A “big box” regulation passes the Chicago City Council…BP Amoco shuts down a pipeline and gas prices rise…property taxes or income taxes rise or there’s a threat to raise them…Topinka issues an “economic plan.”
Unfortunately those who get elected to public office and those who work in the media typically don’t bother to learn the basics available to any student in an Econ 101 course.
So instead, almost every news story is distorted and every legislative plan is misguided due to ignorance. The themes are recognizable. Evil corporations cheating the public or their employees. Benevolent government must exercise compassion or the little guy will suffer.
Henry Hazlitt wrote a book a few years back and it’s worth your time if you ever want to be able to filter out the errors from the evil-corporations or government-as-savior news stories. Here are a few good excerpts:
“The whole argument of this book may be summed up in the statement that in studying the effects of any given economic proposal we must trace not merely the immediate results but the results in the long run, not merely the primary consequences but the secondary consequences, and not merely the effects on some special group but the effects on everyone.”
* * * * *“[F]or every public job created by the bridge project a private job has been destroyed somewhere else.”
* * * * *
Taxes discourage production: “People begin to ask themselves why they should work six, eight or nine months of the entire year for the government, and only six, four or three for themselves and their families.”
* * * * *
“[G]overnment can give no financial help to business that it does not first or finally take from business.”
* * * * *“When your money is taken by a thief, you get nothing in return. When your money is taken through taxes to support needless bureaucrats, precisely the same situation exists. We are lucky, indeed, if the needless bureaucrats are mere easygoing loafers. They are more likely today to be energetic reformers busily discouraging and disrupting production.”
They are simple economic principles, yet information gets distorted due to ignorance.
Economist Thomas Sowell also happened to open his nationally syndicated column today with this paragraph:
“It was a common political move when Chicago’s city council voted recently to impose a $10 an hour minimum wage on big-box retailers. There is nothing that politicians like better than handing out benefits to be paid for by someone else.”
“What was uncommon was the reaction,” Sowell added, as Mayor Daley and both Chicago newspapers denounced the bill. He continued:
“The crowning touch came when Andrew Young, former civil rights leader and former mayor of Atlanta, went to Chicago to criticize local black leaders who supported this bill.
While the $10 an hour minimum wage was politics as usual, the unusual backlash against it provides at least a glimmer of hope that more people are beginning to consider the economic consequences of such feel-good legislation.”
Here’s another excellent excerpt (with emphasis added) from a book that should be required reading for anyone in elective office:
“While certain public policies would in the long run benefit everybody, other policies would benefit one group only at the expense of all other groups. The group that would benefit by such policies, having such a direct interest in them, will argue for them plausibly and persistently. It will hire the best buyable minds to devote their whole time to presenting its case. And it will finally either convince the general public that its case is sound, or so befuddle it that clear thinking on the subject becomes next to impossible.In addition to these endless pleading of self-interest, there is a second main factor that spawns new economic fallacies everyday. This is the persistent tendency of men to see only the immediate effects of a given policy, or its effect only on a special group, and to neglect to inquire what the long-run effects of that policy will be not only on that special group but on all groups. It is the fallacy of overlooking secondary consequences.In this lies the whole difference between good economics and bad. The bad economist sees only what immediately strikes the eye; the good economist also looks beyond.”
