In a conversation this evening, I mentioned that one motivation for this blog was to combat fallacy. My counterpart said that I was the first person, besides himself, in years he has heard use that word.
That caused other conversations where I pointed out fallacies to flash through my mind. I often receive bewildered looks when I say that word. I assumed the looks reflected disagreement. But, maybe they simply didn’t know what I meant and they didn’t want to ask.
I admit, before I became familiar with the term I would not have known. I think the non-intuitive nature of the meaning of fallacy may be on par with economic rent. Neither term is used enough in everyday language to have gained an intuitive understanding.
For example, most people intuitively know that profits can be made in capitalism. They do not intuitively know that profits can also be made from economic rent. Economic rent is such a blind spot, in fact, that most folks commonly mistake profits from economic rent as profits from capitalism.
They also mistake fallacy for legitimate argument.
So, what is a fallacy?
A fallacy is faulty reasoning where the conclusion doesn’t follow from the premises given. A fallacy doesn’t necessarily say the conclusion is wrong, just that the conclusion can’t be made from the premises given.
Here’s an example of a fallacy:
It rained here today, so it will not rain tomorrow.
My premise is that it rained today. My conclusion, based on that premise, is that it will not rain tomorrow. But, rain today usually has no bearing on whether it will rain tomorrow.
Notice, my conclusion may be correct. It may not rain tomorrow. But most people will agree that the logic I used to arrive at my conclusion is not correct.
Fallacies come in many varieties. There are common fallacies that you have probably heard of like ad hominem attacks or red herrings and many more.
Over the years, I have found the list of informal fallacies at the Nizkor Project website to be a handy and valuable resource for checking and re-checking to help me identify fallacy.
Being able to spot and identify fallacies is like the Jujitsu of discussion allowing you to make progress without having to state and defend a case of your own. Simply pointing out incorrect reasoning turns the argument back on your discussion partner and causes them to rethink their logic.
Most important, it often focuses the discussion on the root cause of the disagreement — the faulty reasoning on which the conclusions are based.
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Sorry to be so late to this party, but I was fascinated to find the term ‘economic rent’ used in the same sentence as the word fallacy, but only to illustrate how each term is misunderstood due to lack of common usage. The reason I found this fascinating is that the various theories of ‘economic rent’ themselves have long proved fallacious, and were adroitly torn apart almost as quickly as they were thrice trotted out in different forms!
Rather than repeat what has been already been repeated ad nauseam, Google “economic rent” and fallacy, and you will see some very enlightening articles on the history of the theory of economic rent, as well as the well reasoned arguments that made the theory in all its forms untenable — for all but the willfully blind and politically motivated.
Thanks for the comment, Steven, and for the good example of ad hominem fallacy.
Point well taken. Please strike “for all but the willfully blind and politically motivated”, it was flagrantly ad hominem and totally uncalled for.
Great. I’m always learning. I may simply not understand economic rent. Maybe you can help me.
As I understand it, the sugar market in the US provides an example of economic rent. Tariffs on sugar imports and quotas artificially keep the price of sugar in the US higher than it otherwise would be. This benefits US sugar producers because they get to sell sugar for more than they otherwise would if competition with foreign sugar producers was more open.
Is the higher price they receive for sugar not economic rent? If not, what is it? Why do sugar producers lobby to keep that trade policy in place?
My problem is rooted in the hazards of labeling. Even bogus concepts acquire a mystique and are given persuasive weight once ‘branded’ with an esoteric, euphemistic label. The main problem with economic rent, which I consider a tangled web, is that it is multiple concepts and definitions which are conflated under the same, overly general and ill-defined label. The concept of economic rent itself has undergone multiple revisions, with every definition given thus far having revealed fatal flaws.
The quest for a universal definition of the ever-elusive economic rent arises from a way to identify so-called “unearned income”, whatever that means, which may have arisen from artificial controls, but which then provides an impetus for even more artificial controls. At its core, however, economic rents cannot escape its normative underpinnings, as people attempt to define what can be argued is ‘fairly’ captured and what is not. For example, the oft-used contemporary definition: “…any payment to a factor of production in excess of the cost needed to bring that factor into production…” is a logical positive, but it always begs the question of how to identify a universal reason for such an excess payment. And that’s where the tangled web, the devil’s complex details, are revealed.
For your sugar imports/tariffs example to be useful, we must first identify what factors have caused US prices to be so high that foreign interests are even able to compete – even after accounting for additional distribution and other natural costs.
1) Are higher US producer prices merely the result of already capturing economic rent, with further rent-seeking lobbying for additional protection?
2) Are US producers being held to greater and more expensive regulatory standards to which their foreign counterparts are not held? Or is it deeper than that?
3) Are there other rent-seeking entities involved in their supply chain that have made their processes artificially more expensive?
These are just three of myriad questions that can and must be entertained. Is it a damned if you do or don’t false choice? For example, with tariffs in place it might be argued that both the US sugar producers and the government are capturing rents in the form of unearned income that might otherwise rightly and necessarily be captured by both the more competitive foreign producers in the form of more reasonable profits (from lower prices, else they cannot compete). Likewise the US consumers would capture some of those rents in the form of cheaper prices.
Without tariffs, however, it might be that the foreign producers are capturing economic rents only because they employ labor that is not protected in the same way US labor is protected. Or, their government might be subsidizing their efforts to undermine US producers (which that doesn’t clean US producers’ hands if they are dirty, but it should be factored in). Then again, it is possible that the primary reason for their competitive price position is a mere natural surplus of resources, other than labor, which makes it possible to undercut prices in a way that results in the most efficient distribution or resources. In such a case the sugar producers here might rightly suffer, some may argue and judge, with rent capture, once again, inuring to the benefit of consumers and the fortunate holders of surplus of goods.
I haven’t even scratched the surface, of course, but that’s a start anyway.
Thanks Steven. I appreciate the response. So, it sounds like the concept of economic rent isn’t so much fallacious, as it is complicated. Is that fair?
On that, I would agree.
It seems like you agree that there are sources of profits to some parties that are not entirely market-driven. Right, wrong, indifferent, fair or not.
The point I was trying to make in this post is that such profits often mistakenly get blamed on market forces or failures that often, as you point out, result in even more artificial controls, which often result in even more such profits, continues to feed the cycle.