Mixing Metaphors in Economics

"This Administration has created X number of jobs. Vote to re-elect the President!"

"Millions are unemployed because of the President! Vote him out of office!"

It's amazing how the childish myth of presidential control over the national economy is propagated over and over again. To buy into this idea requires the economic understanding of a ten year-old. Yet assumptions that the vast economy, comprising of trillions of decisions every year by billions of people in the world, can be effectively controlled by anyone are common place. Russell Roberts explains:

A similar confusion occurs when we talk about creating "high-paying jobs" as if jobs were boxes and your salary depends on which box you're working in. Your salary depends on your skills and your alternatives. If you don't understand this, you think that something is wrong with Wal-Mart because its salaries are below average. Wal-Mart's salaries are below average because its work force, on average, has below average skills.

Much of these misunderstandings come from our desire to believe that every phenomenon that exists must be the result of someone's conscious desire that it exist. [snip]

The lesson here is to avoid metaphors taken from physics and engineering that are inevitably cause and effect metaphors and think instead of metaphors from biology where results emerge from the actions of multiple interactions in a complex system. Think rain forest not engine.

At least I said in that earlier post that the economy "grows" jobs. Sounds something like a rain forest. But the problem isn't the verb. It's the noun "economy" doing the growing like a farmer growing wheat. The economy can't do things. It is the result of individuals "doing."

Emphasis added. The economy is simply too big, too complex a system to manipulate effectively. Adding regulations, price floors or ceilings, or subsidies is akin to introducing foreign species into an ecosystem, or hacking down the trees themselves. The economy, like a rain forest, works best when left alone.