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...

  Particularly celebrated as a production function is the caption.   To Begin. There in the market as of economics are two hands, supply and demand; the former represents the household while the latter the firm. In macroeconomics , however, the aggregate households are the aggregate firms. Therefore, the aggregate income earners are the aggregate income payers. In other words, each of us is and all of us are the earner on one hand and the payer on the other hand, no questions allowed.              There in the economy are no such things as labor incomes vs capital incomes. It’s the gross national income, stupid!  In the first place, each of us and all of us are us in commonwealth. In the second place, we wear a hat each, subject to varying colors across (L -3 ); namely, consumer, producer, demander-cum-buyer, supplier-cum-seller, employee-cum-income earner, employer-cum-income payer, saver, investor, labo...

    There surely is a production function at each workshop of a factory but not on the level of factory rightly managed; not to mention at the whole firm to the aggregate industry all the way to the macro-economy.              The operation of the workshop is mechanic, but management of the firm is organic: That’s fortunate (+) to some while unfortunate (-) to others. With regard to the production function, some (+) take the organic economy as the economy; while others (-) take a certain mechanic workshop out of indefinitely many nationally for the whole economy.              An interesting question: Would there be such a thing as organic “equation” or “function” as called in mathematics and macroeconomics? As for the rest of us, at least: Well, never in Here on Earth.   We have yet to discover what over There in Eternity.   14) The Produc...

  Again, where there is yin ( 陰 , yin ) there is yang ( 陽 , yang ). The invisible hand, the market and the economy always and everywhere have two hands. In the first place, “The purpose of production (+) is consumption (-)” (to Adam Smith). Where there is a giving hand (+) there is a receiving hand (-) and vice versa . Each and all of all the kinds of matters, except for “liquidity” in Cambridge, never die or fade away “into the thin air.”              Each and all entities, but for a nonentity (0) or an Eternity ( ∞ ), have two ends , or two hands if we will, one vs the other, south vs north, east vs west or the like. Surefire ( 明若觀火 ; 明若 观 火 , míng ruò guān huǒ ), the principle of mass conservation!   12) Effects of Sticky Wages . Sometimes in macroeconomics, the sticky wage is named as the culprit of the sticky price. True or false, good or bad, or right or wrong, where there is a wage payer there must be a ...

  Spot question: How many kinds of models can we name? Two snap answers: 1)      Macroeconomists: There are “so many models,” indefinitely many actually. 2)      The rest of us: We can think largely of four kinds, namely, ① really moving, ② virtually unmoving, ③ invisibly exemplary and ④ Eternal.   11) Model or Not                  “Is the AS-AD Model a model?” It’s a great question except for the fact that the answer all depends.   1)      Macroeconomists in Cambridge shall say, “Are you kidding me?” 2)      The rest of us on the sidewalk, “Well, sort of.”              First, the demand schedule (T -1 ) and the supply schedule are conceivable in the market for each product, an infinitely tiny microcosm out of the greatest macroscopic economy. By conception, ergo , househ...

    A quick question: How many kinds of markets are there in standard vocabulary? A snap answer: There are at least five; that is, the mart in practice, the market in economics, markets in finance and two more in macroeconomics.   8) The “Money Market.” Very clear to the rest of us by now: We keep “money” for the sole purpose of using it as medium in the market while in the meantime saving financial transaction costs in transforming an asset to “the useless when preferred” money (adapted from Irving Fisher, Paul Samuelson and William Nordhaus). On the flipside, the only way to getting rid of the over-flowing money due to “fiscal policy” or else is spending for various things including “final goods and services” of GDP              Don’t even think about eating, wearing or using as shelter the annoying money for the purpose of acquiring utilities: it’s not only deleterious but unlawful. On the waysid...

  Many a macroeconomist refers to “empirical science.” Is physics one? Is chemical engineering another? Is economics a third? Is finance a fourth? Is macroeconomics yet another? What about “political science”? Science for Abstract Theories . Through history, mathematics used to be named as “science” (e.g. J.S. Mill, 1861). In modern times, it is not so any more. Particularly in the US, the term STEM differentiates science, technology, engineering and mathematics from one another. Generally speaking: ①    Science is of idealized abstract theories from observations and experiments of the reality, natural or economic. ②    Technology is a set of theories and other knowledge more or less readily applicable to the practice. ③    Mathematics is for the sake of convenience in calculation while being silent to causality and blind to metric of dimensions and scales. By the way, measurement is one calculation is another; the former with metric the latter...