The Dangers of Economists Teaching ECON 101 Poorly

by Don Boudreaux on February 22, 2017

in Economics

My dear friend Dwight Lee – who is one of the greatest masters of the economic way of thinking – offered the following in the comments section (at the James Martin Center site) to my essay defending ECON 101 against the misunderstandings of law professor James Kwak:

Boudreaux is correct about the ability of simple supply and demand curves to provide insights that seem to escape “deep” thinkers who dismiss those curves as simplistic.

The problem of teaching a beginning economic course as a highly technical exercise is an extremely serious problem. The introductory course is the only chance most students have to get an understanding of the benefits we all receive from the amazing economic cooperation made possible only by the markets. And few students gain that understanding from the highly technical presentation they get from many introductory courses. But these students do get clear presentations about market economies in many social sciences and humanities courses that are taught by teachers who have less than an introductory level of economics themselves. What many of them do have is a naïve view that markets are based on exploitation and injustices that can be corrected by government.

Dwight’s point is profound.  The teachers who can best enable students to see the unseen, to appreciate what largely goes unappreciated, and to understand the logic of markets too often are derelict in their duty.  Too many economics professors today teach ECON 101 as if it’s a course in curve-bending, puzzle-solving, and mathematics.  This approach to teaching ECON 101 does indeed, as Dwight observes, render the typical ECON 101 course dull, dreary, dry, devoid of any obvious significance, and unnecessarily intimidating.  Real economics goes untaught in too many ECON 101 classes while interesting and accessible (if largely mistaken) takes on markets, prices, and economics are offered in classes taught by economically ignorant sociologists, philosophers, English professors, and [fill-in-the-blank-with-the-name-of-your-pet-oppressed-group]-studies professors.*

It’s a shame.

* Note: I understand that there are some sociologists, philosophers, and English professors who are indeed very well informed about economics.  Many of these are my friends.  Yet they are the exceptions.

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Some Links

by Don Boudreaux on February 22, 2017

in Health, History, Immigration, Innovation, Myths and Fallacies, Trade, Video

Yesterday I was interviewed by Marketplace‘s Nancy Marshall-Genzer on Trump’s proposed scheme to cook the trade-account books.

Speaking of cooking the books for political purposes, here’s more from Rick Newman.

Warren Meyer joins Pierre Lemieux in being among those who clearly and convincingly explain why ECON 101 most emphatically does not teach – contrary to the ignorant assertions of some of Trump’s advisors – that trade deficits reduce GDP.

In this video, the Cato Institute’s Alex Nowrasteh (a former student of mine at GMU) goes head-to-head with Tucker Carlson on immigration.  (HT Tim Townsend)

Roy Cordato helps to dispel some popular myths about trade – myths peddled by economically ignorant people on the political right and on the left.

Here’s more from Richard Ebeling on Karl Marx.

My Mercatus Center colleague Bob Graboyes draws a lesson about health-care from Robert Mundell’s observation that the greatest invention of the 20th century might well be the chicken.

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Quotation of the Day…

by Don Boudreaux on February 22, 2017

in Intervention, Regulation, Trade

… is from page 172 of my Mercatus Center colleague Dan Griswold’s 2009 volume, Mad About Trade (link added):

Unknown-2Trade barriers “dumb down” our economy by undoing the good work of our best engineers, scientists, and entrepreneurs.  The most creative and best-trained minds in America developed the jet engines, the containerization technology, and the Internet and global telecommunications that have done so much to promote the growth of global trade and output.  In contrast, trade barriers are a kind of anti-technology.  The mind-numbing columns of arbitrary tariff rates in the Harmonized Tariff Schedule and the tangled regulations that limit trade and investment stand in opposition to decades of technological advancement.  We find a way to move goods, services, and capital around the world faster, more efficiently, and at lower cost, only to watch the politicians in Washington throw sand into the gears by erecting artificial barriers to commerce.

DBx: Trump, of course, is the most blatant and boastful trade-obstructing bully roaming the DC sandbox in decades.

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In Defense of ECON 101

by Don Boudreaux on February 22, 2017

in Economics, Myths and Fallacies, Science, Work

In this essay I defend supply-and-demand-based ECON 101 courses against law-professor James Kwak’s poorly informed criticisms of such courses.  (I thank George Leef for his skillful assistance in turning my first draft of this essay into a readable final product.)  A slice:

When taught well and wisely, supply-and-demand analysis is the central part of the economic way of thinking. This way of thinking both deepens and broadens students’ understanding of economic reality. Contrary to Kwak’s assertion, such analysis teaches neither that prices automatically and without friction move to equilibrium levels nor that nothing matters except consumers’ and producers’ narrow material concerns.

Instead, the economic way of thinking incites students to ask probing questions about reality that they would otherwise never ask. It encourages them to search for and discover aspects of reality that would otherwise remain hidden. It prompts students to ponder the reality far more profoundly and fully than they would otherwise do. Junking or radically changing Econ 101 would leave students ill-prepared to understand the world around them.

I then go on in this essay to explain how Kwak’s dismissal of ECON 101’s criticisms of minimum wages reveals only that Kwak doesn’t think carefully and critically in the way that good ECON 101 students do.  Kwak not only fails to see the unseen, he mistakes mirages for reality.

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Bonus Quotation of the Day…

by Don Boudreaux on February 21, 2017

in Intervention

… is from page 495 of James Otteson’s superb essay “Adam Smith and the Right,” which is chapter 29 in Ryan Patrick Hanley, ed., Adam Smith: His Life, Thought, and Legacy (2016) (original emphasis):

Unknown-2With the advent of the digital age, however, economic production has been utterly transformed; what constitutes “means of production” has now become broad and open-ended.  Accordingly, socialism has had to adapt to the times: rather than owning the means of production outright, it now proposes to centrally regulate people’s behavior, and to redistribute portions of their productive output, in preferred directions.  Whether realizing socialism’s moral goals requires owning the means of production depends, then, on historical circumstances, but what will always be required is to centrally organize political-economic decision making.  Without that, there is no socialism; with it, fairness, equality, and community can, it is hoped, be achieved.

By contrast, socialism’s antithesis, capitalism, has at its core decentralized political-economic decision making.  Its preferred values might be justice, liberty, and individuality (again, properly defined), but it holds that allowing individuals or voluntary groups of individuals to make political-economic decisions for themselves with little state interference is what enables the realization of the values it holds dear.  So the former position tends to favor planned patterns of social order, or the correction of unplanned patterns, according to principles and authority centrally derived and administered; while the latter tends to favor unplanned or “spontaneous” patterns of social order that are deferential to what individuals and voluntary groups decide to do and skeptical of what third parties might like to mandate or nudge them to do.

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The Libertarian Angle

by Don Boudreaux on February 21, 2017

in Trade, Video, Work

I’m honored to be the guest of Bumper Hornberger and Richard Ebeling on today’s “Libertarian Angle” (from the Future of Freedom Foundation).

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Some Links

by Don Boudreaux on February 21, 2017

in History, Legal Issues, Monetary Policy, Myths and Fallacies, Subsidies, Taxes, Trade

Walter Olson reminds us of Calvin Coolidge’s decency.

Here’s more from my intrepid Mercatus Center colleague Veronique de Rugy on the GOP’s proposed border-adjustment tax.

Dan Mitchell reflects on the likelihood that Trump will successfully drain the Potomac swamp.

Jonah Goldberg explains his uneasiness with Trump.

John Tamny dispels the myth that a country is enriched if its government artificially devalues its currency.

Arnold Kling identifies a major source of flaws in economic reasoning – namely, the mistaken assumption that an economy is – or is akin to – a business.

Roger Pilon laments the demise of Americans’ freedom of association.

George Selgin offers wise advice about monetary policy.

Congratulations to Pierre Desrochers for being named the 2017 Julian L. Simon Memorial Award recipient!

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Quotation of the Day…

by Don Boudreaux on February 21, 2017

in Politics

… is from page 173 of H.L. Mencken’s essay “The Politician,” as it is reprinted in the 1996 Johns Hopkins University Press collection of some of Mencken’s best essays, Prejudices: A Selection:

imagesAt each election we vote in a new set of politicians, insanely assuming that they are better than the set turned out.  And at each election we are, as they say in the Motherland, done in.

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Here’s a letter to the Wall Street Journal:

You describe Trump’s proposed scheme to artificially inflate U.S. trade-deficit figures as an attempt to “deceive” (“A Trump Statistical Trade Trick,” Feb. 21).  Exactly.  Counting goods shipped to other countries through the U.S. as U.S. imports but not as U.S. exports is simply fraudulent.

If the Trump administration gets away with this swindle, don’t be surprised to see it used for other purposes – especially, to further Trump’s goal of stoking Americans’ fears of immigrants.  The same logic that allegedly justifies what you correctly call “single-entry trade bookkeeping” would justify counting all non-Americans who come to the U.S. – even those who come only to visit – as ‘immigrants arriving in the U.S.,’ yet none who return to their home countries counted as ‘immigrants leaving the U.S.’  If this method of measuring immigration flows sounds Orwellian, it is – but it is no more so than is Trump’s proposed new method for measuring trade flows.

Sincerely,
Donald J. Boudreaux
Professor of Economics
and
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA  22030

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… is from pages 88-89 of Arnold Kling’s splendid 2016 book, Specialization and Trade: A Re-introduction to Economics:

images[Jesse] Ausubel points out that even as farm output and overall population have increased, use of water in the United States has actually declined since 1970.  That change reflects greater efficiency in farming.  (Ask your friends who proudly “buy local” whether they know how much water their local farmers used compared with the distant farmers from the supermarket imports produce.)

….

Generally speaking, in a market economy, the combination of incentives and human ingenuity has permitted the human population to grow with a reduction in the rate of resource use.  By selling books in digital format, online retailer Amazon is letting us read more while using less paper; Airbnb is giving us more places to sleep without building hotels; and iTunes is allowing us to listen to more music without manufacturing records.  We are not only leaving future generations with more know-how and more tools of production, we are also leaving them with more wilderness, more forest, and more vegetation.

DBx: What Arnold says.

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