The Teaching and Use of Economics
That project will take quite awhile to complete, and it will take some time for me to talk myself into starting. The best motivation is for me to read what others write on economics because this is what convinces me that I must set the record straight. To ramp myself up, I shall deal with relatively small matters I have seen addressed by others. Just today, I saw a reference to "the law of supply and demand." This and other myths and misunderstandings make the rounds on blogs and in the mainstream media with sufficient frequency that I actually repeat them to my economics and business classes to highlight the extent to which they, my students, are becoming separated through their learning from those around them who only think they know what they're talking about.
Concerning that "law of supply and demand," I am reminded of an incident from several years ago at a blog not far from here. A good friend of mine had posted the link to an article entitled, "Law of Supply & Demand Is Dead for Gold & Silver," by a fellow with an MBA (a bad sign to begin with) and a Master's degree in public policy. The writer of that story went into all manner of statements that were just patently incorrect, posing as he was to have knowledge of economics and finance way beyond his realm. The very title of his article, declaring as it did that a non-existence "law" is "dead," was a virtual sandwich-board sign that he was going to be sacrificing innocent electrons to the word processor god of nonsense. Any hope I might have had that reading his tripe was not a waste of ten minutes of my life was dashed when he made use of the word "bubble" in reference to commodities markets. For the time being, I have given up trying to deal with the conceptual vacuity of "bubble," which has become like the invocation of "Moloch" in the stupefyingly brain-dead "poetry" of the stupefyingly brain-dead "poet" Allen Ginsberg. The writer of the fairy tale article about the death of a non-existent thing in the gold and silver markets was not particularly cutting edge; but that word "bubble," especially in the context of how commodities markets actually work, is the mantric utterance of the thunderously uninformed, or in some cases it is the insider's o-so-revealing story line to make a few bucks telling silly stories to suckers who want simplistic explanations to make themselves feel smarter than they really want to work at being.
On the blog where my friend posted the link to the MBA guy's article, I wrote in comments that there was no such thing as a "law of supply and demand," a point I make emphatically in the early days of every microeconomics class I have taught for nearly three decades. I explained that there is a "Law of Supply" and a "Law of Demand," and I went on to make a summary statement of each of these, as I herewith shall:
The Law of Supply
As the price of a good or service increases, producers tend to provide a greater quantity of it to the market.
The Law of Demand
As the price of a good or service increases, consumers tend to want a lesser quantity of it.
The Law of Supply operates because, as the price of a good or service rises, the opportunity cost of using factors of production to make alternatives rises.
The Law of Demand principally operates because, as the price of a good or service rises, the price-relatives of substitutes fall, inducing consumers to move toward those alternatives that have become relatively cheaper.
The Law of Supply is captured graphically as an upward-sloping curve in quantity-price space, and the Law of Demand is captured graphically as a downward-sloping curve in quantity-price space.
(Each of these laws, by the way, has a rare but interesting exception.)
Okay, I laid out the Law of Supply and the Law of Demand as a quick primer on a basic topic in microeconomics, and I thought that would be the end of the matter there at that blog, but I was wrong. A Leftist commenter who had, with increasing frequency, been displaying the odd behavior of posting one comment right after another, came from out of nowhere and started using appallingly foul language to berate me, spewing howling nonsense from complete ignorance. He asserted something to the effect that there most certainly is a 'law of supply and demand' and he knew all about it. He went on to claim I had never written anything that was accurate about real-world economics, and he made some other blatantly false and appallingly hateful statements.
Because the owner of the blog chose not to make any public effort to deal with his verbally menacing behavior, I never wrote a comment there again. The blog belongs to her, of course, as she later declared in her own over-the-top, inappropriate response to a commenter who had dared to disagree in relatively mature language with the prevailing wisdom. When he noted her disproportionately nasty response, she told him that it was her blog, and she could do whatever she wanted there.
It seems that, when it comes to a small group of Leftists, private property is a thing of horror to be condemned until the private property belongs to a Leftist, at which point it becomes an altogether sacred site upon which anything goes, including decorum out the window.
Once again, there is no "law of supply and demand," although I have heard that mythical term used so often that it has become some kind of assumed thing, sort of like the legendary yeti.
Okay, I shall concede that stories about the abominable yeti are reinforced every time Dick Cheney shows up in public to talk, but that's not the same as saying the yeti, itself, exists only that reasonable facsimiles of it are available for hire as has-been political commentators.
Returning for one more example of out-sized tedium in overwrought statements about economics, the claim was made in comments to a recent post at Big Brass Blog that "macro and micro econ. people get the supply and demand part, but schools don't teach too much else."
This assertion is far from my experience, both in my own classrooms and from what I know of what happens in the overwhelming majority of classrooms in American colleges and universities where economics is taught.
First, supply and demand would be taught in microeconomics; macroeconomics also covers supply and demand, but the constructs are different in the study of economies at the large scale, which is why, in macroeconomics, we use the terms "aggregate supply" and "aggregate demand" to distinguish them from their respective counterparts in microeconomics.
Moreover, although economics textbooks vary to some extent in topical sequence, the scope is relatively consistent from one book to the next, and the syllabi in colleges and universities tend to follow the layout of the textbook being used, so a certain degree of uniformity exists across schools. The topics of "supply" and "demand" are respectively underlain by a considerable build-up: "demand" is part of the theory of the consumer, and "supply" is part of the theory of the firm. In neither aspect of a microeconomics course are the coverages of supply and demand ends, in and of themselves. Not even close. Eventually, the two parts of the market are brought together to show how the so-called "equilibrium price" and "market-clearing quantity" are established, and then some work is done in supply and demand dynamics so students will be able to predict, under relatively simple conditions, what happens to that equilibrium price and market-clearing quantity when supply and/or demand changes. All kinds of useful and interesting results can be obtained, and I have a somewhat proprietary method to make the mechanical part of the analysis a little easier so more time and energy can be spent looking at what the results actually indicate and what they mean for real-world kinds of applications.
In macroeconomics, the topical material is far more integrated than it is in microeconomics, at least if the course is constructed well, the way I do it. The material is conceptually deeper, with more historical references, and a necessary requirement that students hold together an arc of thinking that spans virtually the entire course. While I enjoy teaching many of the topics in microeconomics, it is in macroeconomics that I can see the students, toward the end of the course, compiling a comprehensive picture that deeply affects their thinking about economic life, politics, and their place in a world where vast forces far beyond their control are affecting them and have been since long before they were born.
I shall stipulate that I have seen both microeconomics and macroeconomics taught badly, and that usually happens when a Right-wing or Leftist professor cannot keep his or her own unsupported ideas from going wild in front of students who are unable to know that the material being taught is tainted or who are too afraid to complain. I had a personal experience with a Right-winger who was teaching such unconscionably wrong material that his students were completely incapable of taking any other economics courses after he had finished with them. The situation was outrageous, and the very presence of such people in academia speaks to deep problems with the tenure system and modern methods of granting faculty appointments. One day, I shall write in scathing, personal terms of this mess. Fortunately, most professors are good, and I can state without qualification that most professors who have strong ideological tendencies Right or Left will nevertheless deliver a good course with considerable objectivity. At the same time, I have no problem (as my students will verify) declaring that I am the best teacher ever.
Self-promotion is cheaper than major media ad space.
An extraordinary amount of material is taught in microeconomics and macroeconomics; in fact, I tell my students right up front that economics principles courses are among the hardest courses they will take, certainly at the introductory level. They believe me within only a few class periods. Even though my failure/dropout rates are very low compared to those of most other teachers (and I am one of the toughest testers and graders I know), my drop/fail rate still hovers around 20 to 25 percent.
Beyond the classroom, I have published numerous articles on microeconomics and macroeconomics, including a killer, four-part series entitled, "The Economics of Wreckage." I hold in great esteem the clutch of long-time readers here at Dark Wraith Publishing online properties who have plowed through some of my more intensely analytical writings, a list of which can be found in my post, "The Echo of Now." As I tell my own classroom students, I do not expect anyone to thoroughly, deeply, comprehensively understand the principles of economics in one pass or even several. The understanding is not so much a process as it is a demanding trial. Much like any science or art, mastery is not something that just arrives at people's unconscious behest because they believe they know what they're doing or because they think they have insights from "wisdom and experience," although both are deeply important contributors to bringing the subject matter of any discipline to life outside the classroom and the textbook. This is tangentially related to the modern myth among early learners and the general public that the "Internet" is the key to unlimited genius at the touch of a button. Only slowly do students in good colleges come to realize that the online world they have known is nothing more than a child's wading pool compared to the vast ocean of content that flows from professors, from books, and from the deep resources, some fee-based, in databases like Lexis/Nexis, the Standard & Poor's Reports, Business Elite, Shadow Government Statistics, FRED (Federal Reserve Economic Data), and thousands of other incomprehensibly vast lodes of data and information. Once students see the ocean and lose their fear of its impenetrable scope, the incredibly limited value of Google and Wikipedia, so overused by those who think knowledge is push-button easy, becomes apparent.
I do what I can, and I encourage the same in my students. "Thinking outside the box" is utterly useless without a deep, thorough knowledge of what, exactly, is inside that box. Shed light there, and quite a few myths will disappear about what it is that we have spent centuries developing, teaching, questioning, revising, and expanding. I have no intention of allowing the fields of my wide academic training, business experience, and years in teaching to be further eroded by either iconoclasts or institutional shills. I am old enough to be intensely bored by the wild 'n crazy crowd that thinks anything goes, and I am marginalized more than enough to be enraged by a corporatized, authoritarian system of governance that has penetrated society down to the very core of how people frame their concepts of personal, intellectual, and political freedom.
I am, on the other hand, not old enough to give up. I offer free subscription on Apple iTunes to entire courses in microeconomics, macroeconomics, and other courses I teach. These are podcasts of live, classroom lectures, and my subscriber base is not just my own students. People from all over the world listen, and the very fact that they would do something like that speaks to a heartening value at least some people hold: that information is insufficient without knowledge, and knowledge is insufficient without understanding.
At the end of the day, even understanding is insufficient if it fails to elicit within the learner at least a modicum of wisdom. That last step, I cannot provide. Many attain high degrees, great honors, and wide recognition, yet stop somewhere along the path from accepting raw data into their minds to distilling that data down to information and then processing it into knowledge. Others can make the journey without the need for those high degrees, great honors, and wide recognition. In any event, wisdom does not come without the prior journey. Most unfortunately, genuine wisdom will never be particularly valued, not in a society where ignorance is considered a viable voice, polemics a call to action, and wisdom a matter of opinion.
That does not mean the alternative in disciplined thinking backed by committed, on-going learning is dead.
Not, at least, until the Right-wingers and the Leftists who want teachers and practitioners like me to shut up get the guts to make their dream of a world of ignoramuses just like them come true.
The Dark Wraith has spoken.
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