Comparative Advantage: An Idea Whose Time Has Passed?

Art Carden is living in the past.   Here, for example. Notice that he really just means "division of labor," because DoL is limited by the extent of the market, so "more trading partners" is just "more extent for the market.)

The truth is that "comparative advantage" is nearly useless, except as a pedagogical tool to amaze people innocent of economic knowledge.  My Freeman article, at FEE.

Now, "living in the past" may not be a bad thing.  When I say that about Jacob Levy, I mean that as a compliment, because Dr. Levy is actually studying ancient texts. 

But Dr. Carden (the DubMOE) is living in the past in a bad way, because he is ignoring an important feature of modern markets.  Here is a good summary of the view that I think we ought to jettison.  Not because it is wrong, but because it makes economics seem deterministic.  Very few of the factors that determine productivity are fixed.  So "opportunity cost" and "division of labor" are all we need.

To make the argument really work, of course, one must also resort to Buchanan's notion of returns to hard work and "increasing returns." 

NY Times Causes Head of Mungowitz to Explode

With thanks to Greg Barkimer, who saw this and knew it was gold. An actual headline, seriously, in the New York Times:

Bird Flu Sends Egg Prices Up, but Slowing Demand Prevents Shortages 

Um....yes.  How economically illiterate would you have to be to write that headline?  Answer:  illiterate enough to work for the New York Times.  

Because this is on the order of "Water:  Still Wet!" or "That Crazy Sun:  Rising in the East Again This Morning."

There can never, NEVER be a shortage if prices are free to adjust.  Because a shortage is insufficient supply at current prices.  Lagniappe:  This was in the "Science" section.  Yes, it was.

(updated to correct typos)

(Update 2:  Ya know.... I'm not so sure. Maybe it's a dumb headline. But maybe it was clever clickbait. The whole thing is a little too pat. If so, well played, NYTimes. You used me like an old toilet seat.)

Essential Hayek

A very interesting and useful new set of resources, from Don Boudreaux and the Fraser Institute.

The Essential Hayek.
(Doesn't come live until tomorrow...)

From the book, the Table of Contents:

Foreword, by Václav Klaus / 1
Introduction / 7
Selected Hayek passages explained
1. How we make sense of an incredibly complex world / 12
2. Knowledge and prices / 17
3. Individual flourishing and spontaneous order / 24
4. The rule of law, freedom, and prosperity / 28
5. Legislation is distinct from law / 32
6. False economic security and the road to serfdom / 39
7. Economic booms and busts / 46
8. The curse of inflation / 56
9. The challenge of living successfully in modern society / 62
10. Ideas have consequences / 71
Suggestions for further reading / 77

I'll be using it in class!

How not to flip your classroom

Over at inside higher ed, Rob Weir reports,

Last spring, my best friend decided to flip his introduction to computer science class. He posted reading assignments and an online quiz on Friday, closed the quiz at 10:59 on Monday, and walked into his 11 a.m. class that day and introduced higher-level material based upon what students were supposed to have mastered. Some students did really well, some had tried taking the quiz without careful reading, and some simply didn't get what the text was telling them. One could take a hardball approach and say that those who tried to skip the reading got what they deserved and the clueless were in the wrong class. Insofar as my friend was concerned, though, flipping flopped.

People, this is a big fail. The guy is throwing away valuable information and is not really trying to help his students learn. In fact, he's kind of being a dick.

How about this? Post some short videos, instead of long reading assignments, have the online quiz due well before the next class, check the quiz to see what students are having problems with, start the next class by with a mini presentation on the problematic stuff, try some peer instruction on that material, give a mini presentation on some higher level stuff and follow that with peer instruction too!

 In Rob's, example, flipping didn't flop, the lazy-ass professor flopped.

Flipping is not "you go read the basics and then I'll lecture all class period on advanced material".

Flipping is "you get prepared before class, and then we will do problem solving during the class period."

Flipping does not excuse the professor from the responsibility of making sure the students understand and master the basic material. Flipping does not put a wall between the online and in-person components of the class.

It is actually much harder to run a flipped class well than to go the old "sage on the stage" route that Rob enjoys so much.

But I will say this, if you aren't going to put the work in, please don't "flip" your class.

Note: this is cross-posted at Cherokee Gothic as well.

Some Students, You Just Can't Teach...

Perhaps the most famous scene from Cool Hand Luke...the "failure to communicate"


Sometimes teaching is like that.  The other day, I handed out an optional problem set.  I have 120 students in my "Econ for Non-majors" class.  Met the class 40 minutes early, before class really starts.  I would guess that 80 of the students were there, because there is a midterm coming up. My main theme has been, "You cannot memorize this.  You have to learn to work the problems, and shift the curves, by your intuition about how prices work!"  I spent 30 minutes on the problem set, and tried to get them really to understand how taxes and subsidies shift supply curves.  I thought it went pretty well.

I have a friend, a junior, in the class (almost everyone else is a freshman).  He came up after class  laughing.  Apparently one of the 40 or so students who did not come early came in, sat down, and asked her neighbor what was the subject of the problem set. The person who had been there--and had listened to me say, "Don't memorize!  Learn!"--told the latecomer, "Oh, not much.  He said remember that subsidies shift supply curves up and to the left."

AAAAAARGH!  She told her two things:  1.  Here is a fact to memorize (which I told them not to do).  2.  That "fact" happens also to be WRONG (which is WHY I tell them not to memorize).

Some students...you just can't teach.  But if this is how she wants it, that is how she is going to get it, come midterm time.  Sigh.

Most Excellent Musical / Econ Site

This is nothing short of amazing, fantastic, wonderful.

Do you need some terrible 70's or 80's music to illustrate  a point in econ class?  (Answer:  yes.  Yes, you do.  You ALWAYS do).

Then here is the reference site for you!

And the best thing (and this goes out to YOU, Steve Horwitz!) there is not one shred of that awful sound abortion, RUSH, anywhere on the site.  Because the only principle Rush illustrates is that even functionally deaf people will apparently still buy music.  For proof, check this:  it is NOT intended ironically.

Entrepreneurship Summer Camp

So, I got myself into something difficult.  Being a professor, I do what many of us do, and assume that if students don't "get it," it's their fault for not being smart enough.  (I'm not as bad about this as Ricardo G, "El Certificador!"  He actually believes he stands between idiots and their diplomas, which would be meaningless without El Cert's watchful eye.  But I know I do sometimes blame the consumers when in fact the product is bad.)

But, in this case, I have agreed to give two four-hour* "classes" to a summer church camp.  The kids are 11-17 years old, and they come from (as the director described it) "urban backgrounds."  The time I have is 8:30 to noon, on Monday July 9 and Monday July 16.

My job?  To teach about (1) the American Constitution, (2) the importance of property and exchange, and (3) entrepreneurship.

You see the problem?  This is what people like me always whine about.  "No one is teaching our kids today about (1) TAC, (2) TIOP&E, or (3) Entrepreneurship.  THAT's the problem."  So, here's my chance. 

What you do?  I need advice.  Activities.  This obviously CANNOT be a lecture, or anything like a lecture.  11-17, summer, in a church basement, 8:30 am to noon.  What can I do that will help the kids think about the Constitution, property rights, and entrepreneurship?

I have gotten some ideas on some activities from http://www.econteachinglab.org/ .  And I can use some of those excellent videos from http://www.learnliberty.org/ (I think they will enjoy this one. http://youtu.be/oiZIsP7Ttqw  And of course this one by the Great Zwolinski** is wonderful http://youtu.be/NxBzKkWo0mo )

So, that will take up about...an hour.  Out of seven hours.  This needs to work, folks. I need advice.  Please comment, or send an email to mcmunger at gmail dot com

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*Look at that.  "Four" "hour".  How can two almost identical words be pronounced so differently, with different numbers of syllables, in fact?  Bizarre.

**The Great Zwolinski should either be a magician, or a porn star, in my opinion.  A shame to waste that name on a philosopher.