Saving “the Market” out of Cambridge: “Income-Leisure Tradeoff”
Q1. Are economics and macroeconomics “complementary”?
Q2. Are economists and macroeconomists “substitutive”?
Q3. Are “the market” and “the economy”
on the same boat?
Q4. Is “monetary income” in tradeoff against
“leisure”?
The answer to Q1, conceptually “Yes,”
but practically “No.” More specifically, the vast majority of macroeconomists
get “the market” wrong, the very foundation of economics. Often they go even
antagonistic to the market.
“No” to Q2. In general, a competent
economist makes a good macroeconomist or the other way around. At any rate,
most influential economists are
mostly macroeconomists.
The answer to Q3 is “Up for grabs.” It
depends who you ask the question of. Some say the market is to blame for each
and every macroeconomic trouble; others would point fingers at the government
in general and the central bank in particular, instead, implying a healthy economy
only with wholesome markets.
Ditto
to Q4. Really fantastic is that best-selling authors claim “monetary income”
and “leisure” to be in tradeoff. They even insist that their supply of labor
bend backward.
Reality
check. The backward-bending labor supply starts
from the idea that the opportunity cost of “leisure” is monetary income
(e.g. Gregory Mankiw). Very true but we must know why we demand “leisure” ex ante before measuring its “opportunity
cost” ex post. If “leisure” were none other than waste of time, why would
any of us pay in the first place a cost
for such a “waste”? Instead of idling
away some hours of the day, the
ultimate currency of ours, we might pray for the world peace or prosperity of
humankind as an Eastern saying has it.
To
be correct, “demand” for the potatoes, Irish or otherwise, is always for the utility,
a benefit. Otherwise, none of us would pay a penny. “Supply” of labor everywhere
takes energy, strains, displeasures or pains, a cost (cf. e.g. Jevons 1957, Ch. V, §1) together with
forgone hours for family life, another
cost. If supply of labor were not “costly” all of us would work 24 hours a day,
possibly for free in private yet more readily at the official minimum wage.
Between
the rest of us. Far from being “indolence” (Thomas
Malthus) or waste of time, “leisure” even in the form of taking a nap is an
essential part of life: leisure is a process of renting self-owned hours for the purpose of producing and consuming
certain services. Moreover, the most common opportunity cost of “consumption” for
a benefit is also “monetary income”: we usually buy consumables at the cost of income
from working hours.
If
for instance Daniel Barenboim plays Beethoven home, few of us would call it leisure
in the meaning of “indolence.” Whether or not, auto-supply of music as pianist competes against, rarely companies as opportunistic alternative with,
market-supply for monetary income of music as pianist, conductor or both.
The choice of us is everywhere, “The money or our utilities!” Those of them, on the flipside, Long Live with money aka “preferred liquidity” originated particularly from a low wage!
At any rate,
do when out of comedy not be silly enough to mix foes with friends.
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