Protesting Narrow Economics

I am pretty sure that, had I taken economics in school, I would never have developed an interest in it.

One of my hobbies is collecting economics textbooks. They are not uniformly bad — I have gained insights from those by Alchian and Allen, David D. Friedman, Gwartney and Stroup, and a few others — but they are not as good as the old “Principles”-style texts from days of yore. You know, general theory books covering a lot of ground for a wide audience including amateurs, written (in the best cases) in readable English (or other common tongue) and not littered with Q&As and “work problems” and “call-out” boxes of biographies of Adam Smith, David Ricardo, Karl Marx, and the ever-present Keynes. The best of the old-fashioned treatises, such as by F.W. Taussig, and especially the “anachronistic” efforts by Ludwig von Mises (Human Action) and Murray Rothbard (Man, Economy and State), outshine all econ texts used in colleges today.

Part of the problem is that the textbook industry is a mostly corrupt adjunct to the university system, the main idea being to milk as much money as possible from students. The often-annual revisions in textbooks are usually trivial . . . but quite necessary for the planned obsolescence of the media, allowing universities to renege on buy-backs, thus keeping multi-hundred dollar purchases coming into their revenue streams. Change a few pictures, charge $300+.

This perverse industry has arisen, in part, in response to the near-unlimited demand stemming from subsidized tuitions and student loans.

Sometimes I pity the professors. College teachers often find themselves the lead grifters in a long-running scam on the public purse. I’d be ashamed of myself.

So, were I college student today, I’d probably balk, too. But I hope I wouldn’t be as witless as Greg Mankiw’s protestors:

The students’ general criticism is that Ec 10, in which some 700 students are enrolled, “espouses a specific — and limited — view of economics.” Their specific criticisms are that economics as taught in this class, formally called Economics 10, failed to prevent the financial crisis and does nothing to narrow the gap between rich and poor.

They’d like a more diverse intro course that includes exposure to more progressive economic frameworks.

“I’m someone who lives below the poverty line, my family’s extremely poor. And having a class like this that promotes gaining at the expense of millions of people disturbs me and bothers me at my core,” freshman Amanda Bradley told National Public Radio.

Read the rest of the piece. Amity Shlaes goes on, arguing that Harvard’s economics department lacks the old Schumpeterian insight into destructive creation*, much hint at all of Ludwig von Mises’ great contribution to business cycle theory (malinvestment theory), and, last but not least, Public Choice analysis. This is a great piece.

Shlaes is right. Harvard econ is narrow — though widening it up with the nonsense one often finds in “‘history,’ ‘sociology’ or ‘government'” is not the way out. Broadening out of the neoclassical paradigm that is Harvard’s main focus would certainly get students thinking better.

Sad, in one way. Taussig was a Harvard economist, and not a bad one, all in all. His 90-year-old essay “Is Market Price Determinate?” would be great reading for Harvard neoclassicals. A great challenge. And perhaps it might lead to more Schumpeter, Mises, and Public Choice.

 

* I know, Schumpeter said “creative destruction.” But that’s the wrong order. Capitalism proceeds by gales of destructive creation. Schumpeter’s reversal of these words gives the wrong picture.