Thursday, March 24, 2005

The Economics of Tang - OpinionJournal, Deidre McCloskey: "It's the balloon theory again, that confusion of 'continual motion' with desirable motion. It is not good in itself to be set to work on raising the Great Wall of China, inventing and improving the sciences and arts that have to do with great-wall making, instead of being allowed to get on with one's life and improve the sciences and arts by making universities and museums, houses and automobiles, for us all. It's what is known among economists as the 'Tang' fallacy, which is not about the Chinese dynasty but about the powdered orange drink of that name, which was asserted in its advertising to be a spin-off of the American space program. The fallacy is to think that we would not have gotten even more innovations if we had left the money in the hands of ordinary people instead of throwing it away on moon shots. 'Job creation' through this or that egregious public project--the Big Dig in Boston, the tunnel under 50 miles of 'The Heart of Holland'--is not the goodness of a market economy. After all, notably poor economies often have plenty of jobs. Unemployment was not the problem faced by the slaves in the silver mines of Attica."

Add publically funded football stadiums for privately owned teams to the litany above. And suggestions that hurricanes are good for the economy.

Heh. Broken windows on the moon.

It was said that in Strom Thurmond's declining years as the senior Senator from South Carolina he maintained his hair color with daily Tang dips.



Blogger EclectEcon said...

A superb example of using the counter-factual: what would have happened to jobs and real estate values if the stadium had not been built? Best answer: not much.

9:14 PM  

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