The Trouble with Macro
20th May 2008
Arnold Kling stands conventional wisdom on its head.
In my view, macro seriously undermines sound economics. It treats work as scarce and consumer wants as insufficient, which is the opposite of what we teach in micro. Macro treats saving as contractionary and international trade deficits as contractionary, which is contrary to general equilibrium micro. Most people with no economics training intuitively believe that jobs are scarce, that they help the economy when they spend rather than save, and that trade deficits are bad. In general it is the job of economists to explain why those views are fallacies.