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Tuesday, March 28, 2006

Economic Ignorance

Congressman Ron Paul (R-TX) writes (http://www.lewrockwell.com/paul/paul311.html),

I believe one of the greatest threats facing this nation is the willful economic ignorance of the political class. Many of our elected officials at every level have no understanding of economics whatsoever, yet they wield tremendous power over our economy through taxes, regulations, and countless other costs associated with government. They spend your money with little or no thought given to the economic consequences of their actions. . . .

We cannot suspend the laws of economics or the principles of human action any more than we can suspend the laws of physics. Yet this is precisely what Congress attempts to do time and time again, no matter how many times history proves them wrong or economists easily demonstrate the harms caused by a certain policy.

I strongly recommend that every American acquire some basic knowledge of economics, monetary policy, and the intersection of politics with the economy. No formal classroom is required; a desire to read and learn will suffice. There are countless important books to consider, but the following are an excellent starting point: "The Law" by Frédéric Bastiat; "Economics in One Lesson" by Henry Hazlitt; "What has Government Done to our Money?" by Murray Rothbard; "The Road to Serfdom" by Friedrich Hayek; and "Economics for Real People" by Gene Callahan.

I have read "Economics in One Lesson" by Henry Hazlitt, "Economics for Real People" by Gene Callahan, and portions of "The Road to Serfdom" by Friedrich Hayek and recommend them highly.

"Economics in One Lesson" is online at http://www.fee.org/pdf/books/Economics_in_one_lesson.pdf.
"What has Government Done to our Money?" is online at http://www.mises.org/money.asp. And, finally, "The Law" is online at http://www.fee.org/pdf/books/The_Law.pdf.

In "Economics in One Lesson", Hazlitt wrote,

The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups.

It's easy to support many of the laws proposed by politicians, as long as we focus only on their immediate effects and only on their effects on one group of citizens. It is not so easy to see the wisdom of these laws when we also consider their long-term effects and their effects on all groups.

Hazlitt's central idea can be used to better understand most if not all of the public policy issues confronting us today, including healthcare, gasoline prices, education, etc.

Along this line, Sheldon Richman writes (http://www.fee.org/publications/the-freeman/article.asp?aid=4606),

Opening the newspaper almost any day, one finds the same subjects that occupied Hazlitt for many decades: inflation—that is, government control of money; trade restrictions; business regulation; taxation; deficit spending; the minimum wage; labor unionism; agricultural and business subsidies; price controls; the welfare state; the presumption that government can intelligently guide economic affairs.

With so many excellent books and articles on economics available online, there is simply no longer any excuse for the politicians or the public to remain in a state of economic ignorance!


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