The Notre Dame Department Split

One of the reasons why this group exists is because of the split mentioned in Sean's post about "Hip Heterodoxy". To further illuminate the topic, here are two articles from National Catholic Reporter about the split:

http://natcath.org/NCR_Online/archives2/2004b/040904/040904c.php
http://findarticles.com/p/articles/mi_m1141/is_23_40/ai_n5998939

There is also a nice article from Chronicle of Higher Education. Like "Hip Heterodoxy", it fits the split into the broader issue of the dominance of mainstream economics. Here is the pdf file: http://ase.tufts.edu/gdae/Pubs/news/chron_article.pdf

Finally, there was an article in Scholastic about it, if you can track down a copy. I'm not sure how to access it online, as the Scholastic website seems to have been neglected since February. The Scholastic article does not really add much, except the perspective that things are just fine after the split. And obviously, the belief that things might not be just fine is what compels many of us to engage in this discussion. I don't have much more to say about the articles, but along with "Hip Heterodoxy", they offer a nice primer for the broader issues at hand.

Nick

Why I'm studying this stuff

Hey guys, I know the posts so far have dealt with economic articles, but I figured it would be good to share my thoughts on why I like economics and what I want to do with it. Hope it helps generate more interest in the discipline from others.


When I decided to major in economics, I knew almost nothing about the discipline. I hadn’t taken a class in high school and my reason for majoring in economics was that I was remotely interested in business (my dad worked for
Exxon for 30 years) and I knew that an undergraduate degree gives you lots of options post-graduation.

Lucky for me, the shot-in-the-dark with economics has worked out better than I could have ever expected albeit for reasons I didn’t foresee. My initial interest in economics as a path to the corporate world has all but disappeared,
and in its place has risen an interest in development economics. What intrigues me about development economics is that it allows me to combine my academic field of study with my faith life and desire to use my talents to help others.

On a more general level, though, the field of economics has turned out to be far more interesting than I thought. I’ve realized that economics pervades nearly every part of society and that a healthy economy is essential to a healthy and
stable society. Studying political economy in Ruccio’s class has stimulated this process as its allowed me to more and more to apply economics to real life. For example, the Institutionalists argue that consumption is motivated
by achieving societal status, and when I started to think about it, it was like a light went on in my head. Fascinating stuff.

The thing that excites me most is that I want to know more. The more I learn, the more I realize I don’t know, and the more I want to dig deeper. Just reading and posting on this blog and talking with you guys is a great way to do that.

Greg

They Lost Their Land, But At Least They Get Some Sweet Kicks

Here is an interesting article on the failure of the market to properly satisfy the needs of minority. The article cites Nike's unveiling of a new, wider shoe designed for Native Americans, whose feet are about 3 sizes larger than the average American. The problem lies in that the Native Americans had to wait so long for Nike to make the proper accommodations to their needs - something which, theoretically, the free market should have done a long time ago. From the article:

John Stuart Mill pointed out that voting gives rise to a tyranny of the majority. If we vote on what color shirts to make—or whether to make wide or narrow shoes—then the majority gets what it prefers, and the minority does not. The market, on the other hand, is supposed to work differently. As Milton Friedman eloquently put it in 1962, "the characteristic feature of action through political channels is that it tends to require or enforce substantial conformity. The great advantage of the market is that it permits wide diversity. Each man can vote, as it were, for the color of tie he wants and get it; he does not have to see what color the majority wants and then, if he is in the minority, submit." This is a wonderful argument. Except that for many products and for many people, it's wrong.

Two simple conditions that prevail in many markets mean that individual taste alone doesn't determine individual satisfaction. These conditions are 1) big setup costs and 2) preferences that differ across groups; when they're present, an individual's satisfaction is a function of how many people share his or her tastes. In other words, in these cases, markets share some of the objectionable features of government. They give bigger groups more and better options.

Although the Nike example may seem a bit trivial, market failures such as this have serious implications in other commercial sectors, such as health care:

The tyranny of the market arises elsewhere. With drug development costs near $1 billion, if you are going to be sick, hope that your disease is common enough to attract the interest of drug makers. If you want to fly from your town to Chicago, hope that your city is big enough to fill a plane every day.

When you're not so lucky, you benefit when the government steps in on your behalf, with subsidies for research on drugs for rare diseases or for air service to small locales. For a generation, influential economists have argued for letting the market decide a wide array of questions, to protect your freedom to choose whatever you want. This is true—if everyone agrees with you.

I think his focus on population size in determining market power might be slightly misplaced. Wealth probably has a much stronger influence in the production of certain goods. The profitability of producing a treatment or cure for a disease is really the stronger impetus for research and development of a drug, but the prevalence of the disease might have little influence.

Sean

p.s. does the font size seem to change throughout my post? I feel like it does, or maybe I've just been staring at this computer screen for way to long...

Power Analysis Paralysis

I ranted about the lack of power analysis in mainstream econ a little bit in my personal mini-manifesto. It's probably an issue that many of us have thought about when taking a critical look at econ, because of its myriad implications, but I digress. A couple nights ago I was reading Populorum Progressio, which, as you CST junkies may know, was a big social encyclical that had to do with economic development in developing countries. Pope Paul VI, the commissioner/author of the encyclical, actually seemed like he was showing some understanding of the impacts of power disparities. In talking about trade relations, he noted that,

"[free trade's] advantages are certainly evident when the parties involved are not affected by any excessive inequalities of economic power...But the situation is no longer the same when economic conditions differ too widely from country to country" (para. 58).

However, he seems to glaze over what the solutions to these power disparities are. Obviously he does not take the laissez-faire approach to say "that's a shame" and move on. However, he seems to go a completely different direction and utterly rely on the good will of those in power to change things. While he supports change from below in line with subsidiarity, he ultimately appeals to altruism to provide "aid for the weak".

At least in my opinion, this approach is unrealistic and destined for failure. Unlike real organizing, as exemplified by Cesar Chavez, CST's answer to economic injustice seems to rely on top-down charity. It is too bad that an encyclical with potential to delineate the power dynamics of economic and social inequality does not carry the project all the way through. Paul VI even goes so far as to allow violent revolution as an asnwer to tyranny (para. 31), but for some reason does not endorse non-violent, organized revolution to the more subtle forms of economic tyranny. Rather than writing to inspire the poor with hope to make their own futures better, he ultimately speaks to the rich, only some of whom embrace the altruism that Paul VI promotes. In doing so, he ultimately affirms their power and in some respects legitimizes it.


Nick

Hip Heterodoxy

Welcome to the blog site for QUEST (hopefully we keep this name so I don't have to make another blog)!

I think it is important to look at all the ways economics permeates society in all its different theoretical manifestations, so feel free to post articles about any topic you feel relates to the subject.

To start off, here is the article that sparked the recent neoclassical vs. heterodox debate this summer. It exposes the frustrations of many heterodox economists who feel they have been marginalized by their mainstream, neoclassical colleagues.

Here is discussion of the topic by several economists on the issue in response to Hayes's article.

Enjoy!

Sean