Grasping Reality on TypePad, by Brad DeLong

What I (try to) make my principals students read before class begins; Partha Dasgupta (2007): Economics: A Very Short Introduction http://amzn.to/2gR2jH3. Question: should I try to make my students in my other classes read it too?

Econ 2: Spring 2014: Why We Read Partha Dasgupta:

Me: Note: This is a game theorist's short introduction to economics. Its focus is on:

Most-Recent Must-Reads:

• Dan Davies: The absolute height of irresponsibility...
• Paul Krugman: Is Our Economists Learning?
• Paul Krugman: When Virtue Fails
• Duncan Black: Sometimes We Get Results

Most-Recent Links:

• Mark Thoma: If the Modifications Needed to Accommodate New Observations Become Too Baroque ...
• Nanataco
• Scott Lemieux: Green Party Presidential Campaigns, In One Tweet
• Peter H. Lindert and Jeffrey G. Williamson: American Growth and Inequality since 1700: "Inequality is not driven by some fundamental law of capitalist development, but rather by episodic shifts in five basic forces: demography, education policy, trade competition, financial regulation policy, and labour-saving technological change..."
• Suburban Guerrilla: "The problem with so many video-intensive sites is that I can read a lot faster than I can watch your video...
• Sophie Elmhirst: ‘Golden Hill’, by Francis Spufford:A debut novel set in New York during its hyperactive infancy is a virtuosic triumph.

Most-Recent Storified:

• Storify: Guillermo Calvo: Macroeconomics in Times of Liquidity Crisis
• Storify: Helen Lowe: Tweets About "The Wall of Night"
• Storify: DeLong: Tweets Worth Noting: June 12-16, 2016:

Required Purchases:

• Robert Frank, Ben Bernanke, Kate Antonovics, and Ori Heffetz: Principles of Economics http://amzn.to/1Zpuoj5 (New York: McGraw-Hill: 9781259897580) be sure to order and buy ISBN 9781259897580 from the Berkeley bookstore
• Partha Dasgupta (2007): Economics: A Very Short Introduction http://amzn.to/1ZpuFCQ (Oxford: Oxford University Press: 9780192853455)
• Milton Friedman and Rose Director Friedman (1970): Free to Choose: A Personal Statement http://amzn.to/1NbvEPU (New York: Mariner Books: 9780156334600)
• Tom Slee (2006): No One Makes You Shop at Wal-Mart: The Surprising Deceptions of Individual Choice http://amzn.to/234zCph (New York: Between the Lines: 9781897071069)
• i>Clicker+ Student Remote http://amzn.to/1ZpvkEe (New York: W.H. Freeman: 9781464120152)

"Therefore shall ye lay up these my words in your heart and in your soul, and bind them for a sign upon your hand, that they may be as frontlets between your eyes. And ye shall teach them your children, speaking of them when thou sittest in thine house, and when thou walkest by the way, when thou liest down, and when thou risest up. And thou shalt write them upon the door posts of thine house, and upon thy gates..."

“The Market” as an Institution:

• We start from what look like to us deep truths of human psychology
  • People are acquisitive
  • People engage in reciprocity—i.e., want to enter into reciprocal gift-exchange relationships
    • In which they are neither cheaters nor saps
    • With those they trust…
• We devised property as a way of constructing expectations of trust…
• We devised money as a substitute for trust…
• And so, on the back of these human propensities for acquisition and for trusted gift-exchange, we have constructed a largely-peaceful global 7.4B-strong highly-productive societal division of la* bor:
  • Built on assigning things to owners—who thus have both the responsibility for stewardship and the incentive to be good stewards…
  • And on very large-scale webs of win-win exchange…
  • Mediated and regulated by market prices...
• This is a very valuable and important societal institution…
• Economics is the study of how it—what we usually call “the market”—works…
• In analyzing the market as an institution, we need to cover:
  • The success of the market
  • The failures of the market
  • The political-economic-sociological-historical context of the market
  • The impact of a market economy on the other institutions and practices of society
  • Plus there is the peculiar domain of “macroeconomics”

"Therefore shall ye lay up these my words in your heart and in your soul, and bind them for a sign upon your hand, that they may be as frontlets between your eyes. And ye shall teach them your children, speaking of them when thou sittest in thine house, and when thou walkest by the way, when thou liest down, and when thou risest up. And thou shalt write them upon the door posts of thine house, and upon thy gates..."

The market failure-free competitive market in equilibrium, from the perspective of a utilitarian seeking to achieve the greatest-good-of-the-greatest-number, accomplishes these goals:

1. It produces at a scale that exhausts all possible win-win exchanges—and is “efficient” in that sense.
2. It allocates the roles of producers and sellers to those who can make and sell them in a way least costly to society’s overall resources—to those with the lowest opportunity cost.
3. It rations the commodities produced to those with the greatest willingness-to-pay—to those who, by the money standard, "need" and want them "the most".

"Therefore shall ye lay up these my words in your heart and in your soul, and bind them for a sign upon your hand, that they may be as frontlets between your eyes. And ye shall teach them your children, speaking of them when thou sittest in thine house, and when thou walkest by the way, when thou liest down, and when thou risest up. And thou shalt write them upon the door posts of thine house, and upon thy gates..."

Ten modes of "market failure":

Markets can go wrong--badly wrong. They can:

1. not fail but be failed by governments that fail to properly structure and support them—or that break them via quotas, price floors/ceilings, etc.
2. be out-of-equilibrium
3. see actors have market power
4. be afflicted—if that is the word—by non-rivalry (increasing returns to scale; natural monopolies)
5. suffer externalities (in production and in consumption, positive and negative; closely related to non-excludibility)
6. suffer from information lack or asymmetry
7. suffer from maldistributions—for the market will only see you if you have a willingness to pay, which is predicated on an ability to pay…
8. suffer from non-excludability (public goods, etc.)
9. suffer from miscalculations and behavioral biases
10. suffer from failures of aggregate demand