Monday, June 8, 2009

Hint: It's Not A Car

For those who want to fix the economy, here's a clue:

It's not a car.

You can't rev it up (34,300). You can't jump-start it either (1 million). Nor is it a motorcycle, so you can't "kick-start the economy", as 73,600 have attempted.

The poor analogies for "economic management" go beyond vehicles: 430,000 want to reboot the economy. These analogies fail because they are analogous to nothing. Economies are not 'rebooted', 'kick-started', or 'revved'. Tim Geithner isn't in the driver's seat, pushing levers and steering around chicanes. He's in a big office chair, squinting at tables of figures that reflect the agglomerated decisions of millions of car drivers, computer users, construction workers, soccer players, insurance estimators, and pantyhose salesmen.

So how should we talk about the economy? We can't expostulate theory every time we speak, so we need some shorthand. Here are a few analogies that could mean something:
  • Tying the hands of taxpayers/local gov'ts/businesses. Regulations or endogenous constraints can narrow the number of choices available to economic agents, worsening their well-being.
  • Herding cats. Timmy G. can relate to this one, I'm sure.
  • Mending wall. Externalities can create perverse incentives; good fences make good neighbors.
  • Losing the milk money. People in positions of trust can abuse their power with carelessness or malice.
  • Pushing a car up a hill. For those of you who love car analogies: the fact that GM is dead as a Chevy Vega hasn't stopped the government from trying to huff and puff it back to life.

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