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Economic Illiteracy

On my layover returning from vacation, I was eating at a restaurant in the terminal and overheard the person on the table next to me having a telephone conversation. She was getting help on some homework she was working on. Economics homework. My ears perked up.

Then I heard one of the items she was asking for help with. The question (I think it was a true/false) was something like, "exploitation is the primary cause of poverty."

Yeesh. At that point I decided I should sit this one out.

In the general sense, poverty isn't caused. Poverty is the natural state of man. You escape poverty with capitalism, as a quick glance at the historical record shows neatly.

Poverty can be "caused" by the destruction of capitalism, as in Zimbabwe today or under Stalin years ago. Some people, especially in America, link poverty to unwed childbirth. That is an important correlated factor but it's not a cause: these parents are largely already poor to begin with, and the child just makes it more difficult to climb the economic ladder. It would be more accurate to say unwed childbirth tends to prevent escape from poverty.

On the flight back to Oregon there was a young couple sitting next to me, and the girl was looking through a magazine. She saw something that set her off about Wal-Mart, and my ears throbbed with the standard insults that ensued. Fortunately these matters are well-discussed elsewhere and I don't need to fill space writing about them.

I also decided to skip that potential discussion. It was early in the flight, and I was planning on getting some rest, not arguing for the next three hours.

When I arrived back at work, a co-worker told me about an awful article on RFID he read that complains about how it will displace workers. Sigh! That line of reasoning was demolished by Bastiat over 150 years ago. Lower costs are good, and no special interest group of disaffected people should be allowed to prevent lower costs.

Barcode readers in particular have a basically minimum-skill, minimum-wage job and they could train for another job (which economics tells us must exist, given economic freedom) in very little time.

Tiny Island