Introduction to the series (John Fountain writing)
In this first , short clip, Prof Doug Allen introduces himself and John Fountain and the series - which is for John to raise questions for Doug about the important economic concepts that Doug introduces in his first year microeconomics course Econ 103 at Simon Fraser University. So what else is new you are saying. Aren’t first year econ courses a dime a dozen these days? What’s different about Doug’s course, and his textbook “Economic Principles: 7 ideas for thinking about almost anything “ , is that Doug challenges students to think, reason, argue, and apply these key ideas of economics - it is not a course where rote memorisation or mechanical calculations will enable you to pass, much less do well. In fact, I (JF speaking ) haven’t seen a textbook like this since Alchian and Allen’s text “Exchange and Production: Competition Coordination and Control.”. It turned out that both Doug and I taught first year econ courses from Alchian and Allen way back….decades before most students we teach now were born! And that book taught us to “be” economists. Doug’s book is doing that now for students at SFU. But the book is one thing, Doug the instructor is another. He is everything a student could ask for in a university instructor, everything - dynamic, challenging, stimulating, interesting, funny ….his lectures are a treat! Every grad student in economics, every sessional instructor, every new, and most seasoned, introductory economics instructors should themselves engage with introductory microeconomics Doug Allen style. As he says, students either love my course or hate my course…there is no middle ground. So this series is as much an introduction to Doug as an economist as it is to the basic ideas of economics and of economic reasoning. Enjoy !.
Danny, an econ 103 student, asks Doug about a question in the textbook - how to think about the bumper sticker statement “people not profits - smash capitalism”. As in webcast 7, its important to go back to definitions and measurements when thinking (like an economist) about profits . Profit, thought of correctly, is not an additional “thing” that is added on to “costs” , and something that can just be wiped off the slate. Doug explains that economic profits always exist wherever there are people making choices, since profit from an activity is the difference in value of a bundle of resources used in that activity compared to the value those resources could have in (the next highest valued) other activities. . Even a non profit organisation like a sports club or a school or a church “makes” an economic profit in the economic sense of the term from the real resources (capital goods) it uses. . Remember though, economic profits in the sense of differences in value can be positive (“make a profit”) or negative (“bear a loss”), and somebody, an owner(s), has to claim these profits or bear these losses. And “smash capitalism”. Why? Everyone is a capitalist, because even in a system of communism ordinary people own themselves , you yourself are a capital good, and you earn (if positive or lose, if negative) an economic profit from hiring out your labour services .
Danny, an Econ 103 student, describes a discussion with his brother about apparently ridiculous prices, $58000 a ticket, for a court-side seat at an NBA Warriors game. The brother claims a wealthy person would never sell such a seat. Doug explains how even the extremely wealthy (1) face tradeoffs and (2) have their price, in a "currency" relevant to themselves.
What is the closest “subject” to economics? Business? accounting? No argues Doug - it’s biology. There are a couple of reasons. One is they share a principle of “natural selection” and survival…even without conscious appreciation . Another is the idea of maximisation and reciprocity. Doug explains, again, why the ideas of reciprocity and altruism (self sacrifice) are fundamentally distinct.
One of the end of chapter questions in Doug's text is why large penalties for any and every crime - stealing a loaf of bread or murdering someone - might lead to more serious crimes, even while they reduce the overall crime rate. Doug explains some interesting incentive effects of heavy handed punishment regimes , using the ideas of marginal returns and marginal punishments, and the extensive and intensive margin concepts discussed in an earlier podcast.