From The Transformation of Economics by Richard Vedder in The Wall Street Journal:
Economics as ideology in camouflage. Economists who achieve fame for genuine intellectual insights, like Paul Krugman, sometimes then morph into ideologues—predominantly although not exclusively on the left. The leftish domination of American academia is partly explained by economics. Federal student-loan programs, state appropriations, special tax preferences and federal research-overhead funds have underwritten academic prosperity, even at so-called private schools. The leftish agenda today is one of big government; academics are rent-seekers who generally don’t bite the hand that feeds them. The problem is even worse in other “social sciences.”
A disconnect between economic reality and public policy. Three examples come to mind. First, the Keynesian orthodoxy of fiscal stimulus of the 1950s and 1960s, with its Phillips curves and the like, was shown to be spectacularly wrongheaded. The U.S. experience of the 1970s and the Japanese “lost decade” of the 1990s are two demonstrations. Second, centrally planned authoritarian states with no private property or free markets (e.g., the former Soviet Union or North Korea) have been shown to be monumentally inefficient and not permanently sustainable. Third, nations with some free-enterprise capitalism but with growing redistributionist welfare states start stagnating economically—Europe beginning after 1970, the U.S. after 2000. Yet many economists (including at the Federal Reserve) still champion Keynesian policies and welfare-state expansions such as ObamaCare.
One reason living standards in the U.S. have stagnated: There were 12.7 million fewer Americans working in January than there would have been with the 2000 employment-population ratio. Disability insurance claims have roughly tripled in the past generation (despite greater inherent workplace safety because of the declining relative importance of manufacturing and mining); government-subsidized student loans and grants have lured younger Americans away from work; extended unemployment benefits prolonged unemployment; and food stamps now go to nearly 30 million more Americans than 15 years ago. The government has provided much more income that is only available if people do not work. So fewer do. As Charles Murray has noted, this phenomenon has contributed to declining social cohesion and arguably even largely explains Donald Trump’s electoral success.
Modern computer technology and increased econometric sophistication sometimes yield useful information about the way the world works economically. But those gains are at least partially offset by the sharp decline in historical consciousness—today’s scholars sometimes think they know it all, having an arrogance arising from historical ignorance, often wasting time and energy relearning lessons that those with a good sense of economic history already know. It is still satisfying, after half a century, to try to counter that ignorance, and to teach young people the logic of the price system, the importance of private property and other institutions for freedom and prosperity.
I would only add that the loss of any historical consciousness is not limited to economics.