Ten pillars of economic wisdom
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From chapter 2 of The Joy of Freedom: An Economist's Odyssey. By David R. Henderson.  

An inspiring blend of memoir and policy analysis -- recapping some of the reasons for fighting for freedom that many people overlook

   1. TANSTAAFL: There ain't no such thing as a free lunch.
   2. Incentives matter.
   3. Economic thinking is thinking on the margin.
   4. The only way to create wealth is to move it from a lower valued to a higher valued use. Corollary: Both sides gain from exchange.
   5. Information is valuable and costly.
   6. Every action has unintended consequences.
   7. The value of a good or service is subjective.
   8. Costs are a bad, not a good.
   9. The only way to increase a nation's real income is to increase its real output.
  10.  Competition is a hardy weed, not a delicate flower.

Read a talk by Henderson here.   

Here are some quotes from it;

“Ultimately capitalism will beat socialism because capitalism is more fun.”

On unintended consequences

“The Federal Government is acting [by funding flood insurance] as if we […] want people to locate on flood plains.”

“Economists have estimated that steel quotas designed to save U.S. jobs cost the U.S. consumer $750,000 a year per job saved. That’s a year per job saved, and a job is a $40,000 job. Why? Because they are focusing on the interest group that wants those jobs. They don’t care about the consumers whose interests are dispersed, and they aren’t even aware of the cost to them.”

On anti-terrorist regulation

“Now, am I sympathetic with the idea of maybe on the margin cutting back on some civil liberties in order to go after specific cases of terrorism? I am — not in the sense that I favour them but in the sense that I’m willing to look at them. But that’s not what’s going on. What’s going on is wholesale, massive reductions in civil liberties, with no focus, going after lots of people that have nothing to do with terrorism. By the way, one of the things defined in the USA Patriot Act is domestic terrorism.

The attack on September 11th broke three different terrorist laws. In other words we already have laws on the books that they broke. And of course, they murdered. But the domestic terrorism includes threatening government officials. It also includes harbouring people who might have committed some kind of violence.

Now, I’m not someone who believes in violence, but let’s say my daughter, who turned 17 yesterday, becomes a Marxist in two years – perish the thought – but let’s say she does, and she becomes one of these anti-global people who wants to keep people in Third World countries starving. I hope she doesn’t, but let’s say she does. And she goes to an IMF conference, and she hits a cop or something, and then she comes home and lives with me. I’d be harbouring a domestic terrorist, and that’s a serious crime.

So the government is actually going to put people in the position of being criminals who never thought they’d be criminals for the standard, normal, everyday things they’re doing. That’s the kind of thing that’s going on.”

Some chapter headings

“Maybe We Can’t End Death But Let’s Take a Shot at Taxes.”

“The Environment: Own It and Save It.”

“The key to having the environment treated well is to just have someone own it. And the second best — a distant second best — is to tax pollution. If you think through the problems, taxing pollution just doesn’t work well. You don’t know what level to set, and people’s rights can still be violated because they’re still being polluted.”

“Now, […] I actually think we might need taxes, and I don’t like that, because I do think taxation is theft. […] we might need a certain amount of theft … .  I think we need taxes, for every level of government, to be […] under 3% of GNP. [At that level]  you really have to mess up badly to have really damaging taxes. Whether taxes are on income, or on property, or on sales – that matters. But what matters more is the level — and I want it to be a lot lower. So take any tax that exists today and I think it’s too high.”

“It does help … to have competition in the media, but the major competition is not Fox, […]. The major competition is the Internet.”

“A Senator was saying we’ve got to have uniform standards at airports for security. And I thought, does this guy ever play poker? Uniform standards? Which means once you figure them out, you know how to do it anywhere. What you want is changing standards that aren’t predictable. And that’s what we would get with private airports with private airlines and so on.”


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Last modified: May 05, 2006