Ali G’s caricature of a type of late 20th Century urban ignorance (I know there is a four letter word for this but I will not use it) would be funnier, but for the fact that it appears to exist as actual social policy in the form of the Real Business Cycle model.
A fascinating blog at Mainly Macro examining the ideological bias immanent within the foundations of micro economic theory is here. In it Professor Wren-Lewis explains how, in RBC modelling, changes in levels of unemployment are voluntary, with higher rates of unemployment explained by more workers choosing leisure than work (or hanging out with one’s partner, to paraphrase Ali G). As a result, high unemployment in a recession is not a problem.
I’d never heard of RBC modelling until today. But if it is even slightly as pervasive as Professor Wren-Lewis implies, then it’s sickening. It’s also fascinating to come across an example of applied social policy (with real implications) erected on such anti-socially abstract foundations.
Economic theory often has a pathological air about it.
