamble is of any use. What information am I providing without it being blatantly obvious? Only then could you point to a number of reasons to which, with more questions about my intentions, you will eventually “cut through the fluff” or so the saying goes. I want to assure you that my desire was to reveal how I managed to overcome my deficits. Again, for all of my faults, my greatest strength is asking the right questions of whomever and within myself. Consistently. I grew to learn that by trusting that questions reveal answers, then eventually I managed to cut through loads of “economic fluff” during and after my time as a student. Fortunately, I am also quite willing to be wrong with the answers I stumble upon during this process. This is great for learning.
Most times, what is presented publicly as economic data around the world lends itself to very solid interpretation. What I mean here, is that the craftiest of economists can easily interpret trends seen from the muddiest of data. I have worked with some of the brightest minds who can, without a moment's hesitation, tell you which fancy econometric model would make sense of the data. And given that any two economists would hardly ever agree on the simplest of things, interpretations of the results from these models can vary widely. It means then that you, the general public, should always take in —with your grain of salt— all public interpretation from us economists on any pertinent data. In other words, listen to everyone ! That is the only way you learn to see the total picture. Again, you are allowed to disagree. It is advisable that you do so. But, note that the common themes being revealed as you listen is where the “economic fluff” begins to disappear.
This brings me to the point of the article where the fluff needs to make way. Interpretation of data is a fine skill to have, but the issue in most developing states has always been in the availability of accurate or robust data. In other words, most if not all economic data in these countries is provisional in nature. It is based on assumptions and surveys but this does not typically apply for a significant part of public finance (government accounts) data. I normally have a grouse, especially in Barbados, of how unemployment data is collected and, therefore, how it is interpreted. That became more accentuated when I browsed through the comments under a recent article written, about the Governor of the Central Bank of Barbados, that was posted on a few social media pages. The article dealt with the Governor’s take on why joblessness rose from 7.1 percent in September 2022 to 8.3 percent in September 2023. His response, as revealed by the comments that I read through, did not sit well with a large part of the readership. Most could not see the connection between his position in that unemployment figures rose, during that time, on the account of a large number of persons retiring from our workforce.
I can say that his “interpretation” was quite plausible. It can even be accurate. The formula for unemployment rates is the number of unemployed persons divided by the labour force. Therefore, if the number of unemployed persons stayed the same (or even grew), but the labour force decreased due to a large number of new retirees, then it means that the unemployment rate would have grown. But I had mentioned that I have a grouse. Unemployment data is inherently faulty, and as such, it is the readers duty to inquire even further into whether any interpretation that is given is really worth its merit. There are countless issues I could speak to on how the data is collected. However, I will close with a few of many questions that could have offered the public even more insight; if they were asked during the Governor’s press conference. They go as follows: How did the emigration of young professionals from the island over the past year factor into the increase? How does the labour data treat to early-aged retirees and how does that impact the analysis typically? Lastly, we know that persons who are jobless, for an extended period going into a year or more, are seen as inactive and not unemployed. How does this phenomenon, then, factor into the recent trends shown by unemployment data?