Top 10 Economic Fallacies - Good Read
http://www.mises.org/story/1568
My favorite:
"Myth #9: Hamilton Was Great
Another myth is that the financial genius and economic statesmanship of Alexander Hamilton saved the credit of the infant United States and established the sound financial and economic foundation essential for future growth and prosperity. Ron Chernow's hagiographic biography of Hamilton is now moving up the best seller charts, cluttering the display tables of Borders and Barnes & Noble, and taking up time on C-Span's Booknotes; but its greatest contribution will be to perpetuate the Hamilton myth for another generation.
Sumner's concise and devastating biography of that vainglorious popinjay, written over a hundred years ago, remains the best. He closely studied Hamilton's letters and writings, including the big three-his Report on the Public Credit (1790), Report on a National Bank (1790), and Report on Manufactures (1791)-and came to three conclusions: first, the New Yorker had never read Smith's Wealth of Nations (1776), the most important economic treatise written in the Anglo-American world in that period; second, he was a mercantilist, who would have been quite at home serving in the ministry of Sir Robert Walpole or Lord North; and third, Hamilton believed many things that are not true-that federal bonds were a form of capital; that a national debt was a national blessing; that the existence of banks increased the capital of the country; that foreign trade drained a country of its wealth, unless it resulted in a trade surplus; and that higher taxes were a spur to industry and necessary because Americans were lazy and enjoyed too much leisure.
The idea here was that if you taxed Americans more, they would have to work harder to maintain their standard of living, thus increasing the gross product of the country and providing the government with more revenue to spend on grand projects and military adventures. Hamilton was once stoned by a crowd of angry New York mechanics. Is it any wonder why?"
My favorite:
"Myth #9: Hamilton Was Great
Another myth is that the financial genius and economic statesmanship of Alexander Hamilton saved the credit of the infant United States and established the sound financial and economic foundation essential for future growth and prosperity. Ron Chernow's hagiographic biography of Hamilton is now moving up the best seller charts, cluttering the display tables of Borders and Barnes & Noble, and taking up time on C-Span's Booknotes; but its greatest contribution will be to perpetuate the Hamilton myth for another generation.
Sumner's concise and devastating biography of that vainglorious popinjay, written over a hundred years ago, remains the best. He closely studied Hamilton's letters and writings, including the big three-his Report on the Public Credit (1790), Report on a National Bank (1790), and Report on Manufactures (1791)-and came to three conclusions: first, the New Yorker had never read Smith's Wealth of Nations (1776), the most important economic treatise written in the Anglo-American world in that period; second, he was a mercantilist, who would have been quite at home serving in the ministry of Sir Robert Walpole or Lord North; and third, Hamilton believed many things that are not true-that federal bonds were a form of capital; that a national debt was a national blessing; that the existence of banks increased the capital of the country; that foreign trade drained a country of its wealth, unless it resulted in a trade surplus; and that higher taxes were a spur to industry and necessary because Americans were lazy and enjoyed too much leisure.
The idea here was that if you taxed Americans more, they would have to work harder to maintain their standard of living, thus increasing the gross product of the country and providing the government with more revenue to spend on grand projects and military adventures. Hamilton was once stoned by a crowd of angry New York mechanics. Is it any wonder why?"
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I like #2, although it won't be very popular with our members, most of whom would like to see us at war with three or four additional countries as well as invading a couple of others to take their oil.
Myth #2: The Beneficence of War
A second fallacy is the idea of war as an engine of prosperity. Students are taught that World War II ended the Depression; many Americans seem to believe that tax revenues spent on defense contractors (creating jobs) are no loss to the productive economy; and our political leaders continue to believe that expanded government spending is an effective way of bringing an end to a recession and reviving the economy.
The truth is that war, and the preparation for it, is economically wasteful and destructive. Apart from the spoils gained by winning (if it is won) war and defense spending squander labor, resources, and wealth, leaving the country poorer in the end than if these things had been devoted to peaceful endeavors.
During war, the productive powers of a country are diverted to producing weapons and ammunition, transporting armaments and supplies, and supporting the armies in the field.
William Graham Sumner described how the Civil War, which he lived through, had squandered capital and labor: "The mills, forges, and factories were active in working for the government, while the men who ate the grain and wore the clothing were active in destroying, and not in creating capital. This, to be sure, was war. It is what war means, but it cannot bring prosperity."
Nothing is more basic; yet it continues to elude the grasp of our teachers, writers, professors, and politicians. The forty year Cold War drained this country of much of its wealth, squandered capital, and wasted the labor of millions, whose lifetime work, whether as a soldier, sailor, or defense worker, was devoted to policing the empire, fighting its brush wars, and making weapons, instead of building up our civilization with things of utility, comfort, and beauty.
Some might respond that the Cold War was a necessity, but that's not the question-although we now know that the CIA, in yet another massive intelligence failure, grossly overestimated Soviet military capabilities as well as the size of the Soviet economy, estimating it was twice as large and productive as it really was. The point is the wastefulness of war, and the preparation for it; and I see no evidence whatever that the American people or their leaders understand that, or even care to think about it. An awareness and comprehension of these economic realities might lead to more searching scrutiny of the aims and methods that the Bush administration has chosen for the War on Terror.
Only a few days after 9-11, Rumsfeld declared that the war shall last as long as the Cold War (forty plus years), or longer-a claim the administration has repeated every few months since then-without eliciting the slightest notice or questioning from the media, the public, or the opposing party. Would that be the case, if people understand how much a second Cold War, this time with radical Islam, will cost us in lives, treasure, and foregone comfort and leisure?0 -
*sigh*
This is going to turn political right off the bat. Oh well...0
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