I can see due to links coming into the site that you have said I backed off attacking Steve Keen due to your comments.

http://www.debtdeflation.com/blogs/2011/11/05/laughing-at-mankiw/#comment-34242

If you reread my comments here you can see that I started off saying I hadn’t read the book, and wouldn’t criticise it personally as a result – and I’ll stick to that until I’ve read it.

I also haven’t backed off my defence of economics at all – not one inch.  As I said above, the issues you are trying to raise against the topic of this post (Mankiw teaching economic fundamentals) either miss the point of the fundamentals, or are attacking a straw man.  The distinction between the general economic framework that can be used to understand ideas, and a more specific macroeconomic paradigm that you disagree with are very very different.

Hopefully this comment will help to clarify things – I definitely do not want to give the impression that I have backed away from what I have said in any way shape or form.  When I back away from ideas or have my perspective changed I usually say so directly.

No no no no. Coase is the true King of the Gods and Tullock one of the Elder Gods.

Gordon Tullock is the King of the Gods, hurling thunderbolts of fury at  all those who displease him. Then there are the Elder Gods: Friedman, Becker, Stigler, Coase, Alchian, Demsetz, Hayek, Mises, Knight, maybe a few others. And so down through the Pantheon of the Econ Gods. Yay, let us gather laurel leaves and pay homage unto them!

Mistake. Its 1966 not 1963 that Stigler formulated the Coase Theorem. See his “The Theory of Price” 3rd edition.

Brandon

Matt is right there is plenty of empirical (and experimental) work out there on most areas of economics. In fact, as a theorist, I would argue there is too much ill informed empirical work being done. We need more theory not less. One of my recent papers had the subtitle of “The Latest Example of “Measurement Without Theory” ”

As to the Coase Theoem it was formulated in 1963 by George Stigler and I’m not sure what you think its about but all it says is that the approach that Pigou took to dealing with externalities (taxes/subsidies) is unnecessary within the framework that Pigou used, i.e. a zero transaction cost framework. The actual point Coase was trying to make is that we should move away from a zero transaction cost framework and work with positive transaction cost models. I’m not sure what is arcane or nonsense this. After all positive transactions explain why we have firms and why the law matters.

There is a significant body of empirical literature behind a lot of the economic ideas taught at undergrad – really in the same way as any physical science.  Once you get to post-grad you directly look at the empirical results – but you can’t do empirics without an understanding of theory to start with.

Regarding your comments, a lot of macro and growth theory is based on stylized facts (from the data) – which is then turned into theory, and then tested.  Furthermore, economics is not about prediction – it is about description – given that we don’t have a general theory of economics (given that it is too complicated to have such a theory) these two roles are very seperate.

Outside of Schumpeter in the aforementioned economists there was A LOT of empirical work done by the economists – Keynes also wrote papers on statistics.

It is especially uncharitable to attack economists about being unable to forecast a recession that was due to poor and asymmetric information – no matter how good your theory and empirical models are, if information isn’t there no-one can realistically pick the crisis – the people that you mentioned ALWAYS picked crises, because it was in their interest – they could not explain why, and they would not have been able to pick the real timing.

The most they seem to have are theory, models and/or some fancy-schmancy algebra.  Hell, was the Solow model even developed out of any reverence or respect for the ACTUAL DATA and statistics of nations regarding economic growth in the long run??  

Or how about the BS Coase Theorem?  WHY is it still relevant???  If I recall, the article ITSELF did not even cite a single example of that crap being put in place.  Yet EVERYONE in econ. sees this guy as some sort of “god of property rights justification” or some bs.  WHAT community has ever been able to put in place the Coase Theorem, esp. considering that GOVERNMENTS and bureaucracy would probably get in the way of that? Or how about the Tiebout model?  I’m not exactly sure HOW local or state governments can EVER get a “willingness to pay” regarding taxation for certain programs.  Aside from probably taking a very long time to do (the survey or whatever), how do we know it would be accurate? It’s more theoretical mumbo-jumbo from an economist in like 1913 or something.

AT LEAST Ronald Coase’s theorem was written about in the 1950s!  It’s arcane nonsense like this- almost worshipping defunct economists from several decades ago whose theories have never been put in place even once or proven at all but “sound great” or “make sense” on a logical level- that turns me off to the profession in general.  Don’t get me wrong- I LOVE economics when it’s grounded in strong evidence, but when it’s not, I’m turned off and feel alienated.

Am I the only one who feels so out of place in the economics world because of all these outdated and absurd models, graphs, terms, etc.?  Does anyone else ever feel like modern economics is still little more than a morass of pointless terms and theories with seemingly little grounding in reality?  

I don’t see why it’s so hard to at least do HARD RESEARCH on what you claim to be real or even whether it is real!  Behavioral economics seems to be able to do this all the time.  Why can’t the rest of this profession?   

It seems to me that hard research and empirical evidence oftentimes are merely taken for granted in this profession.  Yes, I know there are many good journal articles, but there are  also many BAD or absurd ones with no REAL empirical research, that simply ASSUME the theory is totally right, and then they go from there with little data or facts to back it up.  

Fortunately, my Public Econ. class, which as I found out, was ONLY an elective (sadly), was actually THE MOST ’empirical’ with actual data and facts, but it still was mired by a lot of pure mumbo-jumbo theoretical crap that just annoys the hell outta me.  For example, the section on taxation HAD LITTLE EMPIRICAL EVIDENCE.  It just showed MODELS and ‘explanations’ as to why the “standard economists’ view” on taxation and distribution is right or how it works.  It’s really disturbing.

I’m so TIRED of this stupid copout for WHY undergrad Econ classes seem grounded and backed by so little empirical evidence- “economists do it with models” or some bs like that.  When I actually took my complaints to the undergrad dean of Econ, she just me some more bs copouts.  I couldn’t believe it!  It seems that Econ classes don’t ACTUALLY get more grounded in empirics until GRADUATE classes, which I find incredibly pathetic.  I was more than ready to learn empirics in class, but I had to sit through all that theoretical garbage and models on end.  

I mean, what is “general equilibrium” or “market equilibrium” but some theoretical BS that CANNOT EVER be measured nor actually happens? The economy is CONSTANTLY CHANGING, and therefore, THERE IS NO SUCH THING AS EQUILIBRIUM!  If they’d just teach THAT instead of this static “equilibrium” crap, I think students would be better off.  Or how about the HUNDREDS of empirical research articles published in journals each year for Econ. that DON’T HAVE MUCH STATISTICS OR DATA but simply offer “prescriptions” or say “what might happen based on my theory”??  I mean, is it REALLY valid to write a 30-page article full of simply theory and complex algebra and a few graphs here and there with very few numbers and say, “This is why I believe we can privatize SS”, for example?  I don’t think so.

In NO OTHER field of science or anything claiming to be science does that work.  Yet economics PASSES THE BUCK on REAL peer review.  For example, Pareto efficiency is neither measurable nor makes ANY SENSE in the real world, so why teach it?  “You can’t take away from one person without making another worse off.”  THIS IS NONSENSE!  Apart from being almost impossible to measure on any grand scale, why do students need to “know” this?  

The ironic thing is that, despite all that ‘formal training’ in Econ. I learned in college, I’ve pretty much shunned all this abstract theorizing, and I think I’m actually SMARTER and more able to tell the BS from the reality in economics than most students out there (and many “economists”, too).  I even have found it a little disheartening that even Steve Keen’s lectures, like the ones posted on his YT page, seem to have MOUNDS of pure theory and models and only sparse empirical data referenced sometimes.  It’s kind of annoying.  

Yes, I would LOVE if economics were treated as a SCIENCE and taken more seriously, esp. by those CLAIMING to be experts!  STOP WITH THE BS THEORIZING.  Just stop it.  Show students what works, what doesn’t and the empirical data that backs up what.  Or at least INTRODUCE them to it.  THAT is real “intro to econ”, I think.  Teaching some bs oversimplified AS-AD curve or IS-LM nonsense doesn’t pass the smell test.  I didn’t feel that much smarter having passed those basic abstract classes than I was before, tbqh. I just felt like they filled my head chock full of abstract unproven crap and confused me even further.

Look, I’m the kind of person who LOVES empirical evidence (facts, data, statistics), esp. when it comes to POLICY!  Sadly, too many economists seem to either SHUN empirical evidence or think it should be “secondary” to pure theory, which I think is ABYSMAL for the profession.  We should demand PROOF for all economic claims about how it works!!  Economists play a fairly large role in policymaking, and it is shameful to see them get away with simply coming up with all manner of inane models and then basing big policy prescriptions that have enormous ramifications on millions of people based purely on those models.  This is a recipe for DISASTER.

It’s time for a new economics- empirical econ.  We CAN do it!  Let’s do it!  Hell, if even Ron Paul and Peter Schiff (whose dad is tax cheat extraordinaire Irwin Schiff and who owns a crappy brokerage firm), two guys who WERE NOT economists nor probably had much formal training in the field regardless, could see the crash coming a mile away, but MOST TRAINED ECONOMISTS COULD NOT, something is seriously wrong with the profession as of late.  REAL reform comes in grounding it in RESEARCH, not simply theories and models.   Just throw out the crappy models.  Get rid of pointless crap like “market equilibrium” or “Pareto efficiency” or “Edgeworth Box.”  This is hypothetical nonsense that helps no one.  It just muddies the waters.