Reflections on the Current State of Political Economy

Like most economics professors, I have spent my academic lifetime examining the economic and public policy effects of issues involving the production, distribution, and consumption of goods and services--political economy, if you will. There is, however, a "political economy" to die very act of producing and disseminating economic knowledge and examining public policies. And that political economy and my assessment of it has changed over a career spanning more than half a century. In this brief article, I will confine my attention mostly to the research dimension and look at five issues, most relating to the political economy of the study of political economy. Diminishing Returns to Research I have long been bemused by economists who profess to understand the principle of scarcity and the importance of opportunity costs, yet write so much trivia of little interest to anyone. They do so because of the nonmarket nature of most academic endeavors and the utter lack of incentives to be efficient. The fifteenth paper on a topic is not very likely to add as much to our stock of knowledge as the first or second. I think the nation as a whole has probably overinvested in higher education because of vast governmental subsidies (an argument best made by retired professors like me whose potential acquisition of economic rents by extolling higher education is minimal). That manifests itself in such phenomena as the overeducated Starbucks barista or in the more than 115,000 janitors with bachelor s degrees. It also means roughly 1,000 academic papers are being written on William Shakespeare annually--three per day (Bauerlein 2009: 6). Who reads them? How much does a typical paper add at the margin to the insights that Shakespeare gave us 400 years ago? The problem extends to the inputs as the well as the outputs of higher education, and too many professors are writing too many words (and equations) that, to borrow from the Bard (Shakespeare to college graduates after 1990), "signify nothing." What if professors wrote only one-third or one-half the number of papers they currently write, but taught one more class per year? My guess is that the net effects would be at least mildly positive, maybe even leading to smaller tuition increases and delaying a bit the demise of die current medieval way we do business. Belated to all that, the U.S. Department of Education can probably tell you how many anthropology professors of Hispanic origin there are in South Dakota, but cannot tell you what the average teaching load of American professors is. But I am pretty sure it is minimally 25 percent less than it was when I began fulltime teaching in tire year the Higher Education Act passed, 1965. Doing less (teaching) with more describes modern higher education. Pseudo-Science and Ideology Modern economics may be less ideologically driven dian, say, sociology, but the notion that economists are scientists who objectively observe phenomenon and derive conclusions solely on the basis of empirical evidence is largely a myth, despite pretenses to the contrary. Nobel Prize winners like Paul Krugman and Joseph Stiglitz sometimes morph into almost pure ideologues, doing little or no truly serious work after receiving superstar academic recognition. And, as is oft-observed, the predominant ideological orientation is leftish, despite overwhelming evidence that many leftish policy prescriptions are failures or at least highly inefficient. Leftish intellectuals helped created the European welfare state that has been accompanied by declining growth rates for six decades, from around 5 percent annually in the 1950s to under 2 percent today. Yet, only a minority of economists uses this overwhelming evidence to suggest the nonmarket statist solutions of the welfare state are highly flawed. Why is this? I think a big reason for this is that modern academic economics is funded predominantly by the state, even at so-called private schools like Harvard. …