What Is Wrong with Economics Education?

How many times does an undergraduate economics student hear the name “Hayek” in his or her courses? The answer, in most programs, is close to zero.

This is surprising. Friedrich Hayek remains one of the most cited Nobel laureates in economics—second only to Kenneth Arrow in mentions and citations in Nobel lectures, according to research from King’s College London. His ideas on the knowledge problem and the economic calculation debate are fundamental to understanding the limits of central planning and the role of markets.

And yet, in most classrooms, Hayek’s name never appears. Why? Because economics education today is not primarily designed to train economists but to produce social engineers.

This point was made forcefully by another Nobel laureate, James Buchanan. In his 1964 presidential address to the Southern Economic Journal, Buchanan asked the deceptively simple question: “What should economists do?” His answer was not about what theories to teach but about how to teach. He argued that the modern economics curriculum had been captured by a vision of training future policymakers to manage society rather than cultivating economists as scientists who study spontaneous order and social processes.

To see the problem, we must start with the question: What exactly is “the economic problem”?

There are two very different answers. The first is what might be called the “allocation” view. In this model, all means and ends are known, and the challenge is simply to compute the best distribution of scarce resources. In such a world, economics reduces to what Buchanan called “the mathematics of social engineering.” The only obstacle is technical—calculating the optimal outcome. This perspective dominates textbooks and exams.

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They don’t teach Free Market Economics, the only sound economic system.

Why don’t they teach it? Same reason they don’t teach the U.S. Constitution or the Bible.

Free Market Economics, the U.S. Constitution, and the Bible promote and propagate individual liberty and pursuits which is the road to success and wealth (John Adams, “The Wealth of Nations” as demonstrated in 1800’s America, emerging into the 1900’s as the freest, wealthiest, and most powerful nation on earth).

Conversely Free Market Economics, the U.S. Constitution, and the Bible dissuade trusting in and relying on gov’t or man for well being and livelihood. All counter to today’s dysfunctional popular culture, unsound conventional wisdom, and lying “political correctness” which is the road to poverty and serfdom (Friedrich Hayek, “The Road to Serfdom” as demonstrated by countless poverty-stricken nations and totalitarian regimes).

Economics textbooks from the 1970s said that because our economy was “ fully developed” and no longer was a “ developing economy”, then the Phillips Curve had shifted, and therefore, FULL EMPLOYMENT was now 9%, & anything below an 8% unemployment rate caused runaway inflation.
The Fed still is mired in the Keynesian idea that growth & jobs cause inflation, that the job of the Fed is to control growth to keep wages from rising, believing the Fed actually can control the ecoomy.
Liberals who wrote those 1970s textbooks did not even consider themselves liberal or biased, but their assumption was that liberalism was so successful that it could not achieve anymore to make our economy further developed, but that government spending was now required to address misery from permanently above 9% unemployment rates. Obama came into office saying the same thing, that we had to accept higher unemployment and slower growth to have a sustainable economy. Bill Clinton also had argued that slow, steady growth was better than fast growth because higher taxes & a balanced budget meant that the Federal Reserve would keep interest rates lower for longer....ie, Republican policies cause booms & busts.....fast growth, low unemployment, followed by a Fed response of hiking interest rates sooner, faster, higher and keeping them high......like now.
Supply siders know this is false. At the end of the 1990s, we had a budget surplus paying off the national debt & 5% economic growth. We had mild deflation, with cars getting bigger, homes getting bigger, pizzas loaded with toppings,...people were properous & optimistic. Gas price had fallen to 90 cents per gallon. Fed chairman Greenspan then broke the law & decided the national debt was being paid off too fast, and wrongly believed that by hiking his short term funds rate he could get long term rates to rise and turn 5% growth with no inflation into 3% growth and 2% inflation. He failed. In 1990, Greenspan demanded a balanced budget to drive down interest rates and inflation, so Presidents Reagan, Bush, and Clinton did what the Fed wanted, so we had a budget surplus and lower interest rates, were paying off the national debt ,as the surplus was getting bigger and bigger.....& Greenspan hiked his Fed Funds rate to 6.5% to contradict everything he claimed to stand for, while Clinton & GOP just let him do it without cutting taxes or condemning him. The NASDAQ crashed from 5,200 to 2,400 & the DOW crashed from 12,000 to 10,000.
Both parties had no problem just writing it off as a “ bubble” that burst, which only embokdened progressives into saying free markets are unstable and don’t work......especially when by 2003, 2004, gas price that was 90 cents in 1998, now was $2.20. .....which also fueled the idea that we needed to stop using fossil fuels, especially after gas price rose to $4 in 2008 as the economy was slowing down and unemployment was rising. it is why Obama won...running against low taxes, fast growth....especially since Bush blamed $4 gas on “ demand from India and China” and nobody believed him.
Supply siders believe that the Fed cannot and should not try to control the economy. It should simply keep the value of the dollar constant, strong and stable, let markets set interest rates, and get out of the way, let competition, innovation, investment, capitalism bring down prices and keep them down.
GOP needs to persuade voters that the narratives from that past were wrong.

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