EYE ON THE PIE: Taking the con out of economics

July 21, 2008

A marketing professor at the Kelley School of Business used to proclaim he could teach all one needed to know about economics in a week. That was back in the days when faculty would spend a few minutes of the morning hours in the coffee room engaged in friendly banter as well as serious discussion.

The coffee room and my friend are both gone, but to me, a teacher of economics, the insult remains. Imagine-denigrating my calling, my faith, with such a gratuitous dismissal. Yet ...

In September, I will embark on an effort to discuss the leading aspects of economics in four one-hour sessions. Can it be done? Can I or anyone distill the essence of a noble discipline into a digestible series of nuggets? Is this not just another capitulation to sound-bite education, conforming to our society's attention-deficit disorder?

Maybe. Or maybe the teaching of economics has wandered from the purpose of the study of economics. At one time, moral philosophers studied who gets what in this world. But something happened along the way. The distribution of goodies became a branch of physics and mathematics.

Instead of trying to understand the wealth of nations, the returns to labor and capital, the rationale for rents and profits, economists learned calculus so they could hold all but one variable constant and determine the consequences for market equilibrium.

Surprise! There is no equilibrium in the economic affairs of the world. But modern economics requires little evidence to sustain the careers of many economists. Once upon a time, students were taught economic history and the history of economic thought. Try to find those courses in today's college catalog.

You might find courses on sports or health economics as student-starved departments attempt to provide "relevant" (i.e. popular) instruction. But it is increasingly difficult to find courses on the structure and performance of national and subnational economies. Most doctoral students in economics do not have any instruction in the basics of the data they will rely on for a lifetime of pontification.

Of course, all this might be dismissed as the rattlings of a senior citizen, except that I said the same things 40 years ago when, presumably, I was too young to understand things as they are and ought to be.

So, what will I teach about the economy? First, I'll start with the fact that each society has a multitude of ways to divide up the goodies of life. This means the mechanisms of the market economy are just part of a larger scheme. Next, we'll look at how and why society is organized into households, businesses, governments and not-for-profit agencies.

Then on to what is known as "supply and demand," which is known to most teens as, "If you paid me more, I would do the lawn more frequently," and, "If the price were lower, I'd buy more." We'll wrap up a discussion of money and its companions, debt and credit.

If the "students" in these Thursday sessions at the Jewish Community Center stay awake and feel they have a better understanding of what is happening in our society, I will have been successful. Unfortunately, my former colleague will have evidence for his disgraceful boast about how little time it takes to teach economics. But then, imagine how little time it would take to teach marketing if we did not want to keep marketing teachers employed.

P.S. Once I was asked to prepare an outline of "Economics for Dummies." It was rejected by the marketing folks of that publishing company because they felt there was no market for such a book.

Marcus taught economics for more than 30 years at Indiana University and is the former director of IU's Business Research Center. His column appears weekly. He can be reached at mmarcus@ibj.com.
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