I havenrrrt heard of you, however it seems to me like economics has developed in the news and social networking a fair bit lately. Now, this could simply be my bias showing, seeing as I'm immersed in this world on a daily basis. But at the very least, I believe it's fair to say individuals are taking into consideration the economy a lot.
Inflation is, of course, one of the main things on people’s minds. Gas and real estate prices in particular have gone through the rooftop in recent months, therefore it is no wonder people are starting to give consideration.
Indeed, bad economic analysis seems to be the only thing in this tight economy that's not in short supply.
Unfortunately, plenty of econ news also means lots of bad econ takes. You've probably heard some. They are available from everywhere; public figures on Twitter and pundits on television. Indeed, bad economic analysis seems to be the one thing in this tight economy that's not in short supply.
Mental Gymnastics on Inflation
Consider, for example, Vice President Kamala Harris's comments back in December about how exactly the Build Back Better Act would \”ease long-term inflationary pressures.\”
Talk about mental gymnastics! She will cite Nobel-prize winners all she wants, however the reality won't change: long-term inflation is ultimately brought on by the Fed's money printing (BRRRRRRR), which is often used to finance government expenditures – the very things she's promoting as the cure.
But maybe, say some state governments, we can mitigate the problem by providing more stimulus checks. Sure, and you can relieve hangover symptoms by drinking more alcohol, however i wouldn't advise it. Consider what will happen when individuals start spending that money. I'll give you a hint: it does not end well.
‘No Supply Shortage’ of Gas?
The analysis surrounding gas prices hasn't been far better. Take this tweet from podcaster Chris Hahn. \”There isn't any supply shortage impacting the price of gas,\” he writes. \”Rising prices are due to market speculation and value gouging. It's amazing how many what are known as 'Capitalists' are part of the 68% of Americans blaming President Biden for the price of a commodity.\”
People like to blame private \”speculators\” and businesses for top prices, however this kind of thinking completely ignores economic realities. To his first point, of course there's speculation; and of course companies are raising their prices (call it gouging if you would like), but that's precisely what indicates a lesser supply in accordance with demand. If there was truly \”no supply shortage,\” private companies would not be able to get away with such high costs.
Regarding his second point, of course Biden isn't entirely accountable for high gas prices, but considering his strict and often senseless regulating the fossil fuel industry, you cannot honestly say he'd absolutely nothing to do with it.
Blame Private Companies
Speaking of blaming private companies, Customer advocates is now pursuing Blackstone Body of America's biggest corporate landlords – because the company recently made a large profit.
\”We need to loosen private equity's grip around the housing market,\” she writes, as if companies like Blackstone are the reason housing costs so much. However, this really is foolishness. Blackstone doesn't set rents, the market does. The only reason the Blackstones of the world can get away with charging higher rents happens because supply and demand have shifted. And, as I recently pointed out within an article on FEE.org, these supply and demand problems are largely driven by government interference in the market, not those things of non-public companies.
\”Ok, so many people on Twitter don't understand economics. What's your point?\”
Economic Illiteracy is Pervasive
My point is the fact that these aren't just some people. This isn't your local comments-section troll. We're talking about a public figure, a senator, and also the v . p .. Huge numbers of people subscribe to their ideas. And we've barely scratched the top of big names and well-funded movements that regularly repeat these kinds of economic fallacies.
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It's clear that economic illiteracy is pervasive, and dangerously so. Some subjects we are able to pull off lacking the knowledge of. Should you forget what your teacher said about parallelograms, no biggie. However when individuals don't understand economics, the consequences are severe.
Every bad econ take underscores the need for economic education. And when you trust the federal government to provide such an education, well, you may think differently after learning some economics.
The great news is, we're not helpless. Along with some effort, we can counter these bad ideas with logic and reasoning. A sharp mind along with a persuasive argument will go quite a distance toward correcting these fallacies and teaching better suggestions to the next generation.
But it isn't enough to simply be aware of arguments and refutations. If we want real change, we have to use them.
Patrick Carroll has a degree in Chemical Engineering from the University of Waterloo and is an Editorial Fellow at the Foundation for Economic Education.
