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This is a good example of how so much economics is meant to distract you from what’s important. Cowen is framing economics to exclude things like unemployment,

This is a good example of how so much economics is meant to distract you from what’s important. Cowen is framing economics to exclude things like unemployment, the process by which investment, savings, and income are determined, and the distribution of income. If you get people into the weeds about sticky prices and whatnot, it’s like putting blinders on a horse.

dataking 6y ago
> This is a good example of how so much economics is meant to distract you from what’s important. I think your assumption of malice is unfounded. A likely benign explanation is that Cowen focused on areas there economists are in broad agreement without intent to mislead.
- RobertoG 6y ago
  The grandparent is not attributing malice to the author, but to the way the framework of economics is built. Cowen probably believe that what is saying is true and can't see different anymore.
  - viburnum 6y ago
    I’ve been reading Cowen for nearly twenty years. He plays dumb when he gets caught out (“I’m not really a macroeconomist,” “I’m not really familiar with Keynes,” etc). Think of him as a lawyer representing his client. He’s not going to introduce evidence that hurts his case.
- cambalache 6y ago
  Nah, in this case the accusation is warranted, Cowen has always been an unconditional cheerleader for unconstrained capitalism,the status-quo and the dubious predictive and normative power of mainstream macro.
- TheOtherHobbes 6y ago
  Economists are in broad agreement because they're paid to be. This is well-documented historically. The Mont Pelerin Society was specifically founded to promote a certain view of economics, and the Chicago School was supported financially by some very rich sponsors who wanted a a pet academic alternative to progressive slant of Keynesianism. The "consensus" in neoliberal economics and its core ideas - including "rationality" and "efficiency" - is a wholly manufactured political project, not an organic open-minded attempt to find credible scientific foundations.
  - DavidSJ 6y ago
    The existence of human irrationality is not unknown to economists. Behavioral economics, which concerns itself with the effects of this phenomenon on economic decision-making, is one of the major branches of the subject studied today.
    - pessimizer 6y ago
      Yet it still gets grouped in as "heterodox."
      - huitzitziltzin 6y ago
        No. Behavioral economics is absolutely not considered heterodox. Mainstream departments (Chicago, mit) all have behavioral people. They don’t have heterodox people (eg marxists, Austrians, or MMT). Nor should they. CS departments won’t hire people who (for example) believe computers work via magic. Dollars and tenure lines are scarce and can’t be wasted on BS. There is a lot more diversity of thought in economics departments than commenters here know, but there are limits, as there are in every field.
        gmtx725 6y ago
        my main problem with economics is it makes a philosophical error in that it assumes people and economic agents are inert objects to be studied as you would chemicals or atoms, without the capacity to react and respond to economic "laws" thereby changing them. Reflexivity is a thing.
- learnstats2 6y ago
  It appears to me that Cowen has set out (his own right-wing understanding of) assumptions underlying macroeconomics, in line with the editorial position of Bloomberg. The assumptions are set in stone before you can begin to do macroeconomics, given to you when you take Macro 101, to lay the foundation of your future work, rather than examined and challenged. I don't think this is exactly malicious, but it bothers me that the field largely operates on, and draws research conclusions from, unchallenged assumptions.
  - huitzitziltzin 6y ago
    > don't think this is exactly malicious, but it bothers me that the field largely operates on unchallenged assumptions What do you know about the research done by contemporary macroeconomists? Anything? Do you know how it is taught in graduate programs? If you did, you would know that all macroeconomists have opinions about where their assumptions (basic and otherwise) limit their models and spend their careers trying to extend them and make them more realistic and take them to the data. I am not a macroeconomist but I will defend how my colleagues approach the subject. You don’t know how difficult it is until you’ve tried to formulate a model that you can actually solve and made an attempt to take it to the data. The field absolutely does not operate on “unchallenged assumptions.”
    - deleted 6y ago
      [deleted]
    - learnstats2 6y ago
      > Do you know how it is taught in graduate programs? If a professor presents these assumptions as "truths" (as they have done, quite literally, via this article), graduate students are strongly disincentivized from thinking about challenging or contradicting them - if they want to pass their course, if they ever might want to get a job in that department, etc.
      - huitzitziltzin 6y ago
        We can have an argument about the nature of scientific truth, but I think that's a big topic. What contemporary graduate macro everywhere teaches you is a set of tools. You then have to ask and answer your own questions. There isn't any "indoctrination" as you seem to be imagining. It's not different at all from doing a math PhD and taking a first-year analysis sequence, or a CS PhD and taking an algorithms class. It is exactly the same. If you can take these tools and show that any of the truths presented in this article are false and can do it in a convincing way, then (as I have said elsewhere in this thread) you are going to be able to get a great job in whatever department you want. Understand something about the incentives in science - surprising and counterintuitive results, convincingly demonstrated, can have enormous payoffs. The way you seem to be imagining things work in economics departments and graduate programs bears little relationship to the way things actually are.
- viburnum 6y ago
  His paycheck literally comes from the Koch brothers. Nobody is required to be naive about this.
lottin 6y ago
The first "truth" he mentions is literally about wages and unemployment.
- RobertoG 6y ago
  But he does it in a very specific framework that is never challenged. That's the trick and what, I think, the grandparent is referring to.
  - OrderlyTiamat 6y ago
    > in a very specific framework that is never challenged. I'm not trying to be glib here, but that seems to fit with the intent and title of the piece, does it not?
    - RobertoG 6y ago
      Yes, but that's my point too. The framework is never challenged. He says "The first and most important thing [..] is that a strong negative shock to demand [..] leads to a loss of output and employment" Fair enough. Not even a comment of what causes the demand shock, but it's OK. And then he jumps to: " Nominal wages are sticky, for a complex mix of sociological reasons, and so employers do not always respond to lower demand with lower wages for workers. Instead they lay some people off, and that can lead to a recession." The are a lot of assumptions there than are not for discussion, are just part of the framework. He says: "The third thing to know is that if central banks go crazy increasing the money supply, the result will be high price inflation." This is just not true, the central bank can increase the money supply all that they want, if the money is not spend in the economy there is not going to be inflation. This has been tested empirically by Japan in the last decades and the Fed and ECB more recently, but it seems that the theory is not going to change, not matter what the reality says. The fourth truth is truth, I think :-)
      - notahacker 6y ago
        It's hardly surprising that a short news piece summarising the conclusions of an entire field of study does not engage itself with challenging the frameworks used. Nominal wage stickiness, recessions etc has been the subject of an enormous amount of study (and wage stickiness is sufficient, but not actually necessary to cause recessions). And the exception to the rule that increasing the money supply is dealt with by the very next sentence from the one you've singled out as a gotcha. Liquidity traps were already baked into the theory. Imagine if somebody dismissed the field of computer science as a distraction from database problems based on a blogger listing CAP theorem as one of its essential conclusions
ipnon 6y ago
"It is easier to macrobullsht than microbullsht," Nassim Taleb
barry-cotter 6y ago
Cowen and Tabarrok have an entire section on Unemployment and Labour Force Participation in their online Principles of Macroeconomics course if you’d like to learn more. https://mru.org/principles-economics-macroeconomics-0# https://mru.org/principles-economics-macroeconomics-0# > The Economics of Choosing the Right Career Defining the Unemployment Rate Is Unemployment Undercounted? Frictional Unemployment Structural Unemployment Cyclical Unemployment Labor Force Participation Taxing Work Women Working: What’s the Pill Got to Do With It?

dataking 6y ago

> This is a good example of how so much economics is meant to distract you from what’s important. I think your assumption of malice is unfounded. A likely benign explanation is that Cowen focused on areas there economists are in broad agreement without intent to mislead.

RobertoG 6y ago
The grandparent is not attributing malice to the author, but to the way the framework of economics is built. Cowen probably believe that what is saying is true and can't see different anymore.
- viburnum 6y ago
  I’ve been reading Cowen for nearly twenty years. He plays dumb when he gets caught out (“I’m not really a macroeconomist,” “I’m not really familiar with Keynes,” etc). Think of him as a lawyer representing his client. He’s not going to introduce evidence that hurts his case.
cambalache 6y ago
Nah, in this case the accusation is warranted, Cowen has always been an unconditional cheerleader for unconstrained capitalism,the status-quo and the dubious predictive and normative power of mainstream macro.
TheOtherHobbes 6y ago
Economists are in broad agreement because they're paid to be. This is well-documented historically. The Mont Pelerin Society was specifically founded to promote a certain view of economics, and the Chicago School was supported financially by some very rich sponsors who wanted a a pet academic alternative to progressive slant of Keynesianism. The "consensus" in neoliberal economics and its core ideas - including "rationality" and "efficiency" - is a wholly manufactured political project, not an organic open-minded attempt to find credible scientific foundations.
- DavidSJ 6y ago
  The existence of human irrationality is not unknown to economists. Behavioral economics, which concerns itself with the effects of this phenomenon on economic decision-making, is one of the major branches of the subject studied today.
  - pessimizer 6y ago
    Yet it still gets grouped in as "heterodox."
    - huitzitziltzin 6y ago
      No. Behavioral economics is absolutely not considered heterodox. Mainstream departments (Chicago, mit) all have behavioral people. They don’t have heterodox people (eg marxists, Austrians, or MMT). Nor should they. CS departments won’t hire people who (for example) believe computers work via magic. Dollars and tenure lines are scarce and can’t be wasted on BS. There is a lot more diversity of thought in economics departments than commenters here know, but there are limits, as there are in every field.
      - gmtx725 6y ago
        my main problem with economics is it makes a philosophical error in that it assumes people and economic agents are inert objects to be studied as you would chemicals or atoms, without the capacity to react and respond to economic "laws" thereby changing them. Reflexivity is a thing.
learnstats2 6y ago
It appears to me that Cowen has set out (his own right-wing understanding of) assumptions underlying macroeconomics, in line with the editorial position of Bloomberg. The assumptions are set in stone before you can begin to do macroeconomics, given to you when you take Macro 101, to lay the foundation of your future work, rather than examined and challenged. I don't think this is exactly malicious, but it bothers me that the field largely operates on, and draws research conclusions from, unchallenged assumptions.
- huitzitziltzin 6y ago
  > don't think this is exactly malicious, but it bothers me that the field largely operates on unchallenged assumptions What do you know about the research done by contemporary macroeconomists? Anything? Do you know how it is taught in graduate programs? If you did, you would know that all macroeconomists have opinions about where their assumptions (basic and otherwise) limit their models and spend their careers trying to extend them and make them more realistic and take them to the data. I am not a macroeconomist but I will defend how my colleagues approach the subject. You don’t know how difficult it is until you’ve tried to formulate a model that you can actually solve and made an attempt to take it to the data. The field absolutely does not operate on “unchallenged assumptions.”
  - deleted 6y ago
    [deleted]
  - learnstats2 6y ago
    > Do you know how it is taught in graduate programs? If a professor presents these assumptions as "truths" (as they have done, quite literally, via this article), graduate students are strongly disincentivized from thinking about challenging or contradicting them - if they want to pass their course, if they ever might want to get a job in that department, etc.
    - huitzitziltzin 6y ago
      We can have an argument about the nature of scientific truth, but I think that's a big topic. What contemporary graduate macro everywhere teaches you is a set of tools. You then have to ask and answer your own questions. There isn't any "indoctrination" as you seem to be imagining. It's not different at all from doing a math PhD and taking a first-year analysis sequence, or a CS PhD and taking an algorithms class. It is exactly the same. If you can take these tools and show that any of the truths presented in this article are false and can do it in a convincing way, then (as I have said elsewhere in this thread) you are going to be able to get a great job in whatever department you want. Understand something about the incentives in science - surprising and counterintuitive results, convincingly demonstrated, can have enormous payoffs. The way you seem to be imagining things work in economics departments and graduate programs bears little relationship to the way things actually are.
viburnum 6y ago
His paycheck literally comes from the Koch brothers. Nobody is required to be naive about this.

lottin 6y ago

The first "truth" he mentions is literally about wages and unemployment.

RobertoG 6y ago
But he does it in a very specific framework that is never challenged. That's the trick and what, I think, the grandparent is referring to.
- OrderlyTiamat 6y ago
  > in a very specific framework that is never challenged. I'm not trying to be glib here, but that seems to fit with the intent and title of the piece, does it not?
  - RobertoG 6y ago
    Yes, but that's my point too. The framework is never challenged. He says "The first and most important thing [..] is that a strong negative shock to demand [..] leads to a loss of output and employment" Fair enough. Not even a comment of what causes the demand shock, but it's OK. And then he jumps to: " Nominal wages are sticky, for a complex mix of sociological reasons, and so employers do not always respond to lower demand with lower wages for workers. Instead they lay some people off, and that can lead to a recession." The are a lot of assumptions there than are not for discussion, are just part of the framework. He says: "The third thing to know is that if central banks go crazy increasing the money supply, the result will be high price inflation." This is just not true, the central bank can increase the money supply all that they want, if the money is not spend in the economy there is not going to be inflation. This has been tested empirically by Japan in the last decades and the Fed and ECB more recently, but it seems that the theory is not going to change, not matter what the reality says. The fourth truth is truth, I think :-)
    - notahacker 6y ago
      It's hardly surprising that a short news piece summarising the conclusions of an entire field of study does not engage itself with challenging the frameworks used. Nominal wage stickiness, recessions etc has been the subject of an enormous amount of study (and wage stickiness is sufficient, but not actually necessary to cause recessions). And the exception to the rule that increasing the money supply is dealt with by the very next sentence from the one you've singled out as a gotcha. Liquidity traps were already baked into the theory. Imagine if somebody dismissed the field of computer science as a distraction from database problems based on a blogger listing CAP theorem as one of its essential conclusions

ipnon 6y ago

"It is easier to macrobullsht than microbullsht," Nassim Taleb

barry-cotter 6y ago

Cowen and Tabarrok have an entire section on Unemployment and Labour Force Participation in their online Principles of Macroeconomics course if you’d like to learn more. https://mru.org/principles-economics-macroeconomics-0# https://mru.org/principles-economics-macroeconomics-0# > The Economics of Choosing the Right Career Defining the Unemployment Rate Is Unemployment Undercounted? Frictional Unemployment Structural Unemployment Cyclical Unemployment Labor Force Participation Taxing Work Women Working: What’s the Pill Got to Do With It?