The rules have changed: We need more economics

While I have the highest regard for the Princeton curriculum, I think that the lack of a core economics requirement is something in need of a 21st-century “rule change.” Although there has been a recent push in academia to make economics a high school requirement, the fact that one could go through Princeton without taking a course in the discipline is worrisome. In fact, if you are reading this column and you don’t know who the “BRICs” are and think that “QE2” is a cruise ship, I urge you to attend the office hours of professor Alan Blinder ’67, or even better, take his ECO 101: Introduction to Macroeconomics course (offered this spring) — it is a phenomenal class, taught by one the premiere economists of the 21st century.

As a former history major who filled his coursework with studies of Bismarck, Napoleon, Churchill, and even dabbled in Shakespeare and Hemingway, I find it highly ironic that I now write these words. Not only was I at the time (and continue to be) passionate about the humanities, I was convinced that any study of the global economy should be left to those seeking careers in finance. As I have learned in the past four years, this logic was, frankly, naive.

If you have ridden the Maglev train from Shanghai to Pudong airport or been near (or at the top of) the Burj Khalifa, you know that we have, to quote Harvard historian Niall Ferguson, begun the “decade the world tilted East.” Although a tad sensationalist, there is no denying that we are in the midst of a global power shift from the U.S.-centric system that dominated the past century to a system that no one really understands. The financial crisis of 2008 should have shattered any complacency we may have had that “business as usual” would prevail throughout our lifetimes. While exposing the fragility of the U.S. financial system, the recent crisis drew attention to the so-called “emerging markets” that have roared ahead in the last five years and seem poised to be the engines of global growth for the foreseeable future. While the United States and the developed markets of Europe are mired in an anemic and fragile economic recovery, these emerging markets (led by Brazil, Russia, India and China, or “BRICs”) are spearheading the rise of a powerful middle-income consumer. This huge portion of the global population that is emerging onto the world’s stage is poised to cause a massive redistribution in wealth and power across the globe.

These changes have long-term implications for how we live our lives. It is imperative that we fully understand this shift in the global economy and prepare ourselves for how these emerging nations may change the rules. Let’s be clear — I’m not insisting on the study of econometrics or game theory; I’m talking about acquiring a knowledge of basic economic principles such as interest rates and supply and demand. To understand the rapid rise of China and its contentious relationship with the United States, you must understand economics (not only is it China’s current account surplus and subsequent demand for U.S. treasuries that is setting short-term interest-rates in America, but China’s artificially depressed currency is arguably contributing to the United States’ intractable 9 percent unemployment rate). To understand how the Indian company Narayana Hrudayalya can offer angioplasties for the equivalent of $3,000, compared with as much as $50,000 at Massachusetts General Hospital, you must first understand economics. The hospital’s pioneer, Dr. Devi Prasad Shetty, has sought massive economies of scale, or takes, as he describes it, “the Walmart approach” to medicine.

I’m sure the liberal arts and pre-med majors will contend that an understanding of these topics is not directly relevant to their career goals. I would argue, however, that you leave Princeton, not as a graduate of “X” department, but as a graduate who has pledged to uphold our timeless motto: “In the nation’s service and in the service of all nations.” Whatever we as graduates choose to do, whether it is teach, compose, construct or aid, to successfully compete we must first understand the changes that are happening to the world around us. Only then will we be able to effectively work together to ensure, as Woodrow Wilson, Class of 1879, wrote in 1896, that we assume the “compulsion of the national life.” To “win the future” without the teachings of Princeton’s economics department is both foolish and close to impossible.

Christopher Berger ’06 is currently pursuing a master’s degree in international affairs at the Fletcher School of Law and Diplomacy. He is from New York, N.Y. He can be reached at cberger@alumni.princeton.edu.