Micro, Macro and Fantasy Economics

"There are two branches of genuine economics, the micro and the macro, and a third and phoney one, the fantasy economics that feeds on wishful thinking demagogy and the rantings of pretentious charlatans. As micro and macro are tangled up in one of their periodic conflicts of mutual misunderstanding, the hour is to the fantasy economics "new order," "need, not greed," "equitable distribution," "stability," and so forth. None of this rhetoric is harmless, and the seductive apple-pie-and-motherhood language it uses makes it difficult to combat. Micro-economics finds support in common sense, the lessons of everyday life and perhaps also in inherited instincts that favoured genetic survival in evolutionary selection. Micro-economics teaches that no sane man will try to increase his income by borrowing more heavily on his credit card so that his increased consumption should stimulate consumption, fill factory order books, and permit him to earn more by doing overtime. Yet macro-economics suggests that something of the sort is a quite plausible sequence of events. Plausible, however, is sometimes mistaken for necessarily true. "It all depends"; macro-economic plausibility may or may not point to correct conclusions."