Chang seems to be conflating two visions of economics: one vision of economics that says how things are, and one vision that says how things should be. There's a lot of overlap, of course, but one is economic theory and one is political theory. In the former, there are well studied areas of economics where we have consensus for cause and effect[0][1][2][3]. To just point to areas of disagreement and say the whole field is bad reminds of those who point to disagreement on abiogenesis and say evolution is wrong. Not to say that agreement indicates correctness, but disagreement doesn't indicate that everyone doing research is wrong.
The article's other problem with economics seems to be that it assumes people are unfeeling, which is a fair criticism but not one that is particularly new. There is a field called Behavioral Economics which tries to address this and is on the radar of pretty much every economist[4].
The problem I think is more that economics never reaches people directly but is filtered through politics. I was reading on Bradford DeLong's blog the story of Mankiw, who is a respected economist but worked for the Bush administration, where he felt he had to be silent about incorrect economic theory but he could influence them in small ways to be better on economics, effectively trading truth and reputation for a small amount of power[5].
Doesn't it seem like a problem that all your sources for broad consensus are from the same outfit?
I'm also not sure how closely you read the review if you don't think Chang talks about behavioral economics: "Those nine schools are Austrian, Behaviourist, Classical, Developmentalist, Institutionalist, Keynesian, Marxist, Neoclassical and Schumpeterian."
One also wonders how likely it is that Ha-Joon Chang, who has a pretty solid list of mainstream credentials (c.f. https://en.wikipedia.org/wiki/Ha-Joon_Chang), is really as confused about the claims of mainstream economics as you seem to imply.
No, it doesn't seem like a problem, because I was only pointing out that consensus exists, which is an obvious statement. You can google any of these and confirm that economists agree on effectiveness of tariffs, but none of the other sources I've seen are as mainstream or as accessible as IGM.
He doesn't talk about behavioral economics, he talks about a behaviourist school of thought, which I think is a concept only he believes in. That's like describing plant biology as a plantist school of thought separate from the animist school of thought. As I've already shown, behavioral economics as a general concept has nearly universal buy-in from economists, so it makes no sense to describe it as a school of thought.
This also marks him as solidly heterodox if he uses language that nobody else uses.
the consensus is "uncertain" for [2], some of the questions don't make sense or are really vague. Behavioral economics is all about critique of the rational actor in rational expectations theory, I think that fits in with critique of neoclassical theory as too mathematized and unrealistic
the categorization is arbitary, even if you think it's heterodox. he's communicating to a general audience
have you read chang's kicking away the ladder? much more specialized if that's you're thing, with historical data
>In this provocative study, Ha-Joon Chang examines the great pressure on developing countries from the developed world to adopt certain 'good policies' and 'good institutions', seen today as necessary for economic development. His conclusions are compelling and disturbing: that developed countries are attempting to 'kick away the ladder' with which they have climbed to the top, thereby preventing developing countries from adopting policies and institutions that they themselves have used.
You seem adamant to discredit specific examples of consensus when there are plenty of examples. Go down the list on IGM and find another one if you wish.
I'm not here to criticize Chang's works, I'm here to criticize the article, which focuses on critiques of economics in general. Those critiques seem to fall into two categories:
1. economists have political schools of thought and disagree on many things
2. economists assume that people are rational
I do not think that these are valid reasons to disregard economics as an area of research and I have responded to these points as much I am willing to do so. I am concerned that many people (such as those that you can see all over in this comment section) have an agenda of discrediting economics in order to support their own political agenda when the facts disagree with their agenda. An example of this when people advocate that lowering taxes will raise revenues. This is not a political difference, this is a disagreement with well researched observations about the world.
I am here to point out that there are factual sides of economics where we have high consensus, and discussions around economics should take this into account, just like when any other area of research is discussed. There is a point to observing the world, discussions can be grounded in evidence, and wrong opinions exist.
We don't have consensus for cause and effect at all. What we have is a well established groupthink trying desperately to maintain its view and its power.
The 2008 crash threw all of it up in the air.
I'd recommend reading debunking economics to see the heterodox viewpoint.
Essentially there is no value free economics. That a marketing pitch for a set of values. There is only political economy.
Economics is an evolving field of study like any other. There are many different schools of thought even within the 'mainstream' position. Using disagreements and changes within the field as an argument that the entire field is flawed is what climate change deniers use when they want to dismiss evidence of climate change. There is room for disagreement on policy without dismissal of the entire field.
Besides, which heterodox viewpoint are you going to argue for? The Marxist? Austrian? Both of these are more clearly 'marketing pitches for a set values' than 'mainstream' economics. If an excessive emphasis on the free market is a pet-peeve of yours then you certainly don't want the latter.
it's not an exact science in the same way physics or chemistry were. by the arguments of market fundamentalists/etc you'd think they think economics is a deductive science
part of his whole thing is that economics isn't something too complicated for the average person to understand. too much mathiness and touted as an absolute certain science
>The ideas of economists and political philosophers, both when they are right and when they are wrong are more powerful than is commonly understood. Indeed, the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually slaves of some defunct economist.
I think sciences should really be classified on degree of complexity of the phenomena they're dealing with.
Physics is a simple science. It studies the most basic of phenomena, and can isolate them pretty well for experiments. Chemistry is a more difficult science, biology even more so - at each step the phenomena get an order of magnitude more complex (in computational sense), and thus more difficult to study. Then there's psychology, social sciences and economics - all of which are even more complex, as they no longer deal with lots of simple machines, but results of sentient minds interacting in the complex world.
Point being, the "softer" a science is, the more difficult it is. That the "hard" sciences spawn so clear predictions and mathematical models is a consequence of their simplicity. The proper approach here is humility - economics and social sciences are so difficult that we barely begun to figure anything out. That's also why there's so much bullshit in "soft" sciences - they're so difficult that you can plausibly say almost anything, and it's hard to tell if you're wrong, or how much.
I don't think that's true at all. Pharmacology is a very difficult science that we get wrong all the time, yet we still have medicine because we are able to test our medicines by trying them on animals and people. Likewise in economics and sociology and astrophysics we are able to test through natural experiments. A test of a model is its ability to predict. We don't accept untested models just because they're "complicated".
And sure, maybe you believe that economics has more untested models, but that doesn't mean there aren't many tested models in economics.
Edit: reply button is locked out for some reason so replying here.
>And look at how much it costs, how unreliable the results are, and how even after full batch of successful trials, we have no clue why a drug works.
And yet we still do solid pharmacology that results in reliable medicine, just like we can do solid economics that results in models with high predictive power.
>If you take a large enough sample and apply enough statistics to it, you can see something that looks sort of like evidence to your hypothesis. In the end, you're not much closer to knowing why it happens (and why it happens only some percentage of the time). Compare that to hard sciences, where most of the time, you can design experiments based on first principles, and you can connect the results back to fundamental theories through a string of formal math.
The idea of statistical approximation does not distinguish between controlled experiments and observational study at all. We were able to statistically model the relationship between speed and energy before we could explain gravity, i.e. we were able to figure something out before we could explain why. And most experiments in physics resulted in approximation, such as newtonian physics, that works well enough at low speeds but breaks down at high speeds. Our current model of gravity was made in the 1970s, yet before 1970 we could explain that when you jump you fall to the earth. The fact that approximation is used is not remarkable in the slightest. That's what modeling is. A model that is too complicated is useless, a model that is too simple is inaccurate. All models are approximations to some level.
>Again, "tested" in physics vs. "tested" in economics are apples-to-oranges.
Yeah, that's why newton discovered relativity, right? No, we have areas of clear evidence and areas outside of our ability to measure for every field. Just becomes some areas of a field are difficult doesn't mean every area is difficult. Just because we couldn't model what happens to a ball thrown at 0.9c in the 1700s, doesn't mean we couldn't model a ball thrown at 0.9 m/s.
>Ultimately, my main point is that economics is so hard that even our best results are pretty bad, and marginally useful.
Look on the IGM site for policy recommendations that we have clear economic consensus on. ]If a country chooses to ignore economics, e.g. zimbabwe and greece, the results are very predictable.
> Pharmacology is a very difficult science that we get wrong all the time, yet we still have medicine because we are able to test our medicines by trying them on animals and people.
And look at how much it costs, how unreliable the results are, and how even after full batch of successful trials, we have no clue why a drug works. This is because medicine, as a practical ofshoot of biology, is a field so complex, it defies reasoning from first principles. We don't have a full model of how things work, so we rely on the "shotgun approach" - statistics.
Same thing happens in psychology, sociology and economics. If you take a large enough sample and apply enough statistics to it, you can see something that looks sort of like evidence to your hypothesis. In the end, you're not much closer to knowing why it happens (and why it happens only some percentage of the time).
Compare that to hard sciences, where most of the time, you can design experiments based on first principles, and you can connect the results back to fundamental theories through a string of formal math.
> A test of a model is its ability to predict.
That I 100% agree with. And it reinforces my point. Hard sciences gives you models you can rely on. Soft sciences don't. Not because they are full of dumb people, but because the problem domains of soft sciences are orders of magnitude more complex than those of hard sciences, and all your models end up being crude approximations.
> And sure, maybe you believe that economics has more untested models, but that doesn't mean there aren't many tested models in economics.
Again, "tested" in physics vs. "tested" in economics are apples-to-oranges.
Ultimately, my main point is that economics is so hard that even our best results are pretty bad, and marginally useful.
Reply button has reappeared so copying my response here for proper flow, but now I can't remove it from my other comment because the edit button disappeared.
>And look at how much it costs, how unreliable the results are, and how even after full batch of successful trials, we have no clue why a drug works.
And yet we still do solid pharmacology that results in reliable medicine, just like we can do solid economics that results in models with high predictive power.
>If you take a large enough sample and apply enough statistics to it, you can see something that looks sort of like evidence to your hypothesis. In the end, you're not much closer to knowing why it happens (and why it happens only some percentage of the time). Compare that to hard sciences, where most of the time, you can design experiments based on first principles, and you can connect the results back to fundamental theories through a string of formal math.
The idea of statistical approximation does not distinguish between controlled experiments and observational study at all. We were able to statistically model the relationship between speed and energy before we could explain gravity, i.e. we were able to figure something out before we could explain why. And most experiments in physics resulted in approximation, such as newtonian physics, that works well enough at low speeds but breaks down at high speeds. Our current model of gravity was made in the 1970s, yet before 1970 we could explain that when you jump you fall to the earth. The fact that approximation is used is not remarkable in the slightest. That's what modeling is. A model that is too complicated is useless, a model that is too simple is inaccurate. All models are approximations to some level.
>Again, "tested" in physics vs. "tested" in economics are apples-to-oranges.
Yeah, that's why newton discovered relativity, right? No, we have areas of clear evidence and areas outside of our ability to measure for every field. Just becomes some areas of a field are difficult doesn't mean every area is difficult. Just because we couldn't model what happens to a ball thrown at 0.9c in the 1700s, doesn't mean we couldn't model a ball thrown at 0.9 m/s.
>Ultimately, my main point is that economics is so hard that even our best results are pretty bad, and marginally useful.
Look on the IGM site for policy recommendations that we have clear economic consensus on. ]If a country chooses to ignore economics, e.g. zimbabwe and greece, the results are very predictable.
> Ultimately, my main point is that economics is so hard that even our best results are pretty bad, and marginally useful.
That’s a very interesting point. Most would consider Econ a “soft science” because it is less like physical science e.g. Chemistry. Weird how people like to flip the script for some sorta political gain. Yes, in the soft sciences it is more difficult to reach conclusions as compared to fields like biology, but should we say that makes them more harder?
Ooops, I tried so much to avoid using word "hard" for multiple meanings, and I failed.
What I wanted to say is that economics is a "soft science", in the same sense physics is "hard science". Also, that economics is a difficult science dealing with complex phenomena, in the same sense that physics is an easy science dealing with simple phenomena.
Which is a moot point because science is done without controlled experiments all of the time, e.g. astrophysics, epidemiology, sociology. One of the most famous cases in medicine is the connection of drinking water to cholera discovered using observation to connect deaths to a nearby well.
Well it’s great that they do more than just design experiments and hack p-vales all day;) Geez, had no idea it was such a controversial statement. What do you want to say, every application of math or coding counts as science? https://en.m.wikipedia.org/wiki/Hard_and_soft_science
Whether something is a "real science" is based on whether or not science is done, not the difficulty of the subject matter. Spending so much time trying to narrowly semanticize science in a way that specifically excludes economics is navel gazing. The purpose of these discussions seems to be to discredit economics and discount it's predictive power by defining it as not-science, but predictive power doesn't come from the definition of the word science, it comes from the statistical methods that science uses.
Does it involve research? Does the research produce models with predictive power? Ok, let's use it, just like every policy maker in the world pre-2016.
Epidemiology, ecology, astronomy, cosmology, botany, zoology and geology obviously don’t count as sciences then.
And you have no idea how much effort goes into randomised controlled trials and the search for good natural experiments and instrumental variables to answer economic questions, to say nothing of the actual experiments in economics done every time a price is changed or a new product appears. There is a ton of data in microeconomics. It may be hard to use and, ill fitted to the question you want to answer and difficult to get but there’s lots of data.
Macroeconomics has many fewer data points and you can’t really perform experiments but even macro, for all the pointless math worship has made progress.
Counterpoints notwithstanding, Economics and other social sciences should be considered distinct from the more traditional fields of science that are rooted in clear cause-and-effect as demonstrated by controlled experts. You have no idea lol, obviously.
> one is economic theory and one is political theory
It is an absurd notion that there are two manners of discussing how the pie should be divided up - one objective, scientific, fair-minded etc., and one "political". Obviously it is all political.
As it was originally called - political economy. The term economics was promoted by Alfred Marshall, one of the most political of those focused on the economy.
"It is an absurd notion that there are two manners of discussing how the pie should be divided up"
There is absolutely a difference between normative and positive statements about the world. Arguing whether raising taxes will lower middle class wages is a different question from whether one should raise taxes.One is a question of facts and the other is a questions of values. This distinction holds no matter what field you are discussing; it's just the field of economics where people seem to insist on blurring the two.
I think it is worth pointing out that often we don't actually know the answer, or are getting results interpreted through politically motivated lenses, and so even seemingly descriptive statements about the economy are often secretly normative ones.
I don't think there is such a clear distinction between fact and values ala Hume’s conception of a "matter of fact" or Kant’s distinction between analytic and synthetic judgments.
economics isn't a deductive science. i prefer Keynes' irreducable uncertainty as a principle of policy. we can't predict the future, we don't how policy is going to act out. the future won't look like the past. the chicago school's knightian uncertainty is the supply side of the same coin
Dewey's objection to the fact/value dichotomy is more against the notion that facts cannot be used to drive value judgments, not to the notion that value judgments should not be used to derive facts, which is mainly what I'm referring to here.
Chang seems to be conflating two visions of economics: one vision of economics that says how things are, and one vision that says how things should be.
This unfortunately is what a lot of people learn in economics courses and pop economics books.
I read (and liked!) Ha-Joon Chang's book (which was not the first of his I'd read); my only quip is with his physics. In fact, there are a lot of cases in physics where we have to do something similar to his recommendation for economics. Quantum physics, relativity, the electron as particle or wave, Newtonian physics, are all different (and mostly contradictory) models for physics. We pick the one that works best for the problem we're working on. We don't use relativity when we're designing bridges, we don't use quantum physics either, but we need to know about them and know when we do need to use them. His recommendation for economics is not so dissimilar.
Put this way. Sophisticated data mining feeding models that forecast the value of your startup or large customer base.....ain’t science. No amount of ML icing on the cake is going to make the (economic) forecast more accurate. It’s good journalism at best.
Well, the sharp end of economic research may or may not be far beyond 70s Chigago, but there are lots of economic opinions flying around in the policy mainstream discussion that just about pass the 101 of 70s Chigago economics class. And those opinions definitely deserve all railing against them that is available. Soviet union did quite effectively kill communism as any kind of credible ideology, someone should somehow do the same for the chigago-libertarian ideology. Hopefully with less misery inflicted on people.
> Almost half of US families can't afford basics like rent and food
> Nearly 51 million households don't earn enough to afford a monthly budget that includes housing, food, child care, health care, transportation and a cell phone, according to a study released Thursday by the United Way ALICE Project. That's 43% of households in the United States.
For instance, in a social democracy you could have supports in place such that people unable to afford housing, food, or healthcare could be provided with those things, whereas in our system the amount of assistance available is quite small and often gated by onerous or humiliating procedures, meaning a high level of precarity for the 43% of households which can't really afford those things (let alone deal with a large, unexpected expense).
One of the most important lessons of economics is that “good intent” does not always mean “good results”. Do you have any reason to believe that higher taxes and spending will lead to better outcomes, or higher net societal welfare?
Consider how U.S. education spending per student has ballooned over the last few decades, while outcomes have stayed flat (and in some cases deteriorated).
>Do you have any reason to believe that higher taxes and spending will lead to better outcomes, or higher net societal welfare?
Not the parent, but how about all of Western Europe?
As much as economics wants to tout itself as a science, when confronted with real world examples of what works, tested in real countries over the past 75 years, it just retreats into some dressed-up version of American Exceptionalism to explain the failing of its own prescriptions.
> Not the parent, but how about all of Western Europe?
You're going to have to be more specific. What about "all of Western Europe"?
> As much as economics wants to tout itself as a science
Is this going to be a game of definitions? What qualifies as a "science", in your view? Do you consider sociology to be a science? Psychology? Ecology? Geology? Anthropology? Archaeology? History? Linguistics?
> tested in real countries over the past 75 years
Which 75-year-old policies are you referring to, exactly?
> it just retreats into some dressed-up version of American Exceptionalism
What you could possibly mean by economics being a "dressed-up version of American Exceptionalism" is honestly a complete mystery to me.
> to explain the failing of its own prescriptions.
Interesting that you mention that. Relative to the size of its wealth, the U.S. spends a disproportionate amount on health care. Even as a high income country, the U.S. spends more per person on health than comparable countries. Total health expenditures per capita, U.S. dollars, PPP adjusted, 2016 [1]:
United States: $10,348
Switzerland: $7,919
Germany: $5,550
Netherlands: $5,385
Austria: $5,227
Belgium: $4,839
France: $4,600
United Kingdom: $4,192
See [2] for a breakdown by country of government/compulsory healthcare spending as a percentage of GDP: https://imgur.com/a/BzaVX6w. The U.S. comes out on top, by far. Has it ever occurred to you that maybe the problems with U.S. healthcare won't be solved by pouring more money into it, but rather by addressing systemic issues with the way it works?
Regarding education:
The United States spends more than other developed nations on its students' education each year... Spending, of course, only tells part of the story and does not guarantee students' success. The United States routinely trails its rival countries in performances on international exams despite being among the heaviest spenders on education... The average first-year high school teacher in the United States earns about $38,000. OECD nations pay their comparable educators just more than $31,000... Among all educators, U.S. payrolls are competitive. The average high school teacher in the United States earns about $53,000, well above the average of $45,500 among all OECD nations. [3]
The United States spent $12,300 per FTE student at the elementary/secondary level, which was 29 percent higher than the average of $9,600 for OECD member countries reporting data... At the postsecondary level, total government and private expenditures on education institutions as a percentage of GDP by the United States (2.7 percent) were higher than the OECD average (1.6 percent) and were higher than those of all other OECD countries reporting data. [4]
Again, has it ever occurred to you that maybe the problems with U.S. education won't be solved by pouring more money into it, but rather by addressing systemic issues with the way it works?
The US spends a disproportionate amount on healthcare because its system is privatized. Healthcare is cheaper relative to the degree of nationalization, as your own data shows. Switzerland and Germany are closed to the American model (although not as bad) and cost more. You specifically said “tax and spend,” not just spend, because you reduce costs with societal-level economies of scale. Of course you spend more in a privatized system - you have a bunch of vultures trying to profit off people at their weakest and most vulnerable.
Education in the US suffers from a similar problem because of its patchwork and variable system of state and federal funding, much of which was specifically designed to disadvantage the poor and minorities.
All your data points show is that privatizing and applying inconsistent distribution regimes to what should be public goods makes them more costly, less efficient, and produce worse outcomes in aggregate.
> The US spends a disproportionate amount on healthcare because its system is privatized. Healthcare is cheaper relative to the degree of nationalization, as your own data shows. Switzerland and Germany are closed to the American model (although not as bad) and cost more. You specifically said “tax and spend,” not just spend, because you reduce costs with societal-level economies of scale. Of course you spend more in a privatized system - you have a bunch of vultures trying to profit off people at their weakest and most vulnerable... All your data points show is that privatizing what should be public goods makes them more costly, less efficient, and produce worse outcomes in aggregate.
Wrong. I specifically linked to data showing government healthcare spending, not private healthcare spending (https://imgur.com/a/BzaVX6w). Read again.
> Education in the US suffers from a similar problem because of its patchwork and variable system of state and federal funding, much of which was specifically designed to disadvantage the poor and minorities.
I don't disagree with this. There are other important factors, of course.
>Wrong. I specifically linked to data showing government healthcare spending, not private healthcare spending
...that they pay in the context of a privatized healthcare system, largely to cover the disabled, elderly, and chronically unwell, who the privatized system sees as a profit center.
I don’t understand what you can’t or refuse to understand about this. Of course the pay more under this arrangement. They would pay less if they covered everyone and the system was nationalized, which, again, the historical example of Western Europe proves to be true.
Lowest unemployment rate since 1969 [1] coupled with negative real wage growth [2] is an indicator that our current ideology (low taxes, limited regulation) is broken.
> an indicator that our current ideology... is broken
Read the very article you linked to:
The jobless rate ticked down to 3.8% in May, another sign of the strong economy and tight labor market. That tied the lowest unemployment rate since 1969. Since then, the only other time unemployment was this low was in April 2000. "It fell for all the right reasons. We had more people coming into the labor market. We saw employers digging deeper into the pool of unemployed," said Josh Wright, chief economist at the software firm iCIMS. The jobs report painted a picture of an economy with opportunities for almost everyone. Black unemployment fell to a record low, and the gap between black and white unemployment shrank to the narrowest ever measured. Job openings are at a record high, and businesses are hungry for workers. That has helped underrepresented Americans find jobs. The unemployment rate among African-Americans and Asian-Americans has been steadily declining. It has also dropped among low-education workers and even teenagers. Over the past year, the unemployment rate among 16- to 19-year-olds has fallen from 14.1% to 12.8%.
Not to mention you haven't established the connection to "low taxes, limited regulation" that you claim. Others could equally claim the problem is that taxes and regulation are too high. This is a classic case of "I'm going to cite bad statistics and blame X without explaining the causal connection with X or whether the alternative would be better."
You seem to have missed the "coupled" in "Lowest unemployment rate since 1969 coupled with negative real wage growth". Neither low unemployment or declining wages alone are indicators that anything is broken. The former just implies that the supply of labor is low while demand is high, the latter implies that the price of labor is shrinking.
But the combination means that there's a problem, because in a free market you would expect the opposite: in times of low unemployment, companies would need to increase wages to attract employees. That this is not happening is a blow against the justification of the current "low taxes, limited regulation" ideology (that it creates free markets), because the labor market doesn't behave like a free market.
The same article the GGP linked to explains why wages haven’t grown as quickly:
Economists believe that the unemployment rate can dip even further because there's still slack in the job market.
Productivity and inflation are lower than in previous periods of growth, and economists believe that has kept a lid on wages. The erosion of workers' bargaining power has also played a role.
Another explanation: Employers are turning to new workers — such as younger people and those just re-entering the job market — to fill positions vacated by better-paid veteran workers who are either retiring or taking new positions elsewhere.
Economists are confident that wages will keep climbing as competition for workers grows.
Dozens of companies have already announced pay hikes and more attractive benefits to lure workers. On Thursday, Costco said it would raise starting wages for US employees by $1, to a minimum of $14 an hour.
What do you find unsatisfactory about these explanations?
> But the combination means that there's a problem, because in a free market you would expect the opposite: in times of low unemployment, companies would need to increase wages to attract employees. That this is not happening is a blow against...
It sounds like you’re setting up a strawman and attacking it. See above.
> because the labor market doesn't behave like a free market.
No one believes the labor market is or behaves like a free market. Again, this is a strawman.
>Economists believe that the unemployment rate can dip even further because there's still slack in the job market.
There isn't "still" slack, the slack is growing as the laborforce participation rate is lower today than it was in 2013. How can it be in a "booming" economy that fewer people want to work and real wages are also falling? I haven't seen an economic explanation for this.
>The erosion of workers' bargaining power has also played a role.
A result of de-regulation, no?
>What do you find unsatisfactory about these explanations?
The lack of evidence that they are more than just theories, I want the data.
> There isn't "still" slack, the slack is growing as the laborforce participation rate is lower today than it was in 2013.
The labor force participation rate is currently about 62.8%. In 2013, it was at most about 63.8%, only 1 percent higher [1].
> How can it be in a "booming" economy that fewer people want to work and real wages are also falling?
Real average hourly earnings for June 2013 were $10.31 [2]. Real average hourly earnings for June 2018 were $10.76 [3]. Real earnings increased over that period. So what are you referring to, exactly?
> I haven't seen an economic explanation for this.
This reminds me of a how a creationist says “Well, I haven't seen an explanation for this" and proceeds to dismiss an entire field.
> The lack of evidence that they are more than just theories, I want the data.
>The labor force participation rate is currently about 62.8%. In 2013, it was at most about 63.8%, only 1 percent higher
This 1% difference works out to 1.6 million fewer people in the laborforce, that is a problem. Especially, when I keep reading about how the economy is doing great compared to other post-Recession years. If this is true, why aren't people re-joining the laboforce? If the labor market is squeezed for talent, as companies and JOLTS [1] data would have us believe, why aren't they raising wages to lure workers? The fact that they aren't is not a good sign of economic fundamentals.
>Real average hourly earnings for June 2013 were $10.31. Real average hourly earnings for June 2018 were $10.76. Real earnings increased over that period. So what are you referring to, exactly?
Correct, since 2013, real wages are up 0.7% annually. I am referring to how real wages have fallen since the tax law was enacted. This is notable because the tax cut was specifically sold on the promise it would increase worker's wages[2]. Why haven't wages risen since the tax cut when they were rising before the cut?
>This reminds me of a how a creationist says “Well, I haven't seen an explanation for this" and proceeds to dismiss an entire field.
Like someone who uses an anecdote about Costco raising wages by $1 as evidence the labor market is great while dismissing real wage contraction?
>Lack of evidence about what? Be specific.
Evidence that any of the "reasons" outlined for slow wage growth are true.
> Others could equally claim the problem is that taxes and regulation are too high.
They could do so, but they'd probably somehow have to account for the fact that both taxes and regulation are substantially lower than periods of broader prosperity.
first thing that came to mind was how anti-communism played out in vietnam, chicago boys of chile, and the contras in nicaragua
you could also argue the underdevelopment of the third world by washington consensus (free market) policies
oh and banking/finance deregulation (pre/post-glass-stegall) of the great depression, s&l crisis, and the most recent financial crisis
i really don't know how to feel about milton friedman, i like the negative income tax and he support georgism. he's really a liberal, but such a huge spokes person for the seemingly detrimental policies enacted after the collapse of keynesianism in the 70s
> first thing that came to mind was how anti-communism played out in vietnam, chicago boys of chile, and the contras in nicaragua
What does this have to do with the Chicago school or libertarianism?
> you could also argue the underdevelopment of the third world by washington consensus (free market) policies
I have no idea where you got this from. The evidence indicates the complete opposite. Free markets and free trade are a boon to developing countries.
China's economic liberalization reforms (agricultural decollectivization, privatization of industry, elimination of price controls, protectionist policies, and regulations) lifted millions out of abject poverty. India's economic liberalization reforms (making the economy more market-oriented, expanding the role of private investment, reducing import tariffs, deregulation of markets, reduction of taxes, and greater foreign investment) similarly led to a vast reduction in poverty and extraordinary economic growth, particularly in sectors opened to competition.
> the seemingly detrimental policies enacted after the collapse of keynesianism in the 70s
Which policies are you referring to, and why do you think they were detrimental?
Regarding the Great Depression, I suggest you read what Friedman had to say about it.
This looks like as good of a dumping ground as any for my pet issue. If you're interested in economic schools besides Neo-Classical there is a class on Coursera called Introduction to Economic Theories.
If you're interested in critiques of contemporary economic thought then I would say Ha-Joon Chang isn't your best option. I think the thing to do is to mostly ditch economists as they aren't that great of critics (aside from a few Post-Keynesians but that's my own personal bias) and look to the philosophers.
Michael Sandel has a video series on INET called What Money Can't Buy based off his book. It's easy to watch and it's basically him prodding at some of the philosophical assumptions made in our usual economic reasoning. I find it quite good and it does have big name economists like Mankiw on it.
Elizabeth Anderson is good as well and she seems to be more than happy to appear on libertarian programs.
There's some sociologists that are also critical of the standard economic reasoning but I don't know enough about that side of the issue to provide any recommendations.
Even if we accepted your criticism that economists have a limited ability to pick apart conventional wisdom, I think it is worthwhile to hear these things from people steeped in and deeply knowledgeable about the field.
As an economics major, it's very clear to me who in this thread has received an education in economics going beyond the freshman level, and who has not. The giveaway tell is that, much like climate change deniers or anti-vaxxers, the latter focus on questioning the fundamental methodologies and paradigms of this field without the contextual knowledge to understand why they came to be established through overwhelming consensus in the first place. Such idle complaints do not constitute valid criticism or discourse, but only ignorance.
Might you give us your own input then? It would be more useful to those who have not received an education in economics going beyond the freshman level, as the others apparently don't need your input.
The article's other problem with economics seems to be that it assumes people are unfeeling, which is a fair criticism but not one that is particularly new. There is a field called Behavioral Economics which tries to address this and is on the radar of pretty much every economist[4].
The problem I think is more that economics never reaches people directly but is filtered through politics. I was reading on Bradford DeLong's blog the story of Mankiw, who is a respected economist but worked for the Bush administration, where he felt he had to be silent about incorrect economic theory but he could influence them in small ways to be better on economics, effectively trading truth and reputation for a small amount of power[5].
[0]: http://www.igmchicago.org/surveys/steel-and-aluminum-tariffs
[1]: http://www.igmchicago.org/surveys/supplemental-nutritional-a...
[2]: http://www.igmchicago.org/surveys/missing-productivity-growt...
[3]: http://www.igmchicago.org/surveys/immigration
[4]: http://www.igmchicago.org/surveys/behavioral-economics-2
[5]: http://www.bradford-delong.com/2018/07/hoisted-from-the-2007...