Populism and lay misunderstanding of economics
Populism and lay misunderstanding of economics
There are profound reasons why the public misunderstands economics in predictable ways, rooted in the mismatch between our human cognitive endowment and economic analysis. This impacts public policy everywhere, but especially when populists control the economy, as their self-presentation as one with “the people” compels them to embrace simplistic views that resonate with those of the lay public.
Edizione2019 - Globalizzazione nazionalismo e rappresentanza
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everybody I'm absolutely delighted to be again in Trento I have come a number of times here and this is a particularly important meeting for me because I usually speak in form in front of a professional advance audience and the whole point of my book is really to think together about what might be the better way of getting people who are interested who care about things and at the same time are not professionals and to get to improve the relationship and the connection between those and the professionals the introduction area meeting professor Tito bilberry has asked us to to present complicated idea in a simple and accessible way and this has been something of my my attempt here so I will begin by showing you a very quick one a very quick video showing a meeting between a member of the public and a number of professional economists some of whom you might even identify okay could we get a sound please this is not working I will have to supplement the sound is not working yeah thank you spend so much time arguing amongst themselves about the problem economics is yes all right now we can begin let's try again politicians spend so much time arguing amongst themselves about the problem economics is really simple I've got ten pounds in my pocket if I go out and buy three pints of beer in Cambridge I'm probably borrowing money if I carry on doing that then I'm going to run out of money and I'm gonna go bust it's not difficult guys to sit down work out what the country needs to do and work collectively together aid as your budget does politicians spend psycho so let's summarize what we have here we have somebody who came to meet economists in Cambridge and he says well economics is really simple and you explained that well you know they could the country is just like your home and same reason ringing apply to which an economist in this case is worth Yanni's varoufakis since the country does not operate the way your budget does no explanation he why not why not things are so simple it's not difficult guys just get together and do it that's the way he feels it and then he got that we didn't hear that bit but do you have the person who says Dave well you know in a country total expenditure equals total income which - and any economics is a very basic idea but it's totally unhelpful depth to that person so we have here a dialogue that totally collapsed and so we have a mutual and country incomprehension on the one hand the public does not understand why don't politicians take common sensical measures about which I will be talking and if they don't well maybe they have ulterior motives maybe they are hidden things there and I begin to suspicious of them on the other hand the economists are frustrated why doesn't the public fail why doesn't if public understand obvious facts and their consequences well they don't because they are not economists used for many years and they didn't so don't come and complain also don't say oh it's really too bad we didn't explain it well it's not just a matter of explaining where oh I will show you that the roots of misunderstanding are very deep and in order to overcome those difficulties well you need a lot of training oh you need something else but you cannot expect somebody just giving a little five chats talk and everything will become clear it will not and I will show you that in great detail now here are examples of obvious steps price caps prices are getting too high maybe rentals are getting too expensive well very simple we impose a load that from now on you cannot rent for more than this and that amount oh well wages are too low we say well there is a minimum wage it's still too low we raise the minimum wage not saying any of those things are bad ideas I'm just saying these are the obvious steps it's not the same we need a balanced budget that sounds very reasonable that's what that gentleman in Cambridge was just saying if I spend more than I earn then I'm going to get into trouble economy say well it doesn't work like that because the economy doesn't work like your home and he goes why not trade protectionism we know for example in the quality person person of Donald Trump he has very specific ideas about how commerce should function and is causing a great deal of damage and the common enemies will tell you that we are no longer in the 17th century win we understand a few things about commerce that everyday understanding does not carry so what's the basis of the problem the problem is that we were not born to live in the 21st century with a complex market economy our forefathers were meant to live in small communities with a simple economies and our mental makeup is attuned to that we for example are fantastic at understanding other people who we understand people we understand the motivations if I see somebody who is now frowning I say ok that person is not really convinced by what I'm saying we had greater that we understand mechanics if I were to drop my class or something we know just what will happen we are good at that we're meant to work in that kind of a world we are no good at understanding quantum mechanics nobody does you really have to become a physicist and study mathematics and even then you don't have that many intuitions and we are good to understand biology because well we live around animals those can be animals that like dogs or they can be like scorpions doesn't matter we try to understand and we we are good at that but in the modern world ok I was just saying that such models may not always be correct but these servers well enough now in the one modern world there are new domains and there are certain places where they study public understanding of X where X can be a climate change ecology vaccination science because it all has real-world consequences with Trump saying climate change definitely a hoax no 99.99 percent of scientists say no it's not a hoax it's terrible in is happening doesn't believe it economics is a crucially important case because so much of our political political activity turns around economics ultimately all of it does because stuff cost money here then Tron but he's not alone we have well we have the brexit we have well the relation in Paris we have in Italy now the thing is public understanding in any domain is poor but economics extra art because here is my claim main claim there is a mismatch between our cognitive endowment on the one hand and the principle of economic thought and I'll try to make a present as clear as I can in a presentation which will be I have to say already now it will be if you know the Ted style sorry if you know the Ted it's going to be a little in the style of Ted because it's the most effective way of giving ideas shortly but people who are interested in hearing more are invited to get the book where they are like five hundred references and it's very scholarly and very everything but you get the main idea from here you don't have to buy the book really although I so why is economic so hard two sides to it the size of the subject that of the object on the times of the size of the subject and will present them seriatim on the side of the subject we have human cognitive limitations that I will describe briefly and on the side of the object I will describe how economic thought proceeds and we will see doesn't match so on the hand one hand we have some kind of a primate well the human really but not really you University student on the right hand we have an iconic graph that represents the supply and demand representing here basic ideas in economics and there's a misunderstanding and that what happened you have a big question mark because the fellow on the left does not understand what's written on the blackboard on the right so let's begin with the subject I will ask the subject to step four yeah thank you so here we have the subject and it is common to think of our knowledge and intelligence in terms of a flashlight or for light I can direct it lights but let's observe to two things about that the one is that the beam of a light has its limitation it goes that far and for all I know there might be a line behind that but I never will know well and not when it's too late but I won't be able to see it it's too far and our intelligence or thought does not go far enough that's one aspect the other aspect is that the beam has a certain breast a certain width and what's beyond that is not caught so if I may this is say cognitive psychology in 20 seconds we have on the one hand long-term memory that's where all our knowledge resides everything we know and we know an awful lot and although we get the more we know and it's all up there some is forgotten that is lot of stuff and the thing is it's not very easily accessed in fact the scope of what we do the breadth of that that light there is very narrow and all kinds of relevant stuff may not be accessible to us it's there but it's not accessed by the question at hand and I'll show you that the other thing is what's called short-term memory and this refers to how many thinking steps we are able to do on a given issue willing able how much we do take an example suppose you have I have a metaphor suppose there is a water pipe that explodes water coming out and I have to do something because the water is pouring on the floor so I can go to my attic that would be the long-term memory and I look and there's a lot of stuff there lot of junk and it's not orderly our long-term memory is not a library it's like an attic plenty of stuff so I trained my light over there and there's something that doesn't look very promising and made well the water is still pouring so I go somewhere else and say oh here I found something and I go there and I pick it up and I solve the eyes of the eye solves my problem sorry this is the way with this is the way we typically do things so that you let me give you an example of a narrow scope people are being asked every year by the Pew Center of a research center should spending on X be increased decrease or stay the same according to you where X can be social security healthcare National Defense Education you know everything that's important and when you ask people do you think we should increase spending on health care people say yes and if you ask them do you think that Social Security should be increased definitely and do you believe National Defense oh yes we need that how about education I'm in favor okay now if you mention that well this might require tax increases people suddenly are not so sure that they want that now the point is I want you to pay attention to the issue here of course people know that the money has to come from somewhere two ways either you spend more on one but then you spend less on the other or you get some more money the only possibilities the thing is people don't spontaneously think like that basically what they do is they support funding program based on their perceived worthiness considered in isolation what's called opportunity cost is ignored that's my scope of access the other thing is about short-sighted policy here is Eric fuel he is the mayor of Kobler a very fine man I'm the talking and he has a good idea just last week two weeks ago he said well people sometimes are thrown away by the by the landlord because they don't pay salary they don't pay the rent well let's have a bylaw that is a municipal law let's make it their responsibility of the landlord to find an alternative place now if you think about it if I have to run to someone I will not take somebody who may possibly have a problem and therefore those people will have even more problem that they do at the present and in general the purpose we have to just think one more step and this really very fine person he didn't become named mayor of big city in France for nothing really blew it in whichever that's where my university is located they meaning the municipality wanted to attract people to the old town it's not nearly nearly as beautiful as in Trento but it's nice and it would be good for tourism and so forth so the idea was here is one of your solution let's give artists money to move there no this is an idea that comes to somebody with a head as small as it is young fellow here because let's think about it what was the effect of giving help to artists to live in the center of their service city well this money for rentals but there is more demanding but they still the same supply therefore surprise surprise higher prices and so you have an equilibrium with higher prices which in addition are making like digital port to the artists who are already there because the average rental was higher even for the people who are already there so a total mess and it's not just in there Sheva city you might say well a proficient town what do they know here is mrs. to me the Camilla Harris she's a democrat senator and presidential consent oh and again a very fine and smart legislator but she has another idea rentals shouldn't be much higher than it should be you should be spending more than 30% on your rental that's really not a good idea how solution well very simple and let the federal government reimburse how hold for rent that is over 30% of household income now you're getting the gist of the idea here increased demand same housing supply prices would rise who will benefit the landlord because people were willing to pay $2,000 an ordeal it will be even worse people will say well since I will bet get reimbursed for anything that's below a third of my salary well I can run to mention what do I care they'll pay well really crazy but again everybody here follows my argument it's not a difficult argument but it doesn't come to mind and that's typical and the government will of course loot lose billions because she wants that to be national white sorry so simplistic policies are framed to narrow loosely true narrowly they don't encompass all relevant variables they don't trace indirect and feedback consequences what they just do is they push in the direction opposite to the present presenting symptom we want people to pay less let's give it a to spend less let's give them money here are some example sheep imports have depressed domestic wages let's impose tariffs where does our to low minimum wages rentals are to high rental caps we are talking about direct and simplistic as opposed to a broader perspective that an economist would use well you can improve education you can improve the infrastructure you can develop sectors with competitive advantage it used to be that something like sixty percent I believe of Israeli export in the 650s were oranges that with education with infrastructure then what we export is most mostly very high high value added items of all kinds computer ideas technology provide alternate alternative alternate investment opportunity so people will not want to make so much money out of existing house as well so here are some example of populist solution and their justifications and I'll move on to some additional ideas here minimum wages why do we want to give minimum wages because they need the money will make sense Lord or time and age because well people have worked enough which is not false distribute money to the people because well people need money no problem with that really as such but here is an example of what happens there's a important study that was completed about two years ago in Seattle that's in Washington State in the United States where the imposed minimum wage and higher minimum wages the thing what that happened is that if you force for example restaurant owners to pay more to the person who cleans it table and to the person who chops the vegetables well restaurants will find ways to save money for example you know what you go to many restaurant they ask you to return your tray nobody has to be paid problem solved cutting vegetables very cheaply but it's now costing me more well suddenly there's a factory that springs up it makes a good true case where the cell will send you cut vegetables we pay all Mexican workers much less and you don't have to pay anybody and then it's very convenient you get every day you get fresh vegetables brought by plain good quality and it comes out cheaper than the new price result is that there are fewer low paying jobs and also interestingly and not expectedly but if you think about it it gets difficult to get a low paying job you are a 17-year old you don't want to go to school you want to work nobody is going to give you work because the rate will be too high and it's fried also everybody can now buy a vegetable from Mexico and the factories there can grow and grow so that we lose jobs for everybody all those other things indirect consequences that don't really come to mind I'll show you a few more things here one is about changing the age of retirement there is such a thing called dependency ratio everybody in Italy the way this pension system works here doesn't work the same everywhere is that everybody pays for other people a proportion of other people so you have those person walking around and they carry on their bag back other people which are partly all the people in partly young kids who don't make money this is called the dependency ratio is how many people what proportion of a person do you carry on your back as a working person now the dependency ratio if you look at it on the right is predicted to increase from 48 - that is one half percent one half person per working person - 87 over the next 30 years or so what we have here is a very interesting contrast of the way of thinking one of them I look at that fellow here if and I said come on he has worked in us he deserved to rest who knows how long he will live even and whether he'll be able to enjoy his return you focus on the individual because that's our psychology but economies say well we can't just look at that fellow we have to look at everybody the proportion of working and not working people and how does he said to evolve in the coming years entirely different construction of reality there is an effect called the identified victim effect you may never have thought about it but you certainly encountered when say in the newspaper they want you to provide many for example children who have fled from Syria they don't give you statistics because we don't feel statistics they show you that girl Hannah that's her look poor poor girls she exists and she needs the food but the communication is built by people understand psychology and it is geared to make us emote and the number of people that we can continue and look at that the emotion drops down like this very quickly we don't care much of well 10 people is already a statistic five people is almost a statistic one person that's the thing - all right don't go much beyond so the pictures show you always one or two person usually one person that's the best that was the subject aspect now I want to talk about the object aspect one of the one of the main economists of previous century extreme that economy does not give you a solution it's a technique of thinking and I want to describe this lay people as I said just now with the example I gave think of individuals their goals their intentions and then choices we're talking about individual drops economists think of the aggregate they think of the lay of the land and they try to project the projectory and they don't really care about an individual drop well they care about the village of jewel drop because they are humans like everybody else and they want individuals to be well but they think about what's called the aggregate the collection the collective thing and that's what you use to think about it and indeed they don't even consider one path of water port they try to consider the anti hydraulic system it is my prettiest slide so I hope you like it in South America so what are the yes so here are the aspects to it economists on with economies concentrate and others don't they look at didn't direct and indirect effect and feedback they look at the aggregate and they think of equilibrium and I will illustrate that with an example not from the economy but that will bring the point home how many of you have heard about lemmings and their suicidal tendencies some people have thank you there is a story that goes that you know what happened is that lemmings these are little rodents living in Antarctica and they the population may has wild fluctuations and then there's a story that goes that's from time to time lemmings have taken by some kind of a collective suicidal urge and they go west and west and then they jump to their deaths through the frozen waters of the Pacific Ocean which there's even a movie by Walt Disney called the frozen desert that explained that you know was only in the 50s and the speaker has a nice baritone voice saying taken by some whatever so well the thing is well here's a picture of the melting rings a drawing of the lemmings jumping and the reason it's a drawing is because they are no photograph since there are no photograph because well it doesn't happen I'll explain what happens to the lemmings as a metaphor for many thinking many kinds of cases of thinking in economics I believe it will be eliminating imagine a little world an island say well there are only three creatures this grass they rabbit and there are foxes and now of course the rabbits will eat grass and foxes eat rabbit such is life now imagine that the quantity of grass increases what will happen to the population of rabbits enough foxes for example well more grass means no Fox no rabbits sorry and more rabbits mean actually less grass then also of course more rabbits more may mean more foxes which mean well you got it less rabbits which mean more grass which means at this point your head start spinning and say well I don't understand what is going to happen here this is the type of thing that for those who have animatic mathematical knowledge you solve that by something called differential equation and specifically the latke lotka-volterra differential equation Volterra being an Italian latke and ultra I can't show you what happened so you have done the population of the rabbit that goes like this then why does it go move to you sorry the population of okay I'll just draw it here then move into something yourself sorry stop it right so what happens is as the population of foxes increases population of rabbits drops as it drops and of course foxes don't have what to to anything to eat so their population drop which allows the population of rabbits to increase and ovo you have a fluctuation another possibility that happens even more often if you try to play with that game on the Internet is that very likely the Fox will eat the rabbits and then they'll die because they won't have anything to eat and you'll have an island with plenty of grass and nothing else that happens typically but it can come to an equilibrium and in an economist look for such equilibria so this is why I how many economic explanation works in direct links feedback aggregation equilibrium and in fact there is a picture there is a picture a photograph in from the movie I said it was known but I lied there isn't one but this was from the movie but you have to know don't know how you feel about all this in general but that picture was taken because they're not the nice people on the set through the lemmings in the water in order to photograph them god bless their souls well anyway that they needed that explanation which is an explanation in terms of of individuals individual little creatures for some unexplained id-1 to commit suicides and when they all do at the same time then there is a drop the real explanation is what's called population dynamics what I just show you with the rabbits and the cinclant going up and down that's a real explanation that if you don't have access to that kind of explanation because we are not really built for that well we end up by saying well it's all intentional enhanced that 1950s movies so we have really wrote less traveled that of population dynamics and both people who have an intentionality ID explaining the population drop by intentionality same thing goes for how much oh that is very short so I will have to so I will ask how do people really manage and I have to do that very quickly there are several way they can do it one of them is by personality traits people don't really know described before the gut feeling well this is what we're talking about we asked people do you think that the economy is instability in crisis do you think that the economy is fundamentally sound and it will restore itself after occasional crisis oh do you think it's gradual well this deterioration doesn't happen very fast or do you think that up to a point it's okay but beyond that point it will collapse again do you think it's chaotic you cannot understand that stuff in things happen and who knows and then also one that says it's always very tricky very dangerous it's finally balanced at any point it can collapse we asked that question I said something love yes for those of you who haven't heard of the Beatles this is a song where a young man explained that yesterday your life was great he had his girlfriend they were happy everything was going just fine life was such an easy game to play and then I said something wrong I don't know what I said I said something wrong and now she took her stuff and she left and now I long for yesterday of course we have to be a wave that we get only the story of the young man I'm sure that if we had a lady we had she would have some explanation why it happened and okay but in any event we ask questions about relationship the same one we asked about the economy and who asked the questions about health and we are the same questions about climate like climate is stable or it can you can push it but not behind the point and the relationship at any time for this man there well you know it's chaotic you don't know everything was fine and then I said something wrong and all gone we are talking about his perception right and same about the economy economists have their ideas but the public thinks from their gut as you mentioned and I can show it because this is technical and I'm not I'm just trying to show off but this is a factor analysis that shows that people have the same belief in all four domains if you are the kind of person who thinks that the economy is about to collapse any moment and your relationship are totally unsafe and so forth and the climate the same and health mainly like you feel perfectly fine then you go to sleep you feel that you feel perfectly fine and you go to sleep and you wake up the following morning dead well those things are highly correlated which really means that people when you ask them what will happen to the economy they don't derive it from some significant meaning of the economy no way what they do is if they are stressed people then they say yeah it can collapse any moment if you are laid-back say well things will be okay would be okay relationship health everything would be okay so this is not one of the sources that allow people to say I want to quickly another thing is I ideology ideology is fine because if you adhere to an ideology then of course you know what we think you've been told by other very people I will move quickly another one is so another thing yet another thing is we asked people about many variables 19 variables in economics if one of them goes up what will happen to the other and people say systemically well they are usually willing to answer and the the way people manage I mean it's really crazy how do people presume to tell you what happens if the money supply increases will consumer debt or the depths of the recession increase or decrease how do people presume to answer they really don't know tip how do they do that well they have a trick turns out and it was now shown extensively here in Trento actually by a economists colleague and also in Australia with a very large data set the web people work is basically to divide everything in good and bad things that when they increase it's good when it creates a bad and the idea is good things go together bad things that go together so if n B belongs to the same goal st. Paul good or bad increasing one would increase the order and mutas is the order if it goes down I call that the good baguettes good heuristic from which photo for example that for people inflation is bad unemployment is bad therefore and when inflation goes up unemployment goes up which every economists will tell you is crazy doesn't work like that at all for good reasons but that's what people believe in their vast quantities I will just move on and want to show you some thing about politics now one of them is the fighting the following there is a classic trade of when you reduce interest rate people and companies can spend more and that will facilitate growth or you can fight inflation by raising rate money will be expensive mad people will borrow this money they will have less money to spend and then inflation will reduce it's one or the other it's a trade-off naive people lay people don't are not usually aware of trade-offs they don't really believe in them I show that at ranking the book here is an example mister everyone a few weeks were made to March 2nd but also already few years back said well we have no inflation that 20 90% we don't deserve this insha'Allah inflation will fall again to 6 or 7% we don't deserve it Turkey has to cut interest rate or the problem with high inflation will persist he doesn't allow any economics and when he speaks with the governor of his central bank and governor says no we can't do that that's really wrong it said shut up because he is an autocrat so when you have people like that who are in power and our clueless well de nieve everyday understanding of economics well it applies to national policy and the Italian turkeys like collapse all example so why is that because for them the good begets good weather can be fair or weather can be bad and all the bad things go together so the goals growth low inflation how to be pursued jointly the right economic policy will get the economy back on track everything will be fine which is madness but it's not obvious - it's actually understandable if you don't understand economics we have metaphors which I will not have time to go by but but here we have also Mike Pence vice president of United States who just last week I believe May 2nd little more the economy is roaring this is the time not only to not raise interest rates but we ought to consider cutting them ok that's another one and I mean I spend my time reading newspaper and say oh my god oh my god so what we have done is the following the public people behave according through daylight and Sheila Nobel Prize winner says economics should be expanded to include study of how people understand basically what Sheila says he has a book coming out knows moon rule of especially authoritarian rules are not always conversant with economic thinking I brought the other one that he's far from being the only one many legislators say for example a noise like that and they may promote policies consonant with lay thinking and then politicians there is a great quote by Jean Claude you know we all not what we do we just don't know how to get re-elected after we've done it and therefore we have to be very careful so they are influenced by the public not because they do know better but well they have to be reelected and there's a quote here by elsif only those in a recent book says says economic financial literacy is a key ingredient for potential reforms you cannot change Canada well every time you know that you cannot have pension reform the way she tried to do if the public doesn't follow just like I would see democracy after all sorry up to a point I understand yes so no I want to come to capitalism cos mother who was here the other day Society is separated into two two groups you've heard those who came to several conferences now that the few people and the corrupt elite a populist leader who gets into PO has to be in a permanent campaign to convince his people that he is not establishment and never will be Nadia will be naughty who also spoke the other day Michael Gove who's said who is the one candidate know for becoming conservative what head Britain has had enough of an expert and then he's another it's a novel phenomenon that in France already old of Kali she's a stand-up comedian who says technocrats those are the guys that when you ask them a question by the time they are finished answering you don't understand the question you ask anymore I believe everybody can can identify with that so we have all those ways we have the public needs to understand translate into behavior the problem is understanding by rules mainly authoritarian affects behavior politicians make allowance for public understanding and they use some mediocre policies to not be totally wrong but also make the people happy and then you have the populist who has to identify if they start talking like those technocrats they become the elite and then they lose their credibility so this is the summary we argue we are the people and this is then the book Tara and if you want to read more to see more about the book here here's the site where you can get information about the book and with that I am totally open to discussion allora gratia neutral met a professor Eliezer fortune adieu mon deploy a primo da polis resposta primo is debated punto público la demanda Christopher de una brave a consideration de la serda laser laser laser abbiamo Abu Tunis or D phenomenology de la Ponte de comer Adamo de pancha perky abbiamo questa purchase Z own a retreat de puta vista de la connaissance dopo la sua loose translation a quest Oh problem Rimini Rimini such a und Vario tralala tralala no sense ree-ally a profundity kirakira putana complexity' oh say dobri mo convey very sempre con questo parakalo del mal de ponte de la panchakshari quindi la demanda de vente a possible a uniformity on información que grata meant a a juice tiempo cuesta de vacaciones crystal stanza Oh put a simply she met a primo spear are a charity cause a button model tender a Allah Allah Allah team is mollified watch verso a puto keep resolve le cose t9 considered a co Nana dotty key for manual equilibria at or no Allegretto catch Angela pancha the considera una volta this question is really about what's called in English of the elephant in the room namely there is a big problem yes yeah so elephant in the room there is a big issue and nobody wants to talk about it the elephant in the room is that well really people don't understand it's just a fact don't shoot the messenger I'm telling you that's the way it is and now the issue is if we want to democratic country country which we all do what can we do and I believe first of all we have to be lucid and clear we have to know that certain things can be explained and other things cannot be explained and accept that that's just a fact of life that also is true in other domains which in an economic domain is just a fact of life you cannot really understand the economic policy if you are not an economist at the same time of course we do want the goals of the politicians to translate what we really care about and so I think first of all this is a little promo but I think we should do studies about what people can and cannot understand and my book is devoted to that but it's only I only have scratched the surface there is much much more that needs to be done and then for the things that cannot be explained well they cannot be explained but there is something that you can do especially you mentioned education I'm not working with a colleague I don't not sure if she's here Camilla prayer from Mannheim University we developed we are trying to develop a program not to teach economics but to teach appreciation for the complexities of economic choices and that can be done it can be done in high school we have a good platform to do so and I believe that's an first and important thing that can be done trying to help people understand that well not not speak like the first man well economics really simple no it's not simple and many things have to be taken into account so we can develop in youth in students an appreciation for complexity at least they will not jump to the first solution and says well that's the first one I thought about so surely that's the only one another thing that can be done and I had a little quote there from Elsa Fournier who she is a one-man show now she is travelling throughout Italy in small towns and meeting the people and discussing with them and I believe that really I really am full of admiration for that woman's work no feeling of superiority just meeting the people who say we want I want you to understand what we're trying to do because I think many people of the public it has to be proven but my hunch my intuition is that people don't realize what a policy is from them it's like that sir who would just decide randomly after having drunk the whole night saying well tomorrow everybody has to pay 5% more taxes why because I'm the boss but in reality that's not how it works for example those pension reforms take into consideration intergenerational justice and take into consideration present population and take into consideration any number of things which have to be finely balanced and it's perfectly legitimate to argue whether this or that solution is the best one how whether they got the balance right and maybe your politicians will you want them to push them on something else that's fine but at least have an understanding that other things are complicated and not complicated insensitive you cannot understand them but that they are trade offs economy is really the science of trade of limited means unlimited needs you need to trade off and that's something that people have to endure thank you grazie Demond el público subito al Cooney microphone Academy in Turkey today they were there they were the fascinating talk having you know being in economics for half a century you know I think you made a lot of things clear where I would mildly like to modify what you're saying is that you talk about economics as if it basically is an established consensus on which the economics profession agrees and I would fully accept the fact that about say 80% and almost everything you mentioned there's a fair amount of agreement amongst economists but I think it would probably help us convince others that we are not these aloof experts if we admit it the things on which economics basically has no answer for instance you know what should be the relative size of the public sector and the private sector in an economy what is the kind of income distribution that you would like to see and why is it that certain of these predictions and economics makes actually aren't there borne out by the fact for instance you know a naive ik economists would argue that in a democracy nobody should go out and vote because the probability that your vote makes any difference is of course negligible and so there's a cost to voting everybody should stay home but people don't and people leave tips in restaurants that they never go back to there are things we do that don't seem to fully accord with the postulates of standard economics and it probably would be good for the standing of the profession in the general public if we were a little bit modest about what we know and what we don't know thank you complimentary professora and do a cheat attorney fees philosophica friedrich hegel a gala philosopher tadesco fidelity st. 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share that with the public and that's something else but at least as opposed to the general public yes there's a difference second thing I don't know how many of you listened yesterday to John Burke oh the Speaker of the House he gave a fantastic talk he's the man who goes order order at the beginning of every session of the Parliament and he described he gave a plea for what do a democracy parliamentary democracy works well you trust your politicians you don't presume to know as much as they know and you let them do it so if you don't have trust everything goes goes down but last week just last week I was invited in the Ministry of Finance in Israel to address the whole branch of the thing there people in charge of salaries really and they said well you know when we have to negotiate salaries of teachers and of social workers well then I always get a very bread press and what should I do about it and I said well when there is a crisis there's nothing you can do about it for the public there are good guys and bad guys and what can I tell you you're not one of the good guys but there is no reason for you to come to the public only at those times in fact you want the public I know many people in the finance ministry and various branches and I'm sure there may be some illegal or devious things happening to but basically people are hardworking people who try to optimize any number of policies for the benefit of the people so I say you should let people know every corporation spends a lot of money to improve its image no it's not just a matter regarding economics is not just a matter of sending a pretty girl and that is going to smile or having a let very funny cartoon you have to understand the public in order to know what the message is and once you have done that study then you can give it to a publicity company to try to make it attractive so my my point really briefly is certain thing you do okay I told him you do all kinds of good things people have no idea what you're doing people don't even know you are you are doing anything for them you just have random decisions explain to people when nobody's shouting when there is no strike waiting explain to them quietly what you are trying to do and how you try to balance various interest and then you gain trust and once you gain trust then when you have to do things that are technical and harder to understand maybe just maybe they will trust you as well of course this is a thing that works very differently in different countries I can't think that in Ukraine this is going too well because everybody is convinced that the government is totally corrupt and they are probably not so wrong other places it works differently in Israel I think it would work pretty well there is a good sense that the ministry is doing a good job and so if they explain more they'll get more credit in Italy I don't know you tell me Reagle Pandora in Italian ah HM oh se-hoon alone fairy studio no mystery Romani complimenting your 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impress each other model is true main t k factional interests that is per mille grazie Shenmue - Adam and I play ultimate echo la la da po q diamo coonley do man ever give you kiss my temper with boy shall not drink on truck window well my first question are you having an outside talk because I think that would be great for people to in the 10 minutes to have a very clear explanation of some things no because and but another question I think and things have become so complicated in many fields it's not just economics but I think the same thing goes for medicine science in general the availability of information is of all kinds of information is just so very very fast what can we do about that I think to make things first of all to make us ready to understand that we don't understand that's the first thing what you are and getting the message is simple ok I think I will be able to answer the three questions say things don't with your point product you say are complicated and that's something that in Israel at least is being taken care of by the Finance Ministry that forces products to become simpler and they have actually hired me to also simplified the way those things are written but also the product themself have to become standardized in many number of ways making is much more simple to compare things and also they put a cap on how much money those companies can earn and so forth this is a matter for regulation because it's to put it in economic term this is not a market it's not a market because there's asymmetry of information there ordinary people don't understand the very big professionals of the companies newer understand a lot and therefore they will fool you every day therefore it's not a market where you say well at the market decide we need regulations and in Israel this is very advanced and they are actually hiring people like me to help promote ease so ok so could you just in one word remind me of your question yes please yes I thought I would remember but sorry quando Paulo technical comedy Chillicothe Quast Ocala fini quando Paulo no she's a picky demand Alisha a poster very good now it's difficult for me to repeat the same the same question but but I was wondering also well I'm not Italian but I'm not a nurse so I understand the I have the difficulty of often understanding the contents of Italian messages because they are often very complicated and very a lot of words to say to express a simple concept and this and this is in many fields it would be very helpful it goes also because those documents you read are contracts and we know that once lawyer gets have a go at a document they get very complicated for good really legal reasons but it doesn't foster communication and therefore there is a way of writing summaries of what really goes on there and then having in small characters all the small characters that you say you understand okay we have to do that but here is the gist of what you are getting you are paying that much you're getting those paying that much interest you're getting that covered in that case half a page and that's something that should be insisted on by the legislature to prevent again that asymmetry of information another thing that I wanted to say is that something that I'm trying to promote it so far without success if you don't feel well you can go to the local doctor who will sort of work out what you have and then decide whether you need to see that specialist or solve your problems whatever there's a whole structure put in place by the state or by private companies that make it possible for you to not decide whether you need something but have somebody competent tell you what one believes with more than anything else and get worse for several of the questions is a profession of financial advisors that are forbidden by law from selling anything except their best advice and then they study all the same way you do for a lawyer you go to see a lawyer you're not going to become a lawyer laws are difficult you tell here mr. lawyer he is my problem what do you recommend and he will tell you she'll tell you and the same should go for financial choices I don't believe it is possible in the modern world that is changing so quickly for ordinary people to manage anymore than it is for you to understand the ditch the details of a surgical procedure it's not for you to decide go to a professional where the professional should not be selling you anything otherwise we'll be in a conflict of interest and it will be even worse thank you allora gratia gratia professor David Liza the Sakura who shall decree Runa prospective Apple Computer markup accomplice and ordinary Queen D is the difficult la trouve remo continue maintain Anya knows to approach gratzi professor grazie Mille