What is wrong (and right) in economics?

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"... anything that has turned into conventional wisdom is almost by definition wrong, or at least, overstated." Examples of dismissal of market failure, rejection of other social sciences, and benefits of globalization.


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But in reality what we teach our students in the classroom – the advanced students if not the undergraduates –and what we talk about in the seminar room are typically much more about the myriad ways in which markets fail.
Dani Rodrik, "What is wrong (and right) in economics?What is wrong (and right) in economics?"
A peculiar deformation of mainstream economics is the tendency to pooh-pooh the real-world relevance of all the theoretical reasons market fail and government intervention is desirable.
Dani Rodrik, "What is wrong (and right) in economics?What is wrong (and right) in economics?"
There are powerful forces having to do with the sociology of the profession and the socialization process that tend to push economists to think alike. Most economists start graduate school not having spent much time thinking about social problems or having studied much else besides math and economics. The incentive and hierarchy systems tend to reward those with the technical skills rather than interesting questions or research agendas. An in-group versus out-group mentality develops rather early on that pits economists against other social scientists. [...] [E]conomists tend to look down on other social scientists, as those distant, less competent cousins who may ask interesting questions sometimes but never get the answers right. Or, if their answers are right, they are so not for the methodologically correct reasons. Even economists who come from different intellectual traditions are typically treated as “not real economists” or “not serious economists.”
Dani Rodrik, "What is wrong (and right) in economics?What is wrong (and right) in economics?"
Similarly, when I questioned some of the excessive claims on the benefits of globalization I was simply reminding the profession what economics teaches. Take for example the relationship between the gains from trade and the distributive implications of trade. To this day, there is a tendency in the profession to overstate the first while minimizing the second. This makes globalization look a lot better: it’s all net gains and very little distributional costs. Yet look at the basic models of trade theory and comparative advantage we teach in the classroom and you can see that the net gains and the magnitudes of redistribution are directly linked in most of these models. The larger the net gains, the larger the redistribution. After all, the gains in productive efficiency derive from structural change, which is a process that inherently creates gainers (expanding sectors and the factors employed therein) and losers (contracting sectors and the factors employed therein). It is nonsensical to argue that the gains are large while the amount of redistribution is small – at least in the context of the standard models. Moreover, as trade becomes freer, the ratio of redistribution to net gains rises. Ultimately, trying to reap the last few dollars of efficiency gain comes at the “cost” of significant redistribution of income. Again, standard economics.
Dani Rodrik, "What is wrong (and right) in economics?What is wrong (and right) in economics?"