By Cecil Bohanon
I am writing this on an airplane to Las Vegas. I’ll be attending the annual conference of the Association of Private Enterprise Education along with two of my colleagues and six of my students. We’ll share some of the work we have done in economics at Ball State Univeresity — and yes, we’ll really attend sessions to learn about what scholars and students from other universities are doing.
Are we crazy? Why go to Las Vegas to talk about economics? My answer is straightforward — because as a colleague of mine says — “economics is fun.” Lots of folks think of economics as boring details about Dickensian “money changing holes.” But economic principles are everywhere — in daily life, in art museums and even in the Bible. Let me share a pedagogical example developed by my colleague T. Norman Van Cott.
Consider the story of Joseph in the Book of Genesis. Those familiar with the story recall his resentful older brothers sold him into slavery. Yet the lad managed to rise to prominence in the Egyptian court by correctly interpreting Pharaoh’s dream. Joseph foresaw an impending famine and used his newly acquired position in the Egyptian government to store up grain in a time of abundance for use in a time of scarcity. In economics we call this inter-temporal resource allocation. My grandma called it savin’ up for a rainy day.
The issue of directing resources today for use in future periods is a central question in any society — ancient Egypt or modern America. So it is fitting that economic students consider how this occurs under a variety of economic means. We all agree that Joseph “did a good thing” by making grain available in the time of famine.
But now let’s add a twist to the story. Suppose instead of rising in Pharaoh’s court Joseph had been a grain dealer in ancient Egypt. One morning lounging in his penthouse overlooking the Nile he opens the Cairo Times and reads the headline: “Pharaoh has Strange Dreams.” He immediately buys storehouses and fills them with low-priced grain. When the famine comes, Joseph sells the grain at a high price and manages to pocket a handsome gain. Joseph is a grain speculator.
Since ancient times, most people have viewed speculators as the embodiment of evil. Profiting from a famine, how wicked. But consider what a successful grain speculator does: He stores up grain in a time when it is abundant and makes it available in a time when it is scarce — just like Joseph did in the Bible story.
But wait, you protest — when Joseph acts as a civil servant he is acting in the public interests, while as speculator he only pursues his private gain. Well, perhaps; but maybe not.
So speculators are good and civil servants are bad? Not really. The example illustrates that the benefits of holding back grain in plenteous years for use in years of famine can be accomplished in a number of ways. It also uses a story that is familiar to many students. This is why I love economics — its fundamental principles are of everlasting interest.
Cecil Bohanon, Ph.D., an adjunct scholar with the Indiana Policy Review Foundation, is a professor of economics at Ball State University.