Just Some Thoughts on the Economy in 2019: an Unhelpful Primer

by Jessica Chang

According to a 2019 Oxfam report, the 26 richest billionaires had more money than the poorest 50% of people in the world. That’s 26 versus 3.8 billion. Breathe. Read those words again. Now take a moment to let that sink in. 26 people have more wealth than the combined wealth of 3.8 billion other people.

While the Oxfam report has been criticized for the way it measured wealth, the fact remains: this growing wealth inequality is unfair. It’s outrageous. It’s unbelievable. And it should make you want to do something about it. But first, before you go calling your district representative (which you can do easily on our Action page, cough, cough), you need to understand the basics of wealth inequality and economics.

I’m no expert on economics or the stock market. But you don’t need to be an economist to understand that there’s something very, very wrong about the way our economy functions today. You just need to know the basics (thanks YouTube!). So, without further ado, here are the terms you should know:

Microeconomics: microeconomics studies the individual decisions, households, and companies that make up the economy as a whole.

Macroeconomics: big-picture economics. Macroeconomics studies features of the economy as a whole, like growth, inflation, or unemployment.

Traditional economy: an economy based on tradition, custom, and the community. A traditional economy is tied to the land and its resources, and is usually found in rural areas, or second- and third-world countries.

Command economy: the economy is controlled by a central government. The government owns all major industries, redistributes resources, and creates jobs. An example of a command economy would be China or North Korea (0/10, would not recommend)

Free market economy: firms and individuals act out of independent self interest to determine what is produced, how much of it, and who buys it. The market is determined by market forces - supply and demand.

Mixed economy: what it sounds like - a mixed economy takes aspects from the other types of economies and uses both socialist and capitalist policies. Most countries, including the United States are mixed economies.

*This is in no way a comprehensive list. If you want to know more, we recommend you check out “Economics A to Z” by the Economist.

Now that you know the basic terms, you need to know how the economy works. Clearly, different nations have different economic systems, but this doesn’t stop them from trading with each other. The entire world is held together by one thing, and it’s not world peace: it’s money. This money can take the form of international trade, foreign investment, aid, or even sanctions. The key thing to remember is that all of these exchanges are regulated. In fact, a lot of economics has to do with regulation. In the US, for example, the government sets regulations on the housing market, taxes, corporate monopolies, minimum wage, and more. Unfortunately, all of these regulations haven’t really helped the average American - the top 1% have 26x more wealth than the bottom 99%.

So how did we get here? For most of history, the economy was mostly based on agriculture and farming. After the industrial revolution, however, and the rise of the corporation, the focus shifted to industry and trade, and the economy ballooned at an unprecedented rate. Anyone could become rich if they worked hard enough. Theoretically. In reality, because of bad government regulations, unethical business practices, and a broken tax system, the rich got richer, and the poor stayed poor.

This problem has only gotten worse - today, the wealth gap is the greatest it’s ever been. In addition, social mobility has all but disappeared; meaning our generation is less likely to make more money than our parents, and in some cases more likely to make less. But wealth inequality is only problem in today’s modern economy. Here’s everything else you should look out for in 2019:

Tariff War: Do we really need to cover this again?

Brexit: on October 31 at midnight, the UK will officially end its membership in the E.U., causing a huge ripple effect on the value of the euro and on markets worldwide

The Federal Reserve: So much happening here. So much to unpack. Basically, the Fed has been running a temporary repurchasing program to help stabilize overnight funding markets. No one really knows what’s going on here.

Recession: After years of economic growth, some economists are worried there will be a recession soon, meaning huge losses for the average household. During the last recession, while the government bailed out the big banks, the average family’s net worth fell by 39%, and 9 million people lost their jobs. The good news is the recession probably won’t happen in 2019, but many experts say you should keep an eye out for a dip in the economy in the coming years

Slow Down: Led by China, the entire global economy is experiencing slow growth in 2019, which could lead to high unemployment and falling stocks.

Student Loans: Student loan debt is expected to top $166 billion this year. Hooray!

So why does all of this matter? Why should you care? Here’s why: the economy is essentially one gigantic spider-web. Everything that happens on an international or national scale will, in some way, affect you. So while the big corporations do their deals, the economy slows down, and the government continues to roll back regulations and cut taxes, the real impact of all this is going to fall on you. A slowing economy coupled with a system that only benefits the already-wealthy means that you’re less likely to find a job, less likely to be able to pay your bills, and less likely to be able to afford healthcare.

TLDR: Today’s economy is a complex web of connections between the corporation, international market forces, the government, and the individual consumer. The problems that face this interconnected system are complex and multi-faceted. For the most part, they are caused by short-sighted governance that failed to benefit and stabilize the economy while favoring big business and neglecting the middle and lower classes. I’ll leave you with another statistic: according to a 2019 University of California report, the 400 richest Americans own more wealth than the poorest 150 million. This is all the evidence you need to see that the system is broken. If you think this is wrong, you’re not alone. And you can help fix it.

Just Some Thoughts on the Economy in 2019: an Unhelpful Primer

Eva’s capstone project, described by Eva;

My page is about understanding the social inequalities of shaker heights. Holistically, shaker heights succeeds national standards in

average income, health insurance, and poverty percentage. However, this affluence does not apply to all of our community. IN my

project I use public 202 cencus data to find this divide. I also investigate the history of shaker heights to understand why this has

happened.

Project brief video;

Why explore inequalities of Shaker Heights?

Learn more here; links worth a look!