An Inoculant Against Simple-Minded Myths

by Don Boudreaux on November 28, 2015

in Curious Task, Economics

Here’s a letter to a long-time patron of Cafe Hayek:

Mr. Kevin Martin

Mr. Martin:

Recollecting that your Econ 101 course at Rice portrayed the world as “pretty simple,” you ask me to elaborate on my claim that a good Econ 101 course “is all about revealing reality’s complexities.”

Your Econ 101 course seems very different from the one that I teach.  My course – which I (perhaps conceitedly) believe is one that economists such as Milton Friedman, F.A. Hayek, and Thomas Sowell would describe as a good Econ 101 course – uses straightforward economic analysis to dispel simplistic yet widely held notions about the economy.  The typical student entering my class simple-mindedly believes such popular myths as that

– prices and wages on markets are simply “set” by businesses;

– steep increases in the prices of fuel and bottled water in the aftermaths of natural disasters are caused simply by “greed,” and that government-imposed prohibitions on such “price gouging” simply make these goods more affordable and accessible;

– rent control obviously makes apartments more affordable;

– a hike in the minimum wage is a simple and obvious way to help all low-skilled workers;

– stricter government safety regulations obviously make people safer;

– imports from low-wage countries obviously reduce average wages in the U.S. or reduce overall employment in the U.S. (or both);

– trading with foreigners is of course economically different than trading with fellow citizens;

– taxes are obviously paid by the individuals and businesses that government makes responsible for paying the taxes;

– of course the chief source of economic strength and growth is consumer spending, and reductions in consumer spending are inevitably harmful;

– the interests of businesses are obviously at odds with those of consumers and workers;

– advocates of laissez faire simply are “pro-business” and (hence) “anti-consumer” and “anti-labor”;

– of course the rich get richer and the poor get poorer;

– government officials’ chief intention, of course, is to improve the well-being of the public;

– the consequences of any action are simply determined by the intentions of the actor.

If I do my job well, by semester’s end each of my students understands that the world is far more complex and reality less “obvious” than he or she believed it to be at the semester’s start.

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

I add that my goal when I teach this course isn’t so much to dispel these and other myths as it is simply (!) to teach a good intro-to-economics course.  But among the inevitable effects of such a course taught well is the dispelling of these and other popular, simple-minded myths.

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