Economics: An Introduction
Part I: Overview and Microeconomics
Part II: Macroeconomics and Conclusion
An Audio Economics Course
Taught by Timothy Taylor, University of Minnesota
Published by The Teaching Company
Reviewed by David S. Dahl
Public Affairs Economist
Federal Reserve Bank of Minneapolis
The Teaching Company, in Springfield, Va., offers numerous courses through its catalog on audio and video tape. "Economics: An Introduction," taught by University of Minnesota professor Timothy Taylor, consists of 20, 45-minute audio tape lectures and accompanying study guides. The course is just what the doctor ordered.
Taylor is indeed a "super star" teacher, for he makes economics understandable without the aid of a blackboard, which is an indispensable tool for most economics teachers. His lectures are well-organized, with an engaging blend of economic theory, history and quotes from notable economists. Theory and history, for example, are very effectively woven together in his discussion of the minimum wage. While most economists now do not favor it, Taylor points out, a minimum wage may have made sense when enacted in the 1930s when the unemployment rate was around 20 percent and employers' power to dictate wages was much higher than today.
His effective use of quotes is demonstrated at the conclusion of the first lecture, when he cites John Maynard Keynes to welcome students to the world of economics:
“The master economist must understand symbols and speak in words. He must contemplate the particular in terms of the general and touch abstract and concrete in the same flight of thought. He must study the present in light of the past for purposes of the future. No part of man's nature or his institutions must lie entirely outside his regard. Economists must be purposeful and disinterested in a simultaneous mood, as aloof and incorruptible as an artist and yet sometimes as near the earth as a politician.”
Taylor strives to capture the challenge and complexity of economics by relating it to the world we encounter at home, at work or in our newspapers. Students, in my limited experience, are not particularly enamored of economic theory, the subject of an introductory economics course, but they are interested in economic issues. Taylor deals with this problem by devoting his first lecture to the important role of markets and lists nine things that economists believe about them. He, like Milton Friedman in his book and video Free to Choose, uses the making of a wood pencil to illustrate the power of markets.
His second lecture is a lucid explanation of supply and demand, where he leads the listener in supply and demand robotics. These exercises are important, for he refers to the fundamentals raised in this lecture throughout the rest of the course.
Next, the lectures link supply and demand to issues listeners encounter every day and explains how prices for goods and services, wages and interest rates are determined. Prices to economists, the listeners are informed, are messengers reflecting the underlying conditions of supply and demand. Taylor warns against shooting messengers with rent controls, minimum wage laws and agricultural price subsidies. Instead, policies should address the underlying conditions of supply and demand that give rise to prices that we dislike, Taylor says.
Although Taylor extols the virtues of markets, he makes very clear that markets also can fail and devotes lectures, for example, to "The Environment and Negative Externalities" and "Regulation to Ensure Free Markets." At the close of his last lecture on microeconomics, his statement on how we should deal with markets strongly influenced my teaching of microeconomics.
“Imagine that you look out there into the world and you see prices or quantities that you don't like. What should you think next? What you should think to yourself, I suggest, is: Is this happening because markets work or is it happening because markets broke down for one of these reasons? If it happened because markets work, then you can say: OK, some sort of policy where I push supply or demand around is the right policy. I won't set prices because I know that has problems, but there is a whole range of policy alternatives that are out there. On the one hand, if the market broke down because of a positive or negative externality, or it broke down because of problems of information or insurance or because I don't like the amount of inequality or poverty that is being produced, then I will go after that particular reason for why the market broke down. So the notion of economists is somehow that when the market works—let it go, let it work. When it breaks down, focus on where it broke down and fix the particular problem.”
Taylor's lectures on macroeconomics were also very helpful. At the start, he uses a clever gambit to introduce the topic of long-term growth, which I used in my classes. He asks his listeners to vote on whether they would prefer a middle class income today of $35,000 or a $35,000 income along with 1925 technology and living standards. Two to one his students chose today's income. I got a similar response when I asked my classes. In discussing why students prefer the present, you can define economic growth and discuss its determinants.
Aside from the tapes' usefulness as a teaching aid, they are an efficient way for busy people to enhance their economic literacy. For example, in Minneapolis/St. Paul the average commuting time to work is now 30 minutes, and it is expected to be 45 minutes by 2020. That time could be spent listening to these tapes instead of music; so the opportunity cost, a concept discussed on the tape, of taking the course is low.
Economic literacy is necessary if we are to sort out experts' advice that appears in the media on how to deal with stagnant wages, exorbitant salaries for corporate executives, looming bankruptcy for Social Security and Medicare. Who are we to believe? Providing irrefutable solutions these and other pressing economic issues is beyond the scope of this course, but it does fulfill the dictum of the noted English economist Joan Robinson, who Taylor quotes in his first lecture, that:
“The purpose of studying economics is not to acquire a set of ready-made answers to economic questions, but to learn how to avoid being deceived by economists.”
Course Lecture Titles
01 - How Economists Think
02 - Fundamentals of Supply and Demand
03 - Reconciling Policy with Supply and Demand
04 - The Labor Market and Wages
05 - Interest Rates and the Demand Side
06 - Financial Investment from the Supply Side
07 - Environment and Negative Externalities
08 - Technology Positive Externalities and Public Good
09 - Poverty and Inequality
10 - Regulation to Ensure Free Markets
11 - The Macroeconomics Perspective
12 - Fighting Unemployment
13 - Why Inflation Matters
14 - A Sustainable Trade Balance
15 - The Federal Budget the Deficit and Fiscal Policy
16 - The Federal Reserve and Monetary Policy
17 - The Unemployment - Inflation Tradeoff
18 - Trade Policy
19 - Exchange Rate Policy
20 - A Global Ec onomi c Perspective