Almost Everything We're Taught Is Wrong

· Wednesday, August 24, 2011

We grow up learning that some things are just bad: child labor, ticket scalping, price gouging, kidney selling, blackmail, etc. But maybe they're not.

What I love about economics is that it can show that what seems harmful is actually good for society. It illuminates what common sense overlooks.

This is all covered in the eye-opening book "Defending the Undefendable" by economist Walter Block.

Most people call child labor an unmitigated evil. David Boaz of the Cato Institute and Nick Gillespie of Reason.tv say that's wrong.

"If we say that the United States should abolish child labor in very poor countries," Boaz said, "then what will happen to these children? ... They're not suddenly going to go to the country day school. ... They may be out selling their bodies on the street. That is not an improvement over working in a t-shirt factory."

In fact, studies show that in at least one country where child labor was suddenly banned, prostitution increased. Good economics teaches that as poor countries get richer and freer, capital investment raises the productivity of labor and child labor diminishes. There's no shortcut through government prohibition -- unless you like starvation and child prostitution.

What about price-gouging? State laws attempt to prevent people from charging "unconscionable" prices during emergencies.

"If I'm in the neighborhood of Hurricane Katrina," Boaz said, "what I want is water and ice and generators. ... If you are in Kentucky (and) you've got 10 generators in your store, are you getting up at 4 a.m. to drive all day to get to Louisiana to sell these generators if you can only sell them for the same price you can sell them for in Kentucky? No, you're going to go down because ... you can sell them for more."

Also, if prices rise during an emergency, that's a signal for people to buy only what they most need. That leaves more for everyone else. If the price remains low, an incentive to conserve is lost.

Ticket scalpers are seen as sleazy guys who cheat you by marking up the price of tickets. Profits go to middlemen instead of the performers. What good could they possibly do?

"I like to think of ticket scalpers as the guy who stands in line so that I don't have to," Gillespie said.

Time spent in line is part of the ticket cost. Scalpers let you pay entirely in money, rather than partly in valuable time.

Most people say that selling body parts is wrong.

"It also seems wrong to have people dying because they can't get a kidney," Boaz said.

Some 400,000 Americans are on a waiting list now for a new kidney, and they are not allowed to pay for one.

"We sell hair. We sell sperm. We sell eggs these days." Boaz added.

Gillespie added, "The best way to grow the supply and allow more people to live is to allow the market to price those organs."

Maybe the most counterintuitive position argued on my show was that blackmail should not be a crime. Blackmail (unlike extortion) is the demand for money in return for withholding information. Robin Hanson, a George Mason University economist, defends blackmail.

"The thing you're threatening when you're threatening blackmail (is) gossip," Hanson said. "If it should be all right to tell people, it should be all right to threaten to tell people."

What we don't like, however, is the blackmailer saying, "Pay me to keep quiet."

"But the effect of that is to make people behave," Hanson said. "If we (allow) blackmail, people behave even more because they are even more afraid of what might happen if they don't."

Maybe Ponzi-schemer Bernie Madoff would have been caught earlier?

"That's right. ... Blackmail is actually a form of private law enforcement."

Also, since gossip is free speech, blackmail is simply selling the service of not engaging in free speech. Why should that be outlawed?

I subtitled my last book, "Everything You Know Is Wrong." I was exaggerating, of course, but many things we're taught are fallacies. That's why I like economics. It explodes fallacies.

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Comments

Rob Risko

The classically trained liberal (i.e. public school educated) struggles with this argument in two ways.

First, optimism is a concept that is only applied by liberals to himself or other liberals. Society will not then improve except that a liberal directs and supports the liberally-minded improvements that approach the goal of independence. What is missed is that this is a pessimistic view that personal responsibility is idealistic and unattainable.

Second, the liberal will bravely combat all forms of evil as evil. While this appears noble, Mr. Stossel has effectively presented the second and third order effects that a liberal does not consider. In pursuing a singular focus on one evil without regard for the potential impact of derailing incremental improvements as a result of hardship, the liberal effectively perpetuates an environment of pessimism where the expected lack of personal responsibility is engineered by enabling the second and third order effects through the defeat of the first order hardship as a teaching tools.

Persistence in the face of failure is the hallmark of a successful person. Crutches and bailouts only serve to terminate a lesson before the real learning occurs.

Thank you for the thought provoking article.

Posted August 24, 2011 at 8:40:29 AM


Mike McGinn

"Ticket scalpers are seen as sleazy guys who cheat you by marking up the price of tickets. Profits go to middlemen instead of the performers."

Actually the performer already got a mutually agreeed to level of profit when they sold the ticket to the future scalper. If the performer wanted more profit, he/she should have charged more for up front.

Stossel's point is spot on. The ticket scalper is merely factoring in a labor cost (i.e., standing in line for the ticket) and market-based supply vs. demand pricing.

Posted August 24, 2011 at 12:08:48 PM


Howard Last

Selling body parts is no different then selling any thing else you lawfully own. It is your kidney, you own it. If you can't sell it then you don't own it. The argument against selling kidneys is that only rich people will get kidneys. For that argument to hold water anyone involved with kidney transplants should also not make money for their service. So hospitals, doctors, the organization arranging the transplant, etc, should also not make money. How many of these groups would be involved with transplants. Did anyone say few to none?

If you own a ticket, you can sell it. The amount you get for it is between you and the buyer. Is anyone else affected?

Posted August 24, 2011 at 12:12:08 PM


Doktor Riktor Von Zhades

I recall once, while working in the USPS, somebody came in and wanted to inform a postal inspector of some information. I told that person, that they should contact them through a certain phone number and gave it to them. I inquired however, as to the nature of the info, and, was told that the corner store was selling individual stamps for .50 cents. You should have seen the look on the face of this person, when they found out it was not a crime. Basically, it's the same scenario as the scalper. It's HIS tickets, he can charge what ever he wishes.

Posted August 24, 2011 at 6:56:17 PM


MichaelSSEC

What's fascinating is that those who subscribe to Keynesian economic fallacies adore government regulation of every economic transaction -- except those involving their own money. When it's YOUR money at stake, they want everything tightly regulated, taxed and controlled. But when their own money is hanging in the balance, suddenly (and only then) they become Capitalists. So they intuitively understand that their sacred economic ideas do not work in reality. They just think their fantasy-economics should be forced down everyone's else's throats.

You see it everywhere. The Kennedy family filed lawsuits with preposterous foundations to avoid paying taxes on the family fortune. John Kerry registered and moored his boat in a state where he does not live, to avoid paying high Massachusetts taxes. Nancy Pelosi thinks everyone should hire union labor -- except her own enterprises which skirted CA labor laws to hire exclusively non-union workers. Michael Moore believes the government should regulate how many blacks every employer should hire and force them to hire more if some arbitrary figure isn't realized, yet on his own films he is notoriously reluctant to hire minorities. Tim Geithner thinks we should all pay more taxes, but he can't be bothered to pay his own. Barack Obama thinks "at some point you've made enough money" but he's not volunteering to donate any of his millions to the IRS beyond what's strictly required by law.

It goes on and on. When it's YOUR money, they're generous and demand more. When it's their own, they're out for blood. It's a flagrant admission that they don't really believe in the economic ideas they claim to believe.

Posted August 24, 2011 at 10:07:58 PM


Mr.Bones.

The citizens of this once great country have this foolish idea the law protects them from people who do bad things.It's this type of thought that puts our whole way of life in jepordy.The idea that some words written on a piece of paper and tucked away in a building somewhere will stop anyone from doing harm to someone else is foolish.If you're not taught it's wrong:To Lie Cheat and Steal as you're growing up.All the laws in the world will not stop you from doing so later in life.A criminal worrys about being caught!They rarely worry about the crime there about to do.Most of our laws make honest folks in to criminals. Because so many of us have no idea we're even breaking a law.[which probably shouldn't be a law]The more laws a society has.The more corrupt that society is.We have a million "LAWS" most of which are not nessesary.Need i say any more! Semper Paratus.

Posted August 25, 2011 at 7:45:49 AM


David S. McQueen

What John Stossel has done is demonstrate the admirable quality of critical thinking. Liberals, generally, tend to think emotionally, not critically. Adolescent logic and the inability to think in abstract concepts is the mainstay of current liberal thought. That is why most liberals become more conservative in their thinking as they mature.

Some, like Obama and his ilk, are not true liberals. They are political pragmatists, but pose as liberals in their public statements. Obama postures in public wearing rolled-up shirt sleeves, but vacations in the ultra-wealthy enclave of Martha's Vineyard. Even riding a bus, it isn't Greyhound but a million dollar tricked-out ride bought in Canada.

Liberalism is a personality disorder, a sign of emotional immaturity, that most people grow out of. Notice how many Obama appearances are in college venues (a favorite trick of leftists). Young people are not politically sophisticated and are easily swayed with emotional argument.

A conservative candidate, using logic, facts, critical thinking and adherence to principles could easily defeat a phony lib like Obama. They are advised, however, by "strategists" who claim they can't win without the "moderate" vote. As a result, they alienate as many right-wingers as they gain from the center. See also Bob Dole and John McCain.

Posted August 25, 2011 at 8:18:12 AM


Ted R. Weiland

One of the the things we've been taught that is wrong is that the U.S. Constitution is a Christian and/or Biblical contract. How can a document that promotes the will *of* the people over Yahweh's will *for* the people be Christian or Biblical. See "Bible Law vs. the United States Constitution: The Christian Perspective" at http://www.missiontoisrael.org/blvc-index.php.

Posted August 25, 2011 at 10:09:36 AM


Teri

Good grief! I don't even know where to start with this one. Talk about being able to justify anything! Sheesh! We are to do what is right! We are not in charge of the outcome. Yes, it may appear for a time that bad things result from right actions but to not do right is not a choice for most of us. Even the USA had growing pains. All developing nations go through them. Child slavery is not right, scalping (ie taking advantage just because you can) is not right. Extortion is not right either! I don't care how hard Mr. Stossel tries to justify these things!

Posted August 25, 2011 at 11:23:09 AM


Teri

"How can a document that promotes the will *of* the people over Yahweh's will *for* the people be Christian or Biblical."

Because God origanated free will by giving all people the choice to obey him or not.

Posted August 25, 2011 at 11:25:53 AM


Ted R. Weiland

Teri, think about what you wrote. If "free will" makes a government Christian or Biblical, then every government that has ever existed has been Christian or Biblical.

To be Biblical, a government must be governed by Yahweh's morality as found in His commandments, statutes, and judgments. In nearly every article and amendment, the Constitution is found not only to be antithetical to Yahweh's morality but antagonistic to His sovereignty.

See "Bible Law vs. the United States Constitution: The Christian Perspective" at http://www.missiontoisrael.org/blvc-index.php.

Posted August 25, 2011 at 11:54:32 AM


Chris

The only thing wrong with child labor is don't have enough of it. I started working when I was 8 years old. Everyone I knew started working in the fields or something around 8 or 9 years old. I was fired the first time when I was 8 years old too! Dissappointed me but I was young and had little concept of it being bad, so I just saw it as what it was, I was not good enough yet to be paid for this job. Next year I was 9 years old, I went back to work and now I was good enough to hold on to my job. I was not great at it, picking berries, but I was good enough to make some money, money I could spend as I saw fit, and not get fired again!

When I was older and was laid off from a job, it was not a dramatic event, it was uncomfortable because my wife and I needed the money, but I knew it was not because I was a bad person, something many do not understand when laid off or fired! So I just went out and found another job in a few days, as I had learned when I was 9 years old. Therefore, we need child labor, gives us more well rounded people later in life!

Posted August 25, 2011 at 4:19:37 PM


Patrick

Teri, all these things ARE bad, but as Mr. Stossel points out the alternative is Worse!!!!

Posted August 25, 2011 at 11:43:00 PM


Patrick

Teri, good for you, you got the free will thing right.

Ted is just another one with his own personal agenda, namely making money and a so called "name" for his self. Don't waste your time.

Posted August 25, 2011 at 11:50:13 PM


Ted R. Weiland

Patrick, where is your evidence for such claims. If you cannot prove your accusations, you have libeled me and are accountable to Yahweh for your sin.

Posted August 26, 2011 at 8:41:52 AM


bluebuss

yeah, so, if we are against child sweat shop workers, then we must be FOR child sex slavery? i'll tell you this only a dirty republican can come to that conclusion. some of these posts make me absolutely sick.

Posted August 26, 2011 at 9:12:29 AM


Jennifer

@ bluebuss: I believe Stossel is a self-proclaimed Libertarian, but feel free to continue spewing uneducated, unreasoned emotional responses about Republicans rather than facts and reasoned arguments, thereby proving the point.

Posted August 26, 2011 at 1:44:37 PM


regina rhodes

This is so thought provoking. scalpers are just middlemen, what is illegal about that, our country is full of them. And most of us engaged in some type of child labor when we were little. My mother had a job jar, we didn't get paid. I certainly don't like the idea of children working hard in sweat shops, but the child prostitution I hear about in Mexico and Thailand makes me sick. Keep it up Mr. Stossel, may you always keep us on our toes.

Posted August 26, 2011 at 5:16:04 PM


Just saying first

Bluebuss, why don't you try a little reading comprehension? Stossel does not say that at all, he is talking about the unintended consequences of impoing the liberal "sainted" will on people. As for the responses here making you sick, well, what about exercising that free will and move on to the HuffPost? No need to vomit all over yourself...and you are not convincing anyone here with your knee jerk liberal reaction.

Posted August 27, 2011 at 2:39:24 PM


bluebuss

@jennifer - i assure you the cato institute is purely republican.

just saying - i'll read whatever i want and comment however i feel.

and you repukes would be bent out of shape have we suggested that you approve of child sex slavery.

Posted August 27, 2011 at 3:51:37 PM


bluebuss

@jennifer - the only uneducated comment is the one where you completely ignore the fact that the cato institute is a republican think tank. nice try, nice slant, now i am beginning to understand how republicans who are uneducated, nor understand law keep getting elected.

just saying - i'll read anything i want, and will also comment on anything i want. knee JERK? yeah.

Posted August 27, 2011 at 3:57:11 PM


Jody

@bluebuss - Is there some reason for the nastyness? I believe you are the only person here being snotty and beligerent.

No one (particularly Mr. Stossel) said or implied that Liberals are willing to trade child sweat shops for child sex slavery. His point was that the making of laws to end child labor frequently has the untended consequence of increasing child prostitution. In other words (I'll use small words, just for you,) pushing your good intentions on someone else, without understand the whole problem, may have unintended (and bad) consequences.

There. Get it now? Also, while I agree that you have the right to comment on anything you wish, you won't convince anyone of anything as long as you act like a petulant child.

Posted August 31, 2011 at 2:24:47 PM


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