The Myth of "The Economy"

If I hear about "the economy" one more time, I'm going to blow a fuse. Referring to "it"as some monolitic, national issue is ridiculous. Talking about "it" this way makes about as much sense as talking about the collective batting average of Major League Baseball, and yet it is the only way we ever seem to talk about "it". "The economy"- in this macro sense- is a complete fiction.

All economies, like all politics, are local. The economy in metro Chattanooga and the economy in Dallas, or Erie, or Wichita, are all completely different animals with completely different rates of growth (or contraction) and completely different metabolisms, savings rates, housing prices, etc., ad nauseum. Of course, all economies are interconnected, and there are rarely huge differences in economic health in adjacent areas. It would be much more useful to think of them like temperatures on a weather map; like those temperatures, you rarely see huge shifts, but rather smooth gradients from one place to the next. I am suggesting here that someone adopt this model, and do it soon: it would do more to correct our thinking about the issue than anything else I can imagine. A monthly economic "temperature map" would be a truly useful and informative tool for policy makers.

The Fed does of course publish its Beige Book, which is a patchwork of reports from the different Federal Reserve branches around the country, in order to gauge just what the hell's actually happening out here. It does this, however, so that it can amalgamate the data and come up with an average that it can use to set one interest rate for "The Economy". As much as I wish there were a way to set different interest rates for different areas of the country, they just don't have that figured out yet, so this is a necessary evil. It is NOT necessary, however- and in fact entirely unhelpful- to carry this rubric forward into general discussion about economics. It's harmless (but facile) in economic circles, but it's downright reckless and stupid in wider reporting, because it almost always (unless you happen to living in the area which happens to fall on the average) entails a disconnect with the reader's reality. Talking about how bad- or how good- "the economy" is only serves to artificially frighten (or embolden) the reader, and thus spend money they probably should not spend, or save it when they should be spending it. In current terms, with consumer confidence at historic low levels, it is a particularly acidic and destructive way of thinking about it. It is very difficult for otherwise reasonably healthy local economies- like mine- to get any sort of economic traction when USA Today is constantly announcing that "the economy" stinks.

So- please- the next time you hear some reporter opining about "the economy" in these general terms, do us all a favor and slap them upside the head if they're within reach. Or write them a letter and ask them to do a feature on the Unicorn while they're at it- they might as well.