Macroeconomics and the Entitlement State

By Mikiel de Bary

It is high time to judge macroeconomics -- the pseudo-economics of "aggregates" -- as a disaster. We must challenge both the premises of the macroeconomists and their "policy" alternatives. Let us recognize them for what they are, namely, public relations consultants for the entitlement state. From its beginnings, which we can date from 1936 (the publication year of Keynes's General Theory), macroeconomics emphasized (on rather vaguely argued grounds) the importance of the biggest numbers in business statistics -- the so-called aggregates. The macroeconomists, as it were, even named themselves after these politically potent "macro" numbers and laid claim to an expertise precisely in tracking and, well, producing them. The supposed tie of macroeconomics to reality has always been its "national income and product accounting" -- the vast statistical project that they claim "measures" aggregate production and, even, national economic performance. But the difficulty such accounting could never overcome (and, therefore, ignored) is its inability to do anything more than record aggregates of spending, which could never reveal much more than.... (Read Full Article)