Thursday, December 20, 2012

Robert Nielsen: "Economics does not talk about fight club."

Nielsen doesn't say what textbooks they use in his classes. But he does say some interesting things about what he's being taught:

In my course I have basically been taught that the free market is the most efficient and best system in the world and trouble always results when it is interfered with. In my textbooks recessions are not mentioned, they do not happen. There is no explanation of unemployment, the biggest issue of our times. There is no mention of profit, the heart of capitalism. Nor do they talk about banks or money or advertising or how systems are guided by power relations. No mention is made of poverty, in effect ignoring three-quarters of the world.

The idea that the market could fail is never given a moment’s thought. The market is always assumed to be in equilibrium, providing the greatest good for the greatest number of people. If you thought the current crisis would have changed this thinking then you would be wrong. The older pre-recession editions of textbooks are essentially the same as the newer post-recession textbooks. Mainstream economics has cut itself off from the real world and instead built a fantasy utopia.

Unemployment is a thought never far from mine or my generations mind. It is the biggest problem affecting millions of people the world over, yet traditional economics offers no explanation of it. I will graduate with a degree in economics in six months time, yet I couldn’t tell you why some people are unemployed.

Reminds me of what the well-respected N. Gregory Mankiw said in regard to the money multiplier: "Each dollar of the monetary base produces m dollars of money"

And that's from the 2011 edition of his book.

What is it Nielsen said? If you thought the current crisis would have changed this thinking then you would be wrong.

No comments: