March 29, 2006

Tax Cuts Are From Mars, Price Controls Are From Another Dimension

In recent years, I've become very interested in the workings of Economics. Having only taken a couple of graduate level courses in it, however, I must admit that often when the subject is discussed the eyes glaze over. This is why Thomas Sowell is one of my favorite Economists. Because he has a knack for explaining such complex concepts with real world examples.

Laws and theories of Economics are not that difficult to understand if you can move beyond the abstract to the concrete. So when I stumble upon something that even I can fathom, I like to share.

Tom at Libertarian Leanings has a great post about microeconomics and human behavior that explains "why price supports and price ceilings don't work and why the Kennedy, Reagan, and Bush tax cuts do work". People often see Free Market Capitalism as a "system" when in fact it really is nothing more than the natural state of an economy when market forces are allowed to play themselves out. It's with the systems of Socialism and Communism that you deal with controls that fly in the face of human behavior, the one variable that cannot be "controlled".

The laws of Economics are no less real than, say, the laws of Physics. You can try to influence them or change them or manipulate them. But when you do, you end up with so many unintended consequences. The laws of Economics and Physics are both constants in their particular equations. You can no more control economic forces than you can control the weather.

Anyway, go read Tom's post. He's the Economics guy and he at least knows what he's talking about.

Posted by: Gary at 07:15 AM | No Comments | Add Comment
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