New Economy Short Cut - “The Best of Mankiw”

For decades, few other textbooks have influenced young economists as much as those by Gregory Mankiw. Peter Bofinger, Professor of Economics at the University of Würzburg, received all the more attention when he recently argued how supposedly one-sided and out of touch with reality some of the books’ key statements are. Rightly so? We invited Peter Bofinger to present and discuss his critique in our New Economy Short Cut on 19 September, 2021. He was joined by Gregory Mankiw himself. Also on the panel to discuss this topic were Rüdiger Bachmann, Professor of Economics at the University of Notre Dame in Indiana and Anna Reisch, a former member of the chair of Netzwerk für Plurale Ökonomik.

[bene]

I most enjoyed Anna Reisch in the debate: esp pressuring Gregory Mankiw on the fact that he is not mereley representing mainstream economics, but that he actually is mainstream economics by now. Which he himself indirectly agrees to by saying that his books are the most sold in the field. By that he is shaping the subject he is supposedly only writing about. In that it also does not help if he only gets feedback from his PhD students or other economic professors that all basically seem to agree with the same baseline. Like that economics is first and foremost about distributing scarce resources and the ensuing trade offs human beings are presented with. Ignoring, that before that happens, those perceived trade offs themselves are shaped by the economic theory which in turn has been shaping the experienced and lived status quo. Which produces a tremendous logical catch 22. Where exactly the point comes in to looking way back considering what it is that humans really need before that shaping of their "wants" and "needs" by the system occurs. Seriously kudos to Anna trying to focus the panel on those areas.

[Nhoj]

Usually the 'economists' who use 'macroeconomic models' 'believe' that the solution to the current macroeconomic problem is the implementation of the 'correct' type of demand side policies. That is, how to increase income/output {'growth'}.
Increase M0, M2 or M3, cut r, or make it negative. Increase G and finance it by 'borrowing' from the central bank or by borrowing from the private sector. Or ensure that private credit is extended only for GDP transactions.
All that is lacking is a 'sufficient' increase in effective demand!
The neoclassical/Austrian economists, who believe that income/output is 'supply determined', will argue that all that is required to generate a large increase the growth of the underlying productive potential of an economy is for taxes to be cut and more 'competition', etc be introduced!
'They' ignore the supply side of the economy.
“This reflects a question I posed here a while back – if electricity is (say) 4% of GDP, how much GDP would we have left if power supply collapsed? The conventional economists’ answer is 96%. The real answer is somewhere near 0%.”
The 'best' of the 'conventional economists' {who offers econometric evidence} is Werner, Richard (2005), 'New Paradigm in Macroeconomics', Basingstoke: Palgrave Macmillan

[asozialesnetzwerk]

Mankiw and Bofinger: being interesting intellectuals.
Bachmann: Just being a Mankiw fanboy.