“The good news is that free markets work. The bad news is that many people don’t believe that free markets work.”
That’s how I begin my review of Phil Gramm and Don Boudreaux’s new book, The Triumph of Economic Freedom. It is actually harmful that people believe things about economic history that are not true, because those misconceptions have fueled damaging economic policies that make Americans worse off.
The book made me think of Julian Simon, one of the great crusaders against economic fake news:
In a 1980 article for The Public Interest, economist Julian Simon wrote, “False bad news is a very real social pollution, and a dangerous one.” He was writing in the context of the Global 2000 Study, a report commissioned by President Carter in 1980 that said by 2000, “the world’s people will be poorer in many ways than they are today.” It said, “For hundreds of millions of the desperately poor, the outlook for food and other necessities of life will be no better. For many, it will be worse.”
It was part of the genre of eco-doomsaying that Simon made it his life’s mission to demolish. In that Public Interest article, Simon clearly articulated why resources would not become scarcer and people would not become poorer by 2000. And he turned out to be correct, just as he was correct in his famous wager with Paul Ehrlich about the future prices of vital commodities.
Between 1980 and 2000, the share of the world’s population living in extreme poverty declined from 34 percent to 25 percent. The death rate from malnutrition declined by 43 percent. Rice yields increased by 41 percent, grain yields and increased by 47 percent. Global average life expectancy increased by six years. And all of that happened while the world’s population increased from about 4.5 billion to over 6 billion.
In the same way, Gramm and Boudreaux provide the facts that dispel myths such as that free markets caused the Great Depression and the Great Recession or that income inequality is high and has been rising for decades. A lot of harmful policy ideas flow from mistaken statements about current conditions and ahistorical views of the past.
Having the freedom to believe incorrect things is part of living in a free country, and in a democracy, policy will be made on that basis. But when crises inevitably arise as a result of bad policy, it is up to defenders of markets to make sure the ideas lying around are the right ones to fix the problems.
You can read the whole review at Civitas Outlook here.