From a Seattle P-I story comes this gem of a quote about declining housing affordability: "It's going to affect people more so than the economy."
Uh, what's that again? The economic outlook is still rosy -- it's just, y'know, people who are in trouble.
This quote -- from a government economist, no less -- embodies one of the most common and pernicious errors pervading much of economic thought. You see, economists (and the reporters who love them) often pretend that the "economy" is somehow different from real people.
A philosopher would describe this error as "reification," i.e., mistaking an abstraction for a real thing. In this case, the abstraction -- really, a bunch of accounting conventions and wiggly lines on macroeconomists' charts -- is given a life and importance of its own, separate from the people whose collective activities and aspirations those charts allegedly represent.
Worse, lots of economic reporting actually elevates the abstraction over the well-being of real people. The prevailing tone seems to be that we shouldn't do something that benefits people if it also harms "the economy."
For example, you'll often read that "the economy" is humming along, even if housing is too expensive for many families. Or that rising wages might hurt "the economy" by raising inflation fears. You may even see stories warning that other countries -- Germany, for example -- are putting their "economy" at risk by providing excellent health care, generous retirement policies, and good public services. (Sure, the people are pretty happy, but how's that going to help the economy?)
Here in North America, we're really good at making the gross domestic product squiggle -- the most common representation of the economy abstraction -- trend upwards. But make no mistake: making our domestic product grosser and grosser just isn't the same thing as genuinely improving our well-being. Government economists should know better; and reporters shouldn't let them get away with it if they don't.
Comments
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Delay And Deny Posted 2:49 am
13 Sep 2007
Yes, Grist, it's a lot like when you talk about the "Environment" and expect people to upend their lives, jobs, families, homes just because you feel sorry for a striped manatee in Rwanda.
Everything in Grist rolls along with vast pronouncements of Government programs that should do away with this or that, or how ordinary middle class citizens "contribute to global warming".
Listen up, buddy. Most people want to get the kids to school, go to work, come home and watch tv. You know why? Because that's all the energy they have!
The extra burden of your imperialist global plans have no place in the American mindset.
John Bailo
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Clark Williams-Derry Posted 3:16 am
13 Sep 2007
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Tom Philpott Posted 3:26 am
13 Sep 2007
I hate it when you write a great post, and all you get in comments is spam from Jbailo.
This is good stuff, reminding me of the irony in the subtitle of EF Shumaker's Small is Beautiful: economics as if people mattered.
Cheers,
Tom
Victual Reality
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wiscidea Posted 3:41 am
13 Sep 2007
For example, environmentalists cheering the rise in fuel prices because it will reduce consumption, forgetting about people who cannot easily move or switch jobs to reduce consumption... there are independent contractors, service people, et cetera who have to drive to earn a living.
Rather than dismiss Mr. Bailo with a wave of the hand, how about telling him why his analogy is inappropriate? Why is there no parallel bewteen economists forgetting about people -- which bothers me very much and I appreciate the original post -- and environmentalists forgetting about people?
It might be time for each of us -- including myself -- to hold up a mirror and ask ourselves whether our harsh criticism of others applies to us as well.
Mr. Bailo cares about the natural world as much as anyone else and deserves some respect, even if you disagree with him.
Another victim of Jean-Paul Marat's ghost and his virtual guillotine?
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Jon Rynn Posted 4:17 am
13 Sep 2007
Bailo occassionally pops up with a quote that makes me think he is a leftist of the Alexander Cockburn sort, that is, pissed off at the global corporate elite (as am I), but believing that there is no global warming and that there is something called abiotic oil, that is, it comes from the Earth and so will never run out. Although, the "imperialist global plans" was pretty funny, I guess that's Limbaugh-Hannity stuff.
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Jon Rynn Posted 4:23 am
13 Sep 2007
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Biodiversivist Posted 5:03 am
13 Sep 2007
In the end, it all comes down to biodiversity. Poison Darts--Protecting the biodiversity of our world
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naturescene Posted 5:13 am
13 Sep 2007
Maybe if you specifically said macroeconomists who love to aggregate individual actions, then I might agree with you.
But to say that economists in general think the economy is abstracted from people is completely ridiculous and shows that you may not have had much actual training in microeconomic theory and philosophy.
The only thing micro-economists are concerned with is individual actions -- that's people. I'd ask you to clarify between the micro and macro aspect of economics, because if you did, then you'd be making a better point.
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Biodiversivist Posted 5:14 am
13 Sep 2007
You are, by definition, an environmentalist Wiscidea.
In the end, it all comes down to biodiversity. Poison Darts--Protecting the biodiversity of our world
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Aklemm Posted 8:21 am
13 Sep 2007
The reason housing affordability has suffered is due to the credit bubble that manifested itself in a housing mania.
There is no other way asset prices can increase faster than underlying wages sustainably.
Haven't you heard of NINJA loans, Neg Am, Option Arm, Stated (Liar) income & asset loans.
Hint, these are the loans that New Century, Countrywide, Bear Stearns, BNP, Citi, German Banks and others are choking on this very minute.
The housing bubble has just begun to unwind and will be many years will the market clears out the mal-investment.
For the environmental gristy tie in, the housing bubble created lots of environmental and social damage.
More and larger homes
Divorces, Bankruptcies and Foreclosures
Excess Granite Quarries
Felled Forests for wood flooring
CO2 emissions from excess concrete and tile manufacture
CO2 emissions from energy to heat, cool and power the excess buildings.
I would like to see Grist take a look at the environmental, social and economic costs of the housing bubble.
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