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Will Economists Say They’re Sorry? Don’t Hold Your Breath

By Shlomo Maital

  In Erich Segal’s gushy novel Love Story, and later in the 1970 film starring Ryan O’Neal and Ali McGraw, you hear this line twice: Love means never having to say you’re sorry.

   Really?   I thought that when you truly love someone and hurt them, you always always say you’re sorry and try to make amends. And if you don’t? Well, where’s the love?

     I am an economist. Led by Milton Friedman, we gave the world unfettered free markets, that in 2008 nearly destroyed the world economy – we’re still repairing the damage.   We gave the world supply-side economics (cut taxes on the rich and you get a cornucopia of investment spending!) and the Laffer curve (cut taxes and you get more revenues than before). We gave the world the idea that senior management is responsible only to shareholders, for maximizing profit – an idea business schools set in stone. Professor Friedman said it was wrong for corporations to give money to charity, for worthy causes, because the money belonged to the shareholders, it should be given to them.

     If you don’t believe me, read Binyamin Appelbaum’s recent book, The Economists’ Hour, a slashing indictment of all the false theories we economists dumped on a naïve, believing world. Appelbaum’s day job is writing editorials for The New York Times.

     The world right now is in a mess. It’s not solely us economists’ fault, but much is.  

     And it’s time to say we’re sorry. No, love is NOT not having to say you’re sorry. Double negative.

       Are economists sorry? I don’t hear a whole lot of apologies or even mild recognition of the damage we’ve done. And this is no Love Story.

       And the part that hurts me most?   Economists built their free-market ideology on one book, Adam Smith’s 1776 Wealth of Nations. The book was pushed to the ultimate absurd, “greed is good” (George Gilder).   But Smith was really NOT an economist, he was a moral philosopher, and his greatest book was Theory of Moral Sentiments (1759), where he said people seek the esteem of their peers, by doing good deeds. Which IS true!   And which is also a good prescription for finding meaning in life. And no, greed really is not good. It’s terrible.

     What if economists had built their discipline on THAT principle, earning our peers’ esteem, and not on free-market bottom-line unfettered capitalism?

       When the Soviet Union dissolved in 1991, Sovietology departments in universities all over the world shut down. Why? They got it wrong. They had not foreseen this startling development. They were utterly discredited.

       Perhaps then economics departments should shut down. As a way of saying, I’m sorry.  

     According to the Washington Post, “A great migration is happening on U.S. college campuses, English majors are down more than a quarter (25.5 percent) since the Great Recession, according to data compiled by the National Center for Education Statistics. It’s the biggest drop for any major tracked by the center in its annual data and is quite startling, given that college enrollment has jumped in the past decade.”

     Same holds for philosophy majors. So we will have a world of lawyers, and economists – who are ignorant of critical thinking and great literature? If we ever impeach economists, perhaps one of the charges will not only be laying the foundations for the Great 2008 Recession – but driving innocent students away from studying subjects that are truly important.

      

Blog entries written by Prof. Shlomo Maital

Shlomo Maital

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