Ten Recurring Economic Fallacies

[Max Power]

http://www.mises.org/fullstory.aspx?control=1568

As an American historian who knows something of economic law, having learned from the Austrians, I became intrigued with how the United States had remained prosperous, its economy still so dynamic and productive, given the serious and recurring economic fallacies to which our top leaders (political, corporate, academic) have subscribed and from which they cannot seem to free themselves—and alas, keep passing down to the younger generation.

Let’s consider ten.

Myth #1: The Broken Window

One of the most persistent is that of the broken window—one breaks and this is celebrated as a boon to the economy: the window manufacturer gets an order; the hardware store sells a window; a carpenter is hired to install it; money circulates; jobs are created; the GDP goes up. In truth, of course, the economy is no better off at all.

True, there is a sudden burst of activity, and some persons have surely gained, but only at the expense of the proprietor whose window was broken, or his insurance company; and if the latter, the other policyholders who will pay higher premiums to pay for paid-out claims, especially if many have been broken.

The fallacy lies in a failure to grasp what has been foregone by repair and reconstruction—the labor and capital expended, having been lost to new production. This fallacy, seemingly so simple to explain and grasp, although requiring an intellectual effort of some mental abstraction to comprehend, seems to be ineradicable.

It goes on...

 

[dilloduck]

Then there are the people. Until very recently, the United States enjoyed a low density of population, which meant high wages and low land prices. And for centuries, the population has been one of the hardest working in the world, creating an infrastructure to build on. Then there is the culture. Largely because of the influence of Christianity, the debilitating sin of envy has no social standing here, unlike the Third World where it is perhaps the chief impediment to wealth-creation and development.

Intersting article--found this paragragh to be particularly interesting.

 

[KarlMarx]

http://www.mises.org/fullstory.aspx?control=1568



It goes on...

The writer's fallacy is.... that economics is a zero sum process, i.e. someone loses when someone gains. That isn't true. If it were, then economies would not grow.

 

[dilloduck]

It's already been posted anyway Max---damn-if you have to bash Bush, at least get creative.

 

[Max Power]

It's already been posted anyway Max---damn-if you have to bash Bush, at least get creative.

It has nothing to do with Bush.

If you have to Max bash, at least get creative.

 

[BaronVonBigmeat]

The writer's fallacy is.... that economics is a zero sum process, i.e. someone loses when someone gains. That isn't true. If it were, then economies would not grow.

Where does he say that?