Wednesday, August 19, 2009

What "Academic Standards"?

by the Sandwichman

Posner writes at the end of his column:
This raises the question of the ethical responsibility of academic economists... who write for the media or join the government, either to adhere to academic standards in their nonacademic work or to make clear to the public that they are on holiday from those standards.
Sandwichman would like to know just what academic standards these are? Academic economists make shit up all the time, both in their nonacademic work and in their academic work. The only academic standards I know about for academic economists is "don't rock the boat" and "go along to get along".

Be that as it may, below is an as yet unanswered email the Sandwichman sent two days ago to David Ellwood, Dean of the Harvard Kennedy School of Government regarding "the question of the ethical responsibility of academic economists":

Dear Dean Ellwood,

I note that the Harvard Kennedy School website has posted Professor Edward Glaeser's Boston Globe op-ed from August 8. While I welcome Professor Glaeser's viewpoint and substantially agree with his argument regarding the efficacy of the Cash-for-Clunkers program I am writing to inform you that Professor Glaeser's piece also contains a egregious item of misinformation and misrepresentation with reference to the so-called "lump-of-labor fallacy", the alleged motives for recent policy initiatives in Europe regulating the hours of work and the outcomes of those policy initiatives.
I have extensively researched the quasi-fraudulent nature of the lump-of-labor fallacy claim and have published the results of my research in two scholarly publications, one in a peer reviewed journal, the Review of Social Economy and the other in the anthology, Working Time: International trends, theory and policy perspectives, edited by Lonnie Golden and Deborah M. Figart. I should point out that my 2007 article, "Why Economists Dislike a Lump of Labor" received over 400 abstract views last month making it the top ranking article in that category on the Research Papers in Economics website. Below is the abstract for that article:

"The lump-of-labor fallacy has been called one of the “best known fallacies in economics.” It is widely cited in disparagement of policies for reducing the standard hours of work, yet the authenticity of the fallacy claim is questionable, and explanations of it are inconsistent and contradictory. This article discusses recent occurrences of the fallacy claim and investigates anomalies in the claim and its history. S.J. Chapman's coherent and formerly highly regarded theory of the hours of labor is reviewed, and it is shown how that theory could lend credence to the job-creating potentiality of shorter working time policies. It concludes that substituting a dubious fallacy claim for an authentic economic theory may have obstructed fruitful dialogue about working time and the appropriate policies for regulating it."

After I read Professor Glaeser's op-ed in the Boston Globe, I emailed him offering to debate hiim on his lump of labor assertions. I received no reply. I also wrote a an op-ed article in response and sent it to the Boston Globe. I have also received no reply from the Globe. I am writing to you to request that, in the interest of balance and of critical scholarship, you post and publicize my response to Professor Glaeser's lump-of-labor claims on the Kennedy School website. I am pasting the text to that response below. I look forward to your positive response to this request.

Yours sincerely,

Tom Walker

Professor has 'lumpy' reasoning

Do Europeans really harbor an uncanny delusion that there is a "fixed amount of work to be done?" Do the resulting policies they espouse discourage hiring and reduce employment? That's the verdict pronounced by Harvard Professor Edward Glaeser. In an op-ed published last week in the Boston Globe, Professor Glaeser claimed that European policies restricting working hours are based on a lump of labor fallacy and are detrimental to employment.

Glaeser's parroting of the hoary fallacy claim is ill informed – and callous. The allegation has a curious history, originating as a yarn about workers' propensity to withhold work effort and evolving into reactionary textbook dogma about the futility of combating unemployment through reducing the hours of work.

One problem with the fallacy story is that there is no evidence for it or credible theory behind it. Unless, that is, countless repetition of unsubstantiated and implausible assertions counts as both theory and evidence. Here is some history:

In 1891, British lawyer and journalist, David Schloss, coined the phrase, "the theory of the lump of labour" – and decried it as a fallacy – in an article discussing workers' objections to piecework. As applied to shorter hours and unemployment, the theme originated with a Scottish journalist, John Rae, a proponent of shorter hours. Because reducing hours raised productivity, Rae discounted it as a remedy for unemployment. An American economist, Charles Beardsley, soon demonstrated Rae's argument to be inept.

At the turn of the twentieth century, the National Association of Manufacturers, under its militantly anti-union president, David Parry, raised the fallacy claim (minus the productivity gain) as its battle cry in the fight against legislation to establish an eight-hour day for government contractors.

In 1902, a U.S. Industrial Commission, appointed by Congress, concluded that, "there can be no question respecting the desirability of fewer hours, from every standpoint… arguments for reduction need no qualification from the standpoint of the workers and little from that of employers." John R. Commons, a founder of American labor economics, was principal researcher for that commission.

On August 26, 1909, Sydney Chapman presented what came to be regarded as the definitive theory of the hours of labor for neo-classical economics. Chapman's theory affirmed and gave algebraic expression to the conclusions of the U.S. Industrial Commission. Such notable economists as Alfred Marshall, Cecil Pigou, Lionel Robbins and John R. Hicks lauded Chapman's theory as authoritative.

In 1926, automaker Henry Ford introduced a five-day, forty-hour week in his factories. His rationale echoed arguments for shorter hours articulated some 60 years earlier by labor organizer Ira Steward. Six years later, at the height of the depression, economist Dorothy W. Douglas praised Steward's theory as "a philosophy of American wages and unemployment that sounds strangely apposite today." What most impressed Douglas was Steward's argument that long hours, low wages and unemployment lay at the root of economic depression.

Meanwhile, opposition to the Black-Connery thirty-hours bill came from 'orthodox' economists who also insisted that the proper way to stimulate economic recovery was to cut wages and slash government spending – positions few economists today would endorse. In 1937, the NAM – reversing itself to claim credit for an outcome it had long and adamantly opposed – erected billboards across the U.S. boasting the "world's shortest working hours" as the free enterprise fruit of the "American Way."

Toward the end of World War II, John Maynard Keynes wrote to the poet, T.S. Eliot, explaining that "the full-employment policy by means of investment is only one particular application of an intellectual theorem" and that the "ultimate solution" for unemployment was working less. Keynes had outlined these views two years earlier in a Treasury Department memorandum on "The Long Term Problem of Full Employment."

The above is only a sampling. Nevertheless, first-year economics students are diligently taught to "refute" a fallacy almost no one actually upholds. Never mind the allegation itself is bogus, incoherent and obstructs thinking about how to combat unemployment.

In the world outside Professor Glaeser's Harvard classroom there were 35,000 fewer private sector jobs in the U.S. in July 2009 than there were ten years earlier. One would hope economists would climb down from their lofty pulpits long enough to check their facts – and their dogmas.

Tom Walker
Vancouver, BC, CANADA

Tom Walker is author of two historical studies: "The 'lump of labor' case against work-sharing: populist fallacy or marginalist throwback?" and "Why Economists dislike a lump of labor."


Robert Vienneau said...

The American Economic Association (AEA) is one of the few professional organizations without a code of ethics. In fact, I know of no other.

And I agree that academic economists make stuff up all the time, everywhere.

Woody (Tokin Librul/Rogue Scholar/ Helluvafella!) said...

What IS an "ethical" economist?

Indeed, what are 'ethical' economics?

I can think of only one other "profession" wherein the relation between the name of the field and the subject of "ethics" is quite so much an oxymoron: public relations.

PictouGene said...

Economics in general, and macroeconomics in particular is full of fallacies and contradictions. The most egregious fallacy is that of "Free Trade" which is based on the concept of "Comparative Advantage". Implied in Comparative is the assumption that there are only two economic actors. But in the real world, there is a multiplicity of economic actors. Thus the logical conclusion of "Free Trade" is that in the real world, a multiplicity of economic actors reduces to two, with all others being driven to zero (i.e. 100 % unemployment). We see this happening today in the US, as previous US jobs and production are being offloaded to other, countries which have a "Comparative Advantage" over the US (i.e., lower wages costs which are equivalent with higher productivity).

But I could go on for hours about the fallacies and contradictions in economics

Shag from Brookline said...

Might such "lack of ethics" be the attraction to economics? Is this why many mainstream economists attack behavioral economists?

Anonymous said...

"Might such "lack of ethics" be the attraction to economics?"