Every semester I start my Principles of Macroeconomics class with a mini-lecture about why teaching macroeconomics is so hard.
- Macroeconomic policies have been practiced for thousands of years - there is a strong element of "we've always done it this way" in policy.
- For 215 years, some of our policies have been guided by the Constitution - and it is designed intentionally to slow down government decision-making.
- Macroeconomics has existed as a coherent field for only the last 70 years - so our system could not have been designed for reasonable execution of macroeconomic policy.
- Democracy is about acceptable compromises on legal inputs to the system - it is not about correct or desirable economic outcomes.
- Most elected officials and bureaucrats took the bare minimum number of economics classes in college - my students may know more macro by the end of the semester than the median government official.
- Reporting on policy is done by people who probably have less economics education than the peope who make the policies - and they focus on bad news and sound bites (because that's what sells).
- Everyone, no matter how poorly informed, feels entitled to have their opinion about macroeconomics policies (and even facts) taken seriously - it's very similar to every parent having an opinion about how to best educate their children.
While going over these points, I emphasize that what the students hear about macroeconomics policies outside of class may make them think I'm dumb or nuts. I'm not, (and neither are they).
As his biographer Reeves pithily observes about Kennedy (and all other presidents), "Kennedy had come to office in the great tradition of American presidents, more or less blissfully ignorant of economics"... His knowledge of macroeconomics was so severe that he asked his economic advisor, Walter Heller, chair of the Council of Economic Advisors, "Now tell me again how I distinguish between monetary and fiscal policy?" Heller replied, "Monetary policy is 'M' like Martin [William McChesney Martin, chair of the Federal Reserve Board]."...