It’s not really news that America’s economics departments, particularly at elite institutions, are stuffed with people whose careers are founded on protecting monied interests. But it’s pretty rare when someone just comes straight out and announces the fact.
Meet Greg Mankiw, chairman and professor of economics at Harvard, one of the most influential economists in the country. As chairman of the Council of Economic Advisers, he guided the economic blundering of George W. Bush. Then in 2006, he became an adviser to Mitt Romney and steered Romney's economic positions in 2012, which included some of the most shocking expressions of classism yet heard from a presidential candidate.
Mankiw's name might not be a household word, but the tentacles of his power and influence extend into Washington, the blogosphere and the classroom, where he molds young minds through his ubiquitous textbooks and lectures (that is, when students are not walking out to protest his conservative bias and harmful agenda).
Above all, Mankiw is the self-appointed Defender in Chief of the 1 percent. How do we know this? Well, because he just published a 23-page paper called “Defending the One Percent.” It’s helpful to understand the official propaganda line in the class war, and Mankiw has laid it out in a paper that purports to determine whether income inequality requires any intervention.
Professor Mankiw begins by asking the reader to imagine a perfectly egalitarian society where the economy is totally efficient and everybody has the same amount of money. What happens, he asks, when a Steve Jobs pops up? Somebody smarter, more creative than everybody else? Suddenly Mr. Entrepreneur makes amazing things that everybody wants to buy, and now economic inequality has entered the egalitarian utopia. Is it fair to intervene and restore equality by penalizing Mr. Entrepreneur?
It must be said that this opening sally, with its clumsily constructed straw man, would not pass muster with a high school debating coach. Most of Mankiw’s opponents do not ask for perfect income equality or imagine perfect efficiency, but rather envision a playing field in which everyone has a chance to succeed and Mr. Entrepreneur has incentives to conduct his business fairly and to share some of the rewards of his efforts with the community that made them possible.Instead of forming a cartel to hold down the wages of his young engineers, as Steve Jobs did. Or colluding to fix prices, as Steve Jobs is also accused of having done. Or backdating stock options to be sure he comes out in the money. And so on.
Mankiw’s writing displays the sensibility of a young person suddenly infatuated with the writings of Ayn Rand, and in the fine tradition of Randian entrepreneur worship, he pretends that economic inequality is mostly the result of certain people being smarter and more creative than others (one brief glance at the Forbes list of the richest Americans, which is populated by quite a few trust fund babies, destroys this illusion). In a nutshell, he argues that egalitarianism in antithetical to entrepreneurialism.
Not many people would actually argue that we don’t want smart people making cool things. We do. But we also recognize that sometimes Mr.Entrepreneur, heady with his economic success, becomes greedy and starts to try to arrange things so that other entrepreneurs will not be able to compete with him. He begins to cheat and bully and set his boot on the neck of his fellow residents of Utopialand. He may even channel his brilliance into making things that don’t help his neighbor, but actually do harm, like a complicated financial product rigged to drain the bank accounts of unsuspecting citizens.
Many Americans now have personal experience with what happens when Mankiw’s vision turns into a nightmare. They’ve begun to realize that markets often don’t work the way he says they do and that our political system has not been doing enough to correct their failures and address the resulting unfairness that leaves many smart, energetic people unable to find an opportunity to fully contribute to society and demonstrate their talents. That’s why Nobel Prize-winning economist and Columbia professor Joseph Stiglitz, whose proclivity for truth-telling has alarmed his Ivy League colleagues, wrote a book called The Price of Inequality in which he points out that America, our beloved land of opportunity, “may have become more class-based than old Europe” due to gross economic unfairness.
Unlike Stiglitz, Mankiw seems to be less interested in thinking about how to correct the market’s failures than reinforcing them. Why is this?
I don’t normally like to play the psychologist, but in trying to get a sense of what kind of man could be so blinded as to fail to grasp the fundamental challenge of our time, I watched some public appearances by Mankiw on the Web. I found something very revealing—a commencement speech he gave just a few weeks ago at Chapel Hill-Chauncey Hall, a prep school in North Carolina, where one of his children has been enrolled.
The story Mankiw tells about himself to those students seems to encapsulate so much of what is wrong with the field of economics that I think it’s worth dissecting. Mankiw comes off as an affable guy who transcended his early math geek persona to become a highly regarded economic professional. The fundamental moment in his history was when his parents chose to take him out of a large public school, where he was not being properly nurtured, and send him to an elite private school in New Jersey, where he flourished. Mankiw congratulates the students at Chapel Hill-Chauncey Hall for making a similar smart “choice” to better themselves in the supportive, tight-knit community of prep school. He seems blissfully unaware that for most children, attending an elite, expensive private school is not on the menu of options. Rather, he sees the world as a place where some succeed solely because they make better choices than others, not because some people have more money with which to advance themselves.
There’s also something very telling in Mankiw’s description of his youthful enthusiasm for mathematics. He was an excellent math student in high school, but realized in college that he would make a second-rate mathematician, so he turned to economics, graduating in 1980 from Princeton and going on to study at Harvard and MIT. This was just around the time that economics was falling into a deep infatuation with mathematical models and losing the sense of itself as a social science grounded in politics, history and culture. The result has been devastating. Economists left the human world behind and entered a mechanistic paradise where their dogmatic and ultimately destructive paradigm failed to acknowledge the forces that were gathering into an economic storm worse than anything the country had seen since the Great Depression.
Slowly and fitfully, the field is now trying to reorient itself. Some economists, like Rob Johnson and his colleagues at the Institute for New Economic Thinking, are calling to reestablish economics as a broad, interdisciplinary field, open to disagreement and grounded in the humanities. Figures like Mankiw, dedicated to the old model, will stand in the way of this process. The Mankiws of the economics profession have devoted themselves to math, but they have not been steeped in the traditional values and ethics that underpin our democracy, and they consistently fail to imagine that their elegant mathematical models might not accurately depict the real world of complex human interactions and institutions.
Mankiw is not a reality-based economist, and it’s no wonder, as he has been cocooned in elite institutions since his parents pulled him out of public school as a boy. He bounced from an elite private school to elite colleges, and then landed softly at Harvard where he has been teaching for three decades. Mankiw lives in Wellesley, Massachusetts, a town in suburban Boston that is one of the wealthiest in the country. He is a defender of the 1 percent because he knows no other community, and the 1 percent has embraced and richly rewarded the insecure math geek who sat in the back of his public school classroom trying to hide behind his spectacles. How could he question them now?
Economists talk a lot about bubbles, but not enough about the kind Mankiw occupies, which so disastrously impacts his ability to contextualize his models or think clearly about the experiences of most of his fellow citizens. During Occupy, 70 students walked out of his introductory economics class in protest (the class, interestingly, was on inequality). In the New York Times, Mankiw accused the protesters of spewing platitudes and insisted that economics is not “laden with ideology.” According to his account, he watched the students walk out, and then, “After a few minutes, I resumed the class as usual.”
More recently, instead of braving the painful process of exposing the failures of prevalent economic theories, like the recently discredited work on debt and economic growth of his fellow Harvard economists Carmen Reinhart and Kenneth Rogoff, he has leapt to defend promoters of nonsense. In a blog post centered on the theme, “Hey, everybody makes mistakes,” he dismissed the seriousness of pushing shoddy economic work that was molded into austerity policies that have caused job loss, hunger and misery for millions of the Earth’s inhabitants.
With his latest paper, Mankiw defends the 1 percent as the source of all good in our economy and society, sounding much like an astronomer defending the Earth as the center of the universe. An astronomer who, if Galileo walked into his class, would look up briefly, and then, in a few minutes, resume business as usual.