VidCon is a convention for online video content creators and fans. YouTube’s top stars will be there, including Crash Course’s main producer and editor, Stan Muller.
The convention is from Thursday to Saturday, and I imagine Stan was preparing for it all week, so he didn’t get a chance to post the video, even though we are all desperately waiting.
Stan, did you know that you can set your YouTube channel to release videos at a specified time, so you don’t have to do it manually?
Don’t make me drop so low that I have to critique popular videos on behavioral economics, like this one. Behavioral Economics has about as much to do with real economics as does Home Economics (that joke is Bob Wenzel’s).
Crash Course Criticism has a wife and kids to feed here Stan. Don’t make them starve.
We’re counting on you.
UPDATE: Stan has tweeted that the next video will be up on Wednesday:
@cccriticism Next Wednesday. Tech trouble and VidCon conspired to create a delay.
Asking this question is similar to “Why can’t politicians agree about what to do about [policy topic]?”
Why didn’t economists predict the 2008 financial crisis?
This is a great question. If you were watching CNBC or Bloomberg in 2007, you would not hear any debate as to whether we were headed for a recession. After all, the stock market was up, unemployment was down, and you just bought a house with no money down! The economy was looking good.
There were, however, people who warned against the impending financial collapse, primarily from the Austrian school. They even made some television appearances, where they were ridiculed and laughed at on just about every program:
Does this necessarily mean that the Austrian school was right because they were the ones who predicted the crisis? It doesn’t, but it would be disingenuous to say that “economists did not predict the 2008 financial crisis.” Some of them did.
The argument against this, of course, is “a broken clock is right twice a day.” In other words, if you always say that a crisis is coming, then you’re going to be right when it happens. In fact, right now many Austrians are warning of an impending financial collapse, and some of them have even predicted dates of the crisis which have now passed. We’ll get to this more when we talk about economics as a social science vs. physical science, but Austrians are often characterized as “doom and gloomers” who always warn that we are close to the next crisis.
However, if you watch the video above, Peter Schiff isn’t only predicting a recession, he says exactly how it’s going to happen:
Today’s home prices are completely unsustainable. They were big up to these artificial heights by a combination of temporarily low adjustment-rate mortgage payments by a complete absence of any lending standards and by speculative buying.
That’s awfully specific, and even if he was wrong about the year (he clearly jumped the gun by saying the crisis would happen in 2007), the fundamentals are pretty dead on from what we know about the recession today.
So take this for what it’s worth: Austrians are not great at predicting the timing of recessions (but then again, neither is anyone), but the explanation behind it seems pretty solid.
Episode 1 of Crash Course gave a brief introduction to how the course is designed, who your co-hosts are, and some basic principles and definitions in economics. There was a mix of good and bad economic conclusions, so let’s dive right in:
How Does Crash Course Define Economics?
Our first co-host, Mr. Clifford, defines economics as “the study of people and choices”. This is a pretty great definition, especially considering the alternatives. Depending on his preferred school of economic thought, he could have easily said economics is the study of “classes and prosperity,” “institutions and planning,” or “statistics and predictions”. Instead, Mr. Clifford went with people and choices which will become important later on when the show gives examples of choices.
The first example of what a human choice looks like couldn’t be more relatable to the audience: watching a YouTube video. YouTubers compete for your attention, and by proxy, ad revenue. YouTube content is a serious business as our hosts know, and the popularity of some channels over others will determine the actual wealth of the content creators.
Our second co-host, Adriene, even goes into defining opportunity cost: “the cost of watching this video is the video you’re not watching.”
I would have been satisfied with this explanation, but Adriene goes so far as to give a great example of opportunity cost in having a large military state:
Military spending in the United States is over $600 billion per year. That’s close to what the next top 10 countries spend combined…the opportunity cost of [each] aircraft carrier could be hospitals, schools, and roads.
This statement is pretty profound in one sense, considering that some people and economists continue to write that any kind of government spending is good for the economy regardless of what it is, even if it’s for a fake alien invasion.
What is not mentioned, however, is that the opportunity cost of these aircraft carriers could also be non-government spending in the marketplace. In other words, if the money spent on aircraft carriers were refunded to taxpayers (or never taken in the first place), people could decide for themselves what they would prefer to spend that money on. It could be towards their healthcare bills, their kids’ college tuition, or buying consumer goods, any of which might be more important to them than another aircraft carrier.
This is a good example of Bastiat’s broken window argument or “the unseen”, which says that it’s easier to see the stuff paid for (in this case, the aircraft carrier) than that which could have paid for.
The YouTube video selection example was a great illustration of the marketplace, but I thought next examples were a little strange.
“But what if I’m watching this at school,” you ask. “What if I’m forced to watch this?” Well, you weren’t forced to go to school. You could ditch, you could drop out, you could move to a country that doesn’t have compulsory education.
Wait, isn’t that a contradiction? Doesn’t something legally compulsory require coercion or force? Parents have a legal obligation to send their kids to school, under the threat of significant fines or jail time, sometimes for the student. It doesn’t matter if school gives you anxiety or you’re being bullied, you still have to go. And you obviously can’t just move to another country; runaways are sent back to their legal guardians.
This is quite different from choosing which YouTube video to watch. You don’t get fined or jailed for not watching a YouTube video. To a child, compulsory education is not the marketplace.
Another problem I had with the videos was a lack of distinction of individual and government action:
Is there a way to ensure there will never be another traffic fatality? Yes, we can crush all the cars, close the roads, and force everyone to walk. Do you want to decrease the number of people convicted of murder? You could decriminalize murder. You want to end the unethical treatment of elephants? You can kill off the elephants, in an ethical way of course.
Are these questions directed at me? I can’t do any of these things.
I can choose one YouTube video over another, but I cannot choose an alternative road system, legal system, or what other people do with their elephants.
You know driving has risks, that you might get in a car accident, but you still drive.
Adriene has now switched the subject to what I personally decide to take as my transportation method. The power to choose whether to drive is different from deciding to crush all the cars and force everyone else to walk. I have control over myself and my actions, but I don’t get to decide how other people act.
I was pleased and entertained by the introductory episode of Crash Course Economics. The big economic principles it taught are generally unobjectionable, but some of the word selection and examples are either confusing or misleading. The 10-minute video has a lot more to unpack, and I’ll try to expound on some of the interesting choices of words and implications before the next video comes out. I’ll also include some thoughts from other economists I’ve asked to contribute to the blog.
Like what I wrote? Hate what I wrote? Feel free to comment below.
I’ve always liked Crash Course. Their unique style that combines textbook subjects with humor and entertaining visual graphics is impressive. I wouldn’t be surprised if a student learns more from one series (which may take about 3-4 hours to watch in its entirety) than in an entire year-long high school course. That’s saying a lot about the gap between schooling and education.
Crash Course announced its next course last week: Economics.
This is great, I thought. Economics is a field that a lot of people wish they understood more about, but are so put off by reading an 800-page treatise that they don’t know where to get started. Instead, many are satisfied with accepting the economic premises and conclusions of whichever journalists they read and move on.
Crash Course could change this, however. With their 3.1 million YouTube subscribers, they have already educated millions on subjects from World History to Astronomy. Finally, a name I trust can explain the principles of economics in an entertaining way.
BUT there is a problem with explaining economics: there are many schools of economic thought. Does the series plan to talk about every subject from the perspective of every school? That’s quite an endeavor, but I’ll wait until I see some of their work before I judge.
But alas! The introduction video has been released, and it’s far from being non-biased or poly-centric in its schools of thought. They come right out of the gate with satire:
Today we peer into a world where shadowy government stooges manipulate the levers of fiscal policy from deep in their evil lairs. They pick economic winners and losers, and control the business cycle creating recessions and controlling inflation to serve their nefarious purposes.
You probably think that members of the government use their powers for bad things, like spending on projects in order to help politically-connected corporations and campaign donors. Since we’re using words like “evil,” “shadowy,” and “nefarious,” we’re showing you how silly this point of view is. Governments clearly aren’t evil, so thinking that politicians are influenced by anything other than the public good is ridiculous!
The satire comes to a stop and is followed by the series’s thesis:
Nah. Fiscal policy is a completely legitimate tool used by non-shadowy government officials to correct the economy!
Almost got you there! Government fiscal policy is totally legitimate.
I’m wondering: Are all government fiscal policies legitimate, even in countries that spend money in completely different ways? Are all their actions legitimate because they are done by governments?
BONUS: Did you catch the factoid in black that was on the screen for maybe half a second? It says “By law, officers are allowed to shut down lemonade stands.” Are these the corrections in the economy the co-host was referring to?
The introductory video implies a few points:
1. Without government intervention, the economy would need correction.
2. Governments correct the economy by taxing its people and spending it on certain projects.
3. This process is completely legitimate because it actually does correct the problems it intends to solve.
This already ignores at the very minimum the Austrian and Chicago Schools of Economic Thought, which suggest that the economy is necessarily worse off when money is diverted from voluntary action (the market) to government projects. And if the video is arguing for spending beyond the bare minimum (roads, military, courts, etc.), it would be ignoring other economic schools of thought as well.
This blog will review each Crash Course Economics video and highlight some of the premises and conclusions made in the videos. I look forward to the project and I hope you are too!
You can watch the full Crash Course Economics Introduction Video below: