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Lynn Parramore: Meet America’s Most Shameless Defender of the 1 Percent, Harvard Economist Greg Mankiw

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Readers were duly exercised about a paper published by Greg Mankiw which had to go through so many hoops to promote the idea that inequality was the result of merit as to be worthy of our Frederic Mishkin Iceland Prize for Intellectual Integrity.

Suffice it to say further ridicule of Mankiw is in order, and Parramore provides a useful contribution.

By Lynn Parramore, a senior editor at Alternet. Cross posted from Alternet

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.

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  1. Walnut Jensen

    Why pay attention to tripe? Many adore Mankiw. How serious should we take an academic’s threat of violence?
    Blow away the tired old cobwebs, and look back in our mind’s eye to the concept of the greatest evils of the 20th century, and there we see the intellectuals who celebrated a system that ruined the lives of their brothers and sisters.

    1. lakewoebegoner

      ironically, or perhaps hypocritically would be better, a big chunk of Mankiw’s wealth is derived economics undergrads who bought his book thanks to federal government education loans.

  2. frank E.

    Having gone the same academic route as Mankiw and having known dozens like him, I can say with some certainty that he doesn’t believe a word he says, or has said since he first started playing the college admissions game. He has probably never cared about the science of economics or advancing it; OTOH he cares deeply about advancing his own interests. He’s been able to slide through life as an Ideologue, masquerading it behind second rate mathematics. Now that he has tenure, fame and is making a fortune, he doesn’t care if it’s believable anymore or if students walk out. As long as he keeps to the ideology, Harvard will never push him out. That’s the real message to the graduates.

    1. Joe

      My only caveat with your statement is your faulty characterization of economics as a ‘science’.

  3. Steve the Other

    Mankiw is not a math geek and mathematicians are deeply concerned about social issues. Let’s not blame theft and fraud on math, christ!

    1. Chris E.

      One of the unofficial positions of this blog’s narrative is to demonize unjustifiably neoclassical economics (with false association to neoliberal plutocratic policies) and mathematics of social phenomena.

      Of course, there are academics all across the ideological spectrum who use mathematical modelling. That means that some of the work is suspect and still others are great. But abuse of a tool does not make the tool evil.

      1. Yves Smith Post author

        Don’t straw man. I make my position on the use of mathematics in economics very clear in ECONNED and the position in this blog is no different. It is hardly a secret that

        1. As Mankiw illustrates, a lot of economists are wannabe mathematicians who couldn’t cut it in math.

        2. Economics has a bad case of physics envy

        3. The mathing up of economics (disapproved of even in the beginnings of that exercise by Irving Fisher and Keynes, both of whom were pretty accomplished mathematicians) has helped economists obtain greater stature, since the false appearance of rigor and the use of formulas serves as a barrier to exclude non-economists from the conversation. As Deidre McCloskey and Phil Miroski have pointed out, the use of math in academic papers is frequently to render the most trivial parts of the argument; the really critical parts are in the overwhelming majority of cases, in the definitions and the narrative that precedes the formulas.

        4. The scientism (and resulting unduly elevated stature) of economics has been detrimental (in that economists tend too much to believe their own BS and policymakers and the public are too easily cowed and/or marginalized in policy discussions).

        This is not hard to understand. Economic theory is based on absurd assumptions and reductionism. The fact that a top journal would publish a paper as patently embarrassing as the one Parramore mentions should be seen as a sign of rot. And as we discussed long-form in ECONNED, to make their proof-like form of mathematical exposition work, they HAVE to assume that economies have a propensity to equilibrium. That is a major Procrustean bed.

        As for their “empirical” work, while it can yield insights, don’t mistake it for science. As a post in MacroBusiness points out, quoting Scott Borg, a cyber warfare specialist and an economist:

        A science doesn’t need statistical correlations because it can say absolutely what happens and how it happens. If I am doing chemistry I don’t have to say there is a statistical correlation that suggests this reaction. We have got this reaction or we don’t. Whenever people are talking statistics they are usually not there as a science.

        1. Chris E.

          Yves writes,

          The scientism (and resulting unduly elevated stature) of economics has been detrimental (in that economists tend too much to believe their own BS and policymakers and the public are too easily cowed and/or marginalized in policy discussions)


          Yes, oh so detrimental. Those horrible DSGE models everyone complains about just happened to have popped up and been implemented by central banks while we’ve seen the most stable prices in the developed world in history of recorded data.

          There’s a lot of bad work that has been done in the framework of mathematical modelling in economics and the attempt to create “laws” and such (what you refer to as physics envy).

          But to ignore the progress we’ve made because we have pretty damn good models now that have led to a rather scientific approach to delivering price stability (albeit at the peril of unemployment and other considerations) is just imbalanced.

          The Austrian/anti-neoclassical critique of mathematical modelling is usually petty, as you write:

          This is not hard to understand. Economic theory is based on absurd assumptions and reductionism.

          Is the definition of modelling that we need to make assumptions and reduce reality to manage it in a closed system for analysis. To find the very attempt at analyzing the econmy in this framework offensive because sometimes it’s wrong and it has been abused — is just strange!

          You can bash mathematical modelling in economics all you want by pointing to ad homs about physics envy and trying to make things scientific in human behavior, but they’ve contributed to a lot of solid development around the world and stability in the developed world.

          Instead of overgeneralizing what are specific legitimate critiques against those who abuse the use of math in economics to create a false impression of law/hard science, focus on the specific bad actors. Time and time again on this blog people just demonize neoclassical economics and modelling because of the bad users, and making false equivalence of neoliberal plutocrats to neoclassical modellers.

          But your four points are just 1. Math in econ is bad, 2. Math in econ is bad, 3. math in econ is bad. 4. Math in econ is bad — Okay well there are a lot of good people out there doing good work and properly framing their results with the right caveats about econometric research.

          1. viculea

            You seem to know a lot about this stuff. Could you give some examples as to who these good economsists are? Thanks.

          2. Yves Smith Post author

            No your 1-4 again are straw manning. There is a world of difference between saying “the way mainstream economics uses mathematics is scientism” and “using mathematics in economics is bad”. I see you’ve also managed to airbrush out that we regularly feature posts and articles that rely on models and analysis (VoxEU, Steve Keen, etc).

            And as I footnote EXTENSIVELY in ECONNED, all of my criticisms of economics are made by economists, including Nobel Prize winners.

          3. skippy

            @Chris E.

            Its simple… you can’t model humans.

            Now what passes for *econned modeling* – is craming – an idelogical template down on a population and observe the reaction.

            Just ask your self why so many models have and are failing so badly, VaR, CAD, Derivitives, et al, their just bias multiplyers.

            skippy… Its all Virtual rubbish.

          4. middle seaman

            Math in the context of econ or any other study is neither good nor bad. Modelling using math can be correct or may miss the point. Whatever math Mankiw used, his model is nonsense.

            Using math, in many cases as ritual dances, is the lingua franca of science. Math is an extremely solid and important field. Using math is sometime abused.

          5. AbyNormal

            Men think highly of those who rise rapidly in the world; whereas nothing rises quicker than dust, straw, and feathers.

          6. craazyman

            maybe the stability allowed the Demonic Sadistic Godless Equation to wallow unmolested by truth and reality for a time. sort of like a pot smoker stoned immobile on a couch while the TV drones and flickers in the dark. Causation is always a tricky thing and math is helpless in the face of it. Math also can’t establish the units being measured or their inherent identity. So much it leaves out. hahahahah. craks me up. physicists have art envy. ever notice that? sterility looking at life.

            Maybe PRofessor Mankiw is in the throes of a steadfast delusion. I think he believes himself, it’s not just a con job. I also think he could be persuaded by the logic his delusion has wrapped around his brain. I think he wants to be liberated, actually. It’s a cry for help.

            I did read bits and pieces of his paper and I think there’s an opening for a revelation there. It would require a little bit of argumentation, but I think it’s possible. It would be useful to have some xanax handy since you get a bit jangled when the worldview falls apart.

          7. diptherio

            “…they’ve contributed to a lot of solid development around the world and stability in the developed world.”

            You’re referring, I assume, to Asian sweatshops, Russian oligarchs, the slowly crumbling EU, and the US’s post-GFC zombie economy…right…

          8. Glasshammer

            “Time and time again on this blog people just demonize neoclassical economics and modelling because of the bad users”
            -Chris E.

            Demonize isn’t the right word, “mocked” would be far more accurate. And it doesn’t take articles by Steve Keen to understand why.

            Neoclassical economics and modeling are so poorly tethered to the observable reality most of us encounter that we can’t help but mock it.

          9. Hugh

            Did DSGE predict the housing bubble in the 2000s, its bursting in 2007, or the meltdown in 2008? How does it address the dominant world economic system of kleptocracy?

            These models and their practitioners simply give intellectual cover to looting. As for price stability, have you ever looked at the CPI-U historically? It was flat to slowly rising from 1913 going into the 1970s. If it had kept that slowing rising trajectory of the 70s, it would currently be a third of its present value. So prices have not been stable. What is really going on here is that the Fed has been keeping prices fixed relative to workers’ wages. This has meant that real wages have been flat for 40 years and below their levels in the 60s and 70s. However, there have been big increases in productivity during this time, the benefit of which has all gone to the rentier classes, resulting in an enormous transfer of wealth from productive workers to the unproductive rich.

        2. Generalfeldmarschall Von Hindenburg

          You can go really deep with a discussion of what exactly science is and how the word and concept are misused to bolster thoroughly rotten power structures.

          1. igor

            There can be no “deep discussion” regarding “what is science”.

            Here is 1 min 02 sec clip where Mr.Feynman explain what science is:


    2. Harry

      The previous poster didnt blame maths.

      besides, economists dont do maths. They do arithmetic. The maths used by economists is generally trivial.

      I think Wankiew does believe it all. I think he has to. Otherwise he would have to acknowledge that everything he has spent his time on is absolute bullshit. And that he himself is an utter fraud.

      People will believe all sorts of lies before they believe that they are frauds.

  4. charles leseau

    Ahh yes, merit…

    …The merit where ambition is rewarded well above skill.

    …The merit of being born a Paris Hilton.

    …The merit that allowed me to make much more hourly as a kid bartender with a 20-drink repertoire than at my current skilled labor job, and more than a pure math genius or theoretical physicist makes, and where the bar owner – a genuine dummy – didn’t do a thing with his incredibly meritorious life except count the register and go home to his riches.

    …The merit that allows one to make money simply by having money to lend at usurious interest or renting out inherited lands. “So…what do you do for a living?” — “Oh, nothing. I own stuff and it’s a constant source of income.” My landlord is much like the aforementioned bar owner. Doesn’t do a thing except own massive amounts of land she inherited. Her life is all leisure, all the time. Hardcore reactionaries both, too.

    …The merit that allows American jerks to spend of their own volition massive millions buying off the government or installing their own lackeys and then go on and crow very publicly about the government stealing their taxes by taxing them at all. Go figure.

    …The merit whereby a young, crap, but handsome 3-chord guitarist “with attitude” makes millions more than a virtuoso classical or jazz pianist, or for that matter an ugly or fat 3-chord guitarist.

    …The merit where a company that makes record profits sees fit to turn around and give the people that did all the work a sudden massive pay cut en masse, because the employees are “free fo find work elsewhere” (in a collusive job market where such practice has been made the norm)

    As for the completely egalitarian society bit, I don’t want that, but I hate the idea a lot less than unhindered plunderism with no limitations. One thing I see only rarely ever mentioned is limits to wealth and land acquisition, as in “Okay, you managed to get nice and filthy rich – congrats! Enjoy! But no, you don’t get to own more and more and more and more and more of the planet. Nope, you get a couple houses and a boat.”

    I sometimes wish money would rust or rot. A potato rots; the money it’s worth does not. I remember reading about “Miracle of Wörgl,” during the Great Depression, where a town decided to use its own rusting currency – stamp scrip – and it was an island of relative prosperity while the rest of the country (and world) suffered. Of course, the Austrian National Bank put a stop to that. Wouldn’t want people to get ideas, after all.

    1. Warren Celli

      Good comment. Regarding this;

      “As for the completely egalitarian society bit, I don’t want that, but I hate the idea a lot less than unhindered plunderism with no limitations. One thing I see only rarely ever mentioned is limits to wealth and land acquisition, as in “Okay, you managed to get nice and filthy rich – congrats! Enjoy! But no, you don’t get to own more and more and more and more and more of the planet. Nope, you get a couple houses and a boat.” “:

      I talk about limits to income and asset wealth a lot. You are absolutely right, getting people to the subject is about as difficult as painting a fart purple. One of the reasons this is so can be explained by this article, it is great article as far as it goes, but it has an underlying very limiting Vanilla Greed for Profit stance and air about it. It chastises the 1% (actually <1%), the newer more Pernicious Greed for Destruction, and Mankiw’s defense of that more Pernicious Greed, but at the same time it neglects to mention its own Vanilla Greed for Profit base that Pernicious Greed for Destruction has mutated from.

      One very good point in the article is the elite school “cocooning” connection made that promotes Mankiw’s Xtrevilist ethos. But here again, that more extreme evil moral nature has its wellspring in the base evil of Vanilla Greed for Profit which is a product of the same past elite school “cocooning”, and that is not mentioned. It is that past elite Vanilla Greed for Profit school “cocooning”, with its conditioning to acceptance of and adoration of great wealth disparities, and the morality that a little crooked government is OK, that makes the mutation possible. I call this the Vanilla Greed lament. In the past Vanilla Greed for Profit was just as obnoxious in defending its advantageous position as Mankiw is in defending his Xtrevilist position now. Vanilla Greed’s erroneous belief that it is still a political power force is what keeps us stuck in the totally non responsive to the will of the people circle jerk system. They have had their clock’s cleaned. They actually hold the keys to change but are so brainwashed to, and still so enamored of, their old also elite immoral methodologies that they are blind to their power. They are deeply skewed to unfairness.

      Until we look at and address the history of this now global institutional inbreeding of a very few aberrant sociopathic Xtrevilist pigs we will have only more intentional chaos as we are being directed to a ruler and ruled world with the ruled in perpetual conflict with each other.

      Google Aggregate Generational Corruption and you will see that this has been going on a long while

      Deception is the strongest political force on the planet.

      1. psychohistorian

        The rules of inheritance need to be changed to eliminate accumulation of wealth and property.

        At least to the level of having enough to effect social policy………..

        1. Warren Celli

          Agree. Strongly! Its a significant problem that contributes greatly to the inbreeding.

          Deception is the strongest political force on the planet

  5. allcoppedout

    Never met him, but did once consider his ‘Principles of Economics’ for 101 plus. Came with a study guide and teaching paraphernalia. Had the same reaction to it as most textbooks for business – biased and dire. Mankiw is only one of many across subject boundaries. Most of my formal training was in the sciences and I find no science in the business curriculum.
    The pressure to teach from textbooks is enormous, not least from students who want to copy answers from them or learn the kind of sums we can set from the content. My own view is we are trapped in a modern scholasticism involving fundamental texts. This stretches cross the humanities and social sciences, so I’m not much impressed by those who want an economics based on more psychology, philosophy and so on. We have to do more to challenge the meritology ideology in which access to education is very unequal and really dull writing and talk can be made to look smart (anyone remember Labov these days). I’m pretty sure we have been conned on education generally (it means ‘to make like a Duke’) and is a weapon of class-war.
    Mankiw no doubt deserves what Lynn says here – but how can we write a ‘new syllabus’ of different content and which won’t disable those who don’t do academic stuff well and probably cannot. The critical theorists and others had very powerful arguments against neo-liberalism by 1970 and there has been much consideration of what dominant ideology has been in different societies. How do we ‘get real’ instead of preaching gospel – whether of Mankiw, Marx, Habermas, Gramsci or Keen? And how do we protect those we will never teach at all and their interests?

  6. jake chase

    The last American economist was Veblen. He died in 1929 and wasn’t even mentioned in the early Sixties when I majored in economics. Neoclassical economics is bunk wrapped around college calculus. Neoliberal economics is bunk proved by assertion and distortion. Both continue to exist for their propaganda value. Every racket exists because it pays, and the academic economics racket is no different than the patent medicine racket.

    Power relations are the real story, and people generally know what they’re up against. They don’t care what these economists are saying and nobody else should either. Answers to the power problem will come out of politics if they emerge at all.

  7. C

    Perhaps the really sad part of this is that his straw man isn’t even his. It is Ayn Rand’s John Gault being relabelled with a real person’s name. In effect he is reduced to cribbing from the selfish queen’s notebook.

    Also his assumption that Steve Jobs is the right example, as opposed to say Steve Wozniak shows how unaware he is of what it takes to make anything.

  8. Clive

    Yes, Paris Hilton (not that I hold any ill-will against her, I’m sure that Paris is a perfectly nice heiress and does definitely like animals) is the example I always cite — just because it always comes to mind — when anyone tries to tell me that the rich are rich because they are creative, gifted and entrepreneurial. Thereby, apparently, deservedly privileged.

    Money, especially when it is either inherited or obtained by fraud and other criminality, does not confer wisdom or worth to society.

    Luckily, some of the most miserable blighted people I know are wealthy if not outrageously so. I keep hoping that the small army of 1%-wannabes I encounter will wake up and smell the coffee… or the lines of coke which all too many “strivers” seem to have to resort to in order to give themselves a “lift” (what they are trying to lift themselves out of or from is never adequately explained).

    The happiest are those who are content with their lot and ever eager to give back more than they have received.

      1. Clive

        Alas I did. I may never recover from the experience. I haven’t felt that unwell since Pia Zadora last took to the screen.

  9. PaulW

    What’s the problem? We can always “eat cake”. Over 200 years after that pseudo-quote it is literally true for us in the West. So long as we can eat cake we’ll attempt to change nothing. The rot from the top shall continue.

  10. McWilliams

    I read the entire piece by Maniew yesterday as an exercise in critical thinking, but almost blew my morning miso onto the screen when Mankiew suggested that his children had no different educational opportunities than any middle-class (whatever that is anymore)youngster. Given his own history,and the placement of his child(ren) in an elite prep school, I now see how justified my reaction was. Hyprocrisy, arrogance, blindness? The list of nouns that can be applied to such thinking can go on and on.

  11. TMoney

    All classical economics assume a rational economic actor.
    Almost all people demonstate large amounts of non-rational behaviour – so the models fail.

    Beware the non-rational economic actor !

  12. Harry

    If you studied neoclassical economics you will understand that Wankiw needs this analysis to prove income distributions reflect merit. The assumptions which are required to prove this include (as Knut Wicksell noted so astutely) that the initial income distribution is virtuous or that over time tends towards virtuous. That would involve assuming that real interest rates or profit rates grow more slowly than the economy.

    Only a half wit muppet would assume either of these points. Someone who hadnt heard of either slavery or feudalism. Someone who hadnt heard of monopoly or external costs or even corruption.

    Does anyone know someone like that that ?

    Greg Wankiw come on down!

  13. MikeNY

    Simply put: America’s distribution of wealth, its treatment of its most disadvantaged citizens, is indecent and immoral.

    Anyone who defends this staus quo is immoral: lacking in empathy, ethically blind. I suspect that Mankiw could read Rawls and not feel ashamed; but this, in itself, is shameful.

    America’s obscene inequality is a moral issue.

  14. Harry

    “This morning I gave the commencement address at the Chapel Hill-Chauncy Hall School, from which my older son just graduated. You can read the speech here.”

    I imagine Chapel Hill/Chauncy Hall must be a tough old place.

  15. Montanamaven

    Stephen Zarlenga of the American Monetary Institute in his essential book “The Lost Science of Money”:

    Observation, more than theory, is needed for discovering how processes and things function. The political economists’ methods [theoretical anti-historical approach] were like medieval doctors who theorized on how the body worked, but never dared to dissect the body to see what was happening.

    Zarlenga observes that neo-classical economists are more like high priests of the Banking aristocracy. They threw up false ideas of money “to entrench bankers”. “

    Some of the most ignorant and even the insane among them were given important positions while the better minds were pushed aside or ignored by the money power.

    If we just imagine people like Mankiw in Mayan, Egyptian, or Catholic priest attire roaming through the halls of colleges chanting and waving pots that fill the air with smoke, then maybe we could see them for what they are. Lambert has a great graphic of Mayan priests throwing bodies down a pyramid as an illustration of “shared sacrifice”. That’s all this is. Priests making stuff up to save their own hides and steal from the people. It’s also like those old films where South Pacific maidens were thrown into the volcanoes by the island a**holes aka priests to save the economy. Although my favorite old movie was one where they lowered a virgin down to be eaten by a giant clam so that good fishing would return to the island.

  16. rich

    Big Lie: America Doesn’t Have #1 Richest Middle-Class in the World…We’re Ranked 27th!
    America is the richest country on Earth. We have the most millionaires, the most billionaires—and a increasingly poor “middle class.”

    “Financialization means the increasing role of financial motives, financial markets, financial actors and financial institutions in the operation of the domestic and international economies.”

    This includes such trends as:

    The corporate change during the 1980s to make shareholder value the ultimate goal.

    The deregulation of Wall Street that allowed for the creation of a vast array of new financial instruments for gambling.

    Allowing private equity firm to buy companies, load them up with debt, extract enormous returns, and then kiss them goodbye.

    The growth of hedge funds that suck productive wealth out of the economy.

    The myriad of barely regulated world financial markets that finance the globalization of production, combined with so-called “free trade” agreements.

    The increased share of all corporate profits that go to the financial sector.

    The ever increasing size of too-big-to-fail banks.

    The fact that many of our best students rush to Wall Street instead of careers in science, medicine or education.

    In short, financialization is when making money from money becomes more important that providing real goods and services. Here’s a chart that says it all. Once we unleashed Wall Street, their salaries shot up, while everyone else’s stood still.

  17. washunate

    I actually rather enjoyed Mankiw’s intro econ textbook. Mankiw is relatively transparent about his approach (in the way that Bush was honest – he actually did tell you what he was doing generally, just not directly).

    The corporate Dems are far worse, because they engage in active deception to make it sound like they support the public good. It is far more manipulative and pernicious.

    Or to say it more bluntly, the problem in our society is not servants of power like Mankiw. Rather, the problem is the lack of opposition to them, the lack of voicing clear alternatives.

    1. Montanamaven

      Yes, you are on to something. But I say do both. We need to expend as much of our energy on exposing the Vichy Bourbon Democrats and their part in the”managed democracy and inverted totalitarianism” that Sheldon Wolin argues is what we have here in the U.S. in his book “Democracy Incorporated” as we do the more visible toady high priests like Mankiw.

  18. washunate

    “not least from students who want to copy answers from them”

    I’ve had the exact same experience. When we have a system that artificially inflates the value of a piece of paper, we basically force people who have no interest in being students to go to college anyway just so they can say they’ve graduated from college.

    The students sometimes appear smarter than the professors – they actually understand how American political economy works :)

    Doing less work to achieve the same outcome is a good thing, not a bad thing. People adopt behavior that responds to the incentives presented to them. Brilliant!

      1. allcoppedout

        I’d say the same Wash – and I was never really able to teach more critical stuff until I’d done some more directly job related stuff (the sums, competitive advantage etc.) because I couldn’t personally justify churning out critical theorists to the unemployment line. Biologically, most undergrads are still in teenage.

  19. F. Beard

    Oh come on, Lynn.

    Not one mention of the government-backed credit cartel, the means by which the rich and other so-called “creditworthies”
    steal the purchasing power of their neighbors?

    Without that cartel, it is likely that large corporations would be very broadly owned and we would not be in the middle of a class war.

  20. Mankiwfus

    Let me respond. Wait, I can’t get this spoon out of my mouth. Muff, just pull on it a little. Pull some more. Is it stuck on my tongue or a molar? Just a minute I will be right with you. Come on Muff there are people waiting. Pull. I said pull!
    Where did you get those muscle’s P.S. 12 ? Let me help. Maybe if we both pull…

  21. Hugh

    Mankiw’s economic work is crap, but it is crap with a particular point of view that just happens to validate the wealth and power of our ruling classes. And in return for producing this status quo legimitizing crap, Mankiw just happens to get a gig at one of the country’s premier universities and gets to write popular crap filled textbooks on economics. It is all very convenient.

    Mankiw is an example of elite bad faith. Propaganda dressed up as research.

  22. Hugh

    Re Steve Jobs, just how many iphones could he have made on his own without an army of designers, engineers, code writers, and production workers? How many could he have made without the government sponsored infrastructure and public education which created the conditions not only for his ideas, their realization, but the consumers who might want to buy them?

    Should Jobs be rewarded for his ideas? Sure, but to the tune of billions? No. No one’s contributions to our society are worth billions. Billionaires are not a sign of economic strength but weakness. They represent a vast, illegimate, and unproductive sequestration of society’s resources into the hands of a few.

    1. craazyman

      I agree wtih you but one think I’m thinking about these days on the bus is this: what if somebody is a billionaire but lives in a 3-bedroom ranch house and drives an old pickup truck with their dog’s head out the window driving down the highway and never indulges in any terpitudes, such as private jet travel, but insists on bicycling or taking Amtrak? What if they dont’ do anything except sit around and tend to their garden, on their 1/4 acre plot of land, and indulge themselves in their hobbies, such as carpentry or shooting model rockets from the local high-school’s football field. Let us say they are indistinguisable from a very middle class homebody.

      Are they still elite?
      Are they still part of the 1%?
      If they don’t use their wealth, does it even exist?
      If it does exist, what is it’s nature?
      If it has a nature, does the consideration of its concentration in one person have important consequences for the ideas of wealth and poverty and the nature of money?
      What if this individual insists that all his (I”m thinking this is a man, just for visualization) workers get paid a fair and living wage?
      Could this person be an enlightened despot?

      These are questions I’m currently contemplating.

      1. Massinissa

        1. No. You need a lifestyle befitting an elite to be an elite

        2. Technically, yes. The 1% is demarcated more by amount of money than what is done with the money. While a useful term, Oligarchs would be a better term than 1%, because Oligarch describes what a person does and not what a person is. So while technically this gardener would be in the 1% in terms of wealth, he would not be part of the 1% social class.

        3. It depends where the wealth is. If its in a bank, then it is, because at least a part of it will be lent out. Same with if its denominated in stocks or something. If its in gold bullion in a cave under his garden, then for all intents and purposes it no longer exists economically.

        4. No clue how to answer what its nature is.

        5. This is interesting. His not spending is actually very important to the economy, because, even if it sits in a bank somewhere, for the most part it is idle for, well, years, and is essentially taken out of the economy. If he doesnt spend it, then for many practical purposes most of that money does not exist in the economy. Its like a blood clot, of money: it isnt moving, and hurts the overall organism, in a way, though perhaps being less hurtful than using that money to corrupt whats left of our sickly republic.

        And as for the question if he is an enlightened despot… I dont recall you ever saying what business this man is in or what investments he has made. So it would ultimately depend wouldnt it?

        My 2 cents. Thanks for letting me talk.

    2. Warren Celli

      Hugh, you are on fire! Keep talking, I agree!

      Lose the billionaires! Dump the Xtrevilist power elite and take back the corporations as a means to regain control of government and regain the privatized (read stolen here) commons. Lose the FED and create government nominal interest only utility banking (like electricity, sewer, and water, all should have access to it) with local democratically elected credit committees.

      What is a fair maximum yearly income? I would put it for starters at half a million max with a sliding scale tax and the caveat that when everyone on the planet has a clean bed to sleep in and a full belly at night then the amount could be raised. The goal would be to encourage those with the most ability, talent, creativity, and the strongest spirits to be maximally productive. We need to balance the degree of wealth redistribution with incentives that maximize the productivity of all people and stop worshiping these parasitic inbred Xtrevilist self anointed elite pigs. That maximum wage amount and a minimum wage would be kept under constant one person one vote review and restructured periodically as needed to maintain a healthy sustainable incentive in the population.

      Craazyman, your imaginary billionaire is a pig that took too much. Let him work to right the wrongs of Aggregate Generational Corruption and acomplish the clean beds and full bellies structure as described above if he wants more.

      Deception is the strongest political force on the planet.

  23. jfleni

    RE: A. Rand & “certain people being smarter and more creative than others”.

    She spent her whole life raging with a lunatic campaign against the Russian Reds who took away her father’s pharmacy, and then to get even, smoked and fornicated herself to death, until desperate, alone and abandoned, she said to Social Security and Medicare (having taken great care to become an American), “Help me!”. And they did! None of the jumped-up economist morons (Mankiw, Greenspan, and others) who believed her raving nonsense while she lived cared a whit then or now.

  24. allcoppedout

    I agree with Hugh, but Harvard gets in the way again. You get moral philosophers “explaining” that the area mega-stipends is tricky because the likes of Jobs and sports stars all get them – hence it’s ‘the way of the world’ – and no mentioning we can do salary caps, or the extent to which the rabid unfairness is demotivating to we other monkeys (real monkeys down tools when they get crap like cucumber they don’t really like if they can see another group getting grapes for the ‘work’ asked of them).
    I only work for money these days – on the grounds most work has become foul and unrewarding (or you burn out in the struggle against this).

  25. Linus Huber

    I do not really care about Greg Mankiw but to me, the increased inequality and enormous imbalances the world over are caused, to a high degree, by the inflationary monetary policies of central banks. Of course, other aspects acted also to influence this unsustainable development e.g. the spirit of one nation one people after WW2 that deteriorates over time or the increase of manipulative regulation that increasingly allows a system to become more inflexible over time.

    I often hear the excuse that prior to the managed currency regime by the FED, there also were crisis’ and havoc from time to time. Yes, of course, but exactly due to abusive and dishonest behaviour by e.g. banks. The real difference, however, is the fact that the centrally managed devaluation of currencies over so many decades allowed all these inequalities and imbalances to develop into an enormous mountain without ever having been subjected to necessary and regular bouts of counteractions and therefore violating the principle of sustainability.

    Before going after the “Rich”, why not start by stopping continuously to transfer wealth from the middle class to the 0,1% via these monetary policies.

    My essay on the longterm consequences of inflationary monetary policy on society can be found here

  26. Anonymous

    These fucking right-wing economics professors love to advocate for policies that attack the social safety net in order to place workers at risk. Why don’t these asshole professors practice what they preach for others and ELIMINATE UNIVERSITY TENURE? After all, right-wing economics professors claim that exposing middle class workers to job insecurity is suppossedly “good” for the economy and for society. Then, why don’t we also expose those same right-wing economics professors to those same risks of job-loss that they want others to be exposed to?

  27. prufrock

    I read twice the surname “Mankiw” among the contributors: in Italy this is called “tengo famiglia”, don’t know how that is called at Harvard.
    Anyway yesterday the other Harvard phenomena Professor Alesina wrote a piece on a mainstream – mainstream in the sense of going bankrupt, as usual – italian newspaper commenting on the final high school examinations going on these days in Italy. Unfortunately the above mentioned phenomena is not informed that both programs and exams have changed in the last decades and he expresses his views on a totally out of date subject. Maybe he is too much concentrated in elaborating his depression economics 101 for the future.
    Funny enough: I have the feeling that I live in avery modest country then I read this stuff… poor guys!

  28. T.D.

    While my political standing is by no means in line with Mankiws’s, and my family is hardly up to the middle class rank, I find this article a very poor criticism of his paper and reeked with personal attacks. The author perhaps did not even carefully read his whole paper.

    For example,when discussing about Mr. Entrepreneur’s obligation to “share some of the rewards of his efforts with the community that made them possible”, the author seems to forget that Mamkiw also acknowledges this in his paper. He just questions the method to come up with exactly how much Mr. Entrepreneur should pay. And Mankiw also makes a clear case that he opposes unproductive economic activities and market distortions.

    Overall, Mankiw did not oppose income inequality intervention, he just raised ethical and economic questions behind the process. As much as I want to defend the poor, I don’t want to hurt those who work hard for what they derserve either, if such people exist at all.

    Perhaps, a better response to Mankiw’s paper can be found here

  29. AlanDownunder

    This paper presents Makiw’s bid to corner the trickle down market. Won’t work though. Even without looking beyond Harvard, there’s plenty of competition.

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