February 12, 2008
Don't we know this already?

One of the struggles that economics has, which it doesn't appear to me afflicts many other disciplines, is the constant need to reiterate and re-prove points or ideas that the public always seems to forget. Part of this seems to be the familiarity that people have with economics: I've had jobs in the past, so that must mean that my knowledge of the effects of minimum wage laws is equal to this academic who has studied impersonal "data."

None of us would claim to have as valid an opinion of how a surgical procedure should be performed than would a doctor. We would never say "I don't care how many times you've done this, the incision goes over here!" But how often do you hear people dispute basic economic ideas that have been validated with tons of experience? Free trade is bad, tariffs help, etc.

Glenn Beck has a column at cnn.com where he suggests the stimulus package should take the form of expiration-dated debit cards. It can't be saved, and the expiration date will ensure it gets spent soon. Thus comes our salvation. No matter how much evidence there is that increased spending is a result of long-term growth, not its cause, and that the cause of growth comes precisely from the saving that Beck disapproves of, people still believe the "consume our way to prosperity" nonsense. Hmm, isn't that how we got into this problem in the first place? People buying too much with their subprime loans...

A second commonly-held belief is that the middle-class is losing ground. Lou Dobbs, basically all of the Presidential candidates, and our current President himself, all seem to buy into this (or at least do so publicly). Drew Carey hosted a reason.tv video that helps to demolish this myth. It stars the empirically-supported optimist, Michael Cox, and would probably be a good supplement to a discussion on economic growth, per capita income, or price indexes.

I guess I should support the public's amnesia on these issues. It guarantees that economists will be in demand.

Posted by Tim Shaughnessy at 04:58 PM in Economics

The statesman who should attempt to direct private people in what manner they ought to employ their capitals would not only load himself with a most unnecessary attention, but assume an authority which could safely be trusted, not only to no single person, but to no council or senate whatever, and which would nowhere be so dangerous as in the hands of a man who had folly and presumption enough to fancy himself fit to exercise it. -Adam Smith

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