Every once in a while, when I’m outside, in front of my home, checking for mail or taking out the trash, I get into a running conversation with a neighbor. He’s an older guy; “a self-made man.” He’s very well off. He’s really smart, too. I’ve learned a lot from him. He really knows his stuff.
On a take-out-the-trash day about a month ago, he and I started talking about a recent newspaper item. It had to do with taxes, government spending and borrowing. I mentioned that governments can borrow money to get out of debt. He looked at me kind of funny, as if he didn’t know that.
That funny look prompted me to explain it to him. So, I did. The same way it was explained to me. “You see, Neighbor, government represents the people. When government borrows money, it borrows from the people. Then, government uses it for the benefit of the people. That means the people are borrowing from themselves for their own benefit.”
On a take-out-the-trash day about a month ago, he and I started talking about a recent newspaper item. It had to do with taxes, government spending and borrowing. I mentioned that governments can borrow money to get out of debt. He looked at me kind of funny, as if he didn’t know that.
That funny look prompted me to explain it to him. So, I did. The same way it was explained to me. “You see, Neighbor, government represents the people. When government borrows money, it borrows from the people. Then, government uses it for the benefit of the people. That means the people are borrowing from themselves for their own benefit.”
Now, the first time I heard that, it sounded logical and plausible. After all, it came from famous economists. I do have to admit, though, it was never really clear to me exactly how it worked. Aside from the fact that it seemed to be circular reasoning, it also seemed as if something was missing. I couldn’t put my finger on it. I asked around. Everybody I knew said the same thing. Nobody came up with any kind of argument to shoot it down.
While I’m admitting stuff, well, I really hate to admit this but, I tried it—borrowing to get out of debt—I mean. It didn’t work. Somehow, I just got deeper into debt. Maybe I just didn’t do it right. So, I gave it up. But. that’s a story for another time. Anyway, when I told my neighbor, he burst out laughing. I thought he was going to bust a gut. When he got his breath back, I asked him what was so funny. He lost it, all over again.
Finally, he stopped. We began to talk. It was during that talk that I found out just how knowledgeable my neighbor was on the subject of economics. My education began when I said to him, “Alright, come on now, Neighbor, I asked you what’s so funny about my saying that when government borrows, it’s just the people borrowing from themselves?”
Smirking, he replied, “That, my friend, is a commonly accepted economic fallacy.”
I tried to let that idea sink-in a bit. Then, I looked at him, straight in the eye, a full twenty seconds. I went back to him with, “Now, just to be sure I understand you, Neighbor, what’s your definition of ‘economic fallacy’?”
He looked back at me, straight in the eye, a full twenty seconds. He came back to me with. “Draco, my friend, ANY fallacy—not just an economic fallacy—is an often plausible argument built upon a false or invalid inference.”
I thought to myself, “Oh, Man, this is going to be some conversation.
While I’m admitting stuff, well, I really hate to admit this but, I tried it—borrowing to get out of debt—I mean. It didn’t work. Somehow, I just got deeper into debt. Maybe I just didn’t do it right. So, I gave it up. But. that’s a story for another time. Anyway, when I told my neighbor, he burst out laughing. I thought he was going to bust a gut. When he got his breath back, I asked him what was so funny. He lost it, all over again.
Finally, he stopped. We began to talk. It was during that talk that I found out just how knowledgeable my neighbor was on the subject of economics. My education began when I said to him, “Alright, come on now, Neighbor, I asked you what’s so funny about my saying that when government borrows, it’s just the people borrowing from themselves?”
Smirking, he replied, “That, my friend, is a commonly accepted economic fallacy.”
I tried to let that idea sink-in a bit. Then, I looked at him, straight in the eye, a full twenty seconds. I went back to him with, “Now, just to be sure I understand you, Neighbor, what’s your definition of ‘economic fallacy’?”
He looked back at me, straight in the eye, a full twenty seconds. He came back to me with. “Draco, my friend, ANY fallacy—not just an economic fallacy—is an often plausible argument built upon a false or invalid inference.”
I thought to myself, “Oh, Man, this is going to be some conversation.
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