There are so many to choose from. but Scott Trask picks ten of the most glaring economic errors that have bespotted the history of American economic policy. Among them: war is great, Hamilton was fabulous, sanctions work, we need an export policy, debt is the best way to finance war, we must choose between industry and agriculture, and others. Trask, as an Austrian and historian, crushes all these errors. [Full Article]
Source link: http://blog.mises.org/2282/ten-recurring-economic-fallacies-1774-2004/
Ten Recurring Economic Fallacies, 1774-2004
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Seems like a fairly idiosyncratic list (e.g., missing “efficiency of socialism”, “externality rationale for regulation”, “monopoly power rationale for antitrust”, and most glaring — nothing on the fallacies underlying many others — labor theory of value and the inverse of Say’s Law), though #1 and #2 especially bear endless repetition.
I have to say I didn’t find this list too interesting either. The list is missing a lot of really common economic fallacies, like zero-sum game, but has more obscure ones that most people probably don’t relate to much.
I think the key thing is ten most recurring fallacies from 1774-2004 not necessarily ten most common fallacies in the last 50 or 75 years. I think that’s a different article that would be more convincing to the layperson.
Looking at these comments, it seems clear that the title should have more plainly said that these are the fallacies that affect how people look at the history of economic policy. Make more sense now?
Perhaps, most common economic fallacy is that in a transaction any one party can control both supply (quantity) as well as price. People deny without a hint of irony that minimum wage control does not reduce employment. How can that be?
1. Regarding the ‘broken window’ myth, the reason why people don’t complain about the foregone comfort and leisure is that people only start protesting vociferously when an existing privilege or comfort is taken away from them; it is more difficult to take offence at something that is as abstract as a privilege that one would have obtained if things had happened in some other way.
2. Myth #5 (governments policies to promote exports) directly contradict the actions of the Indian (and other developing countries’) government.
3. I especially like the way the author puts to the sword the actions of businessmen “[who] proclaimed their devotion to free enterprise and their opposition to arbitrary intervention into our economic life by the state. Except, of course, for their own case, which was always unique and which was justified by their immense concern for the public interest.”
4. One contention of the author that I don’t agree with is that envy is the chief impediment to wealth-creation and development in the Third World. There is no substantiation of this in the essay.
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