I learned how to do such magic tricks from my mother who–at the time of the Great Depression–was in her early twenties, and just married. It was difficult in those days to make do. My parents’ only asset was a house, left to them by my grandparents, who had died of typhoid fever, en route home from Paris. The house was their salvation. To supplement my father’s minimal salary, earned by clipping coupons at the Federal Reserve Bank of New York, my mother took in borders, many of whom were also in similar financial straits.

Cooking for such a brood, my mother learned a major economic lesson, which she passed on to me: AIM BIG. Although my mother didn’t use the jargon, her advice was all about externalities and increasing returns. 

Cooking for such a brood, my mother learned a major economic lesson, which she passed on to me: AIM BIG. Although my mother didn’t use economic jargon, her advice was all about externalities and increasing returns. Take the turkey, for example: “Buy a big one,” she would say. “The cost per serving goes down the more meat there is on the turkey in relationship to the bone, especially if you combine your leftovers with other foods to add value and extend their life cycle.”

My mother, grandparents, and oldest sister Judie

Then she would tell me the story of stone soup.

But my mother didn’t only use scraps of meat to pinch pennies; she would use scraps of everything imaginable–ribbons, ties, pieces of wood–to create delightful, but at the same time low cost, presents for my sisters and me. Among my favorites was a circus ensemble, which was comprised of animal figures, designed by my mother, carved by my great grandfather with his jig saw, and then hand-painted by my mother. Equally precious were the raggedy dolls, donning straw hats and calico dresses, and carrying baskets of flowers, all of which my mother stitched together, just-in-time, working late into the night on Christmas eve.

Growing up in the Fifties, my recollection of hard times began to fade. It was only some years later, when living the tenuous life of a graduate student at Columbia University, and caring for a brand new baby, that I found myself, just like my mother, having to make do. Fortunately, I could build on the never-give-up strategies she had pursued as a young adult. So, I stretched myself, expanding my horizons beyond my dream of becoming the world’s greatest political scientist. Refocusing some of my efforts, I learned how to sew my own cloths and crochet Christmas gifts, simple things at first. To supplement my income from my job as a teaching assistant, I took up babysitting, and even ironed a few shirts at 19 cents apiece. My former husband–also a student–worked part time selling boys cloths at Bergdoff Goodman. Not surprisingly, meals were simple: hash, macaroni and cheese, tuna fish casserole, hamburger borgonone, and spaghetti–often without the sauce. Entertainment, for us, was not expensive either; we engaged in pot lucks, enjoying our time with friends. Even as we skimped by, we were very rich indeed!

Even as we skimped by, we were very rich indeed! 

As I was cooking in the kitchen, savoring these experiences, I wondered whether the coping strategies that have proved so useful to me over the years might apply equally–even if on a grander scale–to the Government’s effort to deal with today’s economic demise. In this context, Jane Jacobs came to mind. As she has argued, generating economic growth cannot be given; it must be earned. For it is by pulling oneself up by the bootstraps that creativity takes place and the keys to economic success are learned. Bailouts, Jacobs might say, are a gift, and hence unlikely to make a difference over the long term. I’m quite sure my mother would agree.

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he saw economics as a mental construct that not only approximated reality, but also–and for that very reason–could be used to improve upon it.

Bloody Dismal Science (Courtesy of Sjamsu)

asked about depressions, and their likely probability, he told us that we need not worry. Now we have the Phillips Curve!

Over the next few years, my enthusiasm for economics waned, not, however, for lack of interest but rather for lack of math skills. As a result–and much to my regret at the time–I chose to study international relations. To be sure, the subject matter was equally interesting and demanding; but, as compared to economics, the discipline’s problem solving ability and methodological approach seemed to me, at least at the time, to be a little fuzzy.

it was not long after, however, that I began to appreciate the decision I had made. For, in the context of the recession of the seventies, and the subsequent oil shocks, the prescriptions that I had learned in Economics 101 no longer seemed to fit. Although the United States still made economic adjustments according to the mathematically proven Phillips Curve, the results were becoming increasingly problematic. The outcome was not greater stability, as economists had led us to expect. Instead the economy suffered persistent stagflation–that is to say, higher prices and fewer jobs. As the late Jane Jacobs characterized this state of affairs (Cities and the Wealth of Nations, 1984), the United States was suffering from underdevelopment. The answer, according to Jacobs, was to shift our focus away from equilibrium outcomes, and to center our thinking on the problem of wealth creation and growth. Jacobs insisted that understanding cities, and how they generate wealth, was the place to start. A non-economist, who employed the wealth of all the social sciences to make sense of the failing US economy–well, that was enough of an inspiration for me.

Faced with the prospects of an up-coming, serious depression, my students ask me what I think. Unlike Dr. Price, I don’t have recourse to an answer such as the Philips Curve. But perhaps this is fortunate. For although I cannot offer formulaic solutions–which may turn out to be wrong–I can provide something that was unavailable in my day–alternative ways of thinking about the economy. Thus, I can point my students to–among other things–Jochai Benkler’s discussions of cooperative growth strategies, which are designed not only to coordinate production but also to generate positive externalities (The Wealth of Networks: How Social Production Transforms Markets and Freedoms) Likewise, I might direct them to Beinhocker’s The Origin of Wealth (2006) for a discussion of the complexity and non-linearity associated with economic interactions. Alternatively, I might suggest that they take a look at Samuel Bowles, Microeconomics: Behavior, Institutions, and Evolution, (2004) for a far more nuanced perspective on economic behavior.

Thus, as I see it, the situation is far from dismal. In fact, we have a learning/ teaching opportunity here. Experience has shown us that prescribed economic solutions, no matter how elegant, are typically situation specific. They are vulnerable to changes in the larger environment. Thus, in teaching about the economy, we must provide our students, not so much with answers, but rather with a menu of perspectives from which they can draw, when faced with fast-moving, unpredictable change.

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