Wednesday, July 11, 2012

Difficult Economics Lessons

One of the more difficult lessons to teach economics neophytes -- and, many times, trained economists -- is that economic theory cannot say anything definitive about subjective statements, such as what's better, good, bad or worse. Let's try a few examples to make the point.

Cabernet sauvignon wine is better than fume blanc. Turkey is better than pork. Matter in the solid state is better than the plasma state. Each of those statements begs the question: Where's the proof? With subjective statements such as those, disagreements can go on forever. It's simply a matter of personal opinion. One person's opinion of what's better or worse is just as good as another's.
Contrast those statements with objective ones, such as: Water is 2 parts hydrogen and 1 part oxygen. Scientists cannot split the atom. The distance in degrees from the equator to the North Pole is 90. With positive statements such as those, if there's any disagreement, there are facts to which one can appeal to settle the disagreement. For example, if one person says scientists can split the atom and another says they cannot, a trip to Stanford's linear accelerator to watch atoms being split settles the matter. However, if you say fume blanc is better than cabernet sauvignon and I say cabernet sauvignon is better, our disagreement can go on forever because there are no facts or figures to which we can appeal.

Read more: http://townhall.com/columnists/walterewilliams/2012/07/11/difficult_economics_lessons

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