A lot has been written about the failures of economics, some of it worth reading. However, as far as I know, nobody has pointed out that pretty much all of us - me, Simon Wren-Lewis, the Adam Smith Institute and all - make a systematic error in thinking about economic policy.
This struck me when reading this by John Kay:
Government by announcement is now characteristic of British politics. The goal is to make statements that will receive favourable media coverage. There is little perception of any need to follow up on these announcements, or consideration of how they might interact with other similar announcements, and no concern for the effects of the uncertainty these initiatives create for people engaged in real business.
This makes the same assumption that Simon makes when he writes about "mediamacro". It assumes that there is a real thing out there called the economy which policy impinges upon and so there's a distinction between impressing the media and good policy-making.
This assumption is questionable. Perhaps we should instead think of the economy as a hyperreality.
Baudrillard defined "hyperreality" as "the generation by models of a real without origin or reality", it is a representation, a sign, without an original referent. Baudrillard believes hyperreality goes further than confusing or blending the 'real' with the symbol which represents it; it involves creating a symbol or set of signifiers which actually represent something that does not actually exist like Santa Claus.
And here's the Stanford Encyclopedia of Philosophy:
What passes for reality is a network of images and signs without an external referent, such that what is represented is representation itself.
These, surely, are better descriptions of "the economy" as the Westminster Bubble sees it than our old-fashioned empiricist idea of "the economy" as an external reality. "The economy" is a set of symbols which exists in its own right without reference to anything else. And good policy-making consists in appearing to manipulate those symbols in a manner satisfactory to the creators and upholders of that hyperreality. "Mediamacro" is the only macro - or at least, the only macro that matters for policy purposes.
Now, you might reply here that, eventually, "bad" policy - in the quaint empiricist sense - will eventually make itself so obvious that the hyperreality can't ignore it. I'm not sure.
For one thing, voters' perceptions of empirical reality are skewed both by fundamental ignorance and by ideology. Hyperreality can thus be sustained by an interaction of the public, politicians and the media. And as Simon says, the direction of causality of the creation of this hyperreality is unclear: do the media merely reflect voters' opinions, or create them?
And for another thing, when it comes to creating hyperreality, we are emphatically not all equal. The suffering of the unemployed, poor and disabled might be "real" to them - but if you're outside the 1% you have little hope of affecting the hyperreality that matters.
What I'm saying here is that those of us who complain about economic policy are assuming what has to be proven - that there's an external reality which matters more than the hyperreality of the media-political elite. And this is questionable. To those who boast of being in the "reality-based community" there's an obvious retort: who gives a damn about your so-called reality?