Psychohistory
I should finish Chapter 2 of Professor deLong's macroeconomics textbook tonight, so I'll be checking out the answers to Problem Set 1 tomorrow morning.
So far, it's clear, which means well-written, and I'm told I have the right reasons for being interested in economics; the three reasons given boil down to self-interest. Knowing something about this stuff lets you respond more intelligently to national events.Thing is, Professor deLong is also clear that this is not precise. For instance there's a table that lays out the difference between microeconomics and macroeconomics
| The Two Branches of Economics | |
| Macroeconomists | Microeconomists |
| Focus on the economy as a whole. | Focus on the markets for individual commodities and on the decisions of single economic agents. |
| Spend much time analyzing how total income changees, and how changes in income cause changes in other modes of economic behavior. | Hold total income constant. |
| Spend a great deal of time and energy investigating how people form their expectations and change them over time | Don't worry much about how decision makers form their expectations. |
| Consider the possibility that decision makers might change the quantities they produce before they change the prices they charge. | Assume that economic adjustment occurs first through prices that change to balance supply and demand, and only afterward do producers and consumers react to the change prices by changing the quantities they make, buy, or sell. |
Then there the GDP. The Professor says:
The first key indicator is the level of real Gross Domestic Product, called "real GDP" or often just "GDP" for short. "Real" means that this measure corrects for changes in the overall level of prices. If total spending doubles because the average level of prices doubles but the total flow of commodities does not change, then real GDP does not change. Economic variables are either "real"--that is, they have been adjust for changes in the price level--or "nominal"--that is, they have not been adjusted for changes in the price level. "Gross" means that this measure includes the replacement of worn-out and obsolete equipment and structures as well as completely new investment. ("Gross" measures contrast with "net" measures, which include only investments that add to the capital stock. "Net" measures are better than gross measures, but the information needed to construct them is nor reliable.)
and
If economics is a science. it's in the state chemistry was in immediately after it emerged from alchemy...except chemists of that day had no idea of the debased state of their knowledge. We do (or can...you need to get this stuff and read it). I'm not saying it's not useful. I'm saying people who make plans like their economic theories are revealed wisdom are full of shit...and were probably unreflective students to boot.
To me, though, the most troubling thing is the goal of applied economics: perpetual growth.
That's not even possible.
I need to figure out an intelligent way to ask what the hell that's about.
