G406: ``Business Enterprise and Public Policy''

This courses teaches how to apply the tools of economic reasoning to a variety of topics in which businesses create or react or public policies. The central ideas are Surplus Changes, Efficiency, and Incentives. Changes in economic surplus--- consumer and producer surplus at its simplest--- show who gains and loses from policies, and hence predicts how a business is most likely will react in the public arena. A policy is "efficient" if it maximizes the sum of everyone's surplus, and this is the benchmark for creating policy that maximizes social wealth. Any policy provides Incentives as a result of its effect on surplus, and care must be taken that these incentives lead to the desired outcome. Understanding how to apply these three ideas is a major objective for an economics education. The hardest part is learning how to apply them in different contexts, which is the aim of this course. In the course of so doing, students will also learn the facts involved in a wide variety of public policy problems in government regulation, ranging from antitrust laws to pollution regulation, public-utility pricing, labor policy, and the safety of consumer products.

The Kelley School's Honor Code is something you have all read. It is online at http://www.kelley.iu.edu/ugrad/honorcode.cfm. Living up to the Honor Code's integrity is not hard; don't cheat, and tell me if you see somebody else cheating. I will take appropriate disciplinary actions against any offenders. Do not cheat! I am strict about that, and have used the official procedures of the Dean of Students before. Most important, cheating is immoral, whether or not you get caught. Leave this course with your honor intact.

May 3 (Thursday) Final Exam: 5-7 p.m. in BU 406. There is a sheet of facts you should know for the final.

Learning Goals. The business school accreditation people like professors to put on their syllabi linkage to ``Learning Goals'' in the style of Schools of Education. To please them, I will note that this course helps with BEPP Learning Goal 1, An Integrative Point of View, because students will have to use various finance and accounting concepts such as the CAPM, efficients markets, depreciation, balance sheets, present value, and weighted average cost of capital, and of course lots of other economics. It will help with Learning Goal 2, Ethical Reasoning, because students need to differentiate between the goals of the themselves, their employers, and the public interest, and will learn to detect hypocrisy and self-seeking policies. It will help with Learning Goal 3, Critical Thinking and Decision Making, because it's all about predicting the effects of different policies and piercing fake reasons and reasoning. It will help with Learning Goal 5, Quantitative Analysis and Modeling, because there are lots of graphs, equations, and numbers.

Learning Outcomes. What students will learn in this course is how to think logically and follow a sequence of reasoning, how regulations are made and carried out, how they should be made and carried out, and their effects on people and businesses.

``Business Enterprise and Public Policy,'' G406, Spring 2012 (May 9,, 2012)