Greg Mankiw Is Everything That’s Wrong With Economics

So anyone who read my rant about N. Gregory Mankiw’s atrocious textbook knows I’m not a big fan. Now comes Mankiw’s recent op-ed in the Times supporting the Trans-Pacific Partnership and the Transatlantic Trade and Investment Partnership: “Economists Actually Agree on This: The Wisdom of Free Trade.”

It reminded me of another piece: Sylvia Nasar’s column supporting NAFTA in the very same paper, 23 years ago: “A Primer: Why Economists Favor Free-Trade Agreements.

Here’s the first line of Nasar’s article:

When economists of every stripe agree on anything, it is noteworthy. 

So economists were unanimously for free trade 23 years ago, and they’re unanimously for it now. Free trade is therefore good. Q.E.D., right?

Well, it’s worth reminding ourselves why economists were for NAFTA back than. Nasar wasn’t arguing that NAFTA would be great for the US; rather, she was saying that the effect on the US would be minor, while it would be great for Mexico (and that a prosperous Mexico was in the US’s interest).

So what happened? Mexico’s wages have stagnated to the point that Mexican wages are now lower than Chinese ones. And politically, rather than a prosperous neighbor, we have a country that has teetered on the edge of becoming a failed state.

And while one could argue that it’s not NAFTA’s fault, one would be wrong. NAFTA actually does deserve a lot of the blame here.

So how can economists, after 23 years’ worth of evidence that they were wrong, have learned nothing? How can they still agree that NAFTA-style “free trade” agreements (which is what the TPP and TTIP are) are simply good?

Well, part of the answer is that Mankiw is lying. Some economists have learned from their mistakes. The consensus is not nearly as strong as it was in the 1990s, when the only debate was between economists who thought that trade agreements were flat-out good and those who acknowledged that they might not be good for every person unless the winners compensated the losers out of their winnings.

But the rest of the answer is that Mankiw is a poster boy of what’s wrong with too many economists (perhaps in part because so many economists start with his atrocious textbook): he sees the world as a set of postulates and theorems, and he sees no reason to abandon that approach just because facts don’t agree. So when he says

The main issue is not the number of jobs, but which jobs.

That’s because to him, it’s just axiomatic that our policies can’t affect the number of jobs (scroll down to “The Broken Window Fallacy Fallacy” here if you want to see why I disagree).

Then it gets worse. Far, far worse. The second part of Mankiw’s article, and seemingly the real point, speculates on why we, the voters, just won’t listen to economists on trade.

Here’s Mankiw:

If economists are so sure about the benefits of free trade, why are the public and their elected representatives often skeptical?

Is his answer: “Because economists have been sure and wrong before, and a rational person can doubt whether the same justifications that have proven wrong in the past are correct today?”

No! Check this out:

One answer comes from a 2007 book by Bryan Caplan, a George Mason University professor, called “The Myth of the Rational Voter: Why Democracies Choose Bad Policies.”

Mr. Caplan argues that voters are worse than ignorant about the principles of good policy. Ignorance would be random and might average out in a large population. Instead of being merely ignorant, voters hold on to mistaken beliefs.

Politicians, whose main goal is to get elected, mold those mistaken beliefs into bad policy. Mr. Caplan writes: “What happens if fully rational politicians compete for the support of irrational voters — specifically, voters with irrational beliefs about the effects of various policies? It is a recipe for mendacity.”

If you’ve finished laughing about “fully rational politicians” let’s — you haven’t? I’ll wait. . . .

Okay, take a minute to read it again. Read Mankiw’s smug condescension: you stupid voters just don’t understand. Only he understands.

Mankiw is giving what are basically the core beliefs of the econ profession:

  • Economists have sophisticated, logical, mathematical models of the economy that non-economists don’t understand.
  • These models let economists see through the noise of the real world to underlying truth.
  • Nowhere is the difference between economists’ true perceptions, and the fuzzy thinking of everyone else, clearer than with trade.

Thing is, only the first point is true. Economists’ models are certainly opaque to the rest of us, but they have a truly atrocious track record, and most economists simply don’t care. No other field, except perhaps astrology, fetishizes its methods to the exclusion of its results; no other field looks down on people who check to see what happens in the real world.

So when Mankiw says this:

Instead of being merely ignorant, voters hold on to mistaken beliefs.

He’s describing himself, not voters. Mankiw, not voters, is “worse than ignorant about the principles of good policy.”

And yet he thinks we should have *less* of a voice in our own government.

How the fuck does this guy get to keep his chair at Harvard?

5 comments to Greg Mankiw Is Everything That’s Wrong With Economics

Leave a Reply




You can use these HTML tags

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>