Q&A with Howard Yaruss

 

 

 

 

Howard Yaruss is the author of the new book Understandable Economics: Because Understanding Our Economy Is Easier Than You Think and More Important Than You Know. An economist and attorney, he teaches at New York University. 

 

Q: What inspired you to write Understandable Economics?

 

A: I grew up in a family that often faced financial difficulties. In my teens, I started working in my father’s grocery store with a good number of people who were elderly but could not afford to retire. I attended a high school that was so dysfunctional that it was designated a "failing high school" by the New York City Board of Education and shut down after I graduated. 

 

Each of these experiences made me interested in why there are such great disparities in well-being and opportunity in our society. I felt that if I wanted to do something about these disparities, I first had to understand how our system worked.

 

I believe the same is true for everyone. That is why I wrote the book. Simply stated, people who want to improve a system need to first understand it and I wanted to help them do that through the book.  

 

Q: What do you think are some of the most common perceptions and misconceptions about how the U.S. economy functions?

 

A: Top of the list for me is the total absence of perception on where money comes from. How is it created? Who gets it when it is created? Most economics students cannot even answer those questions (although everyone who read my book can).

 

A very common misperception is revealed by the fact that people question whether Social Security can go bankrupt, but never question whether the Pentagon or the Department of Justice can go bankrupt. 

 

The fact is that all government programs rely on allocations from Congress. If Congress allocates, they are solvent. If Congress doesn't allocate, they are insolvent. It is purely a political choice.

 

The book discusses many, many other misconceptions. One of the most troubling for me is that you need all sorts of formulas, math, and analytical tools to understand economics. All you really need is some foundational knowledge, attention to what's going on, and some common sense.

 

Q: The Kirkus Review of the book called it an “impressively clear presentation that should prove useful to those looking for a one-stop primer.” What do you think of that description?

 

A: Of course I think it is an excellent description.  But I actually think the best word in that sentence is "primer." In other words, the book is a starting point for understanding our economy. It can serve as the beginning of a journey, but each reader needs to observe the world, use their common sense, and keep learning to achieve real understanding and the ability to promote positive change. 

Q: What do you see looking ahead when it comes to the stability of the U.S. economy?

 

A: As the economist John Kenneth Galbraith said, “Economists make predictions not because they know, but because they are asked.”

 

That said, there are certain policies that have logical results. 

 

For example, tariffs are a tax on imported goods and therefore raise the price we all have to pay for them. 

 

But they also raise the price of domestic goods since domestic manufacturers now have more room to raise their prices due to the higher prices of the imported goods against which they compete. And higher prices slow consumer spending, which leads to lower output and a shrinking economy. 

 

Whether we ultimately go into a recession depends on a number of factors, the most important of which is what the government does in response.

Q: What are you working on now?

 

A: Teaching and educating the public on how our economy works. The more people understand, the more they are likely to support policies that will actually improve our economic well-being and the less they can be misled by politicians and "experts."

Q: Anything else we should know?

 

A: I make a sincere and significant effort to be nonpartisan in the book.  

 

I am donating all of the profits from the book to charity.

 

--Interview with Deborah Kalb