Section I: The Economic Way of Thinking

 

  1. Introduction
    1. What is Economics?
    2. Scarcity
    3. Social cooperation, planning and spontaneous order
    4. The market system; anti-market sentiments; biases (and what gives rise to them)

 

Readings

  • lHayek, F.A. “Introduction to Bastiat’s Selected Essays on Political Economy, Library of Economics and Liberty. Available online.
  • lBastiat, Frederic. 1845. “Abundance and Scarcity,” Economic Sophisms, Chapter 1. Available online.
  • lBastiat, Frederic. 1845. “Obstacle and Cause,” Economic Sophisms, Chapter 2. Available online.
  • l Read, Leonard E. 1958. “I, Pencil,” The Freeman, December 1958. Available online.
  • lHazlitt. Chapter One: The Lesson.
  • lTaylor. Chapter 1.
  • GSSM Ch1. pp. 1-8, 15-18
  • Roger E. Backhouse and Steven G. Medema. 2009. “Retrospectives: On the Definition of Economics” Journal of Economic Perspectives, Volume 23, Number 1. Winter 2009. Available online.
  • Harford, Tim. 2005. The Undercover Economist, Chapter 1: Who Pays for Your Coffee?
  • Marshall, Alfred. 1890 (8th edition 1920). Principles of Economics. London: MacMillan & Co., pp. 1-2, 31-33, 36.
  • Bastiat, Frederic. 1850. “Natural and Artificial Social Order,” in Economic Harmonies. Available online.
  • Klein, Dan. 2006. “Rinkonomics: A Window on Spontaneous Order,” Liberty Fund Feature, May 2006. Available online.
  • Kling, Arnold. 2005. “Economic Man vs. Status Man,” Tech Central Station, October 4, 2005. Available online.
  • Roberts, Russell. 2005. “The Ultimate Chain Letter,” Hoover Digest, 2005 No. 2. Available online.
  • O’Rourke, P.J. 1998. “P.J.s Economics 101,” from a speech delivered at the Independent Institute on October 29, 1998. Available online. Based on his book, Eat the Rich.
  • Benson, Bruce. 1997. “Where Does Law Come From?” The Freeman, Vol. 47, No. 12, December 1997. Foundation for Economic Education: Irvington-on-Hudson, NY. Available online.
  • Rubin, Paul. 2007. “Evolution, Immigration and Trade,” Washington Post, May 7, 2007. Available online.

Other Media

  • VIDEO: An Interview with F.A. Hayek. Available online. Includes his thoughts on the three sources of social norms--instinct, tradition, and intellectual theory.
  • VIDEO Clip: Anarchy is Not Chaos – 20 seconds atop the Arc de Triomphe. Available online.

 

  1. Economic Evolution: Today’s Economy in Historical Perspective

 

Readings

·         l Lucas, Robert. 2003. “The Industrial Revolution: Past and Future,” The Region, Annual Report of the Federal Reserve Bank of Minnesota. Available online.

·         l Ebeling, Richard. 2004. “Free Markets, the Rule of Law, and Classical Liberalism.” The Freeman. Available online.

·         l Marx, Karl and Friedrich Engels. 1848. The Manifesto of the Communist Party. Read the Preface, Section I (Bourgeois and Proletarians) and the last 5 paragraphs of the book. Available online.

·         l Lerner, Abba. 1963. “Review of Capitalism and Freedom by Milton Friedman.” American Economic Review, Vol. 63, No. 3, pp. 458-60. Available online.

·         l Toynbee, Arnold. 1884. Lectures on the Industrial Revolution in England: Popular Addresses, Notes and other Fragments. London: Rivingtons, pp. 85-93. Available online. Scroll down to Section VIII: The Chief Features of the Industrial Revolution.

·         lTaylor. Chapter 22.

·          lMcAfee. Chapter 3.

·         Boudreaux, Donald. 2009. “Biased Imagination,” in Pittsburgh Tribune Review, March 18, 2009. Available online.

·         Acemoglu, Daron. 2009. “Epilogue: Mechanics and Causes of Economic Growth,” in Introduction to Modern Economic Growth, ed. Daron Acemoglu, 2009. Princeton University Press. Available online.

·         Buchholz, Todd. 2009. “There is No Upside to a Down Economy,” Wall Street Journal, June 5, 2009. Available online.

·         GSSM Ch7, p. 164

·         GSSM Ch15, pp. 331-336

·         Cipolla, Carlo M. 1987. “The Basic Laws of Human Stupidity,” Whole Earth Review, Spring 1987. Available online.

·         Harford, Tim. 2005. The Undercover Economist, Chapter 10: How China Grew Rich.

·         DeLong, J. Bradord. 2000. Cornucopia: Increasing Wealth in the Twentieth Century. Available online.

·         Romer, Paul. “Economic Growth.” Concise Encyclopedia of Economics, Liberty Fund. Available online.

·         Landsburg, Steven. 2007. Chapter 2 in More Sex is Safer Sex.

·         Cox, Michael and Richard Alm. 2008. “How Are We Doing? The American. July-August 2008. Available online.

·         Caplow, Theodore, Louis Hicks and Ben J. Wattenberg. 2000. The First Measured Century: An Illustrated Guide to Trends in America 1900-2000. Available online.

·         Cahill, Thomas. 2007. Mysteries of the Middle Ages: And the Beginning of the Modern World, Anchor Books: pp. 123-124.

·         Ebeling, Richard. 2002. “Classical Liberalism in the 21st Century: Freedom of Trade, Part I” Available online.

·         Ebeling, Richard. 2002. “Classical Liberalism in the 21st Century: Freedom of Trade, Part II” Available online.

·         Ebeling, Richard. 1996. “Free Trade, Peace, and Goodwill among Nations: The Sesquicentennial of the Triumph of Free Trade” Available online.

·         Hayek, F.A. 1944. The Road to Serfdom, Chicago: University of Chicago Press, pp. 34-38, 41-42. “Individualism and Collectivism.” Here is one take on it. Here is another way to put it. I do not think this chapter is available online.

·         Schumpeter, Joseph. 1942 (3rd edition: 1950). Capitalism, Socialism, and Democracy. New York: Harper Torchbooks, Harper and Row Publishers, pp. 132-34, 141-42, 150-51, 417-418. Not online, but here is a summary.

·         Friedman, Milton. 1962. “The Relation between Political Freedom and Economic Freedom,” in Capitalism and Freedom. Chicago: University of Chicago Press, Chapter 1, pp. 7-10.

·         Mill, John Stuart. 1869 (1878 edition). The Subjection of Women. London: Longman’s Reader and Dyer, pp. 1-2, 86-93, 192-194. Available online.

·         Berle, Adolph. 1963. The American Economic Republic. New York: Harcourt, Brace and World, Inc. pp. 3-7. “The American Political-Economic System.”

Full Length Books for Future Study

·         Kling, Arnold and Nick Schulz. 2009. From Poverty to Prosperity: Intangible Assets, Hidden Liabilities and The Lasting Triumph over Scarcity, Encounter Books.

·         Lebergott, Stanley. 1993. Pursuing Happiness. Princeton University Press.

·         Braudel, Fernand. 1981. The Structures of Everyday Life.  

·         Manchester, William. 1993. A World Lit Only by Fire: The Medieval Mind and the Renaissance.

·         Cox, Michael and Richard Alm. 2000. Myths of Rich & Poor.

·         Singer, Max. 1987. Passage to a Human World.

·         Easterbrook, Greg. 2003. The Progress Paradox.

·         Moore, Stephen and Julian Simon. 2000. It's Getting Better All the Time: 100 Greatest Trends of the Last 100 Years.

·         Goklany, Indur. 2007. The Improving State of the World.

·         Fogel, Robert. 2004. The Escape from Hunger and Premature Death.

·         Lomborg, Bjorn. 2001. The Skeptical Environmentalist.

·         Simon, Julian. 1995. The State of Humanity.

Other Media

  • lImage: The only thing you need if you travel through time.
  • lFull Length Video: The Industrial Revolution. This is a video in three parts – each part is less than an hour and each can be viewed in streaming format on the course Blackboard site.
    • Part One: The Great Discontinuity
    • Part Two: Freedom Under the Law
    • Part Three: A Magnificent Century

  • lYoutube Clip: Everything is Amazing Right Now and Nobody is Happy. Available online.
  • lYoutube Clip: Can You Spot the Billionaire? Available online.
  • lYoutube Clip: 200 Years That Changed the World (Hans Rosling). Available online.
  • Blog Entry: Caplan, Bryan. 2009 “How I’d Sell Civilization to Cavemen,” Econlog, July 15, 2009.
  • Blog Entry: Boudreaux. Sliced Bread is not a world-shattering achievement.

 

 

  1. Economics as a Science: Modeling, Theories and Policies

 

Readings

·         lBuchanan, James. 1964. “What Should an Economist Do?” Southern Economic Journal 30, January 1964: pp. 213-222. Available online.

·         l Peirce, Charles Sanders. 1931. “Morality and Sham Reasoning,” The Collected Papers Vol. I: Principles of Philosophy. Available online.

·         DeLong, J. Bradford. 2001. “Thinking Like an Economist,” in Macroeconomics Online, Available online.

·         GSSM Ch1. pp. 14-15

·         Bastiat, Frederic. 1845. “Post Hoc, Ergo Propter Hoc,” in Economic Sophisms, Second Series, Chapter 8. Available online. 

Other Media

·         Blog Entry: Cowen. “Hail Emily Oster!” Marginal Revolution, May 12, 2008.

 

·         Blog Entry: Roberts. “How do we know what we know about economics?” Café Hayek, March 12, 2008.

 

·         Blog Entry: Roberts. “Telling Stories,” Café Hayek, January 31, 2008.

 

·         Blog Entry: Boudreaux. “Practical Men,” Café Hayek, October 25, 2008.

 

·         Blog Entry: Meyer. “So Larry Summers Was Fire For Being Correct?” Coyote Blog, July 28, 2008.

 

 

 

  1. Basic Economic Principles
    1. Scarcity
    2. Tradeoffs
    3. Opportunity costs
    4. Thinking at the margin
    5. Sunk costs (class experiment)
    6. Incentives
    7. Pie fallacy (why economics is boring)
    8. Market organization
    9. Market “failure”
    10. Standards of living
    11. Inflation

 

Readings

  • lHazlitt, Chapter 2: The Broken Window. (2 pages)
  • lHazlitt, Chapter 3: The Blessings of Destruction. (2 pages)
  • l Bastiat, Frederic. 1845. “Effort and Result,” in Economic Sophisms, First Series, Chapter 3. Available online. 
  • l Bastiat, Frederic. 1845. “What is Seen and What is Not Seen,” in Selected Essays on Political Economy. Available online. 
  • lTaylor. Chapter 2. “Choice in a World of Scarcity.”
  • Roberts, Russell. 1999. “Nothing’s Free,” The Freeman, Vol. 49, No. 6, Available online.
  • Sowell, Thomas. 2004. “Scarcity,” in Basic Economics. Excerpted here
  • Williams, Walter. 2004. “The Real Price of a Free Lunch,” Capitalism Magazine, August 11, 2004. Available online.
  • Munger, Michael. 2006. “A Fable of the OC,” Library of Economics and Liberty, Feature, April 3, 2006. Available online
  • Roberts, Russell. 2007. “Getting the Most Out of Life: The Concept of Opportunity Cost,” Library of Economics and Liberty, Feature, February 5, 2007. Available online.
  • Smyth, David. 1983. “Until Shrimp Learn to Whistle,” The Freeman, Vol. 33, No. 9. Available online.
  • Roberts, Russell. 2006. “Incentives Matter,” Library of Economics and Liberty, Feature, June 2006. Available online.
  • Munger, Michael. 2006. “Ticket Scalping and Opportunity Cost,” EconTalk podcast. Podcast April 10, 2006. Available online.
  • Hoffman, Morris. 2007. “How Effective Are Public Defenders?” New York Times, Opinion. January 8, 2007. Available online.
  • Gans, Joshua. “The Most Unusual Day,” Core Economics.
  • Leonhardt, David. 2006. “To Do List: Wrap Gifts. Have Baby.” New York Times Economix. December 20, 2006.
  • Murphy, Robert. 2004. “What Does Marginality Mean?” Mises Daily Article, August 11, 2004. Available online.
  • Wall Street Journal, “The Black Liquor War: the US and Canada Duke it Out,” June 30, 2009. Available online
  • Rein, Lisa. 2006. “Fairfax Employees Run Up Odometers To Keep Their Cars,” Washington Post, September 24, 2006. Available online.
  • Welch, David. 2009. “Loopholes May Mean Bigger, Not Smaller, Cars,” Newsweek, April 21, 2009. Available online.
  • Kotchen, Matthew J. and Laura E. Grant. 2008. “Abstract of: Does Daylight Saving Time Save Energy?” NBER Working Paper #14429. Available online.
  • Dubner, Stephen, and Steven Levitt, 2008. “Unintended Consequences,” New York Times Magazine Freakonomics, January 20, 2008. Available online.
  • Whitman, Glen. 2007. “Slavery, Snakes, and Switching: The Role of Incentives in Creating Unintended Consequences,” Library of Economics and Liberty, Feature, May 7, 2007. Available online.
  • McCartney, Scott. 2009. “From Paradise to Perdition on the Tarmac,” Wall Street Journal, April 28, 2009. Available online.
  • Gimein, Mark. 2009. “Is Ticket Scalping All That Bad?” Slate, June 9, 2009.  Available online.
  • Stigler, George. 1984. “An Academic Episode,” in The Intellectual and the Marketplace. Cambridge: Harvard University Press, Chapter 1, pp. 3-9. (unintended consequences)
  • Friedman, David. 1970. “I Don’t Need Nothing,” Machinery of Freedom, Chapter 9.
  • Perry, Mark. 1995. “Why Socialism Failed,” The Freeman, June 1995, Foundation for Economic Education. Available online.

Other Media

 

  1. Ethical Foundations of Commercial Society
    1. The golden rule
    2. Selfishness and self-interest
    3. Soft-values, business responsibility, profits and love
    4. Trust, faith or confidence?

 

Readings

  • lBastiat, Frederic. 1845. “Two Systems of Ethics,” in Economic Sophisms, Second Series, Chapter 2. Available online. 
  • lBastiat, Frederic. 1850. “Conclusion to Part I,” in Economic Sophisms. Available online.
  • l Appiah, Kwame Anthony. 2006. “The Case for Contamination,” New York Times Magazine, January 1, 2006. Available online.
  • lSandel, Michael J. 1998. “What Money Can’t Buy: The Moral Limits to Markets,” Tanner Lectures on Human Values. Brasenose College, Oxford May 11 and 12, 1998. Available online.
  • lWight, Jonathan. 2007. “The Treatment of Smith’s Invisible Hand.” Journal of Economic Education. Summer 2007. Vol. 38, Iss. 3; pp. 341-358. Available online.
  • Bastiat, Frederic. 1850. “Man’s Wants,” Economic Harmonies, Chapter 3. Available online.
  • Bastiat, Frederic. 1850. “Wants, Efforts, Satisfactions,” Economic Harmonies, Chapter 4. Available online.
  • Butler, Eamonn. 2007. “The Theory of Moral Sentiments,” Chapter 4 in Adam Smith: A Primer. Institute for Economic Affairs. Available online.
  • Smith, Adam. 1759. The Theory of Moral Sentiments. Available online.
  • Hill, Peter J. 1988. “Markets and Morality,” PERC Viewpoints, January-February, No. 4. Available online.
  • Evensky, Jerry. 2005. “Adam Smith’s Theory of Moral Sentiments: On Morals and Why They Matter to a Liberal Society of Free People and Free Markets,” Journal of Economic Perspectives, Vol. 19, No. 3, Summer 2005, pp. 109-130. Available online.
  • Raymond de Roover, "The Concept of the Just Price: Theory and Economic Policy," The Journal of Economic History 18 (Dec., 1958), 424.
  • Jeremy Bentham, Defence of Usury (London: T. Payne and Son, 1787), Available online.
  • Thomas Aquinas, Summa Theologica, trans. by Fathers of the English Dominican Province (New York: Benziger Brothers, 1947), II, ii, q. 77, art. 1. (or read the entire Treatise on Man). Available online.
  • Rebecca M. Blank and William McGurn, Is the Market Moral? A Dialogue on Religion, Economics & Justice (Washington DC: Brookings Institution Press, 2004). Summary is here.
  • Heyne, Paul. 1998. “Moral Misunderstanding and the Justification of Markets,” The Region, Federal Reserve Bank of Minneapolis, Vol. 12, No. 4, December 1998. Available online.
  • Aristotle. (350 BC). Nicomachean Ethics. Book V. Available online.
  • Hirshleifer, Jack. 1959. “Capitalist Ethics – Tough or Soft?” Journal of Law and Economics, Vol. 2, (Oct. 1959), pp. 114-119. Available online.

Other Media

·         Freakonomics Blog: “The Business Case for Managed Death”  

·         Youtube Video: Milton Friedman: “What is Greed?” Available on Youtube.

·         Audio Lecture: Heyne, Paul. 2000. “The Moral Critics of Capitalism,” Paul Heyne’s Final Lecture, University of Washington – Seattle. February 17, 2000. Available online. Here is the Q&A.

 

 

  1. Scarcity, Choice, Specialization and Exchange
    1. Basic economic questions
    2. Tradeoffs
    3. Wealth
    4. Trade and exchange
    5. Production possibilities
    6. Diminishing returns
    7. Comparative advantage and Specialization
    8. International
    9. Trade statistics and free trade

 

Readings

  • lHazlitt, Chapter 7: The Curse of Machinery
  • lHazlitt, Chapter 8: Spread the Work Schemes
  • lHazlitt, Chapter 11: Who’s “Protected” by Tariffs?
  • l Smith, Adam. 1776 (6th edition: 1791). “Book I, Chapter II: Of the Principle which gives Occasion to the Division of Labour,” in An Enquiry into the Nature and Causes of the Wealth of Nations. London: A Strahan. Available online.GSSM Ch2, pp. 28-33, 38-46, 50-51
  • l Smith, Adam. 1776 (6th edition: 1791). “Book IV, Chapter II: Of Restraints upon the Importation from Foreign Countries of such Goods as can be Produced at Home,” in An Enquiry into the Nature and Causes of the Wealth of Nations. London: A Strahan. Available online.
  • lBastiat, Frederic. 1845. Economic Sophisms, First Series Chapter 4 through 23, but particularly Chapter 6, 7 (Candlemakers’ Petition) and 17. Series 2, Chapter 16. Available online.
  • lTaylor. Chapter 3.
  • lMcAfee. Chapter 2.6, pp. 32-40.
  • GSSM Ch17, pp. 371-378
  • GSSM Ch12, pp. 263-265 (money)
  • Varian, Hal. 2007. “An iPod Has Global Value. Ask the (Many) Countries That Make It.” New York Times Economic Scence, June 28, 2007. Available online.
  • Bastiat, Frederic. 1850. “Exchange,” Economic Harmonies, Chapter 4. Available online.
  • Bastiat, Frederic. 1850. “On Value,” Economic Harmonies, Chapter 5. Available online.
  • Bastiat, Frederic. 1850. “On Wealth,” Economic Harmonies, Chapter 6. Available online.
  • Harford, Tim. 2004. The Undercover Economist, Chapter 9: Beer, Fries and Globalization. 
  • Martyn, Henry. 1701. Considerations on the East-India Trade, Available online.
  • Lerner, Abba. 1949. “The Myth of the Parasitic Middleman.” Commentary, July 1949, pp. 45-46, 49-50.
  • Munger, Michael. 2007. “The Division of Labor,” EconTalk. Podcast April 2, 2007. Available online.
  • Boudreaux, Donald. 2007. “The Economics of Buy Local,” EconTalk Podcast. April 16, 2007. Available online.

Other Media

                       

  1. Property Rights, Institutions, and Economic Freedom
    1. Transactions costs and the market
    2. Middlemen
    3. Competing political economy models
    4. Origins of American (western) system of property rights
    5. Economic freedom

 

Readings

·         l de Soto, Hernando. 2003. The Mystery of Capital:  Why Capitalism Triumphs in the West and Fails Everywhere Else (New York:  Basic Books, 2003), pp. 41-62. PDF posted to blackboard site.

·         l Alchian, Armen A. “Property Rights,” The Concise Encyclopedia of Economics. Available online.

·         lHazlitt, Chapter 9: Disbanding Troops and Bureaucrats

·         lBastiat, Frederic. 1848. The Law, Available Online.

·         Sowell, Thomas. 1999. “The Rule of Law,” in The Quest for Cosmic Justice, pp. 150-175. PDF posted to blackboard site.

·         Mill, John Stuart. 1848. “Of Property,” in Principles of Political Economy, with some of their Applications to Social Philosophy, Book II, Chapter I. London: Longmans, Green & Co., pp. 208-209. Available online – Private Property Has Not Received a Fair Trial (last 3 paragraphs of § 3).

·         Locke, John. “Of Property,” in Two Treatises of Civil Government (Hollis ed.) [1689] Available online.

·         Rousseau, Jean Jacques. “The Origin of Inequality,” in C. B. Macpherson, ed. Property:  Mainstream and Critical Positions (Toronto:  University of Toronto Press, 1978), pp. 31-37. PDF posted to blackboard site, under Reserves.

·         John Stuart Mill, The Collected Works of John Stuart Mill, Volume II - The Principles of Political Economy with Some of Their Applications to Social Philosophy (Book II, Chapter 1 and 2: “Of Property”) [1848]. Available online.

·         Marx, Karl. “Bourgeois Property and Capitalist Accumulation,” in C. B. Macpherson, ed. Property:  Mainstream and Critical Positions (Toronto:  University of Toronto Press, 1978), pp. 61-74. PDF posted to blackboard site under Reserves.

 

·         Strauss, Leo. 1953. Natural Right in History (Chicago:  University of Chicago Press, 1953), pp. 233-51. PDF posted to blackboard site under Reserves.

·         Gwartney, James. 2009. “"Institutions, Economic Freedom, and Cross-Country Differences in Performance," Southern Economic Journal, Vol. 75, pages 937-956. Available online.

·         GSSM Ch2, pp. 33-38, 46-48

·         GSSM Ch15, p. 336-343

·         GSSM Ch16 (including appendix)

·         Friedman, David. 1970. The Machinery of Freedom. Chapter 1, 2 and 3.

·         Rothbard, Murray. 1973. “Property and Exchange,” For a New Liberty. Chapter 2. Available online.

·         Stroup, Richard. 2003. “Rights: How Property Rights and Markets Replace Conflict with Cooperation.” Chapter 2 in Eco-nomics: What Everyone Should Know About Economics and the Environment.

·         Todd, Walker. 2002. “Property Rights: Origins and Theories,” Economic Education Bulletin, May 2002. American Institute for Economic Research: Great Barrington, MA. Available online.

·         Murphy, Liam and Thomas Nagel. 2002. The Myth of Ownership: Taxes and Justice, New York: Oxford Univ. Press. This is reviewed in “The Philosopher Kings,” AIER Research Reports, vol. 69, no. 9 (May 13, 2002) by Walker Todd (available online).

 

·         Bastiat, Frederic. 1850. “Private Property and Common Wealth,” Economic Harmonies, Chapter 8. Available online.

·         Bastiat, Frederic. 1850. “Landed Property,” Economic Harmonies, Chapter 9. Available online.

·         Schmidtz, David, (2002). “The Institution of Property,” in Environmental Ethics: What Really Matters. What Really Works, edited by D. Schmidtz and Elizabeth Willott, New York: Oxford University Press.

 

Other Media

·         EconTalk Podcast: Richard Epstein on the Rule of Law

 

·         lDocumentary Video: Commanding Heights, Episode One: The Battle of Ideas

 

 

Section II: Analytical Tools of the Economist

 

  1. Supply and Demand
    1. Double oral auction experiment
    2. Perfect competition simplification
    3. Demand
    4. Demand elasticity
    5. Need or wants?
    6. Supply
    7. Opportunity costs
    8. Supply elasticity

 

Readings

  • lTaylor. Chapter 4, pp. 61-77.
  • lTaylor. Chapter 7.
  • lMcAfee. Chapter 2, pp. 8-31.
  • l Radford, R.A. 1945. “The Economic Organization of a P.O.W. Camp.” Economica, XII, No. 48, New Series, pp. 189-201. Available online.
  • l Rizzo, Michael. “Riffing on Gas Price Complaints,” The Unbroken Window, August 8, 2005.
  • l Bastiat, Frederic. 1845. “High Prices and Low Prices,” in Economic Sophisms, Second Series, Chapter 5. Available online. 
  • Galbraith, John Kenneth. 1952. The Affluent Society. Boston: Houghton Mifflin, pp. 126-131.
  • Veblen, Thorstein. 1899. The Theory of the Leisure Class. New York: The Viking Press, Inc., pp. 36-37, 70, 71, 230-32. Available online.
  • Bastiat, Frederic. 1850. “Competition,” Economic Harmonies, Chapter 10. Available online.
  • GSSM Ch3, pp. 55-70
  • GSSM Ch19

 

  1. Equilibrium and the Price System
    1. Methods of rationing
    2. The Market
    3. Coordinating role of money prices
    4. Moving toward equilibrium
    5. Changes to market conditions
    6. How Markets Use Knowledge (Titanium Czar)
    7. The urge to fix prices
    8. Can you eliminate competition?
    9. The success of planned economies

 

Readings

·         l Hazlitt, Chapter 15: How the Price System Works

·         lHazlitt, Chapter 17: Government Price Fixing

·         l Smith, Adam. 1776 (6th edition: 1791). “Book IV, Chapter II: Of Restraints upon the Importation from foreign Countries of such Goods as can be produced at Home,” in An Enquiry into the Nature and Causes of the Wealth of Nations. London: A Strahan. Available online – particularly paragraphs 8 and 9. (Invisible Hand)

·         lAdler, Max. 2009. “Bethpage Gray,” Golfworld  May 25, 2009. Available online.

·         GSSM Ch3, pp. 70-79

Other Media

 

  1. Supply and Demand Applications
    1. Rent Control
    2. Economics of Illegal Drugs
    3. Tax Incidence
    4. Additional applications: professional sports, poetry readings, gold mines, delis, international trade, oil and financial market speculation, the minimum wage and more

 

Readings

·         lTaylor. Chapter 4, pp. 77-83.

·         lBastiat, Frederic. 1845. “The Tax Collector,” in Economic Sophisms, Second Series, Chapter 10. Available online. 

·         lHazlitt, Chapter 5: Taxes Discourage Production

·         lHazlitt, Chapter 6: Credit Diverts Production

·         lHazlitt, Chapter 18: What Rent Control Does

·         lHazlitt, Chapter 19: Minimum Wage Laws

·         GSSM Ch4

·         GSSM Ch17, pp. 378-383, 386-390

·         Harford, Tim. 2005. Undercover Economist, Chapter 3: “Perfect Markets and the Word of Truth.”

·         Rizzo, Michael. 2007. “The Minimum Wage Charade,” Research Reports, American Institute for Economic Research January 22, 2007. Available online.

·         de Jouvenel, Bertrand. 1948. “No Vacancies,” in The Reader’s Digest Condensation. Irvington-on-Hudosn, New York: The Foundation for Economic Education, pp. 33-46. mimeo (I will try to upload, but the scan is huge – 11MB)

·         Hayek, Friedrich. 1945. "The Use of Knowledge in Society", Library of Economics and Liberty Edition: American Economic Review, XXXV, No. 4; pp. 519-30. Available online.

·         Munger, Michael. 2007. “They Clapped: Can Price-Gouging Laws Prohibit Scarcity?” Liberty Fund Feature, January 8, 2007. Available online.

·         Roberts, Russell. 2005. “The Reality of Markets,” Library of Economics and Liberty, Feature, September 5, 2005. Available online.

·         Peter Augustine Lawler, “Is the Body Property,” New Atlantis:  A Journal of Technology & Society, (Fall 2006): 62-72. Available online.

Other Media

·         Slate Article: No Red Roses for Saudi Valentines. Available online.

·         Slate Article: The Great X-Box Shortage of 2005. Available online.

·         Wall Street Journal: Ethanol Boom Fuels Brisk Sales of Midwest Farmland. Available online.

·         Boston Globe: Jacoby, Jeff. 2009. “A Deadly Organ Donor System.” Boston Globe, July 5, 2009. Available online.

·         Blog Entry: Boudreaux - Dispersed Knowledge and Shopcraft as Soulcraft

·         Blog Entry: Meyer - Trying to Find a Job as a Teenager.

 

  1. Evaluation of Market Mechanism
    1. Consumer and producer surplus
    2. Welfare
    3. Interlude (possible): rationality, mistakes, evolutionary psychology and behavioral economics

 

Readings

  • lTaylor. Chapter 4, pp. 83-88.
  • lHazlitt, Chapter 21: Enough to Buy Back the Product
  • l Senior, Nassau. 1836. “Value of the Forces of Supply and Demand,” in An Outline of the Science of Political Economy. New York: Augustus N. Kelly, pp. 13-17.  Scroll down here to the section on value. (Perfect Competition).
  • Harford, Tim. 2005. Undercover Economist - Chapter 8: “Why Poor Countries are Poor?”
  • Harford, Tim. 2005. Undercover Economist - Chapter 9: “Beer, Fries, and Globalization”
  • Hayek, F.A. 1936. “Economics and Knowledge,” Economica, IV (new series, 1937), pp. 33-54. Available online.
  • Marshall, Alfred. 1890. “Competition,” in Principles of Economics. London: Macmillan & Co., Ltd., pp. 4-8.
  • Knight, Frank. 1933. “The Price System and the Economic Process,” in The Economic Organization. New York: Harper and Row, Publishers, pp. 31-36.
  • Friedman, David. 2001. “Economics and Evolutionary Psychology,” Indret, April 2001. Available online. Rationality, just prices and other economic puzzles.
  • GSSM Ch5, pp. 107-110 and reread Ch3, pp. 57-59, 66

Other Media

·         Blog Entry: Rizzo, Michael, 2009. “Why Money Matters,” The Unbroken Window, May 8, 2009. Available online.

 

·         lDocumentary Video: Commanding Heights, Episode Two: The Agony of Reform

 

 

Section III: Profits, Losses and Entrepreneurialism

 

  1. Simple Theory of the Firm
    1. Factors of production
    2. Profitability
    3. Wages and rents
    4. Interest
    5. Calculating profits
    6. Uncertainty
    7. Advertising (possible)

 

 

Readings

·         lTaylor. Chapter 9 (we will cover this material differently, so read this carefully to supplement what we do in class, and to prepare yourselves for what is coming in Eco 207).

·         lHazlitt, Chapter 22: The Function of Profits

·         l Schumpeter, Joseph. 1942 (3rd edition: 1950). Capitalism, Socialism, and Democracy. New York: Harper Torchbooks, Harper and Row Publishers, pp. Chapter VII – Creative Destruction. In PDF form on Blackboard Course Reserves.

·         lGraham, Paul. 2004. “How to Make Wealth,” in Hackers and Painters, O'Reilly Media, Inc. Available online.

·         Harford, Tim. 2005 Undercover Economist, Chapter 2: “What Supermarkets Don’t Want You to Know.”

·         Coase, Ronald. 1937. “The Nature of the Firm.” Economica, New Series 4, pp. 386-405. Available online.

·         Robinson, Joan. 1971. “Increasing and Decreasing Returns.” Economic Heresies: Some Old Fashioned Questions in Economic Theory. New York: Basic Books, pp. 52-63.

·         Parkinson, C. Northcote. 1957. “Parkinson’s Law or the Rising Pyramid,” in Parkinson’s Law and Other Studies in Administration. New York: Houghton Mifflin Company, Chapter One.

·         Baumol, William J. 1990. “Entrepreneurship: Productive, Unproductive, and Destructive,” Journal of Political Economy, Vol. 98, No. 5, Part 1 (October 1990), pp. 893-921. Available online.

·         Bastiat, Frederic. 1850. “Capital,” Economic Harmonies, Chapter 7. Available online.

·         GSSM Ch20

Other Media

·         Wall Street Journal: “Why Governments Can’t Run a Business,” May 21, 2009.

·         Audio - National Public Radio: “Venture Capitalists, Entrepreneurs Bet on Detroit,” April 23, 2009.

 

·         Pittsburg Herald Tribune: Zapp’s Potato Chips, March 17, 2005.

 

·         Video: American Gangster, various clips (we are working on getting access to some of them)

 

 

  1. The Entrepreneur
    1. Arbitrage
    2. Restrictions on competition
    3. Discounting and present value

 

Readings

  • lTaylor. Chapter 10 (we will cover this material differently, so read this carefully to supplement what we do in class, and to prepare yourselves for what is coming in Eco 207).
  • lHazlitt, Chapter 14: Save the X Industry
  • lBastiat, Frederic. 1845. “The Physiology of Plunder,” in Economic Sophisms, Second Series, Chapter 1. Available online. 
  • l Mill, John Stuart. 1849. “Competition and Custom,” in Principles of Political Economy. London: Longmans Green, pp. 242-47. Book II, Chapter IV: Available online.
  • l Rauch, Jonathan. 2008. “Electro-Shock Therapy,” Atlantic Monthly, July-August 2008. Available online.
  • Tucker, Jeffrey. 2009. “Save the Piano Industry?” The Free Market Vol. 27, No. 1, Mises Institute. Available online. 
  • Folson, Burt, 1988. “Entreprenuers and the State,” The Freeman, Vol. 34, No. 8. Available online.
  • Johnson, Steven Berlin. “Old Growth Media and the Future of News,” from his personal webpage. Available online.
  • GSSM Ch21, pp. 483-486
  • GSSM Ch22, pp. 498-502
  • Leeson, Peter. 2009. “The Benefits of Failure,” Washington Times, April 3, 2009.
  • Harford, Tim, 2005. Undercover Economist, Chapter 6: “Rational Insanity.”
  • Kling, Arnold. A rent or buy calculation. Available online.
  • Kling, Arnold. Develop a business plan. Available online.

Other Media

·         DiLorenzo, Thomas. 2004. “Do Capitalists Have Superior Bargaining Power?” Mises Daily Article, September 6, 2004. Available online.

·         EconTalk Podcast: Munger on Middlemen, October 2008.

·         Rethinking Nickel and Dimed (online here and here): Fly on the Wall: Undercover at Walmart. Online at the New York Post.

 

 

Section IV: Markets in the Real World: Extra Thumbs on the Invisible Hand; The Grabbing Hand

 

  1. Competition in the Real World: Price Searching and Market Power
    1. What is a monopolist?
    2. Choice and market power
    3. Price takers, price searchers and optimal resource allocation
    4. The competitive process
    5. The theory of price searchers
    6. Price discrimination

 

Readings

  • lTaylor. Chapter 11 (we will cover this material differently, so read this carefully to supplement what we do in class, and to prepare yourselves for what is coming in Eco 207).
  • lTaylor. Chapter 12 (we will cover this material differently, so read this carefully to supplement what we do in class, and to prepare yourselves for what is coming in Eco 207).
  • lGalbraith, John Kenneth. 1948. “Monopoly and the Concentration of Economic Power,” in A Survey of Contemporary Economics, edited by H.S. Elliss. Homewood: Irwin, pp. 99-103.
  • GSSM Ch5, pp. 111-112
  • GSSM Ch22
  • GSSM Ch23 (we will cover this differently in class, I urge you to read this as a supplement)
  • Kolko, Gabriel. Railroads and Regulation and The Triumph of Conservatism.
  • Friedman, David. 1970. “Monopoly I: How to Lose Your Shirt,” Machinery of Freedom, Chapter 6.

 

  1. Competition in the Real World: Externalities and Public Goods
    1. Conflicting rights
    2. Negative and positive externalities
    3. Thinking about Solutions
    4. Negotiation and the Coase Thm
    5. Adjudication
    6. Legislation: command and control, taxes, permits
    7. Public Goods Experiment

 

Readings

  • lTaylor. Chapter 14.
  • lTaylor. Chapter 15.
  • l Coase, Ronald. 1960. “The Problem of Social Cost,” Journal of Law and Economics, Vol. 3 (Oct. 1960), pp. 1-44. Available online.
  • l Munger, Michael. 2008. “Orange Blossom Special: Externalities and the Coase Theorem.” Library of Economics and Liberty Feature. May 8, 2008. Available online.
  • GSSM Ch5, pp. 112-120
  • Harford, Tim. 2005. Undercover Economist, Chapter 4: “Crosstown Traffic.”
  • Friedman, David. 2000. “What’s Wrong with the World, I and II,” Chapter 3 and Chapter 4 in Law’s Order.

 

  1. Government Incentives and Private Incentives: A Public Choice Primer
    1. Markets and Government, Public Choice
    2. What is the Case for Coercion?

 

Readings

·         lTaylor. Chapter 13.

·         lTaylor. Chapter 20.

·         l Stigler, George. 1984. “A Sketch of the History of Truth in Teaching,” in The Intellectual and the Marketplace, Enlarged edition, Chapter 6. Cambridge, MA, and London, England: Harvard University Press, pp. 43-50. Available online.

·         l Munger, Michael. 2006. “Two Steves and One Soichiro: Why Politicians Can’t Judge Innovation,” feature at the Library of Economics and Liberty. Available online.

·         Hirshleifer, Jack (under the pen name “Sir Epicure Mammon”). 1959. “The Sumptuary Manifesto.” Journal of Law and Economics, Vol. II. October, pp. 120-23. Available online.

·         Harriss, C. Lowell. 1989. “True Fundamentals of the Economic Role of Government,” in Fundamentals of the Economic Role of Government, Warren J. Samuels ed. New York: Greenwood Press.

·         Friedman, David. 1970. “Monopoly II: State Monopoly for Fun and Profit,” Chapter 7 in Machinery of Freedom

·         GSSM Ch6

·         GSSM Ch17, pp. 383-386

Other Media

·         Blog Entry: Dempsey, “The Feds and the Great Multitude,” Inhofe EPW Press Blog, April 30, 2009.

·         Blog Entry: Henderson, “Friedman’s Law,” Econlog, June 9, 2009.

 

  1. The Distribution of Income
    1. Growth and inequality
    2. Special privilege
    3. The importance of inequality
    4. Supply, demand and predetermination
    5. Capital
    6. Poverty
    7. Challenges
    8. Land policy

 

Readings

  • lTaylor. Chapter 16.
  • GSSM Ch27
  • Hicks, John R. 1932. The Theory of Wages. London: Macmillan & Co., Ltd., pp. 4-9, 14-19.
  • Ricardo, David. 1817. “Rent,” in Principles of Political Economy and Taxation. London: J. Murray. Available online. (if you wish, you can stop about 1/3 of the way through with the paragraph that ends, “and the land would be no longer pre-eminent for its limited powers.”)
  • l George, Henry. 1879. “Preface,” Progress and Poverty. New York: Modern Library, pp. xii-xvii. Available online.
  • Harriss, C. Lowell. “How to Make Slums and Create Barbarians,” Economic Education Bulletin. May 1981. American Institute for Economic Research: Great Barrington, MA. Available online.
  • Friedman, David. 1970. “The Rich Get Richer and the Poor Get Richer,” Chapter 5 in The Machinery of Freedom.
  • Buchanan, James. 1971. “Equality as Fact and Norm,” Ethics 81: pp. 228-240. Available online.
  • Wilkinson, Will. 2009. “Thinking Clearly About Economic Inequality,” Cato Policy Analysis No. 640. Available online.

Other Media

 

Section V: Macroeconomics

 

  1. Introduction
    1. Major issues in macroeconomics
    2. Macroeconomic policy

 

Readings

  • lTaylor. Chapter 27.
  • lTaylor. Chapter 28
  • l Lucas, Robert. 1978. “Unemployment Policy.” American Economic Review, May pp. 353-357. Available online.
  • l DeLong, J. Bradford. 1996. “Lecture 34,” From his Intro Macro Course, Available online.
  • l Keynes, John Maynard. 1936. The General Theory of Employment Interest and Money. London: Macmillan, pp. 377-84. “Concluding Notes on the Social Philosophy Towards Which the General Theory Might Lead.
  • DeLong, J. Bradford. 2001. “Introduction,” Macroeconomics Online, Available online.
  • Kling, Arnold. 2008. “Lectures on Macro - #1 through #4,” Available online.
  • Modigliani, Franco. 1977. “The Monetarist Controversy, or Should We Foresake Stabilization Policies?” American Economic Review, Volume 67 (March), pp. 1-8, 12, 14, 15, 17, 18. Available online.
  • GSSM Ch8, pp. 170-183
  • Lekachman, Robert. 1977. “The Specter of Full Employment.” Harper’s Magazine, February, pp. 35-40.
  • Hazlitt, Henry. 1959. The Failure of the “New Economics.”  Princeton, NJ: Van Nostrand, Chapter XXVI, pp. 399-408.
  • Buchanan, James M. and Richard E. Wagner. 1978. The Consequences of Mr. Keynes. London: Institute of Economic Affairs, pp. 13-17, 18, 23, 27.
  • Hutt, William Harold. 1963. Keynesianism – Retrospect and Prospect. Chicago: Henry Regnery, pp. 39-43.

 

Other Media

 

 

  1. Measurement
    1. Measuring GDP
    2. GDP and living standards

 

Readings

  • lTaylor. Chapter 21.

·         l U.S. Bureau of Economic Analysis. “Measuring the Economy: A Primer on GDP and the National Income and Product Accounts,” September 2007.  Available online.

·         GSSM Ch7

·         Rizzo, Mario. 2009. “Is All Spending Created Equal?” ThinkMarkets, April 18, 2009. Available online.

·         Kling, Arnold. 2009. “Lectures on Macroeconomics, No. 15,” Econlog, The Library of Economics and Liberty. May 29, 2009. Available online.

·         Abraham, Katharine G. 2005. “What We Don't Know Could Hurt Us: Some Reflections on the Measurement of Economic Activity,” Journal of Economic Perspectives, Vol. 19, No. 3 (Summer, 2005), pp. 3-18. Available online.

Other Media

·         Caplan, Bryan, 2005. “How Everyone Can Get Richer as Per Capita Income Falls,” Econlog, March 27, 2005.

 

C. Inflation

    1. Causes
    2. Consequences

 

Readings

  • lTaylor. Chapter 24.
  • lHazlitt. Chapter 23: The Mirage of Inflation.
  • lHazlitt. Chapter 24: The Assault on Saving.
  • l Bagehot, Walter. “Why Lombard Street is Often Very Dull, and Sometimes Extremely Excited,” in Lombard Street. London: Kegon Paul and Co., April 1873, pp. 118-123, 150-52. Available online.
  • Hazlitt, Henry. 2008. What You Should Know About Inflation, Mises Institute Daily Article, March 11, 2008. Available online.
  • Weatherford, Jack. 1998. “Cannibals, Chocolate and Cash,” Chapter 1 in The History of Money.
  • GSSM Ch8, pp. 183-186
  • GSSM Ch12, pp. 264-283
  • Harriss, Lowell. 1968. “Inflation’s Hidden Effects,” Tax Review, Vol. 28, No. 7, July 1967, The Tax Foundation.
  • “2008 AIER Cost of Living Guide,” Economic Education Bulletin, Vol. 48, No. 1, January 2008. American Institute for Economic Research: Great Barrington, MA.
  • Law, John. 1705. Money and Trade Considered. Printed by the heirs and successors of Andrew Anderson, printer to the Queen’s Most Excellent Majesty. Read the 1st five paragraphs of the section, “5. Freighting, or hireing out Ships” this is available online.
  • Fisher, Irving. 1935. 100% Money. New Haven: The City Printing Company, pp. 3-20. “100 Per Cent Reserves.”
  • Simons, Henry. 1936. “Rules versus Authorities in Monetary Policy.” Journal of Political Economy, Vol. 44, No. 1 (February), pp. 1-30. Available online. 
  • Keynes, John Maynard. 1932. Essays in Persuasion. New York: Harcourt Brace, pp. 77-79. “Inflation and Deflation.”
  • Samuelson, Paul and Robert Solow. 1960. “Problems of Achieving and Maintaining a Stable Price Level.” American Economic Review, (May), pp. 136, 189, 191-194. Available online
  • Friedman, Milton. 1977. “Inflation and Unemployment.” Journal of Political Economy, No. 3, pp. 454-60, 464-71. Available online.

 

Section VI: A Requiem for the Economic Way of Thinking?

  • lHazlitt, Chapter 25: The Lesson Restated
  • lHazlitt, Chapter 26: The Lesson After 30 Years
  • lStigler, George, 1963. “The Intellectual and the Marketplace,” in The Intellectual and the Marketplace, Cambridge, MA: Harvard University Press. Available online.

 

  • Jacobsen, Rowan. Fruitless Fall: The Collapse of the Honeybee and the Coming Agricultural Crisis, Chapter 2, “How the Honey Bee Conquered the World.” Bloomsbury, USA, 2008. (also chapter 10 and 11).
  • Perry, Mark 1995. “Why Socialism Failed,” The Freeman, June 1995, Volume: 45, Issue: 6. Available online.

 

Other Media

·         YouTube Video: Dent, “This Time is Not Different.”

·         Blog Entry: Caplan, Bryan. 2009. “Thumbs Up for Portfolios for the Poor,” Econlog, June 9, 2009. Available online.

·         Blog Entry: Malanga, Steven. 2009. “Obama and the Reawakening of Corporatism,” RealClearPolitics, April 8, 2009. Available online.