Thank you Mr Mankiw

The funny thing about his remark is that both parts are true- there is both opportunity and a threat to “joe sixpack”. It’s too bad he doesn’t see both.

Blogging has also been bad for many economists, I think. (Not John, though.) See, for example, Brad Delong’s slow slide into dishonesty with his tendency to partially delete and take out of context comments that disagree strongly with him and his lack of ability to accept that he’s not an authority on all topics. Given Daniel’s remarks above, though, maybe this was inevitable .

No, no, no. The arrogance of economists arises from their belief that they are smarter than everyone else (or at least than other scocial scientists, and certainly humanists) because of the alleged scientific rigor of their discipline. By contrast, Mankiw here casts economics as wizardry (that’s Muggles, not mugs) and priestcraft — he’s making light of the (well-earned) stereotype. Surely allowable and, in itself, inoffensive,

As the income inequality graphs plainly show, the US has enjoyed 25 years of economic “growth” that has gone mainly into the pockets of the top 1% of the demographic heap. It is the peculiar mischief of economists like Mankiw that they present this outcome as a though it is a necessary result of natural laws. Other outcomes, producing lower aggregate growth but more equitable distribution are viewed as heretical or pernicious distortions of proper economic management.

Professor Mankiw is thoroughly infected by ideology masquerading as economic theory. It is a short step from a Darwininan to a Hobbesian society, and Mankiw doesn’t seem to mind taking that step if it creates more “wealth.”

Poor Greg Mankiw – work for Republicans and win the ire of the Left for the rest of your life. The man is very smart and very kind, by all lights of those who know him. And what was a silly joke on his blog has now been distorted by another unsurprising and unfair attack on the economics profession by *some* bloggers and *most* commenters at CT.

This reminds me of the outrageous treatment Tyler Cowen received from CT commenters in the Hacker Symposium from months ago. Tyler – another very nice and very smart man – simply couldn’t be treated with respect because he was – gasp! – an economist who – gasp! – defends something like neo-liberalism.

Anyway, I really enjoy CT most of the time, but its times like this that the CT community’s weaknesses are most on display (and I mean that very generally – this isn’t true of everyone).

Predictably nasty replies in 3 … 2 … 1 … Go!

Here is the key quote from Mankiw’s article:

The benefits from an open world trading system are standard fare in introductory economics courses. In my freshman course at Harvard, we start studying the topic in the second week, and we return to issues of globalization throughout the year. The basic lessons can be traced back to Adam Smith of the 18th century and David Ricardo of the 19th century: Trade between two countries creates winners and losers, but it leaves both nations with greater overall prosperity.

Note that “greater overall prosperity” is an aggregate. Mankiw has nothing whatever to say about how that prosperity is distributed. It is the maldistribution of America’s “greater” prosperity that has Joe Sixpack rightly worried. When Bill Gates walks into a bar, he increases the average income of every person in the bar, but that does not improve their welfare.

Economists have more clout than all the other social sciences put together — you’d probably have to multiply by some constant to get an equivalence. (Competition comes only from Foreign Relations, which controls the means of destruction, but this field has no scientific pretensions.). Economists control the Council of Economics Advisers, the Treasury Department, and above all the Federal Reserve Board, and if they’re any good at all they can easily get a job in the private sector paying better than their academic job. So academic economists are either losers or idealists, whereas successful economists are triumphan realists. (Case in point, Greenspan).

As a result, the profession’s center of gravity is outside the university, and my guess is that if non-academic econ PhDs were taken into consideration the Democratic bias would disappear. (In any case, most Democratic economists cluster on the right wing of the party, along with DeLong and Krugman. It’s amusing that when the Nobelist Stiglitz, on the basis of extensive hands-on experience, deviated slightly from the applied theoretical orthodoxy, people in the biz started doubting that he was really all that smart after all.)

In two recent books (Coyle, “The Soulful Science”, and Colander, Rosser, and Holt, “The Changing Face of Economics”) the authors (defenders of economics who claim that the field might become less dogmatic) the authors advise dissident economists to present their ideas tactfully so that they might be accepted. In other words, the leaders of the field will not tolerate a direct (“heterodox”) challenge. It’s interesting that these leaders are never named; two eminent economists, Samuelson and Arrow, contribute benignly to the Colander anthology, but they’re probably not the terrifying and unnameable ones.

I’m inclined to think that the corruption of economics rises from a combination of theoretical principles which are effectively jimmied to favor capital over labor (objectively and scientifically, of course, and non-politically) and an informal extra-academic career path, understood by all, which requires a pro-capital bias.

At my URL I theorize that this is the result of the fact that theoretical and practical (applied) economics have never been distinguished. As a result, practical, ethical, political pro-capital biases have been drawn up into the theory, with the result that an economist can wreak rightwing havoc on the job while still thinking of himself as a nice, liberal person.

Two or three generations ago Veblen diagnosed the tunnel-vision of ever-so-smart smart economists as “occupational psychosis” and “trained incapacity”, and economists have been getting smarter and blinder ever since. (And I don’t just mean Alan.)

Daniel, do you really think “mere Muggles” was meant seriously? Do you think really Mankiw sees himself as a “high priest”?

Most of them joined the profession out of a genuine desire to make the world a better place, even specifically to help those less fortunate than themselves.

I don’t believe that at all. I think people become economists for a variety of reasons, practical and theoretical, including love of formalization, love of science, and conventional materialistic and careerist ambition. But economics teachers, possibly aware of the real practical biases of their science, are careful to throw out the “Help end poverty!” motive early on, just in order to neutralize reasonable doubts about the effects of economics. I don’t think of economists as people with a lot of self-awareness or self-critical tendencies.

The main products of the econ biz are right-wing op-eds, Econ 101 students who have been indoctrinated in freemarketism, and policy advice which is usually but not always right wing. The handful of real scientists doing exciting work at a couple dozen universities are epiphenomenal, though they all stoutly defend their profession because they know how their bread is buttered.

In the Colander (et al) book, it was estimated that iot takes ten years for a new idea to reach most grad schools, ten more to reach upper division undergrad classes in the best schools, ten or twenty more years to reach undergrad classes in general, and anywhere from forty years to forever to reach the principles class.

Mr Punch at no. 4 above has it right on Muggles and wizardry.

If the “Joe Sixpack” language is patronizing, it isn’t referring to the readers of the Times.

The piece is actually pretty effective rhetorically, if you consider the average Times’ reader. It’s an endorsement of McCain’s “straight talk” and devotion to unpopular-generally-but-not-among-these-readers principle, while criticizing Clinton and Obama for their failures on these points.

Labor is a cost, after all, and there is in economics a latent judgment that uncompetitive labor units should just be removed from the economy, the way uncompetitive mines are shut down, or uncompetitive businesses bankrupted. All kinds of ways have been devised to avoid direct statement of this Econ Darwinist principle, but it never quite disappears, because it’s right there in the theory.

Amartya Sen has told the story of how economics was detached from all social value about 70 years ago (via the supposed incomparability of individual utilities, and the impossibility of fairly aggregating utilities by voting). What’s interesting was that these dilemmas, rather than being treated as problems to be solved, were treated as great truths forbidding any attempt by anyone to interfere with the laws of economics in order to improve the general welfare.

And while I like Sen’s attempts to bring social welfare back into economics, it’s pretty notable that his definitions of social welfare and individual rationality are scarcely usable for the modeling and quantification purposes which have been economists’ fetishes for the last four decades or so.

As hh pointed out in the first comment, Mankiw is in a protected position. He benefits from a socialist market, if you like, as a tenured prof.

Maybe Mankiw will next tell us how his investments are going. Any economist publishing on public policy should give a complete listing of his/her investments. Also all their speakers’ fees and consulting fees.

Lets see who is paying them beyond their official salaries.

Sometimes I get the impression is that economics was the patch that filled the hole left by the collapse in the general belief of the divine right of the monarchy and nobility to rule and hold all the wealth.

25: Agreed. But my post was already pretty wordy.

As hh says, most people may be blind to the gains of the last 20 years because they haven’t trickled down. But it seems reasonable to be skeptical of free-trade economics, since what seems most important to most people is economic security, not aggregate economic growth. Maybe Mankiw is just blind to that fact, and not worried about the normative implications of his view?

It strikes me that there is a distinction between positive and normative economics, but there is no set of economists known for doing normative economics. This task is seemingly left to political scientists and political philosophers, or economists who have largely left their quantitative methodologies behind.

It seems to me that Mankiw is saying that economists tend to be out of touch with the economic concerns of that segment of society. It strikes me as ironic that in saying so, he’s being criticized for being out of touch.

Read the rest of his column. Perhaps he’s being snarky in the opening paragraph, but the rest of it makes it quite clear that Prof. Mankiw couldn’t care less about the concerns of the “muggles.”

In any case, the substantive claim is false.

Historically, the main reason for restrictions on trade is not to improve the balance of trade as an end in itself, but too allow for macroeconomic policy that would otherwise be ruled out by external constraints.

Suppose two countries that trade with each other are facing high levels of unemployment. Both would benefit from fiscal stimulus in either. But if one goes first, part of the increased demand will go to imports, worsening its trade balance and making it difficult or impossible for it to maintain the stimulus. And the institutions that would allow for a coordinated stimulus may not exist, especially once we’re talking about more than two countries.

Under those circumstances, restrictions on trade allow a country to under an expansionary fiscal policy while maintaining external balance. In other words, it raises output in the first country, *without decreasing it in the second*. Overall prosperity is greater.

In the real world, this kind of dynamic is often more important than the Ricardian just-so stories Mankiw tells in his Harvard classes. So Mankiw isn’t just wrong on the ethics and politics, he’s wrong on the economics too.

“Where the high priests of the dismal science see opportunity…”

Ethical midgetry at its finest!

No mainstream economic theory says that trade is “good.” Nor does it say the “opportunity” provided by free is worth it.

Mainstream theory merely says that some people win and others lose when you move from one hypothetical non-trade to a second hypothetical trade position. But mainstream economists like to pretend otherwise when they talk to non-economists.

Saying that “we” are better off because, say, you lose $10 but I gain $11 requires lots of intellectual dishonesty and/or ethical midgetry (if you then don’t go on to say exactly what you mean by “we.”)

By using the term “opportunity” this allows Mankiw to avoid all the difficult ethical questions that he must confront to be a real thinker (rather than mere ideologist).

Mankiw and DeLong both belong to the moral midget class.

Vice President Dick Cheney had a different message. Informed during a Good Morning America interview broadcast Wednesday that two-thirds of Americans now think the war was not worth fighting, Cheney said: “So?”

Any institutionally entrenched power will be indifferent to the opinions of outsiders. Economists are institutionally safe and there’s no reason for them to care about outsiders’ opinions. Nothing unusual about this, though it’s also not unusual for this kind of insider to be tarred and feathered when they lose their status.

Joe Sixpack is systematically misinformed because he relies on free media. Information is a commodity like any other. To get the truth you have to be willing to spend some money and shop carefully.

Economists make their livings by selling to truth to people who can pay for it, and feeding garbage to everyone else. People actually praised Greenspan for doing that.

Hey, Thomas (at #18)– speak for yourself. I’m pretty sure Mankiw is referring to me with his “Joe Sixpack”, since I’m working class and, on the whole, not a huge fan of economists. The belief that the class of people you’re offending are too stupid to read the publication you’re offending them in is unbecoming of a professional, but pretty common.

There are dozens of things wrong with Mankiw. My own post just questioned was directed at the general idea, not confined to Mankiw, that this country is fucked up because voters are stupid.

This country is fucked up at the elite level. The Iraq War, for example, was entirely an elite war. The important Republicans and many important Democrats, many or most foreign-relations academics and experts, much of the elite media, and the managers of the mass media (who are wine-track all the way, unlike the audience they serve) all pitched in to make it happen.

In a healthy society ordinary people are justified in trusting the elites, but not in ours. But if Joe Sixpack ever figures out what’s happened and gets mad, he’ll be called a Populist (= “Nazi”, according to the elites.)

It’s important to remember that Dr. Mankiw is not an economist — he’s a paid hack who pretends to be an economist to increase his value as a paid hack.

So there is a limited value to ascribing his views to the economics profession as a whole.

Elites are the ones who run the show, pretty much by definition, and shit flows downhill. It’s quite normal for the poorer, less powerful people to take their lead from their superiors, and that’s what happens. It’s silly to claim the opposite — that the millionaires who run and work for Fox News (or the New York Times, or other similar organizations) are simply following the ignorant masses.

As Dsquared just pointed out in a different context, race is mostly a decoy in American politics. The Republican / media (elite!) Southern strategists used race to push through their agenda, which was hardly racial at all.

I have to agree with Daniel that a lot of economists go into the profession because they see it as a way to improve people’s lives. In general, that is coupled with a belief in the market system to somehow (with more or less regulation) bring about more prosperity than a socialist system; and with a certain degree of affinity to numbers and maths.

The problem is that the way economics is taught at the graduate level and rewarded at the tenure track research level has extremely little to do with the real world. I think in order to not go completely insane, economists start believing in their models more than they should, which then leads them to dismiss the real experience of people on the street (and don’t get me started on dismissing people based on their perceived “intelligence”).

I’m saying this as a soon-to-be (knock on wood) Econ PhD who is completely disappointed in academic economics, and left wondering what else to do. I do not want to turn into Mankiw, and he’s not the only one (nor, I think, the worst).

The big difference between real scientists and economists is in our understanding of the market. Where we see a very straightforward emergent system with predictable behavior trending towards Pareto-optimal cost-minimizing solutions and incentive-driven innovation, Adam Smithites see magical invisible hands guiding rational actors through an engine of marginal returns.

But seriously, it is possible to understand the gains that globalization yields without being interested in them. Cheap food and gasoline has been one of the great plagues on the health of the west and during sugar- and gas-rationing of WWII, Americans were a good deal healthier. Now we have a long-term burden in the form of tragically inefficiently laid-out cities designed to minimize walking time at the expense of literally everything else. Some of us Muggles see very clearly the abundant and cheap goods doing more harm to our quality of life than good, and the massive monocultures of the third world not doing them any favors either. In light of the Malthusian Trap, it becomes very difficult to celebrate any of the incremental gains of globalization when all it implies is a further swelling of the great beast, straining against the bars of its cage and finding no place left to defaecate but in its own water bowl.

But as it turns out being horrible misanthropes is actually a commonality between us.

Now that I’ve reread one of your earlier comments, John Emerson, I think what you’re saying is: “Mankiw thinks the problems in the USA come from its general populace misunderstanding things that its elites know; however, while it is true that the general populace misunderstands a lot of things, the reason why the USA is messed up is that the elites misunderstands matters worse than the populace, and the populace, understandably, follows the leads of those who (they are constantly told) have superior wisdom. Is that a fair restatement?

That’s closer. But sometimes the elite understands things pretty well, but is able to decieve the mass.

The big Joe Sixpack cliche takes several forms. One mostly-Republican form is mostly just a taunt: “The average working man increasingly is a Republican and a conservative”. That’s less than a half truth.

Second, used by Republicans and centrist Democrats, “The average (stupid) working man doesn’t understand that free trade is good for him”. But many average working men are correct in their suspicions about the effects on them.

Third, mostly by elite Democrats, “The Republicans took over because Joe Sixpack is stupid and racist”. Sort of a mirror of #1, and less than half true. Elite Democrats really hate populists of any description and sometimes hate labor too.

But my main point is that a lot of the big disasters have been purely elite disasters. There was not a populist clamor for war in Iraq. It was a carefully staged elite media circus, and the main targets weren’t voters but Congressmen (who are elite).

For some reason, the example of Emanuel Derman sticks most in my mind as an example of the professional deformations of economics.

His autobiography reads, summarised and reduced to the bare facts; I did a PhD in physics but my research never went anywhere and I probably wasn’t good enough to get a good professorial job. Then I went to work for Bell Labs where I was a reasonably competent mid-level employee but my career wasn’t going there anywhere. I joined Goldman Sachs and spent most of my time writing user interfaces for other people’s programs. Fisher Black used to talk to me and I helped him with some ideas. I was second-named co-author on a really important finance paper because of this. Later I spent a lot of time managing a research department. In the 1980s I thought I’d discovered something really fundamental about securities pricing but nothing really came of it. I wrote a lot more programs with good user interfaces, made a load of money and retired and wrote this book.

On the basis of that life story, Derman appears to have convinced himself (and others, like Brad DeLong, whose review of “Memoirs of a Quant” is just incomprehensible to me) that he is “incredibly smart”, quite the equal or superior of all those physicists who got the jobs he didn’t and indeed a Rennaissance man of all talents (he also plays the violin a bit and wrote that autobiography, IIRC. Oh yes and he likes art). I’m told by people who should know that Derman’s a nice guy, and he’s almost certainly cleverer than me, but really.

Cf also, the habit of Larry Summers during his short tenure as President of Harvard, for allocating money to people who he considered “really smart”.

54 is also consistent with the theory that economists are failed physicists. The guy doesn’t really seem arrogant, more bemused.

Damn, I hate it when no one disagrees with me. I’m missing today’s dose of lame motherfuckers.

Economics really went off the rails when it became completely detached from social science and political science. In doing so, it became institutionally autistic

Excellent insight in a good post. Perhaps they should call it “Mammonomics.”

I will reprint the post I linked to in #19, as the conversation seems to have gone that direction and most folks didn’t seem to follow the link (I usually don’t either).

The Sociology of Economics
A reader sends this interesting letter:

Dear Professor Mankiw,

I’m a resident at one of the Harvard hospitals. In the past couple of years I’ve had the chance to attend a number of inter-disciplinary seminars where you have statisticians, physicians, sociologists, anthropologists, epidemiologists and economists present. I’ve been impressed with what your discipline has to say: in virtually every seminar the economists are able to say something useful. Without inflating your ego, I’ve also noticed that the economists present better papers and are less likely to be caught off-guard in a seminar. They are also more likely to discover problems in the work of others. I’ve been trying to educate myself on the economic way of thinking by reading your blog, Freakonomics, and now, by slowly reading your textbook. But clearly, there’s no substitute to being formally trained as one.

My question to you doesn’t concern economics, but more its sociology. So feel free to ignore this email. At the seminar that I attend most often, I’ve noted the following:

1. The economists are the most aggressive people in the room. They have little patience for introductions, motivation, or “being nice”. They want to spend the first 10 minutes trying to figure out the -entire- talk. If they’re not happy, they tend to disengage. I will note that they’re like this with each other also. Why are things this way in economics? There must be pluses and minuses to this way of interacting.

2. The economists are the only social-scientists in the room that are willing to argue with the statisticians. This could be that you are a more argumentative lot in the absence of substance, but also that you know something. I’m not qualified to tell who wins these disputes, but the statisticians seem to regard the economists with a high degree of regard. Why do you think that different disciplines view the importance of statistics differently?

3. There seems to no love lost between the economists and other social-sciences. Some of this has to do with the nature of interferce in the two disciplines: your colleagues are always concerned about confounders. Other disciplines like “to tell a story”; confounders are certainly of concern to them, but the issues of bi-directional causality, and omitted variables seem of second-order importance to them. As a physician, I share your colleagues view of the importance of “selection bias” (nice term, incidentally). Why do you think that different disciplines weight the role of confounders differently?

I posed these questions to one of the economists who regularly attends. His response (that I have permission to send to you) is as follows:

“In general, economists are smarter (we may be better looking too). It’s fashionable not to say such things, but I will bet that if you look at the GRE and SAT scores of incoming PhD students at BU, Harvard and MIT, the average economist will sit at a higher percentile than the average (non-economist) social-scientist. Given that all the other disciplines are trying to recruit students with higher scores, I’m not willing to believe the explanation that these disciplines value other attributes that aren’t measured in the GRE. Higher salaries in economics will tend to reinforce the “economists are smarter” phenomena. Smart people don’t have the time waiting for the less-smart to catch up. If we can finish up the seminar in 10 minutes, then why not do it?

“To this ex ante advantage, add the role of superior and more rigorous training. Economics graduate school is not for slackers. It’s like boot-camp in the Army. One example of this is that we are provided a much deeper understanding of statistics than every other social-science. Consequently, economists are able to publish in journals like JASA and the Annals of Statistics. No other social science is able to do this with the same frequency. This superior training, complemented by a generally higher comfort-level with mathematics is the principal reason for why economists will not shy away from statistics. I wish I had concrete evidence for my argument. At present, it’s indirect evidence. But this “economics know more stats” argument is another reason for why we are more aggressive; we are able to see the strengths and weaknesses of a study faster than others who’re not as fluent in the methods.

“Third, the set of advocates who are economists is quite small (I don’t know if this reflects treatment or selection). In general, economists are more likely to make up their minds about whether a particular policy works based on theory or data. They may have priors, but not the the sort of “do-gooder”priors that advocates have. One of the reasons that economists are so aggressive with the non-economists is that we want to expose all the priors immediately. In my view, a lot of non-economics social science is straight advocacy. There is an important role for advocacy. It may influence policy more than science. But the nature of advocacy is to simplify and ignore nuance and confounding. But our (economists) beef with advocacy isn’t its lack of nuance. We just get really upset when advocacy masquerades as science.

“Fourth, the economics job-market is just that — a market. This means that the best people are more likely to be at the best programs. In other disciplines there are more “bad matches” (good people at bad places). What this means is that Harvard and MIT’s economics departments are more likely to have the top economists than the Sociology Department is likely to have the top sociologists. This is important because what you’re seeing at the Harvard seminars is an exchange between the best economists and not necessarily the best sociologists. The best sociologists may be able to clobber a mediocre economist.”

I’m curious if you have some of your own observations to add to the above.

Best regards,
[name withheld]

These are fascinating questions. I see a lot of truth to the observations described in the letter. I have heard many others note, for example, that economists are generally more aggressive in seminars than other academics. I am not sure how to explain this fact.

To the hypotheses in the letter, let me add one additional conjecture, which is less charitable to me and my colleagues: Perhaps the skills that make a good economist are, for some reason, negatively correlated with the attributes associated with being an agreeable human being. That is, economics may attract people with a particular set of personality attributes, and perhaps these attributes are not the same set of attributes you might choose for your next dinner party.

This is not entirely conjecture on my part. For example, this study

“explores the relationship between student’s personality types, as measured by the Myers-Briggs Personality Type Indicator, and their performance in introductory economics. We find that students with the personality types ENTP, ESTP, and ENFP do significantly worse in Principles of Macroeconomics than identical students with the personality type ISTJ.”

What is this personality type ISTJ that excels in economics class? Check out this description, which say in part:

The ISTJ is not naturally in tune with their own feelings and the feelings of others.

Sounds like any economist you know?

Just as a side note here, Samuelson and Blinder, both at the absolute center of the profession, have recently and quite publicly questioned the “trade is always good” orthodoxy. Krugman, also at the center of the profession, just wrote a solid paper saying that trade was probably increasing income inequality and could be lowering wages for the majority of workers. Etc.

The profession just is not that monolithic. I’m not quite sure why people are so bitter about it in threads like this. Envy over the influence or something?

just react like children to whatever’s dangled in front of your nose

Not entirely about Mankiw, but :

I read quite a few posts, comments, etc sounding like “Lookee, my economisty powers make me able to see the carrot that is dangling under your nose, without even you noticing it”.

Just enlarge the scope of the study to more than just the muggles, and you have, I think, a worthy and interesting subject in itself.

So it is annoying that economists (maybe after the success of those pop eco books) recently seem to be (re?)discovering and playing with the idea of their clear sightedness.

Sometimes the results are interesting (can’t be blamed for trying to say something clever, can you?) but the gimmick is getting old fast.

Apart of this, Makiw and Cowen look suspiciously like nice guys, for marketomaniacs. So I’m confident they will see the light and join the side of the True and the Good one day.

All that matters to economists is the maximization of GDP

Would that it were so. A good four in five economists — certainly in elite departments — have no interest at all in GDP, or indeed in anything you or I would reconize as “economics.” What drives them is clever modelling, fancy statistics technique and use of offbeat data, especially when it lets them describe some new facet of society in economic terms.

One recent paper that made a splash among up-and-coming hotshot economists attempted to measure the importance of political leadership for economic growth by comparing the periods following assinations of heads of state with comparable periods following failed assassination attempts. The idea was that whether the bullet hit or missed was a genuinely random, exogenous variable.

The person who wrote this paper has no interest in (or knowledge of) political history, or economic growth for that matter; the only point is the cleverness of the technique.

67: but…but….but…Ben Olken is a *star*!

We’ve found a rare non-shitty economist! New species, subspecies, or mutant? Only science can tell.

This is amazing. You’ve actually found a real live example of a professional academic being condescending towards those who disagree with him! Surely this is unique to economics. I for one can only hope that Mankiw begins reading the comments sections of this blog for a lesson in proper respect for one’s ideological opponents.

If so, then I withdraw my comment. (Is it a silly instrument? This is the first I’ve heard of it.)

International man of mystery.

Dsquared is a professional internet troll with a private income. Also, he works in the fleecing widows and orphans biz.

I think the complaint is about the silliness of the instrument, because the instrument is so silly.

You would be correct, sir.

uh joe sixpack taj got it wrong – that’s re 59, not 58.

Taj, I consider Emerson a usually reliable source.

I’m almost always right, though some claim I don’t knwo what I’m talking about.

I hate to point out the obvious but in matters pertaining to economics wouldn’t economists be smarter than other social scientists or humanists?

Damn right they should be, and we only wish they were! But that isn’t the accusation. Economists often think that they’re smarter about sociology than sociologists (e.g. Nobelist Becker’s abominable book on the family) — and so on.

“But that isn’t the accusation. Economists often think that they’re smarter about sociology than sociologists”

No, no. The original accusation in Daniel’s post and in Mr. Punch’s comment was that the economists are arrogant because they have the audacity to think that they know more about economics than non-economists (specifically with regard to trade and Joe Sixpack)

(as an aside, how many real to life Joe Sixpack folks hang out on this site? I mean genuine ones, not just people who have Sixpackism as their background).

Of course you have your own, additional beefs with economists and that’s fine. Your accusation is at least non-obvious (-ly wrong) – though for every Becker I’m sure I could find you a number of sociologists’ forays into matter economic which make Becker’s work look like a paragon of brilliance (for example this: http://chronicle.com/temp/reprint.php?id=zm1qcnxs5p3v7pwkq58f7hb3jlh8l0fk)

Re: comment 63 — Lots of disciplines (for instance, engineering, and ALL of the real sciences) have rigorous graduate curricula, with mathematical requirements that make those of economics look, ahem, quaint. Yet it’s rare to see scholars in those fields — fields where actual experiments can be conducted — quite so willing to dispense advice about how to run the world.

Mathematical models are nice and all, but if your models aren’t subject to any kind of empirical test, it’s best to cite them with a strong dose of humility. Economics is at best a kind of speculation.

“At base, when you get to know them, economists are often quite nice people; as Mankiw correctly notes, they skew quite liberal in their actual politics.”

Can you explain why you made the points either side of the semi-colon together? Are you saying conservatives are plainly nastier people than liberals?

Notsneaky #94. Giovanni Arrighi was trained as an economist. Just saying.

Re sglover at #96: “Mathematical models are nice and all, but if your models aren’t subject to any kind of empirical test, it’s best to cite them with a strong dose of humility. Economics is at best a kind of speculation.”

This is incorrect. Economic models HAVE been subjected to empirical testing and have mostly FAILED these tests. (Hence the rise of so-called Behavioural Economics, a field with tries to understand why people who are not economists do not behave according to the models of economists.) More than humility, one would think that the failure of your models would lead you to revise the models, or else to abandon the discipline. Instead of either of these honest reactions, economists accuse people of being “irrational” for not behaving according to economic models.

I’ve never heard of any physicist or biologist (or sociologist, for that matter) faulting his or her phenomena of study for failure to conform to a model. Seems to me that mainstream economics is not only not a science, it’s not even a reputable undertaking. Where’s RICO when you need it?

They are never named One of the definitions of “heterodox economist” seems to be “anyone who fails to treat the leaders of the field with enough deference.” But who are these mysterious, unnameable powers — They Who Must Be Obeyed?

We regret the errors.

DeLong is also a political Democrat, and he probably now knows, because I’ve told him dozens of time, that it is not politically prudent to force your own voters into making sacrifices on the behalf of the other party’s voters (much less voters in foreign countries).

And he also realizes that while the Democrats may have strategized a two-part plan back in the 90s, including support for the displaced workers, etc., the Republicans only allowed them the free trade part.

When Clinton failed to convince the Democrats in Congress of the virtues of his plan, he should have let it drop instead of going to work on the Republican plan.

“Hence the rise of so-called Behavioural Economics”

Which, according to Kahneman himself, applies to about 5% of existing theory. The rest of it is just fine, since all you need at the end of the day is that demand curves slope downward, for whatever (rational or irrational) reasons.

See, this isn’t like Art History, where one school comes along (Todayists) and over throws another school (Neo-Todayists), only to be overthrown by its successor (Post-Neo-Todayists).
It’s building upon, not overthrowing. Part of the ignorance that characterizes many of the above comments above (and pretty much any comment thread where somebody who doesn’t really know what they’re talking about brings up Behavioral Economics) results from this basic lack of understanding.

Yeah, maybe, but it’s more of a matter about how much you want to split hairs. And anyway, you seem to be saying both that there are overthrows and that there is this strangling gradualism. Which one is it? (I know I know, whichever one it is, it’s bad).

Radek: I’m a practical chap. I am prepared to prop up a saloon bar or a blog talking about the causes of economists’ professional arrogance, but what really worries me is the effects, which is that the profession has got a really awful reputation for being arrogant assholes who hate the poor, and their idea of doing something about it is to say “well if the poor weren’t so stupid they’d realise that we’re right”. And then scoffing with laughter as they sigh and say “why is it that economists’ views are most influential on points where the profession is least agreed, and least influential on points (like free trade) where the science is most settled???hahaha!”.

When you see talented people doing an important job badly, harsh criticism is warranted.

also, from the department of “come on man, think”

I don’t know the specific paper you’re talking about but at least potentially the assassination thing could be a decent instrument. At first glance it does appear to be truly exogenous. And it does probably have effect on government policy.

It’s as stupid as dog-catchers’ trousers made of mince. It is flavoured with two kinds of stupid.

1) with a minute’s thought, it occurred to me that a significant proportion of assassination attempts are carried out by the army, that the probability of success is likely to be correlated with army training and that the kind of countries which experience coups are likely to differ systematically from ones which experience random assassination attempts by non-soldiers.

2) with a lifetime’s philosophising, the entire attempt to cram this sort of event into the standard model is crazy. Assassinations are unique events with historical causes and consequences, not draws from a single underlying distribution. (this is Paul Davidson’s critique of econometrics in general of course). If taken to extremes then you have an argument for the impossibility of social science, but for this sort of thing it seems to me to be totally valid. The First World War did actually happen – it wasn’t just a particularly bad observation of the true underlying mean growth rate in Europe.

This is me getting drawn into a fight that I have no dogs in – and I generally agree that there is overuse … well, over-trumpeting … of instruments which may very well be weak or invalid, but;

“it occurred to me that a significant proportion of assassination attempts are carried out by the army, etc.”

Like I said, the devil’s in the details. And if you really think so then you can check it by including an extra variable in the first stage regression (dummy for whether it was an army carried out assassination or a non-soldier assassination) and write a paper of your own. But plain ol’ scoffin’ doesn’t count.

“Assassinations are unique events with historical causes and consequences, not draws from a single underlying distribution.”

No, but you seem to be missing the point here. The success or a failure of an assassination attempt can very well be, roughly, a “draw from a single underlying distribution” (or can be modeled as such without violating reality too badly), even if the actual attempt taking place ain’t. And that seems to be the whole point. Gavrilo Princip acted for a unique, historical, non random reason. But if he had gotten “unlucky” (i.e. gotten a different draw from that probability distribution) and missed the history of the world would’ve been different.

I just don’t agree with that. If Princip had missed, the world wouldn’t have been that different. Germany would still have been an expansionary power on a collision course with France and Britain, Russia would still have been on its way to revolution, the USA would still be the dominant economy in the world a hundred years later etc. The use of this methodology depends on being able to construct a category “polities which experienced assassination events” which is Borgesian – there isn’t any underlying rationale for the category to exist. The whole point here is that economics courses tend to have a massive blind spot for these philosophical issues (the McCloskey critique) and as a result just assert that you can use the statistical toolbox here where there’s decent reason to believe that you can’t (and that you can’t solve this problem by adding more and more instruments[1])

[1] or to put it in statistical terms, that there are always going to beat least as many such special factors needing to be accounted for as you have data points, leaving you with no degrees of freedom.

Any chance people could cease insulting people with autism or aspergers by calling them economists?

Hey John (Emerson), I was wondering what is precisely wrong with the standard economic argument for free trade? You know, the one about comparative advantage and how if countries specialize in what they have the comparative advantage in and trade with other countries that have a comparative advantage in something else, there will be more overall production, etc. My guess is that you don’t think that part is wrong. So is the idea that economists neglect what happens to people who are thrown out of work in pursuit of greater specialization, or they ignore the environmental effects of greater production, or they ignore the cultural changes wrought by super-fast growth? Or other things? Or do you really think there is fallacious reasoning in the simple model?

So the modern economists’ romance begins either in the trash novels and dime-store individualism of Ayn Rand or the dime-store determinism of Isaac Asimov, channeling the worst sort of Stalinist future science. If the end result of Objectivism is anarchy, the end result of the more respectably academic methodological individualism is a population bio-bots ruled by a cadre of supermen. Compared to Asimovian determinism Marx is as old fashioned as Dickens.

As to the failures of utopian technocracy and liberal fascism I’ll leave that to John Holbo

“If the end result of Objectivism is anarchy, the end result of the more respectably academic methodological individualism is a population bio-bots ruled by a cadre of superme”

wtf?

what is precisely wrong with the standard economic argument for free trade? You know, the one about comparative advantage and how if countries specialize in what they have the comparative advantage in and trade with other countries that have a comparative advantage in something else, there will be more overall production, etc.

Lots of things are wrong with the model. In no particular order:

1. Trade also redistributes income. If losers aren’t compensated, there is no reason to think that trade is welfare enhancing. On the other hand, the available forms of comepnsation may be more distortionary than the trade barriers were.

2. Comparative advantage was originally formulated in terms of climate and similar fixed natural endowments. Today, comparative advantage is much more a matter of institutions, physcial and human capital, etc., all of which may themselves be affected by trade. Poor countries have a comparative advantage in labor-intenseive, low-value-added industries; they don’t develop by becoming better specialists in those industries, but by gaining compartative advantage in something else. So the standard model is irrelevant.

3. In the real world, trade doesn’t seem to depend much on comparative advantage anyway. it’s well known that most trade occurs between countries that are economically similar; it is not, in general, driven by gains from specialization.

4. Again, for developing countires, tariffs are much easier to administer than most other kinds of taxes. So any gains from trade liberalization may be swamped by the costs of shifting to less efficient revenue sources.

5. The standard model assumes full employment, so the only question is whether existing factors of production are being used efficiently. but in the short term, at least, the level of output is usually a more pressing problem than efficient allocation. Free trade is often incompatible with appropriate fiscal policy. (This used to be a respectable mainstream view.)

I don’t know if John thinks these criticisms are valid, but I (and lots of other people) sure do.

“I just don’t agree with that.”

Welp. That’s fine. But to a person that does agree with that – that if things had happened differently then they would have had different effects – the above makes for a potentially valid instrument. Or in other words, I don’t see a point of having this argument with a Calvinist heretic.

(and btw, just out of curiosity, how far are you willing to take this? If somebody in Florida in 2000 had counted the other way, would US still have gone to war? If Mohammed Atta and co. had been busted at the security gate, would the US still had gone to war?)

Going back to your other point, 1). Yes, you’ve come up with a potential reason why this identification strategy may be weak. So. What proportion of assassination attempts are carried out by the army? What proportion of assassination attempts carried out by the army are successful and what proportion of assassinations attempts not carried out by the army are successful (assuming you can even separate out the two. Who really killed Haidiri?) What is the proper way to measure “army training” and how exactly does it correlate with the success of assassination attempts? And exactly how different are countries that have army assassination attempts rather than Etc. Does this even matter or are you gonna get something like 50/50, same, zero correlation?

Oh, what, you haven’t actually checked? Just gave it “a minute of thought”? Then said “well, I’ve thought of a reason why this MIGHT be wrong, so of course it’s wrong” and moved on (pulled some similar “devastating criticisms” in your Freakonomics (which I don’t much care for) review too).

Man, talk about intellectual arrogance.

#124 “wtf?”

What is it about the dream of predetermined free choice that you don’t understand?

Sigh. You actually expect me to reply to you? Sigh.

Sigh. You even messed that one up. The proper response was: “No Mr. Bond, I expect you to die!”

Ok. Look. Let me explain something to you. If you want to have a civil discussion with someone, you don’t start it off by acting like a total dickhead and then expect to get taken seriously. Might want to keep that in mind in the future.
Bye.

Notsneaky, I think that most of us have had the experience of being bullied by economists at some point in our lives. Often economists disdainful of any non-economist’s point of view, and whose institutional position made them entirely invulnerable.

So we now have this little hiding place, a comment thread, where we can talk tough. But don’t worry. The economists are still in command. Greenspan retired triumphantly and will never be blamed for anything, and Bernanke has been definitively installed as his successor. You guys are still winning, and we’re still losing. But we haven’t quite disappeared from the face of the earth yet.

Oh, what, you haven’t actually checked? Just gave it “a minute of thought”? Then said “well, I’ve thought of a reason why this MIGHT be wrong, so of course it’s wrong” and moved on (pulled some similar “devastating criticisms” in your Freakonomics (which I don’t much care for) review too).

I am firmly of the belief that if something’s not worth doing, it’s not worth doing properly. The entire point here is that in cases like this, I or anyone else can sit around proliferating these special cases and confounding factors until the author runs out of degrees of freedom. And the reason why this is possible is that the subject matter consists of unique historical events, not the sort of things that can be the proper subject of social science.

Damn. Ruined my joke. Too much caffeine.

“I would be happy to give Rove a Political Science Nobel Prize, if their were one, but I’d also be happy to feed his carcass to starving hogs.

The entire point here is that in cases like this, I or anyone else can sit around proliferating these special cases and confounding factors until the author runs out of degrees of freedom. And the reason why this is possible is that the subject matter consists of unique historical events, not the sort of things that can be the proper subject of social science.

Of course, if you lived in society with 100 million planets, with a combined population in the quadrillions, with a history that spanned 20,000 years . . .

145: Lots.Your blogging style leaves greatly to be desired.

All you do is ask questions, which you think of as probing, insightful, or something like that. Boring. Speak your piece or shut up.

Re: 138

Sorry about your experience John. But hey, I know you guys also need an actual real life arrogant economist to pick on and I’m here and happy to provide that opportunity.

Lolwut may be a bot.

“A bot?….”

I saw it in the paper. Most plutocrats prefer Barbados this time of year though.

California cuisine does not go over around here. I didn’t read the whole article, though.

I’m not an economist, but some of the points made by Mr. Pitkin seem to have been rebutted fairly effectively by economists many times over.

1. Trade also redistributes income. If losers aren’t compensated, there is no reason to think that trade is welfare enhancing.

Doesn’t innovation do the same? If disruptions due to trade are bad, shouldn’t disruptions due to innovation also be thought bad?

2. Comparative advantage was originally formulated in terms of climate and similar fixed natural endowments. Today, comparative advantage is much more a matter of institutions, physical and human capital, etc., all of which may themselves be affected by trade. Poor countries have a comparative advantage in labor-intensive, low-value-added industries; they don’t develop by becoming better specialists in those industries, but by gaining comparative advantage in something else. So the standard model is irrelevant.

I’m not certain that nations must “develop” for there to be substantial benefit. As I understand it, the substantial improvements in the earnings of billions 2-5 (ignoring the top and bottom billion) seem to mostly of come about as a result of trade. That the nations that those billions live in have not developed substantially better institutions and the like doesn’t mean that there have not been improvements for many of those living there.

3. In the real world, trade doesn’t seem to depend much on comparative advantage anyway. it’s well known that most trade occurs between countries that are economically similar; it is not, in general, driven by gains from specialization.

Not trying to argumentative, but if trade between economically similar countries is not necessarily a good thing, why is trade between economically similar states, or even trade between economically similar cities? I’m not certain why nations would make the ideal unit for welfare increasing trade restrictions.

I’m certainly eager to hear counter arguments to the above rebuttals as I’m certain they exist. But you don’t see them very often on economics boards.

As for the effects of *relatively* free-market economics policies, all I can say is that I’m happy to see them tried somewhere (if that’s what the people vote for, that’s their right), but I’m fairly glad I don’t live there. I feel things work best if people can self-sort themselves into the nation that best fits their temperament.

The results of the USA experiment, however, are pretty unmistakable. There’s a lot more people who want to live in the US than want to leave and their absolute standard of living is higher than pretty much anywhere else. And I’m talking about the 100 year experiment, not the last administration or three. (In the big picture, the current Republican and Democratic party positions do not substantially differ economically.) Should the rest of the world adopt American free-market economic policies? Absolutely not – most of us are not Americans. But we also shouldn’t begrudge the fact that those policies *are* effective in making Americans wealthy. They pay the price in loss of security, and they get the benefits in higher standard of living. I’m not, so I don’t get the house, the SUV, and the big screen TV.

But it seems a bit rich to criticize free-market economists claims of knowing which policies are growth-promoting, when the nation that has cleaved closest to those policies *is* the richest.

Claim that those policies are not worth the costs for your country? Sure. But given the results of the world-wide experience with economics, it’s fairly hard to argue with the gross correctness of many of their models.

Depressed, Thanks. I’m glad somebody read it. And cheer up! I was at the Left Forum this past weekend, and they were turning people away from the opening plenary, there was no room in the hall. The whole event was full of newcomers, young people, union activists, very smart serious newly-minted PhDs, just random interested bystanders. It was great! Marxism is making a comeback, wait and see.

Seth, Your sarcasm detector doesn’t seem to be working. You should get someone to look at that.

Lemuel, I thought your comment was good as well.

Maybe Lemuel Pitkin could have mentioned the Leontief Paradox as well.

Name the dubious claims monkey.

Since demand curves slope down

the demand for labour schedule isn’t a demand curve – it’s an input schedule for a production function and there is no particular reason to believe that it’s going to slope up,slope down or even exist at any particular point. This is a pet peeve of mine.

do you know what, Radek? that’s a pack of bollocks.

For one thing, nearly every production function has a flat segment to it; there’s also a huge industry called “management consultancy” which is based on the fact that nearly every producing unit nearly every industry in the world isn’t operating on the efficient frontier.

and your third paragraph, as a description of the state of heterodox economics, isn’t even nearly true. Despite being shut out of nearly all the “mainstream” journals (which I think is what you mean by “the profession moved on”), a lot of extremely interesting empirical work gets produced in heterodox economics and just to prove it, they publish it in Metroeconomica, the JPKE, the CJE and so on.

One thing I come up with fairly often in marginalist apologetics is “The heterodox economists make a lot of criticisms, but have failed to come up with a better theory”.

This is a pretty fundamental error. If you point out that someone has failed to square the circle, it’s not up to you to find a successful way of squaring the circle. Disproofs and negative results are successful science.

According to Redding, economists adopted Lakatos’s philosophy of science, which jettisons falsifiability and justifies persistence within a paradigm even after it has suffered serious damage from critics — e.g., the addition of epicycles. (Hodgson has said that in marginalist / neoclassical economics the ad hoc assumptions do most of the work.)

This philosophical shift coincided with the bureaucratization of the discipline, which took a form allowing the orthodox to perpetuate themselves forever by the nation-wide control of hiring, firing, and promotion. A similar dynamic allowed scholasticism to survive well into the seventeenth century, long after anyone was paying any attention to them. Liberation from the scholastics was attained only by marginalizing the Sorbonne itself and the establishment of new schools.

Politically, it’s always restaurants that make the biggest stink about increases in the minimum wage. Card’s work was (as if) designed to counter their arguments, and it may be that the political relevance of his work was what got him in hot water. In other words, it was brilliant from one point of view, terrible from another, and imprudent given the actual skew of the actual econ biz we have.

Card has said that he discourages his students from doing as he did, which tells me a tremendous amount about the power structure of the econ biz.

ScentofViolets, you’re not listening. This:

“should clearly state the hypothesis, it’s converse, ”

should be:

“should clearly state the hypothesis, its converse, ”

Dsquared:

Peace! I was just parroting what I have heard from the crowd who says those things. BTW, I love your stuff, and have distributed “Everything I Know I Learned at a Very Expensive University” far and wide.

John Emerson:
You are another of my favorites, but this:

“One thing I come up with fairly often in marginalist apologetics is “The heterodox economists make a lot of criticisms, but have failed to come up with a better theory”.

This is a pretty fundamental error. If you point out that someone has failed to square the circle, it’s not up to you to find a successful way of squaring the circle. Disproofs and negative results are successful science.”

is in practical terms a nonstarter. Given that one intends to study economics (or whatever), a program that gives one something to do when one gets to work will always prevail over purely negative criticism. Krugman’s description of what happened to 50’s style developmental economics is a very good example. For consideration of the general case, “Progress and its Problems” by Larry Laudan is a great start.

(NB: this grants the marginalist claim that the heterodox crowd has failed to produce alternatives. Dsquared’s comment on this must be kept in mind.)

Tom West: congratulations on the reasonable tone of your last post. I will try to respond in kind.

Saying:
“The results of the USA experiment, however, are pretty unmistakable.” oversimplifies history in crucial ways. For the last hundred years (putting aside small aberrations like Hawley-Smoot) free trade was good to the US because the US was the leader. As LP implied, it’s fine if the other guy specializes in poverty. Recently things have changed.

However, before that things were quite different. For much of the nineteenth century the US was heavily protectionist. For instance, one of the gripes of pre-Civil-War slave holders was that tariff policy disadvantaged them to benefit Northern manufacturers. In other words, the time horizon of “the last hundred years” is misleading.

More recently and more saliently, the biggest success stories of the second half of the Twentieth Century, such as Japan, Korea, and the Asian Tigers, have been about as far from unrestricted free traders as it’s possible to get.

And I must tell you that this:

” There’s a lot more people who want to live in the US than want to leave”
is a cheap shot. When one considers where people who come here mostly come from it’s far too low a bar. Besides that, it’s logically irrelevant to the best policy for the welfare of the people who live here already, which is (mostly) what US government policy is supposed to be about. And finally, it puts you in some unsavory company.

It isn’t struggling very hard, to be honest. But I think this has to some extent happened – although Dani Rodrik (for example) is still basically an orthodox economist and in some senses could be described as a neoliberal, he’s clearly not the kind of neoliberal that did so much damage in the 1990s.

For all of you who think I overstate the case when arguing that the rule of reason is not the rule of law, and that the enlightenment worshipping rationalists don’t understand democracy, here again is Chris Bertram’s favorite living philosopher, Colin McGinn

“I myself see a close link between democracy as a dogma and the idea that everyone’s opinion is as good as anyone else’s: that is, between equality in respect of voting power and forms of relativism about truth. For if people’s opinions do not have equal value, how can we justify giving their votes equal power?

And of course I posted some of DD’s words on his page as well.

But at some point, instead of running after the latest tweaked version of astrology, people quit hiring astrologers.

I think depressed is saying (and I would agree) that this is not an appropriate analogy. Economics is not astrology, it’s just bad, dishonest astronomy. There’s no unbridgeable methodological gap between “mainstream” economics and the various heterodox approaches. And the reason Mankiw fails to tell us anything useful about the world, while Krugman (or Dani Rodrik or Dean Baker or…) does, is simply that Mankiw is a dishonest hack and they are not.

John Emerson:

“One thing I come up with fairly often in marginalist apologetics is “The heterodox economists make a lot of criticisms, but have failed to come up with a better theory”.

This is a pretty fundamental error. If you point out that someone has failed to square the circle, it’s not up to you to find a successful way of squaring the circle. ”

SoV:

“Well, you do what you can with what you got; that’s what statistics is all about, practically speaking.”

Now you guys argue.

(also, you can take the Behavioral Economics peoples as an example of how it should be done. They identified a problem with standard theory, painstakingly documented the pervasiveness of this problem(s) in the real world and then worked very hard to built a viable and useful alternative theory. And in so doing they found that they were, once again, “building upon” rather than “overthrowing” existing theory)

And SoV, I really don’t know what else to say to you except that you’re basically parading your ignorance here, like many other people, a mathematics degree or not. Economic theories are confronted with data all the time. When they fail, people look for where problem is. Sometimes the problem is with the noisy data, sometimes it’s with the theory but one way or another the data or the theory get refined and the process continues. Likewise, many economic theory actually yield ambiguous results – an obvious example, does labor supply increase or decrease when the wage goes up – which necessitates the estimation of “facts on the ground”. Simply speaking, you have no idea of what you’re talking about.

“I’m a mathematician. You’re an economist. In any sort of comparison as to who falls where in the intellectual hierarchy, I win automatically, hands down, not even a contes”

No. It depends on the topic we’re discussing. I know plenty of mathematicians (and trust me, I know plenty of’em) who don’t know a first thing about many topics outside of their specialization. Nothing wrong with that, except when they get on blog threads and act all high and mighty on a topic they haven’t got a clue in.

I must say that behavioural economics seems to me to be an absolute paradigm case of a research program that isn’t going anywhere.

More empirical work exists on Sraffa effects than YouNotSneaky mentions. A non-complete list includes Albin (1975), Asheim (2008), Prince and Rosser (1985), and Zambelli (2004), in addition to Han and Schefold (2003).

But I don’t see the point to asking for empirical work confirming a demonstration that mainstream textbook economics is logically invalid. I lean towards John Emerson’s view on the exposure of orthodox economics, whether or not you are aware of the existence of alternatives.

Leontief’s input-output analysis is empirical work I think closely related to Sraffa’s theory. This is built into how nations present national income statistics.

(I could stand to learn more about the work of Thomas K. Rymes.)

I don’t find it telling, except for the sociology of economics, whether or not some economists signing the minimum wage cite the CCC. Many probably don’t mention Frank Hahn’s view on General Equilibrium either. But it’s an elementary fallacy to think popularity is an argument. Also, I don’t expect many citations of my Manchester School paper.

If you want to see connections drawn between the CCC and arguments over labor market flexibility, you could do worse than Graham White’s “The Poverty of Conventional Economic Wisdom and the Search for Alternative Economic and Social Policies”. (I mentioned that paper more than a year ago.)

I don’t expect to be able to keep up with comments and posts here.

SoV, if you’re referring to my response to Daniel then, well, those weren’t addressed to you. I’m sure he can stand up for himself. You, on the other hand, started off this whole thing with a smug, condescending attitude, part of which consisted of being cryptic and playing the role of, I don’t know, a game show host chastising an inadequate contestant. I really don’t see why you want to continue this stupid conversation either.

I must say that behavioural economics seems to me to be an absolute paradigm case of a research program that isn’t going anywhere.

There’s some truth to this. But bear in mind, just getting mainstream economists to acknowledge that, even in situations where behaving rationally is universally acknowledged to be the optimal strategy, people still don’t behave as they ‘should’, and in systemic, nonrandom ways, is a big step forward.

Speaking just for myself, I’d like to get a lot of math out of economics, to make it more respectable. I agree with emerson’s #179, btw, though I think that the proper science to equate economics to is not astrology/astonomy, but alchemy. Bear in mind that however crackpot their theories were, those old guys did manage to accumulate a rather large body of very practical lore; they knew how to get certain things done, even if they didn’t know precisely why they worked. And that’s(imho) the state economics is in these days. Recall that no less a luminary than von Neumann once opined that on the subject of economics, we don’t even know the right questions ask yet, let alone what the fundamental entities are, that we’re thinking in terms of phlogiston and caloric, rather than work and energy.

So by all means, hit the big problems from all sides, even if they appear to stop producing results.

“More empirical work exists on Sraffa effects than YouNotSneaky mentions. A non-complete list includes Albin (1975), Asheim (2008), Prince and Rosser (1985), and Zambelli (2004), in addition to Han and Schefold (2003).

From Robert’s list of papers which study the empirical relevance of re-switching and capital reversing I’ve been able to find only a few that are available on line.

The Han and Schefold paper (abstract here:
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1096805)
is the one I referred to above. I said it was 5% of the time. Actually they find it 3.65% of cases.

The Zambelli paper (abstract here:
http://ideas.repec.org/a/oup/cambje/v28y2004i1p99-120.html)
is a numerical simulation which looks at the probability that an aggregate production function can ’emerge’ from an underlying micro structure. The author states in the abstract that: “The conclusion is that there exists a world of significant size for which the aggregate neoclassical theory of production does not hold.”
Which we already knew from the theory. It’s impossible to say what the size of this world actually is since there is no access to the paper.

At this point I should mention that the non existence of an aggregate production function is no guarantee of existence of re-switching and capital reversing. In fact, it’s trivial to construct linear production models where everything works just like in the neoclassical model. In fact, other work in the similar line (computer generated simulations used to asses the likelihood that something that could happen actually happens) has found that the likelihood of reswitching and capital reversing to be very low (I need to look the cite up). So in the end, maybe aggregate production functions don’t exist, but factor demand curves still slope downward.

Likewise there’s no access to the Price and Rosser paper (it might be on Barkley’s site and I might have missed it) but reading it’s title and the relevant discussion on the PKT list, it appears to me that Robert is severely stretching the relevancy of that paper to the present issue (what is the empirical evidence that factor demand curves don’t always slope down). First, the paper is more about environmental valuations of costs and benefits and second, the paper is about “reswitching like” effects, not actual reswitching effects.

I feel like I should be able to find the Albin paper since, I believe, that one is a more cited one. But the Gods of Google were not cooperative.

So I’m still gonna go with my prior that there isn’t much evidence that re-switching and capital reversing are prevalent, or even sort-of-common in the real world.

not squeaky…
It is good to have involved in these discussions, even if it is only to keep John Emerson happy.:-) Not everyone is prepared to argue as honestly as you do.
But to get back to where it all started, isn’t there a point that is forgotten in all this “free” trade discussion. The “” around the free. Whatever happened to the theory of second best? Where is the discussion of the distortions due to IP law (apart from the outstanding Dean Baker), and the rather disfunctional international financial system. (Will you dare to say it isn’t disfunctional NOW at this moment)?