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It’s time to seriously rethink how economics is taught

With little evidence of a serious debate among teachers about economics reform, students are taking the lead


 
(Shutterstock)

(Shutterstock)

The largest gathering of Canadian economists begins Friday at the annual Canadian Economics Association (CEA) conference at Ryerson University. Among the diverse presentations, from the economics of Niagara Falls to the market for hockey cards, the program will feature the annual Innis Lecture, named after economic historian Harold Innis. Innis pioneered staples theory, which seeks to understand Canadian economic development in terms of the production and export of primary commodities (“staples”), from cod and furs, to potash and petroleum. Staples theory helps explain why there is a Fort McMurray.

Yet despite the memorializing of Innis, fewer Canadian economics majors today are being introduced to his thought. Over the past two decades, there has been a shift in economics programs away from required courses in economic history toward more “theory” courses emphasizing mathematical modelling. Further, these courses tend to teach a single approach to economic issues (such as the business cycle or patterns in income distribution), rather than with several competing perspectives. The result is a sort of intellectual monoculture in the classroom.

The ascendency of this pedagogical monoculture, known as free-market neoclassical economics, may be traced to a number of factors , not least the shaken credibility of conventional Keynesian policies during the stagflationary 1970s and the rumoured consignment of social democracy to the dustbin of history with the fall of the Berlin Wall in 1989. For a while, it seemed reality fit theory as many national economies enjoyed an extended period of economic growth, with low inflation, in the 1990s.

Cracks in the edifice began to show after the 1997 Asian financial crisis prompted some soul-searching about the unfettered free flow of finance across nations. It was around this time that some disaffected economics students from around the world began calling for a “real-world economics” that is broader and more reflective than that taught in the classroom.

Then, the 2008 Great Recession hit, and in its wake lay a discipline with a serious public relations issue. As Nobel laureate Paul Krugman observed in 2009: “There was nothing in the prevailing models suggesting the kind of collapse that happened last year.” The crisis galvanized the nascent movement of students and reform-minded professors. Backed by financier George Soros, the Institute for New Economic Thinking was founded in 2009 “to nurture a global community of next-generation economic leaders, to provoke new economic thinking, and to inspire the economics profession to engage the challenges of the 21st century.” In 2015, the International Student Initiative for Pluralism in Economics, a coalition of 65 student groups from 30 countries, pleaded for the reconsideration of the way economics is taught, arguing that this “lack of intellectual diversity not only restrains education and research, it limits the ability of economists to contend with the multidimensional challenges” of today.

So, what’s happening in Canada? With the exception of a few op-eds about Economics 101, there is little evidence of a serious debate among teachers about economics reform. In a session at the 2013 CEA conference titled “The Great Recession and the teaching of macroeconomics,” one prominent academic said the crisis was the greatest professional embarrassment faced by the economics discipline since its handling of stagflation in the 1970s. However, he then said that with respect to teaching, he wouldn’t change a thing. A puzzling admission, as one wonders if a civil engineering professor would respond in the same way if all the world’s bridges suddenly collapsed.

However, unrequited demand by standard supply will spur innovation as some Canadian students refuse to wait for their teachers to change their minds in face of the facts. Two student groups, Rethinking Economics Waterloo and Mouvement étudiant québécois pour un enseignement pluraliste de l’économie (MEQEPE), recently held day-long seminars exploring pluralism in economics. On Thursday, over 100 students gathered at Ryerson for a one-day summer school organized by the Progressive Economics Forum. Billed as “learn in a day what you missed in a year of regular classes,” the school covered such timely issues as rethinking the meaning of public debt, ecological economics and sustainable well-being, institutional power and economics, and the problems of (and solutions to) income inequality.

It is hard to say where and when change will come to economics education in Canada. It may come through advocacy by a fearless CEA president or a visionary department head. But for the time being, the leadership for change appears to be coming from Canadian students. Students recognize the stakes are high in today’s complex world, where getting the policies right begins with what is taught in the classroom.

And maybe one day again, they will learn about Harold Innis.

 

David Pringle is a Ph.D. candidate at Carleton University and the chair of the Progressive Economics Forum.


 

It’s time to seriously rethink how economics is taught

  1. Some ‘real world economics’ would be nice, but Canada doesn’t live in the real world.

  2. Gee … I wonder what the three ( maybe four ) economists who our media mavens
    regard as experts think. Surely someone will ask them. Maybe A. Coyne will.

  3. The author is correct. A degree in economics is a bout as worthless as a pinch of coon crap. Maybe less. Look, without recognizing that every thing in the world, including government, has a variable but finite value to potential purchasers, any time spent studying economics is wasted.
    The problem is that governments themselves are infested with “economists” whose lives revolve around two main functions. One is to create ever more byzantine revenue generation schemes designed to be work-arounds of the hard fact that governments became way too expensive a couple of generations ago. The other is to craft ever more acrobatic explanations as to why such schemes always fall short of the mark.
    The Keynesians (read: stupid people) are still trying to grasp that it wasn’t Keynesianism that propelled the North American economic boom that lasted largely unabated from 1945 until the early 1970’s. It was the fact that we were the only undamaged industrial economy in the world for better than two decades after the end of WWII, and had fallen under the fist of socialism.
    When that boom began to fade, we began a cycle of deficit and debt that continues to this day. It was a symptom of a problem that anyone not blinded by various levels of economics theory (note: there are no economic theories, only economic facts) could easily see. Debt and deficits are merely indications that governments have grown too large and expensive to be supported by the private sector economy.
    This is best exemplified by the fact that we have reached a point where no new taxation measures are capable of generating anywhere close to the projected returns. They always fall short, simply because people find workarounds eventually.
    New gasoline taxes cause people to drive less, or buy more efficient vehicles. New liquor taxes cause people to drink less, or purchase in less expensive tax regimes whenever possible. Higher property taxes drive down property values and drive away citizens (see: Detroit) and jobs.
    On a larger scale, tax jurisdictions increasingly compete with others in efforts to poach businesses from other regions on the basis that a single but deeply discounted addition to the local tax base is better than none at all.
    But none of this happens in a vacuum. Any new taxation or regulation carries a cost that governments cannot afford to pay, so the games are increasingly rigged to try and make the negative consequences of any new taxation be felt elsewhere. It’s exactly why equalization is so popular outside of BC and Alberta, and why once on the equalization teat, no province wants off. Why face local wrath, and job losses, with a local tax when you can get on the equalization train and never get off? After all, the voters three provinces over who are paying the tab for the new “career and arts center” can’t really wield any influence at the local ballot box, can they?
    The left, funded by public sector unions, will carry on ad nauseum about “corporate welfare”, while lobbying for bailouts of union pension plans, and billions for “green energy” projects. Teachers unions use the threat of job action to squeeze the tax base for more money “for the children”, only to have 90% of all new education money go into already bloated salaries. Colleges and universities lobby for more post secondary funding, use the money provided to expand administration staffing and salaries faster than inflation and student body growth might warrant, and then blame tuition hikes on government restraint.
    Everything has a market value above which point it will no longer be purchased. Governments, due to their confiscatory powers, can mask this economic reality. (Note that in the mid-20th century, residents of Michigan and Ontario moved back and forth across the border for as little as $25 per month in taxation and wages.) But even confiscatory power cannot erase the ability of individuals to vote with their feet or their chequebooks. An Alberta resident earning $250,000 per year can afford to carry the cost of maintaining an Alberta residence on the tax savings alone, even if that person lives 11 months per year in Invermere or Kelowna, simply by legally claiming to be an Alberta resident. Look at Lloydminster on Google Earth. There’s a reason that more people live on one side of an imaginary line than the other. It’s called taxes, and they’re still higher in Saskatchewan than Alberta. Governments have grown too big and expensive, and people and enterprises are becoming ever more diligent at reducing the impact of ever more rapacious tax burdens. They’re simply not buying what’s offered.
    Any economist that cannot grasp this simple and basic fact, along with the need to begin the arduous task of shrinking governments at every level, along with reductions in regulatory oversight and burden, is simply someone who has wasted opportunity and money on a field of study that is so exceedingly simple as to defy any reasonable need for it to be considered a legitimate field of study or research.

    • Great rant!

      Totally wrong, but whatever….

      We’ve had taxes since the beginning of time, and we’ve argued about them for centuries as well instead of finding something else useful to do with our lives.

      Now economics is a separate field….full of graphs and charts and fractions….and we still argue.

      Accept it as a given that you will pay taxes. And the rate will go up or down over time depending on what we need and do. But don’t spend your life fretting about it.

      • Having had a bit of economics, may I offer a thought or two.
        1. Problem is WWII continued spending without limit after the Great Depression and is probably more responsible for pulling us out of it as it was Keynsian gone mad. Nobody worried too hard about paying off the debt than being with put a world tyrant. .. . . and then came the Cold War. .
        Keynes. While the theory is a good one it also depends on pay off debt in good times as well as borrowing, investing on infrastructure in bad times.
        2. Prior to WWI there were NO income taxes. Taxes were levied for two purposes a. to influence trade. 2. To raise funds – for example the Stamp Tax and Tea tax of infamous repute. It was only later that tobacco and liquor taxes were levied to punish the sinful because in both cases it was well demonstrated that prohibition didn’t work. Our current governments can’t get that through their heads. 3. Now that taxation of all types is here, as Em says, it is not going to go away because we have forgotten what frugality is

        Supporting definition : Frugality is living in a house without a mortgage i.e build it yourself and add to it as needed/afforded. Doing without until you can pay cash. That was the world of my parents, but not ours.

        • None of that applies to Canada

          http://en.wikipedia.org/wiki/Income_taxes_in_Canada#History

          And if everyone had to wait to build a house we’d still be living in soddies. There is nothing wrong with debt….it’s just another financial tool.

          If you are so concerned about debt….speak to the Brits. They still owe money for the South Sea bubble from 1720….and also WWI. They just finished paying off the US for WWII.

    • Good read pretty much spot on. Completely wasted on most who read the comments on Macleans but I enjoyed it.

  4. There are many things which the economists of our day will have to answer to history for. There is a growing body of evidence that our planet has now entered the 6th great extinction in its history, and it is the activities of human beings–especially habitat destruction–that is the primary driver. If there are any economists around in the not-too-distant future, they will be puzzled by why the people of our times were willing to accept the operations of economies when those economies were destroying the living tissues of the planet in such a visible way. For anyone at any university to stand up and defend neoliberal economics is an astonishingly immoral act. In a more just world, we would drive these charlatans from their tenured chairs and replace them with economists who practiced what the great “small is beautiful” economist E.F. Schumacher called “economics as if people mattered.”

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