Here I want to improve of his efforts and translate some of the many concepts that seem to mystify all who encounter them. Some readers might not agree. Others might have better suggestions. Let me know in the comments.
Economic Term |
Actual Meaning |
Capital |
Stuff |
Capital |
Money |
Capital |
Control |
Money |
Debts |
Money |
Barter |
Money |
Accounting unit |
Money |
Medium of exchange |
Medium of exchange |
Accounting unit |
Accounting unit |
Credits and debits (‘promise unit’) |
Production function |
Recipe |
Time |
Just kidding, economists don't care about time |
Dynamic |
Static |
Equilibrium |
Magic attractive force |
Equilibrium |
Current state of the world |
Productivity |
Unexplained residual |
Efficiency |
New recipe |
Free Markets |
Very specific set of government institutions |
Rational |
Ignorant |
Stylised fact |
Guess |
Scientific |
Unfalsifiable |
Deadweight loss |
Difference between a real pudding, and the magic pudding |
Structural reform |
Non-specific legal change to give rich people more power in the name of efficiency |
Imbalances |
Why aren’t we in equilibrium? |
Competitiveness |
Low wages |
Growth |
Bigger numbers devoid of meaning |
Degenerative scientific research programme |
Why don’t people agree with me? |
Objective |
Laden with hidden value judgments |
Strategy |
Choice |
Choice |
Decision |
Constraint |
State of the world |
Opportunity cost |
What you could be doing instead |
Price |
Price |
Cost |
Some other prices |
Rent seeking |
Buying political favours |
Market failure |
Real life |
Heterodox |
Outside the club. Go home. |
Pluralist |
Pipe dream |
Welfare |
Happiness |
Utility |
Mystical element allowing decisions to be made |
Incentives |
Monetary incentives |
Short run |
Arbitrary time period that makes the model work |
Long run |
The end of time itself |
Uncertainty |
Perfectly known distribution of possible outcomes |
Comparative advantage |
Started producing it first |
Comparative advantage |
Was on/under the land when we conquered |
Endowment |
How rich your parents are |
Technology |
Error |
Institutions |
Error |
Beliefs |
Error |
Expectations |
Error |
Representative agent |
One person |
Uniform distribution of agents |
One person |
Rational |
Clairvoyant |
Growth |
Error |
Land |
Capital |
Property rights |
Unspecified institutional setting |
Protection |
Covertly transferring money to people you know |
Restriction |
Someone else covertly transferring money to someone they know |
Trivial |
Vitally important, but I can’t explain it |
Aggregation | Fallacy of composition |
Orthodox - as in Greek.
ReplyDeleteActually, production functions aren't recipes, they're just (lists of) lists of ingredients -- to be recipes they would have to tell you how the labour and capital get combined.
ReplyDeleteGreat point. I'll update in the next version. Also, if capital in the production function is all non-labour inputs you get a recipe that looks like this.
Delete"Combine vegetable and non-vegetable ingredients optimally. Enjoy your tasty meal"
Where's 'Power'?
ReplyDeleteFallacy of Composition: 1 + 1 ≠ 2
ReplyDelete"Law" = "A Plausible Thing That's Probably Not True" (eg of Demand, Diminishing Marginal Returns)
ReplyDelete"Hypothesis" = "A Crazy Idea That's Definitely Not True (eg Efficient Markets, Ricardian Equivalence, Expansionary Austerity)
"Long run" = "Point in time when our predictions will finally come true"
Delete"Financial Repression" = "When taxpayers fail to make creditors whole"
"Moral Hazard" = "Why people who depend on wage income can't have nice things"
"Skills" = "University Degrees"
"Compound interest" = "Definitely not a free lunch"
"Unemployment" = "Workers who live paycheck-to-paycheck deciding to take a couple of years off"