Economists often are asked to predict -- predict tomorrow's price of gold, the future course of the Dow Jones industrial average, next month's unemployment rate and on and on.
My honest answer to everyone who asks my predictions of such things is: "Your guess is as good as mine."
I can't answer such questions because people want specific numbers such as, "Next July the price of gold will be $752 per ounce." Such specifics are unpredictable, not only by me but even by those who confidently offer such predictions.
I can and do, however, make what the late Nobel economist F.A. Hayek called "pattern predictions." For example, if the Federal Reserve significantly increases the rate of growth of the supply of dollars, I predict that inflation will increase. I don't know by how much it will increase, except that it will increase more the greater is the growth of the money supply.
Here are some pattern predictions that I'm willing to make, recognizing (as I do) that the world is a deceptively complex place:
Imagine if, say, supermarkets were run the same way we run schools. Everyone in my county would pay taxes to fund the county supermarket system; each one of us would then be assigned one specific county supermarket at which we are allowed to shop.
Of course, once in our assigned store, all the groceries that each of us gets are "free" -- meaning, we don't have to pay for them on the spot. If the products and services supplied by the supermarket are of poor quality, we're not allowed to switch to other county markets; we must, instead, complain to politicians.
The managers of the supermarkets will agree that their stores offer abysmal service and undesirable products; they will assert that this sad fact is caused by underfunding. We will be warned that only by paying higher taxes will we have any possibility of getting better supermarkets.
So our taxes will rise and funding for supermarkets will increase. But quality will remain poor -- and the excuses offered by the government-employed managers of the supermarkets will remain that they need yet more funding.
Think about it: If the French minimum wage is the equivalent of $10 per hour, then French workers who can produce no more than $9 per hour of revenue for employers will not be hired, while in the U.S. such workers will be hired.
By pricing the lowest-skilled workers out of the labor market, European regulations ensure that only relatively high-skilled workers get jobs. So measures of average worker productivity will tend to show that workers in restrictive countries such as France and Germany are more productive than are workers in America. But this statistical outcome is a deceptive artifact of lamentable labor-market regulations whose burdens fall disproportionately on Europe's poorest peoples.
But the triumph of these lies is not inevitable. Stand guard against them.
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