MONTREAL – Much commentary about the American economy nowadays leaves the impression that economists should fix its problems. But Washington is teeming with smart economists, and the problems remain.
An economy is like a cloud: only when inside does one realize how diffuse it is – and that what matters are the particles of vapor that it comprises.
Likewise, an economy is an accumulation of transactions involving goods and services, mostly carried out by business enterprises. Their behaviors are what matters, and they cannot be adequately perceived from the distant perspective of economic models and statistics, but only on the ground – where an economy is built, where it breaks, and where it must be fixed.
On the ground, there are two kinds of enterprises: those that rely on exploration, and those that rely on exploitation. Every economy has both, but a healthy one favors the explorers. This fosters the sense of enterprise that made the United States such an economic powerhouse. Unfortunately, the American economy now favors the exploiters.