The Chimera of Macroeconomics

  Economists are fond of supposing “perfect information” while physicists of “frictionless world.” Sounds great! Unfortunately, if you say so you are short-sighted.             First, who with perfect knowledge would raise the cows, or for that matter create a new business? Absolutely positively no one would do that because there will not be such a thing as a profit. In other words, if you did you wasted your time that is limited to 125 years on this side of world.             Second, all of us without frictions would exist, if ever, as a dust, a rock or an asteroid depending upon the mass, or “weight” if you will.             C’est la vie , we’ve got to love imperfect knowledge as is and physical frictions as are.             Let’s take a break and suppose ...

  We call the buying-and-selling in the market “free trade” or “voluntary exchange.” Put it differently, the market is a conceptual venue where the so-called “win-win game” is played. More specifically, no seller would like to “supply the product” at a lower “price” (meaning a benefit : don’t get it wrong) than the marginal “production” cost. No buyer would like, either, to buy the product at a higher “price” (literally) than the marginal utility.              Lo and behold, the consequence of each and every exchange is a happy ending .              Now, let us line up all the marginal benefits “as revealed in the market” from the highest to the lowest on one hand; all the marginal production costs from the lowest to the highest on the other hand.              You’re right, in economics jargon: 1)...