Sense, Logic & Equilibrium

Sometimes in economics classes I stare at the board. It happens whenever I'm having a particularly frustrating/sad/senseless/confusing/empty/fucked day. I stare and I look at the graphs, the lines, the intersections, the points of tangency, the equations, the accounting identities, the truths, and the assumptions that have been painted on my mind.

They make sense; the models flow from one step to the next. They are predictable, and in that small world of me and the board, of me and the professor, they are infallible.

Supply and demand intersect at the market equilibrium price and quantity. All that is produced is sold at the market-clearing price.

Output is the sum of consumption, investment, government purchases, and net exports.

Consumers maximize utility while firms seek to maximize profit.

The capital stock of a country tends toward the amount where depreciation, technological and population growth exactly equal investment.

Consumption is maximized where a line parellel to depreciation is drawn tangent to the output function.

A consumer will buy, and a firm will hire and sell until the marginal productivity of the last unit hired exactly equals the marginal expense of hiring or selling or buying that last unit.

I chose my major because it makes sense in a small world, but it describes nothing. It comes so close to beauty in that it reduces everything to the simplest form possible, and yet it's so far from anything real that it must be ugly.

An underlying assumption in most economic models is that people are rational: they are consistent, and they act in their own benefit. Sometime's that's so far from the truth, but if it is anywhere close to it, I am merely a sunk cost, as so many people have been to me.