As you likely know by now, every Friday at Comments from Left Field we’ve taken to sharing with you something we’ve discovered during the past week in a feature we call Discovery Friday! With all the talk this week about the deficit, the economy, unemployment and taxes this Discovery Friday feature is blog whose focus is on economics, Modeled Behavior. I stumbled across this site when the following post caught my eye:
Likewise the overconsumption theory of recessions makes no sense. On a slightly different matter a frequent commenter writes
I’d rather have economists in charge of the financial system than politicians, if for no other reason than I hate most politicians far more than I hate most economists. But the argument that most of the good times in the past decades were due to economists’ strong hand at the tiller is unpersuasive: anybody can live well for quite some time on credit cards, whether they just run up bills with abandon or do it in a logical and academically justified way.
If I am reading the commenter’s intention right then imbedded in his words is a common misperception. This is a response is to that general misperception not the specific commenter.
I think people are confusing cyclical prosperity with personal luxury. In your personal life you might feel like you are doing well because you have a new house or a new car, etc.
However, this is not how we measure the cyclical wealth of nations. We measure it by employment and production. We say the economy is “doing well” when a lot of people are going to work and making stuff.
For example, we say that Germany’s economy seems to be recovering. However, consumption in Germany is not rising. Consumption is flat. Working is rising. Employment is rising. That is what it means to be doing well. It means that more people are doing more work.
Being a non-economics-type and having struggled through micro and macro economics in university I greatly appreciate it whenever someone can take this daunting topic and make it palatable. The good folks at Modeled Behavior do so in spades and for that reason Modeled Behavior has earned our fourth Discovery Friday pick.