There is nothing wrong with economics, Dean Baker contends, but economists
routinely ignore their own principles when it comes to economic policy. What
would policy look like if we took basic principles of mainstream economics
seriously and applied them consistently?

In the debate over regulation, for example, Baker.one of the few economists
who predicted the meltdown of fall 2008.points out that ideological blinders
have obscured the fact there is no "free market" to protect. Modern markets
are highly regulated, although intrusive regulations such as copyright and
patents are rarely viewed as regulatory devices. If we admit the extent to
which the economy is and will be regulated, we have many more options in
designing policy and deciding who benefits from it. On health care reform,
Baker complains that economists ignore another basic idea: marginal cost
pricing. Unlike all other industries, medical services are priced extra-
ordinarily high, far above the cost of production, yet that discrepancy is
rarely addressed in the debate about health care reform. What if we applied
marginal cost pricing.making doctors' wages competitive and charging less
for prescription drugs and tests such as MRIs?

Taking Economics Seriously offers an alternative Econ 101. It introduces
economic principles and thinks through what we might gain if we free
ourselves from ideological blinders and get back to basics in the most
troubled parts of our economy.

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