This one is almost too easy. Krugman charges freshwater macroeconomists with epistemic closure. He writes,
Ask a grad student at Princeton or MIT, “How would a new classical macro guy answer this?”, and the student can do it; classes at freshwater departments teach real business cycle theory, and good students can tell you what it says even if their professors have a different view.
But students at freshwater schools — or, alas, many of their professors — can’t return the favor. It’s been painfully obvious since the crisis broke that people at Minnesota, or even many people at Chicago, have no idea what New Keynesian economics is all about. I don’t mean they disagree, or think it’s garbage, they literally have no idea what the concepts are. And that’s why they reinvent 80-year-old fallacies when they try to discuss the subject.
It’s interesting to ask why this sort of cocooning is a feature of the right but not the left. But it’s very real, and has a dire impact on economic as well as political discourse.
Of course, we can just as easily replace salt-water students in this analogy with students of heterodox economics/political economy, and freshwater economics with the whole mainstream. For instance, ask a post-Keynesian or a Marxian to hold court on IS/LM, and they can do it easily. This is not because these economists are heroic; instead, they realize that is essential to build a counter-theory by learning the original theory and its critique.
My course in Marxian political economy began with a reschooling in intermediate micro and macro- we actually learned this stuff better a second time by being forced to think critically about it. However, ask Krugman or his friends at Princeton and MIT about the starting point for Marx’s critique (hint: use-value versus exchange value) or Polanyi’s (hint: embeddedness) and I fear their eyes might glaze over. If the mainstream response to my argument is that the aforementioned critiques are not “serious economics,” well, we no longer have anything to talk about.
P.S. (private message for David Ruccio)- since I’ve dispensed with this one easily enough, hopefully you can take some time to follow up on my post re: Sen/Smith.
Being able to pontificate on New Keynesian economics, Marx’s critique or Polanyi’s, does not an economist make. No need to understand quantum chromodynamics to know a mirror reflects light.
Instead, keep it simple. Ask these geniuses why they believe federal spending is supported by federal taxing (It isn’t) and large deficits cause high interest rates (They don’t), and our borrowing from China is a problem (It isn’t) and our grandchildren will pay today’s debt (They won’t). [ See: http://rodgermmitchell.wordpress.com/2010/04/25/isabel-sawhill-and-the-brookings-institution/ ]
Economic myths are not based on historical evidence, but rather on what the experts feel “should be.” Hey, even the genius Aristotle supposedly proclaimed that men have more teeth than women, because “By reason of the abundance of heat and blood which is more in men than in women.” So, the experts are just being geniuses.
My mother used to talk about people being educated beyond their intelligence. She must have been describing the famous experts in the field of economics.
Rodger Malcolm Mitchell
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Yes, but a discipline must be nimble. Debt and deficits may be the issue du jour, and thinking about it may be very obviously wrong-headed. However, that ultimately stems from the epistemic closure that Krugman and I are both talking about. The difference is Krugman draws the line in a different place than I do. Economists need to read the critiques so they are open-minded enough to deal with the myths that will arise decades hence.
Debt and deficits are far more fundamental than “the issue du jour.” They impact all important economic events and the decisions surrounding them — growth, recessions, depressions, inflations, deflations and stagflations.
All money is debt. The correct phrase for “federal debt” is “federal money created.” And economics is the study of money.
So, one more properly might say, government deficits and debt are the very basis of economics, and an economist who does not understand this basis (as seemingly many do not), cannot begin to understand economics.
Sadly, some feel debt and deficits are so obvious there is no reason to study them, which may account for our average of one recession every five years.
Suggested readings:
“7 Deadly Innocent Frauds” at http://moslereconomics.com/2009/12/10/7-deadly-innocent-frauds/
“A quick summary of the facts” at http://rodgermmitchell.wordpress.com/2009/09/07/introduction/
“Isabel Sawhill and the Brookings Institution” at http://rodgermmitchell.wordpress.com/2010/04/25/isabel-sawhill-and-the-brookings-institution/
Rodger Malcolm Mitchell
[...] And, Nick, you’re absolutely right about Krugman: he sees epistemic closure within mainstream economics but not of mainstream economics. Krugman and [...]
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[...] It was a busy week; we talked about: obesity as a function of society; Sen’s new manifesto; taking on Paul Krugman on epistemic closure; reposting Ruccio’s response to Sen’s manifesto; [...]
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Nick, five bucks says this last comment is a spam. I get these by the hundreds.
Rodger Malcolm Mitchell