June is John Maynard Keynes Month

June 5th is the birthday of both John Maynard Keynes and Adam Smith. What an auspicious day to be an economist!

Keynes, a Depression-era macroeconomist, has come back into popular (popular for an economist) focus after this most recent economic crisis. His solution to depressed markets could be grossly simplified as fiscal expansion. If governments spend more, total output will increase.

In fact, looking at the Keynesian Cross model, even a modest increase in aggregate demand will lead to a much larger boost in output. The story is delightfully simple. Imagine today the government gives you 10 bucks to build a dam. You take that 10 bucks, save maybe 2 dollars, and spend the other 8 on Carls Jr. Carl then takes your 8, saves a dollar from it, and spends the other 7 buying more beef. The rancher saves a bit, spends the rest on fertilizer, and so on and so on. We see that from that initial 10 dollars, the money goes a long way in generating transactions.

Of course we learn this the first week of Intermediate Macroeconomics I. Week two, with its IS-LM and A Sad World models, shows us why this doesn't work and why we should all be good little monetarists. Still, enjoy your time in the sun, Mr. Keynes! June is your month!

Last thing I want to share, hip hop artist Slim Thug giving props to Sir John. Skip to 1:40 for the coolest moment macroeconomics will ever have.

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May is Karl Marx Month

Cinco de Mayo, more than just a Mexican holiday, is also the birthday of Karl Marx, notorious political economist and Evil Santa Look-a-like. When I was in the 10th grade, we had to read the Communist Manifesto for an English class. At the time, I was also working in retail and a member of a union, UFCW Local Chapter 555, so it was an exciting time to be a budding communist.

Then I took 11th grade Economics and promptly forgot about class struggles and command economies. Looking back, I wonder how communist economics would be taught in a true econ class using models and mathematics instead of just rhetoric. It's too bad Oregon State doesn't offer a course on heterodoxical economic models.

May is an important month for working people. May 1st is International Workers' Day, when unions and left-wing political groups take to the streets and protest for better living standards for the working class. Even though May Day started in Chicago, it has lost popularity. in America. Labor demonstrations remain very aggressive in the rest of the world, with protests turning violent in cities such as Athens, Macau, and Berlin.

Karl's grim specter of Communism hasn't completely left the world even after the end of the USSR. Workers around the world have yet to buy into free market liberalism and remain skeptical of its promises. Although I haven't been an active member of my union in years, I'm going to make an effort to wear red this month to show at least superficial camaraderie for my working brothers and sisters.

February is Edgeworth Month

Someone gave my an American Economic Association 2010 Calendar that highlights a different economist every month, sort of like a cat calendar but without the cuteness and warmth. February is Francis Edgeworth Month.

Frank is famous for giving us the Edgeworth Box, one of my favorite economics gizmos. Aside from having fistfuls of innuendos shoved into every crack, the Edgeworth Box combines mathematical economics with the more talking-points economics (my personal favorite). An Edgeworth Box is great for demonstrating the first two fundamental theorems of welfare economics. The first theorem tells us that if certain conditions are met, self-serving agents will naturally come to a socially optimal outcome. The second tells us that by manipulating initial endowments, any socially optimal point is accessible.

What does this mean for the pundit economist? It means we should emphasize trade, trade, trade. Governments should establish property rights and allow individuals to exchange goods, and all parties will be better off. This sort of mutual benefaction is a good counter against those who are cautious about capitalism and see it as a zero-sum game.

There's some calculus in the Edgeworth Box which will not doubt please the more mathematically inclined econ student, but most of its concepts can also be demonstrated visually with some curves and lines. Overall, it's one of the sexiest things I've ever seen in my life.