The Economy is…People!!!

From a P-I story comes this gem of a quote about declining housing affordability:

“It’s going to affect people more so than the economy.”

Uh, what’s that again? The economic outlook is still rosy—it’s just, y’know, people who are in trouble.

To me, this quote—from an economist for King County, no less—embodies the most common and pernicious error found in economic reporting. All too often, reporters pretend that the “economy” is somehow different from real people. A philosopher would describe this error as “reification”–that is, mistaking an abstraction for a real thing.

Worse, lots of economic reporting actually elevates the abstraction—say, the squiggly lines on graphs of GDP and corporate profits—over the wellbeing of real people. As if to say we shouldn’t do something that benefits people if it harms “the economy.”

Thus, you may read that “the economy” is doing great, even if housing is too expensive for many families. Or that rising wages might hurt “the economy” by raising inflation fears. You may even see stories warning that other countries–Germany, for example—are putting their “economy” at risk by providing excellent health care, generous retirement policies, and good public services. (Sure, the people are pretty happy, but how’s that going to help the economy?)

Here in North America, we’re really good at making the Gross Domestic Product squiggle—the most common representation of the economy abstraction—trend upwards. But that shouldn’t fool us into believing that we’re doing a good job of making human wellbeing trend upwards too.