Oww I do agree with that – and it is one of the concerns I have with the focus on consumer surplus and not producer surplus.

However, I think with careful use we can use this concept as a “long-run” concept to get the idea of trade-offs across. In the same way Layton does in his energy piece. Ultimately we are “all” consumers, and the idea that what ultimately matters is the value of consumption individuals have is true.

The purpose isn’t to produce, but to “consume” – production is a means to that end. (Although we can go a step further and say consumption is a means to the end of true satisfaction, which gets much more interesting:

http://www.tvhe.co.nz/2013/05/31/is-it-production-or-consumption-that-matter-in-a-sense-it-is-neither/

Perhaps this would be a good issue for us to write about here – you have been reading more moral philosophy than me, as a result you should kick it off 🙂

I think the ‘consumers’ idea is fairly poor because it sets up a false conflict between consumers and ‘business’. I agree that we need a better metaphor to replace NZ Inc with, but I’m just not sure what it is at the moment and I don’t want to let the good be the enemy of the adequate.

Indeed – as I noted at the bottom, the “long-term benefit of consumers” is a more appropriate archetype. As it is less likely to be abused by people “treating the nation as a firm or households”, and allows a way for us to step back and pull out trade-offs between measured variables.

Don’t get me wrong, I am not saying economists do this perfectly at all. But NZ Inc obfuscates trade-offs and gives an archetype/metaphor that can easily be taken out of context when we try to discuss broad questions of redistribution. And this is what concerns me.

You say that what is more important is to discuss trade-offs, which the metaphor obscures. I’m not convinced it does obscure them but, even if we accept that, economists regularly find it useful to talk about the welfare function. The idea of NZ Inc provides a commonly understood way to discuss ideas of welfare changes.

What you seem to be arguing against is the way interest groups claim that what is in their interests is society’s interests. But that is a problem entirely independent of the NZ Inc metaphor.

I’m not a fan of it, as you know, but that’s because I think it can be misleading when people think of a country as a company. In terms of the welfare discussion you’ve highlighted, I think it’s essential to have a good metaphor for public discussion, even if this one isn’t ideal.