Economists’ Views
I am trying to think of issues on which there is a marked difference between the views typical of economists and those of non-economists. It is certainly true that non-economists (especially social scientists other than economists) think there are typical economists’ views. These views are held by a solid majority of professors at the University of Chicago economics department (last I heard that was a sample of 15 people with only one clear exception — Lars Hansen but I last heard in 1990). However, US academic economists tend to be Democrats (more balanced than other departments but to the left of the general public).
I was motivated by an old discussion. Here are some links
So far I have been speculating wildly. Klein and Stern via Google gave me some actual information.
I cut and paste their abstract
Abstract. In Spring 2003, a survey of 1000 economists was conducted using a randomly
generated membership list from the American Economics Association. The survey contained
questions about 18 policy issues, voting behavior, and several background variables. The response was 264 (nonblank) surveys. The responses show that most economists are supporters of
safety regulations, gun control, redistribution, public schooling, and anti-discrimination laws.
They are evenly mixed on personal choice issues, military action, and the minimum wage.
Most economists oppose tighter immigration controls, government ownership of enterprise
and tariffs. In voting, the Democratic:Republican ratio is 2.5:1. These results are compared to
those of previous surveys of economists. We itemize a series of important questions raised by
these results.
My abstract of the abstract
Out of date and low respnse rate — should I google more — nahhh their results fit my priors.
“supporters of”Generally left of center or left of ultra far right.
“mixed on … the minimum wage” is well right of the median US adult, but “mixed” means there isn’t a typical economist’s view.
“oppose … government ownership of enterprises” means not ultra far left by US standards.
Oppose “tighter immigration controls” and “tariffs”. OK that’s it. I note that the majority of the general public supports immigration reform including a path to citizenship, so the best candidate for an gap between economists and the general public is on tariffs.
I considered two other candidates. One was the minimum wage. It used to be that egalitarian economists were very unenthusiastic about the minimum wage stressing their view that the earned income tax credit was a much better policy (I am thinking of three people but can only name one — Robert Waldmann). Here I think economists’ views have changed because of empirical analysis of data largely by Card and Krueger. I don’t know why the survey respondents’ views were mixed, but I think this might be an actual case of economic theory bowing to facts.
The other is rent control. I am pretty sure economists are against rent control. It didn’t appear on the survey, because it barely exists in the USA. Here I guess there isn’t a characteristic economists’ view, because the uninented effects of rent control are clear enough to have convinced non-economists.
There is a fairly broad consensus that rent control was a mistake (broad enough to include almost all Italians — but you wouldn’t believe the insane rent control they used to have).
That leaves tariffs and immigration (so Klein and Stern were ahead of me in 2003). here I see a pincer attack on nativism and protectionism. Pro-market economists oppose restrictions on trade and migration, because they are restrictions. Egalitarian economists oppose them because we believe they hurt the third world poor, that is the poorest.
However, tariffs have largely joined rent control on the ash heap of history. International negotiations on so called trade agreements such as the Trans Pacific Partnership have little to do with eliminating minor remaining barriers to trade. If, you want to know more, this is not the bear you are looking for. Read Kenneth Thomas Dan Crawford and Daniel Becker.
*yes Mark, the title is Thoma link bait.
I take a very harsh view of economists because they ignore the basic underpinnings of the economy. I am talking here about private ownership of property and the ongoing accumulation of such through unfettered inheritance. It has been going on for centuries now
IMO, real economists would make it very clear to the public that the US dollar is NOT a sovereign currency any more than the British pound is. Real economists would go on to explain the control that private money and finance has on the world economy and how countries are being played off against each other by the monied elite.
If sites like yours and ALMOST Naked Capitalism will not discuss private money and finance and the grip it has on our world, we are doomed as a species to fail. Please start discussing the real power and control being exercised in our world instead of worthless models of everything but the real levers of power and control.
No sane non-economist believes that wages are actually set based on marginal labor productivity. Not even at the macro level and certainly not at the micro level that seems to be assumed by standard economic theory.
And no one who ever took a regular job, which we can define as one where the applicant was NOT recruited by a head-hunter, believes that the wage is set by some sort of actual contract between employer and job seeker. Generally you take the job at the wage that is offered and at best negotiate within a set range. And that range is not set in the first instance by actual calculations of labor productivity (something very hard to measure in service and non-assembly line positions) but instead by an even more fundamental measure – that of market clearing supply and demand.
I recently took some Accounting classes and while there was substantial discussion of the ways to track labor cost at every single stage of the process there was never any suggestion that a part of Managerial Accounting was to supply HR with precise metrics to set wages. Instead it was all about supplying the CFO and the Board with ways to maintain and expand throughput and output while reducing labor input.
On the other hand we have a ‘science’ of economics that seems to have its micro-foundations firmly set in an Austrian goat-raising village where prices for goats and goatherds are negotiated face to face and settled handshake by handshake. Something that probably never was really true to start with in that the prices for goods and labor are and always have been set in whole or in large part by factors quite separate from actual cost of production.
IM(not so)HO it is this biindness to actual labor markets present and past that make a lot of economics faintly to outright risible. It just assumes as ‘principles’ certain things not actually in evidence.
When is Labor the largest cost?
Quick notes:
E.I.T.C. shifts 55 billion dollars of income. A $15 minimum wage would shift $560 billion. Economists do not quantify the solution against the need — clearly — not when considering lower income folks! BUT ISN’T QUANTIFYING exactly what economists are supposed to be all about? Just not with the patients most in need of care, I guess. PS. Didn’t Card and Kruger study fast food — the by far heaviest user of labor? See what I mean?
For more emphasis: the 45 percentile wage is $15. $11,000 buys a silver plan for a family of four (premiums plus deductibles — Brill, p. 346); $4,000 payroll taxes on $50,000; $15,000 rent and utilities — and they haven’t even put their dried beans in the water to soak overnight.
With 45% of the US workforce earning in the neighborhood of half a minimum needs family income, will someone for God’s sake tell me what one-third of one percent of the whole economy is supposed to contribute to ending poverty?
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How do we measure marginal labor productivity? At the the price it HAPPENS TO “clear” in what I call the two tier market where labor is paid in relation to other labor — the definition of the race to the bottom? That seems to be the thoughtless case. For possible sympathetic comparison for the right-wing inclined: think NYC transit workers getting obscene (for the right) wages because so few have their finger on the transportation jugular of so many. The two-tier market has its finger on the path from the mouth to the stomach.
How about measuring marginal utility as what labor is able — through effective collective bargaining; probably centralized — to determine the max the consumer is willing to pay (leaving aside NYT type choke points)? Or at least, keep the two upfront, in mind?
When are economists going to become conscious at all of the marginal utility of labor as measured by the consumer — ever?!
I wanted very badly to be an economist but ended up being a computer systems engineer because I perform best in complex reality and economics is far from that.
Another issue that sticks in my craw about so called economists is the lack of discussion about the reality that there are not now, nor in the foreseeable future going to be enough “jobs” for those needing and wanting them. So are economists going to come up with some model for conscientious genocide or are we going to start dealing with the inherited elite. Yes, we need to be concerned with population control but the Xtians are in cahoots with the inherited elite to insure neither puts the other at risk.
@Denis Drew Economists quantify. However, economists tend to discuss theoretically possible policies not politically possibile policies. In theory, the EITC could be expanded until it shifted $ 550 billion. More importantly, by 2003 the more egalitarian economists already supported a higher minimum wage. I think the shift continues. I heard the argument more EITC less minimum wage in the 1980s.
Card and Krueger looked at fast food restaurants. Why look at fast food restaurants to study the minimum wage ? As Willie Sutton didn’t say “that’s where the money isn’t.” The aim is to find employers of a lot of minimum wage workers. Card and Krueger’s estimate was that the increased minimum wage caused increased employment. The literature as a whole includes lots of different estimates but recent estimates with lots of data all fail to show a large damaging effect on employment. I think this evidence has actually convinced many economists that a higher minimum wage would be a good thing.
Economists are willing to consider political realities. I don’t know of an economist who thought that Obamacare was the best policy among single payer, Obamacare and let em die (honestly I’m not sure I personally know one who doesn’t support single payer9. But it was clear enough that insurance companies had to be bought off to get a bill through congress that many economists supporteLd Obamacare as the best politically possible option (I am one).
Most labor economists don’t buy the wage equals marginal product model. I think that most economists who study wages say sensible things about wages (even including me as one of those economists). Even macroeconomists assume that wages equal marginal products because firms adjust employment to make the marginal revenue product equal to the wage and not because the wage adjusts to equal the marginal product. Macroeconomists don’t talk about how different people have different wages, and the sane ones (who exist — I’ve met some) don’t believe that different people have different wages because they have different identifiable and identified marginal products.
Here (as usual) the problem is that an assumption which is known to be false is made when we are really interested in focusing on something else. This means that a standard assumption can remain standard no matter how many times it is massively contradicted by data. The standard assumptions, which are known to be false are not at all innocent, they imply results which foolish economists take seriously. But the fact that they are false is generally aknowledged.
@psychohistorian
greatly increase the taxes on the rich and also increase the transfers to those who can’t find a job.
Funny enaugh your gouvernmant is doing exactly the opposite.
Population control will never be a thing that anyone has to care about. The birth rates are allready going down.
I really think though that robots and stuff will cost some jobs (Nobody knows how many yet) Thats why we have to use taxes to give that lost money back to the now workless.
If everything works out they should be at an even better place in the long run. (Lower prices through higher productivity because of robots)
I’m pretty sceptical that it will work out nicely though.
THere are some aparent dangers again: 1. Monopoly situations ( Biggest threat imo)(Google FB Apple)
2. Avoiding of taxes Also a really big threat because it doesnt matter where the roboter fabric is placed so it wil placed where the lowest energy/Tax costs are.
Again I will remind you that Some always thought that in the future everyone will be workless( Keynes famous essay) And even with the spread of the pc a lot of people thought everything will be over now)
SO I’m not that concerned.
Is it possible that “economists” believe the same fairy tales the rest of us believe and their “economics” is mostly devoted to proving that their fairy tale really is really really true?
I agree with Bruce Webb here.
But I should reveal that I believe in fairy tales too.