Tuesday, March 26, 2013

The Tunnel Vision of the Masses

          Reading through Henry Hazlitts book "Economics in One Lesson" brought up quiet a few economic fallacies. Reading through the ideas brought up exemplifies exactly why many economic policies are either ill thought out or designed with the mindset of not accounting for everything the policy or decision is affecting. How common in politics is it that accepted economic fallacies such as the Broken Window Fallacy and Protecting a dead industry ca
n be seen? Why are policies like these enacted when they have been proven to fail time and time again?

          I don't have a solid answer, but I can hypothesize to some extent why theories such as the ones mentioned above continue to exist and flourish. First of all is the fact that while they may seem completely logical on first glance on further study they fall apart. This simple fact as the effect of making it so that idea's that are actually correct can become lost when the "common knowledge" is brought up in politics. Politicians aren't working towards people's best interests at all times. Politicians work towards getting re-elected and receiving support. Because of this while an economic idea might be completely fallacious the politician itself might be uneducated to this fact (sadly) but more likely is their intended support group to be uneducated upon the basic ideas that said policy might lie upon. This could be because of many reasons such as apathy or simply never being taught or understanding a why such a policy can be bad.

          My second theory for why policies like this are enacted ties closely to my previous idea. I believe policy makers simply do not account for all effects of a policy. While to a certain extent understanding every single effect a policy will have on an economy is impossible it is still important to try and understand the effects their policies have. Enacting a policy that supports one group tremendously while severely setting back the rest of the economy or vice verse of helping a significant portion of the economy a tiny bit while setting a particular sector or group of people at a disadvantage could be the result of simply not enough forethought. 
         In the end I don't know of a solution that would break this trend but I hope for our future that we can instill the tenants of economics in ourselves and the people around us.

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