It’s a problem in the sociology of knowledge at elite professional schools.
Taking a step back, the Washington Post published a profile yesterday of Geithner that garnered a lot of attention from political bloggers who (rightly, in my view) lamented Geithner’s early obsession with the deficit as well as his outsized influence on economic policy. Some of the bloggers also noted that Obama holds ultimate responsibility for those decisions (including the appointment of Geithner in the first place), which is also appropriate. My contention is that those are not separate phenomena.
Both Geithner and Obama went to prestigious graduate professional schools. Geithner studied international economics at the Johns Hopkins School of Advanced International Studies (SAIS), while Obama attended Yale Law. The previous president got an MBA at Harvard Business School. Those sound like entirely different sorts of training, but I’ve noticed at my own school that there is one prominent commonality across all of these sorts of programs – all of them learn a fairly similar form of economics, using fairly similar texts.
Moreover, because of a combination of constraints imposed by time and the students’ varying quantitative backgrounds, the version of economics they learn tends to have relatively little of the nuance of the more complicated models taught in doctoral economics programs (and yes, I know the assertion of nuance is debatable, but I’m speaking in relative terms here). Instead, the professional school version is forced by these constraints to present economic problems as having fairly straightforward solutions that are solvable in the context of a medium-difficulty problem set. And while the professors teaching the course will likely spend time on the financial crisis and its implications, as well as other shortcomings of the models they’re teaching, that information does not (yet) appear in most of these textbooks, which means it likely isn’t tested, which means those of us trained to be good little meritocrats will focus on what is in the textbook (for full disclosure, yes I am in graduate school, but not in one of these programs). And that material tends to be of the variety where you draw and calculate the area of neat little triangles to illustrate the dreaded efficiency-killing deadweight loss imposed by taxes, or in law programs you will likely study some variation of Posner’s Chicago-school Law & Economics work, etc.
I think it is hardly a coincidence that this is also the sort of thinking that the Serious People in Washington present given that most of them came up through the same system.
There is obviously variation here – I have no doubt that the advanced courses for specialists at public policy schools like SAIS, Harvard/Kennedy, Princeton/Wilson and Columbia/SIPA are more rigorous – and I want to be crystal clear about the fact that none of this is intended to point the finger at schools or the professors teaching these courses. I’ve had the good fortune to study with a couple of them, and they were uniformly excellent, especially considering the constraints I noted above. But the point remains that professional-school students tend as a class to receive a remarkably similar set of information about how the world and the economy work. And I would argue it’s a system effect that ends up imparting an implicit ideology without requiring anyone’s conscious decision to do so.
As for why this is important, this chart is from a paper by Acemoglu and Autor that will appear in the upcoming Handbook of Labor Economics. It recreates and updates the data from a similar chart in an earlier paper by Autor,
Levy and Murnane Katz and Kearney (2008) and shows the distribution of income by education over time.
While college-educated people (CLG in the chart) have certainly done well relative to those with no/some college (HSG and SMC), the real gains have gone to the people with graduate degrees (GTC), who by the numbers are overwhelmingly those who went to professional schools.
I make no arguments about causality, but it is striking that we now have a class of professionally educated people who are both enjoying extraordinary returns to that education and who are also operating with a received set of economic views that to some extent valorize their good fortune as a rational market return to their superior skill. The general belief that government policy leans against the generally superior efficiency of the private sector and of markets – in other words, the Serious People trope – has also been instilled into people in that top trend line.
So to return to Geithner, given the above, I’m not convinced that his ouster would change things as radically as many hope. He’s a cadre, one of tens or even hundreds of thousands of them, each of whom has imbibed these same messages.
With special thanks to CC and SK for their feedback.