Economics is haunted by more fallacies than any other study known to man. This is no accident. The inherent difficulties of the subject would be great enough in any case, but they are multiplied a thousandfold by a factor that is insignificant in, say, physics, mathematics or medicine - the special pleading of selfish interests.
Interpretation
Economics is complicated by widespread misconceptions and the influence of self-interest.
Henry Hazlitt argues that economics is plagued by numerous fallacies, more so than any other field, due to the complexities of the subject itself and the additional bias introduced by individuals with selfish interests. This makes understanding economics especially challenging, as personal agendas often cloud rational analysis and lead to misunderstandings about economic principles.
In practice
During a lecture on economic theory, one might use this quote to highlight the common misconceptions students might have.
A man with a scant vocabulary will almost certainly be a weak thinker. The richer and more copious one's vocabulary and the greater one's awareness of fine distinctions and subtle nuances of meaning, the more fertile and precise is likely to be one's thinking. Knowledge of things and knowledge of the words for them grow together. If you do not know the words, you can hardly know the thing.
Mere inflation-that is, the mere issuance of more money, with the consequence of higher wages and prices-may look like the creation of more demand. But in terms of the actual production and exchange of real things it is not.
The only way we could remember would be by constant re-reading, for knowledge unused tends to drop out of mind. Knowledge used does not need to be remembered; practice forms habits and habits make memory unnecessary. The rule is nothing; the application is everything.
The great merit of gold is precisely that it is scarce; that its quantity is limited by nature; that it is costly to discover, to mine, and to process; and that it cannot be created by political fiat or caprice.
If a government resorts to inflation, that is, creates money in order to cover its budget deficits or expands credit in order to stimulate business, then no power on earth, no gimmick, device, trick or even indexation can prevent its economic consequences.
Economics is haunted by more fallacies than any other study known to man
Markets are designed to allow individuals to look after their private needs and to pursue profit. It's really a great invention, and I wouldn't underestimate the value of that. But they're not designed to take care of social needs.
In a perfect world what poor countries at the lowest rungs of economic development need is not a multi-party democracy, but in fact a decisive benevolent dictator to push through the reforms required to get the economy moving
As our economy faces up to potential labour shortages due to our ageing population and as it moves to a new level of sophistication to compete with the rest of the world, we're going to need every Australian on board pulling their weight, rejoining the workforce, gaining new skills. Writing off individuals and communities suffering from poverty just creates a dead weight for our economy to drag along.
Our economy is the result of millions of decisions we all make every day about producing, earning, saving, investing, and spending.
Competition is the most promising means to achieve and secure prosperity. It alone enables people in their role of consumer to gain from economic progress. It ensures that all advantages which result from higher productivity may eventually be enjoyed.
I'm an entrepreneur trying to let the American people know that it's not immigrants that are causing economic problems, it is the fact that our economy is advancing in ways that is making human labor less and less essential.
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