Quotation of the Day…

by Don Boudreaux on January 26, 2017

in Curious Task, Economics, Myths and Fallacies

… is from page 77 of Arnold Kling’s excellent 2016 book, Specialization and Trade: A Re-introduction to Economics:

Unknown-2Although economists do not know enough to engineer society, they can still correct the intuitions of noneconomists.

DBx: Yes.  In fact, I believe that, ultimately, correcting the intuitions of noneconomists is economists’ only useful task.  To perform this task well and admirably requires careful study and thought, as well as a willingness to translate the fruits of that study and thought into language that is accessible and appealing to noneconomists.  This task isn’t easy.  It also requires perseverance as well as skin thicker than whale blubber, for people do not naturally like being told that their intuitions are not only wrong but in many cases completely opposite of the truth.  (See the work of my colleague Bryan Caplan.)

People untutored in economics want to believe such intuitively appealing myths as –

– reducing their fellow citizens’ abilities to buy goods made by foreigners increases employment, raises wages, and improves the overall standard of living in their country

– keeping foreigners from entering the domestic labor market raises real wages for fellow citizens now and into the future

– government can dictate changes in contract terms without imposing costs on anyone or, if costs are imposed by such dictates, these costs fall exclusively on “corporations” (or “employers,” or “the rich,” or whoever is intuitively perceived as being the “bad guy” whose market power or greed unfairly and unjustly stands in the way of the noble worker or “little guy” or “consumer” getting his or her “fair share”)

– the nation, or the national economy, is simply one very large business operation

– it makes sense to talk of countries “competing against” each other in international trade

– people with the power to use force can be trusted to use that force wisely and well if those powerful people are on “our” political team, despite the realization that people with the power to use force cannot be trusted to use that force wisely and well if they are on some other political team

– money is wealth

– a larger population necessarily reduces the average person’s standard of living

– economic growth in market economies necessarily reduces the supplies of resources, as well as makes our environments more polluted

– producers in competitive markets have incentives to reduce the quality of their products and the safety of their workplaces and to screw consumers and workers generally

– labor unions raise the wages of all workers

– a well-functioning and orderly economy that raises everyone’s living standards requires the conscious supervision of state officials.


This list of mistaken but widely held and cherished intuitions can, of course, be greatly expanded


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