I have long been frustrated with activists, politicians and policy makers who seek, support, and pass legislation with the intention of producing some economic result that ends of producing the very opposite effect. Price controls are just one example. Hawaii’s recent choice to put price caps on wholesale gas will create shortages. Period. Other problems are numerous with price controls. But the bottom line is that they simply harm the consumer while politicos get to say they “did something”. For a brief treatment of this, go here. For a thorough and thoroughly readable treatment on economics, I recommend Thomas Sowell’s Basic Economics: the Antidote for Idiocy A Citizen’s Guide to the Economy.
In addition to the general public and activist and politicos, we now know that the problem of economic common sense in this Country is in the sorry condition it is because basic economic reasoning is not taught well, if at all, and the very people who teach economics do not possess it.
A recent study [PDF] found that 78% of economists gave the wrong answer to a simple economic question of opportunity costs. Many of these economists were professionals or doctorates. All of them from top-30 programs in the Country. This is stunning. Here is a New York Times column on the study and the issue.
With increasing economic legislation and regulation and increasing demand for gov’t intervention into all parts of our lives including economics, it would be kinda nice if they were actually educated on solid principles of basic economic reasoning, dontcha think?. This affects all of us, people.
From the TechCentralStation piece linked to above:
“Some analysts warn move may spur supply problems.”
Really? Only “some”? Maybe they need to be more careful about which “analysts” they listen to. Whatever would we do without those other “analysts”?
Imagine the headlines, “Legislature Mandates Pi To Equal 3.00000 — Some Analysts Warn Move May Spur Engineering Problems,” or “King Canute Commands Tide To Recede — Some Analysts Warn Move May Spur Wet Footwear Problems.” What would we think of the analysts who thought that the proposed mandates were no problem, perfectly in consonance with the laws of physics and human nature? Even most people with typical journalism educations would recognize such heads and subheads as the jokes they are, but somehow when it comes to basic economics, the laws of supply and demand, and the function of prices in a market economy bizarrely remain subjects for public debate.
Bizarre indeed.
And I prefer this analogy: it’s as if the Senate and the House were to pass legislation to temporarily ban gravity to give relief to the airline industry through the increased fuel efficiency they would enjoy.
This is what Hawaii is effectively doing. Laughing in the face of objective reality.
The next time you want something done about something, ask yourself if you are certain you understand for yourself [not from this party's propaganda or that party's propaganda or some questionable study that buttresses your pre-determined opinion] the dynamics at play, the underlying principles being demonstrated, etc. What it means to get legislation passed is that you are voting or asking your representative to vote for the authorization of the use of force against your neighbor. Be it police action to enforce the new statute or be it the use of force though increased taxation [gov't sponsored theft] it is force.
Are you certain you are clear enough and confident enough in your reasoning to support that? Have you considered under what conditions the use of force is just? Have you ever denied evidence that contradicted your position and shrugged it off or rejected it out of hand?