Who Gets The Credit?

One of the most acclaimed (and rightfully so) economic writings out there is Leonard Reed’s I, Pencil.  I, Pencil contains many great economic insights, not the least of which is no one person possess all the knowledge required to make even a simple pencil.

But there is another lesson here: no one person deserves the credit for the creation of the pencil.  I, Pencil discusses the countless individuals, all with specialized and local knowledge, needed to build the led pencil, that that also means that no one person is totally responsible for it, either.

I bring this up because there is a tendency among people (myself included) to try and single out one person for credit/blame for economic events: Obama saved the economy!  Bush destroyed the economy!  Etc etc.  The reality is, in a market economy, no one person really can be blamed.  There are thousands of millions of actions that take place and they all aggregate to this thing we call “the economy.”

There is very little anyone can do, regardless of how powerful and/or rich they may be, to actually control the economy.  They can create incentives or impediments, to be sure, but that’s about it.  The Federal Reserve can lower interest rates to incentivize people to borrow, but it still requires people to actually borrow.  Congress can incentivize banks to lend to low-income borrowers, but it still requires banks to agree to it (likewise, banks can offer the loans, but someone still needs to sign on the dotted line).

One must remember that no man is an island.  The glorious thing about the market economy is that we all work together.  Nothing would be possible without this interaction.  However, most of the credit/blame for the good, bad, and ugly that may come is assigned to whatever poor schmuck is sitting in a particular chair at a particular time, whether he had anything to do with it or not.