Sunday, November 11, 2018

Economic myths

Here are some economic myths, courtesy of Armen Alchian and William Allen. Both taught economics at UCLA. The list is an excerpt from their book “Universal Economics”.

Try these on the “intellectuals” you run across to find out if they know what they are talking about.



  •  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 well-being 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.

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