Quotation of the Day…

by Don Boudreaux on October 13, 2016

in Economics, Myths and Fallacies, Reality Is Not Optional, Seen and Unseen, Work

… is from page 345 of the 1990 Transaction Publishers reprint of W.H. Hutt‘s 1936 book, Economists and the Public (footnote deleted):

It has been demonstrated that attempts to make the poor as a whole better off by trying to rig the value mechanism are as certain to fail as efforts to peg the barometer in order to produce fine weather.  Wage-fixations, whether by the State or trade unions, cannot increase the aggregate receipts of the relatively poor.  They may benefit particular groups, or even particular classes of workers for a fairly long period of years.  But this applies only to a limited class – and it will nearly always be certain privileged labour groups, and not the under-dogs, who benefit.  Whether this simple truth will receive influential recognition within the present author’s lifetime is extremely doubtful.

Hutt (1899-1988) was here correct both about the futility of state attempts to enrich the poor by pricing many of them out of the labor market and the fact that people still do not understand this truth.  (It’s now more than 28 years after his death.)  As Hutt wrote, the continued widespread acceptance in 2016 of this belief in economic miracles would not have surprised him.  I suspect, though, that he would be surprised and saddened, were he still living, to learn that many economists, over the past couple of decades, have become revered vicars and preachers in the cult of those who believe in such miracles.  Hutt would be appalled at their worship of the false idol of statistical significance and their attendant rejection, or sloppy use, of economic theory.

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