Things Economists Agree On

1) Getting answers to collide when there's only two choices, Agree or Disagree, is simple, absurdly simple.<p>50% represents maximum dissension.<p>How many other questions were there? How did they coincide with the presented questions? What is the expected distribution if answers were assigned randomly?<p>2) A question that deals with global or national finance often can't be accurately stated in a single sentence. I look at, say, the minimum wage, or the sports franchise question, and I think, "It depends."<p>3) There's an assumption in the questions that contain "should". That assumption is that economists all share the same goals. They don't. The ones who do may agree about the methods to achieve it.

I find it rather strange that even predictions that should be fairly clear-cut and straightforward (e.g. "A ceiling on rents reduces the quantity and quality of housing available.") only get around 9/10 agreement. As a non-economist, I would have thought that a seemingly simple (and testable!) question like that would be like polling physicsts with the question "Does F = ma?". And I would sure hope that more than 93% of physicists would say yes.

Interesting that all economists seem to be pro-business, anti-tax, anti-worker rights. You would almost think that most economists worked at banks or for university business schools.<p>In other research naval officers believe in a larger navy with lots of ships

I found #4 and #11 to be interesting because it is difficult to spend money, reduce taxes, and not have a deficit. Everyone can agree that it'd be great to have all of those things. Economists are far less in agreement when it comes to what the correct balancing act is.

What does this one mean?<p>"If the federal budget is to be balanced, it should be done over the business cycle rather than yearly. (85%)"

I would argue that the questions asked are largely wrong. A ceiling on rents does reduce the amount and quality of housing. The question, then, is: how much does it reduce amount and quality of housing, and how much does it lower prices? If we have minimum wages, unemployment will be higher, but how much higher? On the other hand, how much higher will average wage be?<p>Economics is a cost/benefit trade-off. If minimum wage doesn't reduce unemployment that much (and all evidence is that it doesn't -- the US is at about a natural level of unemployment in the long term, moving up and down with business cycles), we're better off with it in place. If it kills employment, we're better off without it.

Interesting that most of these were fiscal and regulatory policies, but no monetary policies held a broad consensus. I would have thought there would be more consensus on interest rates and money supply.

#4 is a bit misleading. It states "Fiscal policy (e.g., tax cut and/or government expenditure increase) has a significant stimulative impact on a less than fully employed economy. (90%)".<p>While that sounds harmless, a lot of people will take that item and extrapolate it to our current situation and say the correct policy response is to stimulate the economy with fiscal policy. That has to be right since 90% of economists agree right? Well, what happens if you add a little context to the quote and add the text "with high levels of debt as a share of GDP". That 90% number would likely come down massively most likely skewed by biases not related to economic theory.<p>In short, the quote is very misleading if you are trying to use it as a guide to our current mess. What does this imply the right policy response for us is now?:<p>We have to make major cuts in areas of excess that have little stimulative impact. This means cutting back on government pensions, entitlement reform, and cutting things like 9/11 contracts that don't provide any real increase in safety. It means we can also strategically spend in areas that have been neglected the last 10 years like an energy grid for a more stable energy policy, alternatives to petroleum based fuels, a modernized air traffic control system and infrastructure.<p>At a macro level this means net spending decreases in very sensitive areas like entitlements but also strategic increases that make our country more able to compete like education, energy independence and infrastructure.

"If all the economists were laid end to end, they'd never reach a conclusion." -- George Bernard Shaw<p>Edit: note that the article only claims a maximum of 93% of economists agreeing on any one of the items.

I'm curious about the "Eliminate Agriculture Subsidies" one. I don't know enough to give a good opinion, but it seems to me like that could wind up pricing basic, quality food out of the hands of the poorest people, and they'd either have problems with starvation or be <i>forced</i> to eat junk.<p>I mean, maybe I'm wrong, but I could have sworn it was The Man that is keeping eggs down at around $3/dozen and milk around $4/gallon.

The classic response is "nothing".<p>That being said, getting 4 out of 5 economists to agree on something doesn't mean it's right. Most economists will tell you that public policy works best when you have the capability/political will to iterate on solutions. Not unlike a startup really.

Last time I checked, economics was still considered "scientific." That means we should not be operating on consensus basis, but proof. What is the scientific model of these things that economists agree on? Have them be checked against history? Have them predicted future accurately? Have we been able explained whatever deviation they have with reality?<p>Until such model exists, consensus means nothing but politics. Maybe, just maybe, we should start considering demote economics status to "pseudo-science." Last time I check, fortune tellers also agree on shit, you know.

"A minimum wage increases unemployment among young and unskilled workers. (79%)"<p>The fair market price for young and unskilled workers would be lower than the minimum wage, yes. Is this a good thing? For young workers, if young is less than 18 (ie, still in school), then this is OK. But, for unskilled workers? That entire class would be in poverty, as if they aren't on the edge of it now.

Whilst it doesn't really support or refute any points, economists and interested people might be interested in the light-hearted <a href="http://www.youtube.com/watch?v=VVp8UGjECt4" rel="nofollow">http://www.youtube.com/watch?v=VVp8UGjECt4</a>

Great article. I fully agree with its findings that 93% of US economists are me-too academics who don't understand economics and whose "consensus" is destroying the world.

Surprisingly, I agree with all 14 statements on that list.

I am not an economist, but I think economists have been doing a lot of catch up lately. Traditional economists have tended to see people as rational agents, whereas more recent behavioral economists are showing how people are pretty universally irrational.<p>Sure, in an idealized economic simulation we would consider every possibility and only choose the most optimal one. It only stands to reason in such an environment we should remove barriers and maximize choice. But the reality is people are limited and take shortcuts in decision making that traditional economists never even imagined. Those human cognitive limitations need to be seriously considered before jumping to any conclusions about economic policy.

Here's one broad way Mankiw and company are going wrong. I start with three preliminary points and then point to the going wrong:<p>(1) They have <i>physics envy</i>. In particular, they want to sit in a small, dark, closed room and with just <i>pure thought</i>, with little to no contact with any real economy, come up with some economics version of Newton's second law F = ma or Einstein's result in special relativity E = mc^2. Nonsense. Incompetent, intellectually bankrupt nonsense.<p>(2) With their <i>physics envy</i>, they want <i>mathematical economics</i> and to build <i>mathematical models</i>. E.g., for some decades after Dantzig's simplex algorithm, they fell in love with optimization. As optimization moved forward with nonlinear programming, the Kuhn-Tucker conditions, nonlinear duality, deterministic optimal control and the Pontryagin maximum principle, and stochastic optimal control, the mathematical economists continued to use such applied math to build their models. A shockingly large fraction of the Nobel prizes in economics are from just such nonsense. The math is rock solid; there are occasional good applications to particular, small problems, e.g., the climb, cruise, and descent of an airplane or what mix of refined products should come today from an oil refinery; an <i>application</i> to a real economy is nearly always just total BS.<p>(3) To keep their models relatively simple, they make a lot of assumptions. E.g., in finance, they assume <i>perfect information</i> and f'get about the guy on a motorcycle at an airport who asked the guy on the ramp where the plane was going (as in the movie <i>Wall Street</i>), <i>naked shorting</i>, etc. E.g., they make a lot of Brownian motion assumptions that then say that the LTCM disaster was wildly improbable, which it was not. They make assumptions about which workers are <i>more productive</i> and feed that into their optimization looking for some case of a <i>non-inferior</i> solution or <i>Pareto</i> optimality as if Chinese women had 20 fingers on each hand so could sew buttons much faster than women in South Carolina.<p>Going Wrong. They take their assumptions of their simplistic models and the corresponding conclusions and say that a real economy SHOULD be like that. So, they want to bend the real economy to their Procrustean bed of simplistic assumptions and conclusions. If physical science had done such a thing, then they would still be saying that the planets should move as Ptolemy said, that falling bodies should still move like Aristotle said, and that we should still be looking for flogiston.<p>This <i>economic science</i> is intellectually both incompetent and dishonest; it's contemptible, and dangerous.<p>Once I went through Samuelson's college text: I found NOTHING that made any sense at all except for his chapter on the Federal Reserve; in that chapter, he just described what the laws had established and was clear. All the rest of the book was total BS disconnected from any real economy. E.g., if we buy more transistors, then the price of each transistor has to go up. Right: Transistors used to cost several dollars each, and now, after buying many billions, maybe trillions, of transistors, we can buy a few hundred million for less than $100, retail. Wheat: For years 1800, 1850, 1900, 1950, and 2000, take the quantity in bushels of wheat produced in the US and the price per bushel of wheat, corrected for inflation, see that the quantity has gone way up and the price, way down. Similarly for iron, steel, chickens, and pork. We're talking total suckage. The very first things in academic econ, the <i>supply and demand</i> curves, just do not work in any meaningful way in a real economy; real economies mostly just don't work that way, guys. Total BS.<p>E.g., the econonuts argue for <i>free trade</i> based on simplistic nonsense. Their idea is that, for some <i>global benefit</i> or some <i>Pareto optimality for the world</i>, it is <i>better</i> if the production is where it is most efficient. So, yes, grow teak wood in Thailand, grow rubber in Viet Nam, mine tin in Indonesia, and pump oil in Saudi Arabia. Fine. Then, sew buttons in China? Sure, if the Chinese women had 20 fingers on each hand. But they don't. And a sewing factory in China has to struggle with bad situations for each of suppliers, legal system, transportation system, communications infrastructure, information technology infrastructure, etc. Still, the econonuts want to conclude that China is <i>more efficient</i> at sewing buttons. No they aren't: Instead, the Chinese government understands what the econ profs don't: China takes their young women and makes each of them "an offer they can't refuse", work for pennies a hour under whatever conditions, or else, period. It's not a matter of being <i>efficient</i>. So, businesses, careers, lives, and communities in South Carolina are ruined. So, we pay the former textile workers to do nothing or just let them die. I know: A few of the textile workers get to serve BBQ. From such destructive nonsense, instead of textile workers, I have a better suggestion for who deserves to die. They are doing it, and we should say so: The academic econ profs are KILLING Americans.<p>Then there's <i>US competitiveness</i>: In the 1950s the US had a great economy. Except for some points of information, biomedical, and materials technology, it's not clear that our standard of living is as high now. Our imports were meager, maybe some tin from Indonesia, etc. We didn't buy much from outside because the other industrialized economies were devastated and, thus, had little to sell us. But we did sell some products: Telephone systems, construction machinery, airplanes, etc. Then the idea is that since we could sell at what were astoundingly high prices, especially for the buyers, that is why our economy was doing well: NONSENSE. Total 100% nonsense: So, Joe went to work at, say, Caterpillar, and made great machines which we shipped to, say, France. France paid us in silly paper which we converted to gold. So, we accumulated a lot of gold. What good did this do Joe or the US? Next to none: In particular, Joe's labor got consumed in France instead of the US. Econonuts are confused. It is easy to see why, say, Japan, Saudi Arabia, or Jamaica needs foreign trade. But the US was doing just fine, thank you, as essentially a self-sufficient economy in the 1950s and, with foreign trade, is doing worse now. We are shipping our <i>going businesses</i>, <i>market position</i>, <i>education</i>, technology <i>secret sauce</i>, and <i>intellectual property</i> overseas, and the econonuts conclude that this is <i>good</i>. Total BS.<p>Now, sure, we want to import some oil: Saudi Arabia has oil and needs national defense, wheat, construction expertise, water and sewer systems, information technology, cars, etc., so we can swap. Fine.<p>So, why did we give away major parts of the US economy? Sure: Some econonuts had excuses for why this was <i>optimal</i>, and the Foggy Bottom types wanted to <i>save the world</i> by exporting the US economy. Meanwhile, back in the US, the citizens got it in the rear. US citizens were killed, and are still dying.<p>So, several large US industries got shipped to Taiwan, South Korea, Pakistan, and China, and whole states in the US had their economies devastated. There is a <i>loss</i> the econonuts don't count: The human capital that gets <i>written off</i>. Or, the econonuts assume that the textile workers and metal bending manufacturing workers can, of course, just move to Redmond and write software for Microsoft, which has so far likely never happened even once, to sell to China, which, of course, steals software and doesn't buy it.<p>The econ profs conveniently f'get about market manipulations we learned about in the US in the 1890s -- <i>predatory marketing practices</i>, etc. And they f'get about the <i>assets</i> of a <i>going business</i>, technology <i>secret sauce</i>, market position, etc. The simplistic econ models just don't count such things, so the econonuts assume that we shouldn't think about such things in the real economy and, thus, just give them away.<p>In school, I knew the applied math MUCH better than the econ profs, and their nonsense and its intellectual dishonesty were infuriating. After the first lecture, I asked the econ prof, nicely, what he was assuming -- continuity, differentiability, continuous differentiability, convexity, pseudo convexity, quasi convexity, or what. Then within an hour he had called my Ph.D. advisor and got me OUT of his class. That was not my intention but was GOOD.<p>Academic economics has NOTHING important to do with any real economy and is from irrelevant, incompetent, dishonest, and contemptible down to seriously dangerous.<p>We're talking ordinary crooks way down to the lawyers way, way down to bucket shop operators and from there way, way, way down to the politicians and from there, far, far down where just can't see at all, the econ profs. I know what we should export next: If all the econ profs were lined up on a cargo ship, it would be a good thing. And still better if the ship sank far out at sea.<p>The real economy is IMPORTANT, way, WAY too important ever to be touched by anything like econ profs.