Why Bad Economics Makes Such Good Politics
As the election nears, politicians will more and more frantically point out what wonderful favors they’ve done for the voters — or what favors they will do for the voters, if elected.
Of course, they never mean all the voters. They mean groups or individuals within the voting population who believe they benefit from laws, taxes, regulations, and spending programs supported by the politician in question.
Two such examples of these sorts of favors are tariffs and minimum wage laws. Both impose costs on both producers and consumers overall, while benefiting a small sliver of the population that is able to take advantage of the government mandate.
The economics of each of these, or taxation and business regulation in general, have already been addressed numerous times in these pages.
It must suffice to point out that these policies, for which politicians think they deserve accolades, potentially benefit only very specific interest groups. Nevertheless, these policies can prove to be politically popular, and may help a politician get elected.
But why should policies that help so few — and impose many costs on even those they purport to help — be politically popular?
Hazlitt and Mises on the Popularity of Bad Economics
Answering this question was one of the main reasons that Henry Hazlitt wrote his perennially popular bookEconomics in One Lesson.
In the very first chapter, Hazlitt notes that economic science is prone to so many errors because people are motivated to believe an incorrect version of economics that supports their own economic interests. Or as Hazlitt put it, economic errors “are multiplied a thousandfold … by the special pleading of selfish interests.”
Sometimes, these attempts to throw good economics in the garbage are spectacularly successful. After all, for decades, no insignificant number of Americans believed the claim that “what’s good for General Motors is good for America.”1
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