In his Washington Post column Robert Samuelson laments that the economics textbooks widely in use are largely obsolete:
Mankiw’s introductory text, and surely some others, has been overtaken by events.
To be sure, in a book of roughly 800 pages, there’s a huge amount of useful, clearly presented information on many subjects: supply and demand; global trade; competition or its absence; wages; government regulation, spending and borrowing — and much more. When there are disagreements among economists, Mankiw does his best to summarize conflicting views.
But as a teaching device, “Principles of Economics” has fallen behind. There’s little analysis of the impact of the Internet and digitalization on competition and markets. I couldn’t find either Apple or Facebook in the index; Google gets a few mentions.
Likewise, little attention is paid to the 2007-2009 Great Recession, the worst business downturn since the Great Depression, which also receives scant coverage relative to its significance. (Together, the two recessions receive about three pages, from 725 to 727.)
There’s some misleading information about the Great Recession and parallel financial crisis. On Page 691, we have this: “Today, bank runs are not a major problem for the U.S. banking system or the Fed.” This would surely surprise the Fed, which poured trillions of dollars into the economy to prevent financial collapse.
Mankiw’s assertion can be defended on narrow, technical grounds. There was no run by retail depositors (people like you and me) against commercial banks. We were protected by deposit insurance. But there was a huge run — a panic — by institutional investors (pension funds, hedge funds, insurance companies, endowments) that withdrew funds from traditional banks, investment banks and the commercial paper market.
Allow me to present an alternative view. You will know that economics is primarily a science and only secondarily politics by other means when demands for relevancy disappear. Do people demand relevancy from physics, chemistry, or mathematics texts? If they do we have entered a very sad period.
I was taught introductory economics from Paul Samuelson’s text. I’ll need to take a look at it again. I suspect it’s about as relevant as it was 60 years ago.