RealClearMarkets - 10 Things Economists Believe:
10 Things Economists Believe
Read the whole thing.(Via Campaign Standard.)
Tuesday, February 24, 2009
Economics 100
One of my many deficits is in Economics. The basic courses were always on my Gee-If-Only-I-Could list, never quite making it into whatever working plan I had at the time. Indeed, my oldest is taking the Microeconomics introductory course now. So are the ten propositions almost all Economists agree on prepared for in these intro courses?
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About half of those propositions are typically found in macro-economic classes.
Some of them are false or very poorly worded at best because their underlying assumptions are concealed. For instance, "Tariffs and quotas reduce economic welfare" is a common slogan but "economic welfare" is a phoney concept. There is no such thing as aggregate welfare. With trade barriers, the only absolute statement that you can make is that some people win and some people lose. That is not the same as pretending that some nebulous concept of aggregate "economic welfare" is lowered -- let alone that it exists.
Sure, we look at GDP and similar arbitrary collections of data but you can not create a meaningful summation of the welfare across individuals. You can not take Peter's loss and add it to Paul's gain. Welfare is not a quantifiable concept.
Most statistics like GDP are internally phoney concepts too. To illustrate, if the government increases spending on digging ditches and re-filling ditches and advertizing contracts for the ditch industry, well, Statistics Canada will report an increase in GDP after counting all of the beans.
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So, your kid will likely walk out of that economics course with a lot of preconceived notions about quantifying unquantifiable concepts. He will think tinkering with the economy can be justified. However, the chances of him learning honest basic economic theory in school is slim. If he is lucky, he might develop critical thinking skills. Been there, done that.
Nobody wants to hire an honest economist who simply says: "Leave the economy alone. You should not be tinkering." The socialists and the crony capitalists get the jobs because that is what politicians want: a professional or an intellectual authority to justify interventions.
If you want your kid to learn honest economics, send him to a school that is based on Austrian economic methods and praxeology. Unfortunately, there are not many around.
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