April 30th, 2009

eyes black and white

Confusing constants and variables in Political Economics

If many top notch computer programmers, in a field where people are largely selected for their ability to understand causes and consequences, fail to understand the difference between a constant and a variable with respect to a given choice, how can you expect people from professions that don't thus select their members to fathom the difference?

And so most people, most bright people even, have the greatest difficulty understanding the difference between variables under their control, and variables not under their control — be them variables under the control of somebody else, hypotheses of a given thought experiment, natural phenomena, or universal constants.

Actually, the people who are trained to understand and explain the nature of a choice, its benefits and costs, are economists. And even most economists fail (cám ơn, Constant). Only "austrian" economists are properly trained, but they are marginalized in academia and media by statist economists whose very raison d'être is to produce cover stories for the depredations of the State, by denying of the very basic principles of economics.

This is how otherwise intelligent people believe that taxes and prohibition can abridge the consumption of services or goods with inelastic demand -- when by definition of inelastic demand, it will instead displace other consumption, and lead the victims of prohibition to poverty and crime when desperate measures are required to indulge in the inelastic behavior. What is constant is the inelastic demand for addictive drugs, that depends on the will of the people targeted by the prohibition, rather than the propensity of said people to abide by the law when the law is changed. And so what the prohibition law does is introduce more crime and law enforcement, displacing peaceful and productive activities at a huge cost to society.

The same people may believe that raising taxes and prohibitions (such as minimum wage) on services or goods with elastic demand will help them increase transfer of wealth from the designated victims (taxpayers, employers) to the designated beneficiaries (tax consumers, employees). But once again, what is constant when you enact laws is not the behavior of the victims, but their will, goals, desires and preferences. And so the consequence will instead be that less productive employees will not find a job, that taxed capital will either run away or be exhausted, taxed work will be less intensive, and black market activities will increase.

All in all, the only people who benefit from laws are the professionals who specialize in either enforcing or countering the law: scammers, whether legal (politicians) or il-, racketeers, whether legal (bureaucrats) or il-, and their goons with guns, whether legal (cops) or il-, and all the artificial "service" industries they create (lawyers, tax accountants, etc.).

Oppression thrives on people being systematically unable to properly understand the nature of choice and to apply this understanding to Political Economics. And yet, most anyone can be trained into understanding it. If you want to stop Oppression, start by extirpating the seeds it sows inside you. Learn (Austrian) Economics. Knowledge will make you free — and others with you.