Samir Amin
Amin's essay contains many of his own observations about how both books could have gone further, and is well worth reading.
For an introduction to Ha-Joon Chang's book, you can listen to him giving a talk about the book's themes here.
RH
Friday, March 25, 2011
Samir Amin reviews 'The Economics Anti-Textbook' and '23 Things They Don't Tell You About Capitalism'
Samir Amin recently wrote a review (that appears here, and originally here) of The Economics Anti-Textbook and Ha-Joon Chang's 23 Things They Don't Tell You About Capitalism, a book that I'm just starting to read now. It was certainly nice to read Amin's first sentence: "Every honest economics teacher absolutely must make the book written by Rod Hill and Tony Myatt ... compulsory reading for their students, fed almost exclusively on the conventional textbooks that are prescribed reading."
Amin's essay contains many of his own observations about how both books could have gone further, and is well worth reading.
For an introduction to Ha-Joon Chang's book, you can listen to him giving a talk about the book's themes here.
RH
Amin's essay contains many of his own observations about how both books could have gone further, and is well worth reading.
For an introduction to Ha-Joon Chang's book, you can listen to him giving a talk about the book's themes here.
RH
Tuesday, March 8, 2011
The Uncut Movement
Perhaps something interesting is about to happen to challenge the quiet system of tax avoidance and evasion that has been allowed to develop in recent decades around the world. I think it's fair to say that this system has been studiously ignored in the economics textbooks at all levels -- something that I will try to document in the near future -- and it gets little play in the corporate-owned media, naturally enough.
In a recent article in The Nation, Johann Hari (who writes for The Independent in London and for Slate.com) describes how UK Uncut came about. The concept has since spread to many places: there's Canada Uncut, US Uncut, Australia Uncut, among others.
What I like about this new 'Uncut' movement is that it's not just opposing regressive cuts to public spending, but it's pointing to where the money is that isn't being paid to public treasuries to support public services. After all, the plutocracy doesn't like paying taxes and have been quite skillful in avoiding doing so. Naming names and taking public action might prove quite effective.
In the USA, Warren Buffet and his companies might be a good target. In a recent piece, "Warren Buffet wants your taxes", the indefatigable David Cay Johnston (author of Perfectly Legal and Free Lunch, great books about corporate plunder of the public purse) writes "Legendary Omaha investor Warren Buffett loves stuffing tax dollars into his pockets, which means that money never gets to schools, police, and libraries." Johnston then details how Buffet uses accounting tricks and lax regulation to pocket tens of millions in corporate income tax revenues that should be paid to government.
RH
In a recent article in The Nation, Johann Hari (who writes for The Independent in London and for Slate.com) describes how UK Uncut came about. The concept has since spread to many places: there's Canada Uncut, US Uncut, Australia Uncut, among others.
In the USA, Warren Buffet and his companies might be a good target. In a recent piece, "Warren Buffet wants your taxes", the indefatigable David Cay Johnston (author of Perfectly Legal and Free Lunch, great books about corporate plunder of the public purse) writes "Legendary Omaha investor Warren Buffett loves stuffing tax dollars into his pockets, which means that money never gets to schools, police, and libraries." Johnston then details how Buffet uses accounting tricks and lax regulation to pocket tens of millions in corporate income tax revenues that should be paid to government.
Propaganda for the suckers
RH
Saturday, February 26, 2011
Why should students put up with textbook nonsense about labour unions?
The heating up of the class war in Wisconsin (nicely described by Paul Krugman in his recent NY Times commentaries and that generated this great spoof phone call from the Buffalo Beast that outed "Koch whore" Gov. Scott Walker) prompts a brief comment about the textbooks' treatment of labour unions.
As we wrote in The Economics Anti-Textbook, "unions get a 'bad press' in mainstream economics textbooks" (p.173). This is partly because the default model of the labour market is the usual one of perfect competition, so employers have absolutely no market power over the wage. When a labour union is introduced into such a setting, it appears as a source of unopposed monopoly power and students have been already been persuaded of the evils of monopoly in their study of product markets.
As Michael Parkin and Robin Bade write in their 2006 Canadian edition of Microeconomics, "Just as a monopoly producer can restrict output and raise price, so a monopoly resource owner can restrict supply and raise the price of the resource. Labour unions are the main source of market power in the labour market." (p.413). No evidence is provided for this assertion, naturally; I can't really imagine how this could be measured in any reliable way, but it clearly neglects the simple fact of pervasive employer power in actual labour markets. [For details, see the Anti-Textbook, p.187]
Unlike some texts, Parkin and Bade do discuss a monopsony model, in which the employer has market power, although (as with almost all texts that mention this model), they marginalize it by defining it in a very narrow way: "a market in which there is a single buyer", a market type that "is unusual, but it does exist" (p.416). They go on to present a brief discussion of monopsony and unions. They write: "If the union (monopoly seller) faces a monopsony buyer, the situation is called bilateral monopoly. In bilateral monopoly, the wage rate is determined by bargaining." (p.417).
But wait! Students who are alert and thinking for themselves could realize that wage determination by collective bargaining is not "unusual" at all. So employers' market power over the wage must not be unusual either. Perhaps, such students might conclude, unions are just exerting 'countervailing power' -- to use the term coined by the most famous Canadian-born economist, John Kenneth Galbraith, whose name does not appear in Parkin and Bade's book.
Parkin and Bade's treatment of labour unions looks good in comparison to Mankiw, Kneebone, McKenzie and Rowe's Principles of Microeconomics (3rd Canadian edition, 2006) where labour unions get mentioned in only a single paragraph in a 500 page book. That explains only that unions can achieve "above-equilibrium" wages through the threat of a strike. Monopsony and employer power over the wage are concepts omitted from the book.
I suspect that it will be the rare student who escapes the subtle (or not so subtle) indoctrination here that labour unions are not socially desirable. Not all books, however, are this bad.
For example: Frank, Bernanke, Osberg, Cross and MacLean's Principles of Microeconomics (3rd Canadian Edition, 2009) has a detailed yet concise description of the actual effects of labour unions, concluding that "studies suggest that union productivity may be sufficiently high to compensate for the premium in union wages. So even though wages are higher in unionized firms, these firms may not have significantly higher labour costs per unit of output than their non-unionized counterparts." (p.373).
In their Microeconomics in Context (First US Edition, 2005), Goodwin, Nelson, Ackerman and Weisskopf not only discuss monopsony and bilateral monopoly, but they write: "More common are cases of oligopoly and/or oligopsony (few buyers) in labor markets. In many labor markets the employers, employees, or both have some amount of market power, and their relative power is important in predicting outcomes." (p.314).
These few examples suggest that there are significant differences in the textbooks' treatment of the nature of labour unions and their economic effects. Now how can the situation for students be improved?
The simplistic story of consumer sovereignty -- where producers just produce what the consumer wants -- does not work here. The consumers are the students, not the professors who (believing themselves benevolent dictators) choose their texts. But the dictatorship of the professoriate is not necessarily a benevolent one.
Dissenting students really have two choices: exit or voice. With exit, they give up on economics courses and study other subjects. With voice, they complain and try to make things better. Up until now, I suspect that 'exit' has been the option of choice. It's easier and requires no organization, but it does little to improve the situation and those students who exit miss out on the real benefits of studying economics.
The process of much mainstream economics training from first year to PhD has too much in common with being drawn step by step into a strange cult. At first, it all seems innocuous enough, but then it gets progressively weirder (with more and more people dropping out) until those left at the end find themselves seeing the world in a way that seems like lunacy to those outside the cult. ("A dynamic stochastic general equilibrium model of the macroeconomy? Makes sense to me!")
One of the reasons we wrote The Economics Anti-Textbook was to help students to see the kind of subtle indoctrination they were being subjected to by the typical mainstream introductory text and to protect themselves against it. But they can also use it for 'voice', to challenge their professors' choice of text.
RH
Protesters in Cairo Madison
[Photos from The Chicago Tribune]
As we wrote in The Economics Anti-Textbook, "unions get a 'bad press' in mainstream economics textbooks" (p.173). This is partly because the default model of the labour market is the usual one of perfect competition, so employers have absolutely no market power over the wage. When a labour union is introduced into such a setting, it appears as a source of unopposed monopoly power and students have been already been persuaded of the evils of monopoly in their study of product markets.
As Michael Parkin and Robin Bade write in their 2006 Canadian edition of Microeconomics, "Just as a monopoly producer can restrict output and raise price, so a monopoly resource owner can restrict supply and raise the price of the resource. Labour unions are the main source of market power in the labour market." (p.413). No evidence is provided for this assertion, naturally; I can't really imagine how this could be measured in any reliable way, but it clearly neglects the simple fact of pervasive employer power in actual labour markets. [For details, see the Anti-Textbook, p.187]
Unlike some texts, Parkin and Bade do discuss a monopsony model, in which the employer has market power, although (as with almost all texts that mention this model), they marginalize it by defining it in a very narrow way: "a market in which there is a single buyer", a market type that "is unusual, but it does exist" (p.416). They go on to present a brief discussion of monopsony and unions. They write: "If the union (monopoly seller) faces a monopsony buyer, the situation is called bilateral monopoly. In bilateral monopoly, the wage rate is determined by bargaining." (p.417).
But wait! Students who are alert and thinking for themselves could realize that wage determination by collective bargaining is not "unusual" at all. So employers' market power over the wage must not be unusual either. Perhaps, such students might conclude, unions are just exerting 'countervailing power' -- to use the term coined by the most famous Canadian-born economist, John Kenneth Galbraith, whose name does not appear in Parkin and Bade's book.
John Kenneth Galbraith, at home in Cambridge in 1995. (The Boston Globe/ File)
Parkin and Bade's treatment of labour unions looks good in comparison to Mankiw, Kneebone, McKenzie and Rowe's Principles of Microeconomics (3rd Canadian edition, 2006) where labour unions get mentioned in only a single paragraph in a 500 page book. That explains only that unions can achieve "above-equilibrium" wages through the threat of a strike. Monopsony and employer power over the wage are concepts omitted from the book.
I suspect that it will be the rare student who escapes the subtle (or not so subtle) indoctrination here that labour unions are not socially desirable. Not all books, however, are this bad.
For example: Frank, Bernanke, Osberg, Cross and MacLean's Principles of Microeconomics (3rd Canadian Edition, 2009) has a detailed yet concise description of the actual effects of labour unions, concluding that "studies suggest that union productivity may be sufficiently high to compensate for the premium in union wages. So even though wages are higher in unionized firms, these firms may not have significantly higher labour costs per unit of output than their non-unionized counterparts." (p.373).
In their Microeconomics in Context (First US Edition, 2005), Goodwin, Nelson, Ackerman and Weisskopf not only discuss monopsony and bilateral monopoly, but they write: "More common are cases of oligopoly and/or oligopsony (few buyers) in labor markets. In many labor markets the employers, employees, or both have some amount of market power, and their relative power is important in predicting outcomes." (p.314).
These few examples suggest that there are significant differences in the textbooks' treatment of the nature of labour unions and their economic effects. Now how can the situation for students be improved?
The simplistic story of consumer sovereignty -- where producers just produce what the consumer wants -- does not work here. The consumers are the students, not the professors who (believing themselves benevolent dictators) choose their texts. But the dictatorship of the professoriate is not necessarily a benevolent one.
Dissenting students really have two choices: exit or voice. With exit, they give up on economics courses and study other subjects. With voice, they complain and try to make things better. Up until now, I suspect that 'exit' has been the option of choice. It's easier and requires no organization, but it does little to improve the situation and those students who exit miss out on the real benefits of studying economics.
The process of much mainstream economics training from first year to PhD has too much in common with being drawn step by step into a strange cult. At first, it all seems innocuous enough, but then it gets progressively weirder (with more and more people dropping out) until those left at the end find themselves seeing the world in a way that seems like lunacy to those outside the cult. ("A dynamic stochastic general equilibrium model of the macroeconomy? Makes sense to me!")
One of the reasons we wrote The Economics Anti-Textbook was to help students to see the kind of subtle indoctrination they were being subjected to by the typical mainstream introductory text and to protect themselves against it. But they can also use it for 'voice', to challenge their professors' choice of text.
RH
Tuesday, February 22, 2011
Another glimpse into the system of global plunder
As an addendum to my earlier post on the Mubarak billions, here's a report in today's Guardian on the possible billions squirreled away by Libyan tyrant Muammar Gaddafi and his hideous spawn.
Fellow billionaires?
[Photo from a Guardian photo retrospective on Gaddafi's career]
For me, this was just another reminder of the true nature of the system of global finance and banking that helps to facilitate the plunder of countries, whether by dictators like Gaddafi, Mubarak, Suharto, Mobutu, Somoza, Marcos, the Sultan of Brunei, the Saudi kings (and so on), or the corrupt elites in countries like Kenya or Nigeria, or indeed the corrupt elites in the 'developed' countries who use the system of 'offshore' banking and tax havens to escape taxes.
RH
Saturday, February 19, 2011
How is Climate Change Treated in the Economics Textbooks?
In The Economics Anti-Textbook, we wrote that "even by the mid-2000s, almost twenty years after the issue rose to prominence, many textbooks barely mentioned the subject [of climate change] and those that did tucked it away at the back of the book." (p.155) We surveyed nine texts published between 2005 and 2008. It was discouraging to see that only three of the texts contained some factual evidence about climate change.
To try to kill the market for used texts, textbook publishers crank out new editions every three years or so. The changes are often superficial, but regular reviews are required to see what the texts are currently saying about important topics. I intend to use this blog to do that sort of thing myself, but I'll also report on the work of others if I can.
So I was interested to see that Yoram Bauman, famous as the first economist to try standup comedy with an economics theme, has recently written a review of the most recent editions of leading American introductory texts called Grading Economics Textbooks on Climate Change. (You can see his notice about it on his blog here and the full document here. For a video of his standup routine on the principles of economics, see this on his YouTube channel.)
The texts' treatment of climate change is no laughing matter. The topic is an important one and, according to Dr. Bauman, some of the books do a good job, and some are bad to downright awful. It would be interesting to see if those failing to make the grade on this topic also show consistent failings on other hot-button ideologically-sensitive topics as well. For example, do they feature one-sided discussions of minimum wages or labour unions or trade liberalization, for instance?
RH
To try to kill the market for used texts, textbook publishers crank out new editions every three years or so. The changes are often superficial, but regular reviews are required to see what the texts are currently saying about important topics. I intend to use this blog to do that sort of thing myself, but I'll also report on the work of others if I can.
So I was interested to see that Yoram Bauman, famous as the first economist to try standup comedy with an economics theme, has recently written a review of the most recent editions of leading American introductory texts called Grading Economics Textbooks on Climate Change. (You can see his notice about it on his blog here and the full document here. For a video of his standup routine on the principles of economics, see this on his YouTube channel.)
[This simulation from NASA.]
The texts' treatment of climate change is no laughing matter. The topic is an important one and, according to Dr. Bauman, some of the books do a good job, and some are bad to downright awful. It would be interesting to see if those failing to make the grade on this topic also show consistent failings on other hot-button ideologically-sensitive topics as well. For example, do they feature one-sided discussions of minimum wages or labour unions or trade liberalization, for instance?
RH
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