Group Endorses Walk Out in Economics 10 (English, 2-Nov-2011)

Friday, November 25, 2011

Group Endorses Walk Out in Economics 10 (English, 2-Nov-2011)

What’s wrong with Ec 10? The dozens of Harvard University undergrads who walked out of the school’s famous introductory economics course this month think they know.

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.

There is more below.
Ниже есть продолжение.

...Students had expected a class that included 'a critical discussion of both the benefits and flaws of different economic simplifying models'...

But they said the class 'does not include primary sources and rarely features articles from academic journals, [so] we have very little access to alternative approaches to economics'.

They write: 'We found a course that espouses a specific – and limited – view of economics that we believe perpetuates problematic and inefficient systems of economic inequality in our society today.

'We are deeply concerned about the way that this bias affects students, the University, and our greater society.'

Prof Mankiw, who advised President George W. Bush and now Mitt Romney, has written two widely used economics textbooks. In one, he called the idea that tax cuts pay for themselves 'fad economics'...

...The students are correct that Harvard’s economics instruction could use some diversifying. But not the kind they think...

...The protesters suggested this influence has played a key part in the financial crisis, writing: 'Harvard graduates play major roles in the financial institutions and in shaping public policy around the world...'

...As taught by Mankiw... it conveys modern macro- and microeconomics mostly through the prism of capitalism, rather than through socialism or communism. It’s also true that there is a gap in the U.S. between rich and poor; although whether that’s a problem per se has to be debated. Third, and most important, macroeconomic theory did fail to predict the most recent recession. At Harvard in 2007, many professors and students took for granted that we were in an era of “great moderation,” and that life should henceforth progress smoothly down the decades.

What the students get wrong is their proposed solution. There are two theories that could have predicted the financial crisis of 2008, and that have much to say about inequality. Neither of them would be considered “progressive.”..

One is a theory laid out by Joseph Schumpeter. Schumpeter, an Austrian economist who arrived at Harvard in 1927... Schumpeter’s fellow Austrian Ludwig von Mises noted that credit expansions and booms lead to misallocations of cash. The Austrian School of economics, of which Mises is the modern father, called such misallocations “malinvestment and overconsumption.” Malinvestment, in turn, ensures that the boom is doomed. No better example has existed than the money that poured into obscure mortgage securities in 2006 and 2007. But there was no Schumpeter and no famous Austrian School philosopher at Harvard at the time.

Harvard is also short of scholars who focus on what is known as public-choice theory. That concept, for which economist James M. Buchanan won the Nobel Memorial Prize, is wonderfully simple. It says that while government agencies pretend to be virtuous and sophisticated, they are actually as primitive as crustaceans. Government offices will do anything -- scavenge and cannibalize -- to survive or take away from the private sector. That description fits creatures like Fannie Mae and Freddie Mac.