Has Economics Failed?

Politicians spread economic hokum in their attempts to get elected, and citizens ought to hold them accountable

by Thomas Sowell

 

It is especially painful for me, as an economist, to see that two small cities in northern California — San Mateo and Burlingame — have rent-control proposals on the ballot this election year. There are various other campaigns, in other places around the country, for and against minimum-wage laws, which likewise make me wonder if the economics profession has failed to educate the public in the most elementary economic lessons.

Neither rent-control nor minimum-wage laws — nor price-control laws in general — are new. Price-control laws go back as far as ancient Egypt and Babylon, and they have been imposed at one time or other on every inhabited continent. History alone should be able to tell us what the actual consequences of such laws have been, since they have been around for thousands of years.

Anyone who has taken a course in Economics 1 should understand why those consequences have been so different from what their advocates expected. It is not rocket science.......ill-informed voters who support price controls of many kinds, without understanding that prices convey economic realities that do not change just because the government changes the prices. It is as if someone’s fever was treated by putting the thermometer in cold water to bring the temperature reading down. You don’t get more housing with rent control.........Read more