Thomas Sowell's Basic Economics[1] is a superb book on the subject. It's lengthy but very readable, especially for its real-world examples. Particularly excellent are the explanations for the unintended consequences from price controls.
The first edition came out many years ago. Since then, the world has provided a few case studies on the matter. For example we've been been watching the slow-motion train wreck that is Venezuela's economy, as first Chavez and then Maduro gripped prices tighter and tighter. The horrible consequences Sowell describes have shown up inexorably, predictably, just like clockwork. It's grim to watch; but my point is that his book and other writings give a real intuition about economic fundamentals that you can see every day.
>The first edition came out many years ago. Since then, the world has provided a few case studies on the matter. For example we've been been watching the slow-motion train wreck that is Venezuela's economy
Venezuela's economy already went through this period in the late 80s/early 90s. The collapse of oil prices and its subsequent effect on the economy and the government's ability to maintain services is partly what led to an infuriated populace electing Chavez.
>But it treats perfectly competitive markets as special cases rather than the norm, trying to incorporate from the very beginning the progress economists have made during the past forty years or so in analyzing more complex situations: when firms have some monopoly power; people aren’t fully rational; a lot of key information is privately held; and the gains generated by trade, innovation, and finance are distributed very unevenly. The CORE curriculum also takes economic history seriously.
This sounds excellent.
I think "free market" is the worst-named concept ever, and has caused lasting damage since it sounds too much like "unregulated market".
Acknowledging the spectrum of properties, and how unregulated markets don't end up free in a lot of important cases from the get-go will help to fight this damage.
Don't you presume that "free market" is a term pushed mainly for propaganda reasons? It seems likely to me that the term is promoted specifically to promote anti-regulation politics.
Think about it: if we're accepting the need for regulations, aren't we just talking about "market" rather than "free market"? The basic nature of "market" on its own already captures the idea that people are coming together and engaging in some sort of voluntary trade and competition etc.
All the good stuff we care about is present in just "market" and the "free" part is the propaganda term.
The thing is that even Adam Smith and David Ricardo didn't believe free markets existed either, it's just that folks like Milton Friedman played up the idea that competition will always lead to better outcomes for firms and consumers. Markets are only good allocators when either the rules are set (and maintained) to ensure more fair outcomes or that the means of production are owned in common (cooperatives, mutual aid societies, etc). The former is what we've been using for a while but over time it seems those regulatory mechanisms get deconstructed by those who are regulated. So, I think it's time we choose to do the latter since it's obvious capitalism isn't a good model of market economics.
> issues like inequality, globalization, and the most efficient ways to tackle climate change...
> groups of students demanded an overhaul in how economics was taught, with less emphasis on free-market doctrines and more emphasis on real-world problems.
> in many cases this material comes after lengthy explanations of more traditional topics: supply-and-demand curves, consumer preferences, the theory of the firm, gains from trade, and the efficiency properties of atomized, competitive markets
This is very concerning. If you don't understand things like supply and demand curves and relative advantage, you can't understand economics. There's very good reason Mankiw starts with these basics.
If the math gets thrown out for ideological reasons, then economics will become the next sociology.
> But it treats perfectly competitive markets as special cases rather than the norm
In the context of this article's verbiage, I learned Economics the "old way" and at no point was I under any illusion that Perfect Competition was "the norm" or even common. I seem to recall phrases akin to, "There is no such thing as a Perfectly Competitive market," oft-repeated.
While the content of the book is one interesting aspect, the way it was created and is being disseminated is also fascinating. It was a collective effort of econ professors from around the world, who all teach a localized version of the materials. They hired a company from south africa, to develop an open publishing platform. The goal is to turn markdown content into a number of outputs, ranging from a Oxford University Press textbook to a responsive static web site. Most of the tools are open source and all of the core content is on github. (Disclosure: I provided some input to the CORE leadership when they were starting to think about an open platform).
I recommend Choice[1] by Robert Murphy as a way to learn basic economics. The book is a distillation of Human Action by Mises and derives economic theory from the axiom of action.
Just a heads up to those who aren't familiar with Austrian economics. It has very different ideas about how the world works from standard economics, and is much closer to philosophy than science.
(They don't really use the scientific method or much empirical work. This is why he used the word derive.)
I've read the first eight chapters and it is excellent. It's up to date with current empirical developments (Intro texts have hardly changed since Alfred Marshall) and has a much broader scope. Overall it's much more in tune with the real world.
Interpersonal valuation is a logical impossibility. Those guys are selling snake oil. I could easily make the point that 'standards of living' (interpersonal valuation assumption) have gone down. We have less clean air, less clean water, less forest, less cultivable land, less sea-life, etc, than ever in our history. Does anyone really think the Nile delta is now more beautiful than 100 yrs ago? Big-mouthed delusional priests, all of them.
1. Because you can't afford food? Or because the harvest failed or was stolen?
2. Because you're infected by a disease that can't be treated?
3. Because an army invaded your city/town and killed all able-bodied men and sold everyone else into slavery?
4. Because a natural disaster occurred - a hurricane/earthquake/tsunami and you no longer have a roof above your head?
You show an appalling ignorance of history if you don't know that for all of recorded human history, death was always around the corner, even if you were one of the few people who were wealthy. Today the vast majority of humans simply do not have to worry about death _all the time_, like humans always have.
All of the problems you mentioned are totally legitimate and we should be using all of our resources in solving these problems. But please don't imply that quality of life isn't better than it was 100 years ago for most people.
> Big-mouthed delusional priests
And keep abuse to a minimum, especially when your comment is so low quality.
It's surprising the article didn't even mention the leader in online economics education, Tyler Cowen and Alex Tabarrok's Marginal Revolution: https://www.mruniversity.com/
It's been going since 2012, has nearly 1,000 videos and is completely free.
I am especially hopeful that it will cover what is normally considered an externality in economics and which I consider it's most fatal blind-spot: "technological progress"
Another book I really enjoyed was "The end of Alchemy" which took a very un-political view of the financial crisis.
We need more of these kind of books and perspectives.
As the article mentions, The CORE Project seems to cover a lot of material. I wonder if this means it won't fit well into a traditional college semester, and thus it not being used in college classes too frequently.
The main website of The CORE Project does mention a bunch of colleges using it. This points to the fact that colleges are willing to adopt it, but not necessarily to the fact that many colleges will be willing to adopt it.
When colleges do choose to adopt it, I wonder if they'll just pick and choose material that covers more traditional curriculums as opposed to the more modern topics this book covers. If so, the mission of the project will really take a punch.
I'm so happy to see a more realistic model of economics being taught!!
People will STILL call you a marxist/communist if you point out that current economics is wrong sometimes.. very wrong.
Like obvious-fucking-ly when we model chickens as "perfect spheres" in physics we know its only a model and not reality - the model is good enough for some uses, not accurate enough for others.
Point out that a "perfectly rational" consumer and "perfectly efficient" markets are models - that no market is perfect just as no ball is perfectly round.. people lose their shit.
The dogma of the day is Free market/capitalism GOOD , all other systems EVIL! Never mind understanding what precisely any of those words mean or correlating taught concepts to real world business to see how well they hold up.
To me it points to a huge failure in education really - these people were never taught the world is complex and economics is a highly simplified model that can't hope to capture everything. No model can. They were indoctrinated in a religion called economics, distinct from a science called economics.
Do any actual respectable, academic or working economists make these arguments though? I've always thought that the problem isn't that economists work with simplified models — that's part of science, and unavoidable in the days before big data and cheap computing power — but that non—economists, politicians and ideological zealots, take their research and think it's directly applicable to the real world.
Improving Economics as a discipline, making it more evidence driven and predictive, is a good thing. But sadly there will likely always be people who distort and misrepresent its theories in order to fit their own agenda. We see that in pretty much every scientific field, even ones far harder than Economics.
> The dogma of the day is Free market/capitalism GOOD , all other systems EVIL! Never mind understanding what precisely any of those words mean or correlating taught concepts to real world business to see how well they hold up.
You have hit the nail on the head with regard to all Political "discussion" in the USA now.
It is all black or white. You are right or wrong, yes or no. There is actually no discussion, no learning.
There is no stopping to consider the other opinion or side. Or learning about it thoroughly so as to shed more light on the situation or circumstance.
It's a shame, because it means nothing is moving forward.
> The dogma of the day is Free market/capitalism GOOD , all other systems EVIL!
The number of times I have heard a respected economist say this can likely be counted on zero hands.
In econ 101, you learn, "here's the free market model, it's wrong but it's useful", and much of the rest is learning about the scenarios when it's wrong.
Quite the opposite. Everyone praises Karl Marx and Keynes, although they been proven wrong many times. Most Millenials think that Capitalism and freemarkets are evil, while Socialism is good. History has proven otherwise
> Point out that a "perfectly rational" consumer and "perfectly efficient" markets are models - that no market is perfect just as no ball is perfectly round.. people lose their shit
Then they didn't learn economics. Chapter 1 in Mankiw goes into why we learn using frictionless markets of rational actors. I think Chapter 2 or 3 went into market failure.
We have to make a distinction between opinions and facts. In economic journalism, including pieces written by academician economists, opinions seem to dominate the narrative. This doesn't mean that economists can't do science. They can and do science, it's just not generally accessible to the general public.
Now obviously this has a libertarian angle to it but it's IMHO a brilliant little gem to explain a lot of basic concepts extremely well - and in such away that it works even for very young people https://freedom-school.com/money/how-an-economy-grows.pdf
The majority of commenters here seem to be beyond repair after going through their fairytale economics courses. May I humbly suggest they read Debunking Economics by Steve Keen if they are at all interested in the real world. Be warned however that it also trashes Marxian, New-Keynesian and Austrian views.
Anyone who thinks the simplified and unrealistic models "are still useful" does not understand just how bad these approaches are.
This course seems like a step up, but honestly anything still teaching equilibrium models in 2017 should be burnt for electricity.
> Anyone who thinks the simplified and unrealistic models "are still useful" does not understand just how bad these approaches are.
And other approaches are significantly more useful? They yield massively more predictive power? They are more tested and less theoretic? Are these other models comparable to say the difference between classical mechanics and Aristotle's view of physics, because that's what you seem to be implying.
The best approach would obviously be to test the economic theories under various system constraints instead of using a historical based approach where it is virtually impossible to control for any of the massive array of factors that influence any particular economic policy.
Most of us could care less whether Marxian, Keynesian, or Austrian Theory helps us build economic systems that maximize human flourishing and minimize suffering, but we really need to iteratively test/apply/evaluate the theories in a controlled environment if we want to make progress on a small enough time scale.
[+] [-] davidp|8 years ago|reply
The first edition came out many years ago. Since then, the world has provided a few case studies on the matter. For example we've been been watching the slow-motion train wreck that is Venezuela's economy, as first Chavez and then Maduro gripped prices tighter and tighter. The horrible consequences Sowell describes have shown up inexorably, predictably, just like clockwork. It's grim to watch; but my point is that his book and other writings give a real intuition about economic fundamentals that you can see every day.
[1]: https://en.wikiquote.org/wiki/Basic_Economics_(Thomas_Sowell...
[+] [-] karanbhangui|8 years ago|reply
[+] [-] crdoconnor|8 years ago|reply
Venezuela's economy already went through this period in the late 80s/early 90s. The collapse of oil prices and its subsequent effect on the economy and the government's ability to maintain services is partly what led to an infuriated populace electing Chavez.
[+] [-] owebmaster|8 years ago|reply
I just want to point that the world has provided a lot more case studies on the matters of Karl Marx economical bibliography.
[+] [-] djrobstep|8 years ago|reply
[+] [-] rtpg|8 years ago|reply
This sounds excellent.
I think "free market" is the worst-named concept ever, and has caused lasting damage since it sounds too much like "unregulated market".
Acknowledging the spectrum of properties, and how unregulated markets don't end up free in a lot of important cases from the get-go will help to fight this damage.
[+] [-] quadrangle|8 years ago|reply
Think about it: if we're accepting the need for regulations, aren't we just talking about "market" rather than "free market"? The basic nature of "market" on its own already captures the idea that people are coming together and engaging in some sort of voluntary trade and competition etc.
All the good stuff we care about is present in just "market" and the "free" part is the propaganda term.
[+] [-] norea-armozel|8 years ago|reply
[+] [-] unknown|8 years ago|reply
[deleted]
[+] [-] ordbajsare|8 years ago|reply
[deleted]
[+] [-] thedevil|8 years ago|reply
> groups of students demanded an overhaul in how economics was taught, with less emphasis on free-market doctrines and more emphasis on real-world problems.
> in many cases this material comes after lengthy explanations of more traditional topics: supply-and-demand curves, consumer preferences, the theory of the firm, gains from trade, and the efficiency properties of atomized, competitive markets
This is very concerning. If you don't understand things like supply and demand curves and relative advantage, you can't understand economics. There's very good reason Mankiw starts with these basics.
If the math gets thrown out for ideological reasons, then economics will become the next sociology.
[+] [-] gshulegaard|8 years ago|reply
> But it treats perfectly competitive markets as special cases rather than the norm
In the context of this article's verbiage, I learned Economics the "old way" and at no point was I under any illusion that Perfect Competition was "the norm" or even common. I seem to recall phrases akin to, "There is no such thing as a Perfectly Competitive market," oft-repeated.
[+] [-] philipps|8 years ago|reply
[+] [-] Iv|8 years ago|reply
[+] [-] Dowwie|8 years ago|reply
https://github.com/electricbookworks/electric-book
https://medium.com/fire-and-lion/how-we-made-the-economy-a87...
[+] [-] daniloassis|8 years ago|reply
[1] https://www.amazon.com/Economics-One-Lesson-Shortest-Underst...
[+] [-] acdanger|8 years ago|reply
[1] https://www.amazon.com/Basic-Economics-Thomas-Sowell/dp/0465...
[+] [-] clarkmoody|8 years ago|reply
[1] http://www.independent.org/publications/books/summary.asp?id...
[+] [-] JamesBarney|8 years ago|reply
(They don't really use the scientific method or much empirical work. This is why he used the word derive.)
[+] [-] chrismealy|8 years ago|reply
[+] [-] unlmtd1|8 years ago|reply
[+] [-] nindalf|8 years ago|reply
1. Because you can't afford food? Or because the harvest failed or was stolen?
2. Because you're infected by a disease that can't be treated?
3. Because an army invaded your city/town and killed all able-bodied men and sold everyone else into slavery?
4. Because a natural disaster occurred - a hurricane/earthquake/tsunami and you no longer have a roof above your head?
You show an appalling ignorance of history if you don't know that for all of recorded human history, death was always around the corner, even if you were one of the few people who were wealthy. Today the vast majority of humans simply do not have to worry about death _all the time_, like humans always have.
All of the problems you mentioned are totally legitimate and we should be using all of our resources in solving these problems. But please don't imply that quality of life isn't better than it was 100 years ago for most people.
> Big-mouthed delusional priests
And keep abuse to a minimum, especially when your comment is so low quality.
[+] [-] barney54|8 years ago|reply
[+] [-] xiaoma|8 years ago|reply
It's been going since 2012, has nearly 1,000 videos and is completely free.
[+] [-] listentojohan|8 years ago|reply
[+] [-] choward|8 years ago|reply
[+] [-] chrismealy|8 years ago|reply
[+] [-] Dowwie|8 years ago|reply
[+] [-] ThomPete|8 years ago|reply
I am especially hopeful that it will cover what is normally considered an externality in economics and which I consider it's most fatal blind-spot: "technological progress"
Another book I really enjoyed was "The end of Alchemy" which took a very un-political view of the financial crisis.
We need more of these kind of books and perspectives.
[+] [-] adamzerner|8 years ago|reply
The main website of The CORE Project does mention a bunch of colleges using it. This points to the fact that colleges are willing to adopt it, but not necessarily to the fact that many colleges will be willing to adopt it.
When colleges do choose to adopt it, I wonder if they'll just pick and choose material that covers more traditional curriculums as opposed to the more modern topics this book covers. If so, the mission of the project will really take a punch.
[+] [-] chrismealy|8 years ago|reply
[+] [-] zaptheimpaler|8 years ago|reply
People will STILL call you a marxist/communist if you point out that current economics is wrong sometimes.. very wrong.
Like obvious-fucking-ly when we model chickens as "perfect spheres" in physics we know its only a model and not reality - the model is good enough for some uses, not accurate enough for others.
Point out that a "perfectly rational" consumer and "perfectly efficient" markets are models - that no market is perfect just as no ball is perfectly round.. people lose their shit.
The dogma of the day is Free market/capitalism GOOD , all other systems EVIL! Never mind understanding what precisely any of those words mean or correlating taught concepts to real world business to see how well they hold up.
To me it points to a huge failure in education really - these people were never taught the world is complex and economics is a highly simplified model that can't hope to capture everything. No model can. They were indoctrinated in a religion called economics, distinct from a science called economics.
[+] [-] stupidcar|8 years ago|reply
Improving Economics as a discipline, making it more evidence driven and predictive, is a good thing. But sadly there will likely always be people who distort and misrepresent its theories in order to fit their own agenda. We see that in pretty much every scientific field, even ones far harder than Economics.
[+] [-] grecy|8 years ago|reply
You have hit the nail on the head with regard to all Political "discussion" in the USA now.
It is all black or white. You are right or wrong, yes or no. There is actually no discussion, no learning.
There is no stopping to consider the other opinion or side. Or learning about it thoroughly so as to shed more light on the situation or circumstance.
It's a shame, because it means nothing is moving forward.
[+] [-] cynicalkane|8 years ago|reply
The number of times I have heard a respected economist say this can likely be counted on zero hands.
In econ 101, you learn, "here's the free market model, it's wrong but it's useful", and much of the rest is learning about the scenarios when it's wrong.
[+] [-] 0x27081990|8 years ago|reply
[+] [-] JumpCrisscross|8 years ago|reply
Then they didn't learn economics. Chapter 1 in Mankiw goes into why we learn using frictionless markets of rational actors. I think Chapter 2 or 3 went into market failure.
[+] [-] lottin|8 years ago|reply
[+] [-] pharrington|8 years ago|reply
[+] [-] unknown|8 years ago|reply
[deleted]
[+] [-] billysielu|8 years ago|reply
Not a more correct, or better, way.
[+] [-] novalis78|8 years ago|reply
[+] [-] djhworld|8 years ago|reply
[+] [-] unknown|8 years ago|reply
[deleted]
[+] [-] taw55|8 years ago|reply
Anyone who thinks the simplified and unrealistic models "are still useful" does not understand just how bad these approaches are.
This course seems like a step up, but honestly anything still teaching equilibrium models in 2017 should be burnt for electricity.
[+] [-] jfaucett|8 years ago|reply
And other approaches are significantly more useful? They yield massively more predictive power? They are more tested and less theoretic? Are these other models comparable to say the difference between classical mechanics and Aristotle's view of physics, because that's what you seem to be implying.
The best approach would obviously be to test the economic theories under various system constraints instead of using a historical based approach where it is virtually impossible to control for any of the massive array of factors that influence any particular economic policy.
Most of us could care less whether Marxian, Keynesian, or Austrian Theory helps us build economic systems that maximize human flourishing and minimize suffering, but we really need to iteratively test/apply/evaluate the theories in a controlled environment if we want to make progress on a small enough time scale.
[+] [-] mentallimits|8 years ago|reply
[1] http://chrisauld.com/2012/12/06/steve-keen-still-butchering-...
[+] [-] neilwilson|8 years ago|reply
He's just done a two day debunking of the usual nonsense that has now found its way into literature.
http://bilbo.economicoutlook.net/blog/?p=36850
[+] [-] crdoconnor|8 years ago|reply
[+] [-] gbacon|8 years ago|reply