i love how nothing "really" happens in the world until it "happens" at harvard.

I suggest that we reduce economic inequality by confiscating the trust funds of all Harvard students and redistributing the wealth to the needy. I wonder how the pampered little darlings would feel about witnessing social justice in action, using their money.

Reading the presentation—one is aghast that anyone…let alone one who is apparently capable to be admitted to Harvard…would even consider the concept of “theft”…Keynesian economic policy—as a economic principle.
The marvel of capitalism—based on a society of free choice—is the wonder of “pricing.” It is so sad that these young people are so clueless in the reality having never in their lives made the decision to exchange part of their lives—earning money—then spending that wealth and understanding that their choice is capitalism.
It goes to prove the old axiom, ignorance is the easiest thing to earn—how sad.

Hey, let's eliminate the nearly century long influence of John Maynard Keynes in our economics courses, nobody will notice. Oops, this pesky deflationary spiral keeps popping up, anything you can do about that?

Awareness is the first step. I respect those students for their insight and courage.

What a strange way to conceptualize the fundamental question. What is a "blow for economic reform"? It seems like your two choices are that the students either: 1) are negatively impacting "economic reform", or 2) they are empty and shortsighted.

From what you quote in this post, the students wish to have a complete understanding of economics that includes economic theory beyond Adam Smith.

You then quote the professor as stating that he dedicates one day to economic inequality. Given that the negative impacts of a high Gini coefficient are well known including the inability of the increasing numbers of poor citizens to viably participate in our economy make it lest diverse and less redundant/resilient as well as a high Gini correlates to the propensity for the very rich to extract their money from the economy. These concepts are rarley discussed by traditional economic theory. How about behavioral economics. It has been proven on several occasions (Esther Duflo's work in particular) that there is no such thing as a rational economic actor yet we base much of our economic theory on this imagined rationality. In general, we study economics without complexity like we study Physics with friction. It is part of the system that is rigged in favor of the 1%. It's easy to make a nod to inequality when your frame is Adam Smith. Then the Wharton drones you mentioned are actually right and whining about inequality is just that, whining. However, that is completely false. Our increasing inequality has very little to do with economic theory unless you think Capitalism IS an economic theory as opposed to to being an ideology or, increasingly, a religion.

@Steve Wright...sorry for the confusion. The phrase is "blow FOR economic reform," not a blow against it. To rephrase the last sentence: Did the walkout advance the cause of economic reform or not?

Louis Lavelle
Associate Editor
Bloomberg Businessweek

Instead of walking out, the Harvard students should have engaged Mankiw in a debate. His snide remark about being happy in the one percent needs to be rebutted strongly. It is the complacency of Mankiw and is ilk that engenders such justifiable rage. I would recommend to Harvard the intro economics course be taught by two professors, one a conservative like Mankiw and another a liberal with excellent credentials. The dialectic between them with student participation would benefit everyone. Besides, Mankiw's reading of Adam Smith is way too narrow. Smith was not an economist. He was a moral philosopher and considered The Wealth of Nations to be just part of his overall wold view, which was highly moral. He supported regulation of banks, for example, and deplored the terrible state in which most people were obliged to live. His theory was directed at the British aristocracy who opposed free trade because they had monopolies on agricultural products and wanted to prevent competition from abroad that would drive down profits and cut their profits. Smith must be read in the context of his times, considering his other writings as pertinent to the discourse.

I especially enjoyed the use of what the commenter above obviously thinks of as a pejorative, that capitalism is "increasingly, a religion".

I would say the reverse, other ways of organizing economic activity are much more akin to religions, with artificial constructs and either elected or self appointed elites in charge.

I do agree that Capitalism, as it is incorrectly called, is not an economic theory. In a pure form it is the economic dimension of freedom, what would arise in situations where people interact economically as they desire without the use of force and limited interference from government.

One result of unfettered freedom is that those who work smarter, harder or are just lucky get far ahead. The use of state power by the rich to get bailouts or other economic benefits that accrue unfairly to them have nothing to do with capitalism and are just as or more prevalent under any other economic/social system and become more prevalent as government power grows.

The current growing gap in incomes is caused in large part by globalization, where those with fewer skills whio used to just compete with those from the next town or state are now competing with people from around the world, including those who would consider US minimum wage to be untold riches. This is driving down US incomes at the middle and low ends and accruing more income to those with more skills or who have saved their earnings and invested them.

Therefore I would say that the growing gap in incomes is fully explained by economic theory through supply and demand and anyone buying cheap items made abroad, as we all do, is in some way responsible.

The alternate view is that the rich are somehow taking money from the poor because tax rates on the rich are lower than they used to be. While I agree that tax revenue from the rich must increase (whether by rates or a change in tax law or both), this cannot be equated with taking money from the other groups, especially when the rich are paying far more in taxes than the rest and effectively subsidizing defense, roads, police etc. for the rest of us. Again, let's leave out bailouts etc. that are not unique to a western "capitalist" society and violate the foundations of capitalism.

Complete freedom, including economic, results in a number of issues and mankind has therefore chosen to layer in government for critical and necessary functions, including police etc., logical common goods with free rider issues, and desired social welfare actions once society is well above the subsuistence level.

I hope we all desire a more equal set of outcomes and higher incomes for the poorer people in this country and around the world. The problem is how to achieve this without reducing the living standards for all in the future through reduced or much less efficient investment and production. This requires a delicate balancing act and I would submit that anyone who says they know the perfect level of regulation, taxation and way to direct the economy is delusional and centrally directed economies have pretty well borne this out.

Economics is not a pure science so there will always be room for debate. The debate is driven by big ideas. Keynes and Hayak had two opposing ideas on the role of government in a market based economy, which has become the biggest debate. Regardless of where you fall on the spectrum, capitalism cannot work without a set of rules. The government must be diligent in designing and enforcing those rules. Otherwise, cronies will find ways to get around the rules to benefit themselves. These are the big ideas, which should be mentioned in an introductory economics class.
If Harvard students care to understand the debate, they need to understand the ideas behind the debate. However, there are plenty of ways to learn other than skipping class. They could ask Professor Mankiw directly or ask another faculty member to hold a seminar. They could read a book or go to office hours. It sounds like they wanted to join the protest rather than do their homework.

Louis, many thanks for the response/clarification. To be so presumptuous as to try and answer that question I would say: 1) yes, it advanced economic reform in so much as it got attention for the issue, 2) I doubt the intention was to advance economic reform. The intention, at least as stated by the students, was get a more well rounded economic education. I ranted on about that in my previous comment. :)

Steve Wright- If you were as smart as you are smart you would really be smart.

Way to go students! Glad to see them showing support and making an effort towards real change. Sometimes being at the top makes it easy to forget so many others are suffering down below. Bravo. Hope to see more of this as the movement continues.

The economics literacy in our higher education system is terrible - and we are reaping the results in society. We have severely limited our understanding of economic thought, and have failed to appreciate the value of ongoing inquiry about different views of thought. Nearly all universities will award degrees in economics without requiring any courses on the history of economic thought or comparative economic systems. Many do even worse, by emphasizing finance courses over more holistic economics. Stated in such direct terms, it seems incomprehensible, but I rarely find that anyone else has even thought about this.

Without overstating things, consider the magnitude of academic research funded through institutions that are overly beholden to the current framework (e.g., Federal Reserve, etc.). We are now at a relatively extreme end of the continuum of capitalism in practice, which has created tremendous dynamism in many (but not all) markets, but has become quite Darwinian in its absolute rewards/punishments, with resulting social impacts. This has been complicated by an overlay of state-sanctioned industries that are the antithesis of free markets. Both forces combine with a representative democratic system that reinforces the worst systems behaviors of 'buying' influence in a system designed to limit the exercise of government authority. We can see and talk about the need for reform, but are incapable of doing it.

The result is political economy and not merely economy, and we may be in the 'primordial ooze stage' of a new political economy, one with two very different elements. One is the state capitalism variety, most notable in China, but not just Chinese. It was Japanese before that, and Germany has embraced industrial policy to some degree, just with less state ownership. Innovation is hard, but scale can trump it in the short/mid term, and offers a financial means to buy innovation capacity.

The other is a 'bottom-up' aspect that is built on the value of resource sharing. Just as it's cheaper to buy in bulk, aggregating individual or small business consumers into buying units changes how economic transactions occur, and opens up new business enterprise opportunities. These shouldn't be dismissed as social enterprise, as if they were less valid, economically, but should be seen as an interesting business model innovation that has at least some relation to industrial policy models in that the myth of absolute laissez faire is discarded in favor of more sophisticated value maximization. Watch how individual building owners come together to buy solar panels, with strong cost benefits and improved service from financing agents.

Interesting times. And while there is much to be bleak about, seeds of the next generation of economics are emerging. The students' actions are illustrative of that dynamic.

I think the walk out was perfectly appropriate. Whether or not "philosophical arguments have a real-world impact" is not the point. The point is that, are they right or wrong.

Most importantly, however, is the fact that there's nothing philosophical about saying something is wrong with economics. For christ sake something is terribly wrong with economics! They simply cannot explain crisis and inequality. That's it. They add these strange circumstances (technology is doing it; government is the problem). Well, if that is the case then you better include that in your theory because you cannot just assume away these problems.

"Modern economics is sick" as said Mark Blaug.

One should remember that the idea of capitalism more than likely sprung from natural law-i.e. the metaphysical ideas starting with Issac Newton and continuing with Adam Smith. By its nature it may tend to Darwinian in nature thus those that acquire the right resources and are adaptable are to survive. The only reason a capitalist should care about a nation in regards to his business is when in increases his profits. Thus we see the globalization of companies as they seek to exploit least costly resources to increase profits, regardless of the impact on the economy of their given country.
The only reason business should be patriotic would be to help to be held in good stead in the community in order to maximize profits.
In regard to the students stating that the professor focuses on Adam Smith and not Keynes, one should realize that Adam Smith warned us about business men the same profession getting together to lobby and use government to enhance their own good at the expense of others.
We know this is not a problem in America.
Anyway, I have looked at Mankiw's introductory text and thought it to be Economics Light. Maybe the hardest thing about Harvard is getting into Harvard.

One word to describe those non-wealthy; LAZY.

Its great to see students taking ownership of their education. Students at other universities should take their example and REFUSE teachers forms of "knowledge" that are meant to propagate the oppressive/inefficient status quo. Where is the rebellious spirit of the 60?