Thank you Mr Mankiw

by Daniel on March 20, 2008

Greg Mankiw, in the New York Times, demonstrating the deft common touch for which Harvard economists are famous:

No issue divides economists and mere Muggles more than the debate over globalization and international trade. Where the high priests of the dismal science see opportunity through the magic of the market’s invisible hand, Joe Sixpack sees a threat to his livelihood.

Next week, presumably, Greg Mankiw writes on the subject of “Why is it that economists have so little influence in politics?”

Ahh go on then, try and tell me that Mankiw’s just engaging in a little bit of humour (possibly even a self-deprecating sigh at the pomposity of the average economist). No sale. This is how the average professional economist thinks of you lot, for all that you pay his wages; you’re a bunch of mugs who are incapable of understanding anything and just react like children to whatever’s dangled in front of your nose. It’s another of the many scandals of the profession, it is taught in the universities, and you can see it in more or less every popular book entitled something like “Fuckyounomics: How Nobody In The World Knows Jack Shit Except Economists”.

It’s been a staple of CT over the last five years that altogether too many economists have altogether too much academic arrogance when it comes to their dealings with other social science disciplines, but this is as April showers when it comes to the ugly contempt and patronisation displayed by your typical economist to the general working public. I am not sure how this extremely unattractive personality complex came to dominate economics (I am talking about the specific habit of patronising the lay population here rather than general arrogance; JK Galbraith was one of the most arrogant economists in the history of economics, but didn’t have the particular problem I’m talking about here). Part of it must have been picked up from arguments with Marxists, plus of course the fact that modern economics developed significantly out of the RAND Corporation, and picked up a cargo-cult version of the military value system (plus, of course, a surprising proportion of the founding fathers of modern economics had quite severe personality disorders in the medical sense).

My guess, though, is that it’s fundamentally a cry for help. 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. 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. And then they find themselves at the age of 30, smack bang on the career track of an academic industry which is in general, organised around its economic base, which is the production and retail of plausible arguments for the capitalist system as it exists. Which is not a dishonourable trade, but probably a bit of an anticlimax for someone who dreamed of joining Hari Seldon’s Foundation. So it is unsurprising that they a) get arsey and b) start developing hate-my-job personality tics that interfere with their ability to actually produce the goods.

Which brings me on to my actual point, that as a High Priest and all that, Mankiw wants to be a bit more careful who he’s patronising. After all, Joe Sixpack is pretty aware that his livelihood is under threat from something, because his bloody real wages haven’t gone up in the last thirty years. If he ceases to blame the foreigners, then since the problem won’t have gone away, he is likely to start looking round for alternative explanations. And the results of that search are unlikely to be anything but very bad news for the Republican Party.

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{ 194 comments }

1

HH 03.20.08 at 1:16 pm

Professor Mankiw seems to be suffering from the post-traumatic stress disorder of having been a member of the Bush administration. Since he shut down the comments section on his blog, it has been difficult to question him on how his zeal for Republican leadership fits with his understanding of economics.

With each passing day, as the controlled demolition of the US economy under the Bush Administration proceeds, Professor Mankiw faces a higher mountain of incredulity among the general public. It is a growing burden for him to persuade us that this is the best of all possible worlds.

Fortunately, Mankiw is a tenured academic with no exposure to the marketplace discipline that he extolls. Perhaps this provides him some solace as he views the slow collapse of American capitalism.

2

Matt 03.20.08 at 1:19 pm

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 .

3

stm177 03.20.08 at 1:20 pm

Hasn’t part of the success of the Republican Party over the last 30 years been an exploitation of white resentment? Whether against foreigners, blacks, gays, Hispanics, liberals or whoever? So, why wouldn’t this actually be good for the Republican Party?

A rising level of resentment and anger, from any source, will benefit Republicans.

4

Mr Punch 03.20.08 at 1:34 pm

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,

5

P O'Neill 03.20.08 at 1:42 pm

While there may be some general economist tendencies at work here, I agree with the earlier commenters that it’s difficult to separate the case of Mankiw from his manlove for George W. Bush. Bush was sold to the electorate as the man who Joe Sixpack would enjoy having one of his six beers with, the added bonus being that Bush himself wouldn’t need another of the beers. And it’s tough to think of a less credible spokesman for free trade than George W. Bush, who has spent his life being insulated from the consequences of his decisions and who emerged out of an industry (oil) constructed around monopoly resource concessions and an international cartel.

6

HH 03.20.08 at 1:53 pm

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.”

7

Tom T. 03.20.08 at 2:05 pm

I don’t understand what’s outrageous about Mankiw’s statement. I’ve always heard “Joe Sixpack” as an essentially neutral term referring to a working-class John Q. Public, rather than a pejorative “drunken rabble.” The “sixpack” is meant to connote an image of mass-market beer conveying a sort of salt-of-the-earth quality. If you untangle the layers of sarcasm in this old post of Daniel’s, that seemed to be his understanding, too.

As far as the substance of Mankiw’s statement, does anyone disagree with the suggestion that there is a wide disconnect between economists and working-class wage-earners about the benefits and harms of globalization?

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.

8

More Millian Than Most Of You 03.20.08 at 2:19 pm

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!

9

Daniel 03.20.08 at 2:22 pm

not bad, Tom – but you won’t win the brass ring unless you can come up with a similar gloss on “mere Muggles”.

10

HH 03.20.08 at 2:22 pm

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.

11

Barry 03.20.08 at 2:25 pm

My joke is that economics professors frequently b*tch that nobody understands what they do – and that they’re lucky. If people did, there would not be an unburned economics department in the USA.

12

John Emerson 03.20.08 at 2:32 pm

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.)

13

DRR 03.20.08 at 2:33 pm

I don’t know about patronizing, but for whatever other merits he may have had, JK Galbraith didn’t think too fondly of Joe Sixpack either.

14

Tom T. 03.20.08 at 2:38 pm

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

15

HH 03.20.08 at 2:45 pm

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

Implicit in Mankiw’s light-hearted article is the supercilious belief that Joe Sixpack is too dumb to understand that the “greater overall prosperity” resulting from free trade will trickle down to him. Joe Sixpack has been waiting for two decades, and it is still not trickling down.

16

John Emerson 03.20.08 at 2:46 pm

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.

17

Giotto 03.20.08 at 2:47 pm

Joe Sixpack is pretty aware that his livelihood is under threat from something, because his bloody real wages haven’t gone up in the last thirty years. If he ceases to blame the foreigners, then since the problem won’t have gone away, he is likely to start looking round for alternative explanations. And the results of that search are unlikely to be anything but very bad news for the Republican Party.

Oh, I think the Republican party has little to fear. The Joe Sixpacks I’ve known have a ready list of scapegoats to check off before they turn on the actual guilty party. If foreigners are removed from the top of the list, we just bump up the blacks, the homosexuals, the college professors, the feminists, and the Jews. In the absence of class consciousness it is frightfully easy to convince Joe that he is not being sold down the river by other white men.

18

Thomas 03.20.08 at 2:52 pm

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.

19

Andrew 03.20.08 at 2:53 pm

I recall having a word or two about this Mankiw post before he turned off the comments.

The discussion quickly devolved into declarations about the moral and intellectual superiority of economists.

20

John Emerson 03.20.08 at 2:59 pm

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.

21

John Emerson 03.20.08 at 3:05 pm

The Joe Sixpacks get their information from the mass media, which is what it is. There’s the problem.

There are plenty of Joe Sixpacks in the Democratic Party, above all in the anti-NAFTA wing. Even poor white Southerners tend more to be Democrats than to be Republicans. The New Republican Right is not made up mostly of Joe Sixpacks — that’s a deliberate misrepresentation. The Republicans are always happy to split off as much as they can of the labor vote (or the black vote, or the Hispanic vote, or the Jewish vote, or the gay vote), but the Republican Party is predominantly self-satisfied people who are doing fairly well. And predominantly white. And predominantly heterosexual or closeted. And predoinantly Christian.

22

bernarda 03.20.08 at 3:07 pm

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.

23

dsquared 03.20.08 at 3:09 pm

Do you think really Mankiw sees himself as a “high priest”?

Do you really think that he doesn’t intend to convey the meaning that the general population are ignorant of the real truths possessed by economists? He can dress it up how he likes, but the message is intrinsically patronising.

The man is very smart and very kind, by all lights of those who know him.

“those who know him” being rather an important qualification here, given context.

And what was a silly joke on his blog

Although the share price of the New York Times is falling while the royalties from “Principles of Economics” keep rising, the NYT comment page is not (yet) Greg Mankiw’s blog.

24

Stuart 03.20.08 at 3:12 pm

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

Bloix 03.20.08 at 3:13 pm

“the Nobelist Stiglitz”

He’s not a “Nobelist.” The Bank of Sweden Prize is not a Nobel Prize. Nobel had been dead for 72 years when the Bank of Sweden decided to borrow the name of the most prestigious prize in the world in order to make economics appear to be a hard science like chemistry or physics.

26

John Emerson 03.20.08 at 3:19 pm

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

27

dsquared 03.20.08 at 3:34 pm

The Bank of Sweden Prize is not a Nobel Prize

nobody cares.

28

mitterko 03.20.08 at 3:36 pm

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.

29

HH 03.20.08 at 3:43 pm

“Poor Greg Mankiw”

Not poor at all. I’m sure that his book sales income supplements nicely his academic salary. He enjoys excellent health care and a fine retirement plan. His parents invested carefully in his education, thus smoothing his path and allowing him to develop fully to his potential.

Can we blame professor Mankiw for expecting others to do well on their own initiative? If he can lead an orderly and productive existence, what is to stop billions of others from emulating him? Why can’t the people of a superslum like Kinshasa simply emulate Greg Mankiw and adopt good study habits?

The funny thing about Professor Mankiw’s orderly, rational, and highly successful outlook on life is that it does not explain minor matters like global resource depletion, climate change, and steadily growing mass poverty. These “externalities” of Capitalism are presumably left as exercises for his fortunate students.

30

Xanthippas 03.20.08 at 3:56 pm

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.”

31

Righteous Bubba 03.20.08 at 3:59 pm

Do you really think that he doesn’t intend to convey the meaning that the general population are ignorant of the real truths possessed by economists? He can dress it up how he likes, but the message is intrinsically patronising.

What group of insiders doesn’t take a patronising view of the non-insiders? To deny economists the practice of a basic human stupidity is entertaining because I want to deny them stuff, but really…

32

lemuel pitkin 03.20.08 at 3:59 pm

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.

33

Lee A. Arnold 03.20.08 at 4:02 pm

Well, Joe Sixpack is, on the whole, an idiot: Curiously, most other Joe Sixpacks will agree! The upshot of Mr. Mankiw’s piece, however, is that HE hasn’t been teaching very well, if a greater percentage of Sixpacks opposes free trade than before. His edicts should have filtered down by now. This is likely to lead to the conclusion that, whatever Joe Sixpack’s wages are, some Harvard professors are terribly overpaid, since they aren’t good educators. Indeed, fresh evidence for the case is Mr Mankiw’s present column, which manages to AVOID mentioning that the only way that free trade will be equitable is if the winners compensate the losers in some fashion, as John Stuart Mill argued. I’ll bet that even Joe Sixpack could accept that full argument. How did he come to omit this part? I think the most charitable explanation for Mr Mankiw’s omission is that most economists appear to be captured in a mindset, and forget that “one-equation chalkboard science” explains nothing outside of physics and chemistry. A less charitable, though just as likely explanation is that if he admitted to the requirement of recompense, he couldn’t get a job on his side of the political aisle. Here is a big secret: Joe Sixpack already understands that one! It is hard to avoid J.K. Galbraith’s conclusion that “the economics profession — I choose my words with care — is intellectually bankrupt. It might as well not exist.”

34

Eric Nilsson 03.20.08 at 4:10 pm

“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.

35

lemuel pitkin 03.20.08 at 4:18 pm

Saying that “we” are better off because, say, you lose $10 but I gain $11 requires lots of intellectual dishonesty and/or ethical midgetry

True. But as I said above, it’s important in making this argument not to concede the premise. In many plausible trade liberalization scenarios, it’s not even true that the dollar gains to the winners outweigh the losers’ losses.

36

John Emerson 03.20.08 at 4:18 pm

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.

37

John Emerson 03.20.08 at 4:24 pm

According to Coyle and others, around 1970 economists started to reject Galbraith because he “wasn’t really an economist” since he didn’t do enough modeling, and really was just a sociologist or a historian or a writer. Economists began to specialize in purely economic, quantitative areas. Few recognized that by narrowing their focus they were leaving important things out; to read what they say, most of them believed that the things that they studied were fundamental, and the stuff that Galbraith studied was secondary, ephemeral, and unimportant. A lot of bad, Chicago School plicy came out of that.

38

Riku 03.20.08 at 4:46 pm

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.

39

Questioner 03.20.08 at 4:55 pm

On the one hand, you castigate Mankiw for saying that Joe Sixpack doesn’t understand the principles of economics (note that he didn’t say why Joe Sixpack misunderstands economic principle). On the other hand, John Emerson writes “The Joe Sixpacks get their information from the mass media, which is what it is. There’s the problem.” What is the “problem” to which Emerson is referring? My guess–and please correct me if I’m wrong–is that it is the problem of Joe Sixpacks voting against their own interests or misunderstanding the world. And giotto writes that “The Joe Sixpacks I’ve known have a ready list of scapegoats to check off before they turn on the actual guilty party.” Presumably, the Joe Sixpacks’ list of scapegoats is in some way erroneous. Why? Who knows, but in having it, they are again misunderstanding things and voting against the self-interest.

It seems that some of you (at least two of you) are condemning Mankiw for something you yourself do. Is the defense that you blame others for Joe Sixpack’s ignorance whereas Mankiw sees Joe Sixpacks as innately stupid (does Mankiw think that?)?

By the way, isn’t What’s the Matter with Kansas? taking a more or less Mankiwian line? And what’s wrong with that anyway? Don’t you think the vast majority of the electorate are misinformed in significant ways?

40

John Emerson 03.20.08 at 5:15 pm

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.)

41

Questioner 03.20.08 at 5:19 pm

Thanks for your response, John. But surely you think that this country is not just fucked up at the elite level (even if it mainly is)? I mean, lots of non-elite whites have lots of views that you would no doubt find morally repellent, don’t they? (Take fundamentalist Christians, for example.) I think I’m missing your point.

42

Punditus Maximus 03.20.08 at 5:25 pm

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.

43

Questioner 03.20.08 at 5:28 pm

How is he not an economist? He’s listed as the Robert M. Beren Professor of Economics at Harvard University, and he got his Ph.D. in economics from M.I.T.

http://www.economics.harvard.edu/faculty/mankiw/cv/CV_shortversion_Nov2007.pdf

44

John Emerson 03.20.08 at 5:29 pm

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.

45

John Emerson 03.20.08 at 5:32 pm

What questioner said.

Medicine is famous for coddling bad doctors, but I have never, ever heard of an economist losing his licence or being disbarred or defrocked for any reason. No ethical or professional standards are enforced.

46

Maria 03.20.08 at 5:33 pm

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).

47

Questioner 03.20.08 at 5:34 pm

But by saying that “It’s quite normal for the poorer, less powerful people to take their lead from their superiors”, aren’t you claiming that the Joe Sixpacks of the world are fundamentally misunderstanding their own self-interest? I take it you think that what’s in their self-interest isn’t obvious, which would be a perfectly defensible thing to think. But if so, what precisely is wrong with Mankiw’s statement, again?

48

Matthew Kuzma 03.20.08 at 5:38 pm

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.

49

John Emerson 03.20.08 at 5:41 pm

First, I never responded to that part of Mankiw’s statement. But what’s wrong with Mankiw’s statement is that he doesn’t really know or care what Joe Sixpack’s interest is. He’s assuming that Joe Sixpack would be better off under free trade, and is blaming him for not supporting free trade.

The whole hard-hat / Joe Sixpack cliche is pretty much pop media disinformation anyway.

50

Questioner 03.20.08 at 5:42 pm

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?

51

Tom T. 03.20.08 at 5:50 pm

Read the rest of his column.

I read the rest of his column. It’s all about how his views on free trade are so out of touch with current politics that they’re likely to be politically damaging to John McCain, the candidate most aligned with them. This made it seem odd that Daniel was criticizing him for being out of touch with current politics.

Obviously Mankiw thinks he’s right on the substantive issues. Should he have said “my esteemed opponents” instead of “Muggles”? Sure, OK. But I did read the “high priest” reference as self-deprecating, and in that light the Muggles reference seemed like a pretty weak sting.

I dunno. I don’t know the man at all. Maybe he’s a prick.

52

John Emerson 03.20.08 at 5:56 pm

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).

53

greenish 03.20.08 at 6:09 pm

How dare he! What an elitist, to think his education gives him a better perspective on the area of his expertise compared to the common public!

54

dsquared 03.20.08 at 6:31 pm

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”.

55

Tom T. 03.20.08 at 6:53 pm

Re: 54. I get it. I know the sort of person you mean.

Reading your bio of Derman, for some reason I found myself thinking, “This also sounds like Scott Adams” (of Dilbert).
:-)

56

John Emerson 03.20.08 at 6:56 pm

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

57

Josh G. 03.20.08 at 7:04 pm

Economics really went off the rails when it became completely detached from social science and political science. In doing so, it became institutionally autistic, and it is not a coincidence that many economists (and libertarians who parrot Econ 101 dogma) are autism sufferers. To a large extent, the economics profession as it exists today is a symptom of mental diseases and defects. More than that, it is also a religion: an evil, anti-Christian religion devoted to the worship of Mammon. All that matters to economists is the maximization of GDP; never mind how it is distributed, or what the human costs, or whether it is environmentally sustainable.

58

John Emerson 03.20.08 at 7:12 pm

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

59

HH 03.20.08 at 7:19 pm

The governing paradigm for academic economics today is the joke about the drunk looking for his lost keys under the lamp post because the light is better there. Academic economists, persuaded that rigor is the prime measure of research value, avoid squishy issues like income distribution, the culture of poverty, and management of trust.

But the stunted result of an economics detached from these crucial issues is an increasingly dysfunctional and discredited dismal science (that failed to predict the current credit markets implosion). People like Mankiw are telling us that we are all better off because we listen to them, but the daily news tells us the opposite.

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HH 03.20.08 at 7:22 pm

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.”

61

Geoff 03.20.08 at 7:34 pm

I am a third-year political science and economics major at a liberal arts college in Florida. I am totally disillusioned with the profession. The more I read people like Mankiw assume away all the differences between countries, and then wonder why countries like Bolivia open their markets but can’t draw in any investment, the more I get sick to my stomach. Comparative advantage is total bullshit: assuming perfect employment, perfect information, and perfect transferability of resources (i.e. assuming any country can produce any product) makes the model generally unfit for describing trade between countries at different levels of development. That’s just an example of how received neo-liberal wisdom is totally unchallenged by mainstream economists in this country. If you can’t put it in a math model, they don’t see any worth in your ideas. I’m totally sick of it: I don’t see how linear algebra, two or three levels of calculus, and probability are supposed to make me understand how people behave. People are not only “rational, self-interested, utility-maximizing agents.” Real life is more more complicated than that, in ways that mathematical models cannot possibly account for. According to today’s neo-liberal mainstream economists, Alexander Hamilton would be a socialist because he promoted government intervention in the economy in the form of infant industry protection, among other policies. Anybody who actually has a clue about history would realize the folly in that.

In 100 years, people will look back at today’s economics in the same way we look back at 19th Century anthropology: professional support for imperialism. The assumptions that mainstream economists don’t even question completely undermine the usefulness of their programs and, at worst, are blatantly condescending towards the “natives” who actually run countries in the developing world by assuming that they cannot run their own countries effectively. While I will definitely acknowledge that corruption is bad for growth, our own country has had its share of corruption in the past (and currently), yet we were still able to develop into a highly innovative economy because of state investment in important industries (in many forms, including through military R&D programs). South Korea and Taiwan show that infant industry protection and export promotion are not mutually exclusive, but are in fact complimentary. Of course, this cuts against the interests of the people funding economic research in this country, so these points of view are never heard.

62

Andrew 03.20.08 at 7:35 pm

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?

63

John Emerson 03.20.08 at 7:51 pm

They may have priors, but not the the sort of “do-gooder”priors that advocates have.

I pretty much agree, though the terms “do gooder” and “advocate” are too highly colored. Economics goes wrong in its priors. Which means it’s pretty goddam wrong.

64

mq 03.20.08 at 7:56 pm

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?

65

HH 03.20.08 at 8:04 pm

“I’m not quite sure why people are so bitter about it in threads like this.”

Because, unlike the study of particle physics or Elizabethan literature, the doctrine of maximizing “market efficiency” has had a pernicious impact on our nation and the world (the Chicago School).

Take a look at the monstrosities our efficient Wall Street firms have created, then ask investors who have lost their retirement savings why they are so bitter.

66

yabonn 03.20.08 at 8:13 pm

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.

67

John Emerson 03.20.08 at 8:14 pm

Too little, too late. back when the decisions were being made, DeLong and Krugman in particular were rabid in their “free trade” advocacy, and they were both in a position to make a difference. And most economists are still rabid. DeLong and Krugman are nice guys. Relatively speaking.

68

lemuel pitkin 03.20.08 at 8:25 pm

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.

69

a 03.20.08 at 8:41 pm

Agh! Economists never seem to realize that just possibly *they* might be wrong about free trade. It’s overall benefits are based on a simple model, its empirical basis is questionable. Economists aren’t so smart; many of them are wannabe mathematicians who aren’t good enough at math.

70

mq 03.20.08 at 9:02 pm

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

71

christine 03.20.08 at 9:42 pm

Yes, yes, all economists are the same utter bastards (despite being ‘nice people’ in theory), who don’t care about the real world and patronise the masses. Which totally explains why, eg, Dani Rodrik is absolutely with Mankiw on this (sarcasm alert):

http://rodrik.typepad.com/dani_rodriks_weblog/2008/03/why-doesnt-the.html

72

John Emerson 03.20.08 at 9:45 pm

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

73

Walt 03.20.08 at 10:30 pm

I would say that kind of stuff is great, Lemuel, not worthy of criticism. I don’t know if that particular instrument is a good one, but complaining about social scientists getting exciting about a good instrument is like complaining about physicists getting excited because they have invented a new piece of experimental apparatus.

74

roger 03.20.08 at 10:35 pm

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.

75

david 03.20.08 at 10:35 pm

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

76

Walt 03.20.08 at 10:37 pm

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

77

dsquared 03.20.08 at 10:37 pm

Yes, yes, all economists are the same utter bastards (despite being ‘nice people’ in theory), who don’t care about the real world and patronise the masses.

guess what profession I earn my living at, Christine?

78

Walt 03.20.08 at 10:39 pm

International man of mystery.

79

Leon 03.20.08 at 10:44 pm

…which is the production and retail of plausible arguments for the capitalist system as it exists.

The whole concept of hegemony, implicit in the post, is far, far, far more elitist than anything Mankiw said. Dismissing people’s views by ascribing them to the “economic base” is not much more sophisticated than citing “the establishment” or “the man”. The hegemonic view of society is far more arrogant, elitist, and dismissive of the views of the common person than the claim of economists that certain market outcomes are counter-intuitive.

80

John Emerson 03.20.08 at 11:52 pm

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

81

Peter 03.21.08 at 12:05 am

Nobel economist George Stigler once applied mainstream economic theory to economics itself. Mainstream theory tells us that every effective demand (ie demand backed by money) creates its own supply. But who has a demand for economic theories? Capitalists do, and so do socialists. Who has the money to purchase the economic theories they demand? Only capitalists, in the main. Hence, the overwhelming preponderence of economic theories favour and support capitalism. No economist I have met likes to think they have been bought, but that is a consequence of their own theory.

82

lemuel pitkin 03.21.08 at 12:07 am

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

You would be correct, sir.

83

taj 03.21.08 at 12:20 am

john emerson (re 58):

In fact, as a Joe Sixpack trying to get my head around Economics (and how it impacts my wages), I am trying to understand just why I find myself agreeing with all your comments. Is it because you are correct, or is it because I happen to share your preconceived incorrect notions?

84

taj 03.21.08 at 12:21 am

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

85

Megan 03.21.08 at 12:35 am

Geoff in 62: If grad school and your discipline is going sour for you, you might find Dr. Shmidt’s Disciplined Minds very helpful. It describes in detail the way grad school can channel and indoctrinate students, and how that hurts them. I don’t know whether this is a problem for you, but before you do anything like drop out of grad school, please read Disciplined Minds.

86

Megan 03.21.08 at 12:36 am

Taj, I consider Emerson a usually reliable source.

87

PHB 03.21.08 at 1:05 am

I think that the difference between Galbraith, Krugman and the particular type of economist that works as apologist for the GOP party view is that there is the sense that the former wished to actually educate people about economic theories while the latter merely wants to obtain acquiescence for a particular policy position.

Einstein made a big mistake when he decided to bowdlerize the general theory of relativity for his popular book. He got his point across ‘space is not linear’ but he knew that the way he did so was not strictly speaking accurate. If you want to understand relativity properly you have to unlearn the pop culture notion of things getting heavier when they move faster.

I don’t get the feeling that Krugman is using a similar tactic when he explains economic principles underpinning real world events. When he makes an analogy he explains the limitations.

The problem with the supply siders is that it becomes very clear that their public arguments bear no resemblance to their actual reasoning.

88

John Emerson 03.21.08 at 1:20 am

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

89

notsneaky 03.21.08 at 2:54 am

Mr Punch: “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)”

I hate to point out the obvious but in matters pertaining to economics wouldn’t economists be smarter than other social scientists or humanists? At least one would hope so. Just like if you want to know about Shakespeare you’d ask a member of an English dept and not a biologist.

And if I were to psychoanalyze dsquared the same way he attempts to psychoanalyze the entire profession I’d say that he’s suffering from a inferiority complex typical of business/finance types vis-a-vis the academic economists. You know. We may be misguided but we do want to save the world, they’re just in it for the money. They get more compensation and no prestige.

Lemuel,
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. Of course the devil’s always in the details so you could be right but it doesn’t seem quite up to par as a poster boy for silly economics.

And I think my differences with the esteemed John Emerson are just plain ol’ irreconcible so there ain’t much to be said there. Except maybe that I’d second his recommendation of Colander, Rosser, and Holt (also Colander’s book on Teaching Economics). That way all you critics can keep criticizing economics without sounding like such ignorant fools (“all that economists care about is maximizing GDP”) (oh wait. There goes that arrogance again)

90

John Emerson 03.21.08 at 3:06 am

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.

91

grackle 03.21.08 at 3:18 am

And I thought that economics was just a profession society had created for people with Asperger syndrome.

92

notsneaky 03.21.08 at 3:54 am

“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)

93

Alexander Nekvasil 03.21.08 at 4:49 am

Gregory Mankiw has stated his reasons for becoming an economist, saying that he wanted to find mathematical solutions for political problems.

Critiques of this approach are extant, of course, from Plato to Adorno, but these are not authors that economists grace with their attention.

They pay a price for this, in weirdness.

94

sglover 03.21.08 at 5:03 am

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.

95

Walt 03.21.08 at 5:06 am

While (if Clark’s review is accurate) that sounds pretty absurd, it’s still not as absurd as Becker.

96

Peter 03.21.08 at 5:27 am

“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?

97

jj 03.21.08 at 5:38 am

Christ on a crutch, but I used to think that lawyers were the most reviled profession. Evidently (according to this thread), most economists are law school washouts.

98

Z 03.21.08 at 7:29 am

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

99

notsneaky 03.21.08 at 8:45 am

There’s nothing like an apostate.

100

Peter 03.21.08 at 10:11 am

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?

101

John Emerson 03.21.08 at 10:36 am

Economists are physics or math department washouts, not law school washouts.

People are mean to all those poor little economists because, as I’ve said, economists have extraordinary institutional power which they’re confident they deserve, and feel justified in treating other disciplines with scorn.

At the time the free trade decisions were being made, economists assured us that everyone would be better off, but “everyone” really just meant the per capita average — the winners would win more than the losers lost. Now some of them (Stiglitz, Krugman, DeLong) are hemming and hawing a little. Not because there was no net gain, but because they’ve apparently concluded that there were more losers than they’d thought.

But a major factor is that non-conservative economists do not accept the Economic Darwinist approach. To a conservative economist workers who lose their jobs and futures are unproductive workers, period, just as workers in general can be seen to be less productive than management, and thus less worthy of reward, simply because the economy rewards them less.

The liberal economists’ conclusions look like a mixture of economics and something else (politics, ethics, whatever), but that’s just because theoretical economics is tacitly conservative. Conservative economists can pretend to be apolitical pure scientists for that reason.

“Free trade” is a thick topic and not a purely economic one. What economists do is treat it as purely economic and ignore people who talk about other aspects. And they may even have been wrong on part of the economics.

I can’t find the cite, but apparently Mankiw believes that most econmists will support McCain this fall, even after 8 years of Republican fraud and disaster, purely because of free trade.

I did find this:

Myron Scholes of LTCM is sharing his views about how the most recent batch of crooks should be helped.


Yet another economist, Alan Blinder, is in trouble because of doubts about free trade
.

Who are the people who can treat an established economist like Alan Blinder as an apostate? Or Stiglitz? Who are the people that Coyle, Rosser, Colander, and Holt tell you you have to deal with very gingerly if you want your ideas to be given a hearing? Is Mankiw one of them? 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 msyeteries powers?

102

John Emerson 03.21.08 at 10:39 am

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.

103

Barry 03.21.08 at 11:32 am

John Emerson: “At the time the free trade decisions were being made, economists assured us that everyone would be better off, but “everyone” really just meant the per capita average—the winners would win more than the losers lost. Now some of them (Stiglitz, Krugman, DeLong) are hemming and hawing a little. Not because there was no net gain, but because they’ve apparently concluded that there were more losers than they’d thought.”

In DeLong’s case (I read his blog), it might be that the hemming and hawing is because the people who are losing are complaining, and those who are about to lose are noticing. If people would just STFU and eat it, I’m sure that he’d lose those doubts.

104

John Emerson 03.21.08 at 11:47 am

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.

105

notsneaky 03.21.08 at 1:18 pm

“Economists are physics or math department washouts, not law school washouts.”

Seriously. Work on your caricatures. I’m a history wash out personally. So is, for example, Robert Lucas. And most economic PhD candidates are plain ol ‘ simple economic undergraduate washouts.

106

notsneaky 03.21.08 at 1:30 pm

“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.

107

John Emerson 03.21.08 at 1:39 pm

Notsneaky, there sure do seem to be a lot of schools in economics. The Colander-Rosser-Holt book spends about 30 pages talking about the various orthodox and non-orthodox schools.

And then, in the real sciences you do have overthrowals too (e.g. plate techtonics). Economics’ gradualism may be the result of a disciplinary mafia’s stranglehold on methodology, as with analytical philosophy.

108

notsneaky 03.21.08 at 1:50 pm

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).

109

John Emerson 03.21.08 at 1:59 pm

Exactly. Everything about those guys is bad!

110

dsquared 03.21.08 at 2:07 pm

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.

111

HH 03.21.08 at 2:14 pm

The most frustrating thing about Mankiw is his profound faith in the division of labor as applied to intellectual inquiry. He has not the least concern that savant status in his narrow domain may be undermining a larger and more valuable understanding of socio-economic phenomena. His epitaph should read: “That’s not my problem.”

The bias in modern academia seems to be the study of more and more about less and less. Where are the great integrators of knowledge today, when global problems cry out for solutions?

112

notsneaky 03.21.08 at 2:27 pm

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.

113

Matthew G. Saroff 03.21.08 at 2:47 pm

This is not unique to economics.

You find this in many primarily academic fields, just look at string theorists.

With economists, however, the field is literally in front of our noses, and effects us in our daily lives, so the arrogance of economists is galling for that reason

114

dsquared 03.21.08 at 3:32 pm

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.

115

ScentOfViolets 03.21.08 at 3:45 pm

Sigh. Notsneaky, you don’t seem to have a very scientific – or mathematical – mind. Something tells me you don’t have the faintest idea why papers like this do not rise to the level of science.

For that matter, Mankiw probably wouldn’t either.

116

Planeshift 03.21.08 at 3:57 pm

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

117

John Emerson 03.21.08 at 4:13 pm

Actually, PAE had to change their name for that reason. They’re not “Post-autist economics” any more.

118

Questioner 03.21.08 at 4:26 pm

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?

119

John Emerson 03.21.08 at 4:40 pm

There are subtle criticisms of the standard argument, but I don’t understand them and don’t know how valid they are.

My basic criticism of economics is that it’s a very partial description of society which either forgets that it’s incomplete, or else claims that the aspects of society it studies are more “fundamental” and “real” than the other aspects studied by other discipline. (These are not technical econ terms, just the way economists think). But the skewing and slanting is not neutral; they manifest the obsessions and blind spots of one particular way of life, which economists believe is the only reasonable way of life.

120

seth edenbaum 03.21.08 at 4:41 pm

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

121

lolwut 03.21.08 at 5:17 pm

“or else claims that the aspects of society it studies are more “fundamental” and “real” than the other aspects studied by other discipline.”

I think you need to provide some evidence for this.

122

lolwut 03.21.08 at 5:19 pm

“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?

123

John Emerson 03.21.08 at 6:41 pm

123: It seems to be a pervasive informal belief. I didn’t actually think that that would be a controversial statement. The response I expected was “Well, aren’t they?”

I don’t “need” to do anything, by the way — this is the internet, not an econ class. Scarcely a word I’ve said here could be said in an econ class. These sorts of criticism are ignored.

124

lemuel pitkin 03.21.08 at 7:37 pm

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.

125

Robert 03.21.08 at 8:26 pm

At least two posters above (33 and 35) gave good reasons for doubting the political conclusion that tariffs on goods is a bad idea. In addition, Ian Steedman showed over a generation ago that the traditional story is false when capital goods are correctly theorized.

126

notsneaky 03.21.08 at 9:05 pm

“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.

127

Randolph Fritz 03.21.08 at 11:31 pm

A lot of this, I think, derives from the general difficulty of being an intellectual in the USA. Except for certain specialized domains–military strategy, technical craft, and finance come to mind–US intellectuals are treated with utmost contempt. How they respond varies, but one common response is elitism; it is not, from there, too far to the attitudes of the neo-cons, who hold the majority of the human race in such contempt they are willing to see people die by the hundreds of thousands for their abstract goals.

I think Krugman, at least, has jumped the wall; I can only hope he keeps his column, his academic position, and his influence. In a sense I suppose he has gotten his wish, and discovered the sobering weight of real power to an ethical person. Mankiw, like Stockman before him, seems to have been seduced and corrupted by power. I worry about Delong, who seems to be retreading the path to neo-conservatism.

128

seth edenbaum 03.21.08 at 11:49 pm

#124 “wtf?”

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

129

ScentOfViolets 03.22.08 at 2:12 am

Sigh. Notsneaky, have you read the actual paper? Maybe looked at the qualifications they made on their statments? Or their explanation as to why this event can be treated as a random variable? What was the extent of their statistical analysis? Did they really try to justify certain statistical assumptions, or was it the usual let p=0.05 garbage?

The fact of the matter is that this paper simply isn’t science, not no way, not no how, unless it is a lot better researched than is normally the case.

And that’s the point. Which you seem to have missed.

130

notsneaky 03.22.08 at 2:35 am

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

131

ScentOfViolets 03.22.08 at 2:49 am

No. Because you can’t. You know the paper as written is not science. I know that the paper as written is not science. I also know that you know that I know, and that just about everyone else does as well. And – amusingly enough – you helped explain why.

Really, us mathematicians do get tired at the way you lower orders mishandle the tools we give you.

Economics at this point is a science in exactly the same way and for exactly the same reasons that Lysenkoism was a ‘science’ in the old Soviet Union. The sooner the pretenders are exposed, discredited, and disowned, the sooner economics can actually return to being a science.

Not before.

132

notsneaky 03.22.08 at 3:02 am

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

133

ScentOfViolets 03.22.08 at 3:08 am

Shrug. I can’t help it if you make counterfactual statements. Such as your initial knee-jerk defense of the paper.

I will also note that when people say that they “don’t have a dog in this fight” that this almost always means that they have a dog in the fight, and so comments like that one are offensive on two different levels. Please don’t use that phrase in the future.

But getting back to the original claim: once again, no, this is not a paper grounded in science by any means. And I seriously doubt that you really know why.

134

notsneaky 03.22.08 at 3:47 am

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.

135

ScentOfViolets 03.22.08 at 4:09 am

Uh, if you follow the comments, _you_ were the one way out of line, making comments such as these:

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.

Don’t even whine that you’re just telling it like it is, and on those grounds excuse yourself from taking responsibility for the tone of your comments. I don’t know whether you’re the type to drink while you post, but if you are, I would advise you to stop.

And for the last time, this paper has nothing to do with ‘science’. I seriously doubt you know why, but on the off chance that you do, why don’t you explain to all of this what makes this paper ‘scientific’? I’ll give you a hint: you gave a partial answer to a different question.

136

John Emerson 03.22.08 at 1:44 pm

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.

137

ScentOfViolets 03.22.08 at 2:10 pm

I’m not trying to be tough on notsneaky; not unless deducting points on problem for saying 4-7=11 is considered being ‘tough’ on a student. Notsneaky compounds the error by insisting, in effect, that four minus seven really is eleven, and that those who disagree just don’t get it and haven’t done their research, and anyway, they don’t understand statistics the way s/he does.

The snark that notneaky apparently can’t see in his own posts I can live with(perhaps it’s a manifestation of the arrogance we were talking about.)

But getting back to the point, presenting this paper with the apparently poorly justified assumption that assassinations can be treated as a truly random variable and going downhill from there as ‘science’ is precisely what’s wrong with the economics profession; it’s not just a lot of them really don’t know statistics, it’s not just that the models have a poor correspondence with the phenomena they are intended to describe; it’s that in a fundamental sense, they aren’t really doing ‘science’.

I’m solidly behind Galbraith on this one – exoteric knowledge good; esoteric knowledge, well, not so good[1]

[1]I know, I know, it’s a fundamental invasion of privacy . . . but wouldn’t it be nice if economists could,say, directly collect purchasing data directly off of everyone’s computer? With that sort of data base, it might, possibly, be enough to establish economics as the quantitative science that so many of it’s practitioners want it to be.

138

dsquared 03.22.08 at 2:19 pm

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.

139

John Emerson 03.22.08 at 2:22 pm

Probably Walmart economists are doing almost exactly that.

A lot of the applied people might be smarter than the theoretical people. Rove was a working political scientist with one year of college, and he was rightfully contemptuous of the high-powered PhDs he kept beating. Some of the early behaviorists went into advertising, and whatever you say about behaviorism some of their tricks worked in sales. In the same way, the Walmart economists might be smarter than the Harvard economists, in part because they’re much more empirical and because their theorizations have real-world consequences. “Applied” is a kind of “experimental”.

Sometimes the question of the scientificity of social science leads to the question of whether you really want that kind of people to have that kind of knowledge.

I would be happy to give Rove a Political Science PhD, but I’d also be happy to lock him up in jail for the rest of his life.

140

John Emerson 03.22.08 at 2:24 pm

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.

141

ScentOfViolets 03.22.08 at 2:33 pm

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.

If this is a typical attitude, then this could be a partial explanation of why so much of economics these days is essentially Lysenkoism. In fact, from what I understand of this approach, behavioral economics is very ‘scientific’ in it’s adopted methodologies – almost positivist, one might say. Here’s a wiki description:

Traditional economists are also skeptical of the experimental and survey based techniques which are used extensively in behavioral economics. Economists typically stress revealed preferences over stated preferences (from surveys) in the determination of economic value. Experiments and surveys must be designed carefully to avoid systemic biases, strategic behavior and lack of incentive compatibility, and many economists are distrustful of results obtained in this manner due to the difficulty of eliminating these problems.

Rabin (1998) dismisses these criticisms, claiming that results are typically reproduced in various situations and countries and can lead to good theoretical insight. Behavioral economists have also incorporated these criticisms by focusing on field studies rather than lab experiments. Some economists look at this split as a fundamental schism between experimental economics and behavioral economics, but prominent behavioral and experimental economists tend to overlap techniques and approaches in answering common questions. For example, many prominent behavioral economists are actively investigating neuroeconomics, which is entirely experimental and cannot be verified in the field.

What makes this approach a science, of course, is it’s testability:

Other proponents of behavioral economics note that neoclassical models often fail to predict outcomes in real world contexts. Behavioral insights can be used to update neoclassical equations, and behavioral economists note that these revised models not only reach the same correct predictions as the traditional models, but also correctly predict some outcomes where the traditional models failed.

Of course,the so-called ‘neoclassical’ approach was just warmed-over and discarded pre-war economic theory; from what I can gather, it was initially composed of the old guard who wanted to poke Keynesians in the eye, along with those who were flattered by the thought that their own actions taken entirely for personal self-interest were somehow Good. I’m unsure when the neoclassical’s value as propaganda was realized, but surely this was the case by the 1980’s.

142

ScentOfViolets 03.22.08 at 2:42 pm

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 . . .

143

lolwut 03.22.08 at 6:43 pm

“along with those who were flattered by the thought that their own actions taken entirely for personal self-interest were somehow Good”

any examples?

144

John Emerson 03.22.08 at 7:23 pm

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

145

lolwut 03.22.08 at 8:28 pm

“blogging style”? :-/

146

John Emerson 03.22.08 at 8:56 pm

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

147

notsneaky 03.22.08 at 11:19 pm

I read the thread backwards and originally thought John Emerson was referring to Mr. SoV in 148. But since apparently he’s referring to someone else…

SoV, look, I’m not your “student”, I don’t need “hints”, I’m not gonna use my lifeline, I’m not gonna buy a vowel, and you’re not Pat-freakin-Sajak.

Speak your piece or shut up.

Actually it’s too late for that too, since I’m tried of this. It’s obvious what you’re trying to say, you think it’s some kind of deep profound statement about testability and science, but in reality it’s nothing more than your own ignorance and also a misunderstanding about how this topic came about (hint Chucky: it wasn’t about whether this was a good or bad paper)

148

notsneaky 03.22.08 at 11:24 pm

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.

149

John Emerson 03.22.08 at 11:52 pm

We appreciate you appearance, Notsneaky. It was getting boring. I imagine that all the other economists are off in Barbados eating sushi off naked women.

150

John Emerson 03.22.08 at 11:59 pm

Lolwut may be a bot.

“A bot?….”

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notsneaky 03.23.08 at 12:08 am

They got that in Minneapolis now you know.

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John Emerson 03.23.08 at 12:29 am

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

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notsneaky 03.23.08 at 12:46 am

Did you see the letter to the editor by some guy talking about how he’d rather have a place where he can eat medium rare cheeseburgers and mashed potatoes and gravy off of naked women?

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John Emerson 03.23.08 at 1:02 am

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

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Depressed 03.23.08 at 2:52 am

Questioner: google up a paper named “What’s the Matter With ‘What’s the Matter With Kansas.” It’s available online. Based on the general tenor of your comments I believe you’ll find it interesting.

Scent of Violets: the possessive of “it” is “its,” NOT “it’s.” “It’s” is a contraction of “it is.” I know that this is contrary to the usual rule in English, but English is full of exceptions.

Many people: arguing over whether economics is or is not a science is remarkably unproductive. Argue about whether (or to what extent) it’s correct, instead. Although there is not likely to be a generic answer to this question.

My current favorite example of what is wrong with economics from a political point of view is this: David Card is a remarkably good labor economist. A few years ago he published a study suggesting that a raise in the minimum wage did not result in lower employment. Since demand curves slope down this is obviously impossible :-).

For this he received a storm of criticism, much of it personal. He has stated that he lost long-standing friends as a result. He has also left that particular field.

This case is far from unique. Bringing up qualifications to simple statements, such as “Free Trade is Good,” is often regarded as something that polite people don’t do.

lemuel pitkin: number 126 is a nice post. Thanks.

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Tom West 03.23.08 at 3:12 am

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.

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seth edenbaum 03.23.08 at 3:28 am

“Since demand curves slope down this is obviously impossible.”
The data said otherwise. It’s called empiricism

Card, a highly esteemed economist at the University of California, Berkeley, caught flak for his heresy not on trade but on the minimum wage. In 1994 he conducted a study to see whether an increase in the minimum wage in New Jersey had the negative effect on employment that basic neoclassical theory would predict. He found it didn’t. In fact, his regression analysis showed that, controlling for other factors, New Jersey gained fast-food jobs after increasing its minimum wage, compared with Pennsylvania, which hadn’t raised wages. The paper attracted a tremendous amount of attention and criticism, and Card himself largely abandoned working on the minimum wage. In a 2006 interview, he explained his decision to leave the topic behind this way: “I’ve subsequently stayed away from the minimum wage literature for a number of reasons. First, it cost me a lot of friends. People that I had known for many years, for instance, some of the ones I met at my first job at the University of Chicago, became very angry or disappointed. They thought that in publishing our work we were being traitors to the cause of economics as a whole.”

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lemuel pitkin 03.23.08 at 3:44 am

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.

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seth edenbaum 03.23.08 at 3:53 am

“Seth, Your sarcasm detector doesn’t seem to be working.”

it happens sometimes…

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Walt 03.23.08 at 4:00 am

Lemuel, I thought your comment was good as well.

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Glen R 03.23.08 at 6:58 am

The Card study struck me at the time as an example of looking-under-the-lamppost. The theory doesn’t specifically say raising minwage will reduce the number of jobs at major fast-food restaurants; using these as an example of a typical minimum wage job is really more of a popular-culture stereotype. It might make more sense to focus on the number of labor-hours purchased and on institutions that actually pay near the minimum. But it’s not as easy to find all the marginal businesses (that the theory suggests will be affected first) as it is to survey all the McDonalds branches in an area and check their employee count. Hence: lamppost.

Also, as I understand it the Card survey was actually based on calling each restaurant and asking managers whether they intended to increase, decrease or maintain current staffing levels rather than looking at the level of employment that was actually provided. Some of the follow-up studies that did that reached different conclusions.

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Robert 03.23.08 at 9:16 am

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

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lolwut 03.23.08 at 11:52 am

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

Well, I got you to admit that you had no good evidence for one of your many dubious claims about economists, so it’s not like it doesn’t produce results.

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notsneaky 03.23.08 at 12:27 pm

Name the dubious claims monkey.

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John Emerson 03.23.08 at 12:47 pm

Notsneaky, he was talking to me, I think. He probably agrees with you.

Lolwut, this is an example of why your enigmatic blogging style doesn’t work very well. No one knows what you’re trying to get at. Simple declarative sentences have their merit, and I’m glad I was able to get one out of you.

If I had thought that your questions were non-rhetorical I would have referenced evidence, though as I said, “Economists are arrogant” is the kind of truism that you don’t normally have to argue about, like “Water is wet”. (“But you can’t even define the word “ete”, and some things are wetter than water, and ice is water but it’s not wet…..”)

Googling “arrogance of economists” gets over 2,000 hits, and not only from “Crooked Timber”. So you could start there. As far as I can tell, though, there’s no single publication dealing with the question in a systematic way.

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dsquared 03.23.08 at 12:51 pm

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.

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notsneaky 03.23.08 at 1:17 pm

John Emerson,

I know, I was just getting generally annoyed with that style.

Dsquared,

Yeah theoretically factor demand curves could have discontinuity points where they jump up (or if they don’t exist, then we’re talking about the appropriate generalization, whatever). It’s possible. And that possibility was established more than 40 years ago. Since then the evidence that these kind of discontinuities actually happen in real life has been …….

Well, there is that one paper where they find it in 5% of all studied cases. Which would mean 95% you don’t have to worry about it. And that’s about it as far as confronting theory with data (and somehow it’s the mainstream economists who get accused of not having their theories empirically tested!)

Of course it could be that they’re more common, but we really don’t know, considering how ever since the possibility of these points was discovered more than 40 years ago the followers of folks who discovered them haven’t done jack shit in term of relevant empirical work but instead rested on their laurels, threw up their hands in triumph and declared victory, shook their heads in despair over the “state of mainstream economics”, and continued to focus on coming up with very contrived counter examples to standard neoclassical results to the exclusion of anything, like, you know, actually, being constructive. The rest of the profession moved on.

So again we’re back to “you could be right” doesn’t mean “you are right”.

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dsquared 03.23.08 at 2:33 pm

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.

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ScentOfViolets 03.23.08 at 3:00 pm

SoV, look, I’m not your “student”, I don’t need “hints”, I’m not gonna use my lifeline, I’m not gonna buy a vowel, and you’re not Pat-freakin-Sajak.

So you can’t defend your claim that this is science. That’s not very . . . scientific.

Speak your piece or shut up.

You know, when you acted as if you were in a high dudgeon over my supposedly rude comments, you might have had a point, and I at least gave you credit for being sincere. I pointed out that in fact you were rude and abrasive _first_(looking through some of your other postings on other topics, that seems to be something of a hallmark of yours.)

So if you were interested in being consistent, you would have apologized, and moderated your tone.

You didn’t.

That’s inconsistent, ergo, not a sign of a terribly mathematical person.

You’ve also attempted to defend a remarkably silly paper as ‘scientific’, but only in the vaguest, broadest terms. You refuse to give specifics. That’s not terribly scientific.

Actually it’s too late for that too, since I’m tried of this. It’s obvious what you’re trying to say, you think it’s some kind of deep profound statement about testability and science, but in reality it’s nothing more than your own ignorance and also a misunderstanding about how this topic came about (hint Chucky: it wasn’t about whether this was a good or bad paper)

Er, this goes to lack of empiricism(and also the laughable as well as the abrasive assumption of some sort of superior intellect, the topic of the thread); in fact, here was what was originally said:

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.

So, yes, it was about a rather silly, pointless paper. And here’s what you originally said about it, which to me seemed extremely odd for a self-described ‘scientific’ economist:

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.

When someone pointed out that on the face of it, this seemed to be a remarkably silly paper, that the assumption was, er, debatable, you then replied with:

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.

Iow, a ‘looks okay to me’ response, just like the first one I quoted. But then it was pointed out that in all probability, this Just Ain’t So, you responded with:

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.

So. This is you the putative economist giving a pass to a fellow practioner with only the most cursory of observations, but when someone else pointed out that this seemed, er, not to be the case, you read him the riot act, and proceed to sententiously declaim that unless he went to the trouble of writing a paper, doing some research, and so on and so forth, that this was just so much unimformed and idle, meaningless phatic speculation(The fact that this was rank hypocrisy didn’t seem to occur to you, the ‘superior economist’.) This is where I stepped in with the observation that this paper is not ‘scientific’ by any stretch of the imagination. For example, it should explain thoroughly why we can treat ‘unique historical confluences and events’ as ‘draws from an underlying probability distribution'(This was dsquareds original objection,that “[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.” And this most certainly needs to be addressed, i.e., how can such conclusions be justified on such a small data set.) It should explain how this distribution was derived (I’m guessing there was absolutely no mention of the third, fourth, and higher moments of the distribution, or why it was unnecessary to consider them.) It should clearly state the hypothesis, it’s converse, and discuss why a certain p-value was chosen(my personal bugaboo: why is it almost p=0.05 in the social sciences? This seems to indicate a lack of understanding about the use of statistics, and the limits of what statistics can tell us.) It should discuss type I errors and type II errors, and at least attempt to give some sort of qualitative analysis.

As it is, we are just as uninformed, just as ignorant after reading the paper as before. It permits no conclusions to be drawn, one way or the other. It isn’t science

Now, it’s true that this thread is harshing on economists and economics, in particular the unsuitable arrogance of the practitioners of the trade. Deal with it. That’s what the thread is about, and if you want to participate, fine. But you can leave the attitude behind. As it is so far, all you have done is to provide a confirming example of the species. I say that not in rancor, but as a simple observation[1].

[1]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 contest :-) So I can afford to be dispassionate and professorly.

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John Emerson 03.23.08 at 3:54 pm

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.

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ScentOfViolets 03.23.08 at 4:01 pm

The Card study struck me at the time as an example of looking-under-the-lamppost. The theory doesn’t specifically say raising minwage will reduce the number of jobs at major fast-food restaurants; using these as an example of a typical minimum wage job is really more of a popular-culture stereotype. It might make more sense to focus on the number of labor-hours purchased and on institutions that actually pay near the minimum. But it’s not as easy to find all the marginal businesses (that the theory suggests will be affected first) as it is to survey all the McDonalds branches in an area and check their employee count. Hence: lamppost.

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

But more importantly, why isn’t more money spent on more thorough research? Isn’t the whole point of economics (insofar as policy goes) to make some sort of verifiable – and hopefully, accurate – predictions? And since this study ‘goes against’ orthodoxy, shouldn’t orthodoxy be adjusted, rather than observation?

Again, this goes to the point of the nonseriousness of economics as a ‘science’: how can it be a science when the practitioners prefer a theory with a preordained conclusion to the actual facts on the ground?

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John Emerson 03.23.08 at 4:50 pm

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.

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ScentOfViolets 03.23.08 at 5:59 pm

So when is Horowitz going to step up to the plate, and denounce the Chicago Boys and all their appurtenances as being excessively conservative? When is he going to acknowledge a pattern of harassment in the departments of economics across our fair land?

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Depressed 03.23.08 at 6:24 pm

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.

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John Emerson 03.23.08 at 6:36 pm

[This]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.

As long as the paychecks keep coming in, sure. But at some point, instead of running after the latest tweaked version of astrology, people quit hiring astrologers. Mine is a purely external criticism of economics, from the point of view of economists’ customers, subjects, and prey. Dsquared has said that there’s a perfectly fine science inside economics struggling to get out, and that make sense to me.

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dsquared 03.23.08 at 7:17 pm

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.

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John Emerson 03.23.08 at 7:31 pm

If, as I believe, the ideological functions of economics are equally as important as the scientific and descriptive functions, then there’s no need to worry about economics going out of business. Theory for ideology plus epicycles for empirical stuff will keep the buyers happy.

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seth edenbaum 03.23.08 at 9:11 pm

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.

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Tom West 03.23.08 at 9:23 pm

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.

A good point. I have to admit I’m rather sympathetic to Rodrik’s view that for developing countries, unlimited free trade may not be ideal. On the other hand, if it gets them better access to developed markets, it would seem to promote the growth that developing countries so desperately need to (at least partially) alleviate poverty.

(I’ll admit to relative short-termism when it comes to poverty relief. Programs whose results will be felt in greater than 2-4 years seem to fail with alarming regularity.)

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.

Point taken. I was thinking mostly about European-American migration patterns (for which I don’t have direct sources – am I wrong about the relative sizes of migration in either direction?) as an example of cultures that have differing views on free-marketism. However, given I neglected to mention this, your point is valid.

On a side note, I will say that one side effect of the apparent success of American high-growth policies is that it does make the rest of us who haven’t adopted those policies feel poorer. However, that *is* the right of the Americans.

It’s sort of like having a brother-in-law who’s become a successful investment banker while neglecting his wife and kids. You don’t want to *be* him, but it makes you feel worse about your decisions by making you exactly understand what the cost of the choices you made were.

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lemuel pitkin 03.23.08 at 9:35 pm

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.

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notsneaky 03.24.08 at 12:04 am

“For one thing, nearly every production function has a flat segment to it;”

So? You can get all the weird stuff with regular production functions, as Robert’s pointed out before. You don’t have to assume linear production structure, so flat segment or not is irrelevant.

“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.”

Sure, but that’s different than reswitching. You’re trying to pull a sleight-of-hand here. Before you were obviously talking about CCC, now you’re talking about something else.

“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.”

I’m sure this is true in general. But not on this topic. Where are the empirical papers which document the pervasiveness of reswitching and capital reversing in the real world?

For one thing, it’s telling that NOT ONE of those hundred+ economists who signed the letter in support of the higher minimum wage mentioned CCC related phenomenon as the reason for their support. They mentioned equality, social justice, etc. but not this.

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notsneaky 03.24.08 at 12:17 am

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.

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John Emerson 03.24.08 at 12:38 am

Now you guys argue.

He and I are talking about different things and both could be right. His focus was on a specific point, and mine was about the general question of how orthodoxy responds to heterodox criticism.

Lemuel, depressed: I think that some of the heterodox criticisms are pretty fundamental, not just a matter of political bias. Later.

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dsquared 03.24.08 at 12:51 am

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

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notsneaky 03.24.08 at 1:38 am

I agree that most of the big contributions in Behavioral Economics have already been made.

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Robert 03.24.08 at 1:46 am

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.

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ScentOfViolets 03.24.08 at 2:06 am

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.

Sigh. Is argument by (vague)assertion all you’ve got?

You’ve been rude(extremely so,in my book), but have no problem accusing others of rudeness after you’ve initiated it. You’ve made some extremely ignorant statements, and many, many vague ones.

You apparently have little, if any, statistical training, and refuse to answer arguments about that subject, concise arguments backed up with quotes, preferring instead to be nasty.

You’ve been condescending, and from what I can tell you don’t have much of anything to be condescending. When people take the trouble to post material that shows that you are baldly, spectacularly wrong, you refuse to admit it.

In short, you’ve been behaving like a wanker of the first kind and a poster example of why economists don’t get a lot of respect, their assumption of airs to the contrary. But this:

“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.

This is just petty and despicable. You know damn well that I put a smiley on that, so that the quote ends “. . . not even a contest :-)”. It was a tongue-in-cheek comment, made to be taken as a joke. You deliberately, with malice and spite aforethought, removed that bit of nuance to make it seem as if I was being some sort of ponce.

I have no idea why you are the way you are, and I can’t conceive of anything that would explain or mitigate your behaviour.

In my brief interactions with you, you’ve made a couple of things quite, quite clear: your ignorance is so abysmal that it should be properly be called ignirntz. And you’re a very small and unpleasant man, in addition to showing every symptom of being a systemic incompetent. With your defects of ability and character, you have no business being in academia, if in fact you really are.

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notsneaky 03.24.08 at 2:58 am

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.

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ScentOfViolets 03.24.08 at 4:13 am

NO. You did, and continue to do so (that you’re oblivious to your rudeness makes someone else’s point about the personality types that are attracted to economics.) I’m merely pointing out that in addition to not knowing what you’re talking about – and I think everyone can see who’s zoomin’ who here – you’re amazingly petty.

Deliberately cutting off a smiley for chrissakes? Do you key people’s cars too, if you think they’ve taken ‘your’ parking space?

I’ve been around awhile, and I’ve seen some pretty odious cut-and-pastes; but this is a new low for sheer pointless spite.

What in God’s name were you thinking? What could possibly justify such behaviour?

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.

Er, no. I was quite clear: papers such as the one described show a lack of understanding of statistics, and really aren’t ‘scientific’ by any stretch of the imagination. Likewise, to defend such work is also indicative of a lack of understanding of the basic principles of statistics. These really aren’t debatable points. Looking back over what I wrote, I don’t see anything cryptic about my remarks at all(at least, “this paper simply isn’t science, not no way, not no how”, to quote myself, doesn’t strike me as being particularly cryptic.) Nor was it by the remotest stretch condescending; asking you to justify your statements when you argue by telling (‘Assassination a random variable? Looks good to me’ was definitely a jaw-dropper) instead of showing is most definitely not condescension. You shouldn’t have to be prodded into doing this, btw. It’s something most people take for granted that they have to do.

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ScentOfViolets 03.24.08 at 4:57 am

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.

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notsneaky 03.24.08 at 5:54 am

“Deliberately cutting off a smiley for chrissakes?”

Oh my God! Get over it. I didn’t even notice the smiley you petty schmuck and you can’t blame me for taking that statement at face value given your general attitude.

“I don’t see anything cryptic about my remarks at all(at least, “this paper simply isn’t science, not no way, not no how””

What makes it “not science”? You basically proved that assertion with nothing but a condescending *sigh*.

“‘Assassination a random variable? Looks good to me’ was definitely a jaw-dropper”

Arghghg. Assassination is not a random variable. The success of an assassination attempt can possibly be modeled as a random variable. Success, failure. You know, Bernoulli.

“asking you to justify your statements”

That’s not what you did. Instead you started talking about “hints” and “students”. In other words typical asshole passive aggressive power play where you set yourself up as the authority whose wisdom we all have to figure out by guessing his mind. Gimme a break.

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notsneaky 03.24.08 at 11:42 am

“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.

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Tom 03.24.08 at 3:06 pm

Jesus, I’m not sure I’ve EVER seen anyone get so up tight about a missing smiley. This must be some sort of record. That said the earlier reaction to the “sigh” was pretty special too.

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reason 03.25.08 at 4:37 pm

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)?

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