Economics 108: Principles of Economics
Section 40735: T-Th 3:25pm – 4:40pm (Hutchison 140)
Section 93041: MWF 9:00am – 9:50am (Goergen 101)
The goal of the course is to help students consistently apply common sense to the world they live in and think about. A complementary goal is to promote critical thinking skills in all students, particularly by helping them overcome the tendency to pay too much deference or to defy too often, those that seem to be in power. Because I am your professor does not mean that I understand everything well, or that you necessarily agree or disagree with anything I say, simply because you might or might not identify with the material I am hoping to learn with you. So, my task is to help you recognize facts that might be inconvenient for your pre-existing opinions – as I journey through learning economics, I still encounter these regularly (e.g. governments have done some things right through history).
Each year thousands of students study economics. The work of millions of writers, politicians, pundits and educators requires a basic proficiency in the fundamentals of economic analysis. Sadly, few have been able to demonstrate such competence. A quick note of some recent quotations will demonstrate this quickly: “I have a plan for energy independence within 10 years…we’re going to free ourselves from this dependency on Mideast oil”, “Hurricanes Boost Florida Economy”, “We are running out of (insert resource name here)”, “The market is only creating bad jobs”, “Boycotting the products produced by sweatshop laborers will teach (company name) a lesson”, “Farm to Cafeteria … makes good economic sense”, etc.
Economics is about the everyday world around us. The study of economics is intended to equip you with a set of tools to analyze the difficult decisions, and incentives, faced by individuals, firms and governments – it is a theory of choice and its unintended consequences. In other words, the goal of this course is to introduce you to a way of thinking, not simply to show you a set of principles that are an ends unto themselves. The goal of this course is to enable you to analyze economic policies logically, and in a way that you can illuminate an issue rather than rabble-rouse it. The goal is to enable you to take positions of public affairs based on facts, knowledge and intelligent analysis of the consequences of policy proposals.
These goals will be achieved through a careful study of economic theory mixed with a substantial dose of real-world application. We will frequently visit common myths and misperceptions about economics and understand why they have evolved, what the errors in thinking are. The majority of the course will focus on microeconomics – or the study of the choices and constraints faced by individual decision making units. Example of questions to be answered include: why support for the minimum wage is much stronger among politicians than economists; when should a business decide to open or shut down; why do diamonds cost so much more than water if water is necessary for human survival? The last portion of the course will introduce you to macroeconomic analysis – a study of the consequences of microeconomic decisions on national income, national employment levels, the overall price level in an economy, how government actions affect the economy and how the Federal Reserve Bank impacts the economy.
Throughout our analysis of markets and the price system, we will discuss the important interplay between morals and efficiency; we will address the importance of individual consumer sovereignty; and we will address the difficulty of drawing policy implications from our standard theory. In addressing these, I hope to make the course more interesting to you, and to better inform your thinking on real world policy issues.
In our evaluation of the criticisms of market systems, we will not only visit traditional notions of “market failures” but also the possibility that markets are doing all that they are intended to do, but still cause consternation for a considerable portion of society.
While the course will not rely on as heavy a dose of graphics and algebra as one might expect from an economic theory course, it will still nonetheless be an important tool to help illustrate difficult economic concepts. The course will combine a combination of traditional lectures, classroom experiments, video clips and discussions (or debates).
Finally, I’d like for you to understand that the study of economics is not an attempt to design the world around us – it is far too complex a task. Rather, it is intended to have you appreciate this marvelous complexity. In addition, the study of economics would be hollow if not supplemented with a solid appreciation of philosophy, psychology, hard science, literature, culture, language and more. This is why the study of economics is a vital component of a true liberal education. It would be productive to learn that nearly all of the “original” economists that you might have heard of were actually Moral Philosophers. In fact, Adam Smith, best known as the “Father of Modern Economics” and for writing “The Wealth of Nations” in 1776, actually wrote a classic, “The Theory of Moral Sentiments” in 1759. The “Wealth of Nations” cannot be treated as a separate work from it, but rather as an extension of it. The essence of the two is that free-markets and a global economy work only when a majority of citizens have a concern for justice and the cultivation of virtue. That these essentials are often overlooked by critics of the market system and Smith himself has led to widespread misunderstanding of economics.