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Quotation of the Day…

… is from page 472 of Robert Higgs’s Winter 2013 Independent Review essay “Truth and Freedom in Economic Analysis and Economic Policy Making“:

Too few of us understand, however, that the free market itself is a grand generator of truth, and that, in general, government intrusion of any kind operates to substitute falsehood for this truth, with devastating consequences for the genuine flourishing of human beings in their social and economic lives.

DBx: And also, too few of us understand that reality isn’t changed by government preventing prices, wages, and other market signals from reflecting that reality. Minimum wages spread lies about the productivity of low-skilled workers. Residential rent control falsifies information about the availability of rental housing. Tariffs and subsidies misinform people about the relative scarcities of goods and services. As with all lies, some individuals benefit from hiding these economic truths from other people – and as with all liars, the disingenuous beneficiaries couldn’t care less about the welfare of their victims.

In many cases, however, the liars aren’t so much evil or greedy as they are stupid. These liars seem really to believe that reality becomes whatever we formally name it. You want the hourly value of a 16-year-old’s work effort to rise from $12 to $15? No problem! Have government issue a decree to this effect. You want rental housing to be more abundant? No problem! Have government declare that rents are lower than they really are. You want income earners to willingly put aside more resources for investment? No problem! Have government reduce nominal interest rates by inflating the money supply.

Sensible people can, and do, scream their throats sore and write their fingertips raw pointing out the insanity of the superstition that reality becomes whatever government formally declares it to be. But, obviously, the demand to wallow in this superstition is Hercules-strong and widespread. Rational arguments are powerless to prompt people to reject beliefs that they are led to embrace by their irrationality.

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