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I'm so happy to see a more realistic model of economics being taught!! People will STILL call you a marxist/communist if you point out that current economics i

I'm so happy to see a more realistic model of economics being taught!! People will STILL call you a marxist/communist if you point out that current economics is wrong sometimes.. very wrong. Like obvious-fucking-ly when we model chickens as "perfect spheres" in physics we know its only a model and not reality - the model is good enough for some uses, not accurate enough for others. Point out that a "perfectly rational" consumer and "perfectly efficient" markets are models - that no market is perfect just as no ball is perfectly round.. people lose their shit. The dogma of the day is Free market/capitalism GOOD , all other systems EVIL! Never mind understanding what precisely any of those words mean or correlating taught concepts to real world business to see how well they hold up. To me it points to a huge failure in education really - these people were never taught the world is complex and economics is a highly simplified model that can't hope to capture everything. No model can. They were indoctrinated in a religion called economics, distinct from a science called economics.

JumpCrisscross 9y ago
> Point out that a "perfectly rational" consumer and "perfectly efficient" markets are models - that no market is perfect just as no ball is perfectly round.. people lose their shit Then they didn't learn economics. Chapter 1 in Mankiw goes into why we learn using frictionless markets of rational actors. I think Chapter 2 or 3 went into market failure.
- zaptheimpaler 9y ago
  Yes. At a shallow - Econ 101 level, economics seems to be about those simple models. Most people who weren't economics majors only took Econ 101 and assumed what they learnt was correct.
  - fgjjgutjvnu 9y ago
    It's always pretty obvious that those are idealized abstractions, though. I don't understand the criticism of the rational actor model. In the same vein, many people criticize economics for seemingly being obsessed with money. It is not, they just use it as a convenient proxy for value.
  - JumpCrisscross 9y ago
    One shame in much economic teaching is its detachment from empiricism. I had the fortune of good professors, mostly in finance, who forced us to model real markets (and in some cases collect new data). In any case, I don't see someone who misses the Chapter 1 disclaimer finding better value in starting in the deep end.
stupidcar 9y ago
Do any actual respectable, academic or working economists make these arguments though? I've always thought that the problem isn't that economists work with simplified models — that's part of science, and unavoidable in the days before big data and cheap computing power — but that non—economists, politicians and ideological zealots, take their research and think it's directly applicable to the real world. Improving Economics as a discipline, making it more evidence driven and predictive, is a good thing. But sadly there will likely always be people who distort and misrepresent its theories in order to fit their own agenda. We see that in pretty much every scientific field, even ones far harder than Economics.
- zaptheimpaler 9y ago
  I don't know - i would think not. Thats why I think its a failure of education - Econ 101 teaches you to make arguments like this, and non-majors will only ever take Econ 101! Those simple and wrong ideas spread. Agree about the politicization of other fields of science too. Maybe it is more of a political problem in econ too.. thats hard :(
- _h_o_d_ 9y ago
  There are many unrespectable economists in professorial positions and used to advise government policy (see those of Reagan, Thatcher et al), so sadly yes. Furthermore, the politicians or political advisers who ultimately make government economic policy tend to have at most a BA in economics, hence have been indoctrinated in the most simplistic of these dismal ideas without the benefit of more sophisticated epistemological thinking.
  - kwhitefoot 9y ago
    > tend to have at most a BA in economics Or worse in the UK where they all went to Oxford and got a PPE.
    - _h_o_d_ 9y ago
      to be fair, the Oxford PPE contains one of the better economics courses, although dependent on which tutors you have in your college. Nonetheless, there is a significant minority of no-chin toffs who have no business being there except for their school and connections (See most of the Tory party).
billysielu 9y ago
Economics + Agenda = New way to learn economics. Not a more correct, or better, way.
- billysielu 9y ago
  Thanks for the down votes agenda pushers.
- zaptheimpaler 9y ago
  There is always an agenda, always. The question is what agenda is useful for the world. The way it is currently taught has an agenda - it basically justifies whatever happens in business as a "consequence of economics". Paid too little? Economics. Companies exploiting your privacy? Economics. Media turning internet into junk TV? ? Economics. Whats that you want some truth in journalism? No, consumers want entertainment. Economics. At some point we have to stop putting "economics" first and put the way we actually WANT the world to be first. We can DESIGN the market to fit our vision of the world rather than fitting our vision of the world to fit the market.
  - billysielu 9y ago
    I don't think these problems are caused by economics. I think they're caused by the agenda. For example. People are paid too little, because there's an oversupply of workers, because women are working. If women didn't work, men would be paid enough to support the families. But now that women are working, they can't quit, because the man alone won't bring in enough income. I don't think this benefits women, or men, or children, or families, and therefore not society as a whole either. Of course we all know that not everyone agrees about what we want the world to be, and some understanding of economics is required to affect change responsibly, but this course is clearly left-leaning. That's why I don't see it as an empowering "new way to learn economics" but rather as "push agenda more effectively". Personally, that's the opposite of what I want.
    - zaptheimpaler 9y ago
      Education is a huge part of how the "agenda" is implemented. It tells us what is "truth" and what can be questioned. For example, the current syllabus is very careful to downplay genetic differences amongst people. It teaches that genetic differences don't matter and we are all essentially "blank-slates". The truth is somewhere in between. But it will take years before that is generally accepted. Direct result of atrocities in WW2. Thats an example of an agenda being implemented via education and shaping your thought. You are repeating the same theories that justify any market problem - Paid too less? Oversupply. Do you really know that to be the cause or do you assume so because that is the only mechanism the theory of economics provides to explain low wages? Perhaps it is the only possible cause when you assume all people are rational and have full information, market is efficient etc. But look at the real world! Those assumptions don't hold, so why expect this fantasy theory to be so accurate? As long as a company continues to produce profit, of course they can afford to distribute some of that profit in the form of wages! Its profit - where do you think it goes? So why don't they? Why can't society make them? Don't tell me oversupply is the only possible cause of low wages when a cursory inspection of human nature and greed points to so many other possible causes. That is living inside a theory. Don't confuse the theory for reality.
deleted 9y ago
[deleted]
pharrington 9y ago
See Harvey Cox's excellent essay about this: https://www.theatlantic.com/magazine/archive/1999/03/the-market-as-god/306397/ https://www.theatlantic.com/magazine/archive/1999/03/the-mar...
grecy 9y ago
> The dogma of the day is Free market/capitalism GOOD , all other systems EVIL! Never mind understanding what precisely any of those words mean or correlating taught concepts to real world business to see how well they hold up. You have hit the nail on the head with regard to all Political "discussion" in the USA now. It is all black or white. You are right or wrong, yes or no. There is actually no discussion, no learning. There is no stopping to consider the other opinion or side. Or learning about it thoroughly so as to shed more light on the situation or circumstance. It's a shame, because it means nothing is moving forward.
- zaptheimpaler 9y ago
  Precisely :( I don't know if the world has ever been different .. maybe not. I think people are just too lazy to consistently reason from first principles + data without taking shortcuts. So we always end up in a tribal shouting match with 0 learning - doesn't even matter what the issue is.
  - grecy 9y ago
    Certainly, the world outside the USA has been, and continues to be different.
    - zaptheimpaler 9y ago
      Well, all people have their own sacred cows :) "Everybody worships. The only choice we get is what to worship." - DFW
lottin 9y ago
We have to make a distinction between opinions and facts. In economic journalism, including pieces written by academician economists, opinions seem to dominate the narrative. This doesn't mean that economists can't do science. They can and do science, it's just not generally accessible to the general public.
cynicalkane 9y ago
> The dogma of the day is Free market/capitalism GOOD , all other systems EVIL! The number of times I have heard a respected economist say this can likely be counted on zero hands. In econ 101, you learn, "here's the free market model, it's wrong but it's useful", and much of the rest is learning about the scenarios when it's wrong.
- zaptheimpaler 9y ago
  I agree, economists don't say shit like that. But plenty of people who only take econ 101 (or no econ education) think like that anyways! The question of what the perfect market structure is is not "settled" and beyond debate. I can see plenty of cases where the market, left to itself is not the best solution for society. Healthcare is one. Doesn't mean free market is evil either. It just means it might benefit from some regulation. I'm against stupid reductive poles like "free market/no regulation/efficient market" VS "socialism/communism". That whole axis does not make sense. The whole idea of assuming you are either (pro EVERY effect of the free market) OR (pro socialism) is a false dichotomy. Thats what I mean by dogma. I don't know where it comes from but education might help dispel that kind of black and white thinking.
  - gbacon 9y ago
    But healthcare is an example of dirigisme — regulated at every conceivable turn — not the market left to itself.
    - zaptheimpaler 9y ago
      Again, regulations are not all the same. It is heavily regulated in the direction of privacy and safety. Not so much in affordability. Is the unaffordability of healthcare an indictment of capitalism? No? Then why would it be an indictment of all regulation? "Regulation" is not one thing - there are many many choices. Profit-seeking incentives don't always align with societal good. When health insurance companies are not required to cover everyone, they can and DO reject very sick people because their models forecast a loss. This happened for a long time before ACA with pre-existing conditions... Thats what happens in a completely free market - insurance only serves the already healthy and leaves the sick (who need healthcare the most!) to die or pay exorbitant amounts. That is a direct result of a system that incentivizes profit. Thats one area it would benefit from regulation. It already does in so many other western countries where government either directly provides healthcare or ensures that insurers cover everyone at affordable prices. If we aren't willing to examine and interfere with the free market when the most basic need of society - health is being compromised, where does it end?? The market exists to serve society, not the other way around. This has been forgotten.
0x27081990 9y ago
Quite the opposite. Everyone praises Karl Marx and Keynes, although they been proven wrong many times. Most Millenials think that Capitalism and freemarkets are evil, while Socialism is good. History has proven otherwise
- zolthrowaway 9y ago
  I subscribe to the Chicago school way of thinking way more than Marx or Keynesian economics, but I totally disagree. Everything about economics can be wrong. You can't control for every variable in a market. It just isn't possible. Even economic "laws" like supply and demand have counter examples like Giffen goods. Counter examples only show that something does not work in all cases. It isn't a proof that something doesn't work in any case. Supply and demand is going to hold true in the vast majority of cases despite the existence of counter examples. In a similar vein, you can't say that an economic model is invalid in all cases because there are counter examples. There are a ton of external factors that lead to the success or failure of a market. Culture, politics, resources, and industrialization play a huge role in shaping the market. These things are ever changing. Argue against the model, not its success or failure.
  - 0x27081990 9y ago
    >You can't control for every variable in a market. It just isn't possible. Even economic "laws" like supply and demand have counter examples like Giffen goods. That's the whole point. Markets are decentralized brains, while Socialism advocates that a government as a central planner will be more efficient (it could be more efficient in specific cases like total war or natural disasters) and lead to Communism where we won't even need a government because society will behave as one being. The lesson of the pencil comes to mind: https://www.youtube.com/watch?v=R5Gppi-O3a8 https://www.youtube.com/watch?v=R5Gppi-O3a8
- hristov 9y ago
  I don't think you know much about Marx or Keynes, if you conflate them like this. Keynes has been proven right as thoroughly as it is practically possible to prove an economist right. The greatest economic expansion in the modern world happened during the poswar period in the US, western European and certain Asian economies when those economies were entirely under the influence of Keynesian policies. When Keynesian policies started being moved away in favor of Friedman's monetarist policies, in the mid 80's growth promptly slowed. South America rejected Keneysian policies for what they believed were more "free market" policies. They suffered greatly, and they did not experience the massive postwar growth the Western world and the Asian Keynesian countries (Japan, Taiwan, S Korea) experienced. This was a great tragedy, because south america should have done great as they were the only corner of the world not affected by WW2. But they remained mired in poverty. It is difficult to prove an economist right or wrong because it is difficult to run experiments in macro economics. But as much as it is possible to prove an economist right, Keynes has been proven right.

JumpCrisscross 9y ago

> Point out that a "perfectly rational" consumer and "perfectly efficient" markets are models - that no market is perfect just as no ball is perfectly round.. people lose their shit Then they didn't learn economics. Chapter 1 in Mankiw goes into why we learn using frictionless markets of rational actors. I think Chapter 2 or 3 went into market failure.

zaptheimpaler 9y ago
Yes. At a shallow - Econ 101 level, economics seems to be about those simple models. Most people who weren't economics majors only took Econ 101 and assumed what they learnt was correct.
- fgjjgutjvnu 9y ago
  It's always pretty obvious that those are idealized abstractions, though. I don't understand the criticism of the rational actor model. In the same vein, many people criticize economics for seemingly being obsessed with money. It is not, they just use it as a convenient proxy for value.
- JumpCrisscross 9y ago
  One shame in much economic teaching is its detachment from empiricism. I had the fortune of good professors, mostly in finance, who forced us to model real markets (and in some cases collect new data). In any case, I don't see someone who misses the Chapter 1 disclaimer finding better value in starting in the deep end.

stupidcar 9y ago

Do any actual respectable, academic or working economists make these arguments though? I've always thought that the problem isn't that economists work with simplified models — that's part of science, and unavoidable in the days before big data and cheap computing power — but that non—economists, politicians and ideological zealots, take their research and think it's directly applicable to the real world. Improving Economics as a discipline, making it more evidence driven and predictive, is a good thing. But sadly there will likely always be people who distort and misrepresent its theories in order to fit their own agenda. We see that in pretty much every scientific field, even ones far harder than Economics.

zaptheimpaler 9y ago
I don't know - i would think not. Thats why I think its a failure of education - Econ 101 teaches you to make arguments like this, and non-majors will only ever take Econ 101! Those simple and wrong ideas spread. Agree about the politicization of other fields of science too. Maybe it is more of a political problem in econ too.. thats hard :(
_h_o_d_ 9y ago
There are many unrespectable economists in professorial positions and used to advise government policy (see those of Reagan, Thatcher et al), so sadly yes. Furthermore, the politicians or political advisers who ultimately make government economic policy tend to have at most a BA in economics, hence have been indoctrinated in the most simplistic of these dismal ideas without the benefit of more sophisticated epistemological thinking.
- kwhitefoot 9y ago
  > tend to have at most a BA in economics Or worse in the UK where they all went to Oxford and got a PPE.
  - _h_o_d_ 9y ago
    to be fair, the Oxford PPE contains one of the better economics courses, although dependent on which tutors you have in your college. Nonetheless, there is a significant minority of no-chin toffs who have no business being there except for their school and connections (See most of the Tory party).

billysielu 9y ago

Economics + Agenda = New way to learn economics. Not a more correct, or better, way.

billysielu 9y ago
Thanks for the down votes agenda pushers.
zaptheimpaler 9y ago
There is always an agenda, always. The question is what agenda is useful for the world. The way it is currently taught has an agenda - it basically justifies whatever happens in business as a "consequence of economics". Paid too little? Economics. Companies exploiting your privacy? Economics. Media turning internet into junk TV? ? Economics. Whats that you want some truth in journalism? No, consumers want entertainment. Economics. At some point we have to stop putting "economics" first and put the way we actually WANT the world to be first. We can DESIGN the market to fit our vision of the world rather than fitting our vision of the world to fit the market.
- billysielu 9y ago
  I don't think these problems are caused by economics. I think they're caused by the agenda. For example. People are paid too little, because there's an oversupply of workers, because women are working. If women didn't work, men would be paid enough to support the families. But now that women are working, they can't quit, because the man alone won't bring in enough income. I don't think this benefits women, or men, or children, or families, and therefore not society as a whole either. Of course we all know that not everyone agrees about what we want the world to be, and some understanding of economics is required to affect change responsibly, but this course is clearly left-leaning. That's why I don't see it as an empowering "new way to learn economics" but rather as "push agenda more effectively". Personally, that's the opposite of what I want.
  - zaptheimpaler 9y ago
    Education is a huge part of how the "agenda" is implemented. It tells us what is "truth" and what can be questioned. For example, the current syllabus is very careful to downplay genetic differences amongst people. It teaches that genetic differences don't matter and we are all essentially "blank-slates". The truth is somewhere in between. But it will take years before that is generally accepted. Direct result of atrocities in WW2. Thats an example of an agenda being implemented via education and shaping your thought. You are repeating the same theories that justify any market problem - Paid too less? Oversupply. Do you really know that to be the cause or do you assume so because that is the only mechanism the theory of economics provides to explain low wages? Perhaps it is the only possible cause when you assume all people are rational and have full information, market is efficient etc. But look at the real world! Those assumptions don't hold, so why expect this fantasy theory to be so accurate? As long as a company continues to produce profit, of course they can afford to distribute some of that profit in the form of wages! Its profit - where do you think it goes? So why don't they? Why can't society make them? Don't tell me oversupply is the only possible cause of low wages when a cursory inspection of human nature and greed points to so many other possible causes. That is living inside a theory. Don't confuse the theory for reality.

deleted 9y ago

[deleted]

pharrington 9y ago

See Harvey Cox's excellent essay about this: https://www.theatlantic.com/magazine/archive/1999/03/the-market-as-god/306397/ https://www.theatlantic.com/magazine/archive/1999/03/the-mar...

grecy 9y ago

> The dogma of the day is Free market/capitalism GOOD , all other systems EVIL! Never mind understanding what precisely any of those words mean or correlating taught concepts to real world business to see how well they hold up. You have hit the nail on the head with regard to all Political "discussion" in the USA now. It is all black or white. You are right or wrong, yes or no. There is actually no discussion, no learning. There is no stopping to consider the other opinion or side. Or learning about it thoroughly so as to shed more light on the situation or circumstance. It's a shame, because it means nothing is moving forward.

zaptheimpaler 9y ago
Precisely :( I don't know if the world has ever been different .. maybe not. I think people are just too lazy to consistently reason from first principles + data without taking shortcuts. So we always end up in a tribal shouting match with 0 learning - doesn't even matter what the issue is.
- grecy 9y ago
  Certainly, the world outside the USA has been, and continues to be different.
  - zaptheimpaler 9y ago
    Well, all people have their own sacred cows :) "Everybody worships. The only choice we get is what to worship." - DFW

lottin 9y ago

We have to make a distinction between opinions and facts. In economic journalism, including pieces written by academician economists, opinions seem to dominate the narrative. This doesn't mean that economists can't do science. They can and do science, it's just not generally accessible to the general public.

cynicalkane 9y ago

> The dogma of the day is Free market/capitalism GOOD , all other systems EVIL! The number of times I have heard a respected economist say this can likely be counted on zero hands. In econ 101, you learn, "here's the free market model, it's wrong but it's useful", and much of the rest is learning about the scenarios when it's wrong.

zaptheimpaler 9y ago
I agree, economists don't say shit like that. But plenty of people who only take econ 101 (or no econ education) think like that anyways! The question of what the perfect market structure is is not "settled" and beyond debate. I can see plenty of cases where the market, left to itself is not the best solution for society. Healthcare is one. Doesn't mean free market is evil either. It just means it might benefit from some regulation. I'm against stupid reductive poles like "free market/no regulation/efficient market" VS "socialism/communism". That whole axis does not make sense. The whole idea of assuming you are either (pro EVERY effect of the free market) OR (pro socialism) is a false dichotomy. Thats what I mean by dogma. I don't know where it comes from but education might help dispel that kind of black and white thinking.
- gbacon 9y ago
  But healthcare is an example of dirigisme — regulated at every conceivable turn — not the market left to itself.
  - zaptheimpaler 9y ago
    Again, regulations are not all the same. It is heavily regulated in the direction of privacy and safety. Not so much in affordability. Is the unaffordability of healthcare an indictment of capitalism? No? Then why would it be an indictment of all regulation? "Regulation" is not one thing - there are many many choices. Profit-seeking incentives don't always align with societal good. When health insurance companies are not required to cover everyone, they can and DO reject very sick people because their models forecast a loss. This happened for a long time before ACA with pre-existing conditions... Thats what happens in a completely free market - insurance only serves the already healthy and leaves the sick (who need healthcare the most!) to die or pay exorbitant amounts. That is a direct result of a system that incentivizes profit. Thats one area it would benefit from regulation. It already does in so many other western countries where government either directly provides healthcare or ensures that insurers cover everyone at affordable prices. If we aren't willing to examine and interfere with the free market when the most basic need of society - health is being compromised, where does it end?? The market exists to serve society, not the other way around. This has been forgotten.

0x27081990 9y ago

Quite the opposite. Everyone praises Karl Marx and Keynes, although they been proven wrong many times. Most Millenials think that Capitalism and freemarkets are evil, while Socialism is good. History has proven otherwise

zolthrowaway 9y ago
I subscribe to the Chicago school way of thinking way more than Marx or Keynesian economics, but I totally disagree. Everything about economics can be wrong. You can't control for every variable in a market. It just isn't possible. Even economic "laws" like supply and demand have counter examples like Giffen goods. Counter examples only show that something does not work in all cases. It isn't a proof that something doesn't work in any case. Supply and demand is going to hold true in the vast majority of cases despite the existence of counter examples. In a similar vein, you can't say that an economic model is invalid in all cases because there are counter examples. There are a ton of external factors that lead to the success or failure of a market. Culture, politics, resources, and industrialization play a huge role in shaping the market. These things are ever changing. Argue against the model, not its success or failure.
- 0x27081990 9y ago
  >You can't control for every variable in a market. It just isn't possible. Even economic "laws" like supply and demand have counter examples like Giffen goods. That's the whole point. Markets are decentralized brains, while Socialism advocates that a government as a central planner will be more efficient (it could be more efficient in specific cases like total war or natural disasters) and lead to Communism where we won't even need a government because society will behave as one being. The lesson of the pencil comes to mind: https://www.youtube.com/watch?v=R5Gppi-O3a8 https://www.youtube.com/watch?v=R5Gppi-O3a8
hristov 9y ago
I don't think you know much about Marx or Keynes, if you conflate them like this. Keynes has been proven right as thoroughly as it is practically possible to prove an economist right. The greatest economic expansion in the modern world happened during the poswar period in the US, western European and certain Asian economies when those economies were entirely under the influence of Keynesian policies. When Keynesian policies started being moved away in favor of Friedman's monetarist policies, in the mid 80's growth promptly slowed. South America rejected Keneysian policies for what they believed were more "free market" policies. They suffered greatly, and they did not experience the massive postwar growth the Western world and the Asian Keynesian countries (Japan, Taiwan, S Korea) experienced. This was a great tragedy, because south america should have done great as they were the only corner of the world not affected by WW2. But they remained mired in poverty. It is difficult to prove an economist right or wrong because it is difficult to run experiments in macro economics. But as much as it is possible to prove an economist right, Keynes has been proven right.