To keep the conversation going. The first diagram is a vast oversimplification in many respect. The point, though, is that no matter how complex the additions make the diagram, there is no effort to understand the relationship between consumer goods and services [ Lonergan's term is basic but understood functionally] and producer goods and services [Lonergan's term is surplus again understood functionally.]
The example of Einstein's formula as an analogy is crucial. All physicists knew what the symbols, e, m, and c meant what they didn't know and Einstein did was the relationship among them. A similar statement can be made concerning contemporary economists concerning consumer and producer goods and services. The easiest example of this failure is the lack of any data that separates these two flows. If you read all of Piketty's book, powerful as it is; he has no awareness that there are two flows and assumes that government needs to step in with enforcement of correct policies to solve the inequality problem.
The invisible hand is simply the narrative of how to understand the economy. It is mistaken but not because it is a narrative. All accounts of the economy will be a narrative at the common sense level of conversation. A corrected narrative would be able to both to explain why the "invisible hand' narrative is mistaken and what the corrected narrative is and why it is correct. So the "big bang," "expanding space" "evolution", etc. etc.
Obviously, I believe that we do have a systemic problem. By systems, I mean the understanding of the key factors in a given whole. I used as another analogy, the medical community did not discredit bloodletting until the 19th century. It is difficult for me to image when the economic community will discredit their present fundamental assumption of a one flow economic system.
Now as to the policies of any given political parities preferences. I certainly think that any kind of "trickle down" notion just doesn't work. But policies, taxes, etc. cannot work, except accidentally, if the policy makers [read the economists who are chosen by the parties in power to guide them] are mistaken about the fundamental nature of what they are trying to guide.
Well what are we to do. As I mentioned, I am not an economist but I am a citizen. My hope is to do what I can by offering an alternative narrative. Quite similar to what you do, Jim, in almost all of your posts. The main difference is that your posts already have some resonance in the reading public and mine, vis-a-vis the economy, doesn't.
But when you think something is true, and on this point of a dramatic difference between understanding that money that flows to build, for example a car factory, and money that is spent to purchase a car are simply not the same. To lump those two flows together is to miss the very starting point of an economic conversation. So GDP includes both. I am not aware of any data that first separates these two flows and then, most critically, understands the relation of the two to the whole.