Tuesday, September 6, 2011

Don't Know Much About Economics

When I get to the part of my introductory courses in economics when I explain the consequences of government intervention in the market such as price controls, confiscatory taxation, inflation, and subsidies, I get a familiar question. If the consequences of the respective interventions are so bad, why do our lawmakers enact them? Are they ignorant or just evil? I like to remind them that the two are not necessarily exclusive. In fact we humans have a great capacity to convince ourselves that our political biases are the most intellectual defensible principles there are.

An article by Mike Lillis on The Hill (to which I was directed by one of my students) indicates that there does seem to be a lot of economic ignorance in Congress. A report published by the Employment Policies Institute reveals that "Almost 80 percent of lawmakers have no academic background in business or economics, even as Congress grapples with deficits, unemployment and other economic issues of tremendous complexity, according to an independent analysis released Tuesday." Of course formal academic training in economics is no guarantee of sound economic thinking. Paul Krugman, after all, has a Ph. D. and Nobel Prize in economics and he embraces fundamental Keynesianism. Nevertheless, it does seem that part of the problem may be economic ignorance. Our work is never done.

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