Part I, Chapter I – The Lesson
The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in the tracing of consequences of that policy not merely for one group but for all groups.
‘Economics is haunted by more fallacies than any other study known to man.’ The inherent difficulties of the subject are difficult enough, but they are multiplied a thousandfold by a factor that is insignificant in other fields of study – i.e. the special pleading of selfish interests. These special interest groups will hire the best buyable minds to argue for their points persistently, to the point that clear thinking on the subject can be nearly impossible.
The other big factor for the difficulties of economic study is the short-sightedness of both the public and of bad economists. They tend to look only at the short-term benefits of a proposed policy and/or the effects of that policy on only one group. Nine-tenths of economic fallacies stem from these two flaws in thinking; that of looking only at the immediate consequences of an act or a proposal, and that of looking at the consequences only for a particular group to the neglect of all other groups. The opposite error is also possible and is often made by the classical economists; i.e. of concentrating only on its long-term effects on the community as a whole, but that error is much less common than the previous one.
It is often complained that bad economists present their errors to the public better than good economists presents their truth. The reason for this is simple; that the bad economists are only presenting half-truths. They speak only of the immediate effect of a proposed policy upon a single group. The answer consists in supplementing and correcting the half-truth with the other half. But to present the rest of the truth often requires a long, complicated, and dull chain of reasoning which most of the public has a hard time following. The bad economists often just respond to the good economists with slurs like “classicism” or “capitalist apologetics” and quickly dismiss their arguments.
The following chapters will consist of illuminating these lessons by providing examples. Through them we can learn to avoid first the crudest and most palpable fallacies and finally the most sophisticated and elusive.