In the James Buchanan lecture I presented here, one of the points he makes is that a lot of people commit a fallacy of composition when it comes to aggregate behavior. Buchanan referenced the fact that economists like to say that $20 bills on the sidewalk don't exist. They can't exist - someone would pick them up. But he points out that that describes behavior at the individual level, and in the aggregate we often do leave $20 bills on the sidewalk. Keynesians of course have their favorite fallacies of composition - but Buchanan specifically pointed to public choice and the commons of rule-making.
Paul Krugman's post this morning seems to agree with James Buchanan: we do sometimes leave $20 bills lying on the sidewalk.
Emanuel Derman FTW
3 minutes ago