A granfalloon is any large bureaucratic figment of people's imagination. For instance, there's really no such thing as the Feds or the General Veeblefeltzer Corporation. There are a bunch of people out there that relate to each other, and there's some structures, and some paper. In fact, there's lots and lots of paper. The people sit in the structures and pass paper back and forth to each other and charge you to do so.
All these people, structures, and paper are real. But nowhere can you point to the larger concept of "government" or "corporation" and say, "There it is, kiddies!" The monolithic, big "they" is all in your mind.
Kurt Vonnegut, who coined the term
[vonnegut]
A granfalloon is the lumping together of many diverse elements into an abstract collection, and to then think and speak as if the abstract collection is one single entity capable of performing actions. This phenomenon leads people to say things like "the government runs the country." I hope you realize (or will soon) just how absurd the previous sentence is.
Frederick Mann,
THE NATURE OF GOVERNMENT, Version 2 - October, 1998
[frederickMann]
(Compare to collectivism. Contrast with individualism.)
[bk]