Dr Sam Peng, Economics teacher
This is a perplexing time in our world, where economic reality departs from economic doctrine and the common aspiration to economic prosperity fails to evoke a commonly agreed path. As seen in the recent voting for Brexit and the backlash of the Trans-Pacific Partnership (TPP), countries that have long benefited from trade, immigration and technological innovation, “suddenly developed a strain of anti-immigrant, anti-innovation protectionism” (Obama, 2016). Similarly, despite the proven and well-documented benefits of a more equal society (OECD, 2015), inequality has risen to an unprecedented level where the richest one per cent controls as much wealth as the other ninety-nine per cent (BBC, 2016). The much needed economic recovery seems like a pipe dream, while priorities for economic reforms remain widely divided across the political spectrum. As an Economics teacher, I cannot help wondering how our students make sense of this topsy-turvy reality, and more importantly, how they view the purpose of learning Economics.
Teaching junior Humanities alongside Economics provides me an opportunity to consider these questions in a much broader context. In fact, since we are studying human evolution this term, I decided to go back to the prehistorical times and examine our challenges today in the light of the bumpy evolutionary process. To my great surprise, the theory of economics, though not discovered until millions of years later, shines at every major turning point along that path. It explains why we are who we are today and casts light on how we can better proceed along this evolutionary trajectory. To begin with, allow me to wind back time to what is commonly believed to be the first step in the process of becoming human.
Bipedalism is probably the most important step that gradually distinguished us from other hominids. Walking upright on two legs freed our hands for making and using tools and allowed us to gradually develop bigger and more complex brains for communication and imagination. While the origin of bipedalism remains an unsolved mystery, it is believed to be a response to a sudden environmental change in Africa that occurred about five million years ago. When the lush rain forest was replaced by vast grassland, our early ancestors who had lived in trees, faced a huge challenge with the lack of food and natural protection. Many theories have been put forward to explain this posture change, ranging from the need for better defence to the need for long distance travel, but recent evidence suggests that walking upright actually uses less energy than crawling (Rodman and Mchenry, 1980).
Phrased in economic language, the challenge faced by our early ancestors is a typical scarcity problem, and their response to economise use of energy – whether by accident or choice – undeniably increased their chance of survival. While acknowledging the risk of over-generalisation, I am tempted to say that an examination of other milestones along human evolution conveys the same message: each step we make towards humanity is a step towards a more optimal use of resources. This can be seen, for example, in the use of fire for cooking which shortens our digestion time and increases our energy intake; or in the development of language which facilitates the exchange of knowledge and reduces the time for repetitive research; or in the building of cities where resources can be shared and used more efficiently due to the economy of scale.
The more examples you consider, the clearer the message. We are who we are today because of the ceaseless trials we make to optimise the use of scarce resources. In this sense, I would like to call this hidden rule of economics the gene of our humanity. To carry this gene forward, three important questions need to be clarified: what are the scarce resources; what does it mean by optimal use, and who makes the critical decision on resource allocation. During the vast time span of human evolution, resources are limited to natural resources, labour and small amounts of capital (e.g. lithic tools). Optimal use largely means to explore and use resources more efficiently and nature often acts as the ultimate decision maker by selecting the fittest to survive.
Thanks to the development of human civilisation, today the resources cover a much wider scope, including not only natural resources, capital and labour, but also human resources (e.g. ideas, enterprise) and social resources (e.g. education, healthcare, information). Accordingly, optimal use refers to more than efficient use of resources, but also equitable distribution of resources. Without efficiency, equity is harder to achieve; without equity, efficiency tends to suffer. Last but not least, the decisions on resource allocation are less subject to nature or a small number of people. Instead, they are made through the participation of each individual through the market and a democratic system.
Compared to our early ancestors, it is not hard to see that humanity today faces two interlocking challenges: the challenge to use resources more efficiently, as population growth and consumerism continue to push the limit of the environment; and the challenge to distribute resources more equitably. The recent resurgence of protectionism against free trade and innovation is a perfect example of how inequality and poverty can slow down or even reverse our effort to improve efficiency. Therefore, the solution to our challenges today lies in our ability to understand different perspectives in an ever-changing environment and strike a dynamic balance between efficiency and equity. This involves more responsible and informed participation of each one of us in the grand collective decision-making process. Viewed in this light, the purpose of learning Economics is more than to maxmise our individual interest, but also to become a responsible member of society, and to honour the gene of our humanity.
Note: The fact that I have taught vastly different topic areas across a range of year levels has reminded me that ultimately all knowledge is interconnected and transferable, a lesson extremely crucial to our students.
BBC. (2016). Oxfam says wealth of richest 1% equal to other 99%. Retrieved from http://www.bbc.com/news/business-35339475
Obama, B. (2016, October 8). The way ahead. The Economist, Retrieved from http://www.economist.com/news/briefing/21708216-americas-president-writes-us-about-four-crucial-areas-unfinished-business-economic
OECD. (2015). In it together: Why less inequality benefits all. Paris: OECD Publishing.
Rodman, P. S., & Mchenry, H. M. (1980). Bioenergetics and the origin of hominid bipedalism. American Journal of Physical Anthropology, 52(1), 103-106.