That said, what issues do I have with Mankiw’s 10 principles themselves? That would be a very lengthy conversation. At a 10,000-foot level, I would say they are “half-truths that add up to delusional bupkis.” More specifically, behavioral economics has clearly demonstrated that consumers are not rational operators, and that principles 1–4 are not only oversimplifications, but actually distort or distract from the microeconomic dynamics that are really in play. Human decision trees are not analytically neat-and-tidy, they are messy, impulsive and emotional; and, in fact, marketing knowingly exploits that unstable irrationality to condition completely counterfactual, counterproductive, unhealthy, demeaning and dangerous consumption patterns in consumers. For crying out loud…this is obvious to anyone who observes or researches real-world consumer responses to corporate coercion and manipulation.
After 1–4, Mankiw gets a bit more sneaky with 5–7. He uses the phrasing “trade can,” “markets are usually,” and “governments can sometimes,” and of course we can’t really argue those points, because…well…they are in fact reasonable. Except…well…are they? It is when Mankiw elaborates on these points further (in his writings, etc.) that we see the depth of his blindness — how he does not appreciate or address the complex interdependencies involved, or the widely demonstrated externalities and causal chains, or in fact the well-established track record of what actually works in the real world…and what really doesn’t. This is where we can get lost in the weeds, but suffice it to say that Mankiw doesn’t begin to fully enumerate all of the inputs and outputs of trade, or the complex landscape of variables that influence those inputs and outputs, or, indeed, the disastrous consequences of what can fairly be described as “Mankiw-esque” market fundamentalist policies we have witnessed in the past. His ideas live in a bubble — applicable to what I call “a unicorn market,” one that has never and will never exist.
Principles 8–10, along with most of Mankiw’s thinking, are just more conceptual trickle-down from outdated classical economics. But (and this is pretty ironic IMO) unlike Smith, Ricardo et al, Mankiw fairly reliably excludes the common good from being part of serious deliberation. In other words, he drifts into the realm of laissez-faire that classical economists actually warned about. Where, as Smith wrote: “All for ourselves, and nothing for other people, seems, in every age of the world, to have been the vile maxim of the masters of mankind.” But are points 8–10 accurate in any way? Sure…again if you exclude all sorts of other factors, causes, variables, evidences, etc. that are critical to a complete macroeconomic picture, Mankiw’s points provide a partial, highly tailored framing of causal relationships. So, if a person ignores how markets actually function, the corruptive influences of crony capitalism, how boardroom decisions are actually made, why financialization has displaced production for massive wealth generation, why monopolies occur, where Keynes was proven correct (and what monetary policies actually work), why growth-dependent economies boom-and-bust, etc…and instead pines away for a juicy young unicorn to sate their every neoliberal appetite, well then: Mankiw is the porn for them!
Let me just call out one specific example of Mankiw’s delusional approach. His prescription for most resource allocation challenges is to privatize them — like many neoliberals, Mankiw believes private property is the panacea for all ills. However, Elinor Ostrom demonstrated in her common pool resource management research that the tragedy of the commons need not exist where self-organized, self-managed sharing of common resources is approached a certain way, and she goes on to enumerate observed principles that have been successful. Essentially, there are widely employed systems of access to and utilization of common resources around the globe that completely sidestep the tragedy of the commons without private ownership or government intervention. Hmmm. How could this be? In Mankiw’s unicorn universe, it can’t be, since there will always be free riders and excessive inefficiencies when privatization is absent. But again, Ostrom was just documenting what she observed in the real world, so Mankiw is just, well…wrong. Hence the nature of the problem with most of Mankiw’s thinking — and indeed most market fundamentalist thinking (i.e. Randian objectivists, anarcho-capitalists, individualist economic materialists, Austrian School evangelists, etc.).
My 2 cents.
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