I spent the 2007-08 year as a first year student in a PhD Finance program at a Top University. All the classes I took were in the econ department for the first year; I was basically a first-year econ student.The bolding of that earlier sentence was mine. I can't think of any more damning indictment of the current state of economics. Any of you who have seen the inside of a graduate seminar knows that questioning and debate are practically mandatory: a lot of profs will deliberately put out arguments they don't believe just to provoke debate. You won't find one scientist in a thousand who thinks that critical thinking is a detriment to their field. Far from it: they believe, correctly, that it's at the heart of the enterprise.
The financial crisis was unfolding while I was there; one might expect that it would be a very interesting time to be in the graduate econ classroom. I can briefly summarize for you how the financial crisis was discussed, both inside and outside the class room:
Nothing at all. The most significant economic and financial event in decades was happening out in the Real World, but it didn't penetrate the bubble of Academia. Rational expectations and Gaussin distributions were still taught as gospel truth, and woe upon the student (me) who questioned the orthodoxy.
I still remember a professor advising me that critical thinking is a detriment to learning economics.
I still remember a professor scolding me that it would be inappropriate to teach anything realistic in his classroom.
I still remember my advisor yelling at me "Have an open mind! Stop questioning things!" after I questioned the relevance of theory in the face of recent events.
Rather than receiving a broad education to develop well-rounded students, it was more of an indoctrination; designed to instruct students what to belive, rather than teach us how to think.
I am no longer a PhD student, largely because I couldn't accept the fact that academic economists I met have no interest in understanding how an actual economy actually works; they just enjoy irrelevant and overly-complicated math models.
But that's the issue, isn't it? Enterprise, I mean. As someone else "g" pointed out, this whole thing is heavily supported by the business community—along with their apologists in government and the business media. The whole raison d'etre for funding economics as a field is to support the doctrine of giving corporations a free hand to do whatever it takes. Sure, economists also provide them innovative new tools to game the system and make fat killings by creating collateralized debt obligations and credit default swaps and whatnot, but that's not why the money really flows. It flows because only a certain sort of person would actually think that what's going on is right and proper., you need the "Freshwaters" there to indoctrinate them.
That's probably why Krugman (and Keynes!) infuriates them. Marxists, they can handle. Outsiders, they can handle. But people who know economics, believe in markets, know the lingo, yet don't agree with the Holy Axioms?
See for yourself. This is a response to Krugman's blog post:
It’s worse than that. My academic friends, even those outside the core of the fresh-water perspective, think you [Paul Krugman] are a traitor. This is partly because you challenge the academic dogma that the use of math is necessarily the dominant force in economics, and partly because you are airing in public internecine strife they feel is best kept concealed. All those grants could be threatened if anybody saw just how useless the bulk of the profession is.Just like FDR and Keynes, Krugman is seen as a traitor to his class. And you know what?
Good for him.