As we can see from the current dismal state of economic affairs, economies are incredibly complex systems, and policymakers who are forced to act in the face of this uncertainty and complexity want guidance. And over the last half century, neoclassical economists have not only been more than happy to offer it, but largely been able to marginalize any other disciplines or approaches, giving them a virtual monopoly on economic policy advice.
But there are two big problems with this. First, despite economists’ calming assurances, we still know little about how economies actually work and the effect of policies. If we did, then economists should have sounded the alarm bells to head off the financial collapse and Great Recession. But even more problematic, even though most economists know better, they present to the public, the media and politicians a simplified, vulgar version of neoclassical economics — what can be called Econ 101 — that leads policymakers astray. Economists fear that if they really expose policymakers to all the contradictions, uncertainties and complications of “Advanced Econ,” the latter will go off track — embracing protectionism, heavy-handed “industrial policy” or even socialism. In fact, the myths of Econ 101 already lead policymakers dangerously off track, with tragic results for the economy and everyday Americans.
Myth 1: Economics is a science.....
Myth 2: The goal of economic policy is maximizing efficiency....
Myth 3: The economy is a market.....
Myth 4: Prices reflect value.....
Myth 5: All profitable activities are good for the economy....
Myth 6: Monopolies and oligopolies are always bad because they distort prices....
Myth 7: Low wages are good for the economy....
Myth 8: “Industrial policy” is bad....
Myth 9: The best tax code is one that doesn’t pick winners....
Myth 10: Trade is always win-win....Salon
Econ 101 is killing America
Robert Atkinson And Michael Lind
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