Tuesday, September 20, 2016

To the Student of Economics

Before taking a first course in macroeconomics, the student should know a few things about the subject matter to be attended to.  It's important for the student to recognize the dual nature of this discipline.  Without this knowledge the student is susceptible to indoctrination of one sort or another.

The student must be aware there are two major economic strategies available at the macro level, one favoring the rich and powerful and one favoring everyone else.  Without this understanding the student can only imagine he or she is solving problems that may have motivated him or her to seek a degree of this sort in the first place.  Without this basic understanding, the student will suffer frustration and disillusionment.

Basic to this dichotomy of haves vs. have-nots is the distinction between supply-side economics and demand-side economics.  It's important for the student to recognize which strategy is being taught and its anticipated outcome.  Supply-side economics will attempt to stimulate the economy through favorable business policies.  This approach tends to reward society's highest income and wealth levels.  Alternatively, demand-side economics will attempt to stimulate the economy through favorable middle class policies.  This approach tends to more evenly distribute rewards to all levels of the economy.  One strategy pushes rewards upward and the other attempts to distribute rewards more equitably.

Imagining there is only one true approach to macroeconomics will short circuit a discussion of the sustainability and morality of each approach.  Awareness of the tendencies of supply-side and demand-side economics and their inherent differences will allow the student to better judge the merits of each approach.  Without this awareness, one may be lost in a confusing array of theory and models with no ability to appreciate the end product of his or her efforts.

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