By Ryan McMaken, Mises Institute
It has become something of a tradition in the free-market corners of social media to express shock and dismay over the possibility that New York Congresswoman Alexandria Ocasio-Cortez (AOC) — an avowed "democratic socialist" — has an economics degree from Boston University.
This is how it works: AOC makes a statement that is notably anti-market, pro-socialist, or generally clueless about general concepts from the field of economics.
Her critics then post responses questioning whether she actually has a degree, or that she must have not been paying attention in class, etc.
But why is it so hard to believe that she has a degree in economics? It seems far too many people have rather inaccurate ideas about what is taught in economics programs nowadays.
The truth is there is little emphasis on understanding markets in economics programs, and little emphasis on the value of markets. The emphasis is now on using economics to justify state action in the economy. And any bias that may have once existed in favor of unhampered markets in these departments is vanishing.
The idea that economics is the dispassionate study of understanding how hiring is affected by an imposed price floor (i.e., minimum wages), or how opportunity cost affects consumer choices, is rapidly becoming hopelessly outdated.
Sure, twenty years ago, that sort of thing could still often be observed. But microeconomics of that sort is now about as fashionable as other relics of that time, such as the Backstreet Boys.
Basic principles that were once a given — i.e., the notion that making labor more expensive means employers buy less of it — are now out the window.
But this trend didn't start yesterday. For decades now, economics has moved further and further away from teaching microeconomics and how firms and households work. Instead, by the late 1990s, economics was well down the road of constructing elaborate and purely hypothetical mathematical models that had little bearing on everyday life. These model builders claimed they could predict the future, but of course, they completely missed the huge financial crisis of 2008.
Another trend in recent decades has been toward conducting an enormous number of studies that produce statistical correlations. But as the correlations can be interpreted any number of ways, they often end up being used to support whatever policy the researchers prefer. Out of this has come the drive to make economics into a discipline that depends on tinkering and trial and error. Some now insist we can't really guess what the results of a policy might be until we "test" it using methods from the physical sciences.
This is now what's fashionable, and a December article at Quartz tells us, "the new era of big data ... has led economists to revisit the wisdom of some long held assumptions."
Those old "assumptions" are what many people wrongly think is a focus of economics instruction. Last year, for example, Vox happily reported that in a new introductory economics course at Harvard, "[t]here’s little discussion of supply and demand curves, of producer or consumer surplus, or other elementary concept.." Moreover, it's getting easier to get through an economics program without any knowledge of economics because economists are increasingly less interested in economics proper.
As I noted here at mises.org last year, economists nowadays seem to spend a lot of time ripping off the insights of historians, sociologists, psychologists, and political scientists. They then slap some new labels on the research and give it names like "behavioral economics."
In the sorts of "economics" classes that focus on such topics, one learns that government planning is what gets a poor country out of poverty. They learn that people can't be trusted to make decisions for themselves. They learn bailing out billionaires in the financial sector again and again has no real downside, morally or otherwise.
There's no reason to believe that a student with an economics degree is going to graduate with a deep understanding of how government intervention distorts markets or impoverishes consumers. The theoretical foundations behind such things are mentioned, of course, but at many institutions they are most certainly not emphasized.
Far more likely, one learns in these programs that central banks can be relied upon to fix almost any economic problem faced in the course of a business cycle. And if a certain problem becomes especially difficult, the answer surely lies in giving the central bank even more power.
Moreover, economics students believe all sorts of fantasies that most normal people would easily identify as obvious nonsense were they not told otherwise by "wise" economists. Only economics students, for example, are naive enough to think that central banks are "independent" and non-political institutions. This is why the most revealing research on the Fed as a political institution is conducted primarily by political scientists. (For example, see John T. Woolley's "The U.S. Federal Reserve and the Politics of Monetary and Financial Regulatory Policy.")
So, it's entirely plausible AOC took any number of economics courses and came out with good grades after learning virtually nothing accurate about entrepreneurship, wages, money, or consumer choice. What she did learn on these topics was likely built on the premise that the state ought to be intervening and tinkering with all these things.
AOC appears to have the same beliefs as many economics grads.
Meanwhile, AOC's critics make fun of her for being a bartender. But they're getting things backward. Being a bartender is possibly the best thing on her C.V. These snide remarks one often sees about "the bartender AOC" seem to assume bartending is some sort of disreputable line of work that only idiots pursue. It's not. "Serving" in Congress is much less impressive. Besides, tending bar is likely one of the more instructive thing AOC has done as far as understanding markets goes. There's certainly no reason to assume the economics faculty at BU was any help in this regard.
Portfolio Return as of 08/12/22:
Joe Biden signed into law the horrific Inflation Acceleration Act – which, as you know, increases government taxes and spending by roughly A...
Climate change activists are not just interested in reducing carbon emissions in order to "save the planet." Their underlying desi...
High-yield bonds are sending the stock market a warning sign. This is not a prediction, but a leading indicator. Just because it's happe...
After reading (and attempting the solutions offered in some) several articles about SQL and CAGR, I have reached the conclusion that none o...