Macro Themes

On my fourth round of teaching macroeconomics, I am really able to tie much of the course together around the theme of "upholders of Say's Law" versus "Keynesians" (with "Keynesians" acting as a synecdoche for "all general glut theorists").

For instance, I was just teaching the chapter of our text on unemployment. When we discussed structural unemployment, I told the class about how the general glut debate initially launched in the wake of the Napoleonic Wars. "The defenders of Say's Law were not idiots: they saw that there were idle resources. But their explanation was that after 20 years of fighting, the European economy was structured around war: it would take time to change factories for making cannons into factories for making sweaters."

And then I explained how a similar structural explanation was offered for the recent housing-led downturn. And I noted that the Keynesians needn't deny that these structural imbalances occur, but only need hold that they are just an aspect of (and perhaps even the trigger for!) a more widespread malaise that affects business in general.

Our chapter on supply and demand was similarly linked to this topic by noting that the diagrams imply instantaneous achievement of equilibrium -- in which case Say's Law must always hold! But what if the adjustments to changed conditions take time? What if they take years?

I daresay few groups of college freshmen will have Say's Law more on their minds than will my macro students!

Comments

  1. Your classes sound fun!

    My college macro professor was not a distinguished economist or someone with published papers, but he had a lot of energy and came up with extremely interesting thoughts and examples from real world and history in class. We were a class of extremely uninterested, unmotivated students, but man, did he spark a fire and an interest in us. The result was teenagers often talking about how an internal devaluation is worse than an external devaluation, and how the former was worsening Europe - which should not happen!

    Your post reminds me that kind of enthusiasm. It certainly is the case that the biggest role teachers have to play in society is exciting a student's enthusiasm so that they can pursue the topic on their own.

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