But, where the economic debate now stands, we have to ask why are we dual natured. The prior theory was that collective action was different than individual action. Man is not inherently dual natured, just the herd is. That view is being pushed aside for a while, now we ask: Why and How is man dual natured?
Andolfatto says job searching is different than job firing:
As it turns out, the sharp rise in unemployment followed by a slow decline follows as a natural property of labor market search models, something that I showed here (the example I alluded to above). The basic idea is very simple. As I explained above, the labor market is a market for productive relationships. It takes time to build up relationship capital. It takes no time at all to destroy relationship capital. (It takes time to build a nice sandcastle, but an instant for some jerk to kick it down.)
So why do we fire en mass and hire one at a time? In other words, the transaction time to complete the paperwork for hiring someone is about the same as for firing someone. In the meanwhile, the someone is looking for a job, but is listed as unemployed. All things being equal the economy would stabilize with a random walk around the employment line. Instead we get mass firings, and that is not immediately explained by the job search problem.
What is going on?
Economists are having to deal with asymmetry because we have flat lined the short end of the bankers curve. So we will go through a series of debates in which each economist tries to show asymmetry is illusionary, or an artifact of aggregation. Each of these efforts willb e shot down by me, and eventually they will deal with dualism as a fundamental feature.
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