What do you know about economics?

In 2008 you could have been forgiven for thinking the subprime crisis referred to Amazon packages being delivered to the wrong houses or Subway running out of prime steak and cheese sandwiches. You knew it was bad but you didn’t know your CDO from your IPO to your damned-if-I-know.

The infamous American political campaign catchphrase ‘It’s the economy, stupid’ felt personal. When you don’t have money, property or a career the economy is something that happens around you. How can you care about stock markets when you search for bargains in aisle ten of supermarkets.

I cared about global football transfers, not bonds, yields and commodities. But I hated not knowing how money made the world turn. Feeling like an anonymised nobody in television news reels of people wandering aimlessly along high streets with no money in their pockets. Journalists talking about the cost of living and tight and loose labour markets with the threat of recession and economic and mental depression.

My Google approach to PESTLE analysis could be torn to pieces by a few probing questions. After discovering the Phillips Curve is about the inverse relationship between inflation and unemployment, not a special screwdriver for bendy walls, I made it my mission to learn about the economy.

Why HR need to know what E in PESTLE stands for

As an HR professional I deal with people and employee policies, right? Yes, but I need to know Political, Economic, Social, Technological, Legal, and Environmental trends too. The economy has drama with global turbulence, geopolitics, institutional integrity and trade wars. The headlines about retaliatory tariffs, protectionism, the end of globalisation and the UK’s importance in the new world order piqued my interest.

I picked up Can’t We Just Print More Money? from Heathrow Airport. I will spend money now before the UK’s Gross Domestic Product (GDP) declines for two consecutive quarters to cause a recession.

I can reference the law of demand, a false economy and price elasticity but would struggle to explain what a cash cow is at an interview. The book’s everyday examples of our buying habits simplify our relationship with the economy, referencing celebrity endorsements, social media, cultural trends, peer pressure and ethical and environmental impact to explain our influence on supply and demand.

‘Every business keeps producing stuff, until doing so starts to eat away at profits. The law of supply is the mirror image of the law of demand. As the price goes up, businesses will want to provide more of it; as the price goes down, businesses will want to provide less.’

‘Many forces beyond demand can shape the amount that businesses are willing to produce and supply. If the prices of a business’s inputs goes down, workers become cheaper to hire, which means they will get more profit for the same selling price and choose to supply more.’

Understanding supply and demand will not make you the next Warren Buffet but distinguishing Adam Smith (economist) from Paul Smith (fashion designer) can give you informational advantage in the navigation of your career and lifestyle choices.

What motivates your spending

I am interested in how terror and crisis management affect the value of money. The reference to the taxi firm Uber raising prices to terrified passengers fleeing the Sydney terror attack in 2014 before backtracking reminded me of the illegal rent increases by landlords during the recent LA fires. What shortcuts are taken to save or make money? How much are you willing to spend to stay alive? What can the government do to stop greedy people and companies cashing in on fear?

If I were 30 years younger I would be writing essays on how the global culture of fear is perpetuated by social media and the impact this has on the economy. But as I am mid-forties I am more interested in being headhunted on LinkedIn for a six-figure salary and staying alive long enough to enjoy my pension but not too long that I become a drain on my children’s future.

I researched the network effect which is a business principle that illustrates the idea that when more people use a product or service, its value increases. ‘New players struggle to compete because it's in everyone's interest to join the existing dominant player in any given market.’ That might be true but I’m still not joining Facebook, Instagram or X.

How can I apply what I read to my HR role?

Well...‘The balance of supply and demand determines your wage - the number of people available to do jobs versus the number of people looking for workers partly explains why your wage may go up or down. When there's a shortage of workers in a particular area because it requires extremely niche skills or high level of training or simply unpleasant you will generally be paid more.’

For the next pay award I will remember that workers and employers don’t have equal bargaining power. Unless you have unique and in demand skills, it must be more costly for your boss to find another suitable person for your job and give you your requested pay rise, otherwise they will just say no to your demands.

I have a burning desire to develop a slide show on how the economy works, stupid! Just don’t ask me tough questions about pensions.