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Slide 1
Slide 2
www.antonydavies.org Laying the Groundwork for Thinking about
Liberty
Slide 3
www.antonydavies.org As we know, there are known knowns. There
are things we know we know. We also know there are known unknowns.
That is to say, we know there are some things we do not know. But
there are also unknown unknowns: the ones we don't know we don't
know. Feb. 12, 2002, Department of Defense news briefing
Slide 4
www.antonydavies.org Laying the Groundwork for Thinking about
Liberty ~ or ~ One misguided zealot can wreak more havoc than a
roomful of idiots.
Slide 5
www.antonydavies.org Things that are true. Knowledge
MisconceptionThe Unknown Things students believe are true. 33% of
UK adults believe that Mount Everest is in Europe. National
Geographic, 2007 61% of American adults either do not believe in
evolution or have no opinion. Gallup, February 2009
Slide 6
www.antonydavies.org Knowledge MisconceptionThe Unknown What We
Think We Do
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www.antonydavies.org Misconception Knowledge The Unknown What
We Really Do
Slide 8
www.antonydavies.org Misconceptions Are the Enemy (a real
conversation) As wages rise, more people enter the labor market.
Cool.
Slide 9
www.antonydavies.org As wages rise, firms cut back on hiring.
Got it. Misconceptions Are the Enemy
Slide 10
www.antonydavies.org Therefore, price floors create surpluses.
No problem. Misconceptions Are the Enemy
Slide 11
www.antonydavies.org So, a minimum wage causes unemployment.
But we need a minimum wage because companies would pay zero if we
let them. Misconceptions Are the Enemy
Slide 12
www.antonydavies.org Misconceptions Are the Enemy
Slide 13
www.antonydavies.org Knowledge Misconception What We Need To Do
The Unknown
Slide 14
www.antonydavies.org How Do We Dispel Misconceptions? 1.Data
2.Demonstrations
Data source: Statistical Abstract of the United States, and
Bureau of Labor Statistics
Slide 17
www.antonydavies.org Data source: Statistical Abstract of the
United States, and Bureau of Labor Statistics
Slide 18
www.antonydavies.org Data source: Statistical Abstract of the
United States, and Bureau of Labor Statistics
Slide 19
www.antonydavies.org How Do We Dispel Misconceptions? 1.Data
2.Demonstrations
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www.antonydavies.org WorkersFirms Find a firm willing to hire
you at whatever price you can negotiate. Goal: Get the highest wage
you can. Hire workers at whatever price you can negotiate. Goal:
Maximize profit.
Slide 21
www.antonydavies.org Firms Each firm gets a chart like this.
The chart is the firms factory. Each unit the firm produces is
automatically sold for $4.
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www.antonydavies.org Suppose you can negotiate a price of $10
per worker. All the workers will be hired 0% unemployment.
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www.antonydavies.org Only half of the workers will be hired 50%
unemployment. Now, impose a minimum wage of $15 per worker.
Slide 24
www.antonydavies.org This demonstration can be done in 20
minutes and students immediately get two important lessons:
1.Minimum wage causes unemployment. 2.Left alone, firms will not
pay zero.
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www.antonydavies.org Demonstration and data remove
misconceptions, opening the mind to more knowledge.
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www.antonydavies.org Economic misconceptions are usually the
result of pride and prejudice. Inoculate Against
Misconceptions
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www.antonydavies.org Prejudice Humans who work in the private
sector are greedy. Humans who work in the public sector are
altruistic.
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www.antonydavies.org Truth The same humans with the same
strengths, failings, and desires occupy both sectors.
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www.antonydavies.org Schizophrenic Voters The same people you
claim are selfish in the marketplace you also claim are selfless in
the voting booth.
Slide 30
www.antonydavies.org Addict Voters People want to be forced to
do the right thing! Save us!
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www.antonydavies.org Pride Economic truths are opinion.
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www.antonydavies.org Truth The whole point of economic theory
is to describe the real world. Disconnects arise not from a failure
of economics but from a lack of understanding of what economics is
telling us.
Slide 33
www.antonydavies.org Pride Unwillingness to admit
limitations.
Slide 34
www.antonydavies.org Truth It is impossible for an economy to
provide everything that everyone wants. Corollary:A majority vote
does not bestow magical powers to circumvent limitations.
Slide 35
www.antonydavies.org What is the point?
Slide 36
www.antonydavies.org What We Need To Do Dispel misconceptions
with data and demonstration. Inoculate by warning against pride and
prejudice.