The economy is at once mysterious and straightforward. We all know the experience of economy very well, everyone participates in it. Everyone knows something about it.

The forces and relationships we examine along the way are more important to economic life than the meaningless ups and downs of the stock market. Yet our local economic life is affected by the larger and more complex developments reported in the business pages.

In the simplest terms, the economy is all the work humans do to produce the things we need and use in our lives. We need to organize and carry out our work, this is what economists call production. Also, we have to share the fruits of our labor, which economists call distribution.

Factory workers, office workers, bureaucrats, farmers, teachers, nurses, housewives, home builders all do productive work and all that work is part of the economy.

What we produce when we work - so this production includes both goods and services. Objects are tangible objects that we can see and touch. Food, clothing, houses, buildings, electronics, automobiles, machines, toys, and services are functions that one or many people perform for others. It also includes hair cutting, restaurant food preparation, classroom instruction, brain surgery, transportation, and auditing.

Where we do these things - Productive work happens almost everywhere. In private companies, government departments, public institutions, homes, cities, villages, farms and forests.

Why we do this work - We have to live, that's why we need the basic material needs of life like food, clothing, shelter, education, medical care. Beyond that we want to get the most out of our lives, so we aim for more than just sustenance. We need more and more variety of goods and services for entertainment, travel, cultural and personal enrichment, comfort. We can also work because we enjoy it. For economists, the social interaction, financial well-being, and self-esteem that good work provides, conversely, make most people happier when they work for them. How we can distribute and ultimately use the economic pie baked together - in many different ways.


Some things are prepared directly for our own consumption, such as food grown in the garden, and then cooked in the home kitchen. Most things we have to buy with money. We have the right to eat certain products. Some things can be enjoyed for free, such as walking down a paved road, listening to the radio, or going to school. Importantly, what we produce must be reinvested to spur further economic activity in the future. So when we think of economy, we should only think of work.