The Economy is Like a Giant Blancmange, Except that it’s Not.

Posted: October 22, 2013 in Uncategorized

The Australian Independent Media Network

Many people see the economy as like a household budget. You need to keep it all neat and orderly and manage it. Others see it as like the weather. There’s nothing you can to do change it, so you just have to adjust as it happens. I could find plenty of analogies for what the economy is like, but I think it’s worth quoting George E. P. Box here: “All models are wrong; some are useful.”

As far as the economy goes, here in Australia, we’ve often been encouraged to see it similar to the “weather” model: Lots of things beyond our control dictate how well it performs and beyond having an umbrella handy, there’s nothing much we can really do about it. We’re a small country and we don’t have the scale or clout to affect things very much.

Of course, this is partially true, which is what makes…

View original post 849 more words

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