Will Rogers is said to have said that “It isn’t what we don’t know that gives us trouble, it’s what we know that ain’t so.”
So I offer here my own unscientifically compiled list of the dozen most pernicious economic myths held by non-economists (and, sadly, in some cases by economists). I determine the degree of perniciousness by a combination of what I sense to be the myths’ prevalence, the stubbornness with which people cling to them, and their consequences for public policy.
12. A trade deficit is debt.
11. A trade deficit is bad.
10. Imports are the cost we suffer in order to enjoy the benefit of exporting.
9. Corporate managers are driven by stock-market pressures to run their firms so that profits are maximized in the short-run, at the expense of the long-term productive capacities of the companies.
8. Prices and wages are arbitrarily set by businesses.
7. To oppose regulation by government is to oppose regulation; it is to desire that businesses are unconstrained in their industrial and commercial actions.
6. To insist that government do nothing more than stick to protecting citizens against the initiation of violence is to insist either that each person is an asocial, atomistic loner motivated only by narrow selfishness, or that each person should be an asocial, atomistic loner motivated only by narrow selfishness.
5. More people necessarily means a level of per-capita well-being that is lower than it would otherwise be.
3. Democratically chosen government officials generally act with the intention of promoting the public interest, and they are uniquely positioned and qualified to determine what the details of the public interest are and to know best how to promote that interest.
2. The collective is just like an individual; it has feelings, desires, likes, and dislikes; it chooses and it acts.
1. All law is created by, and enforced by, the state.