Understanding business aids journalists’ bottom line

But those who come into my class sense that understanding business and economics is important. A few come as ringers, having passed through pure economics courses, but mostly they come with the frustration of not understanding the language of business. I sometimes see one or two who enter the class like swimmers walking to the edge of a diving board - to face down their fears.

Confronted with a ratio, you can practically hear the wheels turning: Let’s see, to calculate a percentage the small number goes on top and the big number on the bottom and the big number goes into the small number.

I try to dispel their fear of math in the first or second class by bringing a student wearing a Red Sox shirt to the front of the room to explain the concept of the earned run average. “Nothing that we do in this class will be any more sophisticated than that,’’ I assure them.

Numbers are the way business keeps score, I tell them, but (quoting Peter Drucker) I remind them that business is all about people. As journalists, first and foremost, we care about people, and not just the people who run companies. We care about the people who work for companies, and the people who buy the products made by companies.

As the veil lifts on financial reports and markets, they take enthusiastically to the work of understanding corporate strategy and decision-making, of looking at balance sheets and income statements, and writing intelligently about company leaders and cultures.

The class is fun (at least for me), and often we learn together as business or the economy turns up new or timely issues (derivatives, the limits of Fed authority, moral hazard, the role of regulation). But I’m left with the impression that for the vast majority of young people (in a circle much larger than my class or even university) business and the economy are mysterious subjects.

Business is something that happens to them; not something they feel able to grasp or control.

They are often surprised to learn:

■ That the government plays a major role in our free market economy through the nation’s central bank and through spending and tax policies. Government is constantly, and by necessity, managing the economy. A “hands off’’ government would be a disaster.

■ That starting, managing, and growing a business is no small achievement, and that even successful companies keep only a relatively small proportion of their sales revenue as profit.

■ That even the so-called geniuses in business and finance make big mistakes that cost their companies and customers millions and billions. A big salary or impressive title may confer power but it doesn’t guarantee good decisions. Look at the collapse of Enron, the wreckage of the US auto industry, the housing bubble, and resulting international financial meltdown.

Business is a source of power in our society, and it needs to be watched over and critiqued in the way we watch over and critique government. It controls our food supply and develops our medicines. It plays an enormous role in writing our laws and regulations through lobbying and donations to politicians.

I explain that the market is a powerful mechanism for setting prices and distributing goods and services but that sometimes it is not so good at meeting society’s needs in areas such as health care and education and that it often needs the guiding hand of regulation.

I tell my students that they have three audiences: investors, consumers, and citizens, and that always we want to be aiming our reporting toward citizens - toward the kinds of stories that reveal not only how business works but how it shapes our lives and society.

And always, I remind them that I am not trying to turn them into 90-day MBAs or economists. I have something grander in mind for them if they are up to the challenge - careers as reporters.

Lou Ureneck, a guest columnist, is chairman of the Journalism Department at Boston University.