Myths of Economics

[boiker]

http://www.mises.org/story/1568

Well, we have quite a number of opininated folks here when it comes to economics. I though this article would spark additional discussion.

Yes, I realize this doubles as a political piece. Please respond to the economics aspects and ignore the political parts.

[jordanb]

Ok, just reading number one they're already off the mark. Nobody doubts that economic resources get directed against the "broken window" and theoretically can't be used somewhere else, making everyone materially "poorer" in a way. But in our industrial, resource-rich economy, the problem in economic crises is usually too many resources, and not economic activity to support all of the suppliers. The broken window increases economic activity and that's good if the problem is that there isn't enough movement in the economy.

[Lee Nellis]

The heart of the matter is in Myth 8. Nobody really wants free enterprise - except for their competitors, of course - BUT the rhetoric of free enterprise is the perfect shield for all sorts of chicanery and stupidity.

[jaws]

Ok, just reading number one they're already off the mark. Nobody doubts that economic resources get directed against the "broken window" and theoretically can't be used somewhere else, making everyone materially "poorer" in a way. But in our industrial, resource-rich economy, the problem in economic crises is usually too many resources, and not economic activity to support all of the suppliers. The broken window increases economic activity and that's good if the problem is that there isn't enough movement in the economy.

The so called problem of too many resources follows from the (quite widespread) fallacy of a lump of capital, where it is believed that all capital goods are the same and
can be applied to any task. The problem in an economic crisis is that too many higher-order capital goods have been produced at expense of lower-order capital goods and consumer goods. Stimulating demand for more higher-order capital goods will have absolutely no positive effect, because to restore balance to the economy there must be more production of consumer and lower-order capital goods.

[michaelskis]

Some of what he says is very interesting, however I do not completely agree with anything he said.

With #8 there is a theory *from Adam Smith that said that without regulation, competing business will come together in cooperation to increase fees and profits for both creating a monopoly.

A point that I don’t think that he even touched on is the “to help the poor, tax or charge the business” as if the business will just absorb the cost instead of rolling back into what they charge for their product in effort to offset the difference.

[jaws]

With #8 there is a theory *from Adam Smith that said that without regulation, competing business will come together in cooperation to increase fees and profits for both creating a monopoly.

These are continental hardliners, they don't give much respect to Adam Smith.