The main take on this I've seen is that "heterodox" economics challenge the political beliefs of neoclassical economists, but don't really challenge the theoretical beliefs of neoclassical economics. I'd love to see a check-in on the health of fundamental challenges to "rational actor" theory in general. My education was generally skeptical of "rational actor" theory, but from a cultural-studies/lefty perspective that while not discredited, seems to be on the wane. I still like it tho.
I read this Wikipaedia* article about Adam Curtis' "The Trap"; his take on game theory seemed to be a good example of the former, showing that political prejudices (or mental instability, in the case of the beautiful mind dude) weighted theoretical outcomes towards the right-wing conception of homo economicus.
*Accepted Clownae spelling.
I'd love to see a check-in on the health of fundamental challenges to "rational actor" theory in general.
I think there's a lot of work like that -- the mainstream stuff comes under the heading of 'behavioral economics' -- but it doesn't do much toward affecting the public policy face of econ.
I liked this from TPM Cafe:
Does it seem that there may be a teensy bit of gender bias in the assumption that economic actors are rational, autonomous individual mental choice-makers (while somebody else takes care of emotions, dependencies, and bodies?).
Ladies in the house. Somehow she manages to get through an entire post on feminist economics without any oikos jokes.
(Now just start omitting the vowels from our host's name, and you will be ready for a red rubber nose of your own.)
Much of the popular opposition to the neoclassical concensus is just nutty, the equivalent of creationist arguments against evolution. So I can believe appearing too sympathetic to such opponents has bad professional consequences, just as appearing too sympathetic to creationists would not be helpful to career prospects in biology.
Yep. Of the economists mentioned in the article and in the TPM discussion, which are the creationist-equivalents again, and what's your basis for saying so?
Good clown nose joke: Keep it in the nightstand, and take it out when condoms are expected.
In its way, the clown nose is a very effective prophylactic.
Shearer, those dice are more loaded than my drunken texting self. Popular opposition to academic views is almost definitionally poorly-informed, based on misreadings and simplified versions of the views, and so on.
I don't know anything about the current state of economics, and I'm not clear on what's included in the "orthodoxy." But Kahneman got the Nobel for a reason.
9
I said "popular opposition" not "academic opposition."
11: And behavioural economics would be a terrible example of an sidelined heterodoxy opinion. Kahneman got a Nobel Prize, as you said, and Thaler teaches at UofC in a named chair. The other leading lights ain't doing too badly for themselves either.
However, LB's complaint that these results have not been applied to public policy much are valid. The math behind behavioral economic models that account for loss aversion and some other systematic quirks is really damn hard, and almost impossible to implement as a closed-form equation or as an aggregate model covering the actions of millions. A bulk of the research that I've seen in behavioural economics is also psych-style research performed on individuals, the results of which would be almost impossible to scale up to policy-style economics, or it was research in finance, which has much richer data sets but is not going to catch the eye of policy economists.
I'll be interested in reading some more of these articles when I get time, to see how valid I think a lot of the complaints are, but the notion of "orthodox economics" does obscure a large variety of empirical and theoretical work as a monoculture. Though I will say that a very valid criticism of a lot of economist's normative recommendations would be that they tend to assume very strong institutions that may or may not exist and are rarely treated in theory, but are vital to the free-markets-whoopee! success.
Then your comment makes no sense. Sympathy with creationists would damage a biologist's career because to express such sympathy substantively, the biologist would have to say things that were biological nonsense; if you aren't talking about economists who are saying economically nonsensical things, the analogy fails. If your comment was meant to claim that it's reasonable to professionally punish someone who does good substantive work because they have some points of policy agreement with a layperson who says silly things about economics, no, it isn't reasonable.
3: I don't think it's the emphasis on the actor's rationality or autonomy that's misguided so much as the hedonism that's assumed by economists; opposing rationality to emotion only reinforces this kind of error. Describing people exclusively as utility-maximizers obscures the sort of ethical, and by extension political, distinctions that they inevitably make. We have "second-order" desires: not just wants (or utilities) but ideas about what we want to want. The latter are where economics gives way (or should give way) to politics.
The consensus defense seems to be that a.) none of the theoretical alternatives to orthodoxy are superior, b.) most of the criticisms of econ orthodoxy are from outside econ (sociology or politics) and thus can be ignored, c.) economists are just scientists, and need not concern themselves with the public face (policy advice , opeds, undergrad education) of the profession, and d.) there's lots of wonderful econ going on that the public, and the median econ student, never hear about.
"Defense" is too strong a word. Economists do not see any problem. "Response to ignorant criticism" is what they give you.
On the CT thread someone said that mainstream economists are reluctant to publicize results (e.g. on the minimum wage) that might encourage their political opponents. IIRC, the person who said this was pro-mainstream and thought that there was no problem with what was done.
On labor issues economists seem to report theory when theory goes their way but the data don't (minimum wage), but they report data when the data look better than the theory (immigration and outsourcing).
"Response to ignorant criticism"
Awesome euphemism for a three-way.
18: Err... Many labor economists worth a damn will say that labor demand and supply elasticities are low enough at the low levels that minimum wage laws will not affect employment too heavily. The main concern I've heard among actual talented economists is that the minimum wage is a rather inefficient, if politically expedient, method of returning money to low-wage workers. The analogy that Greg Mankiw used was that the minimum wage is functionally equivalent to putting a payroll tax on cheap labor and refunding the revenues to the laborers. That makes much less economic sense than broadening the tax base for the refund by expanding the negative tax rate for low-wage workers.
Also, I don't understand where you possibly think that the theory of immigration and outsourcing look unappealing to economists, given that most arguments are simple varients on straight-up Kaldor-Hicks efficiency, which is about as orthodox of theory as it gets.
14
"... Sympathy with creationists would damage a biologist's career because to express such sympathy substantively, the biologist would have to say things that were biological nonsense; ..."
This is not true, you could publically associate with creationists, give talks criticizing evolution which are one-sided but not nonsense and never criticize even the most nutty creationist views.
"... If your comment was meant to claim that it's reasonable to professionally punish someone who does good substantive work because they have some points of policy agreement with a layperson who says silly things about economics, no, it isn't reasonable."
Soppose they publically support said layperson while never criticizing the silly things he says about economics (or economists)? Anyway my comment was more that it is to be expected rather than that it is desirable. Any profession whether doctors, lawyers or economists has a tendency to band togther against outsiders. Why would heterodox economists expect to be readily accepted by mainstream economists while arguing that the work they do is nonsense?
Comments like that quoted in 3 make me crazy. They lazily deploy sexist stereotypes to make a point. In the context of economics, "rational" means ("you know what you want, and you know how to get it". While this is obviously a false assumption, it is not in any way opposed to emotions, dependencies, or bodies. If you want to cry at sad movies, join a commune, or use natural childbirth, the economic notion of "rationality" can accomodate you.
Immigration and outsourcing, in theory, would both harm American labor, which is relatively well-paid and has little comparative advantage. But you never hear economists coming out and say, "Of course immigration and outsourcing will harm American labor."
As for minimum wages, for decades economists have opposed minimum wage laws, based on theory without empirical evidence. When Card came up with empirical evidence that it really didn't happen that way, a.) Card was shunned by his friends (according to his own testimony) and b.) economists as a group generally continuted saying what they always had said, opposing minimum wage laws.
21: Would you like to give me an example of an economist doing anything comparable?
I didn't think so.
The Occam's Razor explanation here is, "On balance, most economists think that neo-classicism is broadly correct, if simplified, and they're the experts, not you." They're aware of nuances, because they're experts, but don't focus on them in non-academic material because they think that for the layperson, they give the wrong overall impression.
If this were a right-wing blog, you could have this exact same thread with "climate scientists" substituted in for "economists" and "warming skepticism" for "heterodoxy." Nobody likes it when the expert consensus doesn't align with their notions of how the world ought to be.
Epoch: Shut the fuck up about climate scientists. Right now.
23: I would agree that most economists have not been as forthright about the worker consequences of some of these policies as they should be. But American labor does have some fantastic comparative advantages due to our massive human capital (best tertiary education in the world! whoo!) and ready access to superb fixed investments in US infrastructure. Not to mention short turn-around times on high-cost items produced in the US for US consumption. Also, you have to bear in mind that every laborer in the US is also a consumer, so there's a gain for every loss, and the upside effects dominate among the aggregate. This is why economists don't tend to say that the American worker is doomed with immigration and outsourcing, because they aren't, but they should acknowledge the upheaval for some.
As for Card, that's rough. It's pretty despicable that he's getting ostracized for a fairly elegant experiment, even if there were some necessary problems with the design (poor data control, too short of time period, etc.). But as I said, I know many economists who will oppose minimum wage raises for their inefficiency, but easily support negative income taxes as a better alternative.
25 is an inept analogy, not to mention misapplication of Occams razor.
Double jeapardy points off!
Except without actually supporting negative income taxes as a policy because they aren't politically on the table.
29: Which is more to the heart of the problem. Flawed policy `supported' by selective quoting of academic economists work isn't the academic economists problem, per se., but it isn't like they aren't invovled.
28: Do I get some points back if I can spell "jeopardy"?
Seriously, you guys are trying to come up with complicated stories for why, and I quote, "mainstream economics appears so uniformly right-wing to an outsider." I think that nobody's giving enough credit to the answer of, "The experts are coming up with results that you see as right-wing."
(I would guess that they don't see it as right-wing, and talk about "a fair amount of work questioning the neoclassical consensus" because most people don't see themselves as extremists, and because they're talking about work on nuances, not on broad matters.)
The difference is that there aren't legitimate climate scientists doing work that challenges the global warming consensus, and complaining that they're being ostracised for it. There are legitimate economists making such complaints.
Also, you have to bear in mind that every laborer in the US is also a consumer, so there's a gain for every loss
No there isn't. Outsourcing to drive costs down is all too often a way to sell at the same price, but with a higher profit margin, rather than sell at a lower price.
Without effectively supporting negative income taxes as a policy, because they aren't on the table.
It's at least a little noteworthy that Henry's post on CT was quickly followed up with Ingrid saying that she left Economics because she didn't want to do fancy empirical work or applied mathematics. Surely an aspiring graduate student in France who wanted to reason about fat men and trolleys would feel unjustly excluded and put upon, and might even lose friends if he really insisted that this was a valuable way to go about things.
31: no, but you might lose more for a lame (ok, that's a tautology) typo dig.
There are pressures on economists to come to certain conclutions for political reasons:
24
Arthur Laffer maybe? Most people are reluctant to publically criticize their friends and poltical allies.
36: this is the sort of anti-scientific nonsense that any such discipline should be very, very wary of. Which isn't to say it doesn't happen elsewhere.
See, that's the troublesome sort of thing -- 'the cause of economics as a whole'. When you've got people rejecting substantively good work as not in the interests of the discipline, the discipline has a problem. It shouldn't have 'interests' other than to develop useful knowlege.
37: And yet somehow I'm not aware that his career suffered for it.
32
This sounds like a case of one man's terrorist is another man's freedom fighter. There are certainly people claiming that they are legitimate climate scientists and that they are suffering professionally for going against the global warming concensus. There are also arguments about what is and is not the concensus view.
Having read the Nation article, the climate scientist analogy is clearly way off, but it sounds pretty reminiscent of "alternative medicine". Especially the complaints about heterodox ideas being assimilated while the heterodox economists themselves are still stuck outside the mainstream.
And you've got one guy, Card, saying that he wrote a paper and then got ostracized, and another five pages of people complaining about how their methods don't make it into the most prestigious journals or how their university administration decided that they wanted a department that ranked higher in US News and World Report so they brought in a bunch of mainstream people and overhauled the department.
And yeah, the "cause of the field" stuff should be stamped out whenever possible, but is also very emphatically not even remotely unique to economics.
39: Exactly. From an outsiders perspective, it seems to me that the really solid stuff in (theortical) economics isn't that important, and the really important stuff isn't that solid. Read for `important' here to mean having direct application to real systems, or somesuch. Such a situation is the worst case for the type of thinking that you describe, because results are so easily manipulated to suit a particularly orthodoxy --- any supporting evidence can be trumpeted, while pesky disagrements handily swept under the rug of `noisy data', or `modelization issues', etc.
This is bread and butter stuff for politicians, but you really don't want to get any of it on you if you want to consider yourself a scientist.
40
I believe his academic reputation has suffered.
41: The `climate scientists' of this type that I am aware of are the same ilk as the `health scientists' used to prop up the tobacco industries lobbying and delay tactics, not anyone to be taken seriously. Are you aware of others?
I'm no longer in close proximity to any climate scientists, but my understanding is that there hasn't been any real argument about the (at least in teh broad sense) consensus view in many years.
There are certainly people claiming that they are legitimate climate scientists and that they are suffering professionally for going against the global warming concensus.
Not a lot, as far as I can recall. Do you want to link to some names? All the controversies I'm coming up with offhand the global warming debunkers are mining executives like Steven McIntyre or something similar.
Above quite a bit: the Pope is opposed both to war and abortion, but his opposition to abortion is effective and his opposition to war isn't. Economists oppose minimum wage laws, and (some of them) support a negative income tax, but the opposition to minimum wage laws is much more public and more effective (when, for example, the idea of maintaining the real minimum wage comes up -- it fell against inflation for decades).
Of ten the economists formula is "If you wanted to maintain people's incomes, a negative income tax would eb the best way." I.e., they themselves don't support that either, but at the moment they want to knock down the minimum wage.
The negative income tax, however, violates another strong conservative principle supported by most economists: opposition to free riding and "moral risk".
It's probably worth noting that the climate science analogy is just a bad analogy regardless of orthodoxy or no; climate science's arrival at the current state of global warming orthodoxy was empirically driven.
32: Maybe so, though I tend to think that at least a part of that is that people are rather more credulous about experts who align with their preconceived notions.
But let's grant that there's (a lot) more variation among legitimate economists than there are among legitimate climate scientists. Isn't that just a difference in degree, not kind? It still seems to me that the simplest/best explanation for why neoclassical economics dominates the writing of economists oriented towards laypeople is that most economists think that it's basically right, and that the economists you want to be right, are wrong.
I'm not necessarily saying that you are wrong. I believe in the ability of a consenus, much less a majority, of experts to be wrong, particularly in a fuzzy field like economics, where the authority that I grant the experts is considerably less than in harder fields (like climate science). I do think it's a relatively powerful bit of evidence that you're likely to be wrong, but maybe the "quiet" heterodox research that you point is the early signs of a major change in the conventional wisdom, and relatively soon the orthodoxy will be in alignment with the economists that you favor.
What I'm unclear on is where the puzzlement lies. What's complicated about this situation?
46
A couple of examples, Richard Lindzen and Patrick Michaels .
Let's leave Occam's Razor out of this. It's totally irrelevant.
45
Some of the climate skeptics are in fact of the Tobacco Institute type. Others appear to have become emotionally committed to certain views and have lost objectivity (like Hoyle continuing to back his steady state theory despite accumulating evidence for the rival big bang theory). Others are in my opinion legitimate but are at some professional risk.
As for the consensus view there are constant disputes about just how far you can differ from the orthodox view before being labeled a nut.
48
I don't think that is really true, much climate change research is driven by complex mathematical models which are not very well validated empirically. And global warming was predicted well before it was observed.
Omigod, in 48 hours I have moved from Paul Mattick to Geoffrey Pilling until I realized I probably need to go back to Joan Robinson and the Cambridge Capital Controversy with sidetrips to a fucking Kondratieff website and the aquisition of a Routledge Basic Mathematics for Economists. In thirty days I intend to make Krugman blush and stammer but I have no comment at this time.
Ok, maybe one. False Consciousness!! Superstructure!! More seriously, or not, at some point this week I tried to compare this orthodox/heterodox economists cage match to arguments about evolution, where I have always had some sympathy for the creationist side. "But what about human values?" "Sorry, the universe is a black random meaningless vortex without meaning or purpose, and we got three fossils and seven theories to prove it."
And shhh. Over at Sawicky's I swear they asked if Emlightenment scientism was the Capitalist form of the Patriarchy.
It is real simple, folks. Everyone is running as fast as they can from Thomas Malthus, both his Principle of Population and his Theory of Accumulation. Including the Marxists.
Malthus fits the world I see.
Jackson Brown:
"Oh Lord
Are there really people starving still?
Look out beyond the walls of Babylon
How long will their needs go unfilled"
Twit.
Shorter Malthus:The rich get richer and another fucking war.
where I have always had some sympathy for the creationist side. "But what about human values?" "Sorry, the universe is a black random meaningless vortex without meaning or purpose, and we got three fossils and seven theories to prove it."
Nice depiction Bob.
57:Uhh, thanks but I used "meaning" twice. I need to slow down.
Bye.
And yet somehow I'm not aware that his career suffered for it.
I believe his academic reputation has suffered.
Nope. He may have lost a few friends but his academic reputation hasn't suffered at all. The guy won the John Bates Clark award and held tenured positions at Chicago and Princeton and is know at Berkeley. He won the IZA prize last year with Alan Krueger of Princeton. In anyone's list of the top 10 labor economists, Card would surely be there.
The point of the Card story is that the reception of his research was so hostile that he didn't follow up on it. He has said that. So no, his career wasn't hurt. He just quit doing that kind of thing.
59
If you trace the references you will see we were discussing Arthur Laffer not Card.
I think, that if analogies were permitted, the analogy in 42 re alternative medicine would be much more worth pursuing than climate change. You can point to all sorts of problems with mainstream medical research, from the influence of pharma companies to the fact that the statistical methodology in clinical trials is sometimes suspect. And you can point to heterodox ideas that have been assimilated into the medical mainstream. But I still put more trust in Big Pharma than in the homeopaths.
Don't confuse the U. of Chicago econ department with economics faculties in general. They are (1) more conservative, and (2) bigger jerks than the norm. It's not that they're out of the mainstream--they're considered one of the best dep'ts and arguably the most influential. But they're at one end of the spectrum. Whereas Harvard and MIT are equally well regarded and far more liberal (though probably not as far left of center as U. Chicago is right).
63: But even that is partially residual from Becker and Friedman's influence. I haven't found them to be a particularly cold and heartless bunch, even this fellow who is pretty libertarian was supportive of "if your policy aim is to support those with very low incomes, then this would be the best way...". Hell, it was even a major part of the analyses he had us run in class. Other newer faculty are much more neutral. Goolsbee is even a major advisor for Obama's campaign!
Except without actually supporting negative income taxes as a policy because they aren't politically on the table.
Surely you're aware of the Earned Income Tax Credit, which is just a slightly modified version of the negative income tax that accounts for if you have kids (and is honestly way too small if you don't). It's almost certainly the best (and probably only) thing that the Republicans have done for poverty reduction in the last quarter century. It's also quite popular and tends to be boosted in many tax bills. Yay!
Outsourcing to drive costs down is all too often a way to sell at the same price, but with a higher profit margin, rather than sell at a lower price.
Prices are sticky downward, especially with menu costs. The way that the gains get passed on is by fewer price increases over time as increased production costs are absorbed by the artificially fattened margins. This is of course assuming they have a competitor with equivalently low costs, which is the reality in the vast majority of industries and products. I could probably find the academic research that supports this, but I believe Mankiw linked to some of the main papers in his blog sometime, and that would be the best way since I'm feeling lazy and I'm more aware of the finance literature anyway.
Those critics of Card who were afraid his work would be taken up by know-nothings? They were basically correct. There are know-nothings who invoke Card and Krueger's results as evidence that a) the law of demand has been overturned, or b) it makes sense to require the law of demand be "reproven" emprically on a case by case basis.
In this, at least, the analogy to global warming is apt. There are plenty of people motivated to turn any fragment of anti-warming data into a cathedral. This is why there is real ambivalence about when and how "challenging the mainstream" is responsible.
66: Are these know-nothings important or influential? If not, why is there ambivalence? Is there ambivalence about Galileo's work because cranks sometimes cite him as a model of unappreciated genius?
66: there is no "law of demand". In the presence of imperfect competition, demand curves can easily slope up for a bit. Since competition is always at least a little imperfect, the nature of the demand curve is an empirical and not a theoretical question.
This is why there is real ambivalence about when and how "challenging the mainstream" is responsible.
Like Barbar said, it depends on who's using it. The problem is when people in power use non mainstream research in questionable ways. Peter Duesberg still maintains HIV doesn't cause AIDS, but to my knowledge there's not a lot of govt. policy or actual practice of medicine being influenced by this.
This is of course assuming they have a competitor with equivalently low costs...
I don't think you need to assume that. Even a monopolist will want to reduce prices given a reduction in cost.
Which prompts me to ask what the statement
Outsourcing to drive costs down is all too often a way to sell at the same price, but with a higher profit margin, rather than sell at a lower price.
is based upon. Are there studies that show this?
Even a monopolist will want to reduce prices given a reduction in cost....
Are there studies that show this?
Are you on crack? Why does the U.S. pay a shitload more for sugar than the rest of the world? Why do companies like Nike have their shoes made in third world countries, then turn around and sell them in the U.S. for a couple hundred bucks a pair? The goal of companies is to max their profit, not give us everything at low low prices.
to 67 and 69: >it depends on who's using it.
I agree. But this is hard for a challenger of the mainstream to control. In my mind when I wrote that sentence was a conversation I was involved in (mostly as a spectator) about a year ago. Participant A (a physician) said "it is remarkable how few medical procedures have a strong evidentiary basis." Participant B heard this as a justification of his anti-vaccination beliefs. Participant A spent the next 15 minutes trying to fight that implication.
68: Maybe we are debating the semantics of "law." Will you concede that downward sloping demand curves have enormous emprical support, and should be our base case for most markets? Also, I confess I simply don't understand why imperfect competition would lead to an *upward sloping* demand curve. Even in monopoly conditions, increasing price should not *increase* demand, right?
71: Sure, the goal of companies is to maximize their profit. All I'm saying is that if a company's costs (more precisely, marginal costs) go down, it will find that the best way to maximize its profits is to reduce its prices, not keep them the same. Why? Because if it reduces its prices, it will sell more, and so make more profit.
To be clear, I'm not saying that all the cost decrease will be passed on to the consumer; it almost certainly won't. I'm taking issue with your claim that prices won't fall at all.
65: The Amazon Review by Herbert Gintis contra PAE
the above thanks to Max Sawicky, who here has well, quotes showing Gintis moving from youthful Marxism. Gintis shows up in comments.
Max, with his last post, and Galbraith have impressed me most at TPM. Galbraith always impresses me. If Krugman showed up, I haven't read him yet.
I'm taking issue with your claim that prices won't fall at all.
Prices might fall, if the company thinks it's in it's interest to drop them. But what I was disputing was something said by JAC, that "there's a gain for every loss" with regards to outsourcing.
72: but you can view this entire discussion as being prompted by people concerned about the misuse of mainstream economics. It cuts both ways, which is why the abstract discussion is useless. Regarding Card, he has nothing to apologize for in his work. There are know-nothings on all sides of the debate.
75: Well, I'd amend that to "prices will almost certainly fall". But that certainly doesn't mean that the gains outweigh the losses for the workers concerned. On the other hand, I'm not sure JAC was saying that either.
There's a general confusion in discussions of economics as a science between the goals of a scientific discipline and the goals of policy makers. With economics there's often a muddying of the waters between the two positions with both politicians and economists wanting to lay claim to 'it's the science, stupid' as a response to political critiques of a particular set of policy prescriptions.
Orthodox economics might fail as science if, for example, the law-like general claims made by economists:
i) fail to accurately describe actual economic behaviour -- either at the microeconomic or macroeconomic level, or
ii) fail to make accurate predictive claims about micro- or macro- economic events.
It's my understanding, for example, that critiques of orthodox economics from the 'behavioural' economists are largely of this type: pointing out that the claims made by economists about micro-economic behaviour fail to accurately describe or accurately predict how actual agents behave in real-world circumstances.
These kinds of questions are largely empirical. Of course, critics of economics as a 'pseudo-'science, fairly or unfairly, claim that economics isn't actually particularly responsive to real-world evidence about micro- or macro-economic events and that this is why orthodox economics fails.
On the other hand, one can make policy criticisms that are largely independent of these empirical worries. One can point out that, for example, that just because economists tell us that structuring some process or other in a particular way is likely to be the most 'efficient' (in some very specific sense of efficient) that doesn't mean that that's how we ought to structure that process because our proper goals ought not to be the promotion of efficiency (in that narrow sense).
Proponents of Econ 101 arguments often elide these two claims. They want to i) claim that economics as a science is, with respect to some domain or other, empirically adequate and then claim ii) that therefore a particular policy prescription is the right one. However, there are lots of argumentative steps between i) and ii) that are often omitted. This is particularly problematic as the empirical adequacy of the claims they are resting their prescriptions on are often only tested for quite idealised and simplified situations.
Evaluating the empirical adequacy of economics as a special science requires some specialist knowledge; arguing that particular policy prescriptions don't follow from this, really does not.
66: Suppression or discouragement of research for political reasons, just because people aren't mature enough to understand it, sounds highly authoritarian. Card's description of the reception of his work was pretty chilling (and there are other examples from other economists).
Economists repeatedly claim to be pure scientists and without a political agenda, and repeatedly claim that because their science is pure and quantitative, their policy proposals are good. But they have an agenda.
Economists are not at all troubled by the way libertarians take Econ 101 and use it to justify dumb things. A moderate proportion of economists (and a high proportion of the public intellectuals among them) are econ 101 libertarians.
Worst bit of Econ 101: "people respond to incentives."
I mean, to the extent that people completely ignore the possibility of behavior changing, this is a useful and powerful insight. But you see people say this all the time as if it settles cost-benefit analyses.
The Econ 101 crowd tends to talk about how taxing the rich is bad, because rich people produce wealth and "people respond to incentives." Similarly income redistribution to the poor is bad because poor people don't need to work as hard if you help them and "people respond to incentives." The tension between these statements is hidden by Econ 101 rhetoric, which pretends that the speaker is simply being scientific and has no ideological concerns.
Similarly, Econ 101 suggests that raising the minimum wage must increase unemployment, because of the basic law of supply and demand. Yet the Econ 101 crowd will rarely apply this same law with as much ardour to determine the impact of immigration on wages. And irritatingly there is again that pretense of objectivity.
Can I just make a request please that if Megan McArdle writes something about this, everyone does their best to keep the news away from me?
but it doesn't do much toward affecting the public policy face of econ
You may have read it, but Ezra has a good post on this.
Economists assume there are huge public biases against markets because the benefits are dispersed and difficult to discern. It makes them reluctant to dwell on market failures in public statement.
Rodrik pointed out recently in his blog, that too often economists don't do econ 101 analysis when making policy prescriptions:
Just as it puzzles me why so many neoclassical economists are ready to jettison what they teach in the classroom and espouse simplistic rules of thumb on policy.
McArdle is indeed the most annoying presence in the Rand-o-sphere.
Baa, monopsonies (buyers with market power), have an incentive to deliberately under-purchase in order to hold down the price they must pay. (The analysis here is exactly analogous to why monopolies under-sell in order to keep up the price they receive). Hence, if you force a monopsony to pay a higher price, they may purchase more, since they lose their incentive to hold down prices. Likewise, monopolies can have an incentive to sell more when you restrict the price they are allowed to receive (price ceiling).
All you need for a monopsony is an upward-sloping supply curve to the individual firm. I recommend this book on monopsony in the labor market:
http://press.princeton.edu/chapters/s7522.html
Here's what Card said:
"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."
That strikes me as pretty damning. Card's career has gone well, but only because he trimmed his research to the right-wing political demands (or theoretical biases) of his colleagues. He's not heterodox, either; he just got a result people didn't like.
Economists are very well paid and suffer little unemployment, and I think their politics are heavily influenced by the interests of their employers.
84: Card's career has gone well, but only because he trimmed his research to the right-wing political demands (or theoretical biases) of his colleagues.
This is just drastically wrong. Card has had several respectable careers since his minimum wage work, mostly taking leftish and unpopular (within economics) positions on a variety of contentious issues--the rise in wage inequality, the effect of immigration on native workers' wages, the effect of school spending on poor kids' performance, etc. As someone who knows him, it is quite hard to imagine him "trimming his research to the right-wing political demands" of anyone. And if a Nobel is awarded to a labor economist anytime in the next 30 years, he has to be the favored candidate.
People outside the field are pretty seriously misreading his quote from the Minneapolis Fed interview. He has moved away from the minimum wage topic in particular, not from leftish analyses/conclusions in general. Arguably, this is good for the "science"--when a particular intellectual position is too closely associated with one of its proponents, the evidence presented isn't really judged on its own merits. Card and Krueger made their point, and then left the field for others to hash out. Further work from them on the topic would not have had much impact in any case; it is always hard to give much credit to work that serves to confirm the author's earlier results, if only because it is so rare for people to obtain results showing that they were wrong in the past.
None of this is to say that the response to Card and Krueger's results was anything but shameful. (One quote, from a conference at which they presented their work: "But theory is evidence too!") There's no defense for the sort of personal opprobrium that was directed at them. But it seems to me to be a perfect example of what Kuhn pointed out is the standard response to empirical results that challenge the accepted scientific paradigm. I don't see how it supports the view that there is something uniquely wrong with economics. And it should be noted that views on the minimum wage within the economics profession (and particularly among labor economists) have changed quite a lot in the years since the Card and Krueger papers and book: It is now the rare labor economist who would claim that moderate minimum wages have large disemployment effects. It is probably too soon to say that a new paradigm has taken hold, but the old one is pretty well demolished.
Hmm,
I am not sure that the "public face of policy" is in fact all that uniformly right wing. I think one has to distinguish economists meaning people with an economics education who are working for business (more often then not right wing) and economists as in academics (I don't know much about them but my impression is that there is some serious debate going on there). I've read at least one book which advocates quite convincingly that many of the left-wing ideas about policy are in fact quite justified by an economic analysis of the world ("The Efficient Society").
I also know a few economists (ie people with an education in economics) in law school who are among the more left wing people there. (In my experience the most right wing people are the ones with a poli sci background).
Anyway - this is my two cents
Thanks for your patience Marcus. In retrospect it's a pretty dumb question! At 3am, I was (bizarrely) thinking of non-competitve as a monopoly case purely...
Labor economics is a lesser subfield which may never get a Nobel Prize, right? In his Thoma interview Card says that labor economists are self-selected from economists with some experience of non-wealth, and seems to imply that they're atypical.
Card may remain on the left wing of the profession even so, but it looks to me as though he decided to trim. There are other stories: Herman Daly, Mirowski and the Notre Dame department, and another guys whose name I forget at the moment.
All of the left economists defending orthodoxy show signs of Stockholm system, as well as an awareness that if they were going to have careers at all they were going to have to watch their step, and some of them (Gintis, anyway) seem to like the idea of being on the lifeboat shooting out.
"Economics and law", to my knowledge, is generally right wing, and it's one of the major influences of economics on society.
From Ezra's post, linked by Cw in 82, a commenter claiming to be an Econ prof had this to say:
The reaction of my colleagues to Blinder's WSJ editorial was: "isn't that just what we teach our students?" And it is. But it isn't what Economists typically say in the paper because there is this idea that "the public" can't be trusted with a subtle argument and therefore the old "classical" verities, which are often counter-intuitive, need to be emphasized even though "we" understand their limitations.
Again, that's exactly what bothers me about economists as public intellectuals -- the impression that there's social pressure within the discipline not to lend the intellectual prestige of the discipline to uncontroversially valid work that's politically unpopular.
Its true, labor economics is not always given much respect by the mathematical theorists. But again, this seems not much different from the disdain that string theorists have for experimental physicists. What I wonder is whether there is anything unique about economics here.
And in any event, labor is not the backwater that it once was. Of the six John Bates Clark awards given out since Card got his in 1995, two winners (Kevin Murphy and Steven Levitt) are labor economists, and another (Daron Acemoglu) is all over the map but does at least some labor econ. So it isn't implausible that a Nobel will go to a labor economist in the near future; for that matter, Jim Heckman (2000) is a labor economist himself.
I'd call myself a left (ish) economist, but not one who defends the orthodoxy. I got into the profession because it seemed to me that policy was too much influenced by people who had taken Econ 1 and felt entitled to claim on that basis that the laws of economics dictated their preferred right-wing policy positions. The only response to that kind of nonsense is to respond in kind, by demonstrating rigorously that doing the economics correctly doesn't yield such iron-clad conclusions.
And this is my frustration with the "heterodox" debate. It seems to me that many of the heterodox economists are talking amongst themselves, and complaining that the rest of the profession isn't listening. The only way to convince someone of something is to speak their language, and leftish economists have had a lot of success making their arguments within the reigning paradigm. The profession isn't closed to dissent; you just have to be willing to engage in the conversation. And the heterodox people don't seem interested in that.
89: Oh my yes. That's where all of my emotional energy on this issue comes from: the "Law and Economics" I was exposed to in law school was generally astonishingly shallow and poorly founded, and generally argued by horrendously condescending people (professors and students) who ignored argument on the grounds that the only reason to argue with their conclusions was mathematical ignorance. (Now, given your average lawyer, that's a pretty safe way of intimidating people, but the kind of math that gets dragged out in Law and Econ ranges all the way from arithmetic up through algebra -- you don't see much of anything more complicated.)
Law and econ is a perfect example of the toxic effect that Econ 1 has on the public discourse. As far as I can tell, most of the people doing it don't actually know any economics. But because they can do some algebra, they are able to bully their positions across.
It is hard to argue, though, that this is a problem with the economics profession. Almost uniformly, the bad law-and-econ people get their exalted positions in law schools, where the people judging them don't know any economics either. Few of them could get appointments in economics departments.
But this doesn't stop them from presenting themselves in the public discourse as the voice of economics. This, it seems to me, is the problem: People who actually know economics know better, but someone claiming to be speaking for economics has a trump card in the public debate. And, as others here argue frequently, there's a lot of demand for right-wing arguments in the media and elsewhere, so people making them get lots of public exposure.
There is an asymmetry in the profession: People being so irresponsible about claiming the support of economics for their preferred policy positions woudl probably face more sanction if those positions were left-wing than if they were right-wing. This is mirrored in the rest of the public debate: Right-wingers can make all sorts of crazy, offensive statements and not face much sanction for them, while left-wingers are sharply criticized for deviating much at all from the official line. (See, e.g., Rush Limbaugh vs. Michael Moore.) Perhaps as a consequence, the people doing economics and coming to left-wing positions tend to be doing the economics better than those coming to right-wing positions, for exactly the reason that Brad DeLong cites in his TPM post.
People who actually know economics know better, but someone claiming to be speaking for economics has a trump card in the public debate.
I would take this further, and say that people who actually know economics tend, publicly, either to support or at least not to debunk the silly right wing stuff we're complaining about.
A lot of the heterodox schools were part of the discipline at some time in living memory. The process by which they were excluded was political and sociological. They did not choose to be on the outside. Once the orthodox were dominant enough to be able to define their rules and criteria as the only rules and criteria, the rest of them were frozen out.
When I talk about economcs I'm not talking about the science per se. I'm talking about economics PhDs as a group, and the profession, and the opeds, and the undergrad schools. It may be that the top researchers in the top schools are less toxic than the standard average guy teaching econ 101 at the standard average school, but they're a minority and their work isn't filtering down very fast.
Sorry, I should have made the political subtext explicit for those who are easily confused. 24 was intended to refer to economists challenging the market-supremacist public policy consensus; 94 to those supporting it.
Economics may or may not be worse than other academic disciplines. There's more at stake, though. Economists have tremendous power.
I'm also not sure that any other science so badly mis-teaches undergraduates. I don't think that the combination of free-market indoctrination and unrealistic formalization that undergrads often end up with is matched anywhere else; if it is, that's bad too.
96, 99: I don't think we disagree. Economics definitely has a toxic effect on the public discourse. Two important, and related, contributing factors are (1) the fact that so many people teaching it are right-wingers and (2) so many people take one course and come to believe they know enough to apply it to public policy. And there is more at stake in economics than in other disciplines. But if the problems facing economics are common to all academic disciplines, then we shouldn't be looking to economics-specific explanations or solutions for them.
In any event, it seems to me that the "heterodox" schools of economists really offer nothing to the solution to this problem. They are about the "science per se", and I'm not convinced they have much to offer there. As I see it, the "elite" of the field have decided that there isn't much of value to be taken from the recent heterodox work, and the heterodox economists haven't made much effort to convince them otherwise. But suppose that Tom Palley, Jamie Galbraith, et al. could publish all of their papers in top journals. Would that have any effect on the mis-teaching of undergraduates or on the op-eds?
Finally,
A lot of the heterodox schools were part of the discipline at some time in living memory. The process by which they were excluded was political and sociological.
Absolutely. But it was ever thus. The lesson I take from Kuhn is that all intellectual inquiry is political and sociological.
They are about the "science per se", and I'm not convinced they have much to offer there. As I see it, the "elite" of the field have decided that there isn't much of value to be taken from the recent heterodox work, and the heterodox economists haven't made much effort to convince them otherwise. But suppose that Tom Palley, Jamie Galbraith, et al. could publish all of their papers in top journals. Would that have any effect on the mis-teaching of undergraduates or on the op-eds?
I don't know that what I am about to say is true, but it seems to follow from the claims of the 'heterodox' economists in the TPM discussion that part of the mis-teaching of undergrads and slanted-ness of the op-eds comes from the marginalization of the heterodox. Card, e.g., had his colleagues get angry with him for unorthodox work on the minimum wage; wouldn't you expect that a cautious econ professor might not teach that sort of thing to undergrads, regardless of how well supported it is, for fear of a similar negative reaction from peers?
98
So it is your claim that while right wing economists often do not publically correct silly right wing economic arguments in public debate, left wing economists never allow silly left wing economic arguments in public debate go uncorrected?
'often'... 'never', James? Work on a better parallel construction if you want an answer.
Dude, you run a blog with the contrarian posters you have.
101: This is quite possibly true; I really have no idea. I do know that the more recent labor economics and public economics textbooks that I've seen present the theoretical case that minimum wages reduce employment but also give prominent mention to the Card and Krueger result that that may not be true empirically. As I noted earlier, there isn't really a dominant paradigm that incorporates this result yet, so it is hard to see how else one might teach it. (I wouldn't say that the "monopsony" theory that Card and Krueger semi-endorse has much more empirical support than the classical theory, except insofar as it can explain the minimum wage result it was designed to rationalize.)
I took Econ 1 (or, as it happened, Econ 10) from Martin Feldstein, and it was one of the worst classes I took in college. His presentation was politically slanted, he was far from sufficiently circumspect about the limits to our knowledge, and he trampled all over the distinction between normative and positive results. I suspect that this happens a lot. On the other hand, my colleagues (at a "top" research university) are far more likely to be Dems than Reps, so I doubt the slanting is always in the same direction. The problem seems to be that the less "elite" portions of the profession have many more of the idiot libertarian types. I don't know how to address that, though--the draw of economics to an idiot libertarian is obvious, and there aren't enough left-of-center economists to squeeze them out of the profession.
But this is a question of conservatives vs. liberals. The heterodox camp seems to want economics become radical, far more so than the American population at large. Perhaps this would be a good thing. But I'm not at all convinced. It seems to me that the academic fields that have most welcomed the radicals/Marxists/etc. have also been the ones that have abandoned the real world. I'd rather see economics continue to engage with the political debate, with less of a right-wing slant than it has had so far. I don't see how the heterodox or the post-autistic movements help to do that...
Right wing economists are perfectly happy with silly libertarian Econ 101 stuff in the media, but are unhappy when valid economics which goes against their policy prescriptions shows up in the media.
There are very few left wing economists. Krugman and Delong are centrists and (unlike most Democrats and like most Republicans) were enormous supporters of Clinton's trade proposals.
A problem for me in this argument is that I don't know whether 'heterodox' is the name of a coherent movement, or whether it's a catchall term being used to identify people doing reasonably well supported work of any type that's unfashionable in the mainstream and being penalized for it.
Although Krugman has been something like radicalized, and has admitted to changing his ideas about economic as well as political matters because of it, such as trade.
It's a catchall for excluded schools. The include Marxist, Austrian, Old Keynesian, Institutionalist, and perhaps the European historical school. Feminist economists and "evolutionary economists" are sometimes included.
Often these economists are doing different things than orthodox economists, for example feminist economists talking about the family, or environmental economists . Orthodox economists claim that they're doing the same things differently, and worse. When the othordox choose all the problems, by and large the unorthodox look bad. Since I think that orthodox economics is worst because of the questions it leaves out (how it defines the topic), this argument becomes circular.
Doesn't Max Sawicky have a links page/blogroll for heterodox economists and departments, defined inclusively as above? He may not use the word.
I don't think that is really true, much climate change research is driven by complex mathematical models which are not very well validated empirically. And global warming was predicted well before it was observed.
I was perhaps speaking too inexactly. The reason that the particular area of climate research related to global warming has become politically important is the accumulation of large amounts of empirical support for a position that was politically unpopular (and, before that, for empirical evidence for something that *might* have politically difficult consequences, and so was resisteste based on that). It is quite plausible that the massive corporate and governmental resistance to real science being done in the area has resulted in a current orthodoxy that is difficult to oppose seriously, but even it that is true (and I'm not sure) the blame hardly lies with the climate scientists. Of course all sorts of theoretical models were proposed both before and after there was solid empirical evidence for warming (decades, now), but that isn't what drove the rise to prominent discourse. It was the data, period. Early work was very much done in the face of organized political resistence.
This is vastly different the economics case(s), which is part of what makes it such a poor analogy. The economics in question above is largely concerned with large scale political support (rhetorically, and via policy) for theoretical models with ambiguous empirical support, at best, and often in a pick-and-choose fashion. There isn't an analagous build up of empirical evidence (in any direction)
On the other hand, my colleagues (at a "top" research university) are far more likely to be Dems than Reps
But, see Brad DeLong as the quintessential Dem economist at a "top" research uni (if need be, correct my impression that he's 5essential; it's a blogocentric assumption, but Krugman seems to give him a lot of weight). He is loathe to challenge the orthodoxy. He has even posted, multiple times, that the empirical experience of NAFTA is very unfriendly to Econ 101 (and his) assumptions about trade - but the most he's willing/able to do is to wonder publicly if he and his ilk were dupes. It's like Robert McNamara pondering on camera whether maybe - just maybe - they got Vietnam wrong.
So what you have is McArdle-grade (and worse) Randbots "balanced" by Dems who are about 20% farther to the right than upper middle class Dems, let alone rank-and-file Dems. No wonder textbooks still teach the Econ 101 version of the minimum wage first, and the fact that it's empirically bullshit second.
Imagine a bio book teaching Lamarck first, with a sidebar about how Darwin's examples seem to offer an alternate explanation.
103
It seems like it would be easier for you to tell me what you are claiming rather than have me play 20 questions but I will try again.
Is it your claim that left wing economists are significantly more likely to publically correct economically silly left wing popular arguments than right wing economists are to publically correct economically silly right wing popular arguments?
It just isn't true that economists never challenge conservatives. See, e.g.: 1, 2, 3. (I'm sure there are other examples....I vaguely remember at one point that the Bush and Kerry campaigns had duelling lists of economists for and against Bush policies, and the Kerry list had notably more nobel laureates while the Bush list had such academic luminaries as Ben Stein (the teacher in Ferris Bueller's day off)).
If their overall effect is negative--something I dispute--it's because:
1) there are certain fundamental assumptions that you make in economics (perfectly informed, perfectly rational consumers etc. etc.) that are: (a) useful; (b) not actually accurate; (c) inaccurate in a way that biases you towards "the market knows best solutions". ("Assume the market functions perfectly....wow! Look how well the market functions! Clearly we shouldn't regulate!).
2) within the profession, there is too little respect for good empirical work that actually reflects the real world as opposed to beautiful, elegant theories. Whatever the relative intellectual merit of beautiful, elegant theories v. careful empirical studies, the latter is clearly what should have more influence on policy.
Naturally, the fact that I'm married to a liberal economist who mainly does empirical work does not bias me at all. ;)
114: Again, I point you to Brad DeLong, the centrit's centrist. While his policy prescriptions may be left-of-center, his economic arguments are thoroughly mainstream (read center-right to outright rightist). He is always ready, willing, and able to attack those economists on his left (I've never seen him direct venom at any rightwing academic like the venom he directs at Chomsky - including in cases where his entire post is describing lies by a rightwing academic economist), while his attacks at those economists on his right are of the character of "why oh why won't Greg Mankiw be a little more forthcoming about X or Y?" Hell, it took 3 years of Bush-Cheney (plus the intertwined morality tales of the CA energy crisis and the Enron collapse) for Krugman to consider that maybe the verities of orthodox economics were flawed. IOW, there is no evidence that left-of-center economists have any stomach for strongly criticizing economically silly rightwing arguments.
Shearer, I answered for him in 107.
Bush is a rightwinger who economists don't like. He dabbles in protectionism, spends a lot on pork barrel and graft, and is fiscally totally irresponsible. Recently it's been rightwingers rather than leftwingers who I see denying the value of economics. This is new, though. Economists where fine with Reagan and GHW, and even W gets a fair amount of support just because of tax cuts.
JRoth, can you point to an example where DeLong has directed vitriol toward an economist to his left? I don't think Chomsky qualifies. There are probably examples, particularly in the arena of trade policy, but I think they are fairly rare. Of course, one reason that they are rare is that there aren't many prominent economists to DeLong's left...
In any event, I'm picking a loser's fight here. It seems to be a fact about the world that the left is more vicious in its internecine fights than it is against the right. That's not just true in economics--just talk to the various sects of socialists...
But I just don't believe that orthodox economists have no stomach for strongly criticizing silly rightwing arguments. To take one example, consider the Laffer Curve. This is ridiculed by economists left, right, and center. Even Greg Mankiw ridiculed it in his textbook. Sure, he shut up about it once he joined the administration. But the persistence of the belief that tax cuts will pay for themselves isn't because economists aren't pointing out how silly it is...
116
Ok, I don't agree, I expect there is no significant difference, people in general are reluctant to publically criticize their friends. And I think it is a common mistake to expect agreement with your political views to be associated with virtue in general.
106: I think there is real empirical support for the monopsony model in labor markets, at least by the standards of empirical support for theories (in my experience, when you look into actual empirical support for a theory you rarely find real certainty there). Again, check out the book I linked to in comment 83. Remember, monopsony means only that the firm-level supply curve slopes up (elasticity of supply is less than infinity), you don't need a company town. It can be generated by e.g. job search frictions. Just intuitively, if your employer cut your wages 10% below the market, would the whole workforce quit?
Also, law and economics has come a long way. The early pioneers often had an ideological edge, but the economists being hired in law schools now are pretty representative of the profession. Lucien Bebchuk at Harvard has been a pretty radical critic of high executive pay:
I agree with Fillmore above that there is a lot of room within the profession to make left wing arguments if you can back them up with good modeling and research. It is true that the basic Econ 101 model has a libertarian bias, but there is plenty of room for strong liberals in the profession. Here are ten recent Nobel prize winners coming out strongly agains the Bush tax cuts, something a lot of Democrats were reluctant to do at the time:
http://www.berkeley.edu/news/media/releases/2003/02/12_akerlof.shtml
66, 68, 72, 83, 87: I doubt if anyone is still reading this thread, and this is a technical quibble, but I think baa's 3am intuition was right. Though I agree with almost everything else he has said here, I think marcus was misleading when he says that monopsony in the labor market gives you an upward-sloping demand curve. In intermediate micro classes they teach that "monopolists don't have supply curves". In exactly the same way, monopsonists don't have demand curves. It is possible to make arguments for why demand curves might slope upwards, but -- unless I am misunderstanding something about marcus's argument -- monopsony doesn't do it for you.
Technically cdm, you're right, but that's sort of an artifact of how economists choose to set up models (the very result that monopsonists will increase hiring when wages go up is usually illustrated by drawing a downward-sloping demand curve for the monopsonist). But baa seemed to be trying to claim the "law of demand" as a kind of natural law applicable to the real world, not a modeling convention among economists. As such a law, I would interpret it as meaning that all else equal, increases in price lead to a drop in purchases. For the monopsonist, that's just not true.
Shearer, there are almost leftwing economists. Krugman and DeLong are centrists. If you think that they are leftists -- well, they viciously criticized anyone, economist or not, who opposed them on free trade. They were real shits.
You're not in the real world. Also, I do you the honor of responding even though everyone else thinks you are a troll. It would seem that you could respnd to me.
De Long said that a column by Prescott (2004 Nobel Prize in Economics) failed the Turing Test, and was too stupid to be the product of a real human being. Krugman was pretty dismissive of rational expectations macroeconomics in his Clinton-era books.
123: But the problem is that in order to create the upward-sloping demand curve for monopsonists, you would need a flat or downward sloping supply curve (otherwise the monopsonist could still slide down the supply curve and get a lower price for a higher profit).
The kind of coordination it would take to force the monopsonist to see a flat supply curve or downward-sloping supply curve would be impossible without a monopoly supplier, as many individual suppliers would have too much of a defection issue (anyone who supplies for less gets the monopsonist's entire order). And once you have a monopoly supplying a monopsony, you have a dynamic demand curve facing a dynamic supply curve (each depends on the shape of the other), so equilibrium analysis like this is impossible. The typical business response in these cases is revenue sharing so that the entire supply chain functions effectively as one business and shares the spoils of the screwed customer as equitably as possible.
So, yes, it seems like a monopsony could face an upward-sloping demand curve, but it would be nigh impossible to realize it in the real world, or even in an ideal model involving multiple non-cartel firms supplying the monopsony.
Or at least, this is my intuition on the matter. But I've hardly done much higher level econ yet.
plus the intertwined morality tales of the CA energy crisis and the Enron collapse
Actually, the California energy crisis was a very interesting case because of the poor way they structured the deregulation. I need to find my old homeworks, but that class I mentioned earlier with Kevin Murphy was great for this kind of stuff.
In one of the homeworks, he had us build a model that reflected the incentive stuctures for energy producers (power plants) and energy traders/transporters (the grid owners) as established in California deregulation, and the models showed everything going to hell quickly since the power producers had all their incentives set up to let their plants run into the ground with little maintenance and no slack capacity. I think the model we set up later that worked much better was based on revenue-sharing, but this was all nearly a year ago now.
124
"Shearer, there are almost leftwing economists. Krugman and DeLong are centrists. If you think that they are leftists -- well, they viciously criticized anyone, economist or not, who opposed them on free trade. They were real shits."
I expect we have different definitions of leftwing. From my perspective academia in general is far left. University economists may be right wing by academic standards and still well left by the standards of society at large. Suppose you look at things like party identification, political contributions, positions on abortion or gay marriage or gun control etc. I would expect economics departments to show up as left of center according to these criteria. Note I think the political orientation of economists should be judged by their positions on issues unrelated to their professional work. Similarly I would think it incorrect to characterize a climatologist as left wing even though on things unrelated to his professional work he is right of center just because he believes in global warming and that position is more congenial to the left than to the right.
Regarding DeLong and Krugman I sometimes read DeLong's blog and see Krugman's op eds quoted. Both of them strike me as strident, somewhat thin-skinned and intolerant of opposing views. But I don't see what this has to do with whether they are leftists.
"You're not in the real world. Also, I do you the honor of responding even though everyone else thinks you are a troll. It would seem that you could respnd to me. "
They may think I am a troll but they avoid comments like this .
112
"... Of course all sorts of theoretical models were proposed both before and after there was solid empirical evidence for warming (decades, now), but that isn't what drove the rise to prominent discourse. It was the data, period. ..."
I don't agree. Until recently the data, absent a theory predicting warming looked an awful lot like a random fluctuation. The theory was driving things.
25 31
I agree with this except I think it is not just the results of orthodox economics that left wingers don't like but the methods as well. Left wingers just don't like the way economists look at the world and they are generally reluctant to adopt it even when it would produce congenial results. Just as left wingers don't like to use realist arguments against the Iraq war.
126: I don't understand "sliding down the supply curve". Doesn't a minimum wage law force the monopsony labor buyers supply curve to be flat all the way up to the mandated minimum wage?
131
I may be misunderstanding the lingo but I don't think so. Instead of lower pay labor buyers can demand a faster work pace.
Standard supply and demand curve reasoning doesn't work so well for labor markets because an hour of labor is not a fixed quantity like a barrel of oil.