Students of economics learn that economics is a social science that analyses the production, distribution and consumption of goods and services with the objective of meeting private and social goals. It is interesting to note that it is described as a social science and, therefore, concerns itself with human behaviour.

Something else that students of economics learn is that one of the fundamental principles of economics is scarcity of resources. Whether it is an individual or a business or a country, there are never enough resources to meet the needs and wants. This forces individuals, businesses and governments to make choices in the use of such resources, reflecting their policies on a number of issues. Again this implies that economics is more than just numbers.

However, it is sometimes forgotten that resources are scarce and one assumes that the good times go on forever. History has shown that the economic cycle has never been beaten and a boom, at some point or other, is followed by a recession.

We also forget to make the distinction between what is referred to as the ‘real economy’ and what is referred to as the ‘financial economy’ and which of the two is the driver. History has taught us a lesson here as well. The key element is the real economy, this is what drives and creates wealth. The financial economy follows suit.

When we do not control spending and borrowing, we would be living beyond our means, enjoying the party as if there was no tomorrow

The financial economy does not create wealth which is sustainable. It is concerned with financial transactions and has no real basis. It gives wealth to an individual through the financialisation of assets and the sale of those assets. It produces no value added. Stock markets can soar, but if the real economy is not performing well, they would crash in no time. This is why they are not a good indicator of how an economy is really performing.

Relying too much on the financial economy may provide persons with a false sense of security. It may give the impression that one may make a great deal of money by doing nothing and, as a consequence, the persons starts to believe that the economy is one big party.

Admittedly, an economy needs to generate a feel-good factor, but a feel-good factor is in itself very intangible, very subjective and very ephemeral. As such, it needs to be based on something real, on the value that an activity adds to the economy. This is why we need a dose of sobriety in the economy.

There are several elements that are outside our sphere of control and which are all pointing in the wrong direction – lack of political stability because of Russia’s invasion of Ukraine, inflation, disruption in supplies, an increase in interest rates.

We, therefore, need to exercise control over those elements that we can control such as the level of spending and the level of borrowing. When we do not control spending and borrowing, we would be living beyond our means, enjoying the party as if there was no tomorrow.

We do need to appreciate there will be a tomorrow and that the fundamental principle of scarcity in any economy will need to be addressed, as otherwise it would come back to haunt us.

Economics has nothing to do with partying and we need to stay sober to face the issues which the external environment is and will be throwing at us.