Arrowsmith was an economics professor at the City College of New York. After he left that position, he worked for many years as a business economist for a multinational oil company, where, like most corporate economists, he used a macroeconomic framework essentially based on Keynes. -Jeff
Whatever can explain the rise of mass hysteria over the U.S. national debt and federal deficits? To be sure, debt/deficit issues give the Administration’s political opponents a grand weapon in the gladiatorial contest that constitutes the nation’s public politics, but the issue only works because of a virulent public antipathy to serious macroeconomic analysis that has developed over the past four decades. In 1971, President Nixon announced “now I am a Keynesian,” but by 2011, President Obama (in his State of the Union address) said “Every day, families have to live within their means. They deserve a government that will do the same.”
In this environment, as the U.S. continues to suffer from massive unemployment of labor and underutilization of physical and intellectual capital, political survival almost requires economic policy-makers to pay obeisance to the most primitive anti-Keynesian economic theology.
The proverbial Martian certainly would not anticipate such widespread disdain for serious macroeconomics from the overall educational endowment of the American population. By historical standards, the U.S. population is highly educated, with over 40 percent of the labor force having completed tertiary education as of the end of the last decade and annual four-year college graduations reaching 1.6 million. While only about 3-5 percent of U.S. undergraduates major in economics, a far larger proportion experience some exposure to economics. Although data are far from perfect, the best estimates suggest that half undergo a one-semester introductory course and as many as one third of the total cohort take a two-semester sequence. At first blush, even with the most cynical view of the seriousness of students or their instructors, this suggests that a substantial part of the electorate might be expected to have assimilated central theoretical concepts such as the intrinsic difference between the national economy and the individual household and the potential use of federal budgets to stabilize the economy.
Apparently, this has not happened in the U.S. Why? One possible explanation, of course, is a change in the content of the college curriculum. Has mainstream macroeconomics gradually been displaced from introductory textbooks? Are innocent —or, at least, young—minds being subjected to systematic anti-Keynesian theories? Has such a Creationist-type economics become the pedagogic norm across an ever-growing swath of the nation’s colleges?
If anti-macroeconomics were becoming the norm in college teaching, new textbooks would surely have been required. However dedicated they might be intellectually, even the most sadistic instructors would balk at requiring their students to plod through actual texts by von Mises or Hayek. Moreover, producing such textbooks would surely provide an attractive market opportunity both for professors and publishers. The lack of anything like an English-language Hayekian equivalent to Samuelson’s Economics is powerful evidence that there is no substantial volume of Hayekian teaching in the basic economics courses.
Explanations for the declining role of serious rational macroeconomic analysis in America’s marketplace of ideas suggest themselves. Among the more tempting are the rise of cable television and, especially, the rise of the internet. While both developments yield substantial benefits, there are also negative externalities. Cable television under its current regulatory regime is largely a slogan bazaar, dominated by loud, frenetic voices,which overwhelm measured discourse on complex issues.
The internet, meanwhile, despite its huge promise for the expansion of serious knowledge and analysis in all areas, has become a highly effective mechanism for the propagation of all the silly ideas known to mankind. In our culture of credulity, many believe that anything posted online must be true even if it has never been subject to fact-checking or editing. Ill-informed rhetoric on the inevitable, horrifying impact of federal deficits and debt carries as much weight as the most careful analysis. Anecdotal evidence supports the hypothesis that the internet has been providing a major channel for spreading the current American panic over debt and deficit.
And all this takes place in the context of the national propensity to allow religious/moralistic perspectives to overwhelm pragmatism in discussing economic and social issues. Such moralism, of course, is compounded by anti-intellectualism, since as elsewhere strong beliefs are far more common than powerful intellects.