Truth About Lies

by Don Boudreaux on July 3, 2013

in Prices, Reality Is Not Optional, Seen and Unseen

Here’s a letter to the Christian Science Monitor:

You rightly decry government efforts to mask or misrepresent facts about the economy (“When officials try to ban economic truth,” July 2).  Such efforts, however, aren’t confined to falsifying official statistics and muzzling the financial press.  Governments routinely use means far more surreptitious than these to “try to ban economic truth.”  For example….

Rent-control regulations ban rental rates from reflecting the true value of rental units.  Prohibitions on ‘price gouging’ ban prices from telling the economic truth about the unusually high demands for – and unusually limited supplies of – staple goods immediately following natural disasters.  Restrictions on speculation ban investors from moving asset and commodity prices in directions that more accurately reveal the true inter-temporal values of assets and commodities.  Minimum-wage statutes force labor markets to lie about the value to employers of many low-skilled workers.  And deficit financing of government spending blinds today’s citizens to the full costs of government programs.

By all means condemn official lies, but recognize also that the means governments frequently use to hide the truth about economic reality greatly outnumber – and are much more devious than – the blatant and amateurish sorts of truth suppression that you highlight in your editorial.

Sincerely,
Donald J. Boudreaux
Professor of Economics
and
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA  22030

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