"Countless other absurdities abound in the way we are taught economics. Take, for instance, the Keynesian notion of "aggregate demand," the idea that we can measure the total demands of consumers the way we can the number of gallons of gas in an automobile. It's one thing to count how many iPads or PCs we buy but quite another to think that a single number can truly sum up how an economy does as a whole. Quality goes by the boards.
The old Soviet Union turned out industrial product that was mostly subgrade or pure junk. But all this outdated industrial garbage was given a monetary number by Soviet economists and planners; thus the Soviet economy looked like it was turning in a pretty good performance. GDP numbers couldn't tell the difference between East Germany's clunky, junky Trabant and West Germany's Volkswagen. Thus, from the early 1960s through the mid-1980s, Nobel Prize-winning economist Paul Samuelson could proclaim in his once ubiquitous textbook, Economics: An Introductory Analysis (McGraw-Hill, 1948), that the U.S.S.R.'s economy would surpass that of the U.S.
Because we had faith in the notion that the actions of the 300 million-plus people in this country--or any country--can be tidily summed up in a single number, we accepted an inflated estimate of the communist economies' strength during the Cold War.
Put more simply, the whole idea of macroeconomics is a fraud"
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FC