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Quotation of the Day…

Posted By Don Boudreaux On April 24, 2014 @ 7:12 am In Economics,Myths and Fallacies,Reality Is Not Optional,Seen and Unseen | Comments Disabled

… is from pages 218-219 of Steve Landsburg’s 2009 book, The Big Questions [1]:

But the underlying fallacy – the failure to notice that things must add up – is, in my experience, the single greatest source of economic error.  Politicians routinely promise to make medical care or housing or college educations more widely available by controlling their prices; economists routinely scratch their heads and ask where the extra doctors or houses or classrooms are going to come from.  You can no more speed up the line for medical care by lowering prices than you can speed up the deli line by handing out tickets.

I would amend the above excellent account of economic reality only with the regrettable observation that not all economists do as Steve describes.

The market demand by economically illiterate ‘men-in-the-street’ to have their prejudices, superstitions, and economic fallacies confirmed as being ‘correct’ is high.  And the world has no shortage of professional economists catering to that demand.  I do not for a moment believe that the professional economists who cater to this demand are in anyway insincere.  I’m confident that people such as Paul Krugman, Robert Reich, and Peter Morici genuinely believe all that they write and say.  But because the market so highly rewards confirmation of ‘man-in-the-street’ economic fallacies, those people who are especially skilled at assuring the ‘man-in-the-street’ that his fallacious beliefs are, in fact, gems of deep wisdom occupy a sustainable niche.  Yet what they do is mostly lousy economics – indeed, it’s not economics at all, as I (and economists such as Steve Landsburg) understand the subject-matter.

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[1] The Big Questions: http://www.amazon.com/Big-Questions-Philosophy-Mathematics-Economics/dp/B005K693PW/ref=la_B000APFS2U_1_6?ie=UTF8&qid=1352292280&sr=1-6

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