I had the great privilege recently of attending an economics class at a local college with some of my friends. Very fascinating, a different way to do school, that’s for sure. Reminds me of Einstein, “The only thing that interferes with my learning is my education.” But I’ll try to keep myself confined to only speaking about Keynesian economics, at least for now.
I met the teacher before the class, so we spoke for a few minutes. I had a chance to look around his office a bit. Didn’t see any Mises or Rothbard, but I glimpsed, “Macro Economics” by Ben Bernanke sitting on his desk. We got to talking about Ron Paul. He said the Ron Paul was an interesting person. I prodded him a bit, I wanted to know what he actually thought of Ron Paul, and why he wasn’t a Ron Paul fan. Turns out he thinks Dr. Paul is crazy for trying to go back to the gold standard, “and he has some problem with the Federal Reserve.” I pointed out that very few people know what the Fed is. He challenged that, and I said, “hey, I stood on a street corner in Chicago, a few blocks from the Fed, and asked people if they knew anything about the Fed, and most people didn’t have a clue.” I pointed out that we (C4L) believed that the Fed is responsible for the boom-and-bust cycle by their manipulation of the economy. He was impressed, I think, by my knowledge of economics, but not convinced. He mentioned that Milton Friedman is his hero, because of his stand for liberty. It seems that if you wanted to make a hero out of an economist because they stood for liberty, it would Von Mises. Von Mises stood up for liberty far more staunchly than Friedman did, Mises enduring some miserable years at the university in Vienna, and then coming to the US where no one appreciated his work or studies. I mentioned Von Mises to this teacher, and he said that there was a nice Von Mises website, so I laughed and said I visit it every day.
About the actual class. It was far more visually interesting than the classes I take, because usually my classes are audio recording, and there is nothing to look at but the blank computer screen. In this class there was a teacher walking back and forth, drawing on the board, and so forth. With that kind of action, 50 minutes is not long at all. He was talking about labor and labor value. The Value of the Marginal Product of Labor (VMP) is equal to the Marginal Product of Labor multiplied by the net price. Mostly review, quite familiar with the words and abbreviations, happily, as I was a bit concerned that the Austrians were so marginalized, they used a different set of symbols and abbreviations. But to my relief, there were the same demand/price/supply graphs and so forth as I’ve used before. I was a little confused at one point because he implied the Law of Diminishing Returns, but didn’t talk about it, or why it is true, so I wasn’t sure if he was going to cover it or not, but turns out they had already talked about it in a previous lecture. I would have liked to hear his explanation of the Law of Diminishing Returns, I suspect it is a bit different than our’s, but oh well. At least it is there. The most amusing part of the class? When the teacher confessed, “recessions just occur in our economy for unknown reasons and they cannot be avoided.” I think I was the only one who questioned the ability of this teacher to teach economics without being able to explain such a common recurrence in our economy, and I only questioned in my head. Doesn’t anyone else wonder why these teachers can’t understand why recessions happen? I mean, they might as well said, with Keynes, “it is caused by the animal spirits of the investors in the market.” I mean, talk about unscientific!
Okay, one more observation about their economics. There is far more math than I generally do in my economics; maybe that’s why I enjoy Austrian econ so much. These algebraic equations and so forth make no sense in the real world. How can you apply it in a meaningful and relevant way? The economy cannot be explained by algebraic phrases. I think this was a joke one of the Mises professors used: There was a drunk man searching the ground around a lamp pole. Someone came up and asked him what he was looking for. “My keys,” he said. “I dropped them.” And the person said, “but your car is way down the street, why are you looking here for your keys?” And the drunk replied, “because this is where the light is.” Suffice to say, I had to do a bit of explaining with this one to apply it to economics. The application is, Keynesians generally use more math in economics because that is what can be understand. They know how to deal with algebraic equations, because they follow a set of rules. But people are unique, and so the actions that they make are unique. They follow their own set of preferences and principles. Obviously, this makes it a bit more difficult to understand. And don’t misunderstand me, I am not comparing Keynesians to drunkards, I am sure there are some very nice people who are, sadly, Keynesians. And this teacher I met at this college was a very friendly and nice person, it is just we have a little different idea of economics. I don’t mean to insult or offend anyone, and this is not meant to be a personal diatribe against Keynesian teachers. Just a comparison of philosophies.
About the college, there was no individuality, no room for free thinking, for challenging the status quo, for thinking outside the box. I would far prefer to flip burgers at McDonald’s if my only other choice was to go to college. Thankfully, those aren’t my only options.