Laying the Groundwork for Thinking about Liberty
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Laying the Groundwork for Thinking about Liberty. As we know, there are known knowns . There are things we know we know. We also know there are known unknowns. That is to say, we know there are some things we do not know. But there are also unknown unknowns:

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As we know, there are known knowns. There are things we know we know.

We also know there are known unknowns. That is to say, we know there are some things we do not know.

But there are also unknown unknowns:

the ones we don't know we don't know.

—Feb. 12, 2002, Department of Defense news briefing


Laying the Groundwork for Thinking about Liberty

~ or ~

One misguided zealot can wreak more havoc than a roomful of idiots.


Things that are true.

Things students believe are true.

Misconception

The Unknown

Knowledge

33% of UK adults believe that Mount Everest is in Europe.

– National Geographic, 2007

61% of American adults either do not believe in evolution or have no opinion.

– Gallup, February 2009


What We Think We Do

Misconception

The Unknown

Knowledge


What We Really Do

Misconception

The Unknown

Knowledge


Misconceptions Are the Enemy

(a real conversation)

As wages rise, more people enter the labor market.

Cool.


Misconceptions Are the Enemy

As wages rise, firms cut back on hiring.

Got it.


Misconceptions Are the Enemy

Therefore, price floors create surpluses.

No problem.


Misconceptions Are the Enemy

So, a minimum wage causes unemployment.

But we need a minimum wage because companies would pay zero if we let them.



What We Need To Do

Misconception

The Unknown

Knowledge



www.antonydavies.org

Shameless plug


Data source: Statistical Abstract of the United States, and Bureau of Labor Statistics


Data source: Statistical Abstract of the United States, and Bureau of Labor Statistics


Data source: Statistical Abstract of the United States, and Bureau of Labor Statistics



Workers

Firms

Find a firm willing to hire you at whatever price you can negotiate.

Goal: Get the highest wage you can.

Hire workers at whatever price you can negotiate.

Goal: Maximize profit.


Firms

Each firm gets a chart like this. The chart is the firm’s factory.

Each unit the firm produces is automatically sold for $4.


Suppose you can negotiate a price of $10 per worker.

All the workers will be hired  0% unemployment.


Now, impose a minimum wage of $15 per worker.

Only half of the workers will be hired  50% unemployment.




Inoculate Against Misconceptions mind to more knowledge.

Economic misconceptions are usually the result of pride and prejudice.


  • Prejudice mind to more knowledge.

  • Humans who work in the private sector are greedy.

  • Humans who work in the public sector are altruistic.


  • Truth mind to more knowledge.

  • The same humans with the same strengths, failings, and desires occupy both sectors.


  • Schizophrenic Voters mind to more knowledge.

  • The same people you claim are selfish in the marketplace you also claim are selfless in the voting booth.


  • Addict Voters mind to more knowledge.

  • People want to be forced to do the right thing!

Save us!


  • Pride mind to more knowledge.

  • Economic truths are opinion.


  • Truth mind to more knowledge.

  • The whole point of economic theory is to describe the real world.

  • Disconnects arise not from a failure of economics but from a lack of understanding of what economics is telling us.


  • Pride mind to more knowledge.

  • Unwillingness to admit limitations.


  • Truth mind to more knowledge.

  • It is impossible for an economy to provide everything that everyone wants.

  • Corollary: A majority vote does not bestow magical powers to circumvent limitations.


What is the point? mind to more knowledge.


What We Need To Do mind to more knowledge.

Dispel misconceptions with data and demonstration.

Inoculate by warning against pride and prejudice.


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