> This is a good example of how so much economics is meant to distract you from what’s important.
I think your assumption of malice is unfounded. A likely benign explanation is that Cowen focused on areas there economists are in broad agreement without intent to mislead.
Economists are in broad agreement because they're paid to be. This is well-documented historically.
The Mont Pelerin Society was specifically founded to promote a certain view of economics, and the Chicago School was supported financially by some very rich sponsors who wanted a a pet academic alternative to progressive slant of Keynesianism.
The "consensus" in neoliberal economics and its core ideas - including "rationality" and "efficiency" - is a wholly manufactured political project, not an organic open-minded attempt to find credible scientific foundations.
> Economists are in broad agreement because they're paid to be. This is well-documented historically.
This is *complete* nonsense. No one pays me to think or say anything. No one pays anyone in my department anything to take a particular position.
For a simple example of what nonsense your claim is: the economist’s definition of rationality is that preferences are (1.) complete and (2.) transitive. That’s it. (See any microeconomics textbook for proof. Sometimes (3.) reflexivity is included, sometimes smaller sets of axioms which imply the others are used instead.)
How “political” is that definition?? Did someone rich guy pay Paul Samuelson or Gerard Debreu or Kenneth Arrow to use that definition 80 years ago? Obviously not - moreover Arrow and Samuelson at least were on the political left! (And I simply don’t know Debreu’s politics. He could have been on the left too.)
Your comment is *entirely uninformed* and *totally unfair* to an entire profession.
It's not that simplistic, it's not a conspiracy it's a self-selecting self-replicating system.
How do economics professors get hired? By impressing other economics professors. And by having the power to win funding for the department. Who are the people that tend to fit those criteria? Mostly, those who already agree with the existing establishment, and those who already have views amenable to the well-resourced bodies that distribute funding.
> How do economics professors get hired? By impressing other economics professors.
This claim is true.
> Who are the people that tend to fit those criteria? Mostly, those who already agree with the existing establishment
This claim is false. If you can empirically support a result which shows that something most other economists believe is likely false and can do so convincingly, you can write your ticket to any department in the country. Some of the most successful graduate students every year do things like this (not all, because it's very hard to do). But the profession is 100% open to this kind of work.
> And by having the power to win funding for the department.
This demonstrates a misunderstanding of how economics departments are funded. Grant funding is a very small part of the departmental budget everywhere. We are not (to take an example where department funding does depend on grants) health policy departments.
> This claim is false. If you can empirically support a result which shows that something most other economists believe is likely false and can do so convincingly
It's almost impossible to do that though isn't it? Economics isn't a hard science, it's not like you can run RCTs or experiments. And all actually-existing economic systems are situated within an actually-existing political, social and historical context, meaning we only ever observe a tiny fraction of the possible universe of economic systems. There is no possibility to explore counterfactuals.
> This demonstrates a misunderstanding of how economics departments are funded. Grant funding is a very small part of the departmental budget everywhere
I never mentioned grants, departments still have to be funded somehow, whatever that process is, it will introduce selection biases.
> It's almost impossible to do that though isn't it?
Not at all. It IS hard, but that's because research is hard. If it were possible to easily show widely-held beliefs to be wrong, someone would have done it already. (No different from any other scientific field!) But it does happen.
>Economics isn't a hard science, it's not like you can run RCTs or experiments.
Also wrong. You can in many areas. Indeed, there is a gigantic literature on field experiments, and the whole field of development economics runs on RCTs. In macro it is difficult, because no one is going to give you a whole economy to play with, but lab experiments in macro exist. Most empirical work in macro is not based on experiments.
But that does not make it impossible to learn anything, it just makes it hard. Indeed, that is why we have spent years developing methods to solve this problem, then more years criticizing and refining our own methods. That process will never end.
> And all actually-existing economic systems are situated within an actually-existing political, social and historical context, meaning we only ever observe a tiny fraction of the possible universe of economic systems. There is no possibility to explore counterfactuals.
Again, this is what makes it hard. It is not impossible. To answer certain questions for certain models may be impossible b/c there is no way to identify the parameters in question empirically.
You make these claims like it makes our whole enterprise worthless or impossible. We have taken it as a challenge to attempt to develop interesting methods to answer hard questions.
Exploring unseen counterfactuals on the basis of parameters estimated from models given existing data is literally my bread and butter EVERY day (I am not a macroeconomist, but I am an economist). And it is the bread and butter of many of us.
Give us some credit, an overwhelming majority of us are not conservative ideologues. And if you really want to know how it works, HOW we learn things from data (in macro and elsewhere) I can provide references.
Samuelson literally self-censored his textbook in the wake of the Mccarthyite campaign against Lorie Tarshis. A similar campaigned blocked Galbraith from chairing the department at the University of Illinois. One thing Cowen has in common with Hayek and Mises is his university salary is supplied by the inherited wealth of conservative activists.
Paul Krugman, I believe, talked about the risk of being blacklisted if one attacks the US monetary system and central bank. I expect there is some truth to his observations about pissing off the money printers.
The existence of human irrationality is not unknown to economists.
Behavioral economics, which concerns itself with the effects of this phenomenon on economic decision-making, is one of the major branches of the subject studied today.
No. Behavioral economics is absolutely not considered heterodox. Mainstream departments (Chicago, mit) all have behavioral people.
They don’t have heterodox people (eg marxists, Austrians, or MMT). Nor should they. CS departments won’t hire people who (for example) believe computers work via magic. Dollars and tenure lines are scarce and can’t be wasted on BS. There is a lot more diversity of thought in economics departments than commenters here know, but there are limits, as there are in every field.
my main problem with economics is it makes a philosophical error in that it assumes people and economic agents are inert objects to be studied as you would chemicals or atoms, without the capacity to react and respond to economic "laws" thereby changing them. Reflexivity is a thing.
> it makes a philosophical error in that it assumes people and economic agents are inert objects to be studied as you would chemicals or atoms, without the capacity to react and respond to economic "laws" thereby changing them.
This is literally the foundation of macroeconomics AFTER Keynes. This is (one of several) reasons why Keynesianism was rejected.
Every single macroeconomist in every mainstream department in the country (and everyone in a central bank anywhere) would agree with exactly what you said AND say that it is precisely that fact which makes macroeconomics really hard.
This is why, for example, even the bare-bones simplest macroeconomic model you learn in your first year graduate macro class must include some notion of the agents' expectations.
It would be an error if we didn't do that. But fortunately, it's been at least 50 years since we started thinking about exactly that problem.
Oh, come now - comparing Marxists to people who "believe computers work via magic" is a little harsh.
Econ departments don't have Marxists for the same reason philosophy departments don't have Buddhist scholars: it's just not where they belong. The Buddhists belong in religious studies, and the Marxists belong in the political science department.
What are the best counterarguments for the "four basic truths" he claims are broadly accepted?
Taking the first claim as an example (decline in demand leads to unemployment and recession, because sticky wages etc.), I suppose one could argue that just because we've seen this happen before doesn't mean it's an inevitability of human nature. I can imagine a society with a higher level of cooperation and shared responsibility, where everyone _does_ agree to take a small reduction in pay so that others can stay employed and the overall economy suffers less.
If you agree with that argument, my best response to it is that these macroeconomic "theorems" are supposed to be phenomenological rather than prescriptive. They have predictive power in the present economic system but are not necessarily useful in a society radically different from ours.
I agree that it would be an error to treat these emergent properties as some sort of inevitable laws of nature, which is a tendency that I've seen in debates.
The grandparent is not attributing malice to the author, but to the way the framework of economics is built. Cowen probably believe that what is saying is true and can't see different anymore.
I’ve been reading Cowen for nearly twenty years. He plays dumb when he gets caught out (“I’m not really a macroeconomist,” “I’m not really familiar with Keynes,” etc). Think of him as a lawyer representing his client. He’s not going to introduce evidence that hurts his case.
Nah, in this case the accusation is warranted, Cowen has always been an unconditional cheerleader for unconstrained capitalism,the status-quo and the dubious predictive and normative power of mainstream macro.
It appears to me that Cowen has set out (his own right-wing understanding of) assumptions underlying macroeconomics, in line with the editorial position of Bloomberg.
The assumptions are set in stone before you can begin to do macroeconomics, given to you when you take Macro 101, to lay the foundation of your future work, rather than examined and challenged.
I don't think this is exactly malicious, but it bothers me that the field largely operates on, and draws research conclusions from, unchallenged assumptions.
> don't think this is exactly malicious, but it bothers me that the field largely operates on unchallenged assumptions
What do you know about the research done by contemporary macroeconomists? Anything? Do you know how it is taught in graduate programs?
If you did, you would know that all macroeconomists have opinions about where their assumptions (basic and otherwise) limit their models and spend their careers trying to extend them and make them more realistic and take them to the data.
I am not a macroeconomist but I will defend how my colleagues approach the subject. You don’t know how difficult it is until you’ve tried to formulate a model that you can actually solve and made an attempt to take it to the data.
The field absolutely does not operate on “unchallenged assumptions.”
> Do you know how it is taught in graduate programs?
If a professor presents these assumptions as "truths" (as they have done, quite literally, via this article), graduate students are strongly disincentivized from thinking about challenging or contradicting them - if they want to pass their course, if they ever might want to get a job in that department, etc.
We can have an argument about the nature of scientific truth, but I think that's a big topic.
What contemporary graduate macro everywhere teaches you is a set of tools. You then have to ask and answer your own questions. There isn't any "indoctrination" as you seem to be imagining. It's not different at all from doing a math PhD and taking a first-year analysis sequence, or a CS PhD and taking an algorithms class. It is exactly the same.
If you can take these tools and show that any of the truths presented in this article are false and can do it in a convincing way, then (as I have said elsewhere in this thread) you are going to be able to get a great job in whatever department you want.
Understand something about the incentives in science - surprising and counterintuitive results, convincingly demonstrated, can have enormous payoffs.
The way you seem to be imagining things work in economics departments and graduate programs bears little relationship to the way things actually are.
Hidden in all that math and technique are some very strong ideological assumptions. That poor people are lazy, that wages equal the marginal product of labour, that there’s an efficiency/equality tradeoff. Even just the common assumption that markets clear or that Pareto optimality has any kind of ethical basis are hugely ideological.
I think your assumption of malice is unfounded. A likely benign explanation is that Cowen focused on areas there economists are in broad agreement without intent to mislead.