Economic Fallacies

Economic Sophisms, is a collection of short essays showing with unparalleled imagination the fallacy of government intervention ... The most famous ... is "A Petition," in which the candle makers of France petition for relief from the "ruinous competition of a foreign rival who works under conditions so far superior to our own for the production of light that he is flooding the domestic market with it at an incredibly low price." The rival? The sun. The remedy requested? The mandatory shuttering of all windows. The result promised? The encouragement of ... the candle industry [and its suppliers].

Advance tickets for the exhibit were snapped up at once. The National Gallery, however, gave away about 2,000 tickets each day, good for that day only. Naturally, people lined up early. Some folks arrived as early as midnight, even though tickets were not given out until 10 o'clock. Scalpers arrived early too ... The fallacy underlying the prejudice against scalpers and their customers is the belief that the tickets are free. Of course, they are not. They cost hours waiting in line. The real cost of a ticket for any person is the value of the highest-ranking alternative use of those hours.

It is only when the ideology of nationalism ... is permitted to muddy clear economic thinking that common sense is tossed to the wind and obvious truths are traded for rank fallacies. As Bastiat taught, Robinson Crusoe would never shove a useful plank that has washed ashore back out to sea because the free good robs him of work. He doesn't have enough time to make all the things he wants, so the freed-up time represented by the plank is a windfall. Yet at the national level, people fall for that one all the time. For some folks, nothing could be worse than dumping.

One of the most pervasive fallacies in public opinion has been that of seeing the gain that one participant derives from a market exchange as having necessarily been extracted and subtracted from his partner ... After all, if I profit from an exchange with my neighbor, that profit can only have arisen from my neighbor’s presumed, corresponding, loss. It is ... an elementary economic insight ... that my profit must, at least prospectively, be in fact accompanied, not by a loss to my exchange partner (as in a "zero-sum game"), but by profit to him (a "positive-sum game").