Monthly Archives: November 2011

The student debt crisis in one chart

Posted by  at 10:35 AM ET, 10/19/2011
The household credit market is slowly recovering: consumers are generally getting better at meeting their debt payments on time, becoming more willing to borrow, while banks are more willing to lend them money, according to the latest data from the Federal Reserve Bank of New York. But there are some big exceptions to this trend. Americans have become seriously delinquent on an increasing percentage of their student loan debt. In fact, as USA Today notes*, outstanding student loans on track to hit a record high of more than $1 trillion this year, and “Americans now owe more on student loans than on credit cards,” according to the new data. [Contra USA Today , student loan debt is at $550 billion, and it’s still below credit-card debt, which is at $690 billion, according to the New York Fed figures. See update below.]Since the peak of the crisis in 2009, they’ve become increasingly able to pay off their credit cards and mortgages. But the student loan debt crisis has continued mostly unabated.
(New York Fed)Update: An earlier version of this post said that student loan debt has already hit $1 trillion. It’s projected to hit that figure this year.Update 2: Felix Salmon doubts USA Today’s conclusion that there’s projected to be $1 trillion in student loan debt this year. His own conclusion from the Fed data is that there’s $550 billion in student-loan debt—nowhere close to $1 trillion and still less than the $690 billion in credit card debt. I’ve checked the figures that Salmon references, and he’s correct. But other data outside the Fed confirm the $1 trillion figure ad student loans outpacing credit cards.

We Are the 99.9%

Published: November 24, 2011
Fred R. Conrad/The New York Times

Paul Krugman

“We are the 99 percent” is a great slogan. It correctly defines the issue as being the middle class versus the elite (as opposed to the middle class versus the poor). And it also gets past the common but wrong establishment notion that rising inequality is mainly about the well educated doing better than the less educated; the big winners in this new Gilded Age have been a handful of very wealthy people, not college graduates in general.

If anything, however, the 99 percent slogan aims too low. A large fraction of the top 1 percent’s gains have actually gone to an even smaller group, the top 0.1 percent — the richest one-thousandth of the population.

And while Democrats, by and large, want that super-elite to make at least some contribution to long-term deficit reduction, Republicans want to cut the super-elite’s taxes even as they slash Social Security, Medicare and Medicaid in the name of fiscal discipline.

Before I get to those policy disputes, here are a few numbers.

The recent Congressional Budget Office report on inequality didn’t look inside the top 1 percent, but an earlier report, which only went up to 2005, did. According to that report, between 1979 and 2005 the inflation-adjusted, after-tax income of Americans in the middle of the income distribution rose 21 percent. The equivalent number for the richest 0.1 percent rose 400 percent.

For the most part, these huge gains reflected a dramatic rise in the super-elite’s share of pretax income. But there were also large tax cuts favoring the wealthy. In particular, taxes on capital gains are much lower than they were in 1979 — and the richest one-thousandth of Americans account for half of all income from capital gains.

Given this history, why do Republicans advocate further tax cuts for the very rich even as they warn about deficits and demand drastic cuts in social insurance programs?

Well, aside from shouts of “class warfare!” whenever such questions are raised, the usual answer is that the super-elite are “job creators” — that is, that they make a special contribution to the economy. So what you need to know is that this is bad economics. In fact, it would be bad economics even if America had the idealized, perfect market economy of conservative fantasies.

After all, in an idealized market economy each worker would be paid exactly what he or she contributes to the economy by choosing to work, no more and no less. And this would be equally true for workers making $30,000 a year and executives making $30 million a year. There would be no reason to consider the contributions of the $30 million folks as deserving of special treatment.

But, you say, the rich pay taxes! Indeed, they do. And they could — and should, from the point of view of the 99.9 percent — be paying substantially more in taxes, not offered even more tax breaks, despite the alleged budget crisis, because of the wonderful things they supposedly do.

Still, don’t some of the very rich get that way by producing innovations that are worth far more to the world than the income they receive? Sure, but if you look at who really makes up the 0.1 percent, it’s hard to avoid the conclusion that, by and large, the members of the super-elite are overpaid, not underpaid, for what they do.

For who are the 0.1 percent? Very few of them are Steve Jobs-type innovators; most of them are corporate bigwigs and financial wheeler-dealers. One recent analysis found that 43 percent of the super-elite are executives at nonfinancial companies, 18 percent are in finance and another 12 percent are lawyers or in real estate. And these are not, to put it mildly, professions in which there is a clear relationship between someone’s income and his economic contribution.

Executive pay, which has skyrocketed over the past generation, is famously set by boards of directors appointed by the very people whose pay they determine; poorly performing C.E.O.’s still get lavish paychecks, and even failed and fired executives often receive millions as they go out the door.

Meanwhile, the economic crisis showed that much of the apparent value created by modern finance was a mirage. As the Bank of England’s director for financial stability recently put it, seemingly high returns before the crisis simply reflected increased risk-taking — risk that was mostly borne not by the wheeler-dealers themselves but either by naïve investors or by taxpayers, who ended up holding the bag when it all went wrong. And as he waspishly noted, “If risk-making were a value-adding activity, Russian roulette players would contribute disproportionately to global welfare.”

So should the 99.9 percent hate the 0.1 percent? No, not at all. But they should ignore all the propaganda about “job creators” and demand that the super-elite pay substantially more in taxes.


NOVEMBER 20, 2011

Robin Wells: We Are Greg Mankiw… or Not?

In response to the walkout staged by students in the intro economics class at Harvard, INET launched the syllabus project 30 Ways to Teach Economics. We invited professors and students to send us syllabi, and to share their experience with teaching and learning intro economics. Here are three responses, from Bruce Caldwell, Duncan Foley, and Stephen Ziliak.

Another response comes from Robin Wells. In this essay, she warns teachers of letting the classroom become disconnected from the real world. Amid mass unemployment and economic turmoil, “instructors who lecture on the superiority of free markets without acknowledging the dysfunction in the wider economy are at risk of appearing out of touch and exacerbating antipathy towards economics.”

Wells has taught economics at Princeton University and Stanford Business School. With Paul Krugman she co-authored Economics, published by Worth Publishers and soon forthcoming in the 3rd edition.

We Are Greg Mankiw… or Not?


On Nov. 2nd, a group of students in Harvard University Ec10, the introductory economics class taught by Greg Mankiw, staged a walk-out. In an open letter, the students lambasted Greg’s course and his textbook for “espous[ing] a specific – and limited – view of economics that we believe perpetuates problematic and inefficient systems of economic inequality in our society today…..There is no justification for presenting Adam Smith’s economic theories as more fundamental or basic than, for example, Keynesian theory.”

I am sure that many of us who have taught introductory economics or who have written an intro economics textbook (a much smaller subset, and I fall into both) felt a pang of sympathy for Greg when we heard about the walk-out.  If you have ever faced a large lecture hall of restive intro econ students, or coped with a voluble student with an ax to grind, you can feel some solidarity: we are Greg Mankiw too.

But just how far should that sympathy extend?  Is Mankiw simply the target of fuzzy-minded youth who are more intent on making a statement than engaging in reasoned inquiry? Or, is Mankiw – and much of the profession, for that matter – getting a needed reality check about the need to re-orient the way we teach economics?

First, let me say what this essay is not.  It is not an attempt to promote my textbook over Mankiw’s nor an exercise in partisan jousting.  I don’t find a walk-out a useful way to communicate displeasure with an instructor – better to invite him or her to a friendly debate with opposing views. This essay is not a critique of Mankiw’s teaching approach: I was not there to witness it, and every instructor will differ in political preferences and emphasis.  And neither will this essay advocate a root-and-branch re-think of how to teach introductory economics for both pedagogical and practical reasons.  I consider standard microeconomics to be an invaluable introduction to how to reason about the allocation of scarce resources.  Moreover, most intro econ instructors are stretched far too thin to contemplate a wholesale revision of their courses.

But what I will say is this: something is shifting out there, and we ignore it at our peril. It would be very easy to dismiss the student walk-out as an exercise in intellectual laziness and grandstanding.  (After all, as many have pointed out, Keynesian models can’t be taught until second semester of Harvard Ec10.)  But perceptive instructors know that sometimes a stupid question is more than a stupid question.  And a really perceptive instructor will take a seemingly stupid question and turn it into the insightful question that the student should have asked.

Right now the general public views the economics profession with a large measure of distrust and in some cases outright contempt. Students are entering the worst job market in well over a generation, without much prospect of improvement.  Many of them have seen their parents’ lives turned upside down by financial troubles.  They face being members of the first generation in American history with a lower standard of living than their parents.  Income inequality has reached levels not seen since the Gilded Age.  There are over 4 million long-term unemployed.

In this environment, instructors who lecture on the superiority of free markets without acknowledging the dysfunction in the wider economy are at risk of appearing out of touch and exacerbating antipathy towards economics.

But how does an instructor do this in an introductory economics?  I think it’s largely a matter of shifting our perspective to let go of the certainties that were part of our economic training and admit to the painful economic uncertainties that many Americans now inhabit.  Here are four ways to help bring that shift to the classroom:

Provide Context.   Compared to past years, instructors need to acknowledge the limits of free markets earlier in their courses. Students should understand the difference between the conceptual importance of free markets and their real world limitations. Explain that much of the current economic distress arises from markets that don’t behave competitively — the labor and financial markets.

Build Trust.  Trust is built when the instructor compensates for the one-sided nature of the relationship by treating students’ viewpoints with respect.  And this is where the art of the perceptive instructor is most likely to be needed.  For example, to the microeconomics student who protests that Keynes and Adam Smith should be given equal time, respond that the issue boils down to why some economists believe that the labor market doesn’t always clear while others believe that its does.  Then take a few minutes to discuss each side of the debate.   Yet, also make clear that valuable class time won’t be wasted on debating viewpoints that are contradicted by the data.

Address Distributional Issues.  The dramatic rise in U.S. income inequality compels us as instructors to address it.  While international trade and educational differences have clearly contributed to some of the rise, it’s clear that they are only partial explanations: they can’t explain the explosion of income gain at the top 1% of the income distribution, and particularly at the top 0.1%.  We shouldn’t extol the benefits of markets while ignoring today’s highly skewed distribution of the benefits.  While there is no single definitive explanation, there are many factors that are feasible topics in class: moral hazard and the setting of CEO compensation, the decline of countervailing forces such as unions and higher marginal tax rates at the top end, deregulation, asset bubbles and the financialization of the U.S. economy.  And then discuss: to what extent is the level of income inequality a legitimate policy target?

Finally, Adopt Some Humility.  It’s true that those of us who weren’t in the business of teaching Gaussian pricing formulas for CDO’s or touting the benefits of homeownership via sub-prime mortgages aren’t directly responsible for the economic mess we’re in.  But in the eyes of many students we are culpable to the extent that we dismiss the need for some re-think of the deference accorded to free markets in how we teach economics as applied to the real world.  Again, I want to emphasize that we make the distinction between communicating the importance of free markets as an intellectual building block and the frequent mis-use of free market concepts when it comes to making real world policy choices.  Lastly, in a world of liquidity-trap macroeconomics, soaring income inequality and an exploding Eurozone, we are going to have to admit that there are areas in which the profession just doesn’t know what the right answer is.

And remember, there is such a thing as a first-mover advantage.  So schedule a teach-in before your classroom is occupied.

Posted by The Institute for… at 6:34 pm



NOVEMBER 18, 2011

Professors share their experience with teaching intro economics

In response to the walkout staged by students in the intro economics class at Harvard, INET launched the syllabus project 30 Ways to Teach Economics. We invited professors and students to send us syllabi, and share their experience with teaching and learning intro economics. Here, you can read about three different courses. Find more syllabi here.

Macroeconomics without the AS-AD model

Duncan Foley, Leo Model Professor of Economics at the New School for Social Research, tells us that he stays away from the AS-AD model, which is present in nearly every textbook. He sends us the syllabus to Principles of Macroeconomics and writes:

The syllabus deviates from the standard Introduction to Macroeconomics course primarily in framing the issues in terms of economic history and the history of economic thought, and emphasizing institutions complementary to theories. I personally find the widely-adopted “AD-AS” framework for teaching macroeconomics intellectually fallacious and ideologically loaded, so I try to stay away from it.

Microeconomics with Mankiw’s textbook

Bruce Caldwell, Research Professor of Economics and the Director of the Center for the History of Political Economy at Duke University, uses Greg Mankiw’s textbook for introductory micro. He sends us the syllabus to Principles of Microeconomics and writes:

I used Mankiw for my introductory microeconomics text when I taught large enrollment courses at UNC-Greensboro a few years back. The text develops in a clear manner the basic tools of microeconomics: production possibilities curves, supply and demand curves, the notion of elasticity, the various diagrams associated with market structures.  It is very difficult to get people to read much in large classes, and many UNCG students are first generation college students who in addition to carrying a full load work 25+ hours a week at jobs. But if they did the minimal reading I assigned for class they would have the basics under their belts and would be able to understand my lectures.

For lectures I would go through the basics then illustrate them with case studies or applications. I would pitch the lectures at a higher level. I would also give occasional homeworks, uncollected and ungraded, that I would go over in class. Those who did them typically would do well in class. The others, not so well.

Part of what the class was about was to teach students to take responsibility for their education. On the first day I would go over study tips that, if they followed them, would enable them to succeed. The first was to come to class. Next was to review notes from the past week (I told them to recopy them) each weekend. This helps to cement the concepts in their minds, allows them to see if there are any gaps or areas where they are confused, and if so, to come to see me. Third was to quit their job and sell their car (or if this was not possible, to take fewer classes).  A portion of students would not come to class (I did not take attendance – coming to class was up to them), would not do the reading, would not follow the study tips. They would not do well on the first test: typically about half of the class would get an F or D. When I went over the test I would tell them that if they were unsatisfied with their grades they should either change their behavior (by following the study tips) or drop the class. Note that the test option I provided was to replace the lowest test grade with whatever one gets on the final, so a change in behavior could lead to a much better grade.  Some would change and improve, others would drop the class. Sadly, a certain portion would not change their behavior or drop the class. Hope springs eternal, I suppose.

Microeconomics using “The Grapes of Wrath”

Stephen Ziliak, Trustee and Professor of Economics at Roosevelt University-Chicago and a member of the INET Curriculum Committee Task Force, teaches introductory microeconomics using The Grapes of Wrath (1939). Here is the syllabus.

The Grapes of Wrath was published by its author, John Steinbeck, in 1939, during the worst economic crisis in American and world history. Set in and written during the Great Depression, The Grapes of Wrath is a bluesy road-novel with a lot of social and economic theory and analysis. It follows a family of homeless and landless tenant farmers from Oklahoma—the Joads—who’ve been forced on account of foreclosure to leave the farm and land which they labored and lived on for several generations.

Forced by a large bank and absentee owners to leave their home, the Midwestern farmers with little education and no income join other displaced workers on the road to California, in search of jobs, food, and housing—a piece of the American Dream.

Steinbeck’s Pulitzer Prize-winning novel was for many years censored and banned by governments and school boards made uncomfortable by the novel’s detailed portrayal of economic inequality, hardship, and oppression.

We asked Stephen Ziliak to share his experience teaching The Grapes of Wrath, which he has used since 1996 to form the basis of his intro economics course.

Q: Why, Professor Ziliak, way back in 1996, did you begin to teach to introductory economics students The Grapes of Wrath?

A: I guess my first response is that I eschewed in my own research the one-voiced, monological approach of conventional neoclassical economics. Trained as an economic historian, I’m an amateur poet who had also worked as a welfare and food stamp caseworker in the county welfare department, going door-to-door in the poorest neighborhoods of Indianapolis. When I became an Assistant Professor of Economics, in 1996, I was searching for a teaching method that would open up the conversation to a wider, more realistic set of issues. It only seemed fair to me: given that I myself had philosophical objections to the conventional approach to teaching utilitarian economics, it hardly seemed right to force-feed my students. Plus, many of my students came from working class families but they’d never experienced a recession. I wanted them to know that growth and bubbles do not last forever.

Q: Why teach The Grapes of Wrath and not some other novel?

A: Good question. First and foremost, it’s an incredibly moving novel that—I openly admit—continues to make me laugh and cry. Now laughing and crying are not necessary for good pedagogy. But it seems to me that if a fact-based story about economic history can make a grown man and professor of economics cry, it must have something important to say. The visible hand of class conflict needs to be aired and this novel does it.

Q: You said fact-based. What do you mean—it’s a novel, it’s fiction, yes?

A: Yes, but it’s historical fiction—meaning that Steinbeck, like Hugo, Zola, and others before him, was deliberately depicting real and felt experiences. There are exaggerations and omissions of fact, true—as economic historians and English professors know full well. But in fact, Steinbeck himself spent a year or more working and studying inside of the same temporary labor camps that the fictional Joad family experienced in California.

Q: How do students react? Can you share some insights from the teacher perspective?

A: Really well, eventually. Some are defensive at first, being trained to believe that stories are for novelists and theory for scientists. Still others have been so deeply entrenched with what I call the banking approach to learning—regurgitating facts and equations—they’re afraid of dialogue and a plurality of voices and interpretation. But students tell me it’s one of those life-changing courses.

Q: What about the “quants”? Do quants survive the course?

A: Again, it’s not for everyone. But yes, absolutely. An example is a student who studied with me at Roosevelt University. He came to Roosevelt as a freshman from Puerto Rico on a violin scholarship. He was preparing for a career in violin at our conservatory and, at the same time, he had a passion for advanced mathematics. On a lark he enrolled in my Grapes of Wrath course. Half-way through the term he told me that something was happening to him. The evolution of the protagonist, Tom Joad, from self-interested ex-con to benevolent labor leader, he found fascinating. He thought that he might have to switch from violin and math to economics. I told him no, if he really wanted to switch he could study math and economics—he wouldn’t have to give up the math. By the time he was a junior (a third year student) he landed a job with the Federal Reserve Bank of Chicago. At graduation he was promoted to Associate Research Economist. Now he’s a master’s student in economics and statistics at Duke University but he is not at all bamboozled by the utility maximization-only school.

Q: Do you supplement the novel with other literature or media?

A: Yeah. For example, a particularly fun day of class is when we play music by Woody Guthrie, Bruce Springsteen, and Rage Against the Machine—who’ve recorded songs about Tom Joad. Springsteen himself recorded an entire CD on the central themes.

This is an interesting piece by Bremmer (Eurasia Group) and Roubini (NYU Stern). They are betting their money on the U.S. What do you think?

NOVEMBER 12, 2011

Whose Economy Has It Worst?

With Europe, China and the U.S. in crisis, the real question is which of them will stumble first


It’s no wonder that global markets are so jittery. The world’s three largest economies can’t continue along their current paths, and everybody knows it. Investors watch nervously for signs that China is headed toward a hard landing, that America will sink back into recession, and that the euro zone will simply implode.

[usecon2]Edel Rodriguez‘In all three cases, kicking the can down the road has staved off disaster so far — but the cans are getting bigger and heavier.’

In all three cases, kicking the can down the road has staved off disaster so far, but the cans are getting bigger and heavier. Which economy will be the first to stumble on its problems?

An improved political picture in Italy together with a new prime minister in Greece, is helping to patch up fragile investor sentiment, but some analyst say it could be short-lived. Stacy Meichtry joins Paul Vigna and Jonathan Shipman on Markets Hub.

In Europe, the tough decisions have been put off because the principal players don’t agree on how or why the trouble began. Germany and the other better-off countries blame the profligacy of Greece, Portugal and Italy and fear that an early bailout would relieve pressure on them to mend their ways. For their part, the debtor nations believe that the entire euro zone is out of balance and that more prosperous countries like Germany should export less and consume more to set things right.

Other Europeans say that a shared currency cannot survive indefinitely when monetary policy is centrally managed but each government decides how much to tax and spend. Still others warn that access to market capital requires a form of collective insurance, preferably in the form of a euro bond. Not surprisingly, Germany resists this solution because it implies a gradual transfer of wealth from the core economies to the periphery, a “transfer union” from rich to poorer states.

The market continues to pin its hope on massive intervention by the European Central Bank to restore market confidence once the new Greek and Italian governments are in place. But that may be wishful thinking. Simon Nixon joins The Markets Hub.

Yet another European view holds that the austerity plans now envisioned by Germany and the European Central Bank are worse than the disease. The Continent needs growth, not just reform and belt-tightening, they argue, and only a surge of stimulus across the entire euro area can achieve it.

The 17 countries and four European institutions now entangled in the euro zone crisis will continue trying to muddle through, but their dawdling can’t be sustained. Markets are already losing confidence in piecemeal reform. Doubts about Italy, an economy too big to bail, will only add to the volatility.

Europe will be the first to drop out of the game of kick the can: Expect a disorderly debt default in Greece, more trouble for European banks and a sharp recession across the continent.

Associated PressA salesperson talks to a woman visiting a housing fair in Nanjing in eastern China’s Jiangsu province on Oct. 13.

In China, the need for economic reform also has become obvious. It has been four years since Premier Wen Jiabao first warned that the country’s economic model is “unstable, unbalanced, uncoordinated and ultimately unsustainable” and three years since the financial crisis made clear that China’s growth remains dangerously dependent on exports to Europe, America and Japan.

To ensure long-term economic expansion (and political stability), Beijing must figure out a way to encourage Chinese consumers to buy more of the products that local manufacturers make. This will demand a massive transfer of wealth from the state and China’s state-owned companies to Chinese households.

European markets may have calmed down but with the future of the euro still unresolved, interest in the dollar should be on the rise. If not the dollar, then where should the hunt for a safe haven turn to next? Dow Jones’s Alen Mattich discusses.

But Beijing is moving in the opposite direction. The leadership responded to Western market turmoil not by boosting consumption but by increasing state and private spending on fixed investment, which now accounts for nearly half of China’s growth. The result has been an explosion in residential and commercial real estate, more state spending on infrastructure and more cheap loans from state-owned banks to state-owned enterprises.

In an interview with WSJ’s Rebecca Blumenstein, former U.S. Secretary of State Condoleezza Rice says she is very concerned about Europe’s future as it confronts a political crisis that threatens to destroy its unity.

Indeed, a key obstacle to reform is that China remains so heavily invested in its state-managed model of capitalism. Of the 42 Chinese companies listed in the 2010 edition of the Fortune 500, 39 were state-owned enterprises, and three quarters of China’s 100 largest publicly traded companies are government controlled. Party officials with a stake in the success of state-owned enterprises have amassed considerable power within the leadership, and they ferociously resist efforts to transfer away their wealth to private enterprises and ordinary citizens.

China has the cash and foreign reserves to postpone a crisis. But growth is slowing, financial stresses are rising, and there is good reason to fear that China’s days of can-kicking are numbered as well.


Which leaves the U.S. No one can restore confidence in America’s long-term fiscal health without a credible plan to cut spending on entitlements and defense while raising revenues, which are now at a 60-year low as a share of GDP. But don’t expect any immediate solutions from Washington. The campaign season will only exacerbate petty partisanship and political gridlock, which means that the structural problems of the U.S. economy are likely to persist.

But the longer-term future appears much brighter for the U.S. than for either Europe or China. America is still the leader in the kind of cutting-edge technology that expands a nation’s long-term economic potential, from renewable energy and medical devices to nanotechnology and cloud computing. Over time, these advantages will yield more robust economic growth.

The U.S. also has a demographic advantage. In Europe, declining birthrates and rising sentiment against immigration point toward a population that will shrink by as much as 100 million people by 2050. In China, thanks in part to its one-child policy, the working population has already begun to contract. By 2030, nearly 250 million Chinese will have passed the age of 65, and providing them with pensions and health care will be very costly.

Despite debate over illegal immigration, the U.S. population will likely rise from 310 million to about 420 million by midcentury. Between 2000 and 2050, according to Mark Schill of Praxis Strategy Group, the U.S. workforce is expected to grow by 37%. China’s will shrink by 10%. Europe’s will contract by 21%.

Finally, despite the rising exasperation of the American public, the U.S. is significantly more likely than Europe or China to quit kicking the can down the road. Nothing much will change during the election year, but 2013 offers a chance for real fiscal reform.

Next November, Republicans are likely to win both houses of Congress. If a Republican is elected president, the GOP will face enormous public pressure to deliver on its reform promises. Even if President Obama is re-elected, the outlook for a grand bargain is bright. He would be free of the most immediate demands of electoral politics, and like other second-term presidents, he could begin to consider his legacy.

Make no mistake: The challenges that the U.S. faces are formidable, and persistent political gridlock could delay badly needed fiscal and structural reforms. But everything is relative, and the best can to be kicking down the road just now is undoubtedly the one made in America.

—Mr. Bremmer is the president of Eurasia Group and the author of “The End of the Free Market.” Mr. Roubini is the chairman of Roubini Global Economics and a professor at New York University’s Stern School of Business.

Here’s the story in the Harvard Crimson:

Students Walk Out of Ec 10 in Solidarity with ‘Occupy’

Published: Wednesday, November 02, 2011
Economics 10 WalkoutHarvard students and community members gather in front of John Harvard statue in solidarity with the Occupy Movement and Occupy Oakland.

UPDATE: 4:04 a.m. November 3, 2011

Nearly 70 Harvard student protesters walked out of Economics 10 on Wednesday afternoon, expressing dissatisfaction with what they perceive to be an overly conservative bias in the course.

The walkout was meant to be a show of support for the “Occupy” movement’s principal criticism that conservative economic policies have increased income inequality in the United States.

“Today, we are walking out of your class, Economics 10, in order to express our discontent with the bias inherent in this introductory economics course. We are deeply concerned about the way that this bias affects students, the University, and our greater society,” read a statement issued by the organizers.

Economics 10—more commonly referred to as “Ec 10”—is taught by professor N. Gregory Mankiw, and has the highest enrollment of any course at the College, boasting over 700 enrollees.

“I was going to announce this at the end, but I have a feeling people might leave a little early,” he said.

At 12:15 p.m. students stood up en masse and walked out of Sanders Theatre, where Ec 10 lectures are held. Some students carried signs, but most left carrying just their backpacks. As the demonstrators marched out of Sanders Theatre, a small crowd booed them in support of Mankiw. Most students remained in their seats

After walking out, the group gathered in the hallway outside of the theater, standing in a circle and speaking out about the event.

“Harvard graduates have been complicit [and] have aided many of the worst injustices of recent years. Today we fight that history,” said Rachel J. Sandalow-Ash ’15, one of the students who organized the walkout. “Harvard students will not do that anymore. We will use our education for good, and not for personal gain at the expense of millions.”

Gabriel H. Bayard ’15, another organizer of the walk out, said that he believes the course is emblematic of the economic policies that have led the financial crisis.

“Ec 10 is a symbol of the larger economic ideology that created the 2008 collapse. Professor Mankiw worked in the Bush administration, and he clearly has a conservative ideology,” Bayard said. “His conservative views are the kind that created the collapse of 2008. This easy money focus on enriching the wealthiest Americans—he really operates with that ideology.”

Mankiw served as the chairman of the Council of Economic Advisers during the second Bush Administration and is currently an adviser to former Mass. Governor Mitt Romney’s presidential campaign. Mankiw declined to comment for this article.

Sandalow-Ash ’15 said that the course too heavily asserts conservative economic claims as fact.

“It’s a class that’s very indoctrinating, and does not encourage diversity of views. Economic questions are not always clear-cut. Multiple views should be presented in this course,” Sandalow-Ash said.

Many undergraduates remained skeptical of the demonstration’s mission.

Mark S. Krass ’14 said he believes the walkout’s intended goals were unclear, which detracted from the walkout’s message and comprises its integrity.

“Those of us who are supportive of Occupy Wall Street are trying very hard to combat the view that there is no set of objectives or ideology motivating that movement,” Krass said. “It was really distressing for people to advertise a walkout of Ec 10 on the basis of high textbook prices and bad teaching.”

Jeremy Patashnik ’12, an economics concentrator who authored a lengthy piece in defense of the course for the Harvard Political Review, rejected the notion that Ec 10 carries a conservative bias.

“I self-identify as a liberal on these issues, and I don’t see the conservative bias. I think this walkout misses the point of what Ec 10 is supposed to be,” Patashnik said. “This class is not attempting to give normative answers about how to address social issues. It’s meant to introduce students to economics as a social science.”

Krass noted that the topic of Wednesday’s lecture—income inequality—might have been particularly interesting to those who participated in the walkout.

“It’s incredible that in the name of advancing a more liberal view of economics they chose to walk out of a class on a social issue they care about,” Krass said.

According to those who walked out, part of the discontent with Economics 10 stems from what they say is the limited number of opportunities to express skepticism toward the material taught in the course.

“I’ve definitely written question marks in my textbook, but we never really get to question [what he says] in section,” said Alexandra E. Foote ’15, who is currently enrolled in the course. “I don’t know very much about economics, and it’s not really fair that I’m getting a skewed perspective.”

—Staff writer Jose A. DelReal can be reached at

The Open Letter the students sent to Mankiw:


A student defends the course:


The Harvard Crimson has an editorial on the protest:

NPR interviews Mankiw.