Microeconomics is trying to make me a conservative

Today in my microeconomics class, we learned about how labor markets balance risk and wages.  Basically, it costs employers money to mitigate risks, so they are willing to pay more to not have to – that is, they will pay more for people to take on riskier jobs.  This is good, because most people (who have some basic sense of self-preservation) demand higher wages for riskier work.  In the graph my professor drew on the board, there is an ideal point at which the individual’s risk-per-unit-of-wage curve is tangent to the employer’s curve, and everyone has a job and is relatively happy.  Then you have Government Intervention.  The government says you can’t take on that much risk, even if you want to, and the individual is suddenly making less money, and is less happy.  Meanwhile, the employer, having passed off the costs through a wage cut, is sitting pretty.

So what does this tell us?  Government should stay the hell away from markets!  They are just making people make less money, and constraining their rights to risk their lives for profit.  Boo government.

…

Of course, there are a couple tiny problems with this.  For instance: the model assumes that companies make no profits, so if the government imposes a limit on risk, the only way they can stay in business is to reduce wages.  Obviously in the real world, companies do have profits.  Often very large profits.  Another small problem: the model assumes that people know exactly how much risk they are taking on, and are perfectly able to leave and find another job if they don’t like their new level of wages, or their new level of risk.  There are so many examples of these not being true, it doesn’t even seem worth listing them.  So the model is stupid and unrealistic, and sometimes government limits on risky behavior can be “good.”

My professor made this point in class; he’s a good liberal, and he’s not trying to brainwash us.  Nevertheless, I feel that the discipline itself is trying to brainwash us.  It’s so simple!  It’s so clean!  It mostly works even if it’s based on bullshit assumptions that in no way reflect the real world!  Trust it!  Love the market!  BE THE MARKET.

Ahem.

I’ll be over there, writing long maudlin papers about how downtrodden and constrained the poor are, thank you very much.

first day of school

Note: this post is slightly delayed since I still do not have internet in my apartment – it was written on the night of the 26th.

Today was the official beginning of my graduate career.  I woke up at 6:30, hauled myself out of bed, and was sitting in Microeconomics by 8 am, if not ready to learn, at least with my eyes open.  It was a good day; both professors I had today were smart and engaging, I did not feel too lost, it was sunny and I lay in the grass for about ten minutes after lunch.
My favorite thing that has happened today, however, is reading the second chapter of one of my two (two!) giant Microeconomics textbooks.  Yes, I was not expecting this either.

The textbook to which I am referring was written by Lee Friedman, a professor here (Friedman also teaches next semester’s more advanced Micro class).  My current professor described this book (from the outside, your standard 700+ page textbook) as “more literary.”  (As opposed to the other textbook, which upon casual perusal appears to have lots of math.)

The first chapter of Friedman’s book was pretty straightforward: what is the role of a policy analyst, why is microeconomic analysis important for a policy analyst to know, what are its limitations, etc.  The second chapter opened in a similar vein, but then it had a story.  Not just any story.  This story was about a young woman named Barbara Blackstone starting her Very! First! Day! at public policy grad school.  She woke up at 6:45 am!  She wanted to do good in the world but needed more tools to know how!

The real fun begins when Barbara goes to class and her gentle-eyed professor gives a lecture on supply and demand curves (not terribly dissimilar from the one I heard earlier today).  I can’t decide which I find more delightful: the internal nervous dialogue of the students (it does not sound like that inside my head!) or the fact that Professor Friedman likes his opening lecture so much he felt the need to give it to us inside a textbook, complete with fake student questions and interjections.  Though honestly, nothing can beat the end of the story, which I copy in full below:

Professor Weiss went on to show [some math about cost-benefit analysis] and then announced that this was quite enough for one day and ended the class.  Barbara and Reggie looked at each other, tired but smiling.

“That was some class, wasn’t it?” said Reggie.

“You can say that again,” Barbara replied.  “I think this course is going to be very interesting.  I just hope I can keep up with it.  At times it seemed to be going too fast for me.  I’ve never seen anything like this before.”

Reggie grinned at her.  “It sounded to me like you’re going to do just fine.”

Professor Weiss, who overheard the thrust of this conversation, smiled to himself as he left the room.  They both will do just fine, he thought.  This whole class will do just fine.  I am lucky to have such good students.  And with those private thoughts, he disappeared from view.

I solemnly swear to utter the words, “That was some class,” at least once a day every day for the next two years.

rarefied

Today in math camp, the professor made a joke about conservative economists and people who can’t stop fighting the Cold War, and everybody laughed. I laughed too, delighted with the joke and with the fact that everyone else around me got it, but thinking back on it I feel more hesitant. Yes, we (incoming students at the Goldman School of Public Policy) all get it. We are smart and engaged and informed.

I have two vying reactions to this fact.  The first is: how wonderful! It’s a blessing to be surrounded by people like this, and scary to not be anywhere close to the smartest person in the room. The second is: how unreal. I am back in academia, that most rarefied of atmospheres.

To illustrate this problem, let’s take the current furor over health care reform. The Goldman School focuses on real world problems (and in fact the joke was about how classical microeconomics ignores real world problems) but it is still full up with highly educated, highly motivated people, most of who (whom?) cannot understand the first thing about why people are at town halls screaming about “death panels.”  I’ve had several conversations with fellow students where we both put on confused expressions and say, “I just don’t understand what these people are thinking.” We don’t get it; we know too much to understand or empathize with ignorance.  Again: good thing! I want policymakers to know a lot.  But also: bad thing! I also want policymakers who can educate and convince people who don’t know a lot.

halfway everywhere

I am half in grad school now. More specifically: I am in math camp. Math camp started on Monday, but I missed the first three days, while I was traveling. Luckily the first three days were easy to make up on my own: all I needed to do was remind myself of things I learned long ago. Today was a little like that too, except someone else was reminding me.

Doing problem sets last night I remembered both what I liked and what I disliked about math. I like when it is clean and easy, when equations click together just the right way, and you find a solution you can circle and check off. I do not like when it is complicated, and messy, when I have to fill line after line with brute force, adding this, multiplying by this, forcing it into the right shape. The tediousness of algebra takes away the joy of an answer that is simply right, and usually leads to some equally nasty solution, a terrible fraction that introduces a note of doubt into what should be a clean process.

This will probably be the cleanest process of my year though, messy fractions and all. I should enjoy it while I have it. I should wallow in circle-able solutions.

In the realm of Life, I am also halfway to somewhere. I slept in my Berkeley apartment for the first time last night (a friend stayed with me to allay my nerves about being all alone). I am moved in but furniture-less. I am haunting craigslist, waiting for my bed to come. I am checking items off my to-do list: entrance loan counseling, grocery shopping.

It’s a new world

Dear blog,

I decided to give you a ridiculously long name full of a lot of “p” words.  Why “p” you may ask?  Well, it starts both “public” and “policy” which are the two words that make up the name of the discipline I will soon be studying.  Other good words that start with “p” that I did not use include: picnic, post, pillory, puntilious, pugilistic, and plucky.

As you may have guessed, the creation of this new name signals other changes.  First of all, I’m going to try and write in you.  I know that sounds dirty, but I think it will be a good thing.  Second, since I am no longer campaigning, I am not going to be writing about the Obama campaign anymore.  Instead, I will try to focus on the experience of being a graduate student.  I will also be cross-posting wonky policy stuff with a blog run by students at the program I will be attending (the Goldman School of Public Policy at UC Berkeley, known hereafter as GSPP).  I may also be entertaining a request from a dear friend to include a serial novel.  However, I make no promises on that front; that may be beyond my powers at this time.

Love,

Felicity