Back in 2011, thousands of Chilean students participated in protests against the high cost of higher education. The most famous took place in front of La Moneda, the president’s palace, dancing to Michael Jackson’s “Thriller.”

According to the latest statistics from the OECD report, “Education at a Glance 2017,” the costs of a college education in Chile were still very high in 2015-16.

But they’re still not as high as in the United States, where it costs more to go to college than anywhere else in the world.

Of the 35 member countries in the OECD, the United States has the highest average tuition at both public and private colleges, for Bachelor’s as well as Master’s degrees.

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Average public tuition in the United States for a Bachelor’s degree is $8,202 annually, compared to Chile’s $7,654, the country with the second-highest tuition cost.

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In terms of private education, the comparison is not even close: average tuition in the United States for a Bachelor’s degree is $21,189, far higher than in Australia, where the price is $8,827.

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Private-M

The United States also has the distinction of having the most expensive Master’s degree programs—again, in both public and private institutions.

It’s enough to turn U.S. college students into heavily indebted zombies.

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KearnG20170918A_low  Jeff Sessions

political-22

To judge by Christopher Snyder’s attempt to defend contemporary economists, the answer is clear: nothing!

Yes, Snyder is right, economists have expanded their domain, to analyze such issues as art auctions and corruption. But then he goes off the rails.

That’s because the only kind of economics Snyder appear to know about and give credence to is mainstream economics—in terms of what he argues are the “core concepts” that underlie economists’ thinking.

What are those core concepts, around which all economists supposedly organize their theories and models?

For starters, Snyder thinks the most important one is “scarcity”:

Devoting resources to one project—say, preventing diabetes—means some other worthy project—curing cancer—goes unserved. So, in determining whether a choice should be undertaken, one of the functions of economics is to argue that its benefits should not be considered in isolation but weighed against its costs. Costs put a dollar value on what has to be given up when one choice is made over another.

But he never even considers the possibility that scarcity is institutionally created, not a given. And different economies are characterized by different kinds of scarcities, which are endogenously produced and reproduced. Thus, capitalism both creates and is characterized different scarcities from other economic systems, such as slavery and feudalism. Where is that in Snyder’s definition of what economists do and the core concepts they supposedly hold.

And then there’s “value,” which for Snyder “is the result of the interaction of several impersonal market forces,” illustrated in the usual fashion:

Figure-2-Snyder-768x671

But there’s no mention of long-run “natural” prices (of the sort classical economists such as David Ricardo or, more recently, Piero Sraffa focused on) or a class theory of value (emphasizing surplus labor, which Karl Marx developed in his critique of political economy)—or any one of a large number of other ways value can be, has been, and is being analyzed within economics.

Finally, Snyder, discusses “modern empirical research” and the attempt to uncover “true causal relationships rather than overinterpreting apparent correlations as causation.”

Uncovering causal relationships is difficult in economics. Opportunities to run experiments are limited by the expense and ethics involved in controlled interventions in markets (although these opportunities are growing, owing to an explosion of interest in laboratory and field experiments).

Once again, Snyder overlooks the many alternative approaches—concerning both “facts” and “causation”—within economics.

Sure, mainstream economists might claim they’ve finally solved the problem of “causal identification” (as they’ve claimed so many other times in the past). But they still fail to acknowledge the possibility that different economic theories produce different sets of facts. Nor do they consider the idea that economists actually use different notions of causation: some limit themselves to essentialist, one-way causation (from given causes to effects), while others, criticize essentialism and look at mutual effectivity (in which everything is seen to be both cause and effect).

The existence of different notions of scarcity, value, and causation within economics doesn’t prove that mainstream economists are wrong. It merely shows that reducing economics to a set of core concepts that pertain only to what mainstream economists do is wrong.

The problem, of course, is that’s the only set of concepts to which generations of students, who have been taught by mainstream economists, have been exposed. And Snyder just continues that tradition.

In the end, mainstream economists are good for nothing precisely because they exclude all other ways of thinking about and doing economics.

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ColeJ20170908_low  PettJ20170816_low

Cartoon of the day

Posted: 18 September 2017 in Uncategorized
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200000  MarguJ20170913_low

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David Brooks should have left well enough alone.

Middle-class wage stagnation is the biggest economic fact driving American politics. Over the past many years, so the common argument goes, capitalism has developed structural flaws. Economic gains are not being shared fairly with the middle class. Wages have become decoupled from productivity. Even when the economy grows, everything goes to the rich.

But then Brooks spends the rest of his column trying to convince us that there aren’t any really structural flaws, that “the market is working more or less as it’s supposed to.”

Well, maybe it’s working “more or less as it’s supposed to” for those at the top. But it’s certainly not working for everyone else, for those who actually have to work for a living.

The relevant debate is all about wages and productivity.

For Brooks (and the mainstream economists whose work he relies on), wages aren’t growing not because something is wrong, but because productivity isn’t growing. Or in his inimitable, sloganeering fashion:

It’s not that a rising tide doesn’t lift all boats; it’s that the tide is not rising fast enough.

Except, of course, productivity has grown—and wages haven’t kept up. Not by a long shot!

As is clear from the chart above, productivity has increased enormously since 1987—whether measured in terms of real GDP per capita (the orange line) or, even more, real nonfarm business output per hour worked (the green line).

So, yes, Americans have become more productive over the course of the past three decades. But wages have lagged far behind.

In fact, as is also clear in the chart, real wages (measured in terms of real weekly earnings, the blue line) have been virtually stagnant. They’ve risen only 5.5 percent over that period, much less than GDP per capita (54.4 percent) and labor productivity in nonfarm businesses (76.1 percent).

In the end, maybe Brooks is right. Maybe the growing gap between wages and productivity is not a structural flaw. Maybe it’s the way the market is supposed to work.

If so, then it’s time the break the system that both generates and relies on the large and growing gap between wages and productivity—the one Brooks and mainstream economists work so hard to convince us isn’t broken at all.

Our job, then, is to get to work imagining and creating a radically different economic and social system.

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Bruce Plante Cartoon: Equifax  Clay Bennett editorial cartoon