It’s a mistake to view the economy as an abstraction
From a Seattle P-I story comes this gem of a quote about declining housing affordability: "It’s going to affect people more so than the economy."
Uh, what’s that again? The economic outlook is still rosy — it’s just, y’know, people who are in trouble.
This quote — from a government economist, no less — embodies one of the most common and pernicious errors pervading much of economic thought. You see, economists (and the reporters who love them) often pretend that the "economy" is somehow different from real people.
A philosopher would describe this error as "reification," i.e., mistaking an abstraction for a real thing. In this case, the abstraction — really, a bunch of accounting conventions and wiggly lines on macroeconomists’ charts — is given a life and importance of its own, separate from the people whose collective activities and aspirations those charts allegedly represent.
Worse, lots of economic reporting actually elevates the abstraction over the well-being of real people. The prevailing tone seems to be that we shouldn’t do something that benefits people if it also harms "the economy."
For example, you’ll often read that "the economy" is humming along, even if housing is too expensive for many families. Or that rising wages might hurt "the economy" by raising inflation fears. You may even see stories warning that other countries — Germany, for example — are putting their "economy" at risk by providing excellent health care, generous retirement policies, and good public services. (Sure, the people are pretty happy, but how’s that going to help the economy?)
Here in North America, we’re really good at making the gross domestic product squiggle — the most common representation of the economy abstraction — trend upwards. But make no mistake: making our domestic product grosser and grosser just isn’t the same thing as genuinely improving our well-being. Government economists should know better; and reporters shouldn’t let them get away with it if they don’t.