Campus | November 2, 2011 at 11:08 am

In Defense of Ec 10


Today, several Ec 10 students plan on walking out of class to express their “discontent with the bias inherent in [the] introductory economics course.” (An open letter to Greg Mankiw gives a full description of why the students say they will be walking out.) As an economics concentrator, an Ec 10 alum, and a self-identifying liberal (on most issues), I think this walkout is regrettable, because the class gave me an excellent economic foundation that has been crucial to my success as a student and my development as a thinker, and furthermore, these protesters’ arguments (or lack thereof) against the course are entirely unfounded.

One would presume that, in this letter, students would lay out precisely what biases they find objectionable in Ec 10, but the closest they come to doing so is when they say, “There is no justification for presenting Adam Smith’s economic theories as more fundamental or basic than, for example, Keynesian theory.”

Incidentally, the authors of this letter are in for a treat: there’s plenty of Keynesian theory to come in the second semester of Ec 10.  In fact, Mankiw is a great Keynes admirer, and once wrote, “If you were going to turn to only one economist to understand the problems facing the economy, there’s little doubt that that economist would be John Maynard Keynes.”  The only reason that these students have not yet studied the father of modern macroeconomics in Ec 10, of course, is that the first semester of the class is devoted to microeconomics.

The protesters may also be surprised to know that the vast majority of what they are studying in Ec 10 was never actually formalized–or even proposed–by Smith himself.  Smith may have been the first advocate of “the invisible hand” (although he only actually used the phrase twice), and much of modern economics stemmed from this idea, but Ec 10 bears little resemblance to the theories and teachings of Adam Smith himself.

Since, I presume, the protesters find bias in Ec 10 that extends beyond the compartmentalization of John Maynard Keynes to the second semester, they leave it to us to infer what their real problems with the course are. So, for the sake of argument, I will assume that the protesters believe that–given that Mankiw served as Chairman of the Council of Economic Advisers under a Republican president–there is a conservative bias to the course. Again, it would be nice for them to point to precisely what about the course they find so objectionable, but since they do not do so, I will simply go through the components of the course in their entirety in search of this conservative bias.

To date, Professor Mankiw has given three lectures in Ec 10, there have been two guest lectures, eight supplementary articles have been assigned, and the rest of the formal instruction has occurred in section.  We’ll consider each in turn.  (And if you want to follow along at home, lecture slides and readings are available to current Harvard ID holders on the course website.)

Mankiw’s first lecture was an overview of the course where he talked about the discipline of economics in general and class details.  (One quotation from the lecture slides I especially like is from Alfred Marshall: “Economics is a study of mankind in the ordinary business of life.”) As someone pointed out to me via email, Mankiw did mention that “getting rich” was one reason to take the class, but that was mostly a joke–indeed, the same slide has a picture of Arnold Schwarzenegger in his bodybuilder phase–and furthermore, there are plenty of both liberal and conservative students who would like to get rich.

His second lecture went into more detail about what economics is and a major part of this lecture consisted of reasons why economists are not anarchists, among those reasons: dealing with poverty, market power, externalities, and regulating the business cycle. Most liberals, I think, would agree with Mankiw here. For reasons unknown, protesters seemed to have been unhappy with Mankiw’s references to Adam Smith in this lecture, but it’s tough to explain the origins of our current conception of markets without briefly discussing Smith.

His third lecture was a defense of a carbon tax and taxing negative externalities in general.  I’m guessing liberals weren’t the ones objecting to this lecture.

The two guest lecturers were David Cutler, a former Obama health care adviser, and Ben Friedman, who gave a lecture on the religious origins of capitalism and the ties that religion and economics share today. The conservative bias, once again, fails to come through.

Of the articles that have been assigned, one is written by Larry Summers (a former Obama adviser); one weighs the pros and cons of a market for organ donation; on a related note, one talks more generally about how repugnance stifles some markets, written by Al Roth, an expert in market design; one discusses why poverty in America has not declined given that GDP has increased; one discusses how effective anti-trust policies have been; and one talks about pricing schemes used to deter traffic in London.  There’s lots here that is economically interesting and ideologically neutral, and liberals specifically might find some of these articles appealing.

The only articles that contain anything that liberals might object to are one advocating for a shift towards consumption taxes, and one written by Alan Greenspan on Adam Smith and capitalism. I suppose some liberals might claim that consumption taxes are often regressive, but this article specifically says in the conclusion that a consumption tax could be implemented in a progressive way–presumably, if you tax the appropriate consumption.  Indeed, liberal economists have called for progressive consumption taxes before.  And as for the Greenspan article: he mainly argues that capitalism was, on the whole, good for the world in the 20th century.  Maybe some people on the far left disagree with that claim, but it’s hardly a right-of-center sentiment.

So, the lectures and the readings seem clean.  That leaves section.

Sections largely follow The Principles of Economics by N. Gregory Mankiw, and to reconstruct what students learn at these class meetings, I dug out my notes from freshman year. Here are the supposedly biased takeaway points that Mankiw’s propaganda machine pounds home in section:

  • Trade and specialization of labor can make society better off.
  • Demand curves slope downward and supply curves slope upward (usually).
  • Sometimes, things happen that make demand curves and supply curves shift.
  • Comparative statics can be a useful way of thinking about how changes in some variables will affect changes in other variables.
  • Some goods are elastic–more volatile to changes in quantity consumed for a given price change–and some goods are inelastic.
  • Taxes, subsidies, price floors, and price ceilings can change equilibrium outcomes, and sometimes this causes deadweight loss.
  • Tariffs and quotas often cause a loss in total social surplus.
  • Externalities cause free-market outcomes to be different from socially optimal outcomes.
  • Public goods are neither excludable nor rival.

I literally just went through the first half of the first semester and wrote down the main point from every section. Once again, I’m not sure which of these conclusions the protesters find controversial. If you surveyed all the economists in the world and asked them if they objected to these claims, a small minority would take issue with any of them. Economists are divided on these incredibly simplified questions in the same sense that some Republican presidential candidates claim that climate scientists are divided on global warming.

A broader problem that I have with these protesters is that they seem to have a fundamental misunderstanding of what economics is. One lesson from the first day of Ec 10 that will stick with me for the rest of my life is learning to separate positive questions from normative ones. Most of the economics that we read about in the news involves normative questions (eg. Should Congress raise the marginal tax rate on the highest income bracket?) whereas most of what economists actually study involves positive questions (eg. What would happen if the marginal tax rate on the highest income bracket were raised?). Ec 10 is an introduction to the academic discipline of economics, and the vast majority of the course focuses on teaching students how to answer positive economics questions.

Economics is not philosophy, and the primary goal of Ec 10 is not to teach students how to make the world a fair place. If protesters feel that the course spends too much time discussing how to make the economic pie as big as possible and not enough time discussing how to slice the pie equitably, I would point out that it is Professor Mankiw’s desire to avoid bias that drives this. After all, asking how to make the pie bigger generally entails positive questions; asking how to slice the pie fairly almost exclusively involves normative questions. And when Mankiw does normatively evaluate a policy in his textbook, he usually does a pretty good job of explaining why economists might hold different positions on that issue, and then he often discusses some policy alternatives.

Another criticism that some protesters have raised against Ec 10  is that its models are oversimplified and it is difficult to extrapolate real-life conclusions on important normative questions from the course. Again, I disagree here. You can’t hold informed positions on these normative questions without being able to answer the positive ones, and you can’t answer the positive questions without a fundamental understanding of the principles of economics. But building this foundation takes time. Premeds don’t grumble that Life Science 1a does not qualify them to practice medicine; Ec 10 students should understand that the class will not equip them to fully understand the vast complexities of economic policy. Ec 10 builds a foundation to begin to answer these questions intelligently, but as in all academic disciplines, if you want to be an expert, you’ll have to invest more than one year of study.

But perhaps what is most objectionable about this walkout is that students should not be opposed to being exposed to ideas that might conflict with their prior held beliefs. Indeed, this is largely the point of a liberal arts education, and if you go through college and never change your mind about anything, I would question how much you got out of your college education to begin with. But the very best courses are not merely ones that change our minds on specific issues; they are ones that change our understanding of the world and cause us to approach problems in novel ways. I am fortunate enough to have experienced many such classes at Harvard, and Ec 10 was certainly one of them.

Remarkably, these protesters have managed to connect their complaints of the pedagogy of Ec 10 with the Occupy movement and “the increasing economic inequality in America.” Because the protesters do not explicitly state their complaints, it is impossible to reconstruct their argument for this bizarre claim, so I can do little to refute it. Suffice it to say, one major criticism of the Occupy movement is that protesters do not generally seem to be well-informed on the economic issues they care so strongly about. Walking out of an economics lecture will do little to quell this stereotype.

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