>I, too, looked at this exercise and considered it overly simplistic. Not
>because of the political content that is left out, but because of the
>economic content that is left out. The budget balancing problem is just an
>exercise in adding and subtracting. It assumes that any change in government
>expenditures or tax rates will leave GDP, unemployment, and inflation all
>unchanged. In short, it leaves out everything that makes the problem an
>interesting _economic_ problem.
>
>I don't really think there's much pedagogic value (for an economics class) in
>having students make a column of numbers add up to zero - even if they are
>assigned political roles to play. There's no way of getting a feel for the
>real trade-offs.
>
So by interesting _economic_ problem, you mean macroeconomic effects? My
interest was more on the problem of optimization/opportunity cost associated
with changes in the federal budget. I agree that understanding the federal
budget shouldn't come at the expense of a basic understanding of the
linkages between federal spending in aggregate and the rest of the
macroeconomy.
It does bother me that a student can be economically "educated" and have
almost no clue as to how much of the federal budget goes to social welfare
spending, social security, foreign aid, highways, etc. I forgot to mention
that I started off my exercise by having the class estimate the percentage
breakdown of federal spending.
Ira wishes there was more opportunity to fine tune particular government
programs. So, did my students, although they recognized how much more work
that would impose on them.
It's beyond the scope of what I could do in my class, but I wish there were
a way to talk intelligently about public investment vs. consumption vs. pure
transfers.
Thanks to all who offered suggestions for improving the exercise next time I
teach it.
David R. Ross | work: (610) 526-5180
Department of Economics | home: (610) 296-0930
Bryn Mawr College | fax: (610) 526-7475
Bryn Mawr, PA 19010 | internet: dross@brynmawr.edu