TheMarketForIdeas

We live in a world where hating something is trendy. Some hate Hawaiian Pizza, some others hate the rich, some hate immigrants, some people hate rap music, etc. Some people hate economics. What is economics about? I would refer to it as a social science that studies the economy from a well-defined perspective – that resources are scarce, that choices must be made in using them, that most of the time people use some thinking in making these choices, and that the market mechanism helps carry out this resource allocation. Thus, economics is first and foremost about the functioning of the market economy, and about the role of prices in allocating resources. If one wants to get an idea on what economists do study, he/she might look to the table of contents top-5 journals of the field, including the American Economic Review and Econometrica; the collection of Schools Brief in the Economist is also representative of the “hot topics” in today economics. One might be surprised by the methodological homogeneity of the field. Econ-haters will probably disagree with my definition, since when you really hate something, you sometimes end up by denying its existence. I agree, this can raise some logical problem (should I hate something that does not exist?), yet hate is about emotions, not about logical thinking.

I can see at least five reasons why some people hate economics.

Transfer of hate (from capitalism, to econ) 

Many people hate capitalism, read private ownership and the market economy. Using new fancy concepts, most of them will embrace die-hard variants of Marxist ideology, according to which the market is just a mean for capitalists to enslave workers, by depriving them of the surplus of their work. To rescue workers from the capitalist hell, a planned economy should come, where capitalists are expropriated (and normally killed), and workers will run the economy for the common good, using the state and the central plan. For these capitalism haters, because economics strives to understand and improve the functioning of the market economy, it is a theory that supports exploitation of the working class, which deserves to be hated, as capitalism must be hated. What can I say? Fine guys, feel free to hate capitalism, to admire Venezuela, Zimbabwe, and North Korea. Is it a coincidence that these countries are run by bloody dictators, as was the case in all former socialist countries in Eastern Europe? Of course not. If socialism brought extreme poverty and destroyed the environment wherever it prevailed… let us keep our eyes closed and keep hating capitalism and economics. Many economists try to address the issue of inequality, by means of taxation in general. Let us hate them too: if there is no Marxist revolution in the end, what they suggest is necessarily bad as they only work to preserve capitalism. Some haters will combine Marx with Malthus’s perspectives. Capitalism is very bad because it sets the world on an alleged excessive growth path. If the number of people living below the threshold of extreme poverty fell dramatically in the last 40 years (from 43% in 1981 to 9.3% in 2017), it does not matter. What matters is that resources and fossil energy are used for this purpose. Then, the idea of using the price mechanism to back the switch to renewable energy must be hated too. What is needed is a good revolution, to impose a cultural change, “teaching” people to consume less (as, in communist Romania, the dictator Ceausescu “taught” Romanians to heat flats at 5°C in winter times). It is true, for many economists the fight against poverty is a fundamental research goal. If the answer to this serious challenge is sustainable growth instead of degrowth as claimed by the new Malthusians, let’s hate economics.

Hate what you do not know 

Some people hate Formula 1 racing. Why, because they just see cars spinning around, with a big noise and polluting the planet. Those who love Formula 1 have a subtle knowledge of this sport. They know everything about the strategies of various teams, about the pilot’s driving skills, about the risks these people take, and admire their courage. And know that many advances in car technology, including in life-saving safety, come from this sport. In general, people who hate Formula 1 racing have no idea what Formula 1 is about. Many people hate economics because they did not study it, and, consequently, have no clue about its content, methods, principles, and limitations. What can be seen as a paradox is easy to understand. Quite often the econ-haters are well-educated in their own field. Yet, instead of making the effort to learn some economics (and then criticize it eventually), they strive to bring the narrative of economics within their vocabulary and methodology. Well, this is great. Do it. But do not hate economics if no one understands what you say. Sometimes cross-disciplinarity brought great outcomes. A bright scholar such Nicolae Georgescu-Roegen could use concepts from thermodynamics to shed light on economic issues. William Nordhaus combined economics with climate science to analyze global warming. Contemporary economics benefits a lot from the contributions of great mathematicians such as John von Neumann, John Harsanyi or John Nash, or psychologists such as Daniel Kahneman. On the other hands, there are thousands of weird-economics books written by “original” thinkers that had a zero impact, and in general zero sales. If trees could fill a case against abusive cutting to print these books, the planet would be greener…

Hate what you do not understand 

Economics is a difficult discipline. It was created more than 200 years ago and evolved over time into a major field of study in social sciences with the contribution of thousands of educated people. It is a cumulative science, meaning that the brightest recent contributions did not fall from sky, but were built on the efforts of former bright scholars. An economics genius such as Paul A. Samuelson paid tribute to his teachers in his Nobel Prize banquet speech (1970) and is also praised by his PhD students now famous such as Robert Merton. Among the various social sciences, thanks to its fact-based, rigor-driven methodology, economics is the closest to a hard science such as physics. Economics requires a decent background in logics, quantitative analysis, statistics, and mathematics. Traditional economics has a modelling dimension and an empirical one. In the last thirty years, what many haters prefer to ignore (or just ignore), economics has been developing more along its empirical dimension backed by heavy econometrics, complex lab and field experiments, which allow to deal neatly with causality. Some of the econ-haters have an interest in society at large, but just lack the quantitative skills required for the economic analysis. Like those who dream to be a Formula 1 pilot but have not passed the driving license. Because they lack the basic skills to understand contemporary economics, they feel frustrated. In general, these econ-haters will criticize the “oversimplification of reality” by economists, the excessive use of mathematics, the neglect of the social context, of history, of geopolitics, of philosophy and religion, of the weather on Mars, etc… Fine, I can take this criticism if it comes from people with serious training in economics, and there are many such critics, but I found it weird when it comes from someone who does not know what a first order condition for an optimum, or Bayes rule is…

Hate methodological individualism 

In the past, one would rely on school and family education to guide children toward becoming a good person. Today, if hating is trendy, so is moralizing. Just open the daily newspapers, turn-on the TV, read Twitter or Facebook messages – and you will be flooded by calls “you should do this” or “you should not do this”. Self-proclaimed experts tell us what to say and how, how to travel, what jokes we can make and what jokes we cannot, what to eat, how to dress, how to travel, and so on. Worse, (too) many people seem happy with this responsibility-shift and are ready to blindly follow these recommendations. Questioning, debating, arguing – is “has-been”. Moralizing extends to companies, and to markets. Companies expect now to be told what to do for the common good. The fact that they serve the consumers, innovate, create jobs and investment opportunities, is treated as irrelevant. If you are a moralizer (i.e., you believe you know what is good for the others), then you probably hate economics. Because economics is a-moral (not immoral!). It takes people preferences as given, and it tries to avoid judgment values about these preferences. In so doing, it constantly reminds people that they must make choices in a responsible way. That they should be in command of their lives. Moralizers hate this since they want to control anyone else’s life. Economics explains better than any other social science what a negative externality is, and how regulation can be implemented to correct it. But this regulation is most efficient if it builds on the market mechanism and does not fully destroy choice. Firms in the socialist economy were expected to work for the common good (as defined by moralizers at that time) under planning, in full neglect of the market mechanism. In fact, planning destroyed everything, from trust among people, to prosperity and the environment. Because economics builds on the assumption that people are free to choose, moralizers hate it. In their opinion, economic freedom should be restricted to achieve a goal defined by smart people (i.e., themselves) who know what is best for you. What they miss (or do not care about), is that individual choice comes with responsibility, and responsibility comes with social trust.

Hate sells well and makes the buzz 

Finally, in the small world of academia in social sciences, hate of economics sells well on social media: it helps create “the buzz”, and buzz is influence and some visibility. Economics, with its focus on individual choice and responsibility is a natural candidate for publicly claimed hate and criticism. It is of course easy to criticize something. It is of course much more difficult to come up with a meaningful answer. But for the buzz… who cares about the answer? Just write a paragraph mixing quantum physics, cite some philosophers, swear you really care about “those who are forgotten”, say something negative about profits and greed in finance, and the trick works! The like counts will explode. 

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I have discussed here five reasons on why some people might hate economics – because they are ignorant of the field, lack of quantitative skills and feel frustrated, are biased toward the collectivist ideology, love moralizing, or just want to make the buzz. Imagine that someone ticks all the boxes…

If you just have read this note and you HATE it, it might worth trying something different: have a walk in the park, feed the ducks, and STAY COOL. More people will respect you, and you will probably have a better life. 

Photo: Pieter Bruegel the Elder - The Fall of the Rebel Angels (1562)

Source: Wikimedia Commons