Invaders from planet stupid

A very interesting post by Steve Hayward at Powerline with the title, First they came for the Sociologists. But in spite of its title, the post is mostly about economics.

The one field in the social sciences where there is the least presence of post-modern oppression-“privilege” types is Economics, which prompts me to propose the theorem that the presence of politically correct nonsense in an academic department is inversely proportional to the emphasis placed on rigorous regression modeling in the discipline (or knowledge of ancient languages).

I personally think modern economics is well to the left as an academic subject. The veneer of bourgeois respectability is important to economists if their economics message is to influence the political class. Mainstream economics is no longer about the need for free markets, but the importance of controlling free markets. It may be disciplined by various sets of data, but economic theory is no longer Adam Smith. It is, instead, the nearest thing to Marxism that still retains that overlay of markets, best represented by Keynesian theory. Keynes disarmed the Marxists of his time by siding with them over Say’s Law, which had perennially been the province of the economics far left and central to their critique of capitalism.

I have half a chapter on this in my Free Market Economics, beginning with the notion of “perfect competition”. “Perfect” implies that this is the ideal, and is contrasted with “imperfect” competition. Perfect markets cannot exist, given its definition (e.g. perfect knowledge). All other markets are imperfect, which leaves much room for intervention at every turn.

But even with my continuous criticism of mainstream theory, I believe there is only one economics. The “political economy” department at Sydney is merely a cop out. Whatever sociological version of economics that might be taught, unless they also do supply and demand and marginal analysis along with the full panoply of mainstream theory, it is useless, other than as a leftist critique of markets. This is a quote from Greg Mankiw who was on the other end of these barbarian invaders:

Those who attended either of the sessions I was involved with at the ASSA meeting know that the audience included some hecklers. During the first session, I was the target. During the second, Larry Summers was. (At one point, the moderator Bob Hall threatened to call security.) Here is a Washington Post article about the hecklers.

After the first session was over, one of the hecklers came up to me and asked, “How much money have the Koch brothers paid you?” My answer, of course, was “not a penny.”

I don’t find it odd that people disagree with me. I am always open to the possibility that I am wrong about lots of things, and I much enjoy talking with students and colleagues who have views different from mine. But I do find it odd that people who disagree with me are sometimes quick to question my sincerity. If I am wrong, it is sincere wrong-headedness, not the result of being on some plutocrat’s payroll, as some on the left want to believe.

The hecklers probably limit their own effectiveness by questioning the motives of those who disagree with them. I have found that to convince other people, it is usually best not to assume your own moral superiority but rather to talk with them as equals who just happen to have a different point of view.

Personally I think Greg was too mild in his criticism of these know-nothings. I disagree about a lot, but I am never in doubt that the economists I deal with know a lot more about economies than their non-economist critics, a lot lot more and within a proper contextual setting. The true worry is how sympathetic the Washington Post article is to these invaders from the planet stupid.

An Austrian course on Keynesian economics

I have been hassling my Austrian friends for quite some time that it is not enough to be pro-Hayek and pro-Mises but they also have to be anti-Keynes. Unless they specifically present their own pre-Keynesian classical views as a direct counterweight to the Keynesian wreckage, they have no hope of seeing Keynesian economics finally removed from our texts. It still remains a mystery that the events of the past five years have not even commenced a massive overhaul of mainstream economics. It does seem as if the mainstream continues to believe they are on top of it all. But if mainstream economists still think that Y=C+I+G can explain what caused the recession in the first place or what is needed to create recovery, not only is their economic understanding now worthless but so too is their credibility.

But this morning I have received a notice from the Mises Institute that it is about to run a six-week online course on Keynesian economics:

Beginning Monday, November 11, William Anderson will be teaching ‘The Ghost of Keynes’ at Mises Academy. This six-week online course will examine how and why many economists and governments continue to ignore the numerous fallacies that accompany Keynesian thinking even as the Keynesian-influenced economies around the world continue to flounder in high unemployment and low growth.

Whether this will include a discussion of Say’s Law I do not know but it absolutely needs to. You can watch my presentation to the Mises Institute above on Keynesian economics and Say’s Law. But even though there is an appreciation amongst Austrian economists that the two are related, the importance of Say’s Law is not yet completely embodied in the way Austrians discuss economics. They, of course, do not reject Say’s Law but they also do not fully embrace it.

Nevertheless, I encourage you to sign up for this six-week course. You can enroll here.