Silly Ideas: Economic Ignorance

Austrian Economist Steve Horwitz asks "What is the fallacy of fact and fallacy of theory that the reasonably well-informed layperson believes about economics that are most in need of correction? That is, which ones do the most damage?"

Some Highlights:

• Fallacy of Fact: that the economic well-being of the average American is on the decline.
• Fallacy of Theory: that consumption (rather than savings/investment) is the source of economic growth.
• Fallacy of Fact: All human action is zero-sum.
• Fallacy of Theory: greed causes prices.
• Fallacy of Fact: Moderation, not theory, is most important in policy.
• Fallacy of Theory: Trade deficits are bad.

Of course, it's the politicians and journalists who play to these fears that surprise, surprise lead to rent-seeking solutions of regulation and government. The sad irony is that they end up most hurting those on whose behalf they claim they seek to help.