Arnold Kling  

The Great Debate

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I've been working on lectures on microeconomics for my AP econ class. I am finished with macro (I hope), although at some point I will put together something on PSST.

Anyway, I was cruising along with micro lectures, getting ready to talk about market failure, public goods, and so on. Looking ahead, I realized I was going to be describing what I call the Great Debate over the government's role in the economy. I wound up preparing a 40-minute lecture on this debate. If you have the time and wish to comment, feel free to do so here.

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COMMENTS (5 to date)
david writes:

Presenting Hayek as the primary economic school of thought on the limited-government side elides the monetarists, the real-business-cycle Chicago types, etc. - who far outnumber the Austrians or even just abstract-creative-destruction types in academia.

It seems at least a little weird to ignore the achievements that Friedman made against the Keynesian orthodoxy - the present New Keynesian consensus concedes two of Friedman's three principles of monetarism, after all. Why have a lecture about the Great Debate over the government's role in the economy that ignores the actual postwar debate as it happened?

david writes:

On the other hand, for a microeconomic rather than macroeconomic lecture on the debate, it may be better to omit Keynes/New Keynes/etc. altogether and focus on the postwar rise and fall of conceptions of markets as inherently unstable and destructive and the corresponding rise of analyses that model markets as having particular (and fixable) problems (externalities, lemons, transaction costs, etc.). And so the movement toward regulated markets rather than outright nationalization and wage/price boards, esp. after the 70s, reversing the New Deal tendency toward cartelization. This parallels the evolution in attitudes toward macroeconomic policy but they are not quite the same thing.

Coase, the movement of economics into law, etc. - increasing popularity of accepting the framework of markets (and 'externalities') rather than inveighing against free trade altogether. 'Fair trade' as a compromise at a popular level - compared to previous anti-trade efforts, this is a step forward.

Becky Hargrove writes:

Another book I read recently that helped with some of these concepts: Cracker Culture by Grady McWhiney, 1988.

Listening to this lecture I thought of what also tends to hold back progress on Libertarian fronts, the fact that this group needs women now more than ever, as the issues to be dealth with in terms of rescuing from government debt involve fields that are somewhat dominated by women.

Making progress on this front happens in two ways, women and men finding common ground, then women to women seeking common ground. We are only beginning the first phase.

Patrick R. Sullivan writes:

Assuming that you want honest input on what is good for your high school audience; I think you're making a big mistake with this approach. There's way too much there for them to absorb (and what does it have to do with micro anyway).

I'd use Tom Sowell's approach in 'Knowledge and Decisions'. Explain that economics is merely a special case of human decision making. That consequences follow from choices, and that this can't be avoided.

various writes:

By way of introduction, I've seen some of your other lectures and have been very impressed. But I confess that I was relatively confused after watching the first 12 minutes of this lecture. I think you are making tenuous analogies to philosophies of the 1800s and 1900s. I think some of the parallels you draw are correct but others are a bit of a reach. For example, I see a tenuous relationship between today's libertarians and Andrew Jackson. And, I'm going to be blunt here, but describing Wilson as a puritan, if that is the correct word, is not the description I would have selected. Dare I say that the best description I would have come up for Wilson would have been "egomaniac"

A better parallel would have been to compare today's libertarians to the pre 1900 U.S. and today's liberals to pre 1900 France. Or, compare it to the French Enlightenment (i.e., top down control) versus the English Enlightenment (bottom up). That would be simpler and probably more accurate. Bottom line....I think your analysis is too complex and needs to be simplified.

The overall problem with your analogy is one of degree. I mean sure, perhaps the citizens of New England per perhaps more "liberal" than those of Virginia in 1800. But the country as a whole was much more libertarian in its outlook than it is today. In contrast, I think the outlook of most U.S. leaders, pre 1900, was substantially different from those in, say, France.

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