The Problem with Conventional Economics (Part 1)

In order to fulfill a core requirement, I enrolled in Intro Economics taught by Greg Mankiw this past semester. As I go over my notes in preparation for the final, I am reminded of all of the absurdities taught as fact in this intro economics class. This would not upset so much except that the class, composed of over 700 people, is required of all economics concentrators and many of the students are freshman. Why does that matter? Firstly, requiring that economics concentrators’ first exposure to college economics is in a class teaching as fact traditional, conservative economic theory ensures that many of these students are molded into traditional, conservative economists. This effect is compounded by the high concentration of freshman: During first semester freshman year, we are all prone to take our professors’ words as fact rather than questioning the knowledge that is presented to us.

Getting to the point, the following two “facts” were “taught” to the students on the final day of class:

  1. The effects of international trade are just like those of technological innovation because there is no difference between a machine making cheap textiles and a Chinese worker in a sweatshop making cheap textiles.
  2. Workers in developing countries are paid less than American workers because they are less productive.

I’m tempted to not even comment on these statements because I’m not sure if I can capture the appropriate response in words, but I will say how I believe these statements capture the problem with conventional economic thinking. First of all, economists do not view people as individuals but rather as inputs into the economic machine. A Chinese worker slaving away in a sweatshop is not the same as a machine because the worker is a human being. Second of all, first principles cannot be applied to our world directly because there are many other factors at play such as, I don’t know, minimum wage laws. I assume (or hope) that Greg Mankiw knows this personally, but he should not teach students that they can take basic economic theory from a first year economic textbook and interpret the world with it.

And a final note: I am not an economist and do not claim to know as much as trained economists. But I don’t think it takes a trained economist to see the problems within conventional economic thought. The true irony of this class was that it was taught amidst the crash of the financial market, and yet made no attempt to discuss the problems with economic theory that could have led to the crash. Instead, the illusion that the invisible hand will always work its magic was perpetuated.


Wordle has revolutionized my life. You input text or a blog address, and it makes word art of the all the words used in the provided text, scaling the size of the words to number of times used.

Here’s the wordle of this blog:


Media Control

Every time I read a novel by Milan Kundera, his powerful and insightful prose always delights me. Not only has he mastered the art of telling a good story, but also manages to provide relevant views of our society.

From Immortality on the media and isolation in our lives:

My Paris neighbor spends his time in an office, where he sits for eight hours facing an office colleague, then he sits in his car and drives home, turns on the TV, and when the announcer informs him that in the latest public opinion poll the majority of Frenchmen voted their country the safest in Europe (I recently read such a report), he is overjoyed and opens a bottle of champagne without ever learning that three thefts and two murders were committed on his street that very day.

Indeed, with the media there to tell us what is happening outside our window and beyond, it is easy to ignore the realities that could be discovered through personal investigation. With media outlets providing not only the news but also the interpretation around the clock, there is no need to discover or think for oneself. We may know more facts than we ever have in the past due to the availability of information, but we are likely more isolated than ever before as well – all the information we need can be found via switching on our computers or televisions. All of this gives the media great power over our thoughts because they determine not only what news we hear but also how we hear it. While one cannot determine first-hand what is happening in Gaza, one can move beyond the isolation of the television and learn about her community through leaving the sphere of the office, car and home.


The New York Times published a piece today about violence committed by soldiers returning from their deployments in Iraq or Afghanistan. The story as a whole is a tragic one – while we continue to extend the tours of duty of our soldiers to fight a losing war, we are not providing them with enough support when they return. Individuals who were healthy and stable before their deployment come back changed, and in the worst cases commit murder, rape or other crimes. Indeed, what they have seen in Iraq or Afghanistan is unlike anything that I (and most other citizens) can imagine, and our government has an undeniable role to do everything they can do help returned soldiers reintegrate into society. This is not an easy job, but it’s also clear that we could be doing much better.

Within the article, there was a phrase that stuck out amongst the rest of the article. The man who committed the first of the recent nine murders by past or current members of the Fourth Brigade was Stephen Sherwood

…a musician who joined the Army for health benefits, [he] returned from Iraq and fatally shot his wife and then himself.

Not only is our government failing at providing adequate care for the men and women who sacrifice for our country as soldiers, they are also failing at providing basic services such as health care for all citizens. The United States proclaims to have a voluntary army, but the army is no longer voluntary if citizens feel the need to join the army for health care services.

(There is an obvious irony in this situation, but that’s a whole other train of thought.)

When we enter into the social contract with our government and agree to pay taxes and perhaps do some civil service,  we do so because of commitments from the government: That they will protect us and provide basic services. For some reason in the United States, the mentality that basic health care is not a basic service that should be provided by the government is pervasive. Many citizens and policy-makers seem to think that it is OK for the government to spend tax dollars on the Iraq War or the financial bailout or even the interstate highway system, but that spending tax dollars on health care for all citizens is unacceptable. 

Without universal health care, “domestic tranquility” and “general welfare” will be ideals that cannot be reached. No citizen of this country should have to join the army, work multiple jobs or be forced out of their home due to health care costs.