Troy: > [Klein] described the ideology as viewing supply's influence on demand as akin > to the moon's pull on the tide. This is about as wrong as can be. If > supply and demand are not independent the entire neoclassical model > collapses. From where did she pull this analogy?
Mat: > She must have supply-side macroeconomics in mind, not technical > micro-economics? If so, her description is not that out of line. The > economy doesn't work that way, but that is more or less how the supply-side > doctrine treats it. Right, the definition of "neoclassical economics" is arbitrary, a matter of convention, not some sort of glimpse of a "true" phenomenon. I like this analogy for supply-side or classical macro. If the actual level of real GDP differs from the "natural" level (corresponding to the "natural" rate of unemployment), prices adjust to get the economy to its natural level, just as the moon pulls the tide (unless the government throws a spaniard in the works). The trouble with the analogy is that the earth's water never gets to the moon. In the classical macro story, the GDP demanded very quickly gets to equal the GDP supplied (the "natural" level). -- Jim Devine / "Segui il tuo corso, e lascia dir le genti." (Go your own way and let people talk.) -- Karl, paraphrasing Dante. _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
