The Econo-body Revisited

Matt Yglesias, notorious hater of metaphors, says they are the tools of Satan. And why? The answer, I presume, is that they can be super-good at instilling wrong or simplistic beliefs about things, and lazy journalists rely on them far too much. Nearly all political coverage, for example, is riddled with sports metaphors that fall to pieces on the most cursory examination.

However, I think it would be folly to abandon metaphor completely. The reason they are so commonplace—and the reason they're can be so noxious—is that they're powerful. When people are teaching or learning something for the first time, it's an almost uncontrollable impulse to try and explain that thing in terms of other things people already understand. The human brain's capacity to generalize, while dangerous, is surely a large part of its power.

So anyway, some months ago I came up with this complicated metaphor for the economy: that it's like a human body. Here's a sample, if you've forgotten:

I mean this in a kind of macro-anatomical sense. So the economy is composed of lots of interlocking parts. There are infrastructure and transport sectors, agriculture, money, information transmission, etc. It's tremendously complex, but when things are good all of them work in tandem so that most everyone who wants a job has one, factories are working at capacity, and so on. Similarly, the body is composed of lots of interlocking parts. You have a skeleton and muscles, the digestive tract, the circulatory system, the nervous system, etc. When everything is good, they all work together and you feel healthy. 

The order here is deliberate—in this scheme blood is analogous to money. In the economy, the banking system pumps money around the country where dollars are exchanged for goods and services. Inside the body, the heart pumps blood around where oxygen is "exchanged" for productive effort, like digestion, movement, or thought. 

So how can we think about a depression? In the real world, a depression is where we have lots of perfectly good unused capacity (idle factories, empty trucks) sitting around, while at the same time lots of unemployed workers desperate for a job. In our econo-body we had a heart attack (the financial crisis), and our circulatory system seized up and stopped pumping blood around the body properly. We got defibrillated by the EMTs (emergency actions in 2008-09) so we stopped getting worse, but now, we have persistent low blood pressure. This is the key idea. Our muscles are still strong, our organs are still in good shape, and our bones haven't rotted (yet). But we feel tired and weak all the time because our heart isn't delivering enough oxygen. We could be much more active than we are, going to work and playing with our kids, but instead we're sleeping all day.

I've had some thoughts about how this might be expanded and clarified. SR Waldman made the point on Twitter that equating the financial system to the heart gives them tremendous leverage when a financial crisis comes to justify shoveling giant piles of money into the banks—after all, if one's heart is in trouble, saving it is the first priority. This is definitely a worry.

On the other hand if we press forward, there are some more medical facts we could bring in. For example sometimes a bad heart is simply broken beyond repair, in which case we can put the person on bypass and give them a heart transplant. If someone's heart is just shot, repeatedly defibrillating them (injecting money into the banks) isn't going to do much good. This would be analogous to the government and central bank simply taking over the banking system and keeping things from collapsing, then totally restructuring the system from the ground up, as Sweden did in the early 90s. The extent to which you believe this is a necessary remedy will depend on how much you accept this formulation of our problems, but mainly it's an exercise to patch up the banking system = heart metaphor.

Or we could think of the condition of cardiomegaly (enlarged heart), with the natural suggestion of a too-large banking sector that has stopped pumping money efficiently and is in danger of collapse, killing itself and the econo-body at the same time.

Anyway, the point of all this is to say that while metaphors might way overused, they can still be useful, especially in teaching new things. As I've written before, basic economic analysis of depression conditions is one of the most poorly understood things in our national discourse. Anything that might ameliorate that is worth trying.