The Chimera of Macroeconomics

  Certain celebrity macroeconomists are fond of playing with GEMs for general equilibrium models. They must be kidding!              Equilibrium in the paradigm of particular market does not necessarily lead to equilibrium in the model of general economy. On the contrary, what is true between a definitive few is never and nowhere true of indefiniteness, much less infinity. More simply, the market has nothing whatsoever to do with the economy: consequentially, the distance between economics and macroeconomics is no shorter than from Here to Eternity.                Now, “for the sake of convenience” as usual among those macroeconomists, we copy from somewhere else:   (Quote) The Fallacy of Generality How many parts do we think our body, for instance, is composed of? The only feasible answer is “infinity.” We cannot manage the infinity because...

  Hated by the former US president Harry S. Truman, the economy has two hands. Where there is a “take,” there is a “give.” Where there is no “give,” there is no “take.” More generally, where there is an action, there is a reaction and vice versa . Therefore, there in the economy is no such thing as “equilibrium” or ceteris paribus . In other words, an “organism in equilibrium” must be an oxymoron in the worse sense; a life on the Isle of the Dead?             In the first place, none of us in the hat of “the household” of economics would like to be put to “equilibrium” in any sense of the term.   The Concern: “AI and Job Loss ” Don’t worry, be even happier!             Where there is demand for AI, there will eventually be supply of AI. Where there is no demand for AI, there is absolutely no supply of AI in and from the right mind. Scenario #1 . Suppose AI’s...

  Intelligence, Human vs Artificial            What would the most typical difference between RI (for real intelligence) and AI be? That’s a great question subject to answers of all differences depending on whom we ask the question of. 1)      A macroeconomist : There is a “nominal” difference, if any, in that the two never die in “the short run” but fade away in “the long run.” 2)      A scientist : The one is human and organic, the other artificial and mechanic In other words, RI evolves while AI revolves. 3)      A humanist : The one is exciting and gets excited, while the other is boring but never gets bored. 4)      A troubleshooter : The one goes to a clinic, the other to a mechanic. 5)      A layperson like the rest of us: Are you kidding? 6)      A doomsayer : RI’s will certainly suffer fro...

  To begin, we have in the AS-AD model the real GDP [ Y = ( nominal GDP )/ ( the price level) ] on the abscissa and the price level ( P ) on the coordinate.                Some Q&A’s, first:   1)      What is “the price level” ( P )? Ask macroeconomists, please. 2)      What is “the real GDP”? Ask macroeconomists, please. 3)      What is a “long run” like? Ask macroeconomists, please 4)      What is “AS (for aggregate supply)”? Ask macroeconomists, please. 5)      What is a “curve” like? Ask macroeconomists, please. 6)      What is “the long-run AS curve”? Ask macroeconomists please. 7)      How are “the price level” for GDP and “the price level” on the ordinate different? That’s a great question, but again “Ask macroeconomists, please.”   Amon...

  Two millennia and a half ago, the great Chinese teacher Confucius preached, “Masters shall get the names correct before leading people” ( 正名 , zhèngmíng ). This maxim could not be more relevant as regards macroeconomic theories of today.             The unfortunate facts of macroeconomics includes an abundancy of misnomers and miscomprehension of names in other disciplines, classical economics included. With so many misnomers and misuses, macroeconomics naturally misleads people, “endogenous” or “exogenous.” Mainstream macroeconomists seem at best to be masters in name only.             For instance, “equilibrium,” general or otherwise, is for mechanisms, never for organisms. In every sense, ether the market or the economy is an organism             The “marginal unit” must mean a small but accountable unit o...

How would we like “equilibrium”? As always, we have to clarify what we mean with the term. As a rule of thumb, we would very much as regards to a mechanism , but should never as regards to an organism .              For instance, the vending machine out of equilibrium must be put on with a sign “out of order.” Otherwise, your guess is as good as mine. As quipped by one of the Founding Fathers, on the contrary, an organism is finished when it in equilibrium finishes changing.              At any rate, we come across such terms as “the equilibrium price” and “the general equilibrium” as often as we open a textbook thereabout: the former in elementary economics as abstract science, the latter in Cambridge macroeconomics as “empirical science.”              Between you and me, the 20 th -century macroecono...