Grasping Reality on TypePad, by Brad DeLong

Cf. also: Notebook: Discussion of "Communism" and Related Subjects

What should someone coming of age in 2020 or so--someone post-millennial, who has no memories of all of any part of the twentieth century--learn about communism, and really existing socialism?

It is, I think, very clear by now to everyone except the most demented of the herbal teabaggers--and it should be clear to all--that communism was not one of the brightest lights on humanity's tree of ideas. Nobody convinced by the writings of Marx and his peers that a "communist" society was in some sense an ideal who then achieved enough political power to try to make that vision a reality has built a society that turned out well. All, measured by the yardsticks of their time and geographical situation, were either moderately bad, worse, disastrous, or candidates for the worst-régime-every prize. None attained the status of:

a prayse and glory that men shall say of succeeding plantations, “the Lord make it like that of New England.” For wee must consider that wee shall be as a citty upon a hill...

Live from the RSF Fieldhouse: Looks like this question on the final was a little too much of a curveball:

Across the bay and 60 miles south from Avicenna to the town of Tall Stick, home of Crony Capitalism University with 10,001 students. The 10,001 students at CCU do two things with their money over the school year:

• They eat gourmet pizzas
• They rent BMW convertibles
• There are no fixed costs to enter the BMW conertible-rental business, and the marginal cost to car rental companies of renting a BMW is $10,000/year.
• Willingnesses-to-pay of the 10,001 students are evenly distributed between $20,000 and $0.
• Each CCU student has a status-anxiety externality cost of $1 imposed on them by another student’s renting a BMW.
• CCU students’ willingness-to-pay for gourmet students is constant at $40/pizza

The CCU administration imposes a Pigovian tax on BMW rentals by its students, in order to make their well-being as great as possible. It spends the revenue collected from the tax distributing free gourmet pizzas (at a cost of $40/pizza) to the CCU students in their dorms.

1. What Pigovian tax should the CCU administration place on BMW rentals if it wants to achieve the highest well-being for CCU students?
2. With that tax, what is the quantity of BMWs rented by CCU students?
3. With that tax, what is the well-being of CCU students—the sum of consumer surplus from BMW rentals minus externality costs plus consumer surplus from free pizzas eaten?
4. Suppose student demonstrations at CCU lead the administration to abandon the BMW rental tax, and the market for BMW rentals goes to its free-market equilibrium. What is the well-being of CCU students—the sum of consumer surplus from BMW rentals minus externality costs plus consumer surplus from free pizzas eaten?

https://readfold.com/read/delong/notes-for-econ-1-spring-2016-uc-berkeley-unfinished-ypriov7m

Still thinking about auxiliary readings for next semester...

Can I afford to assign a third auxiliary reading book?

And, if I can, which of these should it be?:

• Partha Dasgupta (2007): Economics: A Very Short Introduction http://amzn.to/1iojyew
• Robert Heilbroner (1953, et seq.*): The Worldly Philosophers http://amzn.to/1LnpikC
• Something else: but what?
• Or should I simply ask them to mainline something. Karl Polanyi never wrote anything both short and accessible to Berkeley freshmen and sophomores. But there are: John Maynard Keynes (1926): "The End of Laissez-Faire" http://www.panarchy.org/keynes/laissezfaire.1926.html, and "Concluding Notes on the Social Philosophy towards which the General Theory Might Lead' http://tinyurl.com/nv35dkt

This file: http://www.bradford-delong.com/2015/09/auxiliary-readings-historical-psychological-and-moral-philosophical-context-econ-1-spring-2016-uc-berkeley.html

And to counterbalance Friedman and Director Friedman--what? Last time I used Tom Slee (2006): No One Makes You Shop at Wal-Mart http://amzn.to/1Lnok7L. It seemed not quite up to the task of countering Friedman and Director Friedman, but still better than anything else I could find. Is it still the best thing around?

I should go off and read John Kenneth Galbraith (1977): The Age of Uncertainty http://amzn.to/1LnoKeB...

Something by Dani Rodrik, perhaps?...

This file: [http://www.bradford-delong.com/2015/09/auxiliary-readings-from-the-left-no-one-makes-you-shop-at-wal-mart-econ-1-spring-2016-uc-berkeley.html]

To help the students in Econ 1 next semester put the course, and the discipline of Economics, into its proper moral-philosophical context...

Is there anything better from the right to assign than Milton and Rose Director Friedman (1980): Free to Choose http://amzn.to/1OklF0r? Can I ask the students--Berkeley freshmen and sophomores for the most part--to read anything more sophisticated? And is there anything more recent or more sophisticated and of equivalent length that is better?

And to counterbalance Friedman and Director Friedman--what? Last time I used Tom Slee (2006): No One Makes You Shop at Wal-Mart http://amzn.to/1Lnok7L. It seemed not quite up to the task, but still better than anything else I could find...

This file: http://www.bradford-delong.com/2015/09/auxiliary-readings-from-the-right-free-to-choose-econ-1-spring-2016-uc-berkeley.html

A question of special interest to me right now because the departmental powers-that-be have decided to ask me to go back onto the 700-person Econ 1 Wheeler teaching line next spring...

Chris Y.: A colleague (middle grade civil servant) has sent this request to Mrs Y:

Confronted with any competitive market supply and demand situation, you want immediately to know the answers to four questions:

1. What is the equilibrium price at which the commodity is sold?
2. What is the equilibrium quantity sold?
3. What is the consumer surplus--how much is the existence of the market worth to buyers collectively?
4. What is the producer surplus--how much is the existence of the market worth to the sellers collectively?

If we are willing to assume linear demand and supply curves, we specify the behavior of demanders and suppliers with two parameters each:

• The maximum willingness-to-pay of the consumer who wants the commodity most.
• The number of additional units bought for each $1 drop in the price.

And:

• The minimum willingness-to-supply of the producer who can make the commodity cheapest.
• The number of additional units sold for each $1 increase in the price.

Specify those four numbers under "basic conditions" below, click the "Solve the Model" button, and you will know what you need to know...

The Basic Conditions: Supply and Demand

• <-- Maximum willingness to pay
• <-- Additional customer demand from cutting price by $1
• <-- Minimum willingness to supply
• <-- Additional producer supply from raising the price by $1

Solve the Model 

The Market Equilibrium

• the price <-- The equilibrium price
• the quantity <-- The equilibrium quantity
• the consumer surplus <-- The equilibrium consumer surplus
• the producer surplus <-- The equilibrium producer surplus