When one thinks “macroeconomics,” dry equations, graphs and competing theories come to mind. But in the midst of economic crisis, the subject becomes dramatically relevant.
In Bob Francis’ Macroeconomics class at Shoreline Community College, students are learning the kinds of things most people wish they knew more about as the economy crumbles.
“The beauty of this is it’s so darn relevant right now,” Francis said. “The over arching theme of the class is trying to explain what’s going on.”
Is it a good time to buy a new car? Is it better to spend government money in a stimulus package or give it back as a tax cut? Could the recession redistribute wealth?
Student questions this year show the kind of engagement you don’t get during good economic times, Francis said.
They’re also the kinds of questions that have surfaced at dinner parties.
His students follow the economic crisis every day in the news. They keep journals of articles from the Economist magazine, post them online and discuss them.
First, they studied the causes of the sub-prime mortgage crisis. In recent weeks, they did an economic forecast, which showed the recession will get worse.
Then they tested various ways to fix it — from government spending like the federal stimulus package to cutting taxes to doing nothing.
Class on Monday, Feb. 9 focused on competing economic theories playing out in Washington, D.C. right now.
Neo-classicists think that recessions correct themselves without government help. Keynesian argue that recessions don’t self-correct and need government action.
The Great Depression of the 1930s showed that the Keynesian were right, Francis told his students Monday.
“It showed that government should fix these gaps and not wait for it to self-correct,” he said.
The economy is bad enough that economic terms the students are studying, like “the Paradox of Thrift” are becoming media fare too.
“When NPR does a story on the Paradox of Thrift, it’s pretty amazing,” Francis said.
The Paradox is a Keynesian theory. People need to spend money to make the economy better, the theory says, but in a recession, people are scared and spend less. People operate on emotion, not reason, and that’s one reason why the recession won’t just go away, Keynesians believe.
Some articles students have read argue that the current recession is actually a Depression.
Francis thinks that argument is strong.
He told the class that when they’re older, they’ll look back on these times, just as people did who survived the Depression of the 1930s.
“I survived the depression of ‘09!” Francis said in a faux-crochety voice during lecture Monday. “And I was taking an economics class at the same time!”