J. Bradford DeLong
A Platonic Dialogue on the Failure of Economics Education: J. Bradford DeLong U.C. Berkeley November 30, 2010
Thrasymakhos: You have to realize, Monetaristoteles, that only 4% of the American people and 10% of Washington elites believe what you and I do: that our current macroeconomic disorder of high unemployment is a serious but curable disease of the industrial market economy--a disease curable by strategic interventions to rebalance financial markets through appropriate monetary, fiscal, and banking policies. 96% of the American people and 90% of elites believe, by contrast, that our current macroeconomic disorder and high unemployment is--in some sense they cannot fully explain--just punishment for our sins against financial prudence, that we must take our just punishment like manly men, and that we must not attempt to evade punishment through financial trickery. Think of David Brooks: that argument, on that level, with that degree of background knowledge, and that degree of certainty. Monetaristoteles: Do I have to? Thrasymakhos: Yes.
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J. Bradford DeLong
Monetaristoteles: Very well. I do find this astonishing. Professional economists would go the other way. 90% or more of professional economists think times of high unemployment are cases of a disease that can be cured by strategic interventions to rebalance financial markets. They disagree about how and what those rebalancing policies should be. But they agree that there is a cure, and that it is to undertake the right strategic intervention in financial markets. Thrasymakhos: I think you are wrong about professional economists... Monetaristoteles: May I finish? Thrasymakhos: It is what they would think if they understood their discipline, its foundations, and hits history, but... Monetaristoteles: MAY I FINISH? Thank you. As I was saying, only a small but vocal minority of economists--starting with Karl Marx and continuing with his left-wing disciples like Rudolf Hilferding and his right-wing disciples like Joseph Schumpeter claim that the episodes of high unemployment are a disease that has no cure--that downturns and depressions are functional and necessary for any industrial market economy. And they have never been able to make their arguments in a form that makes any sense to the rest of us. Thrasymakhos: And your point is? Monetaristoteles: Simply this: the Marxists and the Austrians, the theorists of the Pointless Pain Caucus in their various flavors, have not had control over the Econ 1 curriculum. We have had control over the Econ 1 curriculum. If there are two lessons we want people to remember from the "Intro Macro" part of Econ 1, they are (a) that government can stabilize the price level and prevent inflation by stabilizing the money stock over the long-term, and (b) that downturns--episodes of high unemployment-are usually cases of a disease that can be cured by the right strategic interventions in financial markets. Keynesians and monetarists, classicals and neoclassicals, credit-channelers and post-Keynesians--this is what we all believe: that while Say's Law can be broken, the only thing that can
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J. Bradford DeLong
break it is some imbalance in financial markets that produces excess demand for some category of financial assets, and that a competent and nimble technocratic government can conduct strategic interventions that make Say's Law--even though false in theory--roughly true in practice. That is what we all think... Thrasymakhos: But you fight over what the right strategic interventions in financial markets are... Monetaristoteles: Only the Marxists and their mutant Austrian descendants believe that times of high unemployment must be suffered through if the industrial market economy is to function, and they have never had control over the Econ 1 curriculum... Thrasymakhos: Yes but... Monetaristoteles: So why has what we have to say gone in one ear and out the other? Thrasymakhos: Because your discipline has had an amazing educational failure on a remarkably fundamental level? Sokrates: Aren't you a member of the Institute for New Economic Thinking's Education Committee?
November 30, 2010: 610 words
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