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Economic way of thinking Paul Heine

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Title: Economic way of thinking

About the book “The Economic Way of Thinking” by Paul Heine

Paul Heine is an American economist, professor at Seattle University and popularizer of economics. His book, The Economic Mindset, is an introductory course in economic analysis. In the USA, it was reprinted five times without losing its relevance. Currently, it is called one of the most understandable courses in economics.

In the preface to the book “The Economic Way of Thinking,” Paul Heine admits that his main goal was to present to a wide range of readers a conceptual apparatus that would help figure out whether the population of a country (mostly people unfamiliar with each other) can work in harmony or will not be able to agree even in the simplest things. It would seem that this is a topic far from economics, relating, rather, to sociology and psychology, but Paul Heine traces everything back to economic theories.

"The Economic Way of Thinking" was designed as a textbook for students, so its author tried to explain some economic concepts that could help students think clearly and consistently. The author says that it is economic principles that can explain what ordinary people learn about every day from newspapers and hear from politicians. That is, by understanding economic principles, one can understand why certain events occur in the world. The scope of application of economic thinking is practically unlimited. Therefore, the more fully a young specialist masters these tools, the more competent he will be.

The book Economic Mindset offers the following metaphor: if your car is broken, a good mechanic can quickly find the problem and fix it.

This will not cause him any particular difficulty, because the mechanics are very familiar with the mechanism of the engine. Many people consider economic problems too complex to influence (and some do not even try to understand them) because they do not understand enough about the issue. The author tries to eliminate these gaps in knowledge and give everyone the keys to understanding global processes.

In his book, the economist deals with issues of demand, opportunity cost, costs, information, price, monopoly and many other phenomena in the economic sphere.

The book is written for a wide range of readers, so it will be of interest to all non-professionals, as well as those who have just begun to study economic theory.

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Paul Heine

ECONOMIC WAY OF THINKING

Paul Heyne

The Economic Way of Thinking

Publisher: Catallaxy News

1997

The book "The Economic Way of Thinking" by Seattle University (USA) professor Paul Heine is an introductory course in economic analysis. This book has gone through five editions in the United States and is currently one of the most popular economics courses.

Preface to the Russian edition

With gratitude to my closest assistants Wally and Ruth

How do so many millions of people achieve the extraordinary coordination that characterizes modern industrial economies? How can they coordinate their efforts with the high degree of precision required to produce such large quantities of complex goods?

We don't ask these questions often enough. We take for granted the miracles of coherence and coordination in our society that enable us to satisfy our basic needs and enjoy luxuries. Therefore, we are not interested in how they arise, and we do not see that there is anything automatic or inevitable about it. Consistency on such a colossal scale can only be achieved if important prerequisites are in place. In our ignorance, we sometimes destroy these prerequisites or do not allow them to develop. And then we cannot understand why our economic system suddenly “collapsed.”

Economic theory is useful primarily because it is able to explain these processes of coordination in society and identify the prerequisites that allow them to develop successfully. In writing The Economic Way of Thinking, my main goal was to present a framework that will help people understand how and why consistency is achieved among millions of people, even strangers, and also why such consistency sometimes fails to achieve. If those who rule a society do not have such knowledge, the danger of chaos and disaster is great.

I would very much like to see the translation of The Economic Mindset into Russian to promote a better understanding of the institutions that ensure coherence in society, and thereby contribute to the achievement of prosperity, freedom and social harmony.

Paul Heine

Seattle, USA

Preface

Economic theory is not a set of ready-made recommendations applicable directly to economic policy. It is more a method than a teaching, an intellectual tool, a technique of thinking, helping those who master it to come to the right conclusions. John Maynard Keynes An introductory course in economic theory has not been difficult to teach for a long time. True, it is difficult to perceive, but that is another problem. The amount of effort required to master initial courses has little to do with the effort required to teach them.

What do we need?

What is the purpose of an introductory course in economic theory? From what has been said above, it is easy to guess that I do not see much point in setting the usual educational goal: to familiarize students with the disparate elements of analysis techniques. And in fact, why do we want the beginning student to have an understanding of the concept of average variables, average total and marginal costs, to remember in which direction this or that line is inclined on the corresponding graphs, so that he knows about the obligatory intersection of the marginal and average curves costs at the minimum point of the latter, as well as everything else that is required to prove the equality of price to average total and marginal costs for all firms in the long run, under the condition of perfect competition and after capitalization of quasi-rent? Asking such a question means, in essence, answering it. There is no reasonable basis to believe that a beginning student is required to know all of the above. But then why do we continue to teach him this?

Part of the answer lies in our laudable desire to teach theory. It is theory that gives economics almost all its explanatory and predictive power. Without theory we would be forced to grope our way, blindly, through a tangle of economic problems, conflicting opinions and conflicting practical recommendations.

But introducing others to economic theory turns out to be extremely difficult. And many economics teachers, faced with the obvious failure of introductory general theoretical courses, often move on to teaching special and specific disciplines. In such classes, students usually read and discuss statements by trade union leaders, statements by representatives of industry and agriculture, politicians, domestic radicals or foreign socialists. They review data on income distribution, gross national product, employment, prices, and economic growth rates. Considers the case for income security and the case against planned obsolescence, the case for free enterprise and against unregulated competition, the case for nuclear power, and the case against uncontrolled economic growth. What will they learn in the end when the course is completed? They learn that there are many opinions, each based on facts, that "everything is relative," that every American is entitled to his own point of view, and that economics is not a science and is probably a waste of time.

The belief in the need to teach theory is justified to the extent that this implies that facts have no independent meaning outside of a theoretical context. Theory is essential here! But which one? Economic, of course - although in reality this is not the answer to the question. What type of economic theory? And in what sense? Before we can answer, we need to understand what we really need.

Concepts and Applications

I want beginning students to master some set of economic concepts that will help them think more clearly and coherently about a wide range of social problems. Economic principles of analysis make it possible to capture meaning in the discord that surrounds us. They clarify, systematize and correct what we learn every day from newspapers and hear from politicians. The scope of applicability of the tools of economic thinking is practically unlimited. Students should take away an understanding and appreciation of all this from the initial course.

Nothing, however, will work until we, teachers and textbook authors, manage to convince students. And in order to convince, it is necessary to clearly show. Therefore, an introductory course in economic theory should be devoted to the study of the tools of analysis. Mastery of any concept must be combined with demonstration of its practical capabilities. Better yet, start with potential applications and then move on to tools. Pedagogical practice has already accumulated so much evidence in favor of this order of teaching that it is difficult to even understand how any other approach could ever compete with it.

"Here's the problem. You realize it's a problem. What can we say about it?" This is the first step.

"This is how economists think about the same problem. They use such and such a concept." This is the second step in which some elements of economic theory can be demonstrated.

Once the applicability of these elements to the original problem has been shown and some implications have been explored, the same concept must be used to solve other additional problems. This is the third step.

Of course, everything is not so simple, and the matter does not come down to a three-stage division. Teaching the basics of economic theory, along with knowledge of the formal techniques of analysis, also requires imagination, insight, knowledge of current events, and a sense of perspective. The combination of these qualities is not common. In addition, teachers themselves must believe that knowledge of economic theory will be useful not only for solving artificially invented problems or successfully passing equally artificial exams, but also for something more.

The benefits of restrictions

No one will probably argue with what has been said above. But if this is so, then we must admit that our pedagogical practice does not greatly correspond to our views on it. One reason, undoubtedly, is that at all stages...

A simple and understandable economic theory that everyone can master. Paul Heine's book “The Economic Way of Thinking” describes the processes taking place in the global economy in an easy and completely accessible language. No one has ever told you about money so simply.

Was an economist, became a writer

American Paul Heine became famous thanks to his love of economics. For many years he taught his subject at different universities in the country and summarized: many theoretical data from the field are incomprehensible to ordinary people due to their complexity; in fact, the processes are simple and transparent if you delve into their essence.

This is how the book “The Economic Way of Thinking” appeared. The economic writer would now be about 90 years old. He died at almost 70. Throughout his life, he loved to travel the world, enjoyed teaching and teaching the basics of economic theory to everyone. He has crowds of fans all over the world. At the same time, he remained an open and friendly person - he easily agreed to interviews, communicated with fans with pleasure and answered letters, and was revered and respected among teachers and students.

The professor did not forget about economics - he wrote scientific articles, published notes in various publications, explained macroeconomic processes taking place in the world, and gave comments in television stories right up to his death.

Prices by Paul Heine Economic Way of Thinking

Simple Economics

It's hard to believe, but economic theory can be understandable and accessible to everyone. It's all about how to present it. If using numerous concepts and scientific terms, then it will be difficult, if in simple words, then it will be incredibly easy. That's the whole secret that Paul Heine revealed in time. This gave rise to his book.

After reading this literature, it becomes clear:

why crises occur;
what does inflation depend on?
how to protect yourself from falling into a “financial hole”;
Is it possible to quickly double your savings?
what the economy does not tolerate;
what influences the economic processes taking place in the world.

The textbook is recommended for students of economics departments and ordinary people who want to understand the nature of everything that is happening in the economy. The author will not teach how to change the economic destiny of the state. But he will note how to live in the current situation, what to count on, how to predict crises and the moments of overcoming them.

Thanks to understanding the entire economic system of the world, it is easier to manage your own wallet - this is what the professor has repeatedly said. There are examples in the book, if you follow them, then the money will stop going to no one knows where, and it will become much easier to save up for large purchases.

Paul Heine. Economic way of thinking

Preface to the Russian edition

With gratitude to my closest assistants Wally and Ruth

Paul Heine

Seattle, USA

Preface

John Maynard Keynes

The introductory course in economic theory has not been difficult to teach for a long time. True, it is difficult to perceive, but that is another problem. The amount of effort required to master initial courses has little to do with the effort required to teach them.

What do we need?

Concepts and Applications

Nothing, however, will work until we, teachers and textbook authors, manage to convince students. And in order to convince, it is necessary to clearly show. Therefore, an initial course in economic theory should be devoted to the study of analytical tools. Mastery of any concept must be combined with demonstration of its practical capabilities. Better yet, start with potential applications and then move on to tools. Pedagogical practice has already accumulated so much evidence in favor of this order of teaching that it is difficult to even understand how any other approach could ever compete with it.

"Here's the problem. You realize it's a problem. What can we say about it?" This is the first step.

"This is how economists think about the same problem. They use such and such a concept." This is the second step in which some elements of economic theory can be demonstrated.

The famous American economist believes that when making a choice, a person chooses the best possible option. It is based on a comparative assessment of the expected benefits taking into account costs. In this concept, the human individual chooses to take only those actions that he thinks will bring him the greatest net benefit, minus the costs. The more serious the economic justification for this choice turns out to be, the more likely it is that the action is rational.

What is this book?

Everyone can master the theory outlined in the work of Paul Heine. The book is written simply and clearly. It presents economic theory in a language accessible to the average person. Paul Heine in his book “The Economic Way of Thinking” talks very interestingly about the processes of the global economy. The language he speaks is very easy and accessible. We can safely say that they didn’t talk to us about money turnover so simply before the publication of this book.

The American economist became famous for his unconditional and devoted love of economics. For a long time he was a lecturer at various universities. As a result, Heine came to the conclusion that much of the theoretical material was completely incomprehensible to the common man. Everything is written too complicatedly, so you can get lost in the labyrinths of theoretical explanations. In fact, all economic processes are simple and transparent. The main thing is to understand their essence. Only the essence of any object, the main root, and not the surface husk, can reveal to us all the secrets of its proper use.

That’s when a book appeared called “The Economic Way of Thinking,” written by an economist. He loved his subject, and you can feel it through the text. P. Heine loved to travel around the world and teach the basics of economic theory to anyone who wanted it.

What kind of person is he?

This writer-economist has many like-minded people and fans at the same time. At the same time, Paul has always been a friendly and open person. It was not difficult to interview him. He took great pleasure in communicating with fans and answering letters that came to him. Heine was respected and revered by both teachers and students.

Probably thanks to his charisma and simplicity of soul, Paul discovered the secret to studying economic theory. This is clearly evident from the contents of the book “The Economic Way of Thinking,” which can change the consciousness of any person, opening up the world of money to him in a new light.

The professor always wrote scientific articles and notes, which he published in printed publications. Until his death, he explained the ongoing global macroeconomic processes and commented on them in television stories.

Very simple about economics

Incredibly, a person’s economic way of thinking can be formed without resorting to complex scientific terms. Thanks to reading the book by P. Heine, things like:

origins of crises;
processes on which inflation depends;
ways to protect yourself from the “financial hole”;
ways to real and quickly double capital;
processes influencing the course of economic events in the world;
something that the economy does not tolerate.

This textbook is a must-have for students studying in departments related to economics. It will also be useful to ordinary people interested in the nature of everything that happens in the economy.

The essence of the book

The writer does not teach how to change the fate of the state from the point of view of the economic situation, but talks about how to live in the current situation, predict the crisis, get out of it and what to count on at different moments. This whole theory will help shape the economic way of thinking. Paul Heine has repeatedly emphasized that with an understanding of the whole essence of the economic system of the world, it becomes easier to manage your own wallet.

Examples of the correct approach are offered in the book. By adopting them, you can expect that money will cease to be sand, falling through your fingers in an unknown direction.

The economic way of thinking formed thanks to the knowledge gained will help with this. Paul Heine explained how millions of people achieve extraordinary consistency in their actions. After all, this is precisely the quality that is characteristic of a modern industrial economy. To produce large quantities of complex goods requires a high degree of coordination of efforts.

What is important?

Time is fleeting. I don’t want to spend it studying complex concepts that may not be relevant by the time they are learned. This is why the book “The Economic Way of Thinking” is so important. Reviews left after reading it indicate that you can quickly and efficiently understand the theoretical material. After all, whatever one may say, without theory there is no practice.

People do not often enough ask where all the miracles of coherence and coordination in modern society come from, which make it possible to satisfy our urgent needs. We take modern goods and luxuries for granted, without thinking or being interested in how they arise.

Heine Paul makes you think about this. The economic way of thinking of a person makes it possible to understand that there is nothing in the world that happens automatically. Consistency of colossal proportions is achieved due to the presence of important prerequisites. And we, people, in our ignorance often destroy these very prerequisites or do not allow them to develop. As a result, we cannot then understand why our economic system suddenly collapses.

This is why The Economic Way of Thinking is so important. Paul Heine makes it clear that knowledge and understanding of theory in this area are beneficial primarily because they are able to explain the very processes of coordination in society and identify the prerequisites that allow them to develop successfully.

When writing his work, the professor set himself the goal of presenting a conceptual framework that would facilitate the ability to understand the processes of achieving consistency between millions of people, even strangers.

In addition, it shows the reason for the disagreements that contribute to the destruction of this integrity. And this is also valuable knowledge, the possession of which allows those who control the levers of society to bring chaos and provoke disasters. If rulers set themselves the goal of consistency, then they should not neglect the knowledge that Paul Heine told us in his book: “The Economic Way of Thinking.” It is easy and interesting to read. Of course, this is very important economic work.

It calls for a better understanding of the institutions that create coherence in society and promote prosperity, social harmony and freedom.

It is important to understand that economic theory is not a set of ready-made recommendations that can be applied directly to economic policy. It is only a method, an intellectual tool, a thinking technique that helps its owner come to the right conclusions.

In fact, many teachers realize that teaching an economic theory course is not difficult because there is so much information that it is not difficult to fill a class day. There is no need to invent anything; the list of special terms and their explanation already provide the basis for compiling a full course of lectures. However, what results does this bring? After all, what is important is what these concepts will bring into the lives of newly minted specialists, how society will develop further, will these people be able to understand the depth of processes and cause-and-effect relationships? Will they want and, moreover, will they be able to achieve social harmony?

What is characteristic of the economic way of thinking? What ideas does it include?

First of all, these are views and concepts obtained as a result of practical activity. This is the experience of people from everyday economic life. Economic thinking is based on practice, and not on knowledge of action and the use of socio-economic laws. In his work, Heine fills the economic way of thinking with a different socio-economic meaning. It is included in connection with real practice. And economic consciousness is associated with knowledge of the functioning and development of socio-economic laws.

Thus, economic thinking can be considered as a form of manifestation of economic consciousness regarding a specific social situation.

The fact is that not all knowledge in this area is involved in circulation, but only that which is directly applied in practice. This is the economic way of thinking. The book discussed in this article addresses the above issues.

This thinking is closely connected with the economic interests of people. It is formed under the influence of objective factors of economic development, the state of social consciousness, the participation of the working population in economic transformations and, without a doubt, discards what is superfluous, snatching only the main thing from a wide range of possibilities.

What's the point?

The main idea is to focus on how to make a choice, what it should be. Here the main emphasis is on the individual. The primary characteristic of this way of thinking is the calculation of benefits and costs. It is on this that economic behavior is based.

Individuals pursue their own goals. They adapt to each other's behavior. However, each of them respects certain game rules and property rights. This determines the individual's choice.

Paul revealed the essence of the economic way of thinking in his lectures from several sides. He wanted to give the opportunity to become educated in this area to as many people of various professions as possible. The fact is that we are all participants in the economic processes taking place in the world community. And the situation in particular and in general depends on what our consciousness will be like.

The essence of economic thinking

Let's take a look at a few important aspects:

Work is a necessity and condition for the self-realization of an individual, and the attitude towards it is expressed in indicators of the development of practical efforts and subjective incentives aimed at improving abilities. Indicators are attitudes, stereotypes, motives for advanced training, along with facts of economic behavior inspired by these motives.
Attitudes towards different forms of property are also reflected in indicators of practical use and its subjective perception. Indicators are elements of thinking that show ideas about the effective use of social wealth.
The manifestation of attitudes towards management is visible in the indicators of the position of workers and their ability to influence decisions on issues related to the organization of production, social and material security, and incentives. In addition, indicators of active participation in the management of collective, sectoral, regional and public affairs are taken into account. Indicators are people's judgments about the effectiveness and democracy of management, the ability of management to solve pressing issues, as well as the active participation of workers in practical forms of management.

This is the main content that the economic way of thinking has.

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