I don’t understand why people don’t understand this. An ecosystem is a much more accurate (and more useful) analogy. And I’ve always found this amusing/frustrating:

Keynesians on the left are eager to dismiss Intelligent Design (ID) as the creationist afterthought to evolution, but just as eager to embrace its analog in economics. Disciples of Adam Smith know better. Darwin, after all, read Smith. As the late naturalist Stephen Jay Gould wrote, “the theory of natural selection is a creative transfer to biology of Adam Smith’s basic argument for a rational economy: the balance and order of nature does not arise from a higher, external (divine) control, or from the existence of laws operating directly upon the whole, but from struggle among individuals for their own benefits.”

It’s particularly ironic (and there must have been some cognitive dissonance) that Gould wrote this, because my understanding was that he was a life-long Marxist. And of course, the opposite applies as well — many free marketeers refuse to believe in biological evolution. They understand that there is a natural emergent order in the marketplace, but can’t believe that life could evolve unguided from above.

I’m one of those weirdos who believes in both free markets, and free nature.

[Update late morning]

Arnold Kling has some thoughts on the myth of the “economic multiplier”:

It is amazing what happens when you assume that you live in a linear world. You say that the multiplier for government spending is 1.57.

Really? Over what range? Think of it this way: at which level of additional government spending would the path of U.S. real GDP be the highest?

(a) $100 billion in spending above the baseline
(b) $1 trillion in spending above the baseline
(c) $100 trillion in spending above the baseline

If you use a constant multiplier of 1.57, the right answer is (c). Yet we know that this is not the right answer. At $100 trillion in additional government spending, the United States would be operating like Zimbabwe, with similar results.

This is similar to the (dumb) argument often made by space advocates that space spending has a high (or higher) “multiplier” effect than other kinds of spending (the study most cited on this is the one done by Chase Econometrics back in the 70s).

Yes, obviously, if you pay engineers to do things, they’ll go out and spend the money on goods and services, and create more jobs for other people. And yes, if you develop technology, some of it is bound to have an economic benefit and improve productivity, or create new products, and grow the economy.

But when one makes these kinds of arguments, it’s all too easy to ignore what you’re spending the primary money on. It really does matter what product the engineers are building with government money. When it comes to space, does anyone think that it makes no difference whether we had continued to employ people building and flying Saturns, or had developed the Shuttle? Or that if we’d developed a better version of the Shuttle (perhaps by starting with smaller prototypes, and continually improving the concept over the past thirty-five years) that it would have made no difference in our prospects for being spacefaring? That it makes no difference whether we spend thirty-billion dollars developing Ares, or instead something that actually reduces the cost of access to space?

To listen to the “multiplier” argument, it doesn’t matter at all. Having the engineers design a machine to bore a hole to the earth’s center has the same economic value as to build a space elevator.

When we are talking about government spending, it isn’t sufficient to talk about how much we’re spending, and whether or not it will “stimulate the economy.” We have to talk about what we’re spending it on, and unfortunately, much of what the Democrats want to spend it on will (relative to letting people decide what to do with their own money) not create wealth, or grow the economy, but rather destroy it. It’s what governments do.