I’ll be doing a little teaching this term. As those of you who teach know, there isn’t really anything that’s ‘a little’ teaching. With a new prep, there’s a lot of worrying and wondering and researching.
I’m a little late coming to this, because I wanted to say more about it but the clock has run out, but Taibbi had some frightening reporting a couple of weeks back about the concentration of economic power:
Today, banks like Morgan Stanley, JPMorgan Chase and Goldman Sachs own oil tankers, run airports and control huge quantities of coal, natural gas, heating oil, electric power and precious metals. They likewise can now be found exerting direct control over the supply of a whole galaxy of raw materials crucial to world industry and to society in general, including everything from food products to metals like zinc, copper, tin, nickel and, most infamously thanks to a recent high-profile scandal, aluminum.
How should I teach this?
Because a) this is going on so students are hearing/reading about it and should have tools to understand it, and b) I believe that it is economically important. I’m just a humble microeconomist mostly interested in decision making by individuals, so these sorts of corporate organisations aren’t really my bailiwick, especially when they start getting crossed with macroeconomics like fiscal policy. But the main theories of micro are mostly about not having control over markets. I’m just preparing a lecturing on supply and demand, and looking at using the Pit Game (pdf). These vampire squid schemes — and other major events like Enron, which cost California something like US$40 billion, around 80% of the entire New Zealand economy at the time — lead me to wonder about the balance of time spent on theoretical market efficiency versus actual commercial behaviour.
It also leads me back to Galbraith, who discussed the attitudes of the men running corporations in his day. They believed it was their function, not the market’s, to allocate returns to shareholders, management and labour. Other centres of power, such as labour unions, were therefore not anti-competitive, but a necessary countervailing power for an economy that was already far from a market solution.
I propose a new class: Vampire Squid Economics (Econ 20X). Each lecture centres on a case study: Enron, Goldman Sachs I and II, AIG 2008, etc. Prereqs are intro micro and macro. Heck, we could even develop a common syllabus and offer it across the country. Then I can park all this messy reality somewhere and get back to teaching theory.