Monday , October 26 2020
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Economics 1 Again, But So Different

Summary:
We just finished the second week of Economics 1, Stanford’s introductory economics course, and the namesake of this blog and my twitter account.   So far it has been fun, and for the same reasons that I mentioned years ago when I started teaching the course: (1) “I love to teach.” (2) “I love to do economic research” and teaching is “a natural extension of research.” (3) “I love economic policy—the application of economics to government as well as to decision-making in business.” I hope learning economics is as much fun for the students. But things are so much different now.  A year ago, I gave lectures in a large lecture hall, Stanford’s Cemex Auditorium. It is all online now, and virtual and remote.  Students Zoom in to the lectures and the smaller sections taught by a

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We just finished the second week of Economics 1, Stanford’s introductory economics course, and the namesake of this blog and my twitter account.   So far it has been fun, and for the same reasons that I mentioned years ago when I started teaching the course: (1) “I love to teach.” (2) “I love to do economic research” and teaching is “a natural extension of research.” (3) “I love economic policy—the application of economics to government as well as to decision-making in business.” I hope learning economics is as much fun for the students.

But things are so much different now.  A year ago, I gave lectures in a large lecture hall, Stanford’s Cemex Auditorium. It is all online now, and virtual and remote.  Students Zoom in to the lectures and the smaller sections taught by a terrific group of teaching assistants who work together with me as a team.  Students are enrolled from places over the world, in many different time zones, ranging from Hawaii to Pakistan to Bhutan to London to New York. It is like a whole new course.  I have been arguing that Economics 1 is more important than ever as the world becomes more computerized and quantified. Ignoring economics as we consider the latest ideas in artificial intelligence, machine learning, deep learning, or big data is a recipe for disaster.

But that is truer now than last year and, perhaps than any past year. The global pandemic has had huge impacts as have the policy reactions, including sheltering-in-place and social-distancing. But this course shows how it is possible to use economics to counteract these negative forces and improve people’s lives. Of course, we continue to stress the central idea that economics is about making choices with limited resources and about people interacting with other people as they make these choices. We show why free competitive markets can improve people’s lives and how such economic systems have removed millions of people from poverty. We discuss market failures, remedies to these failures, and government failure.  As I wrote ten years ago on this blog, severe setbacks such as the global financial crisis are a vindication rather than a failure of economics. Good economics leads to good policy and good outcomes, and bad economics leads to bad policy and bad outcomes. That is so true now as we adjust micro, macro and international economics to deal with the COVID-19.

COVID19 has renewed interest in alternatives to market economics, whether you call it socialism or simply highly interventionist economic policy. These issues came up years ago when central planning was still used around much of the world, including in Russia or China. Now we need new stories with new ideas.  The overall goal is to use ideas in economics to understand the best ways to react to COVID-19, and to deal better with unemployment and inequality that is now so apparent.

I am happy to say that we will again have exciting special guest lecturers even though we are online this term, including Caroline Hoxby on the economics of education, Susan Athey on artificial intelligence and economics, Chad Jones on the latest ideas on economic growth. We will also have The Best Economics 1 Lecture Ever, but that’s a surprise.

John Taylor
John B. Taylor is the Mary and Robert Raymond Professor of Economics at Stanford University. He formerly served as the Director of the Stanford Institute for Economic Policy Research where he is currently a Senior Fellow. He is also the George P. Shultz Senior Fellow in Economics at the Hoover Institution.

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