Thursday, January 15, 2009

Astounding stupidity

It never ceases to amaze me how people, even seemingly intelligent and educated people, can be remarkably dumb regarding things they haven't bothered to think about, don't understand well, or have ideological blocks regarding. I know I've blogged about some of these before, but here's a recap of some things which just keep coming up, uttered over and over again by otherwise reasonable people, blathering on like morons in these cases:

- We should raise taxes to solve government budget problems
This has to be the #1 most often repeated, stupidest proposition in the common understanding of government economic policies. I mean, it's the definition of insanity: it has never worked (to reduce deficits), yet people keep suggesting it, over and over and over again. The people who keep espousing it must have ulterior motives (not unlikely), ideological impediments to rational thought (probable), or mental damage [in this area], or all of the above. Excess spending is always the problem with government deficits, and reducing spending is always the solution; I'm not sure how much simpler that concept could possibly be. That is not to say there's never a case for increasing taxes (compensating for an intentional and purposeful increase in spending, for example), but for unintentional budget deficits, increasing taxes is never the right answer, period, full stop. The world would be noticeably better if everyone could get that pounded into their thick skulls and stop the insanity.

- Government market manipulation helps people
This is probably #2 on the most common and most monumental fallacies in popular understanding, which nevertheless continues to get touted in one form or another. In virtually no case in history has government market manipulation ever helped people. In case you're incredulous, here are some recent pertinent examples:
- Manipulating home loan rates causes banks to stop lending, cause they can't compete, reducing the availability of lending on the whole
- Interfering in the stock market causes less people to invest there, which decreases the amount of money invested in businesses in the country, decreasing prosperity there (see corrupt 2nd-world countries)
- Mandating fixed prices (eg: food in the 70's) causes shortages of those commodities, as less people produce them due to losses
... the list does on and on.

Note that this should not be confused with market regulation, which is usually burdensome, costly, and completely ineffective, but not uniformly harmful to the people. Nor is it applicable to government-run insurance programs to backstop markets; which, although usually underfunded and eventually very costly and ineffective, do not themselves hurt people nearly as much. No, market manipulation is the real bad guy here, who lures people in with a sweet song of short-term fixes, and is always to their detriment.

Those are probably my top two, or at least the top two noticeable ones today. If you're reading this, do everyone a favor and resolve yourself to never fall victim to one of those gross misconceptions, and you'll have made the world just a tiny bit better.

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