Rethinking the Language of Economics: The Case Against “Must”
During my inaugural year in graduate school, one of my professors maintained an extensive list of “forbidden words.” These were terms that muddied rather than clarified economic discussions. Words like “need,” “afford,” “exploits,” and “vicious circle” made the cut. Today, I propose we consider adding the term “must” to that list.
Brian Albrecht has a compelling new article that highlights this issue effectively:
This approach eliminates human choice entirely. [Michael] Pettis treats markets as if they are foreign entities imposing their will: “the United States has no choice but to run a corresponding trade deficit.” In this view, capital flows descend upon us like an unavoidable storm, leaving Americans as passive victims who “must” adjust their saving and spending habits in response to foreign investments.
The most glaring example: “If a country organizes its economy so that savings far surpass investment, the rest of the world must automatically adjust its savings or investment.” While this may seem like a given, one must question how this framing benefits our understanding. If I sell goods, does it logically follow that the rest of the world “must” buy them? Only under some bizarre interpretation of “must.” In both scenarios, we are merely observing outcomes (savings > investment, or my sales > 0), not targeting some abstract objective. These are the actual traded quantities. And significantly, it removes agency from the equation. Why am I selling these goods? Can policy influence my sales? Absolutely.
In a recent post, I endeavored to clarify the confusion surrounding the U.S. current account deficit by examining other nations. For instance, Australia has maintained relatively stable current account deficits over the decades, whereas the Netherlands has enjoyed substantial current account surpluses. In a certain sense, it is accurate to say that when non-Australian countries collectively run current account surpluses, then Australia “must” run a current account deficit—just as the fact that I successfully sell goods from my convenience store implies the world “must” buy them from me. Not “must” as a command, but “must” as an accounting identity: quantity sold must equal quantity bought.
It follows that if all non-Dutch countries, in total, experience a current account deficit, then the Netherlands must have a current account surplus. And why stop there? If Andorra runs a current account surplus, then all non-Andorran countries collectively must run a current account deficit. How scandalous of those crafty Andorrans to impose a current account deficit on the global stage!
Now, let’s ponder potential explanations for Australia’s persistent current account deficits versus the Netherlands’ surpluses. Does anyone genuinely believe that a meaningful explanation for these trends is: “Non-Australian countries run surpluses, and thus Australia must run a deficit, while non-Dutch countries run deficits, hence the Netherlands must run surpluses”? Is this really the best we can do in terms of explanation?
Albrecht’s entire article is excellent—be sure to read it in full.
