Friday, February 25, 2011

On the Need for Economic Literacy

March 26, 2010

Were I Grand Poobah of the United States, I'd require everyone to read a text and pass a test in basic free-market economics. Why?

To put to rest once and for all, economic myths like the one that sellers in a properly regulated capitalist system can set prices "arbitrarily." Or the closely related myth of "price gouging." Or the myth that the "market" is some cruel, impersonal force, rather than the sum total of the free choices of a population of free people.

So people would understand why price supports result in surplus of a commodity, price ceilings result in scarcity of a commodity and wage controls result in scarcity of jobs.

So that anyone who hasn't had the misfortune to live in a communist country or any other centrally-planned, command economy would know how backward, inefficient and wasteful they are, why they don't work, and why an army of a million government planners can never do what prices do automatically in a free market.

So people would understand that no collection of disinterested bureaucrats could ever regulate an industry as well as consumers when there is real competition. That in a competitive environment, the same company that resists or skirts government regulators will quickly fall in line when customer dissatisfaction affects their bottom line, or lose their business to companies that do. Why true competition in the insurance industry is the best thing that could happen to the healthcare consumer.

So that they would never again be led astray by the lies and promises of politicians and demagogues. So they would be able to figure out exactly why the current healthcare "reform" is so bad for the country, stop demonizing people who oppose it, and maybe even consider the better ideas that have so far been ignored.

There is an ever-increasing population of Americans who have never seen the tragic effects of Marxism, who don't realize it's not a new idea that needs to be tried, and who are easy prey for those who are trying to push us toward it. If that population reaches a certain critical mass, we're in trouble.

My recommendation for an interesting and readable text? Basic Economics, by Thomas Sowell.

Knowledge is power, and the truth will make you free.

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