It’s popular to think of people as solo individuals operating in the economy. The idea is that we’re separate economic units, all going about our own business.
This view is wrong, because we don’t live this way. Most of us have families that we support or at least interact with. Additionally, each of our interactions in the economy affects other people. We aren’t solo agents going independently to some grand marketplace that’s disconnected from everyone else. We’re more of a collective.
As such, it’s imperative to think of the economy in holistic terms. Instead of considering the effects of economic policy on an individual level, we must think of it as it affects the entire nation. There is no “individual and the economy” because none of us live as single individuals. At bottom, we’re all connected, either by blood, social connections, or basic economic connections.
Because of this, it’s a mistake to measure everything in individual terms. A change in policy, say in tax policy, must be considered holistically, and not individually. We must measure it’s effect on the nation as a whole.
So for instance, we must think of welfare in national terms. Instead of considering if it’s good or bad for specific individuals, we must consider if it’s good or bad for the nation.
I’ll write more on this in the days to come.