The relationship between the economy and people’s lives and the degree of suffering

Many people are not interested in the economic situation and related macro news and indicators. This phenomenon is not limited to Egypt, where the situation may be more dangerous than it is in Western countries. Perhaps one of the reasons is the psychological impression formed by economists in the minds of ordinary people. Many people use complex language to explain the economy, and they deduce a large number of confusing economic indicators, which may conflict in some cases. In addition, economists are divided on many fundamental issues due to various biases, which confuse the public. In addition, some economists may use economic indicators to serve political goals, whether to support the regime by downplaying the seriousness of the economic situation or intimidating it by opposing it.

Although some economists remain objective in their analysis, this negative mental image is deeply ingrained, moreover, many lack confidence in the accuracy of economic indicators published by government agencies and lack the conceptual background of economics that much of the public needs. Moreover, this mental image creates a psychological barrier for most people and leads them to believe that tracking economic conditions and their indicators is pointless because it does not benefit them and does not reflect the reality of their daily lives. But is this true?

In fact, people are directly affected by the general economic situation. Economic growth creates new jobs and helps raise personal income levels, while economic stagnation is often accompanied by layoffs and a decline in personal living standards. Stability of market prices is good for people’s lives and ensures that they maintain their purchasing power, while periods of inflation can lead to erosion of purchasing power and personal impoverishment. Therefore, the general economic situation has a direct impact on people’s lives, and perhaps this is what prompted the American economist “Arthur Okun” to introduce what he called the “misery index” during the administration of President “Johnson” in the sixties. With the aim of measuring the economic well-being of the average person and finding out whether his economic well-being is good or bad.

In its simplest form, the misery index is calculated by adding unemployment and inflation. The unemployment rate measures the percentage of the total labor force in the market for people who cannot find work, while the inflation rate measures the annual increase in the prices of a basket of major goods and services in the market. Of course, people hate high unemployment rates, long coffee shop hours waiting for jobs, and frequent big price hikes. Therefore, the higher the index, the worse and worse the economic situation of the people, even if the economy achieved high growth in the same period.

Looking at the Misery Index in Egypt, we find that the new millennium (2000) started at a low of 12%, but quickly rose to an average of 16% in the following years (2000-2008) until the global financial crisis (2008). , which had a significant impact, as it pushed the index to its highest percentage exceeding 27%, before declining to nearly 20% shortly before the January 25 revolution, which led to a volatile political situation, which of course was also reflected in the situation The economic index, which led to a rise in the index to nearly 23% on average in the three years following the revolution, before reaching 23.9% at the end of June of last year, where, according to a study prepared by Bloomberg Agency, the unemployment rate has stopped. The inflation rate reached 13.3% according to official figures, while the inflation rate reached 13.3% 10.6%, making Egypt the fifth most miserable country in the world.

This historical development of the Misery Index cannot be ignored. In the decade leading up to the January 25 Revolution, when the government bragged about staggering rates of economic growth, the general public was alarmed about the deteriorating economic situation and claimed that the growth rate did not reflect reality, showing the pain index of this decade. Confirm people’s feelings of pain. And when people recently complained that the revolution brought them nothing more than economic misery and deterioration in daily life, it was no exaggeration, as evidenced by the rise in the misery index over the past four years.

Taken together, it makes no sense to isolate the state of the economy and its overall indicators from people’s lives. Although there is some doubt about the accuracy of official data, comparing the levels of indicators over longer periods of time can reflect many economic developments and their impact on people’s daily lives. While the Egyptian economy is going through a state of stagflation, the slowdown in economic growth will be reflected in the high unemployment rate, while the expected inflation resulting from the rise in the value of the dollar and the rise in energy prices will undoubtedly lead to more economic growth. The rate of inflation, which in turn means that people who suffer from it are likely to increase.

All in all, the negative mental image of economics and economists has deterred many people from wanting to pay attention to the state of the economy and entrenched the idea of ​​isolating macroeconomic indicators from the realities of everyday life. But this assumption is unrealistic, and given the development of the “misery index” over the millennium, even governments promoting the rate of growth of the economy reflects the suffering of the people and the deterioration of their conditions. It is therefore in the interest of ordinary people to monitor the general economic situation as it has an impact on their daily lives. Macroeconomic indicators, while not completely reliable in explaining the condition of people, can explain a lot if viewed objectively and comprehensively.

Leave a Reply

Connect with

Keep in touch!
Get updated regularly on our latest offerings!



Sign in

Connect with

Send Message

My favorites