Robert Wenzel’s Critique of Episode 2

Surprisingly, Crash Course has not released their video for episode 3 yet.  I’m pretty sure they record all of the episodes in advance, so I can’t explain why they didn’t release episode 3 Wednesday evening as per usual.  Perhaps the topic of episode 3, which was mentioned in the last video to be “how economic systems contribute to differences between countries,” contained some errors, and they are fixing it last minute.  I’ll try to get to the bottom of this by tweeting at the co-hosts and official Crash Course Twitter handle.

I’d like to take this time to talk about Robert Wenzel’s observations of the second video.

pizza

First, Bob also recognized the mediocre example of a pizzeria, where it isn’t so obvious that people have different skill sets, to describe specialization in trade.  He recommends a clearer example:

[People] might become doctors, they might become lawyers, they might become creative movie producers.  If they spend five years studying it and then ten years in the field, they’ve got a lot of knowledge.  That’s a lot of intellectual capital invested in that sector, so it doesn’t really make sense for them to go to another field.  In general, once someone starts down a road of specialization like that, it makes a lot of sense to generally stay in that direction.

Bob also mentions a school of economic thought that rejects specialization:

Karl Marx really didn’t understand specialization.  He thought that there would be a society where in the mornings, someone would be making pizza, in the afternoon working on a farm, and later in the day, working at a construction site.

The Marxian idea, in fact, would work best in a pizzeria.  One employee could very easily go from preparing the vegetables to making the dough to sweeping the floor without much difficulty.  It would be much more difficult to switch from farming to telecommunications consulting.

It’s not that you can quickly put people from this place to that place to the next.  It is knowledge of specific localities, it’s the knowledge that someone is familiar with doing something, it’s knowledge because someone has greater intellect or skills or whatever it might be.

I’m not a Marxist, but I would have liked for Crash Course to talk about different economic schools of thought on the subject of specialization.  Am I right, comrades?

 

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Robert Wenzel Comments on Episode 1 (and 2)

While my response to episode 2 is in the works, check out Bob Wenzel’s commentary on the first two episodes.

What is Economics?

Wenzel agrees that Crash Course’s definition of Economics is good, but not ideal, because of its potential to delve into behavioral economics.  Let’s look at how Crash Course defined economics through the quote they used by Alfred Marshall:

A study of Man [and Woman] in the ordinary business of life.  It enquires [sic] how he gets his income and how he uses it.  Thus, it is on one side, the study of wealth and on the other and more important side a part of the study of Man [and Woman].

Wenzel cautions that this definition of economics may be “looking and attempting to understand how people reach their goals for action.  [Austrian Economist Ludwig Von] Mises doesn’t do that.  He says ‘okay whatever the reason men have goals, and let’s decide what happens in the economy with regard to exchanges once we understand those goals, regardless of how they come up with those goals’

This is a significant difference in one of the biggest questions in economics: what is economics?

Microeconomics Examples

Wenzel also takes aim Crash Course’s explanation of Microeconomics.  From Crash Course:

micro

There is a whole other side of economics that look at different questions: How many workers should we hire to maximize profit?  If our main competitor releases their product in May, when is the best time to release our product?

Wenzel points out that economics is not the study of business decisions:

The economist can explain how once a businessman has his goals, how he chooses, but there’s nothing that an economist can do a