Songs for Intermediate Macroeconomics

I am a big fan of the AI song-creation app Suno. Currently, it will let you create 10 songs a day free, and will store and play back an unlimited number of your songs (as well as letting you discover songs by others).

Full disclosure: I learned about Suno from my daughter, who was associated with a venture capital company (Matrix Partners) that helped fund it. Although she is now leaving that company, she stands to receive a small fraction of its IPO or other exit value. I know I would love Suno even if it had no connection to my daughter.

Suno will take prompts to make a song about anything, including economics! If I can, I’ll try to make up a song or a few about the central idea(s) of each lecture. Listening to them is likely to help you remember key concepts.

You’ll remember the concepts even better if you use Suno or another song-creation app to make songs yourself in your own favorite genre. You can see the prompt I used, which has the key economic ideas in it.

The most annoying limitation on Suno is the limit on the number of characters I can use for a prompt. Running up against that limit, I often intentionally mispell words in order to use fewer characters. You will have to figure out how to deal with that limit if you make your own versions of these songs of economics.

Below are the songs, along with my commentary on them.

A. The Hockey Stick in Per Capita Income

Here my views are shaped by Brad DeLong’s book Slouching Towards Utopia: An Economic History of the Twentieth Century. By “Twentieth Century” in the subtitle, he actually means a “long 20th century” from 1870 to 2010. I do think that recently things have shifted, so ending things in 2010 isn’t bad though one could quibble. But why start the account in 1870? Because 1870 was about when the Second Industrial Revolution began. (Try prompting ChatGPT or other AI: “Tell me about the 2d Industrial Revolution.”) Brad DeLong argues that if the 1st Industrial Revolution (coal, iron, steam, textiles) hadn’t been followed by the 2d (electricity, cheap steel, fertilizers, dyes, explosives, pharmaceuticals, cars, expanded rail networks, mass production), that the “Malthusian Devil” of population growth outpacing resources for that 1st-Industrial-Revolution technology would have won again.

Here are 3 songs about the Malthusian Devil and the evolution escape from it:

I liked “Kings and Queens with Iron Fists” because Brad DeLong emphasizes that when humanity was poor institutions of force and fraud were the main strategy for a few people to get enough, at the expense of everyone else. Now, technology makes it so everyone could have enough, if we could only figure out how to do the social organization right—itself a very difficult problem that is actually the main theme of Slouching Towards Utopia.

All of these songs allude to the 1st Industrial Revolution, and “Dreams of Circuits” alludes to the Digital Revolution. But they give short shrift to the 2d Industrial Revolution. So I asked Suno to make a song directly about the 2d Industrial Revolution:

B. The Invisible Hand

A free market economy is a strange and wonderful thing. As Friedrich Hayek emphasized, it does a lot of processing of widely scattered information. In “America's Big Monetary Policy Mistake: How Negative Interest Rates Could Have Stopped the Great Recession in Its Tracks,” I compared a free market (or relatively free market) to a computer. Recently, I read the philosopher Eric Schwitzgebel’s book for a popular audience, The Weirdness of the World, and realized it might be possible to take the analogy up a notch. Eric Schwitzgebel argues that if the elementary particles of physics somehow interact to generate human consciousness, as a standard nonsupernaturalist view of physics suggests, then interactions between human beings might create a distinct consciousness for, say, the United States of America. To my mind, he missed an opportunity. We actually have a name for the potential consciousness of the economy of the United States or of the world: The Invisible Hand. You don’t have to accept this reasoning. But the fact that we can debate whether a free market economy is a conscious being illustrates how remarkable it is.

(In judging whether there is a distinct consciousness to a free market economy, it is worth remembering that we attribute consciousness to many other animals besides humans. Our dogs and cats certainly seem conscious. My son-in-law Erik Berlin did a series of Twitter polls—back when it was Twitter—on whether various animals were conscious. You can see the results here. The borderline animal was the spider. About 50% of those who answered think spiders are conscious and about 50% think that spiders are not conscious. Now, compare the conciousness of the free market economy to the consciousness of a spider.)

Here is a link to my and my AI Suno’s song on that. The title is an appropriate one for macroeconomic forces that often seem mysterious. For example, if macroeconomic forces raise the unemployment rate, any given individual might escape unemployment, but a larger total number of people are doomed to be unemployed.

C. Levels vs. Changes

In economics, it is crucial to distinguish levels and changes. (That is one reason calculus is so important in economics. y and dy/dt are very different.) Here is a song about that in relation to our economic level and economic growth:

D. US Monetary Policy History

The song “Banner High and Bright” flagged below alludes to (i) William Jennings Bryan’s “Cross of Gold” speech in 1896, arguing for loosening the gold standard (in this case, by allowing the coinage of silver), (b) the Accord of 1951 between the Federal Reserve and the Treasury Department, (c) the US “Great Inflation” of 1965-1982, and (d) the lower inflation since then, with even the high inflation after the pandemic rectified within a few years time. You can easily create graphs of inflation over time, as well as the Federal Reserve’s target interest rate over time using FRED, a convenient data resource provided by the Federal Reserve Bank of St. Louis.

E. How Output Above the Natural Level Causes Higher Inflation and Output below the Natural Level of Inflation Causes Lower Inflation.

For this, I thought carefully about what I have written in research papers. Importantly, “There Is No Such Thing as Decreasing Returns to Scale,” so an upward-sloping supply curve does not come from a long-run U-shaped average cost curve. Rather, it comes from workers, factories and equipment in the factories being at least somewhat attached to particular firms. But also, tight labor markets and tight markets for rental spaces for business and other rentals shift a firm’s supply curve upward.

Firms “daydreaming” about price hikes or price cuts alludes to the “instantaneously optimal desired price” that a firm would wish to have right now if it were the only firm to have perfectly flexible prices. But, in fact, changing prices can be costly—at least if a firm thinks carefully about how to incorporate macroeconomic information into how it changes prices. (Decision-making costs can be substantial. Think of the level of education required to even be involved usefully in incorporating macroeconomic information into price-setting.) But eventually, firms do change prices, and macroeconomic information does percolate into those price changes. Exactly how that happens is a complex and contested area of macroeconomics. So the line “Dreams become what happens” refers to this complex process. A key aspect of this is that firms care not only about the instantaneously optimal desired price now, but the instantaneously optimal desired price in the future, since they might be sticking with the price they set for a while. If there is trend inflation, the instantaneously optimal desired price in the future will be higher than it is now, so trend inflation makes firms set prices higher when they do change their prices. The upshot is that inflation tends to sustain itself, unless output diverges from the natural level. Here are two songs, one for each direction.

(This was in danger of being very dry, I’m afraid, so I thought to put a little color on it by asking Suno to make Country songs about this. Hence the emphasis on farmers.)