My wife and I were visiting the Museum of Modern Art a few weeks ago, and we encountered The Treachery of Images at the Magritte exhibit.  The words in French read, ‘This is not a pipe.’

The painting is an iconic image; I had seen it before.  I had thought of it as somewhat of a joke.  But Magritte’s reason for painting a beautiful illustration of a pipe with the legend ‘This is not a pipe’ was to remind us that it is a picture of a pipe, and not a pipe itself.  You can’t fill it or smoke it.  It is a simple yet profound truth.

The thought came back to me yesterday when I heard on the news that the Dow Jones Industrials closed at 16,479.88, a new record.  We like to believe that a surging stock market is a sign of prosperity.

But it isn’t.  The economy is still doing rotten for most of us; the official unemployment level has dropped to around 7% only because people are giving up on working in droves.

And price inflation is still very much with us: one of my little pleasures is Chewy Chips Ahoy cookies.  A year ago, there were 28 cookies in a package; the most recent package I opened, a couple of days ago, had 23.  The price, of course, has remained unchanged.

If I eat five cookies for an evening snack (belated dessert?) instead of six, it’s probably better for my waistline.  But does that count as a hedonic adjustment?  In other words, it’s still an evening snack, even though it’s smaller, so the effective price of the cookies hasn’t changed: I still get about 4.5 evening snacks out of a package.

But then again, if I had six kids, the difference between 23 and 28 cookies would be glaringly obvious.

The Dow at 16,479 is a datum of prosperity.  A picture, perhaps.

But it isn’t the real thing.

Just like the pipe….