Paul Krugman's article, in this Sunday's NYT Magazine -- is How Did Economists Get It So Wrong?
Well, perhaps the answer to Professor Krugman's question is that very few of the current crop of economists -- saltwater or freshwater (read the article!) -- ever were guided into reading the work of one of the foremost writers on political economy.
And perhaps the few who did read it were too embarrassed to challenge their brethren.
But even a look at the textbooks from which most of the college and university economics professors teach their students would demonstrate that Henry George got it right, and that his ideas, while eclipsed by economists who know where their own bread is buttered, and which ideas they ought not to embrace while seeking tenure (during which they forget the little they ever did learn about this wise man's thought and observations) still shine and still explain what we see around us better than the neoclassical economists who are embraced by most teaching and government economists and economics pundits.
I commend to their attention Henry George's books, all of which are available online and all of which can be purchased in hardcopy from http://www.schalkenbach.org/:
- Progress and Poverty -- the best sellling book on political economy* ever -- modern thought-by-thought updating, abridged, is at http://www.progressandpoverty.org/ and http://www.hgchicago.org/audio. The unabridged is at http://www.schalkenbach.org/
- Social Problems, a book of essays, is at http://www.wealthandwant.com/
- so is The Land Question
- Protection or Free Trade)
- The Science of Political Economy (published posthumously)
* Political economy is the science which deals with
the natural laws
governing the production and distribution of wealth and services. Seems like something most of us have a vital interest in understanding ourselves and promoting widespread understanding.
Some of George's speeches are also available at http://www.wealthandwant.com (the URL comes from the subtitle to Progress & Poverty).
Henry George, along with the other CLASSICAL economists (as opposed to the NEO-classical economists from whom most of today's students learn their economics) recognized that there were three factors of production: land, labor and capital. The Neo-classicals seem to consider the distinction between land and capital too much nuance for their taste, and gloss lightly over it, as if land and natural resources were no longer worth talking about in 20th or 21st century America -- or the rest of the world. While the classical economists weren't familiar with electromagnetic spectrum, or geosynchronous orbits, or rush-hour landing rights at LaGuardia Airport, or water rights, or pollution rights, or oil as a major energy source, or parking spaces for cars in congested cities, they would immediately recognize each of these things as "LAND," and they would likely agree with Henry George that we are all equally entitled to them, and that permitting some to privatize their value, and forcing others to pay them just as if they'd created them is a poor idea.
We fail to measure the value of these important assets, or we measure them only poorly, or we ignore the implications of valuing these rightly-common assets. Or we ignore the work of those who do measure them. Do you think that land value and natural resource value mattering is just a quaint agrarian idea, in the context of the 21st century?
- Remind me again what it is that we and others go to war over.
- Remind me how much of the typical family's budget is going to the FIRE sector (finance, insurance, real estate -- including the sellers from whom homeowners in coastal states bought their homes, who reaped what they did not sow).
- Remind me how much the typical family is paying for energy and other non-renewable natural resources.
- Remind me which direction the average worker's wages are going, and how difficult it is to find work, despite there being so many unsatisfied needs and wants in the world
- Remind me how concentrated our nation's and the global income and wealth is -- and why.
- Remind me again of the havoc that our boom-bust cycles create in the lives of Americans and our neighbors around the world.
- Remind me again of what sprawl costs us; of what too little exercise costs us; of what long commutes cost us; of what children growing up in families with insufficient income to meet their most modestly defined needs costs us. (These are very closely related, and can be traced to a single underlying fallacy in how we structure our economy. And they can be ameliorated by recognizing and correcting that fallacy.)
Then tell me again that LAND and natural resources don't matter in the 21st century.
How did economists get it so wrong? To use my mother's phrase, their education was neglected. Even Paul Krugman's as best I can tell.