Maybe I’m deluding myself, but it seems to me that we’re not hearing as much as we used to about “real Americans” – the notion that the true essence of the nation is white people living in small towns, associated these days with Sarah Palin, but also invoked by what’s-his-name, the guy who lived in the White House between President Clinton and President Obama and misled the country into war. But I’m sure that’s still how a lot of people on the right see it.
What made me think about that concept is something similar that I’ve noticed about the reaction to my writings. Often, I find, the most rage-filled emails and voice mail messages come after I’ve written something fairly economistic. And, typically, part of the rant is something along the lines of: “You call yourself an economist?”
You see, the person delivering the rant has a notion of what economics is; he (it’s almost always a he) believes that “real economics” is about singing the praises of the free market – basically Capitalism Roolz. It’s inconceivable to him that you could have a more nuanced view without being a Marxist. He’s outraged both that I have the temerity to claim that I’m doing economics and that other people seem to take me seriously. And it’s not just random Tea Partiers who think this way – so do TV business show hosts and some famous economists, too.
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What’s really odd is that you can hardly imagine a time when the evidence was less supportive of that view. We’re just coming off a dramatic economic collapse that had nothing to do with any obvious supply-side factors, but seemed clearly connected to malfunctioning markets.
And in the aftermath of the collapse, the supposed real economists made a lot of predictions about runaway inflation, soaring interest rates and so on, all of which proved notably wrong, while the unreal types like me have done more or less O.K.
In fact, there is remarkably little evidence that “real economics” is right even in normal times. The efficiency of competitive markets is a nice story, but where are the dramatically successful predictions we generally look for as confirmation of scientific theories?
Indeed, the general presumption, even within the economics profession, that microeconomics is solid and known to be valid, while macroeconomics is flaky and dubious, seems to me to rest on prejudice rather than evidence.
Yes, much of microeconomics can be derived rigorously from individual maximization plus equilibrium. But why, exactly, does that make it right?
So, in my mind the real America is the diverse America we actually live in, and real economics is the eclectic mix of ideas and techniques that seem to be useful, whether or not they have rigorous microfoundations.
And I say that as both a real American and a real economist.