Aunt Elsies Recipe

And you know this recipe has more than individual application. It is really the answer also to the economic and political problems that beset the nation and the world. It is the simple solution to the current conflict in the economics profession between micro- economics and mac-ro-economics.

Macro-economics is the economic theory which looks to the statistics of a nation’s total economic activity (gross national product, etc.) and holds that policy change designed to alter these total statistical aggregates is the way to determine economic policy and promote economic progress. Micro-economics, in contrast, is the economic theory which says the statistics of total economic activity are valueless as far as providing clues to policy decisions. Micro-economics holds that the individual person and the way his individual activity is influenced by governmental policy is the explanation to economic progress or the lack of economic progress.

Economists, like doctors, tend to make simple things sound difficult. It may be that “a transverse fracture of the ulna” is medically precise but a simple “broken arm” is often a superior explanation. The conflict between micro vs. macro can also be simplified. The macro believers would have government plan the economy and they would force the individual citizen through regulation and taxation to spend his money and time in ways the planners think desirable, even though the individual would not make the same choice if left to his own desire. Individuals like Karl Marx, Nikolai Lenin, John Maynard Keynes, Kenneth Galbraith and Walter Heller are individuals who could be described as macro-economists.

On the other hand individuals such as Adam Smith, Ludwig von Mises, Friedrich Hayek, and my Aunt Elsie are micro-economists. They believe that each individual person is able to make his own decisions better than some bureaucrat. They believe that each individual, if faced with the choice of working or going hungry, will work, and that no individual as a matter of right has a claim to another person’s property. This does not mean charity is precluded. It does mean that giving to another is voluntary and not compulsory. They believe that people, if left alone unhindered by regulation and excessive taxation, will produce more, consume more, save more, and in so doing create a better nation and society for everyone.

My Aunt Elsie, without ever having gone to college or read an economics book, knows human nature, the way life really is, and more about economics than Galbraith, Heller, and Keynes put together. She knows instinctively that inflation, unemployment, excessive taxation, oppressive welfare, shoddy merchandise, a shortage of competent help, and a general feeling of dissatisfaction are all the results of macro-economic policy of regulation and taxation. How much better it would be if our national policy was to let people alone to take care of themselves. The progress, prosperity, and well-being that would flow from this philosophy would stagger the imagination of the supreme optimist.