Why Economics? Its Nature and Functions

1. Why Economics?Its Nature and Functions Prof. Bryson Marriott School

2. Significance of economics • Before we got endowments and named business or management school after rich benefactors, we often named them • College of Business and Public Administration or • College of Economics and Business • In Europe you often have Colleges of Economics and Business and, sometimes, • Universities of Economics

3. Significance of economics • If we were to stop students randomly on Brigham’s Square, what would the top six criticisms of economics be? • Can you refute the critics?

4. Significance of economics • If you believe economics is important for business, why? • Economics is to business what mathematics and physics are to engineering.

5. Significance of economics • What is the conventional definition of economics? “Economics is the study of the allocation of scarce resources for the satisfaction of (unlimited) human wants.”

6. Alfred Marshall: • “Economics is the study of mankind in the ordinary business of life.” • To you, what is “the ordinary business of life?”

7. Alfred Marshall: “Economics is the study of mankind in the ordinary business of life.” • “Man’s character has been moulded by his every-day work, and the material resources which he thereby procures, more than by any other influence unless it be that of his religious ideals…religious and economic influences have nowhere been displaced from the front rank even for a time; and they have nearly always been more important than all others put together. Religious motives are more intense than economic, but their direct action seldom extends over so large a part of life.” Marshall, Principles of Economics,p.1

8. Why is economics so exciting? • Economics is mathematics and more. • It is at the core of most things we are interested in. Beard’s history, for example. • Economics is a language • Economics is a system of logic • Economics is a method of prediction and forecasting

9. Great Conceptions of Economics • 1. Decision Optimization. Who optimizes? • Consumers • Firms • Governments and NGOs • 2. Markets • 3. Organizations (the “New Institutional Economics”)

10. Human life time for labor and service, scriptures, temples Homes, cars, machines and tools, human capital, land, technologies, productive capacities Consider God’s Gifts as Resources SpiritualTemporal

11. Consider God’s Gifts as Resources • The Lord has said: • “Wherefore, verily I say unto you that all things unto me are spiritual, and not at any time have I given unto you a law which was temporal. …my commandments are spiritual; they are not natural nor temporal.” • D&C 29: 34, 35.

12. Consider God’s Gifts as Resources • We are stewards, owning nothing. • (Psalms 24:1) • “The earth is the Lord’s, and the fullness thereof; the world, and they that dwell therein.” Our responsibility is to take care of (“to allocate”) these resources well, increasing them for the benefit of God’s children and for building the kingdom.

13. My Philosophy of Education • 1. There are revealed principles of the gospel that are true. “Happy are ye if ye do them.” • 2. There are foundation principles of theory. These are of particular interest when they are in harmony with divine principles such as agency, human dignity, regard for human life, etc.

14. 3. There are interpretations of theory’s implications. These suggest how the theory should be applied. These interpretations are influenced by the individual’s preferences, educational background, and experiences.

15. These interpretations may lead to a political orientation American’s call “liberal.” The philosophy here is concern for the little man and the disadvantaged and often implies well-financed social programs. • Such interpretations may also lead to a political orientation of conservatism. The philosophy here is concern for personal liberty and independence, with limited government.

16. 1. Principles 2.Theory 3. Interpretation • I am concerned about items 1 and 2. For this course the emphasis will be on item 2. I want you to understand the theory. The interpretation is usually a matter of family and previous educational experiences. Liberal and Conservative attitudes

17. Economics and Belief • I want you to understand, not to believe economic theory. • Science is the best set of hypotheses available. These should be accepted skeptically until the hypothesis can be disproved (rejected)* or until a better hypothesis comes along. • *In science, hypotheses must be set up so that they can be rejected if proved untrue. We accept them only until someone is able to reject them.

18. Economics and Belief • We shall try very hard to aid the student in understanding certain economic models. We shall try not at all to convince him of their truth. Indeed it would be counter to our purposes to instill in the student belief in our models. Belief is appropriate to theology. Science requires understanding of the theoretical system that one employs coupled with skepticism as to its validity. We shall attempt to provide the reader with the understanding. We trust that he will provide himself with the skepticism. Cliff Lloyd, Microeconomic Analysis

19. Economics and Abstraction • 90% of what you now learn that would help you in employment will be obsolete five years from now. • The power to reason is what makes an educated person. Some can do so without formal education, but all of us contemporaries like signaling.

20. Economics and Abstraction Finally, consider the words of the Lord: • 78 Teach ye diligently and my grace shall attend you, that you may be instructed more perfectly in theory, in principle, in doctrine, in the law of the gospel, in all things that pertain unto the kingdom of God, that are expedient for you to understand; 79 Of things both in heaven and in the earth, and under the earth; things which have been, things which are, things which must shortly come to pass; things which are at home, things which are abroad; the wars and the perplexities of the nations, and the judgments which are on the land; and a knowledge also of countries and of kingdoms— (My emphases) D&C 88: 78, 79.