Economics for the Age of TikTok

Rachel Dec reviews Kyla Scanlon’s “In This Economy? How Money and Markets Really Work.”

By Rachel DecJuly 6, 2024

    Economics for the Age of TikTok

    In This Economy? How Money and Markets Really Work by Kyla Scanlon. 304 pages.

    IN 2022, AS THE labor market thrived, a noticeable gap emerged between traditional economic indicators (which seemed good) and the lived experiences of Americans (which seemed not). Kyla Scanlon, a young and wildly popular economics commentator (with over 175,000 subscribers on TikTok) coined the term “vibecession” to define the phenomenon. Her newsletter on the topic blew up, and “vibecession” commentary has since permeated nearly all parts of the media ecosystem, with repeated usage in Bloomberg and The New York Times.


    As of 2024, it seems we’re still in a vibecession. Despite positive news regarding the labor market, consumer confidence remains relatively low, even as inflation is slowing. As David Kelly, chief global strategist at J. P. Morgan Asset Management, recently wrote, “even if the economy is humming along because of the income and spending of the most affluent households, most families could still feel that they were languishing.” In this complex, unpredictable, and unequal postpandemic economy, do economic indicators still hold meaning for everyday Americans?


    This is a question Kyla Scanlon seeks to answer in her debut book, In This Economy? How Money & Markets Really Work (2024). She sets out to explain most of the economic and financial systems of the United States, with a particular focus on the impact of the pandemic—and she accomplishes that task well. Among a wide range of topics, she manages to squeeze in explanations of classical economics, degrowth, the labor market, the housing market, the stock market, the bond market, cryptocurrencies, fiscal policy, monetary policy, and her signature “vibe economy” paradigm (which views popular feelings as “vibes” that shape consumer sentiment, which then influences economic outcomes). Much like her explanatory TikToks, each section aims to highlight the “human” side of an issue—a welcome departure from mid-2000s economics texts like Steven D. Levitt and Stephen J. Dubner’s Freakonomics: A Rogue Economist Explores the Hidden Side of Everything (2005), which, due to their focus on empirical data and quantification, frequently overlook more humanistic explanatory models.


    Yet even Scanlon peppers her explanations with an astonishing number of statistics and charts. The prose is breezy (“This is how we feel. This is vibes”), and her cheerful, bright voice brims with exclamation points (“There were so many things going on!”), creating a reading experience that is more late-night Twitter thread than Econ 101 homework. This approach breaks down the coldness and abstraction of economic analysis, an effect enhanced by Scanlon’s numerous references to mass media and literature. She quotes authors such as James Baldwin, Mary Gaitskill, and Toni Morrison, though citing Morrison’s musings on fascism seems rather strained in a section discussing the benefits of recessions. These gestures at humanizing her analysis are welcome, but they sometimes come at the cost of logical clarity. To bring a bit of levity to tough topics, Scanlon includes her own hand-drawn comics, which sometimes serve as unwieldy metaphorical illustration. One depicts how the Federal Reserve navigates markets via a sketch of a mountain, with rent and supply chain recovery shown as “disinflationary storm clouds,” and the labor market as a mountain goat (“something that the Fed needs to work with but is sort of in the way”), while falling snow is the stock and bond markets that could “lead to an avalanche and bury us all.”


    The book aims to depict the field of economics both exhaustively and pointedly—and it partially succeeds. While it lacks the hard academic focus of Abhijit Banerjee and Esther Duflo’s Good Economics for Hard Times: Better Answers to Our Biggest Problems (2019) or the explicitly ideological, case-study approach of Ha-Joon Chang’s 23 Things They Don’t Tell You About Capitalism (2010), it successfully builds upon the legacy of “pop economics” texts by combining comprehensive explanations (along the lines of DK’s The Economics Book: Big Ideas Simply Explained [2012]) with more forward-looking and opinionated arguments (such as one finds in Kate Raworth’s Doughnut Economics: Seven Ways to Think Like a 21st-Century Economist [2017]). In explaining how and why the debt ceiling haunts American politics, Scanlon writes: “It’s stupid. But that’s why we need to understand it.”


    In This Economy? is most compelling when it explains the hyper-online and the deeply wonky. In a section titled “What GME Really Meant,” Scanlon contextualizes the AMC and GameStop meme stock frenzy as “signs of a broader shift, reflecting the ways investing has evolved alongside changes in people’s lives.” She argues that traders were “frustrated and angry at a system that has abandoned them” and, in response, were fueled by a feeling of “community.” It’s a unique perspective—a take you wouldn’t read in MarketWatch.


    The book also covers tough topics like why cryptocurrency rose and fell so quickly, why postpandemic inflation feels so different to different people, why housing policy has become impossible to tackle, and why some say the Federal Reserve has overstepped its authority in recent years. Topics generally receive two-to-three-paragraph chunks, perfect for our attention-deficit minds, and Scanlon’s analyses strike at the heart of what we see in the headlines. Larger topics like inflation, however, receive an entire chapter.


    In This Economy? hit bookshelves the same month as the release of Cato Institute scholar Ryan Bourne’s The War on Prices: How Popular Misconceptions About Inflation, Prices, and Value Create Bad Policy. Bourne’s book seeks to exonerate corporations from their role in causing inflation, arguing instead that the fault lies with “damaging government price controls and the harmful effects of central bank monetary mismanagement.” Scanlon disagrees—while conceding that inflation isn’t entirely due to companies being greedy, she writes, “Let’s be real, there is some of that.” What’s happening, in her view, amounts to “storytelling,” where companies are given an excuse to raise prices and condition people to believe that “there is no other option than to accept them.” Why do this? Because that’s just what a corporation does. “[C]ompanies,” she says, “are going to do what they do best, which is to charge people more for the goods and services they make.” It’s such a clear-headed explanation that it almost sounds trite.


    Scanlon takes aim at a number of economic indicators—ways we measure and interpret the health of the economy—and reconsiders their relevance today. At one point, she states that “our economy has changed, but our measurement methodology hasn’t.” This, I think, is the most insightful theme of In This Economy?—and one that I hope isn’t lost on the many “rational decision-makers” reading the book.


    Scanlon pokes holes in a lot of metrics common to everyday economics reporting. She notes that there are actually three commonly used definitions of “living paycheck to paycheck,” which frustrates any historical comparison using the statistic. She challenges the efficient-market hypothesis by noting the continued inability of models to account for irrational behavior or extreme events like the 2007–08 financial crisis. She shows that the inversion of the yield curve (long considered a recession indicator) did not lead to a recession in July 2022—and has not since. She explains that the Fed’s goal of a two-percent inflation rate is based on little more than a vague consensus that has prevailed since the 1980s. Scanlon even suggests that the gross domestic product (GDP), the purported gold standard for measuring economic growth, may actually not be a reliable measure of the economy in a “social-media, hyper-online, tech-driven world” (although this claim isn’t particularly well supported). Similarly, she addresses stock price inflation and the trade-off it poses to long-term sustainable growth. While all of these explanations would have benefited from richer discussions, I am pleased to see them in a book that’s being touted by major orthodox economists like Tyler Cowen.


    Scanlon’s criticism of the US economy itself—its structure and outcomes—is largely limited to the final section, titled “Theories, Problems, and Opportunities.” This is unfortunate. Why spend 10 pages early on explaining supply and demand, only to list—hundreds of pages later, in what feels like an appendix—major market failures like childcare? (The overall structure of the book is sometimes quite strange—the chapter on how the Federal Reserve acted during the pandemic is placed before the chapter explaining the Fed’s history, mandate, and other fundamental context.) Scanlon misses the opportunity to gnaw at deeper questions by integrating her progressive analysis throughout the book.


    The “problems” covered in the final chapter are occasionally addressed in the rest of the text, but in limited detail. Class analysis is almost entirely missing from the book, which is surprising given how many times “wealth inequality” is mentioned as a negative outcome—a throwaway line to demonstrate concern but with little curiosity for the implications. This is surprising given Scanlon’s strong focus on inflation, and on the vibecession more broadly; every price increase, after all, is a challenge to those living in poverty. Statistics should be linked to their human outcomes if the chief argument of the book is “human-centricity.”


    While the book contains some brief language about monopolistic consolidation, noting at one point that “this concentration of power makes it more expensive for people to live and can definitely contribute to inflation,” it fails to explain to the reader why these outcomes are truly problematic. This limits the book’s ability to persuade those who do not already align with Scanlon’s views, making it difficult to envision the book’s ideal reader—someone who has little knowledge of economics but strong progressive inclinations?


    In This Economy? does make occasional, if glancing reference to those most harmed by economic policy. The debt ceiling discussion includes a passage about how elected officials routinely endanger critical programs like the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC). In another passage, Scanlon mentions that “wage growth has been kind of flat for a while,” pointing out that “the wealthiest 1 percent of households in the United States saw their wealth increase by 35 percent” during the pandemic “while the bottom 50 percent saw their wealth decrease by 4 percent.” It’s great that Scanlon highlights this startling reality, but rather than pursuing the discussion to its logical conclusion (why did this happen, and what can we do about it?), she just drops the whole matter. As Scanlon is someone who generally explains tough concepts well, this squanders the opportunity to deliver a more thorough, people-focused analysis. The reader is left wanting a deeper understanding of how economic realities like stock price manipulation or the international impact of low wages materialize, if at all, in everyday human life.


    What Scanlon does offer is a well-rounded primer on basic political and economic concepts, one that could appeal to almost everyone. The book also serves as a welcome reminder that economic discourse can still find a place in the age of TikTok. By effectively highlighting the chasm between old-school economic concepts and our postpandemic reality, Scanlon succeeds where many other commentators have fallen short: she shows that inflation statistics are more than numbers on a screen; somewhere, someone is placing eggs in a shopping basket and contemplating returning them to the shelf.

    LARB Contributor

    Rachel Dec is an economic analyst and writer in San Francisco. She writes about economics and culture on Substack and tweets at @rachdele.

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