When the majority of Americans examine the world
around them, they see a stock market at record highs and modest
apparent improvement in the economy, but they also have the sense that
something remains terribly wrong, and they can’t quite put their finger
on it. According to a recent survey
by the Federal Reserve, 40% of American families report that they are
“just getting by,” and 60% of families do not have sufficient savings
to cover even 3 months of expenses. Even Fed Chair Janet Yellen seemed
puzzled last week by the contrast between a gradually improving
unemployment rate and persistently sluggish real wage growth.
We would suggest that much of this perplexity reflects the application of incorrect models of the world.
Before the 15th century, people gazed at the sky,
and believed that other planets would move around the Earth, stop, move
backwards for a bit, and then move forward again. Their model of the
world – that the Earth was the center of the universe – was the source
of this confusion.
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