Some Myths and Facts
|January 19, 2005||Posted by Fred Foldvary under Progress Report, The Progress Report|
Many Mainstream Economic Views are Mistaken
Some Myths and Facts
Everett W. Gross sheds light on some errors that the mainstream wimpmedia fail to dissolve.
by Everett W. Gross
Every newspaper carries articles which reinforce major errors of belief about the economy and how it should work and why it is not working that way and who should do something about it and what that something is. Those major errors of mass belief seriously interfere with electing to public office people who know how to solve the problems they are sent there to solve.
Those major errors often appear in articles and letters by persons considered wise or at least educated. See if you can recognize some of the myths that guide our public policies and that act against the solutions of our problems.
MYTH – Our exports are good for our economy and imports are bad.
FACT – The opposite is true. If we could import all we want without ever exporting, we could be much richer than we are. If we could export all we want. to, and never import anything, we would become poor rapidly. Exporting serves no useful function at all except to make importation possible.
MYTH – Imports of goods from a foreign country cause unemployment and other hardships here.
FACT – That is false. Other causes such as our own reverse system of taxes and subsidies are much more than enough to cause all of our own unemployment.
MYTH – High interest rates are bad; low interest rates are good for the economy.
FACT – That is an ancient myth that should have been killed a long time ago by sensible economics teaching, but was dug up and dusted off by Keynes during the Great Depression. It is based on another myth, that borrowing and spending is nicer than saving and lending. You would be a lot better off if more people could be in business without borrowing at. all.
MYTH – High land prices are good and low land prices are bad.
FACT – Changes in land prices give an illusion of being good or bad if you notice only the part of the people for whom they appear to be good or bad. Land prices rise when the bidders expect the rest of the economy to improve. Then the resulting high land prices tend to stifle that very improvement by increasing the. difficulty of starting a new business. I speak here of all land and not just farm land. In fact, farm land, being cheaper than town land, is much less the guilty element.
MYTH – The farm problem is causing the rest of the economy to suffer.
FACT – That may have a smidgin of truth at a very local level. But actually the rest of the economy broke down first and the market for farm products collapsed, while still not offering farmers any alternate jobs to fall back upon when farming failed. Companies which sell supplies to farmers do not exist in large enough numbers to compete with each other at prices more favorable to farmers.
MYTH – All high taxes are bad and therefore all taxes should be low.
FACT – Not true. We need to learn the nature of the different factors of production. Taxes on property improvements should be held as low as possible, while bare lots should be taxed high enough to make bare lot speculation completely unprofitable.
And one final FACT – This is only a brief list and handled in the briefest form. My own personal library has several books dealing with each of the above topics.
To bust harmful myths, also see these classics by Fred Foldvary –
Economics in Six Minutes
An Economics Quiz
The Heart of Economics in One Short Story
What’s your opinion? Got any more myths that should be pointed out? Share your views!