I find the whole discussion of what "economies must" and what "economies should" baffling.
Economies don't have wills of their own. Economies describe the voluntary economic activity of millions to billions of people.
Economies end up doing what is profitable, and possible (given skills, capital investment, infrastructure).
When someone says "Economies should" what they're actually saying is: "I wish the government would spend a lot of money or pass a lot of laws to force the economy in the direction I want".
If you understand what people mean, why do you find it baffling?
But in any case, it's not necessarily a prescription, it can be simply an observation, as in, "advances economies must make things [if they are to remain advanced]", no different than a biologist might say "species A must increase their reproduction rate [or go extinct]".
I think what he's saying (and your example doesn't contradict) is that there exists a common fallacy of confusing individual firms' complex behaviors, like planning and executing a new manufacturing plant, with emergent behavior.
Similarly a species doesn't increase its reproduction rate: it grows in numbers or it shrinks (to the point of extinction) based on individual specimens' reproductive behavior. The equivalent in economics here, I think, would be net exports. Though there is correlative power between the firm and the economy, the specimen and the species, the incentives and long-term/short-term outcomes might not be aligned, which has implications for policy.
You raise a good point. Economies are the collection of individual decisions. Perhaps what people are getting after is the short term vs. long term incentives or the potential for conflict between the incentives for individuals and those for the group.
>When someone says "Economies should" what they're actually saying is: "I wish the government would spend a lot of money or pass a lot of laws to force the economy in the direction I want".
If you don't, somebody else will, and if you don't have political representation in that policymaking you're not going to end up a winner.
Not likely. Families (generally, when they're intact) don't compete internally for resources or seek to gain leverage over one another through informational asymmetry and protective tariffs. Monetarily speaking, their constituents are either neutral to or supportive of one another.
Of course I would. In fact, that is an excellent metaphor.
At least in my family, we follow the following pattern to arrive to a decision:
We choose what we want for the family, we discuss the possible paths, and we decide where we invest the resources of the family. In others words, we have a form of government.
What we don't do is this:
We discuss and decide about nothing, because we trust that the result of the forces of our internal interactions it's the only true path to 'optimal' outcomes.
