Economics - Spring 1998

Economics 2, Principles of Macroeconomics, will introduce you to the major economic issues of growth, business cycles, unemployment, and inflation that form the core of macroeconomics. Building on the basic principles of economics, we will develop a theoretical framework for understanding the role of monetary and fiscal policies in affecting the economy. The focus is on contemporary economic policy debates.

Course assessment will be based on problem sets, a midterm, a short paper, and the final exam.

Further information about the course will be available, probably in early March, at http:/econ.ucsc.edu/~walshc/Econ2.

• Heilbrun and Gray, The Economics of Art and Culture
• Scitovsky, The Joyless Economy
• READER--80 G--SUPPLEMENTAL READER--FOR 137

NOTE: ADDITIONAL SECTION MEETINGS (AS LISTED IN SCHEDULE OF CLASSES, WILL BE DISCUSSED DURING FIRST AND SECOND CLASS MEETINGS

1+ Introduction

• H&G, Part I (pp. 3-54)

3 Demand for the Arts

• H&G, Chs. 4 and 5 (pp. 55-98)
• READER(S) Demand Section

3 The Performing Arts Firm

• H&G, Chs. 6-8 (pp. 98-148)
• READER(S) Production Section

2 The Visual Arts @ Museums

• H&G, Part III (pp. 149-198
• READER(S) Visual Arts Section

3 The Performing Arts as an Occupation

• H&G, Ch. 14 (pp. 281-301)
• READER(S) Art as an Occupation Section

2 Economics of the Symphony Orchestra

• H&G, Review Chs. 6-8
• READER(S) The Symphony Orchestra Section

3 Public Policy Towards the Arts

• H&G, Part IV (pp. 199-280)
• READER(S) Public/Private Subsidies Section

1 Taste and Culture in the United States

• H&G, Ch. 16 (pp. 323-349)
• READER(S) Review section on Demand
• Scitovsky, The Joyless Economy***

1 A Future for the Arts

• H&G, Ch. 17
• *** Scitovsky's book should be started during week one
• ECON 80 G (137) CLASS REQUIREMENTS

All students will be asked to do a bi-weekly paper (EVERY OTHER WEEK, AS OPPOSED TO FIVE ON THE LAST DAY OF CLASS!!). This should be a short (2 page typed) paper, discussing any of the relevant media items from the Reader as they relate to the material covered in class and in the text for the respective week. These papers will be read and evaluated by the class reader, reviewed by the instructor, and will constitute a significant portion of your class evaluation. [please note: save these papers, and turn them in to the instructor on the last class meeting].

Students taking 80G will also be asked to turn in a short paper (5 typed pages), reviewing Scitovsky's analysis of our national disdain for culture (pp. 224-247, 258-263, and 275-277), to be read by instructor. This paper is due the last day of class (Thursday, Dec 5th)

Students taking 137 will be asked to do ONE or TWO papers, totaling approximately fifteen pages. The topic(s) should be drawn from the journal articles in the Supplemental Reader. The first of these papers (OR A PARTIAL DRAFT, IF YOU ARE WRITING ONE PAPER) is due by the end of the seventh week of the quarter (November 27), and the BALANCE OF THE WRITTEN WORK, by the last day of class (Thursday, Dec 5th). [note: none of these papers require reading beyond the two Readers]

The final exam, for both classes will consist of one of two options:

OPTION 1. A take-home exam, covering the material in the course will be available on Tuesday, December 3, and should be returned no later than 5pm, Saturday, December 7th.

OPTION 2. Perfect class attendance ( = all classes but two). Attendance will be taken at most every class meeting in the form of a brief "attendance quiz" during the last five minutes of class. Students may miss two classes for any reason; students missing more than two classes, for whatever reason, opt for OPTION 1 above. Students who wish to select both options may do so (after a consultation with a member of the counseling service).

In addition to the twice weekly lecture/discussion meetings, the class may meet in informal sessions from time to time, as indicated in the schedule of classes under section meetings. Student presentations (and performance); video performances and discussion by well know artists; and conversations with individuals involved in the production/business side of the arts are among the possibilities for these meetings.

How firms survive, thrive or sink. Competition, incentives, planning, game theory. Case studies and class discussion, simulation game with international dimension, group presentations, plus more.

This course will deal with the development of a military economy over much of the 20th century. The main focus of the course will concern the period 1945-1990/91. In this sense, it will be dealing with the history, development, and perhaps ebbing of what many have called the military-industrial-complex. Basic economic concepts; supply, demand, product quality, industry structure and conversion will be applied in the analysis. The subject will be considered from the neo-classical, institutional, and radical perspectives.

The syllabus is not yet ready, but you can get an idea of what the course will be about, and how we will proceed from the 1995 syllabus (when the course was last taught).

• Fen Hampson, Unguided Missiles, Norton 1989.
• William W. Kaufmann, Assessing the Base Force, Brookings, 1992.
• Murray Weidenbaum, Small Wars, Big Defense, Oxford, 1992
• Raymond Vernon and E. Kapstein, Defense and Dependence in a Global Economy, Congressional Quarterly, 1992
• United States General Accounting Office, National Security, 1992 (on RESERVE)
• READER (available at UC Copy Center)
• ON RESERVE:
  • Paul Baran and Paul Sweezy, Monopoly Capital, Modern Reader, 1960.
  • Martin Binkin, Military Technology and Defense Manpower, Brookings, 1986.
  • Congressional Budget Office, Defense Spending and the Economy, Washington, D.C., 1983
  • David Gold, The Impact of Defense Spending on Investment,.. Defense Budget Project, 1990.
  • Mary Kaldor, The Baroque Arsenal, Hill and Wang, 1981.
  • William W. Kaufmann, A Reasonable Defense, Brookings, 1986.

Lecture/discussion, with a significant amount of time devoted to student group discussion (exactly how much will depend on class size, but I would guess that a minimum of five to seven class meetings will be used in this fashion).

These discussions will deal with the following five common "group" assignments:

1. The nature of the "Soviet/Russian/Europe/Near East and South Asia/East Asia and the Pacific/Low Intensity Conflict" threat.
2. Analysis of a specific weapons system--usefulness,budget, cut, expand, eliminate, Clinton budget plans as well as a some discussion of proposed impact on the major contractor. Weapons to be considered are: Tirdent sub and missile, MX and Midgetman, B1 bomber, Air-launched cruise missile, M-1 Abrams tank, and SDI (Star Wars). Each of these systems are discussed at length in Unguided Missiles, Fen Hampson (options may be offered if approved in advance)
3. The Patriot Missile controversy (material on reserve)
4. Clinton's proposal and present efforts towards defense "conversion."
5. The impact of the internationalization of weapons development and production.

Items 1 and 2 include a short paper (4-6 pages), and should be done in groups of 3-5 students. In addition to the group paper projects there will be:

• 2 brief mid-term exams, covering sections II-VIII;
• one individual paper (4-6 pages) detailing your personal analysis of items 3, 4, or 5 above;
• a final exam, covering the entire quarter's material, to be given as scheduled (June 15, from 4:00 till 5:30), OR AN ALTERNATIVE TO C;
  • which simply requires "perfect" attendance {defined as no more than two absences for whatever reason during the quarter}.

NOTE: Papers 1 and 2 should be turned in at the time of class discussion. The Patriot/Conversion/ Internationalization paper is due on the last day of class; June 8.

I. Introduction: Defense Spending-Levels and Trends

II. The Need for Defense-Model 1-External Threat

III. The Need for Defense-Models 2/3--Organizational

Process/Political Process

IV. The Military Industrial Complex

V. The Defense Industry-Profits and Performance

VI. Economic Impact-Employment & Inflation

VII. Economic Impact-Growth/Technological Change/R&D

VIII. Department of Defense and the University

IX. The Quality of Defense

X. Conversion

XI. Global "Integration"

I. Defense Spending

• Weidenbaum, Chs. 1, 2, 6.

II. The Need for Defense-Model 1

• Richard Pipes, "Can the Soviet Union Reform?" READER
• Robert L. Pfaltzgraff, "The Emerging Global Security Environment." READER
• Ilana Kass, "The U.S.-Soviet Strategic Relationship. READER
• Gregg Easterbrook, "Ideas Move Nations." READER
• Graham T Allison, "Conceptual Models and the Cuban Missile
• Crisis," pp. 689-98 READER
• AND ON RESERVE
  • United States General Accounting Office, National Security

III. The Need for Defense-Models 2 and 3

• Fen Hampson, Unguided Missiles, chapters 1-4.
• Graham Allison, "Conceptual Models..." pp. 698-718 READER
• William Niskanen, "Bureaucrats and Politicians," and comment by Julius Margolis. READER

IV. The Military Industrial Complex.

• Paul Baran and Paul Sweezy, Monopoly Capital, ch. 7. RESERVE

V. The Defense Industry

• Weidenbaum, Chs. 7, 8.
• David E. Kaun, "Where Have All the Profits Gone?" READER

VI. Economic Impact (employment-inflation)

• On Reserve
  • David Gold, The Impact of Defense Spending..., DBP, 1990
  • Congressional Budget Office, Defense Spending and the Economy, 1983.

VII. Economic Impact (growth etc...)

• Weidenbaum, Ch. 5.
• Robert Solo, "Gearing Military R & D..." READER
• Steve Chan, "Military Expenditures and Economic Performance," READER
• On Reserve
  • David Gold, The Impact of Defense Spending....

VIII. DOD And the University

• David A. Wilson, "Consequential Controversies," READER
• Richard D. Lambert, "DoD, Social Sciences and International Study," READER
• Jonathan Feldman, "Growing Pentagon Hegemony Over Universities," from Universities in the Business
• of Repression (ch 7), South End Press, 1989. READER
• Mark Warden, "The Military and the University," STUDENT PAPER IN READER

IX. The Quality of Defense

• Dina Rasor, "Fighting with Failures," READER
• Jacquelyn K. Davis, "Technology and Strategy...," READER
• David E. Kaun, "Lying as Standard Operating Procedure...," READER
• On Reserve
  • Mary Kaldor, The Baroque Arsenal.
  • Martin Binkin, Military technology and Defense Manpower,

X. Economic Conversion

• White House Press Release on Conversion...READER
• Weidenbaum, Ch. 3.
• David Blair, "Criteria for Planning the Transition to Lower Defense Spending," READER
• Shelly Dawson, "Economic Conversion," STUDENT PAPER IN READER
• David E. Kaun, (w/Mark Murphy and Rebecca Long), "Conversion Follies," READER

XI. GLOBAL INTERDEPENDENCE

• Vernon and Kapstein, Defense Dependence in a Global Economy

Revised 7/13/04.