Knowing Models vs. Knowing Economics | Foundation for Economic Education

Knowing Models vs. Knowing Economics | Foundation for Economic Education

This blindness to the most important features of economic reality is promoted by the failure of modern economic training to teach young economists to ask — always to ask — why.

• “You say that monopsony power is rampant in reality. Why? Why are not profit-hungry entrepreneurs entering markets to seize the available profits that are implied by your assertion?”

• “You say that Ex-Im is profitable for taxpayers. Why? Why are not profit-hungry entrepreneurs entering markets to seize the available profits that are implied by your assertion?”

• “You say that women are consistently underpaid. Why? Why are not profit-hungry entrepreneurs entering markets to seize the available profits that are implied by your assertion?”

• “You say that worker pay is falling short of worker productivity. Why? Why are not profit-hungry entrepreneurs entering markets to seize the available profits that are implied by your assertion?”

• “You say that economic growth uses up resources unsustainably. Why? Why are not profit-hungry entrepreneurs entering markets to seize the available profits that are implied by your assertion?”

• “You say that free-rider problems cause all manner of problems in markets — problems that must be solved by government. Why? Why do the very same sorts of decision-making arrangements that can lead to free-rider problems in markets not also plague politics in ways that often render imperfect politics an even worse alternative than imperfect markets?”

Such questions can be greatly multiplied. Just as knowing a lot about cooking does not mean knowing how to cook well, knowing a lot about economics does not mean knowing how to think clearly and creatively as an economist.