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Brief Contents
PART 1 Introduction to Economics

1 The Art and Science of Economic Analysis 1
2 Economic Tools and Economic Systems 26
3 Economic Decision Makers 46
4 Demand, Supply, and Markets 66
PART 2 Fundamentals of Macroeconomics

5 Introduction to Macroeconomics 91
6 Tracking the U.S. Economy 113
7 Unemployment and Inflation 137
8 Productivity and Growth 164
9 Aggregate Demand 187
10 Aggregate Supply 212
PART 3 Fiscal and Monetary Policy

11 Fiscal Policy 233
12 Federal Budgets and Public Policy 256
13 Money and the Financial System 280
14 Banking and the Money Supply 305
15 Monetary Theory and Policy 327
16 Macro Policy Debate: Active or Passive? 350
PART 4 International Economics

17 International Trade 375
18 International Finance 400
19 Economic Development 419
vii
Table of Contents
PART 1 Introduction to Economics Chapter 3

Economic Decision Makers 46
Chapter 1
The Art and Science of Economic Analysis 1 3-1 The Household 47
3-1a The Evolution of the Household 47 | 3-1b Households
1-1 The Economic Problem: Scarce Resources,
Maximize Utility 48 | 3-1c Households as Resource
Unlimited Wants 2 Suppliers 48 | 3-1d Households as Demanders of Goods
1-1a Resources 3 | 1-1b Goods and Services 4 | 1-1c Economic and Services 49
Decision Makers and Markets 5 | 1-1d A Simple Circular-Flow
Model 5 3-2 The Firm 49
1-2 The Art of Economic Analysis 7 3-2a The Evolution of the Firm 49 | 3-2b Types of Firms 50 |
3-2c Cooperatives 52 | 3-2d Not-for-Profit Organizations 53 |
1-2a Rational Self-Interest 7 | 1-2b Choice Requires Time and Case Study: User-Generated Products 53 | 3-2e Why Does
Information 8 | 1-2c Economic Analysis Is Marginal Analysis 8 | Household Production Still Exist? 54
1-2d Microeconomics and Macroeconomics 9
3-3 The Government 55
1-3 The Science of Economic Analysis 10
1-3a The Role of Theory 10 | 1-3b The Scientific Method 11 | 1-3c 3-3a The Role of Government 55 | 3-3b Government’s
Normative Versus Positive 12 | 1-3d Economists Tell Stories 13 Structure and Objectives 57 | 3-3c The Size and Growth of
| 1-3e Predicting Average Behavior 13 | 1-3f Some Pitfalls of Government 58 | 3-3d Sources of Government Revenue 59 |
Faulty Economic Analysis 13 | 1-3g If Economists Are So Smart, 3-3e Tax Principles and Tax Incidence 60
Why Aren’t They Rich? 14 | Case Study: College Major and 3-4 The Rest of the World 62
Annual Earnings 15
3-4a International Trade 62 | 3-4b Exchange Rates 62 | 3-4c
Appendix: Understanding Graphs 20 Trade Restrictions 63
Drawing Graphs 21 | The Slope of a Straight Line 22 | The Slope,
Units of Measurement, and Marginal Analysis 22 | The Slopes
of Curved Lines 23 | Line Shifts 25 | Appendix Questions 25 Chapter 4
Chapter 2 Demand, Supply, and Markets 66
Economic Tools and Economic Systems 26 4-1 Demand 67
2-1 Choice and Opportunity Cost 27 4-1a Law of Demand 67 | 4-1b Demand Schedule and Demand
Curve 69
2-1a Opportunity Cost 27 | Case Study: The Opportunity Cost
of College 28 | 2-1b Opportunity Cost Is Subjective 29 | 2-1c 4-2 What Shifts a Demand Curve? 70
Sunk Cost and Choice 30
4-2a Consumer Income 71 | 4-2b Prices of Other Goods 71 |
2-2 Comparative Advantage, Specialization, and Exchange 31 4-2c Consumer Expectations 72 | 4-2d Number or Composition
of Consumers 72 | 4-2e Consumer Tastes 72
2-2a The Law of Comparative Advantage 31 | 2-2b Absolute
Advantage Versus Comparative Advantage 31 | 2-2c 4-3 Supply 73
Specialization and Exchange 32 | 2-2d Division of Labor and
Gains From Specialization 33 4-3a Supply Schedule and Supply Curve 73
2-3 The Economy’s Production Possibilities 34 4-4 What Shifts a Supply Curve? 75
2-3a Efficiency and the Production Possibilities Frontier, or 4-4a State of Technology and Know-How 75 | 4-4b Resource
PPF 34 | 2-3b Inefficient and Unattainable Production 35 | 2-3c Prices 75 | 4-4c Prices of Other Goods 76 | 4-4d Producer
The Shape of the PPF 35 | 2-3d What Can Shift the PPF? 36 | Expectations 76 | 4-4e Number of Producers in the
2-3e What We Learn From the PPF 39 Market 77
2-4 Economic Systems 39 4-5 Demand and Supply Create a Market 77
2-4a Three Questions Every Economic System Must Answer 39
| 2-4b Pure Capitalism 40 | 2-4c Pure Command System 41 | 4-5a Markets 77 | 4-5b Market Equilibrium 78
2-4d Mixed and Transitional Economies 42 | 2-4e Economies
Based on Custom or Religion | 43 ix
x Contents
4-6 Changes in Equilibrium Price and Quantity 80 Appendix: National Income Accounts 134
4-6a Shifts of the Demand Curve 80 | 4-6b Shifts of the Supply National Income 134 | Personal and Disposable Income 134 |
Curve 81 | 4-6c Simultaneous Shifts of Demand and Supply Summary of National Income Accounts 135 | Summary Income
Curves 82 Statement of the Economy 135 | Appendix Questions 136
4-7 Disequilibrium 84 Chapter 7
4-7a Price Floors 84 | 4-7b Price Ceilings 85 | Case Study: Rent Unemployment and Inflation 137
Ceilings in New York City 85
7-1 Unemployment: Its Measure and Sources 138
PA RT 2 F
undamentals of 7-1a Measuring Unemployment 139 | 7-1b Labor Force
Participation Rate 141 | 7-1c Unemployment Over Time 141
Macroeconomics | 7-1d Duration of Unemployment 141 | 7-1e Unemployment
Among Various Groups 142 | 7-1f Unemployment Varies Across
Chapter 5 Occupations and Regions 145 | 7-1g International Comparisons
Introduction to Macroeconomics 91 of Unemployment 145 | 7-1h Sources of Unemployment 146
5-1 The National Economy 92 7-2 Other Unemployment Issues 149

5-1a What’s Special About the National Economy? 93 | 7-2a The Meaning of Full Employment 149 | 7-2b
5-1b The Human Body and the U.S. Economy 93 | Unemployment Compensation 149 | 7-2c Problems With
5-1c Knowledge and Performance 94 Official Unemployment Figures 151
5-2 Economic Fluctuations and Growth 95 7-3 Inflation: Its Measure and Sources 151
5-2a U.S. Economic Fluctuations 95 | 5-2b The Global
Case Study: Hyperinflation in Zimbabwe 152 | 7-3a Two Sources
Economy 98 | 5-2c Leading Economic Indicators 99
of Inflation 153 | 7-3b Historical Look at Inflation and the Price
5-3 Aggregate Demand and Aggregate Supply 99 Level 154 | 7-3c Inflation Across Metropolitan Areas 154 | 7-3d
International Comparisons of Inflation 155
5-3a Aggregate Output and the Price Level 100 | 5-3b Aggregate
Demand Curve 100 | 5-3c Aggregate Supply Curve 102 | 5-3d 7-4 Effects of Inflation 157
Equilibrium Real GDP 102
7-4a Anticipated Versus Unanticipated Inflation 157 | 7-4b
5-4 A Brief History of the U.S. Economy 103 The Transaction Costs of Variable Inflation 158 | 7-4c Inflation
5-4a The Great Depression and Before 103 | 5-4b The Age of Obscures Relative Price Changes 158 | 7-4d Inflation and
Keynes: After the Great Depression to the Early 1970s 104 | Interest Rates 159 | 7-4e Why Is Inflation So Unpopular? 160
5-4c Stagflation: 1973–1975 and 1979–1980 106 | 5-4d Somewhat
Normal Times: 1980 to 2007 107 | 5-4e The Great Recession Chapter 8
of 2007–2009 and Beyond 107 | Case Study: U.S. Economic Productivity and Growth 164
Growth Since 1929 109
8-1 Theory of Productivity and Growth 165
Chapter 6
8-1a Growth and the Production Possibilities Frontier 166 |
Tracking the U.S. Economy 113 8-1b What Is Productivity? 168 | 8-1c Labor Productivity 168 |
8-1d Per-Worker Production Function 169 | 8-1e Technological
6-1 The Product of a Nation 114
Change and Know-How 170 | 8-1f Rules of the Game 171
6-1a National Income Accounts 115 | 6-1b GDP Based on the
Expenditure Approach 116 | 6-1c Composition of Aggregate 8-2 Productivity and Growth in Practice 173
Expenditure 117 | 6-1d GDP Based on the Income Approach 118 8-2a Education and Economic Development 173 | 8-2b U.S.
Labor Productivity 174 | 8-2c Slowdown and Rebound in
6-2 Circular Flow of Income and Expenditure 119
Productivity Growth 176 | 8-2d Output per Capita 177
6-2a Income Half of the Circular Flow 119 |
6-2b Expenditure Half of the Circular Flow 120 | 8-3 Other Issues of Technology and Growth 179
6-2c Leakages Equal Injections 122 8-3a Does Technological Change Lead to Unemployment? 179 |
8-3b Research and Development 180 | 8-3c Industrial Policy 182
6-3 Limitations of National Income Accounting 122
| Case Study: Income and Happiness 183
6-3a Some Production Is Not Counted in GDP 122 | 6-3b
Leisure, Quality, and Variety 123 | 6-3c What’s Gross About
Chapter 9
Gross Domestic Product? 123 | 6-3d GDP Does Not Reflect All
Costs 124 | 6-3e GDP and Economic Welfare 125 Aggregate Demand 187
6-4 Accounting for Price Changes 125 9-1 Consumption 188
6-4a Price Indexes 125 | 6-4b Consumer Price Index 126 | 9-1a Consumption and Income 188 | 9-1b The Consumption
6-4c Problems With the CPI 127 | Case Study: Price Check on Function 189 | 9-1c Marginal Propensities to Consume and
Aisle 2 128 | 6-4d The GDP Price Index 130 | 6-4e Moving From to Save 190 | 9-1d The MPC Is the Slope of the Consumption
Fixed Weights to Chain Weights 130 Function 191
Contents xi
9-2 Nonincome Determinants of Consumption 192 11-2a Before the Great Depression 238 | 11-2b The Great
Depression and World War II 238 | 11-2c Automatic
9-2a Net Wealth 192 | 9-2b The Price Level 193 | 9-2c The
Stabilizers 239 | 11-2d From the Golden Age to Stagflation 240
Interest Rate 194 | 9-2d Consumer Expectations 194 | 9-2e The
Life-Cycle Model of Consumption and Saving 195 11-3 Limits on Fiscal Policy’s Effectiveness 241
9-3 Other Spending Components 196 11-3a Estimating the Natural Rate of Unemployment 241 | 11-3b
9-3a Investment 196 | Case Study: Investment Varies More Lags in Fiscal Policy 242 | 11-3c Discretionary Fiscal Policy and
Than Consumption 198 | 9-3b Government Purchases 199 | Permanent Income 242
9-3c Net Exports 200 11-4 Fiscal Policy from 1980 to 2007 243
9-4 Aggregate Expenditure and Income 200 11-4a Fiscal Policy During the 1980s 243 | 11-4b 1990 to 2007:
9-4a Components of Aggregate Expenditure 200 | 9-4b Real From Deficits to Surpluses Back to Deficits 243
GDP Demanded 201 | 9-4c What if Spending Exceeds Real
GDP? 202 | 9-4d What if Real GDP Exceeds Spending? 202 11-5 Fiscal Policy During and After the Great Recession 244
11-5a The Financial Crisis 245 | 11-5b President Obama’s
9-5 The Simple Spending Multiplier 203
Stimulus Package 245 | 11-5c Fiscal Policy Since 2007 246 |
9-5a An Increase in Spending 203 | 9-5b Using the Simple Case Study: Cash for Clunkers 248
Spending Multiplier 204
Appendix: Demand-Side Effects of Government
9-6 The Aggregate Demand Curve 205 Purchases and Net Taxes 252
9-6a A Higher Price Level 206 | 9-6b A Lower Price Level 206 |
Changes in Government Purchase 252 | Changes in Net Taxes
9-6c The Multiplier and Shifts in Aggregate Demand 208
252 | Summary 254 | Appendix Questions 255
Chapter 10
Aggregate Supply 212 Chapter 12
10-1 Aggregate Supply in the Short Run 213 Federal Budgets and Public Policy 256
10-1a Labor and Aggregate Supply 213 | 10-1b Potential Output 12-1 The Federal Budget Process 257
and the Natural Rate of Unemployment 214 | 10-1c What If the 12-1a Presidential and Congressional Roles 258 | 12-1b Problems
Actual Price Level Is Higher Than Expected? 215 | 10-1d Why With the Federal Budget Process 259 | 12-1c Possible Budget
Costs Rise When Output Exceeds Potential 215 | 10-1e What If Reforms 260
the Actual Price Level Is Lower Than Expected? 216 | 10-1f The
Short-Run Aggregate Supply Curve 217 12-2 Fiscal Impact of the Federal Budget 260
10-2 From the Short Run to the Long Run 218 12-2a The Rationale for Deficits 260 | 12-2b Budget Philosophies
10-2a Closing an Expansionary Gap 218 | 10-2b Closing a and Deficits 261 | 12-2c Federal Deficits Since the Birth of the
Recessionary Gap 220 Nation 261 | 12-2d Why Deficits Persist 263 | 12-2e Deficits,
Surpluses, Crowding Out, and Crowding In 263 | 12-2f The Twin
10-3 Aggregate Supply in the Long Run 222 Deficits 264 | 12-2g A Short-Lived Budget Surplus Then More
10-3a Tracing Potential Output 222 | 10-3b Wage Flexibility and Deficits 264 | 12-2h The Relative Size of the Public Sector 267
Employment 223 | Case Study: U.S. Output Gaps and Wage
12-3 The National Debt in Perspective 268
Flexibility 224
12-3a Measuring the National Debt 268 | 12-3b International
10-4 Changes in Aggregate Supply 227 Perspective on Public Debt 270 | 12-3c Interest Payments on
10-4a What If Aggregate Supply Increases? 227 | 10-4b What If the National Debt 270
Aggregate Supply Decreases? 228 | 10-4c Hysteresis and the
Natural Rate of Unemployment 229 12-4 Federal Debt and the Economy 272
12-4a Are Persistent Deficits Sustainable? 272 | 12-4b The Debt
Ceiling and Debt Default 272 | 12-4c Who Bears the Burden of
PART 3 F
iscal and Monetary Policy the Debt? 273 | 12-4d Crowding Out and Capital Formation 274 |
12-4e The National Debt and Economic Growth 275 | Case Study:
Chapter 11 Reforming Social Security and Medicare 275
Fiscal Policy 233

Chapter 13
11-1 Theory of Fiscal Policy 234
Money and the Financial System 280
11-1a Fiscal Policy Tools 234 | 11-1b Discretionary Fiscal Policy to
Close a Recessionary Gap 235 | 11-1c Discretionary Fiscal Policy 13-1 The Birth of Money 281
to Close an Expansionary Gap 236 | 11-1d The Multiplier and the
Time Horizon 237 13-1a Barter and the Double Coincidence of Wants 281 | 13-1b
The Earliest Money and Its Functions 282 | 13-1c Properties
11-2 Fiscal Policy Up to the Stagflation of the 1970s 238 of the Ideal Money 283 | Case Study: Mackerel Economics in
Federal Prisons 284 | 13-1d Coins 285
xii Contents
13-2 Money and Banking 286 15-3 Money and Aggregate Demand in the Long Run 337
13-2a Early Banking 286 | 13-2b Bank Notes and Fiat Money 287 15-3a The Equation of Exchange 338 | 15-3b The Quantity
| 13-2c The Value of Money 287 | 13-2d When Money Performs Theory of Money 338 | 15-3c What Determines the Velocity of
Poorly 289 Money? 340 | 15-3d How Stable Is Velocity? 340
13-3 Financial Institutions in the United States 289 15-4 Targets for Monetary Policy 342
13-3a Commercial Banks and Thrifts 289 | 13-3b Birth of the 15-4a Contrasting Policies 342 | 15-4b Targets before 1982 343 |
Fed 290 | 13-3c Powers of the Federal Reserve System 290 15-4c Targets after 1982 344 | 15-4d Other Fed Responses to the
| 13-3d Banking Troubles During the Great Depression 291 | Financial Crisis 344 | 15-4e What about Inflation? 346 | 15-4f
13-3e Banks Lost Deposits When Inflation Increased 294 | 13-3f International Considerations 347
Banking Deregulation 294 | 13-3g Banks on the Ropes 295 |
13-3h Banks Recover 295
Chapter 16
13-4 Banking During and After the Great Recession Macro Policy Debate: Active or Passive? 350
of 2007–2009 297
16-1 Active Policy Versus Passive Policy 351
13-4a Subprime Mortgages and Mortgage-Backed
Securities 297 | 13-4b Bad Incentives Fueled the Financial Crisis 16-1a Closing a Recessionary Gap 351 | 16-1b Closing an
of 2008 298 | 13-4c The Troubled Asset Relief Program, or Expansionary Gap 353 | 16-1c Problems With Active Policy 354
TARP 299 | 13-4d The Dodd-Frank Act of 2010 300 | 13-4e Top | 16-1d The Problem of Lags 355 | 16-1e A Review of Policy
Banks in America and the World 301 Perspectives 357 | 16-1f Active Policies, Passive Policies, and
Presidential Politics 357
Chapter 14 16-2 The Role of Expectations 359

Banking and the Money Supply 305 16-2a Discretionary Policy and Inflation Expectations 359 |
16-2b Anticipating Policy 361 | 16-2c Policy Credibility 362 |
14-1 Money Aggregates 306 Case Study: Central Bank Independence and Price Stability 363
14-1a Narrow Definition of Money: M1 306 | Case Study: Faking
It 307 | 14-1b Broader Definition of Money: M2 308 | 14-1c Credit 16-3 Policy Rules Versus Discretion 364
Cards and Debit Cards: What’s the Difference? 309 | 14-1d Is 16-3a Limitations on Discretion 365 | 16-3b Rules and Rational
Bitcoin Money? 311 Expectations 366
14-2 How Banks Work 312 16-4 The Phillips Curve 367
14-2a Banks are Financial Intermediaries 312 | 14-2b Starting a
16-4a The Phillips Framework 368 | 16-4b The Short-Run Phillips
Bank 313 | 14-2c Reserve Accounts 314 | 14-2d Liquidity Versus
Curve 369 | 16-4c The Long-Run Phillips Curve 370 | 16-4d The
Profitability 314
Natural Rate Hypothesis 371 | 16-4e Evidence of the Phillips
14-3 How Banks Create Money 315 Curve 371
14-3a Creating Money through Excess Reserves 315 | 14-3b A

Summary of the Rounds 318 | 14-3c Reserve Requirements
and Money Expansion 318 | 14-3d Limitations on Money PART 4 I nternational Economics
Expansion 319 | 14-3e Contraction of the Money Supply 320
Chapter 17
14-4 The Fed’s Tools of Monetary Control 320 International Trade 375
14-4a Open-Market Operations and the Federal Funds
Rate 321 | 14-4b The Discount Rate 321 | 14-4c Reserve 17-1 The Gains From Trade 376
Requirements 322 | 14-4d Responding to Financial Crises 322 | 17-1a A Profile of Exports and Imports 376 | 17-1b Production
14-4e The Fed Is a Money Machine 322 Possibilities without Trade 378 | 17-1c Consumption Possibilities
Based on Comparative Advantage 380 | 17-1d Reasons for
Chapter 15 International Specialization 382
Monetary Theory and Policy 327 17-2 Trade Restrictions and Welfare Loss 384
17-2a Consumer Surplus and Producer Surplus From Market
15-1 The Demand and Supply of Money 328 Exchange 384 | 17-2b Tariffs 385 | 17-2c Import Quotas 387
15-1a The Demand for Money 329 | 15-1b Money Demand | 17-2d Quotas in Practice 388 | 17-2e Tariffs and Quotas
and Interest Rates 329 | 15-1c The Supply of Money and the Compared 389 | 17-2f Other Trade Restrictions 389
Equilibrium Interest Rate 330
17-3 Efforts to Reduce Trade Barriers 390
15-2 Money and Aggregate Demand in the Short Run 332 17-3a Freer Trade by Multilateral Agreement 390 | 17-3b
15-2a Interest Rates and Investment 332 | 15-2b Adding the World Trade Organization 391 | Case Study: Doha Round and
Short-Run Aggregate Supply Curve 333 | 15-2c Recent History Round 391 | 17-3c Common Markets 392
of the Federal Funds Rate 335 | Case Study: Greater Fed
Transparency as a Policy Tool 336
Contents xiii
17-4 Arguments for Trade Restrictions 393 Chapter 19

17-4a National Defense Argument 394 | 17-4b Infant Industry Economic Development 419
Argument 394 | 17-4c Antidumping Argument 394 | 17-4d
Jobs and Income Argument 395 | 17-4e Declining Industries 19-1 Worlds Apart 420
Argument 396 | 17-4f Problems With Trade Protection 397 19-1a Developing and Industrial Economies 421 | 19-1b Health
and Nutrition 423 | 19-1c High Birth Rates 424 | 19-1d Women
Chapter 18 in Developing Countries 426
International Finance 400 19-2 Productivity: Key to Development 426
18-1 Balance of Payments 401 19-2a Low Labor Productivity 426 | 19-2b Technology and
Education 427 | 19-2c Inefficient Use of Labor 427 | 19-2d
18-1a International Economic Transactions 401 | 18-1b The
Natural Resources 428 | 19-2e Financial Institutions 428 | 19-2f
Merchandise Trade Balance 402 | 18-1c Balance on Goods
Capital Infrastructure 429 | 19-2g Entrepreneurship 431 | 19-2h
and Services 403 | 18-1d Net Investment Income 403 | 18-1e
Rules of the Game 431 | Case Study: The Poorest Billion 433 |
Unilateral Transfers and the Current Account Balance 404
19-2i Income Distribution Within Countries 435
| 18-1f The Financial Account 405 | 18-1g Trade Deficits and
Surpluses 405 19-3 International Trade and Development 435
18-2 Foreign Exchange Rates and Markets 407 19-3a Trade Problems for Developing Countries 435 | 19-3b
Migration and the Brain Drain 436 | 19-3c Import Substitution
18-2a Foreign Exchange 407 | 18-2b The Demand for Foreign Versus Export Promotion 436 | 19-3d Trade Liberalization and
Exchange 408 | 18-2c The Supply of Foreign Exchange 409 | Special Interests 437
18-2d The Foreign Exchange Rate 409
19-4 Foreign Aid and Economic Development 438
18-3 Other Factors Influencing Foreign Exchange Markets 411
19-4a Foreign Aid 438 | 19-4b Does Foreign Aid Promote
18-3a Arbitrageurs and Speculators 411 | 18-3b Purchasing Power Economic Development? 439 | 19-4c Do Economies
Parity 411 | Case Study: The Big Mac Index 412 | 18-3c Flexible Converge? 439
Exchange Rates 414 | 18-3d Fixed Exchange Rates 414
Glossary 445
18-4 International Monetary System 415
18-4a The Bretton Woods Agreement 415 | 18-4b Demise of Index 459
the Bretton Woods System 415 | 18-4c The Current System:
Managed Float 416
Preface
E
conomics has a short history but a long past. As a distinct discipline, economics
has been around for only a few hundred years, yet civilizations have confronted
the economic problem of scarce resources and unlimited wants for millennia.
Economics, the discipline, may be centuries old, but it’s new every day, with fresh evi-
dence that refines and extends economic theory. For example, what could be newer than
how technological change is reshaping the way we live? In this edition of Economics:
A Contemporary Introduction, I draw on more than three decades of teaching and
research to convey the vitality, timeliness, and relevance of economics.
Lead by Example
Remember the last time you were in unfamiliar parts and had to ask for directions?
Along with the directions came the standard comment, “You can’t miss it!” So how
come you missed it? Because the “landmark,” so obvious to locals, was invisible to you,
a stranger. Writing a principles textbook is much like giving directions. Familiarity is a
must, but that very familiarity can cloud the author’s ability to see the material through
the fresh eyes of a new student. One could revert to a tell-all approach, but that will
bury students in information. An alternative is to opt for the minimalist approach,
writing abstractly about good x and good y, units of labor and units of capital, or the
proverbial widget. But that shorthand turns economics into a foreign language.
Good directions rely on landmarks familiar to us all—a stoplight, a fork in the
road, a white picket fence. Likewise, a good textbook builds bridges from the familiar
to the new. That’s what I try to do—lead by example. By beginning with examples that
draw on common experience, I try to create graphic images that need little explanation,
thereby eliciting from the reader that light of recognition, that “Aha!” I believe that the
shortest distance between an economic principle and student comprehension is a lively
example. Examples should convey the point quickly and directly. Having to explain
an example is like having to explain a joke—the point gets lost. Throughout the book,
I try to provide just enough intuition and institutional detail to get the point across.
But my emphasis is on economic ideas, not economic jargon.
Students show up the first day of class with at least 17 years of experience with
economic choices, economic institutions, and economic events. Each grew up in a
household—the most important economic institution in a market economy. As con-
sumers, students become well acquainted with fast-food outlets, cineplexes, car deal-
erships, online retailers, and scores of stores at the mall. Most students have supplied
labor to the job market—more than half had jobs in high school. Students also have
interacted with government—they know about sales taxes, driver’s licenses, speed
limits, public schools, and laws about texting while driving. And students have a
growing familiarity with the rest of the world. Thus, students have abundant experi-
ence with economics. This rich lode of personal experience offers a perfect starting
point. Rather than try to create for students a new world of economics—a new way
of thinking, my approach is to build on student experience—on what Alfred Marshall
called “the ordinary business of life.” I frequently remind students how much they
already know.
xv
xvi Preface
This book starts with what students bring to the party. For example, to explain
r esource substitution, rather than rely on abstract units of labor and capital, I begin with
washing a car, where the mix can vary from a drive-through car wash (much capital
and little labor) to a Saturday morning charity car wash (much labor and little capital).
Down-to-earth examples turn the abstract into the concrete to help students learn and re-
member. In this edition of Macroeconomics: A Contemporary Introduction, I add about
140 fresh examples to the exposition, bringing the total number of examples to about
300. Because instructors can cover only a portion of a textbook in the classroom, mate-
rial should be self-contained and self-explanatory. This gives instructors the flexibility to
emphasize in class topics of special interest.
What’s New With the Eleventh Edition

If there is one overarching theme with this edition, it’s the impact of technologi-
cal change on all aspects of economic life. From Spotify, to smart apps, to Uber, to
bitcoin, to interactive learning software, I underscore how technological change is
affecting the way we work, learn, play, and live. This edition builds on previous
success with additional examples, more questions along the way, and frequent sum-
maries as a chapter unfolds. By making the material both more natural and more
personal, I try to engage students in a collaborative discussion. Chapters have been
streamlined for a clearer, more intuitive presentation, with fresh examples, new
research findings, revised case studies, and additional exhibits to crystallize key
points.
Recent research suggests that students learn best by trying to recall what they have
just read. In that spirit, I pose “Checkpoint” questions after each section of a chap-
ter. And to help students grasp the material, I also break down each chapter into at
least four sections. As with the previous edition, each chapter includes a relevant case
study integrated into the narrative flow, not isolated from the mainstream. New with
this edition is an additional case study per chapter available on the companion site at
www.cengagebrain.com. Questions at the end of each chapter and after each online
case study aid student comprehension.
It goes without saying that I revised all data to reflect the most recent figures
available. Time-sensitive examples and discussions have also been updated. To make
economic principles richer and more interesting, this edition of Macroeconomics: A
Contemporary Introduction places greater emphasis on recent research. I report on
findings from 94 additional studies, nearly all appearing since my previous edition
went to press. This brings the total number of studies cited and discussed in this edi-
tion to 174. In the following chapter-by-chapter summaries, I will note the number of
fresh examples added and the number of new studies reported. I will then sample new
material and outline changes to the coverage.
Introductory Chapters: 1–4

As with earlier editions, background material common to both macro- and microeco-
nomics is covered in the first four chapters. Limiting introductory material to four
chapters saves precious class time, particularly at those institutions where students may
take macro and micro courses in either order (and so must cover introductory chapters
twice). New or revised features in the introductory chapters include:
Ch. 1: The Art and Science of Economic Analysis I add nine fresh examples and
report on three new studies. This chapter provides more detail on the implications of
Preface xvii
rational self-interest. For example, a physician who owns a pharmacy prescribes more
medication than other physicians, and a physician who owns a nuclear scanner is seven
times more likely to prescribe such a scan.
Ch. 2: Economic Tools and Economic Systems I add seven fresh examples and report
on four new studies. I note that an economy’s productive capacity depends not only on the
state of technology but also on the level of know-how. Know-how can boost production
even if technology and resources are unchanged. By improved know-how, a steel mini-
mill, for example, doubled production with no change in technology or the work force.
The significance of know-how carries throughout this revision.
Ch. 3: Economic Decision Makers I add four fresh examples and report on three
new studies. Unlike other principles books, I discuss the role of cooperatives, such as
Sunkist, and the not-for-profit sector more generally, such as the Texas Medical Center,
which employs more than 100,000 people, exceeding employment at major corpora-
tions such as Apple, Google, and Chevron.
Ch. 4: Demand, Supply, and Markets I add eight fresh examples and report on two
new studies. In explaining the effect of a price change on quantity demanded, I note
that the more important the item is as a share of the consumer’s budget, the bigger the
income effect. That’s why, for example, consumers increase other purchases when the
price of gasoline plunges, as happened in 2015.
Macroeconomic Chapters: 5–16

Rather than focus on the differences among competing schools of thought, I use the
aggregate demand and aggregate supply model to underscore the fundamental distinc-
tion between the active approach, which views the economy as unstable and in need of
government intervention when it gets off track, and the passive approach, which views
the economy as essentially stable and self-correcting. Again, all macro data have been
updated to reflect the most recent figures available. Equilibrium values for real GDP
and the price level used in theoretical models throughout the macro chapters match
actual values prevailing in the U.S. economy.
Wherever possible, I rely on student experience and intuition to help explain mac-
roeconomic abstractions such as aggregate demand and aggregate supply. For example,
to explain how employment can temporarily exceed its natural rate, I note how stu-
dents, as the term draws to a close, can temporarily shift into a higher gear, studying for
exams and finishing term papers. To reinforce the link between income and consump-
tion, I point out how easy it is to figure out the relative income of a neighborhood just
by driving through it. And to offer students a feel for the size of the federal budget,
I note that if all 4.6 thousand tons of gold stored in Fort Knox could be sold at prevail-
ing prices, the proceeds would run the federal government for about two weeks.
Chapters in this edition follow the same order as in the previous e dition. New or
revised features in the macroeconomics chapters include:
Ch. 5: Introduction to Macroeconomics I add four fresh examples. A new section,
“The Global Economy,” discusses the interdependence among national economies over
the last three decades.
Ch. 6: Tracking the U.S. Economy I add five fresh examples and report on a new
study. I note that in 2014 the United Kingdom and Italy began counting spending on
prostitution and illegal drugs in their GDP estimates. I also add a pie chart showing the
composition of the CPI.
Ch. 7: Unemployment and Inflation I add six fresh examples and report on 13 new
studies. I also add a bar chart showing that the unemployment rate declines as the level
of education increases. (But graduating from college is key, because college dropouts
have the same unemployment rate as high school graduates.)
xviii Preface
Ch. 8: Productivity and Growth I add eight fresh examples and report on 15 new
studies. As an example of technological progress, I note that putting an hour of video
online cost about $400 in the late 1990s but less than two cents today. To elevate
the importance of social capital, I move that discussion from the final chapter to this
chapter.
Ch. 9: Aggregate Demand I add three fresh examples and report on five new stud-
ies. I simplify the chapter title from “Aggregate Expenditure and Aggregate Demand,”
to “Aggregate Demand,” to reflect the content and match the title of the next chapter,
“Aggregate Supply.” I add “The Life-Cycle Hypothesis” as a new section and key term,
but include evidence from behavioral economics at odds with this hypothesis.
Ch. 10: Aggregate Supply I add two fresh examples and report on a new study.
“Hysteresis and the Natural Rate of Unemployment” is a new section, with hysteresis
as a key term.
Ch. 11: Fiscal Policy I add two fresh examples and report on four new studies.
“Fiscal Policy from 2007 to 2014” is a new section discussing the effects of federal
spending and deficits on jobs and economic growth. This section includes a new exhibit
showing deficit financing by year as a share of federal outlays by year. After the spike
in federal spending in 2009, that spending remained flat over the next five years even
in nominal dollars.
Ch. 12: Federal Budgets and Public Policy I add two fresh examples and report on
three new studies. I have a new subsection on federal budget sequestration and include
that as a key term.
Ch. 13: Money and the Financial System I add five fresh examples and report on
six new studies. An exhibit shows that China is now home to four of the world’s five
largest banks. While the United States may have some financial institutions considered
“too big to fail,” only one U.S. bank ranks among the world’s ten largest.
Ch. 14: Banking and the Money Supply I add three fresh examples and report on
two new studies. Two new pie charts now show consumer payment systems in 2013
and projected in 2018. In keeping with an emphasis on technological change, I add a
section entitled “Is Bitcoin Money?” examining this digital currency.
Ch. 15: Monetary Theory and Policy I add two fresh examples and report on a new
study. I say more about quantitative easing and about the Fed’s payment of interest on
bank reserves held at the Fed.
Ch. 16: Macro Policy Debate: Active or Passive I add three fresh examples and
report on three new studies. A new section discusses “Active Policies, Passive Policies,
and Presidential Politics.”
International Chapters: 17–19

This edition reflects the growing impact of the world economy on U.S. economic wel-
fare. International issues are introduced early and discussed often. For example, the rest
of the world is introduced in Chapter 1 and profiled in Chapter 3. Comparative advan-
tage and the production possibilities frontier are discussed from a global perspective
in Chapter 2. International coverage is woven throughout the text. By comparing the
U.S. experience with that of other countries around the world, students gain a better
perspective about such topics as unionization trends, antitrust policies, pollution, con-
servation, environmental laws, research and development, tax rates, the distribution of
income, economic growth, productivity, unemployment, inflation, central bank inde-
pendence, government spending, and federal debt. Exhibits show comparisons across
countries of various economic measures—everything from the percentage of paper that
gets recycled to public outlays relative to GDP. International references are scattered
throughout the book, including a number of relevant case studies.
Preface xix
Again, every effort is made to give students a feel for the numbers. For example, to
convey the importance of U.S. consumers in the world economy, I note that Americans
represent less than 5 percent of the world’s population but buy 38 percent of the diamond
jewelry sold worldwide. New or revised features in the international chapters include:
Ch. 17: International Trade I add 12 fresh examples and report on eight new studies.
People prefer having a choice of products, and international trade helps broaden that
choice. Yet another benefit of international trade is that trading partners are less likely to
go to war because war with trading partners would involve more economic loss. Bilateral
agreement, multilateral agreement, and common market are upgraded to key terms.
Ch. 18: International Finance I add three fresh examples and report on two new
studies. Foreigners find America an attractive place to invest because U.S. capital mar-
kets are the deepest and most liquid in the world. Fiscal problems in eurozone nations
such as Greece have taken some of the shine off the euro. I note that arbitrage opportu-
nities are short lived; most are available for less than a second. High-speed computers
act on such opportunities instantly.
Ch. 19: Economic Development I add 12 fresh examples and report on 18 new
studies. Education is valued more in some economies than in others. For example,
some teachers in Mexico can legally sell their tenured positions or pass them on to
their children.
Student-Friendly Features
In some principles textbooks, chapters are broken up by boxed material, qualifying foot-
notes, and other distractions that disrupt the flow of the material. Students aren’t sure
when or if they should read such segregated elements. But this book has a natural flow.
Each chapter opens with a few off-beat questions and then follows with a logical narra-
tive. Case studies appear in the natural sequence of the chapter. Students can thus read
each chapter from the opening questions to the conclusion and summary. I also adhere to
a “just-in-time” philosophy, introducing material just as it’s needed to build an argument.
Footnotes are used to cite sources, not to qualify or extend material in the text.
This edition is more visual than its predecessors, with more exhibits to reinforce key
findings. Exhibit titles convey the central points, and more exhibits now have summary
captions. Captions have been edited for clarity and brevity. The point is to make the exhib-
its more self-contained. Students learn more if concepts are presented both in words and
in exhibits.
Additional summary paragraphs have been added throughout each chapter; these sum-
maries begin with the bold-faced identifier “To Review.” As noted earlier, each section now
is followed by “Checkpoint” questions. Economic jargon has been reduced. Although the
number of terms defined in the margin has increased modestly, definitions have been pared
to make them clearer and less like entries from a dictionary. In short, economic principles
are now more transparent (a textbook should not be like some giant Easter egg hunt, where
it’s up to the student to figure out what the author is trying to say). Overall, the eleventh
edition is a cleaner presentation, a straighter shot into the student’s brain.
Color is used systematically within graphs, charts, and tables to ensure that stu-
dents can easily see what’s going on. Throughout the book, demand curves are blue
and supply curves are red. Color shading distinguishes key areas of many graphs, and
color identifies outcomes in others. For example, economic profit and welfare gains are
always shaded blue and economic loss and welfare losses are always shaded pink. In
short, color is more than mere eye candy—it is coordinated consistently and with fore-
thought to help students learn (a dyslexic student once told me she found the book’s
color guide quite helpful). Students benefit from these visual cues.
xx Preface
The Support Package

The teaching and learning support package that accompanies Economics: A Con
temporary Introduction provides instructors and students with focused, accurate, and
innovative supplements to the textbook.
Instructor’s Manual The Instructor’s Manual provides chapter outlines, teaching ideas,
experiential exercises for many chapters, and solutions to all end-of-chapter problems.
Instructor Resources on the Product Support Web Site. This site at www.cengagebrain.
com features the essential resources for instructors, password protected, in
downloadable format: the Instructor’s Manual in Word, the Teaching Assistance
Manual (discussed next), the online case studies, the test banks, and PowerPoint
lecture and exhibit slides.
Teaching Assistance Manual Written and revised by me, the Teaching Assistance Manual
provides additional support beyond the Instructor’s Manual. It is especially useful to new
instructors, graduate assistants, and teachers interested in generating more class discussion.
This manual offers (1) overviews and outlines of each chapter, (2) chapter objectives and
quiz material, (3) material for class discussion, (4) topics warranting special attention, (5)
supplementary examples, and (6) “What if?” discussion questions. Appendices provide
guidance on (1) presenting material; (2) generating and sustaining class discussion; (3)
preparing, administering, and grading quizzes; and (4) coping with the special problems
confronting foreign graduate assistants.
Test Banks Thoroughly revised for currency and accuracy, the microeconomics and
macroeconomics test banks contain over 6,000 questions in multiple-choice and true-
false formats. All multiple-choice questions are rated by degree of difficulty, and are
labeled with learning outcomes tags.
Cengage Learning Testing Powered by Cognero.

This is a flexible, online system that allows you to:
• author, edit, and manage test bank content from multiple Cengage Learning
solutions
• create multiple test versions in an instant
• deliver tests from your LMS, your classroom or wherever you want
Start right away!
Cengage Learning Testing Powered by Cognero works on any operating system or browser.
• No special installs or downloads needed
• Create tests from school, home, the coffee shop—anywhere with Internet access
What will you find?
• Simplicity at every step. A desktop-inspired interface features drop-down menus
and familiar, intuitive tools that take you through content creation and manage-
ment with ease.
• Full-featured test generator. Create ideal assessments with your choice of 15 ques-
tion types (including true/false, multiple choice, opinion scale/Likert, and essay).
Multi-language support, an equation editor, and unlimited metadata help ensure
your tests are complete and compliant.
• Cross-compatible capability. Import and export content into other systems.
Preface xxi
Microsoft PowerPoint Lecture Slides Lecture slides contain tables and graphs from
the textbook, and are intended to enhance lectures and help integrate technology into
the classroom.
Microsoft PowerPoint Figure Slides These PowerPoint slides contain key figures from
the text. Instructors who prefer to prepare their own lecture slides can use these figures
as an alternative to the text’s PowerPoint lecture slides.
The Teaching Economist Since 1990, I have edited The Teaching Economist,
a newsletter aimed at making teaching more interesting and more fun. The
newsletter discusses imaginative ways to present topics—for example, how to
“sensationalize” economic concepts, useful resources on the Internet, economic
applications from
science fiction, recent research in teaching and learning,
and more generally, ways to teach just for the fun of it. A regular feature of
The Teaching Economist, “The Grapevine,” o ffers teaching ideas suggested by
colleagues from across the country. The latest issue—and back issues—of The
Teaching Economist are available online at cengage.com/economics/mceachern/
theteachingeconomist.
Additional Case Studies Online As mentioned earlier, this edition’s companion site now
includes an additional case study for each chapter followed by a Checkpoint question.
To access this material, log into www.cengagebrain.com, search for McEachern, then
find the 11th edition.
Aplia Started in 2000 by economist and instructor Paul Romer, more students are
currently using an Aplia Integrated Textbook Solution for principles of economics
than are using all other web-based learning programs combined. Because the
assignments in Aplia are automatically graded, you can assign homework more
frequently to ensure your students are putting forth a full effort and getting the
most out of your class. Assignments are closely tied to the text and each McEachern
Aplia course has a digital edition of the textbook embedded right in the Aplia
program. This digital text is now in the Aplia Text format, which gives students
the same interactive experience they get on Web sites they use in their personal
lives.
MindTap for McEachern

• Personalized teaching becomes yours through a Learning Path built with key stu-
dent objectives and your syllabus in mind. Control what students see and when
they see it.
• Analytics and reports provide a snapshot of class progress, time in course, engage-
ment and completion rates.
• An additional case study per chapter along with a Checkpoint question.
• Aplia generic homework and math and graphing tutorials.
• Homework; Concept Clips videos with assessment; online exercises; Checkpoint
Q&A; end of chapter questions and problems.
• Adaptive Test Prep to help students master chapter concepts.
Custom Solutions Create a text as unique as your course quickly, simply, and
affordably. Custom Solutions allows you to add your personal touch to Economics: A
Contemporary Introduction with a course-specific cover and up to 32 pages of your
own content, at no additional cost. Contact your sales consultant to learn more about
this and other custom options to fit your course.
xxii Preface
Acknowledgments
Many people contributed to this book’s development. I gratefully acknowledge the
insights, comments, and criticisms of those who have reviewed the book for this and
previous editions or provided feedback on particular points. Their remarks changed
my thinking on many points and improved the book.
Steve Abid, John J. Bethune, Stephen Cobb,

Grand Rapids Community College Barton College Xavier University
Basil Al-Hashimi, Trisha L. Bezmen, Francis P. Connolly,
Mesa Community College–Red Mountain Old Dominion University Nassau Community College
Polly Reynolds Allen, Jay Bhattacharya, Doug Conway,
University of Connecticut Okaloosa Walton Community College Mesa Community College
Mary Allender, Gerald W. Bialka, Mary E. Cookingham,
University of Portland University of North Florida Michigan State University
Jeffrey Alstete, Roberta Biby, James P. Cover,
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Hassan Y. Aly, William Bogart, James Cox,
Ohio State University Case Western Reserve University DeKalb College
Ted Amato, Andrew A. Bonacic, Jerry Crawford,
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Donna Anderson, Kenneth Boyer, Thomas Creahan,
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Richard Anderson, David Brasfield, Carl Davidson,
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University of Colorado at Colorado Baylor University Carroll College
Springs Charles Callahan III, David Denslow,
Andy Barnett, SUNY College at Brockport University of Florida
Auburn University Giorgio Canarella, Kruti R. Dholakia,
Bharati Basu, California State University, Los Angeles Grayson County College
Central Michigan University Shirley Cassing, Albert Duncan,
Lauri J. Bates, University of Pittsburgh Borough of Manhattan Community
Bryant University Shi-fan Chu, College of CUNY
Lee Beard, University of Nevada–Reno Mary Sue DuPuy,
Southwest Indian Polytechnical Institute Ronald Cipcic, Arizona Western College
Klaus Becker, Kalamazoo Valley Community College Gary Dymski,
Texas Tech University Larry Clarke, University of California–Riverside
Getachew Begashaw, Brookhaven College John Eastwood,
Harper College Rebecca Cline, Northern Arizona University
Charles Bennett, Middle Georgia College John Edgren,
Gannon University Eastern Michigan University
Preface xxiii
John C. Edward, Robert Gordon, Calvin Hoy,

Bentley University San Diego State University County College of Morris
Ron D. Elkins, Fred Graham, George Hughes,
Central Washington University American University University of Hartford
Kenneth G. Elzinga, Philip Graves, Jennifer Imazeki,
University of Virginia University of Colorado, Boulder San Diego State University
Donald Elliott, Jr., Gary Greene, Beth Ingram,
Southern Illinois University Manatee Community College University of Iowa
G. Rod Erfani, Harpal S. Grewal, Susan Iredale,
Transylvania University Claflin College Cuesta College
Gisela Meyer Escoe, Carolyn Grin, Paul Isley,
University of Cincinnati Grand Rapids Community College Grand Valley State University
Mark Evans, Daniel Gropper, Joyce Jacobsen,
California State University, Bakersfield Auburn University Wesleyan University
Jamie Falcon, Simon Hakim, Nancy Jianakoplos,
University of Maryland Baltimore County Temple University Colorado State University
Gregory Falls, Robert Halvorsen, Claude Michael Jonnard,
Central Michigan University University of Washington Fairleigh Dickinson University
Eleanor Fapohunda, Nathan Eric Hampton, Nake Kamrany,
SUNY College at Farmingdale St. Cloud State University University of Southern California
Mohsen Fardmanesh, Mehdi Haririan, Bryce Kanago,
Temple University Bloomsburg University Miami University
Paul Farnham, Oskar Harmon, John Kane,
Georgia State University University of Connecticut SUNY College at Oswego
Rudy Fichtenbaum, William Hart, David Kennett,
Wright State University Miami University Vassar College
T. Windsor Fields, Baban Hasnat, William Kern,
James Madison University SUNY College at Brockport Western Michigan University
Fathali Firoozi, Travis Lee Hayes, Robert Kleinhenz,
University of Texas at San Antonio Chattanooga State Technical Community California State University, Fullerton
Linda R. Fisher, College Faik Koray,
Quinnipiac University Julia Heath, Louisiana State University
Rodney Fort, University of Memphis Joseph Kotaska,
Washington State University James Heisler, Monroe Community College
Richard Fowles, Hope College Barry Kotlove,
University of Utah James Henderson, Edmonds Community College
Roger Frantz, Baylor University Marie Kratochvil,
San Diego State University Michael Heslop, Nassau Community College
Julie Gallaway, Northern Virginia Community Joseph Lammert,
Southwest Montana State University College Raymond Walters College
Gary Galles, James R. Hill, Philip J. Lane,
Pepperdine University Central Michigan University Fairfield University
Edward Gamber, Jane Smith Himarios, Steven P. Lanza,
Lafayette College University of Texas, Arlington University of Connecticut
Adam Gifford, Calvin Hoerneman, Christopher Lee,
California State University, Northridge Delta College Saint Ambrose University, Davenport
J. P. Gilbert, Tracy Hofer, Jim Lee,
MiraCosta College University of Wisconsin, Stevens Point Fort Hays State University
Robert Gillette, George E. Hoffer, Dennis Leyden,
University of Kentucky Virginia Commonwealth University University of North Carolina, Greensboro
Art Goldsmith, Dennis Hoffman, Carl Liedholm,
Washington and Lee University Arizona State University Michigan State University
Rae Jean Goodman, Bruce Horning, Hyoung-Seok Lim,
U.S. Naval Academy Fordham University Ohio State University
xxiv Preface
C. Richard Long, Milton Mitchell, Richard Saba,

Georgia State University University of Wisconsin, Oshkosh Auburn University
Ken Long, Shannon Mitchell, Simran Sahi,
New River Community College Virginia Commonwealth University University of Minnesota, Twin Cities
Michael Magura, Brian Mock, Richard Salvucci,
University of Toledo Indiana Wesleyan University Trinity University
Thomas Maloy, Barry Morris, Rexford Santerre,
Muskegon Community College University of North Alabama University of Connecticut
Gabriel Manrique, Tina Mosleh, George D. Santopietro,
Winona State University Ohlone College Radford University
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Davenport College Fairfield University University of Central Oklahoma
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Vanderbilt University Central Michigan University Kenyon College
Nelson Mark, Rick Nelson, Ted Scheinman,
Ohio State University Lansing Community College Mt. Hood Community College
Richard Martin, Heather Newsome, Peter Schwartz,
Agnes Scott College Baylor University University of North Carolina, Charlotte
Peter Mavrokordatos, Farrokh Nourzad, Carol A. Scotese,
Tarrant County College Marquette University Virginia Commonwealth University
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University of Cincinnati University of Minnesota, Duluth San Diego State University
Bruce McCrea, Norman P. Obst, Roger Sherman,
Lansing Community College Michigan State University University of Houston
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Arizona State University Upper Iowa University Central Michigan University
KimMarie McGoldrick, Joan Q. Osborne, Alden Shiers,
University of Richmond Palo Alto College California Polytechnic State University
David McKee, Jeffrey Phillips, Virginia Shingleton,
Kent State University Thomas College Valparaiso University
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University of New Orleans Florida National University California State University, Chico
Mark McNeil, Jeffrey D. Prager, William Shughart II,
Irvine Valley College East Central College University of Mississippi
Michael A. McPherson, Fernando Quijano, Paul Sicilian,
University of North Texas Dickinson State University Grand Valley State University
Scott Eric Merryman, Jaishankar Raman, Charles Sicotte,
University of Oregon Valparaiso University Rock Valley College
Michael Metzger, Reza Ramazani, Calvin Siebert,
University of Central Oklahoma St. Michael’s University University of Iowa
Art Meyer, Carol Rankin, Michele Sims,
Lincoln Land Community College Xavier University Arizona Western College
Carrie Meyer, Mitch Redlo, Gerald P. W. Simons,
George Mason University Monroe Community College Grand Valley State University
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Housatonic Community College Mississippi State University University of Phoenix
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Murray State University Delta College DeKalb College
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Morehead State University West Texas A&M University Duke University
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University of Nevada, Las Vegas Wayne State University Brigham Young University
Bruce D. Mills, Mark Rush, Jane Speyrer,
Troy State University, Montgomery University of Florida University of New Orleans
Preface xxv
Joanne Spitz, Steven Trost, Michael White,

University of Massachusetts Virginia Polytechnic Institute St. Cloud State University
Denise Stanley Lee J. Van Scyoc, Richard Winkelman,
California State University, Fullerton University of Wisconsin, Oshkosh Arizona State University
Mark Stegeman, Percy Vera, Stephan Woodbury,
Virginia Polytechnic Institute Sinclair Community College Michigan State University
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University of Illinois, Chicago Winthrop University Saddleback College
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Indiana University of Pennsylvania University of Wisconsin, Stevens Point Bossier Parish Community College
Michael Stroup, Gregory Wassall, Peter Wyman,
Stephen Austin State University Northeastern University Spokane Falls Community College
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Pace University Eastern Illinois University Morehead State University
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University of South Alabama Xavier University University of Wisconsin, Eau Claire
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Drexel University St. Louis Community College Rock Valley College
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Brookdale Community College University of Arizona Bucks Community College
Jill Trask, Robert Whaples,
Tarrant County College Wake Forest University
John Tribble, Mark Wheeler,
Russell Sage College Western Michigan University
I also thank the many contributions and comments from the group of instructors
who participated in the Online Survey of my book, or responded to our phone surveys:
John Abell, Ali Erhan, Martin Milkman,

Randolph College Aquinas College Murray State University
Richard U. Agesa, Erwin F. Erhardt, III, Kaustav Misra,
Marshall University University of Cincinnati Mississippi State University
John Beck, Jeff Florea, Phillip Mixon,
Gonzaga University Madisonville Community College Troy University
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San Diego State University Northern Arizona University Moorpark College
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Gonzaga University Virginia Commonwealth University Community College of Rhode Island
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Borough of Manhattan Community College East Central Community College Volunteer State Community College
Andrew M. Bonacic, Charles James, Martin Sabo,
Adirondack College Washington State University University of Colorado at Denver
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Jefferson Community College Fairfield University Northeastern University
Joseph Daniels, Leland Kempe, Michelle Sims,
Marquette University CSU Fresno Arizona Western College
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Indian River State College St. Petersburg College Indian River State College
Mary Sue DePuy, Nazma Latif-Zaman, Sourushe Zandvakili,
Arizona Western College Providence College University of Cincinnati
John C. Edward J. Franklin Lee,
Bentley University Pitt Community College
Dennis S. Edwards, Harry Miley,
Coastal Carolina University South Carolina State University
xxvi Preface
The talented professionals at Cengage Learning provided invaluable editori-

al, administrative, and sales support. I owe a special debt to Julia Chase, Senior
Content/Media Developer, who nurtured the manuscript through reviews, revi-
sions, editing, and production. She also helped with photography selection and
coordinated the work of others who contributed to the publishing package. For the
fresh look of the book, I owe a debt to Michelle Kunkler, Senior Art Director. I am
also grateful to the Senior Content Product Manager, Colleen Farmer. The actual
production of this book was expertly handled by Cenveo Publisher Services, espe-
cially Rajachitra Suresh, who coordinated the manuscript through its several stag-
es. Her good cheer and steady guidance made things go smoothly. I would also like
to thank Sarah Greber, Senior Marketing Communications Manager, who has been
especially helpful with the publications of my newsletter, The Teaching Economist.
I am most grateful to Erin Joyner, VP, GM Social Science & Qualitative Business;
Michael Worls, Product Director; Michael Parthenakis, Senior Product Manager and
problem solver; Kasie Jean, Digital Content Designer; and John Carey, the Senior Mar-
keting Manager whose knowledge of the book dates back to the beginning. As good
as the book may be, all our efforts would be wasted unless students get to read it. To
that end, I greatly appreciate the dedicated service and sales force of Cengage Learning,
who have contributed in a substantial way to the book’s success.
Finally, I owe an abiding debt to my wife, Pat, who provided abundant encourage-
ment and support along the way.
William A. McEachern
The Art and Science
of Economic Analysis 1
Bernd Vogel/AGE Fotostock
• In what way are people who pound on vending machines relying on theory?
• Why are comic-strip and TV characters like those in FoxTrot, The Simpsons,
and Family Guy missing a finger on each hand? And where is Dilbert’s
mouth?
• Which college majors pay the most?
• Why is a good theory like a California Closet?
• What’s the big idea with economics?
• Finally, how can it be said that in economics “what goes around comes
around”?
These and other questions are answered in this chapter, which introduces the art
and science of economic analysis.
Y
ou have been reading and hearing about economic issues for years—
unemployment, inflation, poverty, recessions, federal deficits, college tuition,
airfares, stock prices, computer prices, smartphone prices, gas prices. When
explanations of such issues go into any depth, your eyes may glaze over and you may tune
out, the same way you do when a weather forecaster tries to explain high-pressure fronts
colliding with moisture carried in from the coast.
What many people fail to realize is that economics is livelier than the dry accounts of-
fered by the news media. Economics is about making choices, and you make economic
choices every day—choices about whether to get a part-time job or focus on your studies,
live in a dorm or off campus, take a course in accounting or one in history, get married or
stay single, pack a lunch or buy a sandwich. You already know much more about economics
than you realize. You bring to the subject a rich personal experience, an experience that
will be tapped throughout the book to reinforce your understanding of the basic ideas.
Topics discussed in this chapter include:

• The economic problem • The scientific method
• Marginal analysis • Normative versus positive analysis
• Rational self-interest • Some pitfalls of economic thinking
The Economic Problem: Scarce

1-1
Resources, Unlimited Wants
Would you like a new car, a nicer home, a smarter phone, tastier meals, more
free time, a more interesting social life, more spending money, more leisure, more
sleep? Who wouldn’t? But even if you can satisfy some of these desires, others keep
popping up. The problem is that, although your wants, or desires, are virtually
unlimited, the resources available to satisfy these wants are scarce. A resource is
scarce when it is not freely available—that is, when its price exceeds zero. Because
resources are scarce, you must choose from among your many wants, and whenever
you choose, you must forgo satisfying some other wants. The problem of scarce
resources but unlimited wants exists to a greater or lesser extent for each of the
7.4 billion people on Earth. Everybody—cab driver, farmer, brain surgeon, dictator,
shepherd, student, politician—faces the problem. For example, a cab driver uses
time and other scarce resources, such as the taxi, knowledge of the city, driving
economics skills, and gasoline, to earn income. That income, in turn, buys housing, grocer-
The study of how people use ies, clothing, trips to Disney World, and thousands of other goods and services
their scarce resources to that help satisfy some of the driver’s unlimited wants. Economics examines how
satisfy their unlimited wants people use their scarce resources to satisfy their unlimited wants. Let’s pick apart
Chapter 1 The Art and Science of Economic Analysis 3
the definition, beginning with resources, then goods and services, and finally focus resources
on the heart of the matter—economic choice, which results from scarcity. The inputs, or factors of
production, used to produce
the goods and services that
1-1a Resources people want; consist of labor,
capital, natural resources, and
Resources are the inputs, or factors of production, used to produce the goods and ser- entrepreneurial ability
vices that people want. Goods and services are scarce because resources are scarce.
labor
Resources sort into four broad categories: labor, capital, natural resources, and en-
The physical and mental effort
trepreneurial ability. Labor is human effort, both physical and mental. Labor includes used to produce goods and
the effort of the cab driver and the brain surgeon. Labor itself comes from a more services
fundamental resource: time. Without time we can accomplish nothing. We allocate our
time to alternative uses: We can sell our time as labor, or we can spend our time doing capital
other things, like sleeping, eating, studying, playing sports, going online, attending class, The buildings, equipment, and
human skills used to produce
watching TV, or just relaxing with friends. goods and services
Capital includes all human creations used to produce goods and services. Economists
often distinguish between physical capital and human capital. Physical capital con- natural resources
sists of factories, tools, machines, computers, buildings, airports, highways, and other All gifts of nature used to
human creations used to produce goods and services. Physical capital includes the cab produce goods and services;
includes renewable and
driver’s taxi, the surgeon’s scalpel, and the building where your economics class meets exhaustible resources
(or, if you are taking this course online, your computer and online connectors). Human
capital consists of the knowledge and skill people acquire to increase their productivity, entrepreneurial ability
such as the cab driver’s knowledge of city streets, the surgeon’s knowledge of human The imagination required to
anatomy, and your knowledge of economics. develop a new product or
process, the skill needed to
Natural resources include all gifts of nature, such as bodies of water, trees, oil re-
organize production, and the
serves, minerals, even animals. Natural resources can be divided into renewable re- willingness to take the risk of
sources and exhaustible resources. A renewable resource can be drawn on indefinitely profit or loss
if used conservatively. Thus, timber is a renewable resource if felled trees are replaced to
entrepreneur
regrow a steady supply. The air and rivers are renewable resources if they are allowed
A profit-seeking decision
sufficient time to cleanse themselves of any pollutants. More generally, biological re- maker who starts with an idea,
sources such as fish, game, livestock, forests, rivers, groundwater, grasslands, and soil organizes an enterprise to
are renewable if managed properly. An exhaustible resource—such as oil or coal—does bring that idea to life, and
not renew itself and so is available in a limited amount. Once burned, each barrel of oil assumes the risk of the
or ton of coal is gone forever. The world’s oil and coal deposits are exhaustible. operation
A special kind of human skill called entrepreneurial ability is the talent required wages
to dream up a new product or find a better way to produce an existing one, organize Payment to resource owners
production, and assume the risk of profit or loss. This special skill comes from an en- for their labor
trepreneur. An entrepreneur is a profit-seeking decision maker who starts with an idea,
interest
organizes an enterprise to bring that idea to life, and then assumes the risk of operation.
Payment to resource owners
An entrepreneur pays resource owners for the opportunity to employ their resources in for the use of their capital
the firm. Every firm in the world today, such as Ford, Microsoft, Google, and Facebook,
began as an idea in the mind of an entrepreneur. rent
Resource owners are paid wages for their labor, interest for the use of their Payment to resource owners
capital, and rent for the use of their natural resources. Entrepreneurial ability is for the use of their natural
resources
rewarded by profit, which equals the revenue from items sold minus the cost of
the resources employed to make those items. Sometimes the entrepreneur suffers a profit
loss. Resource earnings are usually based on the time these resources are employed. Reward for entrepreneurial
Resource payments therefore have a time dimension, as in a wage of $10 per hour, ability; sales revenue minus
interest of 6 percent per year, rent of $600 per month, or profit of $10,000 per resource cost
year.
4 Part 1 Introduction to Economics
1-1b Goods and Services

Resources are combined in a variety of ways to produce goods and services. A
farmer, a tractor, 50 acres of land, seeds, and fertilizer combine to grow the good:
corn. One hundred musicians, musical instruments, chairs, a conductor, a mu-
sical score, and a music hall combine to produce the service: Beethoven’s Fifth
good Symphony. Corn is a good because it is something you can see, feel, and touch; it
A tangible product used to requires scarce resources to produce; and it satisfies human wants. The book you
satisfy human wants are now holding, the chair you are sitting in, the clothes you are wearing, and your
service next meal are all goods. The performance of the Fifth Symphony is a service be-
An activity, or intangible cause it is intangible, yet it uses scarce resources to satisfy human wants. Lectures,
product, used to satisfy movies, concerts, phone service, wireless connections, yoga lessons, dry cleaning,
human wants and haircuts are all services.
Because goods and services are produced using scarce resources, they are themselves
scarce. A good or service is scarce if the amount people desire exceeds the amount
available at a zero price. Because we cannot have all the goods and services we would
like, we must continually choose among them. We must choose among more pleasant
living quarters, better meals, nicer clothes, more reliable transportation, faster comput-
scarcity ers, smarter phones, and so on. Making choices in a world of scarcity means we must
Occurs when the amount pass up some goods and services. Exhibit 1 shows the options of one individual facing
people desire exceeds the scarcity. But not everything is scarce. In fact, some things we would prefer to have less
amount available at a zero of. For example, we would prefer to have less garbage, less spam email, fewer telemar-
price
keting calls, and less pollution. Things we want none of even at a zero price are called
bads, the opposite of goods.
EXHIBIT 1 Scarcity Means You Must Choose Among Options
laola/Shutterstock.com, colia/Shutterstock.com, Utekhina Anna/Shutterstock.com, james weston/Shutterstock.com,

Elena Elisseeva/Shutterstock.com, zimmytws/Shutterstock.com
A few goods and services seem free because the amount available at a zero price
exceeds the amount people want. For example, air and seawater often seem free be-
cause we can breathe all the air we want and have all the seawater we can haul away.
Yet, despite the old saying “The best things in life are free,” most goods and services
are scarce, not free, and even those that appear to be free come with strings attached.
For example, clean air and clean seawater have become scarce. Goods and services
that are truly free are not the subject of economics. Without scarcity, there would be
no economic problem and no need for prices.
Sometimes we mistakenly think of certain goods as free because they involve no ap-
parent cost to us. Napkins seem to be free at Starbucks. Nobody stops you from taking
a fistful. Supplying napkins, however, costs the company millions each year and prices
reflect that cost. Some restaurants make special efforts to keep napkin use down—such
as packing them tightly into the dispenser or making you ask for them. And Starbucks
recently reduced the thickness of its napkins.
You may have heard the expression “There is no such thing as a free lunch.” There
is no free lunch because all goods and services involve a cost to someone. The lunch
may seem free to you, but it draws scarce resources away from the production of other
goods and services, and whoever provides a free lunch often expects something in re-
turn. A Russian proverb makes a similar point but with a bit more bite: “The only place
you find free cheese is in a mousetrap.” Albert Einstein once observed, “Sometimes one
pays the most for things one gets for nothing.”
1-1c Economic Decision Makers and Markets

There are four types of decision makers in the economy: households, firms, govern-
ments, and the rest of the world. Their interaction determines how an economy’s re-
sources are allocated. Households play the starring role. As consumers, households
demand the goods and services produced. As resource owners, households supply
labor, capital, natural resources, and entrepreneurial ability to firms, governments,
and the rest of the world. Firms, governments, and the rest of the world demand the
resources that households supply and then use these resources to supply the goods
and services that households demand. The rest of the world includes foreign house-
holds, foreign firms, and foreign governments that supply resources and products
to U.S. demanders and demand resources and products from U.S. suppliers.
Markets are the means by which buyers and sellers carry out exchange at mutually market
agreeable terms. By bringing together the two sides of exchange, markets determine A set of arrangements by
price, quantity, and quality. Markets are often physical places, such as supermarkets, which buyers and sellers carry
department stores, shopping malls, yard sales, flea markets, and swap meets. But mar- out exchange at mutually
agreeable terms
kets also include other mechanisms by which buyers and sellers communicate, such as
classified ads, radio and television ads, telephones, bulletin boards, online sites, and product market
face-to-face bargaining. These market mechanisms provide information about the A market in which a good or
quantity, quality, and price of products offered for sale. Goods and services are bought service is bought and sold
and sold in product markets. Resources are bought and sold in resource markets. The resource market
most important resource market is the labor, or job, market. Think about your own A market in which a resource
experience looking for a job, and you’ll already have some idea of that market. is bought and sold
1-1d A Simple Circular-Flow Model circular-flow model

A diagram that traces the flow
Now that you have learned a bit about economic decision makers and markets, con- of resources, products,
sider how all these interact. Such a picture is conveyed by the circular-flow model, income, and revenue among
which describes the flow of resources, products, income, and revenue among economic economic decision makers
6 Part 1 Introduction to Economics
decision makers. The simple circular-flow model focuses on the primary interaction in
a market economy—that between households and firms. Exhibit 2 shows households
on the left and firms on the right; please take a look.
Households supply labor, capital, natural resources, and entrepreneurial ability to
firms through resource markets, shown in the lower portion of the exhibit. In return,
households demand goods and services from firms through product markets, shown
on the upper portion of the exhibit. Viewed from the business end, firms demand
labor, capital, natural resources, and entrepreneurial ability from households through
resource markets, and firms supply goods and services to households through product
markets.
The flows of resources and products are supported by the flows of income and
expenditure—that is, by the flow of money. So let’s add money. The demand and sup-
ply of resources come together in resource markets to determine what firms pay for
EXHIBIT 2 The Simple Circular-Flow Model for Households and Firms
Product
markets
Go
s o ds
u ct Re
ve
d
an
nu
o
Pr
d
e e
se
r
rv
tu
ice
di
en
s
Exp
Households Firms
it
Lab entre
rof
,p
or,
nt
ca pren
re
pit
t,
co
es
In
r
te
al, eur
m in
es
tu e ,
na
es
rc
ia ral g u
l a re Wa so
bil so Re
ity urc
es, Resource
markets
Households earn income by supplying resources to resource markets, as as shown in the upper portion of the model. Households spend their in-
shown in the lower portion of the model. Firms demand these resources come to demand these goods and services. This spending flows through
to produce goods and services, which they supply to product markets, product markets as revenue to firms.
resources. These resource prices—wages, interest, rent, and profit—flow as income

to households. The demand and supply of products come together in product mar-
kets to determine what households pay for goods and services. This expenditure on
goods and services flows as revenue to firms. Resources and products flow in one
direction—in this case, counterclockwise—and the corresponding payments flow in the
other direction—clockwise. What goes around comes around. Take a little time now to
trace the logic of the circular flows.
CHECKPOINT
Identify and describe the movement of resources and products through the circular-
flow model.
1-2 The Art of Economic Analysis

An economy results as millions of individuals attempt to satisfy their unlimited wants.
Because their choices lie at the heart of the economic problem—coping with scarce r esources
but unlimited wants—these choices deserve a closer look. Learning about the forces that
shape economic choices is the first step toward understanding the art of economic analysis.
1-2a Rational Self-Interest

A key economic assumption is that individuals, in making choices, rationally select
what they perceive to be in their best interests. By rational, economists mean simply
that people try to make the best choices they can, given the available time and infor-
mation. People may not know with certainty which alternative will turn out to be the
best. They simply select the alternatives they expect will yield the most satisfaction and
happiness. In general, rational self-interest means that each individual tries to maximize rational self-interest
the expected benefit achieved with a given cost or to minimize the expected cost of Each individual tries to
achieving a given benefit. Thus, economists begin with the assumption that people look maximize the expected
out for their self-interest. For example, a physician who owns a pharmacy prescribes benefit achieved with a given
cost or to minimize the
8 percent more drugs on average than a physician who does not own a pharmacy.1 A expected cost of achieving a
physician who owns a nuclear scanner (used to look inside the human body) is seven given benefit
times more likely to recommend a scan than a physician who does not own a nuclear
scanner.2 And as one more example of self-interest, the USA Today weekly football poll
asks coaches to list the top 25 teams in the country. It is no surprise that coaches distort
their selections to favor their own teams and their own conferences. And, to make their
own records look better, coaches inflate the rankings of teams they have beaten.3
Rational self-interest should not necessarily be viewed as blind materialism, pure
selfishness, or greed. We all know people who are tuned to radio station WIIFM (What’s
In It For Me?). For most of us, however, self-interest often includes the welfare of our
family, our friends, and perhaps the poor of the world. Even so, our concern for others
1.
Brian Chen, Paul Gertler, and Chuh-Yuh Yang, “Moral Hazard and Economies of Scope in Physician
Ownership of Complementary Medical Services,” NBER Working Paper No. 19622 (November 2013).
2.
Sandeep Jouhar, Doctored: The Disillusionment of an American Physician (Farrar, Straus, and Giroux,
2014), p. 96.
3.
Matthew Kotchen and Matthew Potoski, “Conflicts of Interest Distort Public Evaluations: Evidence from
the Top 25 Ballots of NCAA Football Coaches,” Journal of Economic Behavior & Organization, 107
(November 2014): 51–63.
Another random document with
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That is, as I say, the most characteristic and the most significant
episode, as it is the most amazing, of the defence. Paris was not to
fall, was not even to be attacked. Attila was surfeited with destruction
and loot, he was forced now to concentrate his attention upon the
attack on the Visigoths of the south lest Rome and Aetius should
stand in his way and imperil his whole campaign. His plan must be to
defeat the Visigoths before he was forced to face Aetius coming up
out of Italy, and with this on his mind he set out from Metz with his
main army, passed through Toul and Rheims, which were gutted,
through Troyes and Sens, which he was in too great haste to
destroy, and over the Sologne, held then by his ally the King of the
Alans, Sangibanus, and marched directly upon Orleans. That march
represented the work of a whole month. He left Metz in the early
days of April, he arrived before Orleans in the early days of May.
Orleans stands upon the most northern point of the Loire, the
great river which divides Gaul east and west into a northern and a
southern country. It has been the point around which the destinies of
the Gauls have so often been decided—one has only to recall the
most famous instance of all, the deliverance under Joan of Arc—that
it is without surprise we see it fulfilling its rôle in the time of Attila
also. From time immemorial, before the beginning of history, it had
been an important commercial city, for it stood not only on one of the
greatest and most fruitful rivers of western Europe, but, as I have
said, upon the marches of the north and south, whose gate it was.
No one could pass without its leave, at least in safety. Anciently it
was known as Genabum and there had been planned and conceived
the great revolt which so nearly engulfed Julius Cæsar, who burnt it
to the ground. It stood then, as later when it rose again, upon the
northern bank of the river and was joined with the south by a great
bridge. The resurrection after that burning was not long delayed, but
it seems to have been less magnificent than might have been
expected and it certainly suffered much from war, so that in 272, in
the time of Aurelian, it was rebuilt with a wall about it, and for this
cause took the name of the Emperor. Times, however, were sadly
changed with the great city when Attila came into Gaul. Much
certainly was in ruin, the municipal government in full decadence or
transition and it was therefore with a dreadful fear in her heart that
Orleans watched the oncoming of the Huns. Nevertheless the city
put herself into a state of defence. The first direct assault upon her
was made by that Sangibanus, King of the Alans, and Attila’s ally,
who requested to be allowed to garrison it. Orleans refused and
closed her gates. At the same time she sent forth her bishop (and
this is as significant of the true state of affairs of government in Gaul
as the facts about Tongres, Rheims and Paris) into the south, still
Roman, to Arles to learn when Aetius might be expected in relief and
how far the Visigoths would move, not for their own defence only, but
against the common enemy.
Anianus, for such was the bishop’s name, thus appears as the
representative, the ambassador and the governor of the city. In
Arles, to his delight, he found not only a secure and even splendid
Roman government, but the great general himself, Aetius, who
received him with impress. Anianus urged the necessity of an
immediate assistance. He reckoned that it would be possible to hold
out till the middle of June, but no longer. Aetius heard him patiently
and promised that by then he would relieve the city. Anianus was not
too soon, he had scarce returned to Orleans when Attila began the
siege.
It will be asked, and with reason, why it was that Rome had waited
so long before interfering to defend her great western province
against this “wild beast”? Why had Aetius not marched out of Italy at
the head of his armies months before? why had he waited till all the
North was a ruin before he carried the eagles over the Alps and
confronted this savage and his hordes with the ordered ranks of the
army of civilisation? The answer may be found in the war we are
fighting to-day against a similar foe. The French failed to defend the
North against the modern Attila because they were too long
uncertain which way he would come and where he would strike
hardest. They could not be sure which was the decisive point of the
German attack. This it was that kept so great a proportion of their
armies in Alsace and upon that frontier. They credited the German
with more subtlety than he possessed. They failed to grasp the
gigantic simplicity of the Barbarian plan; the mighty hammer-stroke
that shattered Belgium and plunged in to destroy all the North of
France. They looked for something less blindly brutal and more wise.
They could not believe that the German would destroy his whole
case and outrage the moral consciousness of the world by violating
the neutrality of Belgium. They failed to comprehend the essential
stupidity of the Barbarian. They were wrong.
Aetius was wrong also, but with perhaps more excuse. He could
not make up his mind where the real attack of Attila upon the Empire
was to be delivered. What if the descent upon Gaul were but a feint
and Italy were the real objective, Lombardy the true battlefield?
There was this also; in Africa, Genseric, Attila’s ally, waited and
threatened to descend upon the coast. Aetius overrated the
intelligence of his enemy as much as did Joffre. Neither understood
the force which opposed him, which it was to be their business and
their glory to meet and to break.
Like Joffre, too, when Aetius at last found himself face to face with
the reality of the situation he must have dared only not to despair.
The successes of the Huns had decided the Visigoths to remain on
the defence within their own confines; they refused to attack.
Everywhere the Roman delay had discovered treason among the
tribes who should have been their allies against a common foe.
Aetius could only not despair. He addressed the Visigoths, though
perhaps with more right, much as we might address to-day the
Americans. “If we are beaten you will be the next to be destroyed;
while if you help us to win yours will be the glory.” The Visigoths
replied as America is doing to-day: “It is not our business; see you to
it.”
They were wrong, the victory of Rome was as necessary for the
future as our victory is to-day.
Much indeed was already achieved to that end by the mere
presence of Aetius in Gaul. Suddenly the whole country was
changed, everywhere the peoples sprang to arms, the noble and the
peasant, the bourgeois of the cities, the bond and the free. From
Armorica came an heroic company, the Ripuarian Franks and the
Salian Franks having seen the ruin of the Roman cities of the
country they had been permitted to occupy, the Burgundians also
returned to, if they had indeed ever left, their old allegiance. So
successful at last was the diplomacy of Rome that when even
Sangibanus appeared Aetius feigned to be ignorant of his treason.
The great general prepared with a good heart for the attack, but was
determined to do everything possible to mobilise the Visigoths with
his other forces. It was with this object that at last he sought the aid
of Avitus, the senator, a very great Gaulish nobleman who lived in
the city of Clermont, the chief town of the Auvergne.
In Avitus we have a figure which at once arrests our attention amid
all the welter of Barbarians of which even Gaul was full. In him we
see, and are assured, that the civilisation of Rome was still a living
thing in the West, that it had not been overwhelmed by savages or
lost in a mist of superstition. Avitus indeed seems to have stepped
suddenly out of the great Roman time, he reminds us of what we
have learned to expect a Roman noble of the time of Marcus
Aurelius, or for that matter of St. Ambrose, to be. In him we see one
we can greet as a brother; we should have been able to discuss with
him the decline of the Empire. A rich man, coming of a noble family
which for long had enjoyed the highest honour and the heaviest
official responsibility, a scholar, a connoisseur, above all a somewhat
bored patriot, he was also a soldier distinguished for his personal
courage. He had already in 439 been successful in arranging a
treaty for Rome with the Visigoths, and it was to him in this hour of
enormous peril that Aetius turned again. He found him in his
beautiful, peaceful and luxurious villa of Avitacum amid the foothills
of the mountains of Auvergne, living as so many of our great nobles
of the eighteenth century lived, half a farmer, half a scholar, wholly
epicurean and full of the most noble self-indulgence, surrounded by
his family, his son and daughter, and his friends, poets and scholars
and delightful women. His son Ecdicius was the heir both of his
wealth and his responsibilities, his daughter Papianella had married
Sidonius Apollinaris of Lyons, a man already famous as a poet and
coming of a distinguished Gallo-Roman family. It was this man who
in the moment of crisis appeared on behalf of civilisation at the
Visigoths’ Court—we could not have had a more noble
representative.
His mission was wholly successful; but the time spent in showing
the Visigoths where their interests lay was to cost Orleans dear. The
devoted city wholly surrounded and every day submitted to the
assaults and the clouds of arrows of the Huns, hearing no news of
any relief, was in despair. In vain the Bishop Anianus went in
procession through the streets, and even among the troops on the
ramparts, bearing the relics of his church; they called him traitor. Still
firm in his faith in God and in the promise of Aetius, daily he made
men climb the last high tower in expectation of deliverance. None
came, no sign of the armies of Aetius could be discerned. Day after
day the mighty roads southward lay in the sun white and empty of all
life. At last he sent by stealth a messenger to Aetius with this
message: “My son, if you come not to-day it will be too late.” That
messenger never returned. Anianus himself began to doubt and at
last heard counsels of surrender almost without a protest; indeed
consented himself to treat with the Huns. But Attila was beside
himself at the length of the resistance, he would grant no terms.
Nothing remained but death or worse than death.
Upon the following morning, the week having been full of thunder,
the first rude cavalry of the Huns began to enter the city through the
broken gates. The pillage and massacre and rape began, and, as to-
day in Belgium, we read with a certain order and system. Nothing
was spared, neither the houses of the citizens, nor their holy places,
neither age nor sex. It seemed as though all would perish in a vast
and systematic vandalism and murder.
Suddenly a cry rose over the noise of the butchery and
destruction. The Eagles! The Eagles! And over the mighty bridge
that spans the Loire thundered the cavalry of Rome, and the
tumultuous standards of the Goths. They came on; nothing might
stop them. Step by step they won the bridge head, they fought upon
the shore, in the water, through the gates. Street by street, fighting
every yard, the Imperial troops pushed on, the glistening eagles high
overhead. House by house, alley by alleyway was won and filled with
the dead; the Huns broke and fled, the horses stamped out their
faces in the byways, in the thoroughfares there was no going, the
Barbarian carrion was piled so high; Attila himself was afraid. He
sounded the retreat.
That famous and everlasting day was the 14th of June, for Aetius
had kept his word. Orleans had begun the deliverance of Gaul and of
the West.
VII
THE RETREAT OF ATTILA AND THE BATTLE OF
THE CATALAUNIAN PLAINS
The retreat of Attila from Orleans would seem to have been one of
the most terrible of which we have any record. The Gothic chronicler
Jornandes, writing a hundred years after the events he describes,
wholly or almost wholly at the mercy of a Gothic and so a Barbarian
legend, would seem, though poorly informed as to facts and details,
to be fully justified in the general impression he gives of the horror
and disaster which befell the Hunnish host. It is certain that Attila’s
withdrawal of his army must have been not only difficult but
impossible without disaster: too many and too brutal crimes had
been committed for the ruined population of northern Gaul to permit
it an easy passage in retreat. The devastated country could no
longer supply its needs, everywhere ruined men awaited revenge: it
can have been little less than a confused flight that Attila made with
his thousands towards the Rhine, with Aetius and Theodoric ever
upon his flanks.
Nor was he to escape without battle. The Imperial armies pressing
on behind him gained upon him daily, a sufficient comment upon his
state, and it was really in despair that he reached at last the city of
Troyes, more than a hundred miles from Orleans, an open city which
there might, he hoped, be time to loot, and so to restore to some
extent the confidence and the condition of his people. That he was
not able to loot Troyes is the best evidence we could have of the
energy of the Imperial pursuit; but here again we meet with one of
those almost incredible interpositions of the spiritual power that we
have already seen at Tongres, at Rheims, at Paris, and not least at
Orleans. It must have meant almost everything to Attila on his
hurried and harassed road north-east out of Gaul to be able to feed
and to rest his army at Troyes, where the great road by which he had
come crossed the Seine. That he was not able to do this was
doubtless due fundamentally to the pressure of Aetius upon his
flanks, but there was something more, we are told. Just as Anianus
of Orleans had by his prayers saved his city, so Lupus of Troyes
defended his town in the same way. He, the Bishop, and now
perhaps the governor, of Troyes went forth to Attila, faced and
outfaced him, and indeed so impressed and even terrified the
superstitious Barbarian that he left Troyes alone and passed on,
taking only the Bishop himself with him a prisoner in his train. “For,”
said he, mocking him even in his fear, “if I take a man so holy as you
with me I cannot fail of good luck even to the Rhine.”
Attila passed on; he had crossed the Seine; before him lay the
passage of the Aube, and it was here that the advance guard of the
Imperial armies first got into touch with their quarry. It was night.
Attila had left the Gepidae to hold the crossing, and it was they who
felt the first blows of Aetius whose advance guard was composed of
Franks; the fight endured all night and at dawn the passage was won
and some 15,000[12] dead and wounded lay upon the field. Attila had
crossed into Champagne, but the Imperial army was already at his
heels; he would have to fight. The battle which followed, one of the
most famous as it is one of the most important in the history of
Europe, whose future was there saved and decided, would seem to
have been fought all over that wide and bare country of Champagne
between the Aube and the Marne, and to have been finally focussed
about the great earthwork still called the Camp of Attila by Châlons;
it is known to history as the battle of the Catalaunian plains.
It may well be that the fight at the passage of the Aube had given
Attila time to reach that great earthwork, one of the most gigantic
and impressive things in Europe, which rises out of that lost and
barren country of Champagne like something not wholly the work of
man. There he halted; convinced at last that he could not escape
without battle, he encamped his army and made ready for the
conflict.
In this terrible and tragic place he held council, and superstitious
as ever in the supreme moment of his career, began to consult an
endless procession of soothsayers, augurs and prophets upon the
coming battle. From the entrails of birds, or the veins upon the bones
of sheep, or the dying gestures of some animal, his sorcerers at last
dared to proclaim to him his coming defeat, but to save their heads,
perhaps, they added that the general of his enemies would perish in
the conflict. It is sufficient witness to the genius of Aetius, to the fear
he inspired in the Hun, and should be a complete answer to his
enemies and traducers, that Attila, when he heard this, from despair
passed immediately to complete joy and contentment. If after all
Aetius defeated him at the price of his life, what might he not recover
when his great adversary was no more! He therefore made ready
with a cheerful heart for the conflict. Jornandes, whom we are bound
to follow, for he is our chief, if not quite our only authority for all this
vast onslaught of the Hun upon the Gaul, describes for us, though
far from clearly, the configuration and the development of the battle.
In following this writer, however, it is necessary to remember that he
was a Goth, and relied for the most part upon Gothic traditions; also,
above all, it is necessary not to abandon our common sense, protest
he never so insistently.
Jornandes tells us that Attila put off the fight as long as possible
and at last attacked, or so I read him, not without fear and
trepidation, about three o’clock in the afternoon, so that if fortune
went against him the oncoming of night might assist him to escape.
He then sketches the field. Between the two armies, if I read him
aright, was a rising ground which offered so much advantage to him
who should occupy it that both advanced towards it, the Huns
occupying it with their right and the Imperialists with their right,
composed of auxiliaries.
On the right wing of the Romans Theodoric and his Visigoths held
the field, on the left wing Aetius and the Romans; between them
holding the centre and himself held by Aetius and Theodoric was the
uncertain Alan Sangiban.
The Huns were differently arranged. In the midst, surrounded by
his hardest and best warriors, stood Attila considering as ever his
personal safety. His wings were wholly composed of auxiliaries,
among them being the Ostrogoths with their chiefs; the Gepidae with
their King; and Walamir the Ostrogoth; and Ardaric, King of the
Gepidae, whom Attila trusted and loved more than all others. The
rest, a crowd of kings and leaders of countless races, waited the
word of Attila. For Attila, king of all kings, was alone in command and
on him alone depended the battle.
The fight began, as Jornandes insists, with a struggle for the rising
ground between the two armies. The advantage in which seems to
have rested with the Visigoths, under Thorismund, who thrust back
the Huns in confusion. Upon this Attila drew off, and seeing his men
discouraged, seized this moment to harangue them, according to
Jornandes, somewhat as follows:
“After such victories over so many nations, after the whole world
has been almost conquered, I should think it ridiculous to rouse you
with words as though you did not know how to fight. I leave such
means to a new general, or to one dealing with raw soldiers. They
are not worthy of us. For what are you if not soldiers, and what are
you accustomed to if not to fight; and what then can be sweeter to
you than vengeance and that won by your own hand? Let us then go
forward joyfully to attack the enemy, since it is always the bravest
who attack. Break in sunder this alliance of nations which have
nothing in common but fear of us. Even before they have met you
fear has taught them to seek the higher ground and they are eager
for ramparts on these wide plains.
“We all know how feebly the Romans bear their weight of arms; it
is not at the first wound, but at the first dust of battle they lose heart.
While they are forming, before they have locked their shields into the
testudo, charge and strike, advance upon the Alans and press back
the Visigoths. Here it is we should look for speedy victory. If the
nerves are cut the members fail and a body cannot support itself
upright when the bones are dragged out of it. Lift up your hearts and
show your wonted courage, quit you like Huns and prove the valour
of your arms, let the wounded not rest till he has killed his enemy, let
him who remains untouched steep himself in slaughter. It is certain
that nothing can touch him who is fated to live, while he will die even
without war who will surely die. And wherefore should fortune have
made the Huns the vanquishers of so many nations if it were not to
prepare them for this supreme battle? Why should she have opened
to our ancestors a way through the marshes of Azov unknown till
then if it were not to bring us even to this field? The event does not
deceive me; here is the field to which so much good fortune has led
us, and this multitude brought together by chance will not look into
the eyes of the Huns. I myself will be the first to hurl my spear
against the enemy, and if any remain slothful when Attila fights, he is
but dead and should be buried.”
These words, says Jornandes, warmed the hearts of the Huns so
that they all rushed headlong into battle.
We know really nothing of the tremendous encounter which
followed, the result of which saved the Western world. It is true that
Jornandes gives us a long account of it, but we are ignorant how far
it is likely to be true, whence he got it, and how much was his own
invention. That the battle was immense, we know; Jornandes asserts
that it had no parallel and that it was such that, if unseen, no other
marvel in the world could make up for such a loss. He tells us that
there was a tradition that a stream that passed over the plain was
swollen with blood into a torrent: “they who drank of it in their thirst
drank murder.” It was by this stream, according to Jornandes, that
Theodoric, King of the Visigoths, was thrown from his horse and
trampled under foot and slain, and so fulfilled the prophecy which
Attila’s sorcerers had declared to him. The fall of the King appears
so to have enraged the Visigoths—and here we must go warily with
Jornandes—that they engaged the enemy more closely and almost
slew Attila himself in their fury. Indeed, it was their great charge
which flung him and his guard, the Hunnish centre, back into the
mighty earthwork which before them seemed but a frail barrier so
enormous was their rage. Night fell upon the foe beleaguered and
blockaded within that mighty defence.
In that night Thorismund, the son of Theodoric, was lost and found
again. Aetius, too, separated in the confusion of the night from his
armies, found himself, as Thorismund had done, among the
waggons of the enemy, but like Thorismund again found his way
back at last and spent the rest of the night among the Goths.
When day dawned, what a sight met the eyes of the allies. The
vast plains were strewn with the dying and the dead, 160,000 men
had fallen in that encounter, and within that terrible earthwork lay
what was left of the Huns, wounded and furious, trapped as Alfred
trapped Guthrum later upon the Wiltshire downs.
The battle had cost the Imperialists dear enough. Nor was their
loss all. The death of Theodoric brought with it a greater anxiety and
eventually cost Aetius his Gothic allies. A council of war was called.
It was determined there to hold Attila and starve him within his
earthwork. In the meantime search was made for the body of
Theodoric. After a long time this was found, “where the dead lay
thickest,” and was borne out of the sight of the enemy, the Goths
“lifting their harsh voices in a wild lament.” It is to be supposed that
there Theodoric was buried. And it is probable that the bones and
swords and golden ornaments and jewels which were found near the
village of Pouan by the Aube in 1842 may well have been the
remains of Theodoric and his funeral, for the fight doubtless raged
over a great territory, and it is certain that the king would be buried
out of sight of the foe. On the other hand, these bones may have
belonged to a Frankish chief who had fallen in the fight for the
passage of the Aube.
But it is in his account of the events that followed the burial of
Theodoric that we most doubt our guide Jornandes. He declares that
Thorismund, Theodoric’s son and successor, wished to attack the
Hun and avenge his father’s death; but that he consulted Aetius as
the chief commander, who “fearing if the Huns were destroyed, the
Goths might still more hardly oppress the Empire, advised him to
return to Toulouse and make sure of his kingdom lest his brothers
should seize it. This advice Thorismund followed without seeing the
duplicity of Aetius.” Such an explanation of the treason of the Goths
was doubtless accepted by the Gothic traditions and especially
comfortable to Jornandes. It is incredible, because any observer
could see that Attila was not so badly beaten that he was not a far
greater danger to the Empire than ever the Visigoths could be. To let
him escape, and that is what the departure of Thorismund meant,
was treason, not to the Goths, but to the Empire. It served the cause
not of Aetius but of Thorismund, not of Rome but of the Goths,
whose loyalty was never above suspicion and whose slow adhesion
to the Imperial cause had been the talk of Gaul and the scandal of
every chancellery.
But Aetius could not have been much astonished by the desertion,
and it was no less, of Thorismund. Rome was used to the instability
of her Barbarian allies who if they really could have been depended
upon, if they had really possessed the quality of decision, and known
their own minds would no longer have been Barbarians. It was Attila
who was amazed. He had given himself up for lost when looking out
from that dark earthwork at dawn he saw the Visigothic camp empty
and deserted, and at the sight “his soul returned into his body.”
Without a moment’s hesitation, broken as he was, he began a retreat
that Aetius was not able to prevent or to turn into a rout, which he
could only ensure and emphasise. Upon that long march to the
Rhine all the roads were strewn with the Hunnish sick and wounded
and dead, but the main army, what was left of the half-million that
had made the invasion, escaped back into the forests of Germany.
Gaul was saved, and with Gaul the future of the West and of
civilisation. But Attila was not destroyed.
FOOTNOTES:
[12] Jornandes, R. Get., 41. According to the Abbe Dubos the
“XC millibus” which appears in the text of Jornandes is the
mistake of a copyist for “XV millibus.”
VIII
ATTILA’S ATTACK UPON AND RETREAT FROM
ITALY
It might seem to be a hard question to answer whether Attila was

really beaten or not in Gaul. This at least is certain, the retreat from
Orleans to the Camp by Châlons was a disaster for him, and the
great battle which followed was only not annihilating because of the
desertion of the Visigoths. Attila saved what that retreat and battle
had left of his army, and without delay, for necessity pushed him on,
turned to prove upon the body of Italy itself that he was still the
“universal tyrant” and the “scourge of God.”
Historians of the decline and fall of the Empire, of the invasions of
the Barbarians, have consistently expressed surprise, often not
unmixed with contempt and derision, that Attila was allowed to
escape. But it must be remembered that it is the almost unbroken
characteristic of the Barbarian wars that the invaders did escape; so
Alaric continually avoided destruction at the hands of Stilicho; and if
the Visigoths were thus able to save themselves how much more
was Attila whose armies were so largely composed of mounted men.
It might seem that the superiority of the Barbarian lay in just that,
mobility; the rude and savage men that composed their armies were
content and able to live upon the country they ravaged, they were
not dependent as were the Imperial armies upon their bases and
their supply; they were always a bolt shot at a venture. Their success
is paralleled in our own day by that of the Boers in South Africa. We
do not blame Roberts and Kitchener that they allowed De Wet to
escape them for so long; we understand that it was inevitable it
should be so. Not thus argued the Romans. Full of discontent, rotten
with intrigue and corruption as the Imperial Government was, there
were many who from personal hatred and ambition, or mere treason,
blamed and traduced Aetius for the escape of Attila which they had
planned and prayed for in their hearts. Any weapon was good
enough to use against the great general who apparently suffered
neither fools nor traitors gladly, and was as ambitious if as able as
Stilicho. Every sort of calumny was used against him. It was recalled
that he had had intimate relations with Roua, the uncle of Attila, it
was suggested that he had purposely spared the Huns.
To all this bitterness much was added by the acts of Aetius
himself. Immeasurably proud, like Stilicho, he pretended to claim the
hand of the Princess Eudoxia, the daughter of the Emperor
Valentinian, for his son; moreover, among his other preparations
against a new attack of Attila was a plan to remove the Emperor into
Gaul; that he might replace him himself, his enemies declared. So
violent grew the opposition to this last project that it had to be
abandoned. Aetius was content to send Valentinian to Rome, while
he himself, with his army, held Ravenna and the line of the Po.
In the first chapter of this book I have briefly explained the Imperial
theory of the defence of Italy; that theory I have at greater length,
and I think for the first time, set forth in a previous work.[13] Here I
must very briefly recapitulate in saying that the valley of the Po, the
whole Cisalpine Plain between the Alps and the Apennines, was in
the Imperial theory, and rightly, the defence of Italy. That defence
was barred again upon the inward or southern side by the barren
and therefore impassable range of the Apennines,—impassable, that
is, save at the eastern extremity, where the Via Emilia ran between
the mountains and the sea into the city of Rimini. That narrow pass
was commanded and held not by Rimini, which was indefensible, but
by Ravenna which, on account of its position in the marshes, could
not be taken and scarcely attacked. It was the due and wise
recognition of these facts that caused the Emperor Honorius to take
up his residence in Ravenna when Alaric crossed the Alps. That city
had been the key to the defence of Italy ever since; it remained so
now, therefore Aetius went thither gathering his army along the Via
Emilia behind the line of the Po to await the final adventure of Attila.
Having failed to destroy the Eastern Empire, having failed in his
attack upon the western provinces, the only thing that remained for
Attila to attempt was the destruction and rape of the soul of all, the
citadel of civilisation, Italy and Rome. It was the hardest task of all,
therefore in his prudence, and he was always prudent, he had not
tried it till now. It was his last throw. It was to fail, and that so
contemptibly that his campaigns East and West in comparison seem
like triumphs. Like Kaiser Wilhelm II., what Attila lacked in real force
he strove to supply with blasphemy and boasting. He was as ill-
informed and as ignorant of the real nature and strength of the forces
opposed to him as the German statesmen of our day; he
exaggerated and relied upon the corruption of the Empire; above all,
like the Kaiser, he failed to see that the future frowned against him
dark and enormous as the Alps.
CISALPINE GAUL AND THE DEFENCE OF ITALY

Tradition rightly imposed upon Aetius the defence of Italy at the
expense as it were of Cisalpine Gaul; it insisted that Cisalpine Gaul
was to be the scene of the encounter. He determined to hold the line
of the Po as he had held the line of the Loire; there was no need to
be doubtful of his success. Already so many Barbarian invaders had
found destruction in the immensity of that great plain. Nevertheless
Aetius reinsured himself and Rome; he reinsured himself with
Constantinople. It was no longer Theodosius the Calligrapher who
sat on the Eastern throne, but Marcian the soldier. To him Valentinian
sent ambassadors; Marcian heard them and promised an army. If,
then, Aetius could lure Attila on far enough, but not too far for the
safety of Italy, if he could hold him in the Cisalpine Plain, Marcian
coming into Pannonia would be in time to cut off his retreat, and so
at last the Hun would be utterly destroyed, and the bones of his great
host might bleach beside the rivers of Lombardy. There at any rate
we have the best explanation of what followed.
Before the winter was over, the winter of 451-452, Attila was
already moving south-west out of Barbary over the Danube, and at
last by the great Roman road through Pannonia, crossing the Julian
Alps as Alaric had done before him to cross the Isonzo, to lay siege
to the first great Italian fortress, then perhaps, save Ravenna, the
strongest place in all Italy, Aquileia, the capital of the province of
Venetia. The walls of this mighty stronghold which was some sixty
stadia from the sea were washed by the rivers Natiso and Turrus. I
say it was, save Ravenna, the strongest place in Italy. It had been
made so about the end of the fourth century, but it had much longer
ranked third among Italian fortresses, only outstripped by Milan and
Capua. Though set in the plain it was so strongly held with walls and
towers that it enjoyed the reputation of being impregnable. Both
Alaric and Radagaisus had passed it by; in the early spring of 452
Attila laid siege to it. For three months he laboured in vain; no engine
he possessed, no contrivance he could command, no labour he
could compel, were enough to break those Roman walls and to
batter down the gates of this virgin fortress. He hoped to starve it
out, but in three months the number of his armies, their depredations
and ravages of the countryside began to tell far more against him
than against the beleaguered city. Living on the country as he must
do he was himself like to go hungry; moreover the spring heats in the
marshy plains were already due, his hosts were discontented, they
expected the loot of Italy, they began to remember the siege of
Orleans and the battle of Châlons.
Furious at being denied, enraged with his people, and perhaps
most of all with himself, the Hun was about to pass on as Alaric had
done in spite of the danger which was greater far now than in the
time of the Goth, when one evening, so it is said, as he moodily rode
within sight of the walls and towers of his inaccessible prey after the
heat of the day he saw by chance a stork preparing to leave her nest
on one of the towers of the great city, and to fly with her young into
the country. In this he saw an assurance of victory. On the morrow
once more he hounded his Huns to the assault: and no man since
that day has found even the ruins of Aquileia.[14] It was not defeat, it
was extermination, complete pillage, and fire. So horrible were the
cruelties there committed that they can only be compared with what
the Germans have done, and in our day, in Belgium. History records
the fate of a young and beautiful woman, Dougna by name, who,
pursued by a band of Huns, wrapped her head in her veil and flung
herself from the walls into the Natiso.
The fall of Aquileia, the extermination of its inhabitants and the
horrors that were committed terrorised all Venetia. It was the
Prussian doctrine of “frightfulness” carried out with as little scruple
as, though more excuse than, that we have seen at work with so
great an amazement, and rage, and disgust here in the West upon
the body of our Godchild Belgium. Attila marched on; Altinum and
Concordia suffered the same fate; they too disappear from the pages
of history; Padua and Modena were ravaged and burnt. Vicenza,
Verona, Brescia, Bergamo, Milan and Pavia opened their gates, they
were but spoiled, their inhabitants exchanged death for slavery. In
that long night such as might flee fled away doubtless demanding of
God whither they should go. God led them to the lagoons.
That Attila thought he was already victorious when he looked on
his ruins as Kaiser Wilhelm did when his “heart bled for Louvain”
(blood from a stone indeed!) an incident twice recorded by Suidas
bears witness. It seems that in Milan, among the mural decorations
of the palace, was one representing two Roman Emperors
enthroned and clothed in the purple with certain Barbarians, Huns or
Scythians, prostrate, demanding mercy at their feet. This work Attila
ordered to be effaced and in its stead to be painted one in which he
himself sat enthroned, while before him the two Roman Emperors
poured gold from great sacks which they bore on their backs. A witty,
if brutal jest; futile, too, since along the Po still flashed the eagles of
Aetius and already over the Alps came the rumour of the armies of
Byzantium.
And, indeed, in the heart of Attila there was more fear than hope,
fear of the gods of this strange and lovely country he had ruined, of
the gods of the marshes and the heats that were already devastating
his armies with fever, of those gods Peter and Paul whom he had
already learnt to dread in Gaul and whose City, the most ancient and
the most holy in the world, it was in his heart next to ravage and to
sack; fear of his own armies now heavy with loot and riches, anxious
for home and already on the verge of starvation in a country they
had made utterly barren; fear most of all, perhaps, of his own
destiny. “What,” he asked himself, “if I conquer like Alaric only to die
as he did?”
That the very name of Rome was still terrible to the Barbarians is
certain. They feared her name. Nevertheless the pride of Attila and
his ambition conquered his fear of his army, of his destiny, of the
name of Rome. He was determined to go on, and with this intention
he ordered his troops to concentrate from Padua, Vicenza, Verona,
Brescia, Bergamo, Milan and Pavia upon Mantua, whence he
proposed to cross the Po, probably at Hostilia, and so to descend
upon the Via Emilia at Bologna.
This move seems to have disturbed Rome profoundly. The
enemies of Aetius were there in the ascendant with the Emperor,
and their influence with the government was enough to cause a deep
disquietude with regard to the strategy of the great general. They
remembered Alaric; they remembered Radagaisus; they recalled the
fate of Orleans, and the escape after the battle of Châlons, above all
they whispered of Aquileia, Altinum and Concordia which were no
more. In this state of panic they left Aetius out of account, they forgot
the army of Marcian already on the move, they repudiated the whole
strategy of their general and with it their own traditions. They decided
to send an especial and unprecedented embassy to Attila, to offer a
price for the safety of Italy. The ambassador they chose was the
Pope.
Perhaps this amazing act ought not to astonish us, for we have
seen the like so often in Gaul. The acts of Anianus of Orleans, of
Lupus of Troyes, should have prepared us for the supreme act of S.
Leo the Great. That they have not done so is sufficient to prove to us
that we have failed to understand the time. Moreover, this great
embassy was not the first Leo had undertaken on behalf of the
Imperial Court. During the pontificate of Sixtus III (432-40), when Leo
was Roman Deacon, Valentinian III had sent him to Gaul to settle a
dispute and bring about a reconciliation between Aetius their chief
military commander in that province and Albinus the chief
magistrate. Sixtus III died on August 19, 440, while Leo was in Gaul,
and the ambassador was chosen as his successor.
The great Pope did not go alone upon this his last great mission,
with him were two illustrious nobles, the Consul Gennadius Avienus,
who after the Emperor was the greatest noble in the West, and the
Prefect Trigetius. They set out from Rome by the Via Flaminia and
met Attila as they had intended before he crossed the Po, on the
Mincio near Mantua—in a place called the Campus Ambuleius. It
was there one of the most grave and famous conferences that have
ever been held in Europe met.
The ambassadors were all in official dress, Leo wore his pontifical
vestments, the golden mitre, a chasuble of purple with the pallium. It
was he who dealt with Attila, in what manner we know not, but with
complete success. It was not the armies of Aetius after all that saved
Italy, and with Italy all that was worth having in the world, but an old
and unarmed man, Leo our Pope, for above him in the sky the Hun
perceived, so he declared, the mighty figures of S. Peter and S.
Paul; his eyes dazzled, he bowed his head. Yielding, he consented
to retreat and evacuate Italy and the Empire. It is as though the new
head and champion of civilisation, of Christendom, had declared
himself. It was the Pope.
The terms of the treaty then made were doubtless shameful
enough to old Roman ideas, for they certainly involved an annual
tribute to the Hun, from whom, moreover, no indemnity was exacted
for the ruin of the Transpadana. But the great fact of the situation
created by Leo overshadowed all this; Italy, the soul of the West, was

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It might seem to be a hard question to answer whether Attila was

CISALPINE GAUL AND THE DEFENCE OF ITALY

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