In my daily trek of researching the news, a friend posted up a piece by Forbes contributor Alex Berezow over Socialist Alternative candidate Kshama Sawant in a Seattle City Council election and her credentials as a teacher of economics. I can assure you my friend found the piece humorous and so did I.
But I am curious, why is Alex Berezow, a person listed to write on “science, science policy, and a dash of European affairs,” allowed to write on a subject he did little to no research about? In fact, has he read anything aside from Gregory Mankiw?
Perhaps an analysis of his post can allow us understanding of why an individual can write over economics with such terrible insight.
Berezow is right to state economics is not a science usually considered “traditionally,” though that is the only part where he is right. He moves on to say:
Still, economics can provide powerful insights on market behavior. Indeed, economists from various ideological backgrounds have managed to reach a consensus on several major issues, and from that vantage point, we can say the field has developed something resembling scientific knowledge.
Economics has not reached consensus on major issues since there many schools of thought. Additionally, the issue of terrible reporting on economics has been talked on by economist Dean Baker, for instance, and the issue of problems within the economic paradigm as it works within a neoclassical model. That is why books like The Economics Anti-Textbook by economists Rod Hills and Tonny Myatt exist, to counter-act such thoughts bias in the field and rejection of alternative theories.
Yet, as I read the entire piece, it starts with the age-old idea of incentive for people to work:
One of those insights is that people respond to incentives. If I offer a teenager $50 to mow my lawn — and an extra $25 if he trims the bushes — then I can expect to shell out $75. I just offered my little helper a handsome incentive, and there’s a very good chance he’ll respond to it.
Here I admit defeat as my socialist convictions cannot respond to such logic of paying a teenager $75 to mow the lawn and trim the bushes. I thought capitalism was exploiting others, but it seems this teenager (whoever it is) is a genius who is taking an easy $75 to do errands for Alex Berezow who is too busy writing on things he knows nothing about.
He mentions how socialists, like me, never admit to the idea of incentive in our framework despite our work proving him wrong. But the best part of the entire post is found within one line:
Yet, shockingly, socialists can regularly be found on college campuses.
Yes, we’re here on campuses preparing events to teach the public on special causes. We can be found in your cafeteria, your classrooms, your libraries, your buses, your trains, your lanes and even your sidewalks (yes we can walk). Perhaps most shocking of all, we’re human beings that can critically think and engage with other people while hoping for a change in the future.
He then proceeds to call out Sawant by saying she “openly endorses socialism” and might win her Seattle City Council race as she currently has 49.5 percent of the vote.
Two years ago, it was found by Pew Research Center those aged 18 to 29 view “socialism” favorably at 49 percent to 43 percent. It’s not a dirty word anymore.
Berezow flat-out deceives the reader to fit into his agenda of what is right and wrong. For instance, he criticizes Sawant for her support of rent control by stating:
If Dr. Sawant’s embrace of socialism isn’t bad enough, she also endorses a terribly destructive policy called “rent control.” This policy can take various forms, but basically, landlords are not allowed to charge market rates for apartments. That might sound like a nice thing if you’re a renter, but Dr. Mankiw — citing a 1992 paper in American Economic Review — states that 93% of economists reject rent control because it “reduces the quantity and quality of housing available.”
One major problem with this argument is the lack of a definition with rent control. Yes, the statistic of 93 percent of economists rejecting rent control is all fine, but what specific rent control are we speaking about? Here is the question he either refuses to answer or does not know much about.
In the Economics Anti-Textbook by Rod Hills and Tonny Myatt, they do talk about the neoclassical idea of rent control, but give an alternative view as well. They write:
But knowing the extent to which the ceiling rent is binding over time is very tricky. It’s complicated by the fact that we cannot observe the equilibrium rent. A second complication is that the type of rent control prevalent nowadays is very different from the type assumed in textbooks — a rigid rent freeze.
What Berezow is saying is that “first-generation rent control” is rejected by many economists. For those unaware, it is, as stated above, “a rigid rent freeze.” However, “second-generation” rent control is more flexible as it can allow “automatic rent increases geared to increasing costs, excludes luxury high-rent buildings and new buildings, restricts conversions, decontrols between tenants, and provides incentives for landlords to maintain or improve quality.”
In the same manner my introduction to microeconomics textbook (coincidentally written by Gregory Mankiw) failed to address this, so does Berezow fail to distinguish to difference between the two.
But the biggest problem is thinking that housing units aren’t assets, when, in reality, they are. Again, the two economists state there are more factors such as “interest rates, inflation, profit opportunities elsewhere, the local real estate cycle, government housing and tax policies, and current and expected future changes in all relevant variables.”
Nowhere, in a business site named Forbes, is the discussion of any of these factors raised. Rather, a reporter with time on his hands decided to write an article on a subject he did not research thoroughly.
Richard Arnott, economist at the University of California — Riverside, spoke on the impact of such factors. He wrote, in “Time for Revisionism in Rent Control?“: