Placing economic considerations at the heart of all policymaking

This article appeared originally in Gulf News: link to original article

Economics is at the heart of things. Or is it?
I have attended hundreds of meetings (voluntarily and non-voluntarily) covering all sorts of topics. Now for someone who’s not a fan of meetings that exceed 15 minutes in duration, that’s huge.
Through out all of that suffering — and the higher chance of a stroke due to sitting still for hours — I have almost no recollection of economics being discussed in depth. Like it doesn’t exist, or perhaps it just doesn’t matter.
This article, in its entirety, is to answer whether or not economics should be at the heart of policymaking — you should know the answer already.
Let’s consider a few examples here to test my above generalisation. The first example is that of the feasibility of including comprehensive genetic testing in pre-martial tests. In the UAE, pre-martial blood tests are mainly done to reduce the spread of Thalassemia — a genetic disease.
However, and if you read the World Health Organisation’s report for the past few years; death among the UAE’s population could be attributed to three reasons: 1. cardiovascular diseases and diabetes, 2. Other non-communicable diseases, and 3. cancer.
If genetic testing included testing for all of the above, at least for high-risk families based on historic background, wouldn’t that lead to saving thousands of lives and saving billions in health insurance premiums and future health costs?
Does it make economic sense? I don’t know. Health economics can answer that.
The second example is that of Ethiopia’s investments into the establishment of industrial parks. With low cost of labour, and huge domestic and regional markets, it makes perfect business sense for companies to go and invest in textile and other factories there.
What’s the end game for Ethiopia? Job creation for a growing, young population; better infrastructure that cuts commute and transport time and hence cutting costs; and the increase in wealth shown potentially by GDP per capita.
And this should consequently lead to reduced child mortality, higher education attainment, and an increase in life expectancy — evident in Ethiopia over the past decade or so. Does it make economic sense?
I don’t know. Development, labour, and industrial economics can answer that.
The third and final example is that of countries trying to plant all sorts of crops in order to be self-sufficient when it comes to food requirements. Taken at par, this requires huge swathes of arable lands (with the right climate of course), massive capital investments, and skilled labour — to run the machines since automation is inevitable.
But what if countries rather focused on one or two food staples where they can achieve a relatively higher yield, and at a lower production cost? There is of course a geopolitical, food security angle to be considered here by countries.
But let’s talk economics for this time only. Will agricultural production be much more efficient if countries focused on what they can produce best and cheapest?
Does it make economic sense? I don’t know. Agricultural and land economics can answer that.
Does that mean that all policies and decision-making processes have a decent economic component? For that, I use a very basic rule of thumb when determining whether or not an announced policy have had decent economic thought put into its planning or pre-implementation phase — how long did it take to revoke, not amend, it. Let’s consider the 2008 financial crisis for instance. Central banks have just started taking action to reverse a few of their post-crisis measures, which is almost a decade later.
According to my economically biased rule of thumb, that says a lot about the intellectual thinking that went into the post-crisis economic policymaking (monetary economics, by the way).
To illustrate, the US unemployment rate is at its lowest since 2008, and Japan has reported consecutive quarters of positive growth. The last thought that I want to leave you with: how can economic decision-making be best streamlined?