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> issues like inequality, globalization, and the most efficient ways to tackle climate change... > groups of students demanded an overhaul in how economics was

> issues like inequality, globalization, and the most efficient ways to tackle climate change... > groups of students demanded an overhaul in how economics was taught, with less emphasis on free-market doctrines and more emphasis on real-world problems. > in many cases this material comes after lengthy explanations of more traditional topics: supply-and-demand curves, consumer preferences, the theory of the firm, gains from trade, and the efficiency properties of atomized, competitive markets This is very concerning. If you don't understand things like supply and demand curves and relative advantage, you can't understand economics. There's very good reason Mankiw starts with these basics. If the math gets thrown out for ideological reasons, then economics will become the next sociology.

Jtsummers 9y ago
I haven't read the book, but I think your fears are somewhat unfounded. Skimming through it, chapter 8 discusses Supply and Demand (in fact, that's the title of the chapter). And it's certainly not devoid of math.
- thedevil 9y ago
  I haven't read it either, just skimmed. Maybe I'm overly concerned. It's not devoid of math, but it's certainly very light on math. And the supply and demand isn't until chapter 8 while inequality is 1.1. But much more concerning is "1.9 Capitalism, causation and history’s hockey stick". It starts off questioning whether capitalism actually did cause the great hockey stick. It then presents the German case study pretty fairly but then ends: "We cannot conclude from the German natural experiment that capitalism always promotes rapid economic growth while central planning is a recipe for relative stagnation." While it's true that one case study isn't conclusive (and the absolute term "always" was used to weaken the hypothesis), the closing paragraph leaves the reader with the impression that we only have one data point so we're not that sure which approach works better. Edit: On the other hand, it is honest about price controls. And it does actually incorporate supply and demand curves in later sections where appropriate.
  - jpttsn 9y ago
    A newfangled med school could conceivably lecture on "Smoking, causation and the cancer of old age" in the intro course, and still turn out great doctors. But it should raise some questions about who backs the school.
  - userpass 9y ago
    The important aspect is competition. If you have multiple central planners that compete with each other then maybe it could work out as well.
    - bmelton 9y ago
      So, similar to how capitalism does it?
      - Jtsummers 9y ago
        Capitalism isn't about markets. Capitalism is defined as private, not state, ownership of property. Nothing in capitalism's basic theory requires markets. It's just that capitalism, sans monopolies, and markets are a natural fit for each other. Capitalism with monopolies is the late 1800s US, which was an economic disaster for many and why we saw a rise of unions and socialist groups at the time.
        bmelton 9y ago
        Sure. But if one central planner is better than two, because price controls would work better without competition, then it should stand to reason that even more than two planners would be even more effective. If the entire market were involved in price-setting, it should be optimal. Sure, there's probably a point of diminishing returns on how many people are needed to make price controls more efficient, but it seems likely that the point of diminishing returns isn't proximally close to 2.
deepnotderp 9y ago
> If the math gets thrown out for ideological reasons, then economics will become the next sociology. I've got bad news for you buddy.... Economics has been nothing more than a pseudoscience for the past few decades, driven by political pandering.
js8 9y ago
> If you don't understand things like supply and demand curves I am not an economist, but I disagree strongly. The concept of supply and demand is a plague of economics theory, especially in the aggregate. It's a terrible idea, which should have been obsoleted years ago, and has much nicer alternatives. The basic (but not only) problem with it is that you're looking at one side of equation at a time. There is a much nicer alternative treatment in J.M.Blatt: Dynamic Economic Systems, which uses Leontief matrices. Also, if you want to know where my criticism is coming from, read Steve Keen's Debunking Economics. And even he doesn't list all the issues with supply/demand analysis, although he hints at them in other chapters.
- JumpCrisscross 9y ago
  > Leontief matrices These are commonly called IO models in econometrics (for input-output). There are a number of successful IO models. Characterising these as "competitors" to supply-demand curve drawing is silly since they share common themes and complement each other. IO models need lots of data and underperform in situations where the market computes the table for you, i.e. where prices are clear, e.g. for commodities or liquid financial assets.
  - js8 9y ago
    > IO models need lots of data To draw supply and demand curves to just find the equilibrium also requires quite a lot of data. And if you aggregate, then it's not even clear what these curves are and what is the equilibrium. > where the market computes the table for you I am not sure what you mean by that. How is supply-demand model better? What it gives you in those situations? Also, I should add: Blatt's IO model (if you want to call it that) is not an econometric (meaning statistical) one. I am not familiar with IO econometric models, so I cannot say how it is different. And it's kinda underdeveloped, too, unfortunately though understandably.
    - JumpCrisscross 9y ago
      > I am not sure what you mean by that. How is supply-demand model better? What it gives you in those situations? It yields better predictions with fewer inputs. For simple calculations of optimal pricing or optimal production quantities given input costs, a simple table of volume versus price beats a matrix. IO models become interesting when observing entire industries. (That is why the DoJ uses the HH metric [1], an IO-derived metric, to measure competitiveness.) But they're macroeconomic, not microeconomic, models. Macro has a worse track record than micro, which starts with simple regressions of volume and price that we call supply and demand. These kinds of matrix models are deeply embedded into the IMF's approach, by the way. Many are critical of the IMF's over reliance on such difficult-to-intuit models. [1] https://en.m.wikipedia.org/wiki/Herfindahl_index https://en.m.wikipedia.org/wiki/Herfindahl_index
superioritycplx 9y ago
Propaganda should be kept out of education.
norea-armozel 9y ago
Supply and demand curves don't follow closely with most, if any, markets. Agriculture and some commodity markets follow the models but the rest don't. You literally couldn't model your restaurant's business finances on the basis of micro-economic models. Even models regarding scales of economy don't fit any firm anywhere on the planet. Firms that produce electronics don't bother with such models and theoretically overshoot scales of economy all the time but make up for it by the fact they can sell their electronics at a price that offsets their costs (i.e. they set the price for the revenue they want, not what the market will bear).
- TheCowboy 9y ago
  > You literally couldn't model your restaurant's business finances on the basis of micro-economic models. If a restaurant lowers the price for a given quality of food, will it increase demand for its services? Probably If a restaurant provides discounted prices for items during certain low demand hours (happy hour), will it be able to increase demand for its services? Probably If other restaurants decrease prices during low demand hours, will it decrease demand for its services? Probably > they set the price for the revenue they want, not what the market will bear If the price they set for the revenue they want is not what the market will bear, then they lose money. Done long enough, they go bankrupt. Am I arguing that this is always 100% perfectly true? No. Is it true more often than not that it can be demonstrated with evidence? Yes.
  - norea-armozel 9y ago
    You keep using that word, probably, as if it's a quantifiable number by which a firm can and will make their business model upon in such a manner which they can bank on gains/losses to actually turn a profit which they can model precisely (hint: they don't actually do this, I've worked in a restaurant). Seriously, making cute micro-econ models isn't science, it's phrenology. If you want to construct something with known quantities with known and repeatable events in a model then I'll listen. If you're going to give me Friedman's plucking model then I'm going to just put my headphones and ignore anything you have to say.

Jtsummers 9y ago

I haven't read the book, but I think your fears are somewhat unfounded. Skimming through it, chapter 8 discusses Supply and Demand (in fact, that's the title of the chapter). And it's certainly not devoid of math.

thedevil 9y ago
I haven't read it either, just skimmed. Maybe I'm overly concerned. It's not devoid of math, but it's certainly very light on math. And the supply and demand isn't until chapter 8 while inequality is 1.1. But much more concerning is "1.9 Capitalism, causation and history’s hockey stick". It starts off questioning whether capitalism actually did cause the great hockey stick. It then presents the German case study pretty fairly but then ends: "We cannot conclude from the German natural experiment that capitalism always promotes rapid economic growth while central planning is a recipe for relative stagnation." While it's true that one case study isn't conclusive (and the absolute term "always" was used to weaken the hypothesis), the closing paragraph leaves the reader with the impression that we only have one data point so we're not that sure which approach works better. Edit: On the other hand, it is honest about price controls. And it does actually incorporate supply and demand curves in later sections where appropriate.
- jpttsn 9y ago
  A newfangled med school could conceivably lecture on "Smoking, causation and the cancer of old age" in the intro course, and still turn out great doctors. But it should raise some questions about who backs the school.
- userpass 9y ago
  The important aspect is competition. If you have multiple central planners that compete with each other then maybe it could work out as well.
  - bmelton 9y ago
    So, similar to how capitalism does it?
    - Jtsummers 9y ago
      Capitalism isn't about markets. Capitalism is defined as private, not state, ownership of property. Nothing in capitalism's basic theory requires markets. It's just that capitalism, sans monopolies, and markets are a natural fit for each other. Capitalism with monopolies is the late 1800s US, which was an economic disaster for many and why we saw a rise of unions and socialist groups at the time.
      - bmelton 9y ago
        Sure. But if one central planner is better than two, because price controls would work better without competition, then it should stand to reason that even more than two planners would be even more effective. If the entire market were involved in price-setting, it should be optimal. Sure, there's probably a point of diminishing returns on how many people are needed to make price controls more efficient, but it seems likely that the point of diminishing returns isn't proximally close to 2.

deepnotderp 9y ago

> If the math gets thrown out for ideological reasons, then economics will become the next sociology. I've got bad news for you buddy.... Economics has been nothing more than a pseudoscience for the past few decades, driven by political pandering.

js8 9y ago

> If you don't understand things like supply and demand curves I am not an economist, but I disagree strongly. The concept of supply and demand is a plague of economics theory, especially in the aggregate. It's a terrible idea, which should have been obsoleted years ago, and has much nicer alternatives. The basic (but not only) problem with it is that you're looking at one side of equation at a time. There is a much nicer alternative treatment in J.M.Blatt: Dynamic Economic Systems, which uses Leontief matrices. Also, if you want to know where my criticism is coming from, read Steve Keen's Debunking Economics. And even he doesn't list all the issues with supply/demand analysis, although he hints at them in other chapters.

JumpCrisscross 9y ago
> Leontief matrices These are commonly called IO models in econometrics (for input-output). There are a number of successful IO models. Characterising these as "competitors" to supply-demand curve drawing is silly since they share common themes and complement each other. IO models need lots of data and underperform in situations where the market computes the table for you, i.e. where prices are clear, e.g. for commodities or liquid financial assets.
- js8 9y ago
  > IO models need lots of data To draw supply and demand curves to just find the equilibrium also requires quite a lot of data. And if you aggregate, then it's not even clear what these curves are and what is the equilibrium. > where the market computes the table for you I am not sure what you mean by that. How is supply-demand model better? What it gives you in those situations? Also, I should add: Blatt's IO model (if you want to call it that) is not an econometric (meaning statistical) one. I am not familiar with IO econometric models, so I cannot say how it is different. And it's kinda underdeveloped, too, unfortunately though understandably.
  - JumpCrisscross 9y ago
    > I am not sure what you mean by that. How is supply-demand model better? What it gives you in those situations? It yields better predictions with fewer inputs. For simple calculations of optimal pricing or optimal production quantities given input costs, a simple table of volume versus price beats a matrix. IO models become interesting when observing entire industries. (That is why the DoJ uses the HH metric [1], an IO-derived metric, to measure competitiveness.) But they're macroeconomic, not microeconomic, models. Macro has a worse track record than micro, which starts with simple regressions of volume and price that we call supply and demand. These kinds of matrix models are deeply embedded into the IMF's approach, by the way. Many are critical of the IMF's over reliance on such difficult-to-intuit models. [1] https://en.m.wikipedia.org/wiki/Herfindahl_index https://en.m.wikipedia.org/wiki/Herfindahl_index

superioritycplx 9y ago

Propaganda should be kept out of education.

norea-armozel 9y ago

Supply and demand curves don't follow closely with most, if any, markets. Agriculture and some commodity markets follow the models but the rest don't. You literally couldn't model your restaurant's business finances on the basis of micro-economic models. Even models regarding scales of economy don't fit any firm anywhere on the planet. Firms that produce electronics don't bother with such models and theoretically overshoot scales of economy all the time but make up for it by the fact they can sell their electronics at a price that offsets their costs (i.e. they set the price for the revenue they want, not what the market will bear).

TheCowboy 9y ago
> You literally couldn't model your restaurant's business finances on the basis of micro-economic models. If a restaurant lowers the price for a given quality of food, will it increase demand for its services? Probably If a restaurant provides discounted prices for items during certain low demand hours (happy hour), will it be able to increase demand for its services? Probably If other restaurants decrease prices during low demand hours, will it decrease demand for its services? Probably > they set the price for the revenue they want, not what the market will bear If the price they set for the revenue they want is not what the market will bear, then they lose money. Done long enough, they go bankrupt. Am I arguing that this is always 100% perfectly true? No. Is it true more often than not that it can be demonstrated with evidence? Yes.
- norea-armozel 9y ago
  You keep using that word, probably, as if it's a quantifiable number by which a firm can and will make their business model upon in such a manner which they can bank on gains/losses to actually turn a profit which they can model precisely (hint: they don't actually do this, I've worked in a restaurant). Seriously, making cute micro-econ models isn't science, it's phrenology. If you want to construct something with known quantities with known and repeatable events in a model then I'll listen. If you're going to give me Friedman's plucking model then I'm going to just put my headphones and ignore anything you have to say.