Liberals Do Not Understand Basic Economics

According to a Wall Street Journal Opinion piece by Daniel Klein, Self-identified liberals and Democrats do badly on questions of basic economics.

Klein asked 4,835 people eight questions that are answered by basic economics and asked them to identify their political ideology.  This is the average amount each political group answered incorrectly out of eight:

Very conservative, 1.30;Libertarian, 1.38; Conservative, 1.67; Moderate, 3.67; Liberal, 4.69; Progressive/very liberal, 5.26.

Here is more about the eight questions:

Consider one of the economic propositions in the December 2008 poll: “Restrictions on housing development make housing less affordable.” People were asked if they: 1) strongly agree; 2) somewhat agree; 3) somewhat disagree; 4) strongly disagree; 5) are not sure.

Basic economics acknowledges that whatever redeeming features a restriction may have, it increases the cost of production and exchange, making goods and services less affordable. There may be exceptions to the general case, but they would be atypical.

Therefore, we counted as incorrect responses of “somewhat disagree” and “strongly disagree.” This treatment gives leeway for those who think the question is ambiguous or half right and half wrong. They would likely answer “not sure,” which we do not count as incorrect.

1) Mandatory licensing of professional services increases the prices of those services (unenlightened answer: disagree). 2) Overall, the standard of living is higher today than it was 30 years ago (unenlightened answer: disagree). 3) Rent control leads to housing shortages (unenlightened answer: disagree). 4) A company with the largest market share is a monopoly (unenlightened answer: agree). 5) Third World workers working for American companies overseas are being exploited (unenlightened answer: agree). 6) Free trade leads to unemployment (unenlightened answer: agree). 7) Minimum wage laws raise unemployment (unenlightened answer: disagree).

If you find that your thinking does not agree with basic economics, I recommend that you read Thomas Sowell’s, Basic Economics: A Common Sense Guide to the Economy.  That’s an excellent start.  If you don’t care to take the time to educate yourself with basic economics, then at least consider the possibility that your thinking may be incorrect.