Keeping it on the road: a metaphor for the economy?Metaphors from the economy pervade per·vade
tr.v. per·vad·ed, per·vad·ing, per·vades
To be present throughout; permeate. See Synonyms at charge.
[Latin perv our language, as Gozzi shows. (1) We "coin" phrases, "spend" time, and enter the "marketplace for ideas." (2) The road between the economy and metaphors runs both ways. The economy provides powerful metaphors. At the same time, metaphors from other aspects of life direct our thought about the economy.
Each metaphor has the potential simultaneously to inform and misinform mis·in·form
tr.v. mis·in·formed, mis·in·form·ing, mis·in·forms
To provide with incorrect information.
mis : Every one contains some elements of truth but is necessarily incomplete and potentially misleading. In my view, a "useful" metaphor provides more insight than distortion.
A favorite source of metaphors for the economy is the automobile. Politicians promise to "jump-start" the economy, to "look under the hood under the hood - [hot-rodder talk] 1. The underlying implementation of a product (hardware, software, or idea). Implies that the implementation is not intuitively obvious from the appearance, but the speaker is about to enable the listener to grok it. and see what's wrong" with it, to "turn it around and get it moving in the right direction," and to "fine-tune it."
The first frame of a recent political cartoon depicts the president and an opposition leader in a car labeled "U.S. Economy." The opposition leader throws out a toolbox labeled "Stimulus Plan." The next frame shows a stalled car and the president asking for his toolbox. This cartoon provides a good point of reference for considering just how apt this metaphor really is.
The automobile metaphor is, unfortunately, both common and prejudicial. Specifically, the seemingly neutral metaphor distorts one's view of a market economy and creates a strong presumption in favor of an interventionist stance. In this paper I explore how the metaphor provides a biased perception of an economy's tendencies and of government's abilities. I also describe the automobile/mechanic combination that might be required for the metaphor to be fitting, and I suggest an alternative metaphor.
Steering the Economy
Suppose that a car is in good running order. Even a car in good repair requires steering. Most economists once accepted that the economy, like an automobile, requires continual steering. The 1966 Economic Report of the President The Economic Report of the President is a document published by the President of the United States' Council of Economic Advisers (CEA). Released in February of each year, the report reviews what economic activity was of impact in the previous year, outlines the economic goals for is typical: "Compared with the previous cyclical record, the postwar recessions have been far shorter, considerably milder, and substantially less frequent.... This improvement in the postwar record was aided by the deliberate discretionary steps taken by the government...."(3) In this account, the government uses discretionary fiscal and monetary policy to steer the economy along the path of relatively smooth growth. The report contrasts this picture with what allegedly went before, the weaving path followed by a laissez faire Laissez Faire
An economic theory from the 18th century that is strongly opposed to any government intervention in business affairs. Sometimes referred to as "Let it be economics. economy.
Even as this view was in its ascendancy, Milton Friedman Noun 1. Milton Friedman - United States economist noted as a proponent of monetarism and for his opposition to government intervention in the economy (born in 1912)
Friedman leveled a series of devastating dev·as·tate
tr.v. dev·as·tat·ed, dev·as·tat·ing, dev·as·tates
1. To lay waste; destroy.
2. To overwhelm; confound; stun: was devastated by the rude remark. attacks.(4) Incorporating his criticisms into the driving metaphor yields surreal results. If the government is a driver, it is one that suffers from severe visual impairment Visual Impairment Definition
Total blindness is the inability to tell light from dark, or the total inability to see. Visual impairment or low vision is a severe reduction in vision that cannot be corrected with standard glasses or contact lenses and . We never know where we are along the road or what turns or twists lie ahead.
Being deprived of acute vision is not the only problem. The would-be driver must reckon with the system's steering linkages. A market economy does not react to steering as a car does. Our knowledge of the actual economy's linkages is profoundly deficient. Worse than this, the linkages change depending on, among other things, what economic actors expect government to do. Rather than steering a Ferrari, the driver struggles to direct a Model-T with linkages cobbled cob·ble 1
1. A cobblestone.
2. Geology A rock fragment between 64 and 256 millimeters in diameter, especially one that has been naturally rounded.
3. cobbles See cob coal.
tr. together by Rube Goldberg on a bad day. There is more: Actors in the economy routinely work to influence policy; this is like having the steering wheel try to direct the driver's hands.
Still, we must do something, right? What happens without some attempt, however clumsy, to steer the car? The answer is that it will "steer" itself, albeit with occasional lurches. Both economic analysis and historical evidence say that the market economy is a self-directed mechanism. Business cycles happen, but market forces put the economy back on track. The "car" has an automatic pilot.
That might not be good enough. The Council of Economic Advisors, quoted above, says that stabilization policy makes cycles less intense. Maybe even a myopic my·o·pi·a
1. A visual defect in which distant objects appear blurred because their images are focused in front of the retina rather than on it; nearsightedness. Also called short sight.
2. driver cursed with Adj. 1. cursed with - burdened with; "stuck with the tab"
cursed, curst - deserving a curse; sometimes used as an intensifier; "villagers shun the area believing it to be cursed"; "cursed with four daughter"; "not a cursed drop"; "his cursed an unreliable and possibly perverse steering mechanism is better than the automatic pilot.
Probably not. Christina Romer reports that the apparent reduction in cyclical severity results from changes in how we construct estimates of economic activity. Using a consistent technique, she finds no evidence of increased stability since government began to pursue discretionary anticyclical policies. While Romer's findings are not definitive, they suggest that the Council gave the government credit for a statistical apparition apparition, spiritualistic manifestation of a person or object in which a form not actually present is seen with such intensity that belief in its reality is created. . (5) Romer's findings do not imply that government actions have no effect. Rather, they question whether policy actions that have been taken have predictably beneficial effects on economic activity.
Further, government policies can make matters worse. As a spectacular example, many analysts conclude that the Great Depression's enormity resulted at least partly from government mistakes: Both monetary policy and fiscal policy were contractionary during the Depression's early stages, and the Smoot-Hawley Tariff added to recessionary pressures. These actions are consistent with having the Keystone Kops, not a competent driver, directing the economy along the road (or, rather, into a ditch).
Fixing the Car
The cartoon's opposition leader throws out the toolbox just before the car needs repair. If only the kit were still available, repair would be forthcoming. The picture is clear: The economy is a lifeless mechanism that needs intermittent repair, not just steering. A presumably pre·sum·a·ble
That can be presumed or taken for granted; reasonable as a supposition: presumable causes of the disaster. competent mechanic, acting in the public interest, must undertake the repair. Both aspects of the analogy are dubious.
It is not obvious that market economies require "fixing" of the type depicted. Being human institutions they are imperfect, but this does not mean they are broken. Ours is a world of imperfect information and limited resources, one where undesirable and even horrible things happen. Someone seeing these events might conclude that institutions must be changed. Such temptation should be resisted, however, unless we can expect the new institutions to be better than the current ones.
Any repair must be effected by government. Government, however, differs from the cartoon's driver/mechanic in two important ways: It is not distinct from the mechanism being repaired, and it does not have detailed knowledge of the mechanism being repaired. Government is not a disinterested, informed agent, separate from the economy. Rather, it is part of a larger system, subject to pressures to serve specific interests. Marxists argue that business interests mold government to serve their purpose. One need not adopt this extreme view to recognize the metaphor's limitation. Further, even if government agencies were disinterested and dedicated to serving the general interest, they have limited information. Both diagnoses and repair programs must contain guesswork.
Fine-Tuning the Car
The economy-as-mechanism metaphor frequently involves calls to "fine-tune" the economy. This term's meaning is not obvious. If fine-tuning involves setting the car's timing and then letting it run, then the metaphor suggests relatively moderate government involvement. For example, one might envision setting up a tax-and-transfer system in which net flows to the government are cyclical, buttressed with a program of unemployment insurance. Indeed, most modern economies have such "automatic stabilizers." Of them, Robert Gordon says, "The Great Depression would have been considerably less severe if the high postwar marginal tax rate Marginal Tax Rate
The amount of tax paid on an additional dollar of income. As income rises, so does the tax rate.
Many believe this discourages business investment because you are taking away the incentive to work harder. ... had been in effect during 1929-32." (6) (If automatic stabilizers indeed worked this way; but if the economy since the Depression is as cyclical as earlier, as Romer reports, something is wrong. The implication seems to be that either discretionary policy has been destabilizing or the economy has become inexplicably less stable, offsetting the stabilizing effects of automatic stabilizers.)
This fine-tuning of the structure to make it less rickety rick·et·y
adj. rick·et·i·er, rick·et·i·est
1. Likely to break or fall apart; shaky.
2. Feeble with age; infirm.
3. Of, having, or resembling rickets. differs from tine-tuning of the mechanism while it operates. This second view of fine-tuning is an extreme version of repairing the inherently flawed machine when the mechanic diagnoses serious difficulties, discussed above. Calls for this sort of fine-tuning are subject to the criticisms leveled against "Fixing the Car." In any event, using the "fine-tuning" aspect of the metaphor should be avoided because it confuses, while a metaphor should inform.
Figures of speech, Donald McCloskey says, "think for us," so we should choose them carefully. (7) Given our infatuation with automobiles and our concern with their performing reliably, using this analogy predisposes us to a possibly unwarranted view of the economy's behavior and the government's role in directing it. We should use the analogy with caution, if at all.
Friedrich Hayek's Nobel Memorial Lecture offers an alternative, along with sage advice: Given the limited knowledge we can master, doing more good than harm requires using available knowledge, "not to shape the results as a craftsman shapes his handiwork, but rather to cultivate a growth by providing the appropriate environment, in the manner in which the gardener does...." (8) This metaphor recommends humility but not inaction. The government/gardener must define and enforce property rights, a daunting daunt
tr.v. daunt·ed, daunt·ing, daunts
To abate the courage of; discourage. See Synonyms at dismay.
[Middle English daunten, from Old French danter, from Latin task when common-property issues related to the environment are considered; establish and execute anti-trust policy; define and implement monetary policy; and so forth. There is much to do and much room for disagreement about what to do. This alternative metaphor points out the longer-term (and uncertain) nature of policy actions. It warns us not to expect instant gratification.
Of course, there is vast room for debate about how the gardener should intervene. Analysts favoring much government involvement can use this metaphor to state their case. Indeed, early in his administration, President Clinton spoke often of "growing the economy." At the other end of the spectrum, critics of government activism (like Hayek) use the metaphor to caution against too much of what they view as meddling med·dle
intr.v. med·dled, med·dling, med·dles
1. To intrude into other people's affairs or business; interfere. See Synonyms at interfere.
2. To handle something idly or ignorantly; tamper. . This situation is as it should be. A metaphor should help us to organize our thoughts and make our case. It should not prejudge pre·judge
tr.v. pre·judged, pre·judg·ing, pre·judg·es
To judge beforehand without possessing adequate evidence.
pre·judg the argument.
The economy-as-automobile metaphor promotes activist government policy. A more neutral metaphor, the economy as a garden, allows one to illustrate and even advocate roles for government but does not implicitly insinuate in·sin·u·ate
v. in·sin·u·at·ed, in·sin·u·at·ing, in·sin·u·ates
1. To introduce or otherwise convey (a thought, for example) gradually and insidiously. See Synonyms at suggest.
2. that a hands-on policy predictably improves our economic lot.
1. Raymond Gozzi, Jr. "Our Inflationary Language: A Metaphor of Communication," ETC ETC - ExTendible Compiler. Fortran-like, macro extendible. "ETC - An Extendible Macro-Based Compiler", B.N. Dickman, Proc SJCC 38 (1971). ., 50, No. 4: 478-481, 1993-1994.
2. Raymond Gozzi, Jr. "The Metaphor of the Market," ETC., 47, No. 4: 403-406, 1990-1991.
3. Council of Economic Advisors. Economic Report of the President, 1966. Washington: Government Printing Office, 1966.
4. Milton Friedman. A Program for Monetary Stability. New York New York, state, United States
New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of : Fordham University Press The Fordham University Press is a publishing house, a division of Fordham University, that publishes primarily in the humanities and the social sciences. Fordham University Press was established in 1907 and is headquartered in the Canisius Hall building in the Rose Hill Campus of , 1960.
5. Christina Romer. "Spurious Volatility in Historical Unemployment Data," Journal of Political Economy 94, No. 1: 1-37, 1986.
6. Robert J. Gordon Robert J. Gordon is an economics professor at Northwestern University. He also holds the title of "Stanley G. Harris Professor in the social sciences".
He is an expert on measuring and explaining productivity growth, the causes of unemployment and airline economics. , Macroeconomics macroeconomics
Study of the entire economy in terms of the total amount of goods and services produced, total income earned, level of employment of productive resources, and general behaviour of prices. , Third Edition. New York: Little, Brown, 1984.
7. Donald N. McCloskey. The Rhetoric of Economics. Madison: University of Wisconsin Press The University of Wisconsin Press (or UW Press), founded in 1936, is a university press that is part of the Graduate School of the University of Wisconsin-Madison, United States. It published under its own name and the imprint The Popular Press. , 1985.
8. Friedrich August von Hayek Noun 1. Friedrich August von Hayek - English economist (born in Austria) noted for work on the optimum allocation of resources (1899-1992)
Hayek , "The Pretence of Knowledge," Nobel Memorial Lecture, December 11, 1974; reprinted in American Economic Review, 79, No. 7: 1-7, 1989.
J. Wilson Mixon, Jr. is Dana Professor of Economics in the Department of Economics at Berry College (Mount Berry, Georgia Mount Berry, Georgia is a census-designated place contiguous with the main campus of Berry College. Mount Berry is an unicorporated part of Floyd County bordering Rome. Mount Berry was named after Berry College founder Martha Berry. ). The author thanks Robert Frank, Raymond Gozzi, Jr., and Michael Patrono for helpful suggestions.