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After reading my recent list of some commonly held economic myths [2] – myths that spring from the widespread misconception that the economy is far simpler than it really is – Jerry Jordan sent to me this slice from the forthcoming Universal Economics by the late Armen Alchian [3] and William Allen. This new volume is an updated version (minus most of the macroeconomics) of Alchian’s and Allen’s justly famous and brilliant text, University Economics [4]. I share this list here with Jerry’s kind consent.)
Our Intent
We want your study of economics to be interesting and even enjoyable. But we promise one unanticipated result: you’ll be brainwashed—in the “desirable’ sense of removing erroneous beliefs. You will begin to suspect that a vast majority of what people popularly believe about economic events is at least misleading and often wrong. A few examples of such common errors are:
- price controls prevent higher costs to consumers;
- reducing unemployment necessarily requires creation of more jobs;
- larger incomes for some people require smaller incomes for others;
- free, or low, tuition reduces costs to students;
- all unemployment must be wasteful;
- stockbrokers and investment advisors predict better than the alternatives of throwing a dart at a list of stocks or the use of horoscopes;
- taxes are borne entirely by consumers of taxed items;
- employers pay for “employer provided insurance”;
- minimum wage legislation helps the unskilled and minorities;
- housing developers drive up the price of land;
- foreign imports reduce the total of domestic jobs;
- “equal pay for equal work” laws aid women, minorities, and the young;
- economic efficiency is a matter only of technology and engineering:
- agricultural and other surpluses stem from productivity outrunning demand;
- capitalism requires a social “harmony of interests”–but also capitalism is the source of competitiveness and conflict;
- property rights commonly conflict with human rights;
- business people are self-centered and rapacious, while government people are self-sacrificing and altruistic;
- labor unions protect the natural brotherhood and collective wellbeing of workers against their natural enemies, employers;
- charging a higher price always increases the seller’s profits;
- the American economy is increasingly dominated by monopolists who arbitrarily set prices as high and wages as low as they please;
- rent control improves and expands housing;
- there is unemployment because workers outnumber jobs;
- fluctuating prices create wasteful uncertainty and rising prices constitute inflation, so government should make it illegal to raise prices;
- we cannot compete in a world in which most foreign wages are lower than wages paid to domestic workers.
…….. and on and on and on.