is there such thing as a free lunch?

Great Debates
1

In another thread, labdude made an astute observation:

"many people get their economic education from rush Limbaugh"

The fault I find with this statement is that it implies that ignorance of basic economics is limited to the right wing. No, I would say that there is a profound ignorance of the most basic tenets of economic theory that pervades our entire society. For a message board that does its best to fight ignorance, there is a surprising display of this ignorance. Not, of course, from all posters, but from a great many posters with varied political leanings. Take, for example the plethora of threads that propose drastic new taxes to achieve some policy goal, or the many threads proposing and end to all taxation to support similar goals.

In most cases, it is not that the idea itself is bad. One could reasonably support, for example, the position that higher unemployment is an acceptable price to pay for a higher minimum wage. This is a choice of tradeoffs. But many OPs fail to take into account the repercussions the proposal will have on the market. This is either ignorance or intentional denial.

I don’t think that the general public needs to be familiar with such micro basics as the Slutzky Equation. But I do think the general public should have a good working knowledge of how markets work. Not just parroting ‘supply and demand’ but knowing how artificial price levels affect supply. How monopolies and oligopolies are detrimental to the maximization of a societies utility. What utility really means to an economist. How about what it means not to have any inefficiencies in a market? What an externality is. Or what the three basic markets are, how they work, and why they are important to each other and society? The list goes on for quite some time, but not so long that a semester or so in high school or college would not be able to cover it.

I think this is important because for the most part, society holds as laudable such goals as the reduction of poverty and the empowerment of individuals. Unfortunately, some people are quick to support legislation that while sounds good, may have the unintended consequence of exacerbating the situation. A better understanding of economic theory would allow for better debate as to the best (or most preferred) method of achieving those goals. A better economics education will allow people to understand the differences between capitalism, socialism and communism, why there has rarely (if ever) been a society that was exclusive to any, and what results arise from a blending of the three. A better education will help to understand how to use market forces to our advantage, rather than trying to dictate our whims to the market. A better understanding of economics will bring peace on Earth, make you beautiful and desired by all your peers, and will improve your sex life. Well, maybe not that last one, but I was wondering if anyone was still reading this far.

My questions are then: Why is economics not taught earlier and more thoroughly in schools? Should it be? At what cost (i.e. less biology, gym class or recess)? Has anyone else noted the frustrating lack of economics understanding here on the boards or out in public?
Thanks for listening,

Rhythmdvl

PS My apologies if I have offended anyone with this post. I don’t wish to insult anyone’s intelligence by my statements. Not knowing something is much different than not being able to understand.

2

I would say that, at least for now, teaching economics in high school might do more harm than good, as most high school students don’t have the math to understand what they are being taught. I think it is for this reason that many people who actually have been taught some economics don’t really understand what they studied.

-VM

3

Must agree because I barely understand a word you said. Admit that I know jack about economics.

But I will say that in my state, Virginia we have adopted a new education standard. These SOLs (Standards of Learning)as they are called contain benchmarks for the education of children in math, english, the sciences and social studies. I believe certain economic principles are included. I know they are because this year my second grader was tested on simple economic terms such as supply and demand, consumer, goods, services, etc. Even though I have not gotten out my copy of the SOLs I would imagine that economics will be a testable subject in future years under the social studies heading.

Need2know

4

You’re such an idealist, but hey, on you it looks good.

Suppose I did go back to college and learn all this stuff–how is it applicable to my life? I mean, I’m sorry, but knowing WHY gas prices bounce up and down like bipolar depressives off their lithium isn’t going to lower them any, or make me feel any better about paying $1.80 for gas. It’s actually kind of comforting, I think, not to have to worry about it. I let Alan Greenspan do it for me, the same way I let Janet Reno worry about attorney general stuff for me. That’s what they get paid for.

I did have one economics class in college, and I suppose it covered all the stuff you mention, but golly, the only thing I remember is that there are things called “leading indicators”, and I had no idea what I was supposed to do with that information, since I wasn’t planning on going into economics as a career.

Although I do think I will have to memorize the phrase “How monopolies and oligopolies are detrimental to the maximization of a societies utility”, so I can throw it at the chairman of the Finance Committee at the next meeting. He won’t know what it means, either, but he won’t know that I don’t know. Ha. Whoosh.

5

Teaching economics in high school would be a good cure for school violence-- you can’t fire a gun in your sleep after all :slight_smile:

Actually, I had to take 2 economics courses in college, and they were the two most torturous classes I ever endured. I would rather listen to the entire collected recordings of Yoko Ono than take another Econ class.

Part of my dislike for economics is the way the discipline is so fragmented. Beyond a few basics, there seems to be little agreement amongst those in the profession. Every day I listen to NPR on the way home from work, and whenever they have an economist on saying A is going to happen, they also have economist #2 saying B is going to happen. It’s even money that there will be a third telling us all that the first 2 are wrong. Even when economists are describing what happened in the past you have one saying that the cause of ‘blah’ was a shortage of unskilled labor, another saying it was trade imbalance, and someone else saying it was due to lack of consumer confidence. The thing is, all three are probably right, but so many interconnected factors can’t be separated out very easily.

To a layman with an aversion to the intricacies of business, this all looks like little more than an elaborate guessing game, and how am I to decide who to believe? Apparently even if I were to get my doctorate in economics, I would just be another guy with an opinion in a sea of differing experts. I am not saying that economic theories are useless, but there doesn’t seem to be much of a consensus beyond supply and demand when you are on the outside looking in.

6

I had a great HS Econ teacher, he made us “president-for-life” of our own imaginary small country, and we had to improve the Econamy (before computers). And, he wrote on the blackboard “TANSTAAFL!!”!

7

Well I am an economist, but what the hell does that mean? Anyone can call themselves one. Most of the commentary you hear on the radio is by finance journalists, and most of what they say is, of course, piffle.

I actually did some economics in school, and it was quite useful, although it did damn me to my current vocation.

Part of the problem of course is that economics is hard, that one’s subjects do tend to talk back and the ethics committee won’t let you disect them. One manifestation of this is that people with firm but uninformed views tend to dominate the debate. For example, ask a real economist why the US exchange rate has appreciated so strongly against the Euro in the last six months and they will tell you “I don’t know.” This is not the stuff headlines are made of.

Economists do disagree (but perhaps less than the public believe), but this is not surprising. Since experimentation is frequently impractical, there are rarely decisive victoriers of one point of view over another.

Take the Great Depression for example. Some of the profession believe that this was due to the bursting of an unsustainable bubble. Some believe it was due to inappropriate monetary policy by the Fed. Still others (and just to indicate that these people are mainstream, several recent Nobel Prize winners) believe that the depression was due to a forgetting of technology and that there was no unemployment in the recession, it’s just that a lot of people decided to take holidays. The data cannot eliminate any of these theories.

BTW, society does not have utility, only individuals do. And economists don’t agree on what “utility” means. It is a rather more slippery concept than most economists think it is (I am basically writing my PhD thesis on this topic).

To establish my credentials, I should probably add that the Slutzky equation says that the matrix of substitution terms is negative. :wink:

picmr