THINK LIKE AN ECONOMIST
The Masters of Money documentary series (aired on SBS, February 2013) provides an excellent introduction to three important Economists who have shaped our economic thinking. Furthermore, the views on these economists are discussed in a historical context as well as in light of recent world events. This enables us to hypothesize and hear the varied views of current leading economists around the globe. The series is very engaging, topical and informative and is a useful resource for Economics teachers and students.
Students would benefit from gaining an understanding how Economists think, and learning about how economic theories have evolved over time.
Episode 1: John Maynard and Keynesianism (13/2/2013)
Episode 2: Hayek and the Free Market (20/2/2013)
Episode 3: Karl Marx and Marxian Economics (27/2/2013)
A few ways to use this fantastic series:
Part A: Questions and tasks linking the documentary Masters of Money to specific units and areas of study in Economics.
Part B: A student and class based set of tasks culminating in a Conference on Famous Economists
i) Biography of a famous economist
ii) Class Conference
iii) Summary exercise
Part A: Questions linked to the VCE Economics course
Unit 1: Economics: Choices and Consequences
Area of Study 1: ‘A market system’
The nature and distinctive features of economic systems
1. Economics is classified as a “social science”. Discuss comments made by each of the three economists in the documentary that support this classification.
2. Distinguish between the following pairs of terms:
a. capitalism and socialism
b. market and non-market (planned)
3. Outline the key characteristics of Australia’s market capitalist economy.
4. Describe how the three basic economic questions are answered in a market capitalist economy, a market socialist economy, a non-market (planned) capitalist economy and a non-market(planned) socialist economy.
5. Karl Marx predicted that capitalism would collapse. However, this did not occur and many former non-market (planned) and market socialist economies have adopted market capitalism. Research and discuss the process of change in at least one country that has undertaken this transition and given up central planning.
6. Karl Marx would say that capitalism is the cause of great economic evil. Discuss three advantages and three disadvantages of a market capitalist economy.
The degree of market power
- Some economists would argue that the profit motive drives the economy forward, while others would say that greed and the profit motive divides society and promotes inequality. Explain two disadvantages and two advantages of firms having market power.
2. Explain the opinions that Keynes, Hayek & Marx would have in regard to the existence of oligopolies operating in the Australian economy.
3. Distinguish between the terms market failure and government failure. Explain which economists would argue that market or government failure exist. Provide two examples of each within the Australian economy.
The role of markets
1. “Markets, left to their own devices, will ultimately allocate resources efficiently.” Explain what is meant by this statement.
2. “Government subsidies to producers manipulate the market price.”
a. Discuss two examples of subsidies being used to improve living standards.
b. Discuss two arguments against government subsidies.
3. Hayek was adamant in his sentiment that meddling with the market distorts price signals. Explain how the price mechanism operates in a perfectly competitive market.
Area of Study 2: ‘Economic issues’
Economic growth
- Discuss three economic costs and three economic benefits of economic growth on Australia’s material and non-material standard of living.
- According to Hayek, governments should not prop up failing businesses. Explain two economic costs and two economic benefits of governments propping up failing businesses.
- Explain how Keynesian economics would work to support the economy during an economic downturn.
- Provide specific examples of G1 and G2 spending that the Australian government used to lift aggregate demand and stimulate the level of economic growth during the GFC. (see www.budget.gov.au)
- Discuss the importance of consumer and business confidence as demand side factors that have a significant influence on aggregate demand and economic growth.
Creation and distribution of wealth and income
1.Karl Marx was of the view that capitalism was productive but inherently unfair. Outline three aspects of capitalism that Marx saw as its failings.
2.The income gap between workers and owners of businesses was a major concern for Marx. He said that while the owners of resources get richer, the workers get poorer. What measures exist in the Australian economy to redistribute incomes and ensure greater equity?
Inflation
1. After WW1 a number of countries experienced hyperinflation.
a. Define what is meant by hyperinflation.
b. Discuss what caused hyperinflation to occur.
c. Explain the impact of hyperinflation on households, firms and governments.
d. Copy and paste 3 photos from google images depicting the impact of hyperinflation on daily life.
2.In the 1970s the rate of inflation globally rose significantly. Research what aggregate demand and aggregate supply factors might have caused this to occur.
Unit 2: Economic Change: Issues and Challenges
Area of Study 1: ‘Population, employment and change’
1. Explain how Keynesian economics would work to decrease the high level of unemployment during a recession.
2. Hayek believed that any attempt to intervene in markets would have unintended consequences and make problems even worse than they already are. Discuss how the economy may self-correct in a period of recession.
3. It seems that “governments spending their way out of recession” was successful during the GFC. Explain this statement.
4. Classical economists said that wage cuts would increase job creation and stimulate economy activity. Discuss the costs and benefits on the economy of cutting wages for workers.
5. Keynes was quick to point out the multiplier effect of economic actions such as the government stepping in to lift government consumption and investment expenditure. Explain what the multiplier effect is in terms of job creation.
Area of Study 2: ‘Global economic issues’
International economic relations
- Keynes would question the austerity measures being forced upon weaker Eurozone countries. Explain what austerity measures are and why Keynes suggests that such measures are not the solution to the crisis.
- There is much debate about the benefits of free trade. Discuss the views of Hayek, Marx and Keynes to the general reduction in tariffs and increased move to free trade between nations and regions.
Development economics
- “Global income inequality reflects the rich world exploiting the poor world.” Discuss this statement.
2.“The new pool of cheap labour is located in poorer countries around the world.” Explain the costs and benefits of this for developed countries and developing countries.
Economic Globalisation
1.“Today, the global economy is still struggling.” What do Marx, Keynes and Hayek suggest could be done to stabilise the global economy.
- “Keynes was convinced that economies needed institutions to force them together to cooperate.” Work in pairs to prepare a PowerPoint presentation for your class on the workings of one of the organisations listed below. Include the following- history of the organisation, aims and role of the organisation, members of the organisation, activities of the organisation,)
- International Monetary Fund (IMF)
- World Bank
- United Nations (UN)
- Organisation for Economic Cooperation and Development (OECD)
Part B: A Famous economists Conference
TASK ONE (Homework):
The obvious starting point would be for students to prepare a short (400-500 word) biography on one famous economist. In order to learn about their thinking they need to understand something about their background.
From experience, I think it is easier to allocate an economist to each student (or a few students) and depending on class size increase or decrease the number of economists studied. This will help concentrate the class conference on a few famous economists and give students a more in-depth understanding of the chosen economists.
It is really useful to cover a broad range of ideas and therefore ensure that for your class conference you have a number of students representing each economist.
These are the Economists I have used in the past but they can easily be added to:
Adam Smith
Friedrich Hayek
Milton Friedman
John Maynard Keynes
John Kenneth Galbraith
Joan Robinson
Karl Marx
TASK ONE: Present a 1-2 page typed biography on the Economist allocated to you. Be sure to include the following:
- the country they were born in & date of birth/death
- family background
- place and level of education
- occupation/s and employer/s
- friendships and/or influence of other Economists
- Name and date of major published works
- Overview of main economic theory/ies
TASK TWO (one week):Hypothetical- Famous Economists Conference
Pre-conference
Students are to undertake extensive research on the economic thinking and rationale, ideas and theories of the economist allocated to you. Once you have completed this research you need to meet with the other students in your class who have been allocated the same economist. Together, you need to imagine that your economist is alive today. Discuss and form opinions on what he or she would say about a range of current domestic and global economic events and situations. You should then meet with your teacher to discuss your views. At the conference you will be able to use your research and notes to contribute to the topics of discussion.
Teachers could ensure a few things have been done to allow for an informative conference:
a) Have Economists name stickers in large letters available for the day so everyone can identify easily who is present
b) Have a photo of each of the Economists you have chosen on a single PowerPoint slide on screen during the conference or a series of A3 sized photos of the Economists on display in the room
c) Have a list of topics/questions you will discuss
d) Ensure the classroom is set up in a horseshoe shape with you as Chair in the middle so you can see everyone and control the discussion
Irrespective of when you hold this conference, students need not and will not have an in-depth understand of economics, given their commencement of this subject in Year 11. Nevertheless, challenging them to read, research and discuss their understanding of their economists views in light of topical issues will extend their learning and, from experience, remain a memorable task that they will enjoy.
Conference (a double lesson-100 minutes):
*Students should bring their notes, writing paper and pens to the conference.
* Teacher: As your Economists arrive in the classroom ask them to get and display their name sticker on them and sit next to that or those Economists with whom they share similar views. This is interesting as they should end up with some introductions and discussion with each other to sort this out, as well as being seated in the spectrum of thinking from totally laissez faire economics (Adam Smith) to the other extreme of communism (Karl Marx).
Start the conference by asking each Economist to introduce him/herself and the major contribution that was made to economic thinking. After a general introduction, guide the discussion to the some or all of the topics listed. Ideally every student will get a number of chances to contribute to the conversation. If this is not the case, invite comment from certain people.
Possible topics to choose from, discuss, add to and seek Economists’ opinions on:
General themes relevant to Australia and global economy:
- Greece should exit the Eurozone.
- Austerity measures in Europe will simply make the economic crisis in Europe worse.
- The Australian government should NOT have introduced a carbon tax.
- The Rudd government did the right thing by implementing expansionary budgetary policy to prevent Australia from going into a recession during the GFC.
- The government should NOT subsidise the Australian car industry.
- Budgetary policy is more important than monetary policy.
- Unions distort the allocation of resources and have too much power in Australia.
- Free markets improve people’s lives.
- In the last few decades most countries have adopted market capitalist economies and planned (non-market) economies have collapsed. Why is this?
- Stong, rich countries typically exploit weak, poorer countries.
- Creating jobs is the way to increase economic activity.
- The RBA should step in and depreciate the Australian currency.
- Free trade will benefit all economies.
- The Australian government should privatise all GBEs
- The private sector should run all schools in Australia.
- The Melbourne City Council should introduce a congestion tax for the Melbourne CBD.
- If water had a market price we wouldn’t have a shortage of water in the first place.
- Affluenza is the cause of many of our economic woes.
- The minerals in the ground belong to all Australians and therefore the Australia government has a right to tax miners.
- Imported goods under the $1000 GST free threshold should also be taxed.
- The 10% GST is too low in Australia.
- The supermarket duopoly in Australia should be prohibited.
- The Taxi industry needs to be totally deregulated.
- Unemployed people should only receive the Newstart allowance for 6 months.
- Victoria’s desalination plant is a total waste of taxpayers’ money.
- Should firms outsource labour?
- Capitalism caused the GFC.
Task Three:Post Conference (1 lesson)
Students are to write a summary of the key theories of each economist who attended the conference. These summaries should be on the sheet provided.
| Name |
Date of Birth/Death |
Key economic theories and beliefs |
| Adam Smith |
1723-1790 |
|
| Karl Marx |
1818-1883 |
|
| John Maynard Keynes |
1883-1946 |
|
| Friedrich Hayek |
1899-1992 |
|
| Joan Robinson |
1903-1983 |
|
| John Kenneth Galbraith |
1908-2006 |
|
| Milton Friedman |
1912-2006 |
|
General Resource List:
Great Economists and their Times – The Federal Reserve Bank of San Francisco
https://www.frbsf.org/publications/education/unfrmd.great/greattimes.html
How influential economists changed out History
https://www.investopedia.com/articles/07/economists.asp#axzz2N2tMgFHo
Timeline of Famous Economists- Bized
https://www.bized.co.uk/virtual/economy/library/economists/timeline.htm
https://www.youtube.com/user/EconStories?feature=watch Keynes versus Hayek
Ideas for Eco 