David R. Henderson  

Robin Wells on the Mankiw Walkout

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In a post on November 20, economics professor Robin Wells weighs in on the students who walked out of Greg Mankiw's class. I had previously blogged about this here.

I particularly like the tone of Professor Wells's comments. This surprised me because in the New Yorker profile of her husband, Paul Krugman, Larissa Macfarguhar had written:

[T]hese days she [Wells] focusses on making him less dry, less abstract, angrier. Recently, he gave her a draft of an article he'd done for Rolling Stone. He had written, "As Obama tries to deal with the crisis, he will get no help from Republican leaders," and after this she inserted th Ie sentence "Worse yet, he'll get obstruction and lies."

But Professor Wells actually shows sympathy for Greg Mankiw.

One of my favorite paragraphs is this:

But what I will say is this: something is shifting out there, and we ignore it at our peril. It would be very easy to dismiss the student walk-out as an exercise in intellectual laziness and grandstanding. (After all, as many have pointed out, Keynesian models can't be taught until second semester of Harvard Ec10.) But perceptive instructors know that sometimes a stupid question is more than a stupid question. And a really perceptive instructor will take a seemingly stupid question and turn it into the insightful question that the student should have asked.

I agree with all of this. That does not mean, I hasten to add, that the students who walked out are not intellectually lazy or grandstanding. I don't know whether they are or not and neither, of course, does Robin Wells. But I've seen time and time again how a seemingly stupid question can be insightful. And I agree that we ignore student reactions at our peril.

The rest of Robin Wells's post is interesting for another reason, though. She gives four suggestions for how to teach, the fourth of which is "Adopt Some Humility." But the other three of her suggestions show the opposite: not humility but a tremendous amount of certainty about what's going wrong right now, a certainty not justified by the evidence. Consider her first suggestion:

[I]nstructors need to acknowledge the limits of free markets earlier in their courses. Students should understand the difference between the conceptual importance of free markets and their real world limitations. Explain that much of the current economic distress arises from markets that don't behave competitively -- the labor and financial markets.

But both the labor markets and the financial markets are highly regulated. For the labor market, consider the minimum wage and coming laws that will require employers to provide health insurance. For the financial markets, consider deposit insurance and the requirement that various assets be blessed by three firms given government privileges: Standard and Poors, Moody's, and Fitch. Wouldn't one want to acknowledge that some of the problems in these markets are due to government regulation?

Interestingly, her second suggestion is:

For example, to the microeconomics student who protests that Keynes and Adam Smith should be given equal time, respond that the issue boils down to why some economists believe that the labor market doesn't always clear while others believe that its does.

I know that Keynes said that labor markets don't always clear. Did Smith? I don't recall that.

Professor Wells's third suggestion is worth quoting in full:

The dramatic rise in U.S. income inequality compels us as instructors to address it. While international trade and educational differences have clearly contributed to some of the rise, it's clear that they are only partial explanations: they can't explain the explosion of income gain at the top 1% of the income distribution, and particularly at the top 0.1%. We shouldn't extol the benefits of markets while ignoring today's highly skewed distribution of the benefits. While there is no single definitive explanation, there are many factors that are feasible topics in class: moral hazard and the setting of CEO compensation, the decline of countervailing forces such as unions and higher marginal tax rates at the top end, deregulation, asset bubbles and the financialization of the U.S. economy. And then discuss: to what extent is the level of income inequality a legitimate policy target?

The factors she names are all possible factors, although I think the decline of union monopoly is a stretch. Unions tended to produce wage gains for unionized workers at the expense of non-union workers with no clear impact on income inequality traditionally measured. But notice two major sources of income inequality that she leaves out: the increasing number of households that have two high-income earners and the increasing number of households with one parent due to divorce.

Finally, her major criticism is about the fact that economists talk a lot about the benefits of free markets--too much, according to her. She doesn't mention the fact that there are still many economists--I suspect her husband is one--who don't acknowledge the important insights in public choice that help us understand why so many government policies are so destructive.

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CATEGORIES: Economic Education

COMMENTS (27 to date)
Kent Gatewood writes:

Is Mankiw's class open to all Harvard students or even to the public of student age?

600, 700 students are enrolled in the class? How many people walked out?

Who staged the event?

joeftansey writes:

Maybe instead of asking statists to be intellectually honest and admit that they don't personally control the state and therefore have to include incentives somewhere in their analysis, we could just be intellectually dishonest and copy their "magic wand theory" of the state with our own "auto-solve lip service" of the market.

Poverty? Well Bill Gates should handle it. There that's my political/economic theory. What? That's unlikely? Well its also unlikely that the state would solve poverty too.

So now you see what the problem is, and maybe we can move forward. Just kidding because these people think that democracy allows them to play Supreme Commander with the state. Hoh boy.

David Friedman writes:

The obvious question is whether, when she teaches economics, she feels obliged to expose students to views that don't fit her own political position, since she seems to be suggesting that people who disagree with her have such an obligation.

Does she, for example, when discussing regulation as a solution to market failure, spend time on public choice theory, regulatory capture, and other economic arguments that suggest that the cure may be, and often has been, worse than the disease? In discussing macro, does she concede that Keynesian economists in the past have repeatedly made predictions that turned out to be mistaken?

As best I can tell from a quick google, she doesn't currently teach economics. But she has taught in the past. I found some web pages for an MIT course she taught, didn't see anything mentioning ways in which adverse selection, moral hazard, etc. are problems for government activities, but there wasn't enough information on the pages to really tell. I'm not familiar with the textbook she used, and which most of the readings were in.

Daniel Kuehn writes:

Why are those first three suggestions not humble? They seem like a very thoughtful self-evaluation and criticism of how economics is often taught at the undergraduate level... isn't that what "humility" is? Self reflection and self criticism?

Are you just saying it's not humble because you don't agree with all of it?

David R. Henderson writes:

@Daniel Kuehn asks:
Why are those first three suggestions not humble?
David Friedman above suggests why and I thought I had also. Humility is contextual.

Daniel Kuehn writes:

I would imagine every economics class in the country teaches about market efficiency, and the distortion of the minimum wage, rent control, and unions - which cover several of the points you mention. I haven't come across an intro text that doesn't teach this stuff These are standard fare. I guess I figured she would teach this stuff as a matter of course, and then is suggesting we ought to introduce other caveats. That's why I was wondering - because you mention minimum wage, when I think the sort of things you list are pretty typically found in economics classes. What Wells lists seems to be less typical.

Daniel Kuehn writes:

In the intro course I'm TAing, we covered unions and minimum wages as labor market distortions within the first couple weeks.

We just got into labor markets that "don't behave" (to use her phrase) - sticky wages and all that - right before Thanksgiving break. And the reason why that's not covered as quickly as the government distortions is very obvious - they have a lot harder time understanding it than they had understanding the impact of unions, minimum wages, and regulations.

Glen S. McGhee writes:

Labor market distortions? To borrow a point just made, all this is contextual. Depends on POV.

Your "market distortion" is my "market."

And what unions are you talking about?

Is anyone familiar with David Montgomery's The Fall of the House of Labor: The Workplace, the State, and American Labor Activism, 1865-1925 (1987) ?

David R. Henderson writes:

@Daniel Kuehn,
Her advice could well be relevant to people like me who talk up the virtues of free markets. That was not my point. I suggest, if you want to know why this is not humility on Robin Wells’s part, that you reread my post and reread David Friedman’s comment above.

Nathan Sumrall writes:

Some of the problems in financial and labor markets are surely due to government regulations, buf it is disingenuous to imply that this neans they are not good examples of the failure of free markets. The state of labor and financial markets before those regulations were implemented are perfectly legitimate examples of why free markets are not always socially efficient. The problems that stem from government regulation are a functiin of poorly designed regulation, rather than the existence of regulation. It is certainly a tough adgument to make that things were better before they were implemenfed

TylerG writes:

Daniel Kuehn,

I really think you're over-reacting to Henderson's valid observation regarding the contradictory tone Wells portrays. We can play the tit-for-tat game speculating which concepts in economics tend to be more equitably represented in most undergraduate frameworks. In the end, however, if you're going to preach about humility in economics you probably shouldn't include zingers like 'they [international trade and educational differences] can’t explain the explosion of income gain at the top 1%' or imply there is a need for more unionization and higher MTRs. Despite her disclaimer that the article is not an attempt to 'exercise partisan jousting' (but isn't that her and her husband's signature M.O. ?), I think you would have to be near delusional to read that article and not sense her attempt to take advantage of the Mankiw walk-out to slide in her own political preferences.

Corey writes:

Don't forget that over regulation and special privilege in the education market is contributing to the surge in inequality. I'm always amused when people look to government paid economists and professors for answers to the inequality problem. Universities have the gall to increase tuitions higher than the rate of inflation for the past 30+ years and yet we go to them for information to solve our economic problems? Conflict of interest much?

David Friedman writes:

Daniel writes: "I would imagine every economics class in the country teaches about market efficiency, and the distortion of the minimum wage, rent control, and unions"

Also about externalities, and public goods, and imperfect competition--standard reasons why the market doesn't achieve the first best outcome, and standard arguments for government intervention.

She wants us to go beyond that, to make a point of issues that concern her and are not part of the standard core of the subject. So the obvious question is whether she does the equivalent in the other direction.

Simple example: Carbon taxes. I would expect a standard textbook, if it discussed them, to offer the standard Pigouvian tax argument. If you look at the actual cap and trade bill that came out of the House, however, it was not even close to what economic theory would recommend. Public Choice theory would help explain why--and imply that the actual carbon tax that would get passed in a realistic political setting might well be worse than no carbon tax at all.

Margaret writes:

Hi there, as a disclaimer, I finished my Economics degree course in 1975.

I was raised on JM Keynes, but during my course mention was made of Stagflation. I fear that Stagflation is not being taken seriously by certain economists who favour government interference in the market economy.

First of all, even though I am rusty in the subject, I agree with comments made by Daniel Friedman.

Keynesian economists such as Krugman are more socialist or Marxist than they are Keynesian. They seem to not want to look at the historical perspective of why Keynesian prescriptions had failed by the mid-1970s. My own simplistic answer is that government interference distorted the market.

Please note I base my arguments upon observations from the Australian economy, not the USA economy.

All this talk about rich and poor is obfuscation, and honing in on what a CEO takes home does not address why economies end up going into crisis. There is a missing ingredient. I do in fact think that many CEOs are overpaid, and that if any economy around the world is to be revived then the salary cuts need to begin with the CEO of a corporation, as well as with the CEO of government.

Second, union demands do in fact distort the economy from a purely supply and demand point of view. An increase in wages can in fact cause a decrease in employment opportunities. Yet I think that there are many other factors to be taken into consideration.

Many of those other factors come back to government regulation. It seems to this rusty economics graduate that government regulation and interference in the economy is more to blame for the present situation around the world than anything else.

As regards to inequality of incomes, and being female, I roll my eyes when I hear talk of women not getting equal pay, I believe it is all relative. It all depends upon occupation, as well as demand and supply of particular skill sets. Example: my husband is a logistics and aeronautical engineer. At the time I was working what I earned was roughly a third of his earnings. Being a female had nothing to do with the difference between our salaries, but everything to do with chosen occupations, and it boils down to demand and supply.

Coupon Clipper writes:
they can't explain the explosion of income gain at the top 1% of the income distribution ... there are many factors ... the decline of countervailing forces such as unions and higher marginal tax rates at the top end,

Was anyone else amused by this? Since the "income inequality" stats are typically based on before-tax income, higher top marginal rates actually increase the apparent "inequality" even though they may reduce the after-tax inequality.

Daniel Kuehn writes:

David Friedman

re: "Also about externalities, and public goods, and imperfect competition--standard reasons why the market doesn't achieve the first best outcome, and standard arguments for government intervention."

Right - and that all should be covered (although these usually aren't as emphasized for people who just take an intro course - but that's beside the point). My point is that all the stuff about which David Henderson asked "wouldn't one want to acknowledge that some of the problems in these markets are due to government regulation?" - is stuff that Wells and Krugman's book and every economics text and course already acknowledges. We cover these problems in markets due to government regulation in considerable detail. It's not clear why David thinks this is being neglected.

I understand you are making another point. I'm not entirely sure I take your view that the teaching of science should be "fair and balanced" like that. I think scientific consensus rather than incorporating views of "the other side" should determine what gets taught. But that seems like another discussion entirely to me. My only point was to note that all the stuff that David Henderson seemed so worried about is taught (as it should be, IMO).

Daniel Kuehn writes:

TylerG -
re: "We can play the tit-for-tat game speculating which concepts in economics tend to be more equitably represented in most undergraduate frameworks."

I'm not personally interested in "equitable" representation when it comes to what's taught in economics. My point was not about tit-for-tat at all. It was simply that (1.) David is exactly right to say that the impact of government regulation should be acknowledged, and (2.) it is in considerable detail (as it should be).

I'm not sure what to make of the rest of your comment. You seem to just be saying that expressing an opinion on something that someone out there might disagree with makes someone not humble. That strikes me as absurd. One can make reasoned arguments that people disagree strongly with. I'm not sure I'd call Krugman humble - simply because he inserts himself everywhere. Wells seems pretty humble to me. Opinionated, yes, but I don't think that disqualifies anyone.

David Friedman and David Henderson - other relevant examples in this particular thread - are two quite opinionated people that have always struck me as fairly humble and reasoned in the justification of their opinions.

Daniel Kuehn writes:

On this whole equitable representation thing: "equitability" requires we give modern protectionists, Marxists, strict praxeologists, and modern monetary theorists a seat at the table too. I think this is absurd. Economic science is not a political campaign. "Fair and balanced" is not a concern that needs to be indulged. We teach what the consensus is, and we present different opinions insofar as there is a substantial divide in the consensus. Freshman economics courses are notorious for coming across as conservative to students. I had a commenter on my blog who said that he thought Krugman and Wells were right-wingers when he used their textbook as an undergraduate, and was shocked to find out how liberal Krugman was. This isn't a Krugman thing either - all intro textbooks are basically the same. The perceived "imbalance" is irrelevant. Governments introduce major distortions into markets. That's a scientific fact about human social organization as reliable as any scientific fact we've collected about chimp or baboon social organization, and it ought to be taught as one.

Margaret writes:

Daniel Kuehn wrote

The perceived "imbalance" is irrelevant. Governments introduce major distortions into markets. That's a scientific fact about human social organization as reliable as any scientific fact we've collected about chimp or baboon social organization, and it ought to be taught as one.

My view here is that an introductory economics course should be about the basics. I agree that economics should not be a political campaign.

I hear a lot of criticism of JM Keynes, and sometimes I wonder if the critics have ever read what he had to say, let alone put Keynes into any context.

As a graduate from the 1970s, I often point out that at the mid-point through my course Keynesian policy prescriptions had failed. What I find is that economists who have studied after me, or even at the same time, have themselves failed to seek out why those Keynesian prescriptions have failed.

An economist who writes text books such as Samuelson, should be writing about the basics so that they student gets a good overview of the topic. Only after the student understands the basics of the laws of supply and demand, can one really look economies fail and go into depression.

Ultimately you have to look at those other factors: oil shocks etc. In doing so, there needs to be a critical look at the role of government in such failures.

Out of control government spending has consequences. It is not just corporations, but it is also government and I might add the creation of the welfare state without sufficient controls to prevent fraud, that has seen economies collapse.

Stephanie writes:

"I'm not entirely sure I take your view that the teaching of science should be "fair and balanced" like that. I think scientific consensus rather than incorporating views of "the other side" should determine what gets taught. "
I think, especially in a university setting, professors should at least briefly discuss "the other side". Students need to be aware of the many different takes on economics, even if they don't agree with them. It doesn't benefit anyone to only teach more widely accepted theories, especially in a field that is so opinionated like economics. Students should be aware that some people define themselves as "protectionists, Marxists, strict praxeologists, or modern monetary theorists" and know their ideologies, even if they don't agree with them.
University classes are there to facilitate learning and develop a deeper understanding of economics, not simply to teach what the most widely accepted views are.
As a current undergrad student, I have found that learning about theories like Marxism has been interesting and it's helped me understand more about economic theory.

Roy Lee writes:

I agree with Professor Wells to a certain extent; as a current student of economics I feel that professors talk too much about the benefits of free markets without addressing some of the major problems that also accompany them. Even when these problems are addressed, the presentation of free markets in general is heavily skewed in favor of the "rich", or the 1% and the 0.1% by supporting, almost absolutely, an unregulated or heavily unregulated free market.

More needs to be taught by professors about the dangers that accompany unregulated free markets, as well as the (possible and very real) benefits of regulation presented in a favorable light.

Maybe I'm not far enough along in my career as a student, but this is the sense I get from the vast majority of my economics classes thus far.

Hervy Garren Byrd writes:

It is my belief that as of lately, many people are caught up in the whole “Occupy Movement.” Let me make it clear that I am not against what many of the protestors believe, however, I do believe that they should go about it in another manner. To my understanding the walk out that took place in Mankiw’s Economics 10 class took place because a few of the students believed that many of his teachings are what have lead to the increased income inequality in the United States. This however is problematic for me. First of all, I think to make such a bold claim, one must really understand how the entire structure works. I’m sure the students in his class are intelligent, but that doesn’t take away from the fact that they are still in an entry level economics course. I for one believe that they should build a much stronger foundation before making such a daring move. Take a few classes become truly knowledgeable about the subject matter at hand and THEN form an educated opinion on the matter. Secondly, I don’t believe that Mankiw and his books try to promote a conservative bias on economic issues as some of his students believe. Many of them believe that his economic books endeavor to give normative answers about how to take on social issues, when in reality it is simply meant to introduce students to economics as a social studies.

Bruce writes:
  • @Henry Garren Byrd

    I agree with what you mean by not being against the Occupy movement, however it need be handled in a different manner. believe that the walkout was somewhat unnecessary, Mankiw's most likely just teaching from a book, and although they disagreed. I'm discontent with the greed in our current world, however isn't that what fuels us as people, for the most part those corporate fat cats had to work to get where they are. To contrast, what are those people that are protesting doing? sitting expecting a handout? isn't that a little odd that they expext to change incomes by sitting around and pouting? I just don't understand sometimes.

    [login url in URL field removed. Please use only publicly accessible urls in that field.--Econlib Ed.]

Thuy-Van Vu writes:

Sometimes what students learn in the classroom are totally different with the real world. For example, in the labor and wage concept, talking about the union vs. nonunion theory, many of us was taught that union would be more attractive for workers to move over with better benefits and compensation. However, later on, we read an article and found out that actually only the top officers and staffs got the most compensated out of the other workers' pocket. So the question " is that union really that good to join?" was created. Everything goes back to the starting point that students need to be more flexible and apply whatever they think that would work out for them based on the what is in the textbook and lectures.

Hao Huynh writes:

Learning in the classrooms are different from the real world. Unfortunately, a professor/instructor only has a limited amount of time during a quarter/semester to go through an entire book so they obviously would not be able to go into full details over every single little aspect of economics.
While the students do have a right to walk out and protest it just seems ridiculous to do so being that this was an INTRODUCTORY to Economics, where the instructor tries to cover a little bit of this and a little bit of that to give the students an understanding of the basic values and terms of economics. Just my 2 cents.

Tuan Nguyen writes:

Sometimes what students learn in the classroom are very useful because we can apply it into our real life. For example, union organization. Many of us was taught that Union would be more attractive for workers to move over with better benefits and compensation. However, who doesn't have a chance join the Union will suffer the lost about the wage and so. So after we have learned this then we know how to deal with the company that we work with.

Ruben Soto writes:

An introductory course is the sole purpose of presenting the generalization of the subject such as economics. The subject itself has many approaches to identifying the proper tactics to proceed. Yet, economists rarely reach an agreement as far as the political powers favoring their ideas and benefits. Having a straight forward approach like professor Mankiw. The huge gap between the top one percent and the rest of the 99% should be addressed in the introductory course of economics because it was affects our modern society. Yet, the explanation can range from both ends of the spectrum. In my previous economic courses with professor Mack i disagreed with a lot of what he said because his lectures and book all consisted of his point of view in the generalization of economics. Its absolutely ok for a student to disagree with the professor because as a young economist, its mandatory to create your own hypothesis to explain the outcome of hat was theorized.

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