Anti-Mankiw

When I was an undergraduate learning basic economics from Paul Samuelson's classic textbook, I ran across a book by Marc Linder called Anti-Samuelson. Linder's book was a leftist critique of Samuelson's presentation of the field.

Samuelson was the ostensible target of the attack, but as the author of the leading economics textbook, he was really only a proxy. Linder's actual target, it seemed to me, was the mainstream of the economics profession and the way almost all economists teach undergraduates. He thought we economists preached too much reverence for market mechanisms. (Linder is now a law professor: On his webpage, he sports a t-shirt that says "people before profits.")

I now know how Paul must have felt when Linder's book came out. A friend recently called to my attention an article called Economic Indoctrination, which takes a similar approach to my principles text. The author, a cofounder of the "post-autistic economics movement," tries to portray my book as right-wing propaganda.

This is not the first time my text has been criticized for being biased. When President Bush appointed me to be CEA chair, some members of the political right opposed the nomination because my textbook was too Keynesian and not sufficiently sympathetic to their supply-side views. I suppose the symmetry in the attacks suggests I am getting things about right.

When I teach introductory economics, either in the classroom or in my textbook, I view myself as an ambassador for the economics profession. I try to represent the economic mainstream, not my personal political views. Some students may view the economic mainstream as right of center. That assessment is probably correct, at least as judged by the universe of college professors. But the job of an introductory course is to present, as honestly as possible, the consensus of the profession. If the typical economist is more market-friendly than the typical literature professor, then that point of view will likely be reflected in the leading textbooks.

I was most surprised to read that the author of this critique was once a member of the army of teaching fellows I oversee in ec 10. I wish he had come to talk with me about his views while he was involved in the course. I have long been intrigued by the post-autistic economics movement. A conversation on the topic would have been edifying for both of us.

Ambitious or Quixotic?

Economist Nicholas Stern opines on the challenge of climate change. He writes:

The overall targets of 50% reductions in emissions by 2050 (relative to 1990) agreed at the G8 summit in Heiligendamm last June are essential if we are to have a reasonable chance of keeping temperature increases below 2C or 3C.... For a 50% reduction in global emissions by 2050, the world average per capita must drop from seven tonnes to two or three. Within these global targets, even a minimal view of equity demands that the rich countries' reductions should be at least 80% - either made directly or purchased.

A Quick Quiz

MUNICH - distorted: hunting at baby!, 11/29/07

Your preferences are in your genes

New findings from the study of twins show how genes influence economic choices:

We find strong evidence that economic preferences are heritable. For altruism as well as risk preferences the genetic effect is significantly different from zero. In our best fitting models, the point estimates suggest that 35 percent of the variation in altruism and 27 percent of variation in risk preferences is explained by genetic influences. Furthermore, our results suggest only a modest role for common environment as a source of phenotypic variation. We argue that the significance of these results extends well beyond documenting an important, but hitherto largely ignored, source of preference heterogeneity. For example, although it is widely accepted that parent-offspring correlations in isolation cannot be used to discriminate between theories of genetic and cultural transmission, much economic research is carried out under the presumption that genetic transmission is small enough that it can be ignored. Such an assumption is not consistent with our findings.

Mishkin on Fed Policy

Fed governor Rick Mishkin talks to undergrads at MIT.

Still looking for a holiday card ...

Try the shutterfly's new designer card collection. There are designs from Martha, Stacy Claire Boyd and Shirley Lee.

Here are some favorites:

Even better, this week they are 20 percent off.

Enjoy!

LONDON - camberwell college of arts, peckham + white chapel, 11/28/07

Congratulations, Keith

President Bush has appointed Keith Hennessey to replace Al Hubbard, who recently resigned as the head of the National Economic Council. I worked closely with Keith for two years, when he was the #2 person at the NEC, and I can attest that he is an excellent choice.

Keith has spent most of his career as a Washington policy wonk, after getting a math degree at Stanford and a public policy degree at Harvard's Kennedy School. But, like most readers of this blog, in his heart he is an econonerd. I recall that in his spare time (a precious commodity for those working in the White House), Keith was reading David Romer's graduate-level textbook, Advanced Macroeconomics, just for fun.

I also remember some advice Keith gave me as I left my Washington post to return to Harvard: Start a blog.

More on Social Security

From Washington Post columnist Ruth Marcus.

The Sock Market

A former ec 10 student recommends listening to this NPR story on U.S. trade policy and the sock industry.

LONDON - hoxton boutique party + istituto marangoni party, the cuckoo club, 11/27/07

earrings! a sampler

moonrox's blast earrings in crystal quartz and shell

it's late, so here are a tiny sampling of delicious earrings i've been hoarding for just such an occasion -- each is linked to its respective store. enjoy!

LONDON - durrr, the end + on the street, brick lane & liverpool street & dover street, 11/26/07

Inequality vs Injustice

Herb Gintis (via Free Exchange) writes:

no one cares about inequality. People care about injustice, unfairness, poverty, sexual predators, family values, gay marriage, terrorism, and many other problems of everyday life. People don't care about Gini distributions.

This passage was written about Paul Krugman's new book, but it can be taken as a much broader critique of the conventional economic approach to inequality.

The whole theory of optimal taxation and redistribution, best exemplified by the literature that follows Mirrlees, assumes that the social planner cares about inequality in itself. Government policy in the model is driven by a utilitarian calculus, which in turn is based on the axiom of diminishing marginal utility. The planner would, if he could achieve the goal without blunting incentives and diminishing efficiency, use the system of taxes and transfers to equalize incomes.

There is no room in the model for the concept of injustice beyond inequality of ability, the distribution of which the model takes as inherent and immutable. The model also maintains the neoclassical conclusion that, given ability, people are paid the value of their marginal product. That is, people are paid what they contribute to society.

I agree with Gintis that people care more about injustice than about inequality. For example, greater outrage is directed at highly paid CEOs than at highly paid athletes. People sense that athletes earn their high income by being highly talented, whereas they feel (correctly or not) that CEOs are paid a lot because they have manipulated the system.

If Gintis is right, then the standard model is barking up the wrong tree.

The Top One Percent

As seen by Thomas Sowell.

invitapaperstudio: thank you cards

thank you! very much. folded set of 6 cards

seriously. thank you! these sweet cards are hand printed both inside and out, with lovely matching envelopes, and can be purchased in multiples. lots of lovely choices! more at invitapaperstudio.etsy.com

ah yes. where was i?

hello friends -- am back! after many travels. hope all of you u.s. readers enjoyed your thanksgiving holidays -- i headed straight for my sister's, now that she is respectably married, and "helped" in the kitchen. by staying out of it, that is. she made pies from scratch. mmm.

and, since she's not a reader, i can tell you all i managed to scrape up enough to get the artisan stand mixer i wanted to get them for the wedding but couldn't swing at the time. hooray! wrapped for xmas and in her guest-bedroom even now. yuppie registries, unite! here's to many more delicious thanksgivings to come.

i could tell a number of heart-warming holiday tales -- interventions, 4 a.m. mall outings, etc. -- but will skip it and head for the goods, which is why you're here. right!

my sincerest thanks for everyone's well-wishes and patience while i took time off. here's my sister in her element:

The U.S. Budget Balance

This graph from Econbrowser shows the budget surplus or deficit of the U.S. federal government as a share of GDP (blue, left scale).

LONDON - brick lane market + black peter group show, catch + boombox, hoxton square bar and kitchen, 11/25/07