Fallacies

A fallacy is an invalid conclusion drawn from observation or facts A fallacy is an invalid conclusion drawn from observation or facts. Fallacies derive from faulty logic/reason. The 2 main causes of fallacy are ignorance and laziness.

Economic fallacies can be distilled down to 5 main errors. Forgetting Costs – Nothing without cost – seen or unseen Forgetting that nothing works in isolation – Both time and place Forgetting that improvements in standard of living can only be measured in the how much we value the goods and services that are produced. Forgetting about individuals. Money is not wealth, it has no intrinsic value, it is only a measure of wealth.

How do economic fallacies impact the economy and you? EQ 4-3

Fredric Bastiat - French economist and satirist (speaker) Please Read The Broken Window Fallacy 1. What is the larger message of the story? Relate to government spending Disasters War 2. What would Bastait say to people who only look at GDP as a sign of economic growth? 3. Brainstorm reasons why Bastiat would write this story. 4. Who is his intended audience?

The Broken Window Fallacy https://www.youtube.com/watch?v=erJEaFpS9ls From the movie the “Fifth Element” https://www.youtube.com/watch?v=SnzzWGcdMqY https://www.youtube.com/watch?v=gG3AKoL0vEs War, natural disasters, big government spending- don’t help economies

Directions: Read The Essence of “bad economics” and get acquainted to the fallacies on the list. Read news articles and determine which fallacies are associated with the story. Determine if your topic or candidate’s policy are associated with any fallacy. Share

X X X X X X X X X X X X X

Be on the look out!!!!! For fallacies throughout this unit and for fallacies that relate to your topic.

What Fallacy?

What Fallacy?

How do economic fallacies impact the economy and you? EQ 4-3

Imagine that a law was passed to increase min. wage from $7 Imagine that a law was passed to increase min. wage from $7.25 per hour to $10.10

Link the fallacies to the minimum wage laws.

You can exchange $8 for $100 trillion in real usable currency. True or False You can exchange $8 for $100 trillion in real usable currency. In other words for only 8 dollars you can become a trillionaire. Click See how

Prices are metric of wealth but not wealth themselves Money is Wealth Fallacy Prices are metric of wealth but not wealth themselves

What message is the pie-graph attempting to convey to the reader? Is there a flaw with this method?

The Zero-Sum Fallacy Aka The Fixed Pie Fallacy https://www.youtube.com/watch?v=OYyNY_5ACFc https://www.youtube.com/watch?v=qSco-xFnrpg The idea that there is a fixed amount of wealth and that wealth cannot be created only redistributed. A gain by one must mean a loss by another. Gains and losses add up to zero.

Comparing a finite resource, like land, to an infinite resource like human creativity and wealth production causes plenty of false assumptions and misplaced anger based on ignorance of basic economic principles.

There is not much more land in America than there was 50 years ago. But there is far more wealth. Since 1960, the total output of the U.S. economy, accounting for inflation, has more than quadrupled. Total physical assets have done likewise.

The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups.

The Free Lunch Fallacy https://www.youtube.com/watch?v=kZMxvlKxyk0 Tax, inflation, low interest, creative loans, deficit spending, and the debt

The Isolation Fallacy One group doesn’t make or break the economy, profits and business help other businesses

Immediate Effect Fallacy The Immediate Effect Fallacy Look past phase one of economic polices, economic policies live longer than political terms

The Win- Win Fallacy Everything has a level of scarcity, you cannot have your cake and eat it to

The Composition Fallacy The Division Fallacy What is true for a part doesn’t mean it is true for the whole The Division Fallacy What is average for the whole doesn’t mean it is true for each part

The Fallacy Of Collective Terms

The Protection Fallacy Creative destruction hurts but it is necessary, survival of the fittest and laws of nature. Protecting competitors not competition Protecting those who are on the inside against those on the outside Remember the petition to the candle makers?

The Open Ended Fallacy There can always be more of something good but not at the expense of something else Open space, health, safety

The Chess-Piece Fallacy People are human and cannot be counted on like pieces on the chess board

Production for its own sake The Production for its own sake Fallacy Paying someone $200,000 to dig ditches and to fill them back in will not improve the economy

Correlation = Causation The Correlation = Causation Fallacy The Post-Hoc Fallacy (false cause, coincidental correlation, correlation not causation): X happened then Y happened; therefore X caused Y

The Single Cause Fallacy

Starting point and ending point The Starting point and ending point Fallacy Those who use data to attempt to show causation often hand pick starting points and points to support their ideas. For example: “since this bill was adopted murder rates dropped.” But they may be neglecting to tell the audience that murder rates were dropping before the bill.

The False Dilemma Fallacy It is either this or that Used often to promote extremes Used often to levy false logic against a position. “He is against government spending on education. He is against education.”

Please provide and explanation. GDP and Fallacy Using your fallacy packet fill in the chart (to the right), place an “X” for every fallacy that can occur by using GDP as an indicator. Selection 2-3 from the chart and give a detailed explanations as to why those particular fallacies relate to GDP. Connect GDP to 1 or more of the 5 main errors of economics that can lead to economic fallacy. Please provide and explanation. GDP