+3 votes
asked ago by (6.9k points)
The recent NY Times column "Blame Economists for the Mess We’re In: Why did America listen to the people who thought we needed “more millionaires and more bankrupts?” By Binyamin Appelbaum has this interesting url https://www.nytimes.com/2019/08/24/opinion/sunday/economics-milton-friedman.html .

Every economist who reads it will note that much of his critique comes from work by economists, although he appears not to know that.
Here's the place where I took particular note:

"Markets are constructed by people, for purposes chosen by people — and people can change the rules. "

That's not a criticism of economics, it's an endorsement of market design.
The piece is full of these confusions--which ones particularly struck you? (feel free to quote Raj Chetty and others on inequality...)
And what's your thought on talking about pieces like this with your students?

4 Answers

0 votes
answered ago by (2.7k points)
edited ago by
In my opinion, the goverment has to control market disfunctions (i. e. Inequality) and history has showed that markets doesn't work properly and the invisible hand isn't a God taking care of all of us. Liberalism has lots of breakthroughs, but the extremes are not good in every philosophy. A philosophy is a way of living. We live producing, innovating and consuming, so we deserve good resources according to our productivity. Inequality is a big problem the few last years, but it's necessary in a regular degree, because the human being has to improve his life, improving other's life. That's Capitalism. 99% and 1% looks like Anarcocapitalism.
+1 vote
answered ago by (160 points)
I read that quote you shared slightly differently. Applebaum seems to be arguing there that we should eschew markets altogether in some cases and focus on decision criteria other than efficiency, such as egalitarianism. By saying "markets are constructed by people, for PURPOSES chosen by people - and people can change the RULES" (my emphasis added), he's arguing (although I'll admit somewhat unclearly) that people can change the institutions that we feel like will achieve our (new) social goals. See a following sentence: "Reducing inequality should be a primary goal of public policy."

I don't know a lot about market design, but it appears to me that market design's central focus is still on efficiency rather than distribution. It's about overcoming problems with how markets allocate goods and services. So Applebaum's essay is not really a veiled attempt to push market design, at least in my reading.

At any rate, I still agree with you that economists should not be blamed for all of this. A lot of economists are interested in distribution and how it can be used to achieve better social outcomes. I support those efforts.

As to whether these articles should be used in class discussions, I don't think so. At least not in most undergrad classes where students are still trying to learn what economics is all about. Maybe in a history of thought class it could serve as an interesting "Resolution" to be debated - to wit, whether economics should be concerned with issues of distribution.
commented ago by (6.9k points)
edited ago by
I didn't think Applebaum was endorsing market design--I thought the line of his I quoted indicated that he didn't know it existed, and was criticizing economists without knowing what we do.  
As for designing markets to address inequality, think about rationing and price caps and such, e.g. see https://marketdesigner.blogspot.com/2018/10/market-design-to-reduce-inequality.html which links to the recent paper Redistribution through Markets by Piotr Dworczak, Scott Duke Kominers, and Mohammad Akbarpour
+2 votes
answered ago by (1.6k points)
You can blame all economists some of the time, and some economists all of the time, but you can't blame all economists all of the time. And you can blame more journalists more of the time. They, and their ilk, were often the people who took subtle and nuanced ideas of economists, selectively simplified them, and blew them up into attention-grabbing headlines and sound bites, perhaps starting with Harriet Martineau's popularization of Adam Smith.
commented ago by (6.9k points)
AKD: I had to look up Harriet Martineau...but it sounds as if you don't think I need to catch up on her interpretation of Smith.
Which contemporary economic journalists do you find rewarding to read?
commented ago by (1.6k points)
I don't regularly follow anyone. (Should I? Would love to have your recommendations.) But in my occasional reading, leaving aside economics professors who write columns, I like Tim Harford, Martin Wolf, Rana Faroohar, Catherine Rampell, Peter Coy, and several anonymous editors, article authors and columnists for The Economist. But the single best journalistic article I remember, which pinned down pretty much all aspects of the politics and economics of trade protectionism, and did it with brilliant humor, was Barry Newman, "The Greeks have a word for banana but lack bananas", in the Wall Street Journal, some time in 1983.
+2 votes
answered ago by (180 points)
I just noticed this post now, after having finished Mr. Appelbaum's book.  It's interesting that the URL of his NYT piece actually reveals my main critique with the book.  The headline of the article is "Blame Economists for the Mess We’re In" but the URL calls out Milton Friedman.  When reading his book, I found it strange that he would write about "economists", but when he got down into the details, he was really just talking about Milton Friedman.  I found it doubly strange that more often than not, his critiques of Friedman were based largely on the work of other economists.  

Perhaps economists are not actually the intended audience of this book, but as a rank-and-file government economist, I tend to view Milton Friedman much more as an outlier of the profession than a representative.  I'm sure to the general public over a certain age, Friedman is the first person they think of as an "economist", but for as well-researched as the book is, I would have appreciated if he had at least acknowledged that economists doing actual research are economists too, even if they don't prosthelytize.