August 29, 2021

Everybody Needs an Economics Elective

28 minutes

Why do I think a basic understanding of Economics is important for everybody?

It’s an area of the political realm we just can’t avoid. Quote from the preface of the textbook:

“Most of us are necessarily ignorant of many complex fields, from botany to brain surgery. As a result, we simply do not attempt to operate in, or comment on, those fields. However, every voter and every politician that they vote for affects economic policies. We cannot opt out of economic issues and decisions. Our only options are to be informed, uninformed, or misinformed, when making our choices on issues and candidates.”

So to increase the chances that you and your students are informed in these areas I highly recommend an economics class. It doesn't need to be math-based economics with charts and graphs and equations--it's much more important to understand economic theory and thinking.

Through the study of economics students and parents will hopefully get into a mindset of looking at political and economic problems/solutions and asking the basic questions: "Compared to What? At What Cost? What hard evidence do you have?"

Structure of the class for us

Used Thomas Sowell. “Basic Economics.” as a textbook. Sowell is a brilliant economist and social philosopher and is currently 90+ years old. You can find videos on YouTube of him being interviewed by Peter Robinson on Uncommon Knowledge. You can get a sense of his style of directness and dealing with facts and data from those videos.

https://www.youtube.com/watch?v=sGYl17DiEwo

The book is a Preface + 27 chapters, divided into 7 parts. We typically did 2 chapters a week, but some chapters were bigger so sometimes we'd only do 1 chapter. I did include a couple supplementary videos to break up the weeks. Each of the 7 parts has a set of 15 discussion questions to review. These are not softball questions either; we'll look at some of them in more detail to give you a flavor and you'll see what I mean. Every couple weeks we'd go through the provided questions as a class discussion and re-read any areas that the students weren't comfortable with.

http://tsowell.com/BE_Questions5.pdf

Overview of the book

Style of the book:

“The most obvious difference between this book and other introductory economics books is that Basic Economics has no graphs or equations. It is also written in plain English, rather than in economic jargon, so that it can be readily understood by people with no previous knowledge of economics. This includes both the general public and beginning students in economics."

Chapter 1 is an intro that gives terms and high level concepts for the foundations used throughout the rest of the book. “Economics is the study of the use of scarce resources which have alternative uses.”

Part 1 is about Prices and Markets. What are prices? How do they work in a market economy? How do they work in socialist planned economy? Costs vs Prices? Price controls.

How can the price of baseball bats be affected by the demand for paper or the price of catchers’ mitts be affected by the demand for cheese?

Part 2 is about Industry and Commerce. Why do Businesses grow and fail? What happens with profits and losses? Middlemen, specialization, big businesses, monopolies, regulation, anti-trust, and government institutions

After the A & P grocery chain cut its profit margins on the goods it sold, back in the early twentieth century, its rate of profit on its investment rose well above the national average. Why?

What is the difference between the government’s protecting competition and protecting competitors?

Part 3 is about Work and Pay. Productivity, income "distributions," capital, discrimination, minimum wage, unemployment, working conditions, collective bargaining, and exploitation.

What have been some of the economic and social consequences of the substitution of machine power for human strength, as a result of industrialization, and the growing importance of knowledge, skills, and experience in a high-tech economy?

Is it possible for per capita income to rise by 50 percent over a period of years while household income remains unchanged over those same years?

Part 4 is about Time and Risk. Investments, returns, speculation, inventory, natural resources, stocks, bonds, insurance, hazards, uncertainty, time and money.

Why may the statistics on the known reserves of a natural resource provide a misleading picture of how much of that resource there is in the ground?

Part 5 is about The National Economy. Measuring National Output, money, inflation, deflation, banking system, government functions, corruption, property rights, government revenue, expenditures, budgets, market failures and government failures.

How does the level of honesty or corruption in a country affect the effectiveness of its economy? How do economic policies affect the level of honesty and corruption?

Those who favor increases in tax rates are often disappointed that the additional revenue turns out to be less than they expected. Conversely, those who fear that cuts in tax rates will substantially reduce the government’s revenues have often been surprised to find the government’s revenues rising. Explain both phenomena.

Part 6 is about The International Economy. International trade, advantages, restrictions, transfers of wealth, international investment, foreign aide, international disparities in wealth, and cultures.

What are some of the problems in applying laws against “dumping”?

Part 7 is about Special Economic Issues. Market myths, non-profit organizations, brands, non-market values, morality, history of economics, and closing thoughts.

Critics have claimed that profits exceed the value of the services performed by those who receive those profits. What empirical evidence could be used to test this belief?

Economic thinking is important for everybody!

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By Doug Clark, Lisa Clark