Somewhere in Bourdieu’s conversation with Wacquant, he observes — and I’m paraphrasing here — that the purpose of social science is to make it difficult to say idiotic things about the social world. Now I’m not an economist, of course, but to the degree that idiotic analogies are something of a hobby of mine, so I also have a passing interest in the moronic things people routinely have to say about macroeconomics. By far the worst of the lot, in my view, is the analogy between household and sovereign debt. Today, Krugman describes what might be the closest contender for top honors.
. . . [T]he fact is that running a business is nothing at all like making macro policy. The key point about macroeconomics is the pervasiveness of feedback loops due to the fact that workers are also consumers. No business sells a large fraction of its output to its own workers; even very small countries sell around two-thirds of their output to themselves, because that much is non-tradable services.
This makes a huge difference. A businessman can slash his workforce in half, produce about the same as before, and be considered a big success; an economy that does the same plunges into depression, and ends up not being able to sell its goods. Nothing in business experience prepares one for the paradox of thrift, or even the inflationary impact of increases in the money supply (which is real when the economy isn’t in a liquidity trap.)
All of which only reminds me of Berton Churchill’s famously idiotic harangue in Stagecoach (1939):
I don’t know what the government’s coming to. Instead of protecting businessmen it pokes its nose into business. Why, they’re even talking now about having bank examiners. As if we bankers don’t know how to run our own banks. Why, Boone, I actually have a letter from a popinjay official saying that they were going to inspect my books. I have a slogan that should be blazoned on every newspaper in the country. America for Americans. The government must not interfere with business. Reduce taxes. Our national debt is something shocking. What this country needs is a businessman for President.Because, of course, that plan has always turned out well.