Sunday, December 4, 2011
Mankiw’s Reply to the Walk-Out
Whatever my disagreements with Greg Mankiw’s op-ed self-defense today, I appreciate that he takes his dissident students seriously and refrains from slinging labels, pulling rank or other repressive tactics. Protesters don’t always get this treatment.
That said, I think Mankiw fails to see two ways in which his introductory course, and other mainstream econ courses, impose a worldview that makes thinking constructively about economic problems less rather than more likely.
First, what does Mankiw say? I would summarize his argument in this way:
1. His Ec 10 course at Harvard is not much different from other mainstream introductory econ courses taught in other colleges and universities. (Nor by implication is his textbook so different either.) It’s the tried and true.
2. Economics is essentially an organized, rigorous way of thinking; it allows its practitioners to adopt a wide range of positions, so long as they reason clearly and respect evidence. There is no intrinsic bias to the discipline.
3. Even economists on the left, like Paul Samuelson, have been the object of criticism coming from Marxists and others outside the mainstream. This shows that it is not Mankiw’s personal conservatism that has sparked the protest, but the discipline of economics itself. (The implication is that replacing the Republican Mankiw with another professor more associated with the Democrats would not placate the protesters.)
Let’s take these in reverse order. I think #3 is correct, although this bears mainly on how well the protesters understand what they are protesting. If they think Ec 10 can remain a mainstream introductory course but shed its conservatism under new management, they are wrong. In other words, this is not about Mankiw. (I don’t know anything about his skills as a teacher, but nothing has been written that suggests that he is unfit for the job.) Perhaps a good precedent is the protest of French students several years ago against “autistic economics”, which targeted content and not, despite the moniker, personality.
#2 is on shakier turf. Mainstream economic concepts and tools are valuable and well worth knowing, but they also contain implicit biases. The most fundamental of these is the assumption that individuals are connected to one another almost exclusively through markets—that the essential aspects of the economy can be understood by employing models that incarnate this assumption, relaxing it in only a few narrow instances. What are the connections that are left out or radically downplayed? Culture, politics, language, environment: the relationships between people, and between them and their material world, that are the objects of study in such fields as sociology, politics, organization theory, social psychology, anthropology, geography and so on. The problem is not that there is a division of labor between disciplines; that’s how it should be. It is that assuming that economic interactions can be studied apart from all the others leaves power and culture out of the equation. (Literally.) That’s a bias. Of course, it is entirely possible to stick to mainstream economic thinking and harbor non-mainstream views on other matters, but that doesn’t mean that the bias has disappeared, only that it has been overcome. There is a reason why exposure to economics, and especially the worldview-defining core of microeconomics, tends to shift student views, on average, in a libertarian direction.
Repeat: the solution is not to simply throw mainstream economics into the dumpster. There is a lot of good, useful stuff, and students should be exposed to it. But the assumptions should be discussed openly and honestly, so that students can develop a sense for when economics has more to say, when it has less, and how its insights can be combined with those from other intellectual traditions.
As for #1, Mankiw is right, and that’s the problem. It would not be an exaggeration to say that there is a central narrative at the introductory level that has hardly changed in at least a generation, perhaps longer. It presents a system of perfectly competitive markets composed of rational, unconnected agents as the benchmark, from which specific deviations, like externalities, behavioral anomalies, sticky prices, etc., are considered one at a time. Most of the interesting and important work in economics is about these deviations. If you added up all of this innovative research, you would have a composite picture that is exciting, relevant—and light years away from the introductory narrative.
A huge gap has opened up between the introductory course and the work professional economists are actually doing. Each departure from the narrative is considered one at a time, even though research has chipped away at all of them. Unfortunately, this feeds back to the self-understanding of the researchers themselves: they get their central narrative from the vision of Ec 10 (or 101 or whatever) and see their own work as deviating in just one specific way from the benchmark model. (To get published, this is exactly what you need to show, that your novelty, taken in isolation, enhances the benchmark’s explanatory power.) Thus the introductory course still looks like a distillation of the research frontier, even though, if you put all the research results together, you would have something quite different. Consider, for instance, the vast amount of work that has gone into the analysis of cooperation and its relevance in a wide range of economic situations. Is this work mainstream? Yes. Has it entered the core narrative? No. It’s just another wrinkle, taken up at one juncture and then put aside when the next wrinkle is introduced.
The introductory economics course is a big, big problem. I hope the walkout adds to the pressure for a fundamental rethinking.
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I'll posit that the single greatest flaw in economics - at any level - even greater than the absurd assumption of rational actors - is the assumption of symmetrical relationships. Or, stated the other way, the willful ignorance of the blatantly obvious fact that transaction almost never occur on an equal playing field.
Thus you get the von Mises excuse for Scrooge: The fact is, if Cratchit's skills were worth more to anyone than the fifteen shillings Scrooge pays him weekly, there would be someone glad to offer it to him. Since no one has, and since Cratchit's profit-maximizing boss is hardly a man to pay for nothing, Cratchit must be worth exactly his present wages.
First, I would like to commend Greg Mankiw for responding to the criticisms and for doing so in a friendly and constructive tone. The problem with economics is systemic, not the fault of any particular individual. Part of that systemic problem is revealed in the location of Paul Samuelson as "decidedly left of center" on the economics spectrum. That spectrum is like the "whole alphabet" from A to C with B in the middle.
Professor Mankiw's second reaction to the protest, after nostalgia, was "sadness at how poorly informed the Harvard protesters seemed to be." Their complaints seemed to him "a grab bag of anti-establishment platitudes without much hard-headed analysis or clear policy prescriptions."
But are these students more poorly informed than, say, Harvard Economics professors? From the perspective of "what they think they know that just ain't so" many Harvard professors are astonishingly poorly informed. I'll name a few names: Edward L. Glaeser, Lawrence F. Katz, N. Gregory Mankiw.
What these notables think they know that just ain't so and what they foist on their students and on an unsuspecting public is something more sinister than merely a grab-bag of pro-establishment platitudes without hard-headed analysis or clear policy prescriptions. It is also a haughty and intellectually dishonest injunction AGAINST hard-headed analysis and clear policy prescription.
One might think that university professors have something like a fiduciary duty to do due diligence on the platitudes they profess. I've drawn up a point-by-point indictment of material misrepresentation and omission of fact, breach of fiduciary duty and negligence with regard to just one perennial myth propagated by the mainstream economics profession. The myth in question is that old canard, the lump-of-labor fallacy. The documentation I have assembled is comprehensive and unequivocal. Economists have not only promulgated a demonstrably false assertion, they have ignored repeated substantive refutations of the bogus fallacy claim.
This may seem like a small thing but it has to do with unemployment and one of the most fundamental policy ideas for achieving full employment -- an idea that John Maynard Keynes called the ultimate cure for unemployment. Albert Einstein also "suggested that working hours should be shortened so that, at least in his understanding of economics, more people would have a chance to be employed," a view Greg Mankiw dismissed as "about as well thought out as my views on quantum mechanics." My question to Greg Mankiw is how well thought out was that knee-jerk disparagement?
One small area of disagreement with Peter -- or maybe just a friendly amendment. The narrative of perfectly competitive markets is not just any old kind of narrative. It is a theodicy ("vindication of divine providence in view of the existence of evil"). This distinction is important because, frankly, the market narrative doesn't hang together as smoothly as claimed EVEN WITH all of the unrealistic assumptions in place.
People waste a lot of breath pointing out that the unrealistic assumptions are not realistic. But that is beside the point. The point is they are not sufficient. They do not make even the ideal perfectly competitive market work. All unrealistic assumptions accomplish is to reduce the remaining leaps of faith to proportions that can be managed with a modicum of arm-waving, shoulder-shrugging and some evasive metaphors.
The supposed core narrative is a sheath. The REAL core narrative is the theodicy, the articles of faith of which have been conveniently enumerated for us by one Dorning Rasbotham, Esq. in 1780.
why does no one ever mention that people with advanced math get paid more, and get more respect, and have more job security ?
Why does no one ever mention that Mankiw and Krugman and Taylor (stanford), people who are wealthy, charge poor students an outrageous amount of money for texts
Why does no one ever mention that the koch brothers, and there class, spend a lot more on tenured professorships then (fill in) [Bertrand Russell noted that back in teh 20s, a rich koch clone was able to get a tenured prof fired from UCalBerkely]
Why is it that no one ever mentions that it is more fun to sit in a nice office at harvard/uchi/etc writing theorys, then to get out in the real world and do empirical work ?
I bought a Macroeconomics book by James Galbraith, I find it unreadable. And also the book "Contemporary Economics" by Carbaugh, unreadable. My self-education began with a book by Robert Pollin, Contours of Descent, and soon I was reading Edward Wolff and the Survey of Consumer Finances, which is truly unreadable. Maybe in high school I tried to read St. Augustine's City of God, and that was my first economics book. I think the students at Harvard freshly exposed to the chill winds of rational analysis, graphs, algorhythms, mathematic formulae, and unspoken theodicies, and the assumption that Scrooge had it right when he bah-humbugged generosity -- welcome to planet Aspergers -- are truly offended and intellectually bewildered. Presently the top one percent households have a pre-tax income equal to (is it?) 60% of US households. And their net worth is greater than 90%. This generally accepted wisdom, "all is well" floors me, and probably the Occupiers of Wall Street, the freshmen/women at Harvard and everyone under 30 who is not gainfully employed. The hedge fund fellow Paulson who earns over $1 billion a year lectured the OWS, and the head of Goldman Sachs says he is doing God's work, and Henry Paulson has $500 million in his nest egg before taking the post of Secretary of Treasury, and 16% of the nation, 50 million, live in official poverty. Doesn't the stench of this unstated absurdity reach ever nostril in the country? Yesterday I read the Statistical Abstract and saw that $13 trillion was lost 2007-2009, $9 trillion in financial assets and $4 trillion in residential assets, a drop of a total US household net worth from $64 trillion to $51 trillion, I think. I know that the top 5% of households own 72% of all financial assets, and that financial assets are the majority of the nation's net worth, and to muddy up this comment, 39% of home equity is owned by residents while 61% is owned by banks (Sylvia Allegretto's State of Working America's Wealth). I wonder why more of those resources, called financial assets, are not socialized, that is realized as tangible assets for the benefit of citizens who have ultimately produced them? Maybe the freshmen in the Harvard Ec 10 course wonder the same thing. This is a stray comment, not a discourse. Thank you.
A huge gap has opened up between the introductory course and the work professional economists are actually doing.
You think? Seems to me that econmics -- well, macro at least -- was taught ina much more realistic & sophisticated way 30 years ago. (Just check out Dornbusch's 1980 open-economy textbook.) If anything, I think the problem is precisely that pedagogy has followed the direction of research *too* closely, with the ever-increasing emphasis on explicit optimizing "microfoundations." (In quotes because there's nothing genuinely micro about a representative agent model...)
It would be nice to believe that there is a genuinely progressive research program that most economists subscribe to, but which introductory courses just haven't caught up to yet. But the reality, it seems to me, is just the opposite. Macro at the Ec 10 level -- where you at least still get ISLM -- is probably *more* realistic than most of what's published in top journals.
A rewiew here:
Edward Fullbrook does a job on Mankiw here:
I love his starting sentence:
"No discipline has ever experienced systemic failure on the scale that economics has today. "
An economist can be both a scientist and a philosopher. In the role of philosopher one would hope that the individual would base their philosophical ideology on their knowledge, and the content, of the science. That is not required by the field and the public cannot recognize when one hat or the other is being worn by the professor of a concept.
Also when in the guise of a philosopher the economist can also serve the purpose of a publicist. So long as the Congress and the Executive are going to base their actions which are focused on economic activity on the promulgations and prognostications of the economist philosopher that area of the profession will be subject to the temptations of great wealth. Philosophers are rewarded for presenting a set of ideas that benefit a specific group with a particular point of view. You get what you pay for and great wealth can better afford to influence ideas that do not go beyond philosophical ideology.
Ben, James Galbraith has been called many things in his career but never, I suspect, an apologist for the moneyed elite!
A huge gap has opened up between the introductory course and the work professional economists are actually doing.
Isn't this perfectly normal, in all the scientific disciplines? I have a degree in electrical engineering, as well as one in economics, and there is a huge gap between what we studied in the first year of electrical engineering and what professional engineers and engineering professors actually do. I studied chemistry for 4 years at high school (2 years as part of general science, 2 years as its own subject, note I am a NZer), and each year seemed to consist of overturning most of what we learnt the year before and going into more detail, I came to suspect that chemistry PhD graduates are taken aside after the ceremony and told "Okay, now we can tell you the real truth. There's only 4 elements, earth, air, fire and water ...."
In Terry Pratchett's The Science of the Discworld, he talks about "lies to children", with the example of a rainbow. Teachers "explain" a rainbow to kids by showing how a lens breaks up white light into separate colours, but they don't explain how come the light from all the separate rain drops combines to form a curve in the sky. This isn't because physicists and teachers are inherently biased, or hate kids, it's because there's so much to learn that there's no way you can cram all the knowledge into students' brains at once. So we start with simplifications, like how my biology classes talked about dominant and recessive genes, which explained why my blue-eyed mother and brown-eyed father could produce my blue-eyed brother, but not how they produced my olive-eyed self.
In the case of economics, people have been studying economics for over 200 years (dating from Adam Smith, and arguably you could go back even earlier). They've generated a lot of ideas, theories and data, I don't see how all of that can be covered in one year (particularly given the extremely messy state of macroeconomics given the impossibility of doing controlled experiments in said field). And it takes time for students to absorb new ideas, it's not merely a matter of a professor mentioning something once in class, most people, including me, need to spend some time thinking about ideas, be that by doing pencil-and-paper problems (maths or story-telling), by debating them, or by doing experiments or practical applications (eg in electricity, building a radio), or all of the above. This takes even more time.
So to summarise, Econ 101 is very different to what professional economists do because it has to be.
Soccer Dad said...
" why does no one ever mention that people with advanced math get paid more, and get more respect, and have more job security ?"
Because that's not the topic here.
Being a reasonably well-read adult econ "hobbyist" who has returned to university a year ago (after a full 18-year, ongoing career has happened), and having just completed entry macro and micro courses (using Mankiw's text, no less), here are a couple of observations.
Yes, you can explain a rainbow with prisms but if that was the only class a lot of people ever took on science, you would end up with a bunch of people that think there's a big glass prism in the sky (wait, is that not a terribly effective counter factual?...maybe that's what they do think). Based on the breadth of what the Mankiw book, and it's associated homework teaches one, you could forgive a student who is then done with econ (or can they go straight into finance courses from there?) for thinking that things are pretty well hunky dory with Scrooge's pay scale, 1% taking 60% of wealth, etc..
The important thing is that (unlike preschoolers) instructors should be able to tell university students right up front that this idea is really just a kind of thought experiment to elucidate some aspects of certain situations. That is a MUCH different thing from presenting things like the "laws" of supply and demand or the "lump of labor fallacy" or the "neutrality of money" and such as plain old facts more akin to Newton than Freud (I would posit more the reverse).. Mankiw makes absurdly primitive straw men of many very valid and empirically supported assertions such as the real potential benefits of infant industry protections (to name just one that I remember taking issue with in written form) among many others, dispatching boatloads of work with literally a sentence or two. Furthermore, I found much to screw my face up over in just many choices of words. They say a lot and show quite a bit more of the Mankiw-as-quintessential-Republican-advisor than the Aw-Schucks-ex-leftie-Mankiw of is essay. This is not subtle or benign. It is blinkering minds which are just forming their first conceptions of what is and isn't a permissible point of view in the field. As a caveat, I have read some earlier scholarly work of Mankiw's which, to my pretty novice sensibilities, is quite insightful and sensible. His textbook seems to throw that insightfulness and deep thinking out the window in favor of a sort of Reader's Digest approach (both in terms of thoroughness AND point of view) that I think does harm to many students thought horizons very possibly for life
This also highlights the role of the instructor to go beyond this material, though many potential obstacles, class time, mixture of comprehnesion levels, etc can make amess of this. (I might have carped on Mankiw a lot less in Noah Smith's course.) While I was lucky enough to have an open-minded and thoughtful professor who, at my various outbursts of incredulousness, opened up a very constructive dialogue and spent a good deal of time discussing things more deeply with me, I think most of my classmates left with an highly rote set of parameters in their heads about the borders of economic (and perhaps by association, human) relations that did little to spark critical thinking, at least from my cumpulsory readings of their writing. Just clear acknowledgements of the limits of intro concepts would be a good start to increasing their credibility. It really is not a given.
Finally, it does seems like obsessions with "micro foundations" and math play a strong role in limiting current areas of research which seems both ironic and a pity since most of what you learn in intro macro was derived either historically or introspectively. A move back in that direction and away from applied calculus would seem worth a very hard look as well.
I greatly enjoyed your post and also the Post-Autistic Economics link (I'm ready to join!). Thanks for that and shall we all press on learning ?!
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