Johann von Goethe, famed writer and scholar from two centuries ago, said that "Truth must be repeated again and again, because error is constantly being preached round about us." That certainly applies to our time. We are bombarded with propositions proven to be false time and again. People give undeserved reverence to politicians and influential figures whose self-serving opinions hurt more than they help. All knowledge is not truth, and even the brightest scientists, professors, physicians, and researches often give themselves credit for knowing much more than they actually do. Their research and pronouncements are often guided by politics rather than a quest for truth, reinforcing the presuppositions of the consensus.
Climate science, dietary guidelines, health practices, and a long list of other areas of expertise have a significant effect on our lives because they prevail upon official government policy and finance. They often fly in the face of truth and use the veil of officialdom to hide uncomfortable realities. Real science can only delineate certain laws of nature, it cannot tell us everything, nor tell us how we should apply the laws. Science can tell us how to put a man on the moon. It can never, under any circumstances, tell us if we should put a man on the moon. That is a matter of opinion, of weighing the costs and benefits based on imperfect human judgment. Science can tell us how to build windmills for generating electricity. It cannot tell us if we should build them. That is subject to limited human judgment regarding expected gains and losses. Science can tell us how to build a nuclear bomb and what will happen if it is detonated. It cannot, however, tell us if we should detonate it above a city of a millions people. That is a human decision, weighing all of the consequences, most of which are unknowable.
Economics is perhaps the most familiar and glaring case in point with the present economy in shambles and economic fallacies being preached as gospel truth. Economists are important because those who are influential with the politicians affect the lives of everybody through policy implementations. Those who are influential with the politicians, however, are the ones who tell them what they want to hear. It is apparent that most politicians care not what the truth is, but rather embrace whatever will help advance their own agenda.
Economics, like the physical sciences, legitimately can only tell us how things work. It can delineate the laws which govern the economic relationships in society. It can tell us cause-and-effect, the potential results of various actions. The basic laws of economics have been known for a long time. They are not that difficult to understand, and everyone who takes an elementary economics class learns about them. They are valid and unavoidable. The trouble with economic laws, however, is that they describe a system made up of billions of changeable, uncontrollable inputs on a daily basis. All decisions that every individual makes are economic decisions. They affect and are affected by the actions taken by others. It is an extremely complex system which is not subject to direct control by political manipulation. It is not a machine with levers and knobs.
Every attempt to control the economy has unforeseen, often profound, consequences. People are not like atoms or molecules which have precisely measurable and predictable properties. People change their minds. What they like one day, they may, for whatever reason, hate the next day, witness the notorious herd mentality in financial markets. When politicians attempt to manipulate the economy, typically at the behest and with the blessings of many eminent economists, individuals react to avoid the negative consequences as much as possible. Black markets arise from controls on prices or quantities of goods, and gang violence arises from black markets. Minimum wage laws increase unemployment among the least skilled workers, those who it is purported to help. Protectionism raises prices for domestic products and makes exporters less competitive, offsetting expected gains in employment. And so on...
Economists who jump on the political bandwagon to solve social problems necessarily have to ignore the laws of economics. They have done this brilliantly with modern macroeconomics, which treats economic laws as quaint niceties, annoyances which get in the way of their good intentions. As we have seen with "stimulus packages," interest rate manipulations by monetary authorities, cash-for-clunkers, and truckload of other clever programs, good intentions don't give good results when they ignore economic law.
Dan McLaughlin is a columnist for The Post-Journal. Contact him at danmcl999@roadrunner.com.