The Bathtub economics model

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It’s time for a simple model of macro economics – the political economy – so voters can grasp what politicians are saying – or not saying.

Many popular ideas of the political economy – national rather than corporate economic – Macro rather than Micro – tout ideas that seem sensible. Things like:

  • The Government should not spend more than it gets in in taxes
  • Companies should keep wages down so they have money to both pay investors and invest in the business to create more jobs
  • We cannot afford to give money to the poor
  • Companies should be encouraged to do good business by being only lightly taxed
  • Banks are merely intermediaries of people’s money
  • Taxes work to discourage negative behaviour

The trouble is, these basic intuitive statements run counter to how the economy actually works at a national level. For the ordinary person in the street, the voter, to be able to understand we need models that help them grasp what politicians are saying and what the consequences – for example of austerity – would be.

We are offering this model to help voters get a grasp of how the economy works, and which policies are good for the many and which benefit only a few.

Lets’s get started with the basic explanation. More will come. Keep updated by subscribing via the link on the left. All bathtub economics articles will be published under the bathtub category.