Economics is not as difficult to understand as politicians, the main stream media or too many Econ 101 profs make it out to be.

Every day for more than a decade at his web site Cafe Hayek Donald Boudreaux has provided coherent and valuable proof that basic principles like supply and demand — and more complicated, less intuitive things like the mutual benefits of free trade between peaceful nations — can be made explicable to the average man in the street.

Boudreaux, Wikipedia says, is “an American libertarian economist, author, professor, and co-director of the Program on the American Economy and Globalization at the Mercatus Center at George Mason University.”

But he’s really a good economist who writes like a good journalist.

Here, with this little lesson from today’s edition of Cafe Hayek about the importance of always looking at the broad and long-term impact of any economic activity, is simple but elegant proof of Boudreaux’s communications skills:

I am increasingly struck and distressed by how much of modern economics – economics since the time of J.M. Keynes (1883-1946) – is an elaborate practice of assuring the man-in-the-street that his economically untutored sense of the way economies work is, in fact, spot-on correct. The man-in-the-street, seeing only what Deirdre McCloskey calls the “first act” of economic phenomena, concludes that the first act is all that there is.

Does freer trade reduce domestic employment? The man-in-the-street concludes that it does because the man-in-the-street sees only the jobs lost to imports. Do minimum wages improve the welfare of low-paid workers? The man-in-the-street concludes that it does because the man-in-the-street never bothers to ask how employers and employees will adjust to mandated higher labor costs. Does more government spending improve the economy? The man-in-the-street concludes that it does because the man-in-the-street sees only the increased output and employment of those firms that receive the government spending. Must the government act to “correct” externalities? The man-in-the-street concludes that it must because the man-in-the-street neither bothers to ponder the processes that give rise to the apparent externalities nor questions the ability or willingness of government officials to act in the public interest.

If modern astronomy were akin to modern economics, a great deal of modern astronomy (although by no means all of it) would be devoted to explaining – with the use of fantastic mathematics and elaborate empirical demonstrations – that the man-in-the-street has been correct all along in believing that the sun and the planets and the stars all revolve around a stationary earth.

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