Quotation of the Day…

by Don Boudreaux on October 25, 2016

in Economics, Myths and Fallacies, Seen and Unseen

… is from pages 216-217 of the 1990 Transaction Publishers reprint of W.H. Hutt‘s excellent 1936 book, Economists and the Public (original emphasis):

317vvaaqunl-_bo1204203200_It is true that however simply the arguments of modern economics are expressed, they will remain abstractions, and so peculiarly liable both to misapprehension and misinterpretation no matter how clear or concrete the illustrations….  Misunderstanding and misrepresentation are inevitable.  Yet it is of the greatest importance in any democratic State that some persons at any rate shall persevere and experiment in the task of popularizing economic truths.  For whilst the desire to make economic teaching plausible has admittedly had a most deplorable effect, the conclusion can still be reached that some means of conveying elementary economic knowledge to the community is needed.  This, we shall see, is absolutely necessary if institutions are to be reformed in light of accepted ideals through rational initiative.


And so it is especially distressing that there is today such a large number of credentialed economists who, when writing and speaking to the public, simply reinforce the public’s economic ignorance.  These economists, who assure economically untutored audiences that their economic intuitions are indeed plausible, win applause from other pundits, politicians, and preachers.  These others pundit, politicians, and preachers applaud these economists for using smatterings of economic terminology and concepts to confirm the alleged validity of the general-public’s untutored economic impressions – impressions that truly great economists such as Adam Smith, F.A. Hayek, Milton Friedman, Armen Alchian, Harold Demsetz, Jim Buchanan, Vernon Smith, Bruce Yandle, and Deirdre McCloskey aim to correct.

The popular myths, held even by six-year-olds, that are reinforced today by pundits such as Paul Krugman (on the left) and Peter Morici (on the right) are many.  Forcing wages up by legislative diktat helps workers exclusively at the expense of business owners or rich consumers – or maybe even at the expense of no one at all?  Check!  Allowing people to buy especially low-priced imports harms the domestic economy?  Check!  Trade deficits are both a signal and a source of domestic economic decline?  Check!  The destruction by natural disasters of buildings, inventories, and infrastructure is really an economic blessing?  Check!  Markets unregulated by politicians and bureaucrats poison consumers with foul foods, kill homeowners with shoddy construction, maim workers with perilous workplace conditions, and cheat savers with fraudulent investment services?  Check!  The simple key to a booming economy is maximum spending, especially by government?  Check!  Government debt held by that government’s citizens is no burden upon that economy because we owe it to ourselves?  Check!  Growing income and wealth inequality means stagnant economic fortunes for the middle class and increasing poverty for the poor?  Check!  In markets lightly regulated and lightly taxed by governments, the rich get richer and the poor get poorer?  Check!  In markets women, blacks, and other minorities are underpaid because of discrimination – a problem that can be solved only by government regulation?  Check!  Economic growth devours precious resources, making these resources ever-more scarce?  Check!  The more you “buy local” the more you enrich your community and protect the natural environment?  Check!  Free lunches abound?  Check!!

This list of widely held man-in-the-street economic fallacies can be extended indefinitely.  Sound economists who engage with the public attempt to correct these fallacies.  Yet for each of these fallacies you can find credentialed economists who say “Don’t listen to the likes of Milton Friedman or Gordon Tullock or Alex Tabarrok or David Henderson or Bryan Caplan or Steve Landsburg or Russ Roberts or Dwight Lee or Arnold Kling.  They rely only upon simple textbook economics.  Really sophisticated economists have discovered, using very advanced models and statistical techniques that, in fact, you don’t need to ever learn any economics because pretty much all that the economically untutored masses believe, and have believed all along, about the economy is in fact correct!  It turns out that the likes of Frederic Bastiat, Henry Hazlitt, and Edwin Cannan were mistaken: there really is nothing to see beyond what you, you man-in-the-street – you without any instruction in, or learning of, economics – naturally see.”


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