Re: Today's Wall Street Journal on Mankiw's new textbook

[Charles Anderson <chasna@xxxxxxxxxxx>]

William S. Lear wrote:
>
> In a revolting editorial disguised as a book review, the Wall Street
> Journal today published, on p. A18, the thoughts of Mark Skousen, who
> celebrates Mankiw's new textbook as a "counterrevolutionary" work
> which "defeats" Keynesianism and puts "classical economics back at the
> forefront, where it belongs".  Mankiw, apparently undeterred by the
> 1980s, "approvingly quotes Milton Friedman" that "inflation is always
> and everywhere a monetary phenomenon".  One other gem discerned by
> Skousen in Mankiw's new book is that "Unemployment is caused not by
> greedy industrialists, but by minimum wage laws, collective
> bargaining, unemployment insurance and other regulations that raise
> the cost of labor."
>
> Are there any critical reviews of this book yet out?
>
> A letter to the editor might be in order from PKT folks...
>
> Bill

Chas writes:

Is the Journal article about a new Mankiw edition for the principles
level or a new revision of his intermdeiate level text? I have used the
last two editions of the intermediate level text and, without benefit of
having read the Journal article or seeing the new text, find the Skousen
comment to be most inacurate.

I find no attempt on Mankiw's part to either defeat Keynesianism or to
put Classical economics back in any forefront. Mankiw includes all the
traditional IS-LM stuff and presents it in the same manner as every
other intermediate level text, though with less mathematical rigor. In
fact, he makes no mention about the fraudulent use of the Keynesian AD
curve even though this critical flaw has been revealed in other very
Keynesian texts. Rather, he offers an alternative derived from the
equation of exchange alongside with the traditional multiplier form.
This approach has been used by both principles and intermediate level
texts for some time and could hardly be considered as something new.

My attraction to Mankiw was his use of the loanable funds model for
explaining the relationship between the current and capital accounts.
Something, I suspect, a rightwing maniac like Kindleberger would approve
of. There is no shameless attempt to impose either a Robertsonian lag,
something used by at least one renown PKTer, and no discussion about
differences between saving and investment.

All-in-all, I find Skousen's claim to be unfounded.

Chas