Salon: Econ 101 is killing America
In the Middle Ages, people looked to the Church for certainty. In today's complex, market-based economies, they look to the field of economics, at least for answers to questions concerning the economy. And unlike some disciplines, which acknowledge that there's a huge gap between the scholarly knowledge and policy advice, economists have been anything but shy about asserting their authority.
As we can see from the current dismal state of economic affairs, economies are incredibly complex systems, and policymakers who are forced to act in the face of this uncertainty and complexity want guidance. And over the last half century, neoclassical economists have not only been more than happy to offer it, but largely been able to marginalize any other disciplines or approaches, giving them a virtual monopoly on economic policy advice.
But there are two big problems with this. First, despite economists' calming assurances, we still know little about how economies actually work and the effect of policies. If we did, then economists should have sounded the alarm bells to head off the financial collapse and Great Recession. But even more problematic, even though most economists know better, they present to the public, the media and politicians a simplified, vulgar version of neoclassical economics — what can be called Econ 101 — that leads policymakers astray. Economists fear that if they really expose policymakers to all the contradictions, uncertainties and complications of "Advanced Econ," the latter will go off track — embracing protectionism, heavy-handed "industrial policy" or even socialism. In fact, the myths of Econ 101 already lead policymakers dangerously off track, with tragic results for the economy and everyday Americans. ...
It has been many moons since I took Econ 101. Honestly, I can't remember what I learned in the introductory class and what came later, so it is hard for me to evaluate this article's take on what is taught. I do know that I agree with most of the qualifications presented in response to the myths listed. I think most economists do as well. I would just add that finding exceptions to some principle does not negate it. Gravity pulls things to the ground at great speed. Pointing out that a man dropping with a parachute does not fall quickly does not nullify the principle of gravity. It requires us to think through how other factors might influence the principle.
As anyone who reads Salon knows, the mag has a strong leftward slant, and the polemic nature of the article exhibits that. Still, it is good food for thought. Hat tip to economic historian Gavin Kennedy for highlighting this piece and offering his own helpful commentary. Is Econ 101 Killing America?
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