Dear Caroline Lucas,
On the Westminster Hour this evening you, repeatedly, said that you wanted to explain why the nation was distinct to a household economically, and you talked about economic illiteracy. However you did not explain anything.
Someone else made the same distinction and he too failed to explain it: J.M. Keynes. He had years to do it ,but he failed, So far, his epigones have failed too. I will tell you why they failed.
There is no difference that is sound. Adam Smith made many errors, but his ideas that a great economy is like a single household was not one of them. Now, Smith knew, as well as Keynes did, that there might be such a difference, that Aristotle was right that there can be a fallacy of composition. The eleven best football players need not be the best football team, for example. But it is also the case that they might be the best team too.
Similarly, it could be that if we look after the pennies then the pounds might not take care of themselves on empirical & logical grounds, but this old adage is, in fact, quite sound. It is contingently the case that there is no distinct macro level that has different actual ways in the economy. The idea that distinct policies are needed is a false one. That is the basic fact of the matter It might have been otherwise, but it is not.
Yours sincerely,
David McDonagh
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