Charlie Munger’s criticism of economics

I found this transcript of a speech by Charlie Munger thanks to Greg Mankiw’s blog:

Academic Economics: Strengths and Faults After Considering Interdisciplinary Needs (pdf)

Despite the very dry sounding title, it’s an astute criticism of economics that I greatly enjoyed. My own interest in economics stems from attempting to understand how things like open source software and programming languages fit into the world at large, and what forces govern their rise and fall. Economics is generally a pretty good way of thinking about problems like that – one of the best there is. But it’s certainly a system that is far from perfect, and Munger points out some of its defects in an effective way, without going overboard and trashing the whole discipline, as some do. His words give voice to somewhat vague doubts in my own mind, and back them up with the experience and successful career of Mr. Munger. Like all good criticism, it’s also constructive and suggests improvements rather than simply tearing down.

I don’t agree with his complaints about free trade and China, but they’re not completely without foundation, and that’s probably a discussion best left to someone else’s online journal. Suffice it to say that I think he’s performing a bit of slight of hand by turning hypothetical numbers where everyone is objectively better off into a relative ranking, where there can only be one “winner”.

Overall, though, it’s a good read, especially if you have read a few things about the subject of economics.