Don Boudreaux's Ah-Hah Moment
In “The Greatest Service Economists Perform,” published this morning by the American Institute for Economic Research, Don Boudreaux tells a story that he had told me in shorter form many years ago. It’s one of my favorite stories about someone being “hooked on economics,” to the use the title of Chapter 2 of my book The Joy of Freedom: An Economist’s Odyssey. Here’s Don’s story:
My love affair with economics began nearly 42 years ago in a classroom at Nicholls State University (in Thibodaux, Louisiana). I was an 18-year-old freshman with only four passions: girls, football, beer, and The Beatles. But this reality soon changed dramatically.
The winter of 1976–77 was bitterly cold. That January, my hometown of New Orleans had a few low temperatures in the teens, and snow fell as far south as Miami! One dark, bone-chilling January morning as I made the 50-mile drive to school I heard on the radio that an elderly couple in Buffalo had frozen to death in their home. They had no heat because of the nationwide shortage of natural gas.
For the spring 1977 semester, I enrolled in Michelle Francois’s economics course because it didn’t meet on Tuesdays and Thursdays. On those days of the week I worked at the shipyard where I assumed I would soon begin working full-time once I’d satisfied my mother’s unreasonable demand that I attend college for at least one year. When I signed up for Dr. Francois’s course, I hadn’t the slightest idea what economics was, nor did I care. I had a steady girlfriend, enough money to buy a regular supply of Budweiser, and a collection of all Beatles’ records. Life was fine.
But one day early in the semester Dr. Francois drew a supply-and-demand graph on the blackboard. “Look at what happens when government imposes a price ceiling.” She pointed to the graph. “The quantity demanded exceeds the quantity supplied. There’s a shortage.” Facing her students, Dr. Francois continued: “You all remember the gasoline shortage of 1973. Here’s the explanation. The government now has price ceilings in place in the energy market, keeping gasoline and natural gas in short supply.”
Wow! Just wow! I remember sitting up straighter at my desk to gaze in fascination at that supply-and-demand graph. For the first time in my life, I experienced the thrill of intellectual discovery. Here was a compelling explanation of why that couple in Buffalo froze to death. Here also was a compelling explanation of why, when I first got my driver’s license in 1973, there was a nationwide shortage of gasoline, complete with such long lines at service stations that I didn’t do much driving.
Not only did Dr. Francois’s course convince me to finish college, it inspired me to dream of getting a Ph.D. in economics. Economics is powerful stuff!
If you don’t count the lines to draw the axes, it takes only three lines—the demand curve, supply curve, and price ceiling—to show the result. I think I remember Don telling me that those are the most important three lines in economics. I’m not sure I agree, but they’re definitely up there.