Tuesday, February 9, 2016

Five Wacky Notions Believed By Many Economists

By Don Boudreaux

Gary Bryant, in an e-mail, asks:
What is [the] most ridiculous economic fallacy that is believed by a significant number of professional economists?
Wow.  Good question.  There are many such fallacies, and it’s difficult to rank-order them according to their ridiculousness.  My list and rank-ordering, of course, reflects my own understanding of economics (which is Hayekian-Alchianian-Coasean-Buchananite-McCloskeyan) and my subjective assessment of ridiculousness.  But Mr. Bryant’s question is fun, so here’s a list of five:
(5) the idea that government-subsidized health care will lower the cost of health care;
(4) the notion that government must have monopoly control over the money supply in order to ensure sound performance of the economy;
(3) the belief that large differences among people in monetary incomes or monetary wealth reflect some market failure that ought to be ‘addressed’ by the state;
(2) the blind faith that government officials in democratic societies can be trusted to exercise power over people who economists do not trust to make choices for themselves;
(1b) the notion that welfare payments (other than EITC) subsidize employers by pushing workers’ wages lower, and
(1a) the notion that the minimum wage is, or can practically be, a boon to all low-skilled workers.
Each of these notions reflects not only an ignorance of history but also an utter failure to grasp basic price theory.
The above originally appeared at Cafe Hayek.


  1. Notice he said Hayekian. Mr. Boudreaux is not in the Mises/Hazlitt Austrian deductive reasoning school.

    1. I really like mr boudreaux but ill never get over his ridiculous remark about rothbard being 1/100 as good an economist as milton friedman. (as shown to us here by bob)