Tonight eldest asked me to help he on her economic development presentation. It is due tomorrow. I got very frustrated. She was very tired, and I realised that she did not have the background to understand my points. My fault in not explaining simply enough.
The issue dealt with neo-classical economics and the production function. The assignments was to critique an article attacking theories based on the production function in development economics. Before going on, I should explain the production function for non-economists.
To produce things, you need labour and capital. The production expresses the relationship between the two. This can be at firm or national level. A national production function is really the aggregation of individual production functions throughout the economy.
Now things are a little more complicated than this in practice. The relationship between labour and capital changes. Part of this is due to new technology and ideas. So economists add in something to accommodate this.
Okay, for the benefit of economists, I know that all this is a gross over-simplification, but I think that it captures the guts.
My problem is that while the production function can be useful at firm level, it has absolutely no validity at national level other than as a device for explaining some of the variables. So how to explain this to daughter in a way that is actually useful?
This is not an economics post. I must admit That I found production functions as boring as bat shit when I had to study them. I know that bat shit is not boring to some of those who love bats, but in a sense that's my point. It's very much a minority perspective.
You can use the production function to illustrate development problems based just on high savings rates. But its only a limited tool.
I turned off economics as a discipline when it became dominated by, from my perspective, fairly useless simplistic models. I fear eldest is going the same route, but without my exposure to alternative and interesting perspectives. So she won't come back.