I’ll begin with an article that appeared on Reuters about two weeks ago: Special Report: Crisis forces “dismal science” to get real. The authors note that:
An increasing number of teachers argue that the textbooks, some by experts who didn’t see the crisis coming, are divorced from reality, inconsistent, dull, and, in a crisis that has gripped the globe for more than four years, even dangerous.
But the following section of the article is what I found most interesting and encouraging:
The drive for change is also evident in Germany, where Professor Peter Bofinger is passionate about the shortcomings of the main texts. Bofinger is head of monetary policy and international economics at the University of Wuerzburg and one of five “wise men” who formally advise Chancellor Angela Merkel.
He also thinks most text books are dangerous.
The author of a textbook himself, he didn’t bother to read the modern texts, he said. But last year, he did a systematic analysis, and what he found shocked him.
“To me the most astonishing thing was that all these textbooks do not find an analytical explanation of unemployment,” he said. “I was really amazed.”
I sent an E-mail to Dr. Bofinger and briefly introduced the inverse relationship between population density and per capita consumption, and its role in driving up unemployment. No reply so far.
I was actually going to comment further on this article until a new editorial appeared on Reuters this morning: Sloth and the Big Honest State, by Edward Hadas. In this piece, Hadas speaks of the “Big Honest State” (BHS) as being a benevolent government (regardless of the nation in question) that works toward the best interests of the common good, something that a vibrant economy depends upon. He then warns of “spiritual sloth,” a term used by philosophers, creeping into monetary policy and undermining the role of the BHS in providing a healthy environment for the economy. Hadas warns of four threats:
- “The first is fiscal laxity. Politicians around the world have become blasé about deficits.”
- “The second danger is monetary incompetence. Again, the economic effects of years of zero policy interest rates and haphazard bank subsidies are basically unknown.”
- “The third risk is only regional, but the region in question holds great practical and symbolic importance. The euro zone has the world’s second largest GDP, only 15 percent smaller than that of the United States, and it is the spiritual home of the BHS. If the politicians and central bankers there fail to keep the single currency together, global economic chaos would be hard to avoid.”
- “Finally, the BHS model could be undermined by poor management of international economic relations. Trade imbalances are still large enough to create political tension, through shifts of employment, financial havoc, and the foolish investment of the funds created by surpluses.”
As I read the piece through the first three threats, I was already pondering the comment I’d submit in response, taking Hadas to task for failing to recognize the threat of trade imbalances. So his 4th threat above came as quite a pleasant surprise. An even more pleasant surprise was Hadas’ suggestion for economists regarding trade:
How dangerous are these interlocking threats to the BHS model? A collection of “should” statements supports an optimistic judgement. …. With a little less intellectual laziness about the virtues of free trade, it should be possible to manage cross-border economic in a more responsible way.
“Intellectual laziness about the virtues of free trade!” I couldn’t have said it better myself. If there’s any criticism of academic economists that should sting the most, it would be accusations of “intellectual laziness.” How could they not be accused of such? Economists’ slow response to the near-financial collapse of 2007 and the subsequent Great Recession may be more forgiveable since, after all, it’s “only” been less than five years. But an unwillingness to question the real world results of free trade, where the U.S. has now been burdened with an enormous trade deficit (now exceeding a cumulative $11 trillion) for 37 consecutive years is absolutely unforgiveable. It’s “intellectual laziness” at its worst.
Actually, it’s worse than that. By snuffing out, in general, any train of thought that may challenge conventional economic wisdom and, in particular, may question the effects of never-ending population growth, the field of economics has been guilty of intellectual censorship that would make Nazis and communists proud.
Economists should be ashamed. Students of economics should be emboldened to challenge their professors and textbooks, open their minds and question everything, including the taboo subject of overpopulation. This is where the only real hope for a prosperous, sustainable future lies.