Here is a Little Economics Lesson

Here’s a little economics lesson: supply and demand. You put the supply out there, and demand will follow. — Rick Perry, U.S. Secretary of Energy

While the media is having fun at the expense of Secretary Perry’s asinine “economics lesson” it is worth pointing out that the very same publications that ridicule Perry perpetually peddle the exact same theory under the guise of “debunking” the imaginary lump-of-labor fallacy. Here is The Economist from yesterday telling its readers that the demand for goods and services is infinite:

By the 1990s governments and employers realised they were making pension promises they would not be able to keep. The idea that there is only a finite number of jobs to go round—the “lump of labour”—was more widely exposed as a fallacy. It became fashionable to argue that “we must work till we drop.”

Just for the record, the number of jobs to go round is indeed finite. The demand for goods and services is limited by the funds and credit available to consumers to purchase them and the time available to consume them. Those funds and credit are, in principle, limited even though those limits are, in practice, quite malleable and difficult to pinpoint. Expansion of credit beyond those limits invariably leads to collapse when debt loses its “credibility” — which is to say the reasonable expectation that the debtor can continue to service the debt.

Perry may be a total fool but he is only parroting what he has been taught by… “economists.”

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