Sometimes, Simple is Better Than Perfect

This blog post doesn't really have a clear purpose: it's just one of those times when I wish that navigating the maze of life didn't have to be so complicated! For the most part over the years, I've sought to learn something new every day. But there are some things in life I will never be able to figure out, and lately Arnold Kling has taken to bashing aggregate supply and demand as a valid concept...why?

Maybe I've just been too close to Main Street over the years instead of academia. But to me, concepts of supply and demand are about as basic as it gets. Many who are steeped in "inflation certainty" (or, if it happens somewhere in the world it's happening here) have a similar problem when it comes to thinking of nominal targeting. Supposedly, such reasoning goes, nominal targeting is just another "measurement gauge" no more significant than any other, thus doesn't relate to other variables any differently. No, nominal targeting isn't perfect either. But if we wait around for perfect, we might be waiting for a long time. Consequently, perfect is something I consider a luxury good: nice on occasion, but not suitable for a daily meal. Sometimes it seems like the world would rather starve, than make do with some basic meals of knowledge workability.

Another one of those discussions that I can't for the life of me figure out: the idea that money isn't necessary in macroeconomic terms. Economic life does tend to get usurped by government self importance from time to time. But that doesn't mean government can throw something as basic as money right out the window and expect to get away with it.Yes, Simon-Wren Lewis, money is about as special as it gets for a medium of exchange and it seems that The Beatles definitely agreed. And of course Nick Rowe never tires of trying to figure out why money is weird, even if Simon-Wren Lewis isn't quite sure. While one's government may be fooled into believing money isn't a real concept, some of us don't fool so easily. My wallet doesn't have magic qualities which allow me to play make believe, although I sure wish it did.

And how did Say's Law ever fall into such such ill repute? In a pinch, when contracts get too stretched out of shape along with everyone's high expectations, and some service definitions become overvalued, one would think people could find a way to use services so that supply could in fact create its own demand. The best way to engage with those who tell us we can't make it happen? Just go ahead and make it happen anyway. That's another problem with perfect, it just doesn't walk the talk, even if it's great at talking.

Another problem with perfect. It always seems like one person's perfect is the next person's dystopia. I liken simple to the bird that will eat just about anything that moves...or perhaps isn't moving at all. They're good at utilizing what is. They may not be everyone's idea of bird watching, but they are doing a real good job at surviving. Social skills don't hurt, either. I don't know if eagles (which aren't picky eaters) have good social skills, but crows do. At one time, living on the edge of the woods, I felt really sorry for the crow who found  a possum on the nearby rocks, and so went to tell his friends about it. They came back with him, but in the meantime some other creature dragged the possum away. Perhaps his buddies gave him the benefit of the doubt in all the confusion (they hunted for the lost meal), for he certainly was trying! Long story short: simple isn't always pretty, but oftentimes (in spite of the hapless crow), it gets the job done.

If we had started working on the problems of the world a bit sooner (such as the need to redefine middle class) maybe those now front burner issues wouldn't have become quite so pressing. But the argument has always been "Everything is fine. We don't need to work on the problems unless they arrive." Mmmm, yep, the problems have arrived. And so far, the "perfect" models and solutions are on the usual display but they're not exactly making a difference in the places that need them. And time is short. At least I can feel better in that regard, since my own time is a bit shorter than it used to be! That means any sense of urgency on my part isn't exactly misplaced. Arnold Kling, I wish I could figure out the rationale in your head as to macroeconomic thought. But even if I'm lucky enough to live to 100 that's not likely to happen. Just the same, some of your observations are astute as ever, and your "signature" signoff feels especially appropriate here: Have a nice day.