An economy is not a single “thing,” as liberal-progressive, macroeconomic computer modelers claim, nor is it comprised of abstract “things” such as consumption, investment, or savings.
Government planners have never successfully gained control of these abstractions and never have they been able to move them about in accord with their plans. The present economic fiasco, engendered by Obama’s socialistic urges, channelled through Larry Summers and Ben Bernanke, is but the latest evidence of planners’ folly. Even in a command economy like the Soviet Union, planners were hopelessly ineffective.
Consumption, savings, and investment are merely helpful concepts that provide intellectual frameworks for understanding actions of individuals and the effects of those actions. They cannot be used to predict more than a range of possibilities for the future actions of roughly three-hundred-million Americans.
In the real world, our economy is, analogously to a kaleidoscope, a political unit filled with tens of millions of independent people moving into ever-shifting, microeconomic patterns. People want to do things their way to achieve their desires. Liberal-progressive, macroeconomic forecasters and planners want everybody to fall into regimented lock-step and march according to their orders.
Read Bill Flax’s discussion in Forbes Magazine.
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