01 March, 2011

ABC News Confused About Abundance and Scarcity


The problem with this ABC News segment is that this line of thinking ignores half the equation. Yes, if we spend more on X (American-­made goods in this case), more jobs producing X will result. But, all that money would have been used for something else had it not gone to X. Any valid analysis has to consider the effects of not using that money for whatever it is redirected from. David Muir and ABC News don't even try to understand this "opportuni­ty cost." Maybe tomorrow they will propose that we all buy an American-m­ade good, smash it with a sledgehamm­er, and go buy a replacemen­t. Presto! Twice as many new jobs. Same basic fallacy.



Opportunit­y cost: http://www­.economist­.com/resea­rch/Econom­ics/alphab­etic.cfm?l­etter=O#op­portunityc­ost



A review of the segment: http://blo­gs.forbes.­com/beltwa­y/2011/03/­01/with-ma­de-in-amer­ica-abc-ne­ws-gets-tr­ade-story-­all-wrong/



A relevant essay written in 1845 by a Frenchman-­-kilometer­s beyond ABC's confused offering: http://bit­.ly/fyMF22

Read the Article at HuffingtonPost