Is it just me, or is Greg Mankiw slowly becoming more liberal (in the classical sense)? I’ve been keeping up with his blog recently and it seems to me that he is rather inclined towards the free market. Maybe he’s always been like this. I’m not saying he’s a libertarian, but compared to Krugman he’s a saint.
Can anybody comment on his relationship with Jeff Miron? He did advertise Mirron’s new book on libertarianism on his blog. Maybe Mirron’s libertarianism is wearing off?
I’ve been reading Mankiw’s blog since I first became interested in economics, and he’s pretty consistently “libetarian-esque.” He pretty consistently has supported deregulation, tax cuts, and spending cuts instead of tax hikes. Of course he supports some regulation here and there and he believes in fiscal and monetary stimulus (though he has supported tax cuts over spending hikes when it comes to fiscal stimulus), but overall I’d say he’s a friend to our side, at least when it comes down to most issues.
Mankiw is the idiot who was advocating negative interest rates. I can’t take somebody who says that seriously.
I read his introductory textbook and it explained the difference between progressive and libertarian views on taxation. I haven’t seen any other popular economics textbook that does the same thing. He is known at Harvard as being a “conservative” but he is most definitely not an strict libertarian. He is a big supporter of the pigovian tax.
Solid Choke,
He is known at Harvard as being a “conservative” but he is most definitely not an strict libertarian.
That’s largely why I ask about his relationship with Jeff Miron. I heard that originally he and Miron did not get along intellectually, but now that Mankiw has been talking about Miron’s new book it seems that Mankiw is opening up to libertarian theory (Miron is director of undergraduate studies at Harvard).
Chris,
Mankiw is the idiot who was advocating negative interest rates. I can’t take somebody who says that seriously.
I think that for the most part it’s best not to shut out opposing intellectuals, even if you disagree with most of what they say. Sometimes they have very good insights that are worth listening to.
Mankiw is the epitome of conservative Neo-classicism/New-Keynesian economics.
Pretty boring stuff really. If you’re not familiar with the Austrian framework, people like Mankiw can make seemingly convincing arguments.
Esuric: “Mankiw is the epitome of conservative Neo-classicism/New-Keynesian economics.”
I’m a mere layman, but from the Austrian perspective, each of the mainstream bullet points you listed are absurd, aren’t they? It sounds like another “top 10 economic fallacies” list. I’m always in disbelief when I read what the mainstream takes to be true, that intelligent people can adhere to such ideas. They need two years of advanced calculus to come to conclusions like this? I’ve learned to watch my tongue when criticizing the mainstream, but these ideas just seem to be way out in left field. EDIT: They actually believe these things?
Their arguments are quite sophisticated and have evolved over time beginning with Ricardo. There have been many splits/economic cataclysms, and the mainstream has followed the opposite path with respect to the Austrians. The Austrian framework is entirely different from that of the mainstream’s; it makes different assumptions, asks different questions, and is extremely nuanced in nature (focuses on relative shifts and perpetual disequilibrium). This is why many mainstream new classical economists say absurd things like “anything sensible from the Austrian framework has already been absorbed;” nothing could be further from the truth. For each one of those bullet points they could provide seemingly plausible rationale.
The main difference, though, comes from the interpretation of value and capital. The mainstream is essentially using a hyped up Ricardian framework which looks at capital as a fund (homogeneous and substitutable; no structure) and focuses on distribution (refined by the likes of Frank Knight and J.B Clark). The differences are so complicated that when you introduce them to mainstream economists they quickly become perplexed and look at you as if you had 9 heads.
Esuric: “The Austrian framework is entirely different from that of the mainstream’s; it makes different assumptions, asks different questions, and is extremely nuanced in nature (focuses on relative shifts and perpetual disequilibrium)”
Esuric: "The main difference, though, comes from the interpretation of value and capital [emphasis mine]. The mainstream is essentially using a hyped up Ricardian framework which looks at capital as a fund (homogeneous and substitutable; no structure) and focuses on distribution (refined by the likes of Frank Knight and J.B Clark)."
Thanks for your reply. You and Jonathan provide an excellent “bridge” between maintream and sound economics.
I’ve heard you you describe the mainstream’s understanding of capital as a “homogeneous blob” but did not understand what this meant. But as you describe it above, "homogeneous and substitutable; no structure", it’s becoming more clear now.
The mainstream does not grasp or accept the concept of (or existence of) a capital structure, correct? That is stunning to me, it’s like a physician not accepting the existence of microbes.
In terms of value (I assume you mean exchange value?), I think you’re saying the mainstream accepts equilibrium models. Is this necessary to make their equations balance? Can they make their calculus work without a starting assumption about “equilibrium”?
Sound economics (Austrian) has it right; equilibrium is meaningless, it is subjective value scales, subjective marginal utility that determines exchange price. The reality of exchange is “disequilibrium”, each party must value what is received more than what is given up (in an ordinal sense), otherwise there would be no exchange.
Final question: With respect to the mainstream’s concept of capital, what is meant by the phrase “focuses on distribution…Knight and Clark”?
Sound economics (Austrian) has it right; equilibrium is meaningless, it is subjective value scales, subjective marginal utility that determines exchange price. The reality of exchange is “disequilibrium”, each party must value what is received _more_than what is given up (in an ordinal sense), otherwise there would be no exchange.
Well, that is a position that some Austrians hold, although it’s probably something of a minority position. Kirzner, quite reasonably, argues that insofar as it is concerned with equilibrium, “mainstream” economics is general correct. The point is that this equilibrium is only part of the story, it doesn’t account of issues pertaining to knowledge that Hayek wrote about supplementing the pure theory of choice and explaining how this equilibrium comes about.
You can polish a turd only so much.
According to a recent blog post, Mankiw is a “quasi-libertarian”. So, my suspicious turned out to be true. He admits that he “recoils at more radical libertarianism”, but given that he turned “quasi-libertarian” after being a known Neo-Keynesian, I think that it’s only a matter of time before he warms to these “radical” beliefs (of course, I’m not talking about anarchism or anything like that, but far more free-market economic principles… maybe even choice in currency? 
).
A “libertarianesque” keynesian has to be the weirdest thing ever.
Also just a layman, but the impression I get is that the mainstream thinks money [meaning paper, or even gold and silver money] is what counts. They always seem to solve problems by playing with the paper. You rarely hear them even mention resouces or products. It’s all about money.
Austrians say it’s the resources that count. Paper manipulation won’t produce more resources, and that’s all there is to it.
Also just a layman, but the impression I get is that the mainstream thinks money [meaning paper, or even gold and silver money] is what counts. They always seem to solve problems by playing with the paper. You rarely hear them even mention resouces or products. It’s all about money.
The mainstream believes in the superneutrality of money (i.e. they lack capital theory), which means that in the long-run an increase in the supply of money won’t change the underlying ‘real’ factors of the economy. For example, I recently read parts of Stiglitz’ The Stiglitz Report, where he blames the market for not adapting to the increase in excess liquidity created by the Federal Reserve (and thus, it’s a market failure).
Amazing. And I though that saying that a market failure is when the market does not respond as a keynesian model spects was a bad joke…
Here is what Greg Mankiw had to say about Mises:
http://gregmankiw.blogspot.com/2006/04/austrian-economics.html
Now, perhaps since then he has finally given it some more thought. I’m sure since then, the number of inquiries he receives regarding Austrian economics is much much greater. He cannot possibly ignore it forever. However, it is practically impossible for a mainstream economics of his academic and social rank to totally change his views. He is too much invested in his previous works. The self-interest biases are too great.
It’s his students that we should go after.
Amazing. And I though that saying that a market failure is when the market does not respond as a keynesian model spects was a bad joke.
What? “Keynesians” think money is non-neutral.
What? “Keynesians” think money is non-neutral.
It must depend on the Keynesian, because Stiglitz believes that if the market was really flawless then money would be superneutral. Monetarists and Keynesians reject the neutrality of money, but I’m not so sure about the superneutrality of money (that is, that markets adjust in the long-run without major discoordination).