I mostly think economics education is fine... most high school graduates in the US come out with a good basic understanding of supply/demand and labor/capital basic inputs to businesses, etc. But that doesn't mean that people are prepared to talk about economics on a daily basis, especially when it comes to politics. People confuse personal finance and budgeting with economics in general and don't know how to correctly think about the difference between legal and economic incidence of taxes like tariffs on imports.
Do I think economics in higher education needs to change? no. But the base level of economics knowledge and principles are very lacking for the everyday person, to the detriment of society at large.
throw0101d · 4h ago
> People confuse personal finance and budgeting with economics in general and don't know how to correctly think about the difference between legal and economic incidence of taxes like tariffs on imports.
Or like treating the debt of a country in a similar fashion to household debt.
exolymph · 17h ago
> most high school graduates in the US come out with a good basic understanding of supply/demand and labor/capital basic inputs to businesses
I profoundly doubt this
jlhawn · 16h ago
surveys show that if you ask most people what happens to the price of X when the number of X available increases, people correctly understand that the price falls and vice versa. There are some things though, particularly housing, where more people think the opposite happens.
barry-cotter · 10h ago
> most high school graduates in the US come out with a good basic understanding of supply/demand and labor/capital basic inputs to businesses
If this was true politics would be so profoundly different the entire world would be unrecognisable.
jgeada · 19h ago
Economics - the business of creating a cover story for whatever the rich want to do. All dressed up in mathematically rigorous fictions claiming to model reality so it cannot be questioned by the hoi polloi. Never matters whether the forecast predictions ever match reality.
They serve the same role that soothsayers and captive religions used to play.
throw0101d · 4h ago
> Economics - the business of creating a cover story for whatever the rich want to do.
… excepting those who call bad ideas "bad ideas" even if they help the rich:
Econ 102 taught me most markets are not perfectly competitive and how to measure monopolistic control over markets. That and how to measure value each country gets from trading goods based on specialization.
This is conspiratorial anti science rhetoric, any econ student will tell you isn’t the case.
littlestymaar · 7h ago
“Most market are not perfectly competitive” is the econ version of “the earth is not perfectly flat”.
When you say something preposterous in the first place, saying “it's not perfectly accurate” a bit later is never going to be enough.
mason_mpls · 2h ago
I opened with that because the person I’m replying to is claiming Econ is libertarian-esque propaganda
littlestymaar · 1h ago
You are mixing things up:
- libertarianism derives from a fringe branch of economics (the Austrian school) which is an heterodoxy.
- but mainstream economics, the classical branch then the neoclassical synthesis, is nonetheless heavily ideological (markets being seen as inherently good, even though they are often imperfect in the real world). And when you have a clique going as far as making their own apocryphal “Nobel prize” in order to promote their views and establish scientific credibility to political leaders, calling it “propaganda” is not entirely unwarranted.
lanfeust6 · 18h ago
This sort of fanciful projection seems common with progressives who don't know anything about the subject.
jgeada · 18h ago
Economics can't predict what should be one of the most important and fundamental property of markets: inflation (aka how prices move)
Any "science" whose theories aren't falsifiable and cannot make useful predictions of future behavior isn't a science.
daedrdev · 18h ago
The three body problem means that we cannot predict the future of orbits of planets. Clearly astronomy is a science anyway.
Since the economy is made up of individuals who make chaotic choices, I think anyone claiming to be able to predict inflation perfectly is a charlatan. Especially since businesses and consumers react to the inflation predictions themselves which make them obsolete the moment they are published.
bigbadfeline · 15h ago
> The three body problem means that we cannot predict the future of orbits of planets.
Only an economist could write something so far from the truth.
Astronomers do predict how everything moves, with great precision. The 3-body problem is unsolvable IN GENERAL aka "it has no general closed-form solution, meaning there is no equation that always solves it"
However, all specific REAL cases are solvable, each with their own equations, not by substituting in one general equation. I could say a lot more about it but I know economists only pretend to understand math and I'd be wasting my time.
Besides, the contemporary economists specialize in gaslighting shamanism, an example of which is bringing up the 3-body problem into a discussion of the absolute impotence of academia economics compared to "we can do everything" technology fields.
daedrdev · 14h ago
My point is orbits of planets are not calculable. In only 5 million years in fact they are chaotic!
Thus its easy to imagine inflation not being predictable, especially since the prediction is invalidated when it itself is released since people change their behavior chaotically in response.
littlestymaar · 7h ago
> In only 5 million years
When economics will be able to give meaningful forecasts just 5 weeks in advance that would be a very massive step forward though.
> since the prediction is invalidated when it itself is released since people change their behavior chaotically in response.
That's exactly the problem the study of all dynamic systems face, including the n-body problem you mentioned above! Yet with proper models you can get very good approximation as you acknowledge yourself.
lanfeust6 · 1h ago
Re predicting inflation in particular: we are in a global system with tons of factors which are themselves unpredictable. That doesn't mean that key factors like money supply don't have an impact! We don't know what global policymakers will decide and we don't know whether a pandemic is about to break. The global powers spent a fuck-ton and inflation followed, that's about as predictable as it gets. What isn't predictable is how and when that subsides.
Milei's policies curbed hyper-inflation in Argentina. Is that because he's a wizard? Is that because it's impossible to predict that drastically reducing deficit spending would reel in inflation? And if it's so fucking obvious that it would, what's the significance of denying those data points be scientific? They're either valid or not.
The theories that last e.g. supply-and-demand have lasted because they work. Guess what 20th century experiments didn't work?
throw0101d · 4h ago
> Any "science" whose theories aren't falsifiable and cannot make useful predictions of future behavior isn't a science.
Economics makes all sorts of falsifiable statements, including (recently) on tariffs, and in the past, tax cuts and "expansionary austerity":
There were predictions in the 2010s where some folks said QE wouldn't be a big deal, but others were giving dire warnings:
> We believe the Federal Reserve’s large-scale asset purchase plan (so-called “quantitative easing”) should be reconsidered and discontinued. We do not believe such a plan is necessary or advisable under current circumstances. The planned asset purchases risk currency debasement and inflation, and we do not think they will achieve the Fed’s objective of promoting employment.
The real difficulty in economics is predicting what humans will do: Feynman once joked "Imagine how much harder physics would be if electrons had feelings"—or free will . Well, that's just the situation that economists are in.
For your inflation example, we know of causes such as demand-pull, cost-push, and expectations:
The difficulty is not in the predictions, but in accepting accurate ones from accurate models and living life and making policy based on them. Some folks simply do not wish to "accept" them, or wish to ignore them to pursue their own interests.
Climate change models are not inaccurate because people reject their accuracy and smother the findings.
lanfeust6 · 16h ago
> inflation (aka how prices move)
How prices rise, decreasing purchasing power.
Notwithstanding that "science" isn't about forecasting, this is a Social Science, which shares the same pitfalls as Sociology and even Nutrition in most cases. What you have to work with is large datasets and logic, not observing and measuring material properties. Obviously that doesn't mean useful information can't be gleaned, nor that the scientific method isn't applied to research.
Ideas that we take for granted as a given now, like supply and demand, were not always. Data reflects it's a highly predictable effect. It's a moot point whether you want to call it science or not: data quality and interpretation matters.
Your use of science here is just a thought-terminating cliche meant to say "nooooooo don't pay attention to the facts!"
disambiguation · 10h ago
The effectiveness and pragmatism of economic theory aside -
It's interesting to observe that highly opinionated topics (such as economics) tend to follow a "team sports" pattern. More than day to day utility, people argue passionately for their "home team". It becomes a point of pride and identity.
Of further note is the role of education - generally considered a form of training to improve your personal wellbeing - yet it has a secondary function. It can convince you to "change teams."
rethinkeconomics.org says:
> The problem we face is the total dominance of one way of teaching, which promotes the marketisation of society, leading to increased inequality, injustice and significant harm to the natural world.
A cohesive society is one with "team support" parity between the people and government. It begs the question - what happens when society reverses parity?
hacker_yacker · 19h ago
I think the structures are relevant, but I also think there is a huge opportunity for the concepts to be disrupted by AI.
mason_mpls · 19h ago
it’s more relevant than ever
lanfeust6 · 18h ago
Ugh, paradigmatic. We've seen these same criticisms leveled against Mathematics. It makes no more sense here either.
Fringe activist asks "why does this not focus on fringe heterodox notions and topics completely irrelevant to the subject?" If you already know the answer, don't ask.
Even for STEM they ask to corrupt the pursuit of truth and scientific rigor in service of a worldview.
dismalaf · 19h ago
Articles like this pop up a lot, and not just here. I took economics. On one hand, I did find my education to be very high quality, relevant, gave me a good understanding of the economy and all the principles are sound.
The problem with economics is that people and politicians either don't listen or want specific outcomes that aren't good for the economy as a whole.
Voters will always vote for handouts, not for a robust and sustainable economy for everyone. Rich people will always vote for things that increase inequality, because they're the beneficiaries. Homeowners will always vote to simply increase the value of their assets, after they bought them of course. And so on...
The only place anyone listens to economists is in banks and hedge funds. But then you're probably not creating the change that led you to consider economics in the first place...
jondwillis · 18h ago
I only agree with the “will always vote” statements here if asterisked with “in aggregate, given the current socioeconomic incentive structures”
Maybe this is pedantic hair-splitting, but cultures and material conditions change… even human nature can change on long enough time scales. Maybe Humans will evolve into Bonobos.
abdullahkhalids · 18h ago
What you are saying is understating the problem. Today's debt-based national economics allows people alive today to gain benefits while placing the resultant costs/restrictions on the people who are not yet born (or are currently children).
Debt-based economics is one of the biggest subversion of democracy. Decisions are being made for people who can't vote.
jlhawn · 18h ago
This comment is one of the things I refer to in my top-level comment. People have just enough of an education in economics and an understanding of personal finance and budgeting to be dangerous. They conflate economics with federal budget politics, have a one-sided and incomplete view of what debt is (especially US national debt), and then build a whole model of a system called "debt-based economics" which is based on political observations instead of fundamental economic understanding.
hgomersall · 9h ago
Debt is money is debt. You can't separate the two. What is "debt" at the state level of a sovereign state is just book debt, which is to say, numbers that balance the money creation. The real crime is paying interest on that "debt".
dismalaf · 17h ago
The problem isn't the concept of debt. The problem is people vote for the own interests ie. handouts and kicking the can down the road to the next generation. You can have debt in a society without accumulating more in perpetuity. Debt is a money multiplier and fine, never paying it off is the issue.
abdullahkhalids · 16h ago
Indeed, debt is simply a tool that can be used in the good or bad ways. I think we agree that this tool is sometimes used poorly in general by countries, often because voters/politicians don't listen to prescriptions by economists.
What I am saying is that poor use of this tool leads to not only economic problems, but it is fundamentally at odds with democracy. If you vote to take on large debts that the future generation have to "pay" [1], you have taken away their democratic right, in a way that is distinct from other economic tools.
The current generation can vote to have low taxes or high taxes, but that doesn't have much impact (modulo infrastructure maintenance) on future generations ability to exercise their democratic rights.
Debt is unique in this regard.
[1] Pay in quotes because future generations might pay directly via taxes, or indirectly via higher inflation or by working hard to make gdp larger etc.
zokier · 18h ago
There was this one time economists were given almost free reign, and that ended screwing up most of South America.
I'm not sure if economics education ever was very fit for any century.
dismalaf · 17h ago
Chile has the largest GDP per capita in South America among countries with more than 5 million people and is widely regarded as the healthiest South American economy. What point do you think you're making?
littlestymaar · 19h ago
As long as economics education continues to teach anything about the marginal cost of production just because David Ricardo thought he was clever with his lumberjack analogy two centuries ago, it's fair to say it's not fit for the 21th century.
daedrdev · 19h ago
Marginalism is one of the most understandable and widely accepted economic theories, what is your alternative?
littlestymaar · 18h ago
Marginal thinking is useful on the demand side (that's what the marginal revolution was about). But it makes absolutely zero sense on the supply side: for pretty much every business, upfront costs dwarf marginal cost of production. Think of most businesses: the salaries are negotiated in advance, you must order stuff to your suppliers before you can sell them and all the CapEx is spent before you can use the productive capital. The cost of producing one more item with what you already have paid (inputs+workers+capital) is pretty much zero.
What makes sense if working on average costs, and that's why it's the metric that is being used by every real companies out there.
But then you can't show the nice graphic showing supply and demand curves nicely crossing each other at the equilibrium price anymore…
Economists should have ditched Ricardo's view of the supply side long ago like they did for the demand side (labor theory of value was crap and was rightly abandoned).
BlandDuck · 18h ago
Standard theories of production clearly distinguish between fixed and variable costs. Moreover, it is well understood that this distinction depends on the time horizon, with more costs being variable for longer horizons.
Moreover, concepts like economics of scale (with low marginal costs of producing an additional unit, as you state as an example) are well understood for certain products in certain circumstances.
The distinction between and relevance of average and marginal costs is taught in undergraduate classes.
Whether or not you can draw a nice diagram of supply and demand is pretty irrelevant for professional economists and our understanding of markets, their dynamics, and equilibria.
littlestymaar · 17h ago
How economics is practiced has nothing to do with how it it taught though, which is the topic here.
> The distinction between and relevance of average and marginal costs is taught in undergraduate classes.
Yes, and what's being taught is exactly the problem. Marginal cost is a red herring.
> Moreover, concepts like economics of scale (with low marginal costs of producing an additional unit, as you state as an example) are well understood for certain products in certain circumstances.
This kind of sentences is a good summary of what's wrong with teaching the concept of marginal cost: it assumes that economies of scale is a phenomenon limited to “certain circumstances”, when in reality it affects 90%+ of the economic activities and it shapes pretty much everything around us.
Thinking about marginal costs leads to missing the crucial point of any business, no matter its size or market: breaking even.
daedrdev · 18h ago
In a busy season at work more people work overtime, which is a very simple a marginal cost that increases with production.
If we have a sudden surge in production, suppliers can get us goods much faster than usual but only if we pay more, another marginal cost, no?
If there is not marginal cost, then there is never decreasing economies of scale, which is blatantly wrong if you've ever seen the HR of a company get less efficient as it grows
I get that the marginal cost to copying a piece of software is a few cents of electricity, but for sure in the real world there are plenty of marginal costs.
littlestymaar · 17h ago
> In a busy season at work more people work overtime, which is a very simple a marginal cost that increases with production.
It's not a marginal cost, it's yet another incremental upfront cost: you usually pay your employees to stay an hour more, you don't pay them some amount of money depending on how many things have been sold over the said hour.
The last, emphasized part, is the key: the fundamental realization of the marginal revolution is that value isn't created when something is manufactured (which was Ricardo's labor theory of value) but when someone found it useful enough to buy it (that's marginal theory of value).
> If we have a sudden surge in production, suppliers can get us goods much faster than usual but only if we pay more, another marginal cost, no?
Marginal cost is about how supply volume, not speed, incurs costs, so it's irrelevant. Most of the time suppliers give you a discount the more stuff you buy at once by the way.
> If there is not marginal cost, then there is never decreasing economies of scale,
I don't know how you get to such a conclusion, if average cost goes up, there you go.
daedrdev · 16h ago
I think you misunderstand what marginal cost is in economics.
littlestymaar · 9h ago
Quite the opposite, actually.
belter · 19h ago
Why study Economics, when you can be mathematically illiterate and make it to US President?
[1] " "We've cut drug prices by 1200, 1300, 1400, 1500 percent. I don't mean 50 percent. I mean 14-, 1500 percent,"
This is unrelated and divisive. How does it have to do with the actual content of the post?
belter · 17h ago
Yeap :-) Pointing out that 1500% reductions are mathematically impossible is incredibly divisive. I am really splitting the room between people who passed 4th grade math and people who didn't.
If someone making US economic policy with a team of PhD advisors can say this unchallenged, then maybe that's exactly why economics education isn't fit for the 21st century. We made basic arithmetic a partisan issue.
ryandv · 18h ago
Amazing what LLMs and the power of AI can do for you! Economists take note, you are all going to be replaced by ChatGPT 5. Future POTUS, AI literacy will now be your core competency.
huitzitziltzin · 19h ago
Entirely useless recommendations and very dubious empirical claims here. Let’s take them one at a time….
- “The climate crisis and socio-ecological issues are broadly absent from economic curricula.”
-> I don’t believe that for a second. Externalities are taught in every Econ 101 class I’ve ever heard of.
“75% of universities do not teach any ecological economics”
-> as a whole class maybe not but that doesn’t mean the material doesn’t get covered.
“ instead, when issues of ecological sustainability are taught, environmental damage is considered as something that needs to be priced into market mechanisms.”
-> which is a completely normal, standard idea among economists for good reason!
“Economics education does not address historical and contemporary power imbalances”
-> that’s not our job? Wtf - that’s not part of economics at all. Does it get covered in statistics? In history? I don’t know who’s responsible but it’s not us.
“55% of universities do not provide meaningful teaching on questions of historical slavery, colonialism, or neocolonialism at all. History and ethics are absent from these discussions.”
-> economics departments are not being held responsible for this supposed omissions but I really doubt this supposed fact is true. Does an American history class count or not ? It’s just not possible that slavery is not taught.
“Mainstream neoclassical economics dominates the economic theories taught.”
-> also a good sign as that’s the standard. We don’t teach Marxist thought anymore. That’s progress.
“Of the 480 theory modules we graded, 88.3% of them included mainstream neoclassical economic thinking focusing on rational, self-interested individuals.”
-> Show me any alternative that’s credible. Also: behavioral methods are widely taught. We are plenty criticism of our own models. That’s also Econ 101 material.
“They are almost entirely taught through quantitative technical skills.”
->. Good. Also: as opposed to…? What exactly?
“Economics is taught in isolation from other social sciences. The discipline of economics should be embedded within the social sciences, and students should be encouraged to learn across other disciplines such as politics, sociology, geography, and history, but for the most part, it remains siloed”
-> that’s true of what happens in every other department too. Leave it up to universities to set distribution requirements.
“There are two programmes that are critical, climate-conscious, and provide an economics education fit for the 21st century. SOAS and the University of Greenwich introduce students to a range of intellectual and methodological perspectives within the economics discipline. They put a learning focus on climate, power, and inequality throughout the course.”
Do I think economics in higher education needs to change? no. But the base level of economics knowledge and principles are very lacking for the everyday person, to the detriment of society at large.
Or like treating the debt of a country in a similar fashion to household debt.
I profoundly doubt this
If this was true politics would be so profoundly different the entire world would be unrecognisable.
They serve the same role that soothsayers and captive religions used to play.
… excepting those who call bad ideas "bad ideas" even if they help the rich:
* https://en.wikipedia.org/wiki/Kansas_experiment
* https://en.wikipedia.org/wiki/Tax_Cuts_and_Jobs_Act
This is conspiratorial anti science rhetoric, any econ student will tell you isn’t the case.
When you say something preposterous in the first place, saying “it's not perfectly accurate” a bit later is never going to be enough.
- libertarianism derives from a fringe branch of economics (the Austrian school) which is an heterodoxy.
- but mainstream economics, the classical branch then the neoclassical synthesis, is nonetheless heavily ideological (markets being seen as inherently good, even though they are often imperfect in the real world). And when you have a clique going as far as making their own apocryphal “Nobel prize” in order to promote their views and establish scientific credibility to political leaders, calling it “propaganda” is not entirely unwarranted.
https://www.nytimes.com/2024/04/12/opinion/inflation-economi...
Any "science" whose theories aren't falsifiable and cannot make useful predictions of future behavior isn't a science.
Since the economy is made up of individuals who make chaotic choices, I think anyone claiming to be able to predict inflation perfectly is a charlatan. Especially since businesses and consumers react to the inflation predictions themselves which make them obsolete the moment they are published.
Only an economist could write something so far from the truth.
Astronomers do predict how everything moves, with great precision. The 3-body problem is unsolvable IN GENERAL aka "it has no general closed-form solution, meaning there is no equation that always solves it"
However, all specific REAL cases are solvable, each with their own equations, not by substituting in one general equation. I could say a lot more about it but I know economists only pretend to understand math and I'd be wasting my time.
Besides, the contemporary economists specialize in gaslighting shamanism, an example of which is bringing up the 3-body problem into a discussion of the absolute impotence of academia economics compared to "we can do everything" technology fields.
https://en.m.wikipedia.org/wiki/Lyapunov_time
Thus its easy to imagine inflation not being predictable, especially since the prediction is invalidated when it itself is released since people change their behavior chaotically in response.
When economics will be able to give meaningful forecasts just 5 weeks in advance that would be a very massive step forward though.
> since the prediction is invalidated when it itself is released since people change their behavior chaotically in response.
That's exactly the problem the study of all dynamic systems face, including the n-body problem you mentioned above! Yet with proper models you can get very good approximation as you acknowledge yourself.
Milei's policies curbed hyper-inflation in Argentina. Is that because he's a wizard? Is that because it's impossible to predict that drastically reducing deficit spending would reel in inflation? And if it's so fucking obvious that it would, what's the significance of denying those data points be scientific? They're either valid or not.
The theories that last e.g. supply-and-demand have lasted because they work. Guess what 20th century experiments didn't work?
Economics makes all sorts of falsifiable statements, including (recently) on tariffs, and in the past, tax cuts and "expansionary austerity":
* https://en.wikipedia.org/wiki/Kansas_experiment
* https://en.wikipedia.org/wiki/Expansionary_fiscal_contractio...
There were predictions in the 2010s where some folks said QE wouldn't be a big deal, but others were giving dire warnings:
> We believe the Federal Reserve’s large-scale asset purchase plan (so-called “quantitative easing”) should be reconsidered and discontinued. We do not believe such a plan is necessary or advisable under current circumstances. The planned asset purchases risk currency debasement and inflation, and we do not think they will achieve the Fed’s objective of promoting employment.
* https://www.hoover.org/research/open-letter-ben-bernanke
The real difficulty in economics is predicting what humans will do: Feynman once joked "Imagine how much harder physics would be if electrons had feelings"—or free will . Well, that's just the situation that economists are in.
For your inflation example, we know of causes such as demand-pull, cost-push, and expectations:
* https://en.wikipedia.org/wiki/Inflation#View_post-2000_to_pr...
The US saw demand-pull from the COVID recovery funding (to help kickstart the economy) and inflation was expected:
* https://www.piie.com/blogs/realtime-economic-issues-watch/in...
What wasn't expected was a simultaneous effect of cost-push factors due to energy and food prices spiking due to human actions:
* https://en.wikipedia.org/wiki/Russian_invasion_of_Ukraine
There was also a change in human behaviour between services demand and goods demand that had a long tail:
* https://www.frbsf.org/research-and-insights/data-and-indicat...
* https://www.frbsf.org/research-and-insights/publications/wor...
* https://www.frbsf.org/research-and-insights/publications/eco...
The difficulty is not in the predictions, but in accepting accurate ones from accurate models and living life and making policy based on them. Some folks simply do not wish to "accept" them, or wish to ignore them to pursue their own interests.
Climate change models are not inaccurate because people reject their accuracy and smother the findings.
How prices rise, decreasing purchasing power.
Notwithstanding that "science" isn't about forecasting, this is a Social Science, which shares the same pitfalls as Sociology and even Nutrition in most cases. What you have to work with is large datasets and logic, not observing and measuring material properties. Obviously that doesn't mean useful information can't be gleaned, nor that the scientific method isn't applied to research.
Ideas that we take for granted as a given now, like supply and demand, were not always. Data reflects it's a highly predictable effect. It's a moot point whether you want to call it science or not: data quality and interpretation matters.
Your use of science here is just a thought-terminating cliche meant to say "nooooooo don't pay attention to the facts!"
It's interesting to observe that highly opinionated topics (such as economics) tend to follow a "team sports" pattern. More than day to day utility, people argue passionately for their "home team". It becomes a point of pride and identity.
Of further note is the role of education - generally considered a form of training to improve your personal wellbeing - yet it has a secondary function. It can convince you to "change teams."
rethinkeconomics.org says:
> The problem we face is the total dominance of one way of teaching, which promotes the marketisation of society, leading to increased inequality, injustice and significant harm to the natural world.
A cohesive society is one with "team support" parity between the people and government. It begs the question - what happens when society reverses parity?
Fringe activist asks "why does this not focus on fringe heterodox notions and topics completely irrelevant to the subject?" If you already know the answer, don't ask.
Even for STEM they ask to corrupt the pursuit of truth and scientific rigor in service of a worldview.
The problem with economics is that people and politicians either don't listen or want specific outcomes that aren't good for the economy as a whole.
Voters will always vote for handouts, not for a robust and sustainable economy for everyone. Rich people will always vote for things that increase inequality, because they're the beneficiaries. Homeowners will always vote to simply increase the value of their assets, after they bought them of course. And so on...
The only place anyone listens to economists is in banks and hedge funds. But then you're probably not creating the change that led you to consider economics in the first place...
Maybe this is pedantic hair-splitting, but cultures and material conditions change… even human nature can change on long enough time scales. Maybe Humans will evolve into Bonobos.
Debt-based economics is one of the biggest subversion of democracy. Decisions are being made for people who can't vote.
What I am saying is that poor use of this tool leads to not only economic problems, but it is fundamentally at odds with democracy. If you vote to take on large debts that the future generation have to "pay" [1], you have taken away their democratic right, in a way that is distinct from other economic tools.
The current generation can vote to have low taxes or high taxes, but that doesn't have much impact (modulo infrastructure maintenance) on future generations ability to exercise their democratic rights.
Debt is unique in this regard.
[1] Pay in quotes because future generations might pay directly via taxes, or indirectly via higher inflation or by working hard to make gdp larger etc.
https://en.wikipedia.org/wiki/Chicago_Boys
I'm not sure if economics education ever was very fit for any century.
What makes sense if working on average costs, and that's why it's the metric that is being used by every real companies out there.
But then you can't show the nice graphic showing supply and demand curves nicely crossing each other at the equilibrium price anymore…
Economists should have ditched Ricardo's view of the supply side long ago like they did for the demand side (labor theory of value was crap and was rightly abandoned).
Moreover, concepts like economics of scale (with low marginal costs of producing an additional unit, as you state as an example) are well understood for certain products in certain circumstances.
The distinction between and relevance of average and marginal costs is taught in undergraduate classes.
Whether or not you can draw a nice diagram of supply and demand is pretty irrelevant for professional economists and our understanding of markets, their dynamics, and equilibria.
> The distinction between and relevance of average and marginal costs is taught in undergraduate classes.
Yes, and what's being taught is exactly the problem. Marginal cost is a red herring.
> Moreover, concepts like economics of scale (with low marginal costs of producing an additional unit, as you state as an example) are well understood for certain products in certain circumstances.
This kind of sentences is a good summary of what's wrong with teaching the concept of marginal cost: it assumes that economies of scale is a phenomenon limited to “certain circumstances”, when in reality it affects 90%+ of the economic activities and it shapes pretty much everything around us.
Thinking about marginal costs leads to missing the crucial point of any business, no matter its size or market: breaking even.
If we have a sudden surge in production, suppliers can get us goods much faster than usual but only if we pay more, another marginal cost, no?
If there is not marginal cost, then there is never decreasing economies of scale, which is blatantly wrong if you've ever seen the HR of a company get less efficient as it grows
I get that the marginal cost to copying a piece of software is a few cents of electricity, but for sure in the real world there are plenty of marginal costs.
It's not a marginal cost, it's yet another incremental upfront cost: you usually pay your employees to stay an hour more, you don't pay them some amount of money depending on how many things have been sold over the said hour.
The last, emphasized part, is the key: the fundamental realization of the marginal revolution is that value isn't created when something is manufactured (which was Ricardo's labor theory of value) but when someone found it useful enough to buy it (that's marginal theory of value).
> If we have a sudden surge in production, suppliers can get us goods much faster than usual but only if we pay more, another marginal cost, no?
Marginal cost is about how supply volume, not speed, incurs costs, so it's irrelevant. Most of the time suppliers give you a discount the more stuff you buy at once by the way.
> If there is not marginal cost, then there is never decreasing economies of scale,
I don't know how you get to such a conclusion, if average cost goes up, there you go.
[1] " "We've cut drug prices by 1200, 1300, 1400, 1500 percent. I don't mean 50 percent. I mean 14-, 1500 percent,"
[1] - https://www.newsweek.com/donald-trump-doubles-down-impossibl...
If someone making US economic policy with a team of PhD advisors can say this unchallenged, then maybe that's exactly why economics education isn't fit for the 21st century. We made basic arithmetic a partisan issue.
- “The climate crisis and socio-ecological issues are broadly absent from economic curricula.”
-> I don’t believe that for a second. Externalities are taught in every Econ 101 class I’ve ever heard of.
“75% of universities do not teach any ecological economics”
-> as a whole class maybe not but that doesn’t mean the material doesn’t get covered.
“ instead, when issues of ecological sustainability are taught, environmental damage is considered as something that needs to be priced into market mechanisms.”
-> which is a completely normal, standard idea among economists for good reason!
“Economics education does not address historical and contemporary power imbalances”
-> that’s not our job? Wtf - that’s not part of economics at all. Does it get covered in statistics? In history? I don’t know who’s responsible but it’s not us.
“55% of universities do not provide meaningful teaching on questions of historical slavery, colonialism, or neocolonialism at all. History and ethics are absent from these discussions.”
-> economics departments are not being held responsible for this supposed omissions but I really doubt this supposed fact is true. Does an American history class count or not ? It’s just not possible that slavery is not taught.
“Mainstream neoclassical economics dominates the economic theories taught.”
-> also a good sign as that’s the standard. We don’t teach Marxist thought anymore. That’s progress.
“Of the 480 theory modules we graded, 88.3% of them included mainstream neoclassical economic thinking focusing on rational, self-interested individuals.”
-> Show me any alternative that’s credible. Also: behavioral methods are widely taught. We are plenty criticism of our own models. That’s also Econ 101 material.
“They are almost entirely taught through quantitative technical skills.”
->. Good. Also: as opposed to…? What exactly?
“Economics is taught in isolation from other social sciences. The discipline of economics should be embedded within the social sciences, and students should be encouraged to learn across other disciplines such as politics, sociology, geography, and history, but for the most part, it remains siloed”
-> that’s true of what happens in every other department too. Leave it up to universities to set distribution requirements.
“There are two programmes that are critical, climate-conscious, and provide an economics education fit for the 21st century. SOAS and the University of Greenwich introduce students to a range of intellectual and methodological perspectives within the economics discipline. They put a learning focus on climate, power, and inequality throughout the course.”
-> eye roll.