海角大神

The New York Times opinion page recently ran a series of short pieces on Rethinking How We Teach Economics, making the point that we need to change our economics instruction to be able to account for the financial crisis. There are several articles in the 鈥渄ebate,鈥� but I would like to consider Alan Blinder鈥檚 contribution. In addition to being a Princeton economist, Blinder was on President Clinton鈥檚 Council of Economic Advisors and he was also a member of the Board of Governors of the Federal Reserve, so his take on this is not surprising.

Blinder聽argues that we must change the way we teach economics. In his words,

And,

Blinder is right in saying that many instructors should change the way they teach economics, but it鈥檚 not because of the crisis. The crisis has exposed some of the failures of mainstream economic theory, namely the failure to explain the cause of the business cycle.

Austrian theory fully explains how Federal Reserve policies triggered the financial crisis. Austrians understand that the Fed does not counter the business cycle and instead it should be blamed for creating this meltdown.

Some instructors do not need to revamp their teaching methods. Those who teach Austrian business cycle theory can use the current crisis as another example of the failure of 鈥渃onventional鈥� monetary policy. Instructors that use Austrian readings such as Murray Rothbard鈥檚 鈥淭he Mystery of Banking鈥� to explain business cycle theory do not need to 鈥渞ethink how we teach economics.鈥�