Use Facts to Counter Political Arguments which are based on Theories and Misconceptions

Use Facts to Counter Political Arguments which are based on Theories and Misconceptions

“An Ounce of Action is Worth a Ton of Theory” ~ Ralph Waldo Emerson

I groan every time I hear somebody invoke the Econ 101 argument. That’s the argument over policy that goes like this:

“My position is right because they teach it in econ 101, and if you don’t agree with me then you don’t understand basic economics”.

This type of argument seems to be most prevalent among conservatives:

  1. “If we raise the minimum wage, then minimum wage workers will lose their jobs. There will be fewer jobs in the economy. If you knew basic economics, you would agree with me.”
  2. “If we raise the minimum wage, then nobody will gain because all of the cost increase will be passed on to consumers in the form of higher prices. If you knew basic economics, you would agree with me.”
  3. “The reason unemployment is high is because taxes on the rich and on corporations are too high. If you understood basic economics, you would know that higher taxes decrease production and jobs.”
  4. “The Federal Reserve’s policies are creating high inflation. Too much money chasing too few goods results in nothing but high inflation. Anybody who stayed awake in Econ 101 knows this.”
  5. “The economy would be more stable if we returned to the gold standard. Basic economics says that nothing will hold its value if we use worthless pieces of paper as a currency.”

…and on and on.

These types of arguments appeal to theory, yet they show a lack of understanding of the theories that they appeal to. For the record, Econ 101 does NOT state as a fact that if a specific policy is adopted in the real world, then a specific outcome will follow. For example, basic economics does not say that if you raise the minimum wage, then the economy will lose jobs. Whoever makes such a claim is the one who must have fallen asleep during an Econ 101 lecture.

You see, economics models and theories are not designed to tell you as a fact that a specific outcome will follow a specific policy. Economics models and theories always involve more than a simple “if A, then B” logical argument. Far too often, people of all levels of learning in the field of economics make this simple mistake. All they take away from what they have learned is that “if A, then B”. Yet the source they are citing never actually says “if A, then B”. Instead, the models and theories always involve more. There are numerous assumptions necessary to make these models and theories work logically – assumptions such as ceteris paribus (all else held equal or constant), a starting and ending point of a general equilibrium, and all of the assumptions of simpler models that the one in question is based on, just to name a few of many. The point is that all of these assumptions are required in order to make any conclusions valid, and all of these assumptions are not typically met in the real world. Logically, each of the assumptions adds another “if” to the if-then equation. Instead of “if A, then B”, all economic models and theories use the equation “if A, and if C, and if D, and…if N, then B”. Drawing a conclusion in the real world that “if A, then B” is not rational.

But rational, or not, there is a much more effective and accurate way to make a case in a debate over policy, which is the main point of this post. Good heavens, why would anybody need to mention what some theory says will happen, when we have an extensive historical record that will tell us exactly what has happened? Why say that jobs will be lost if the minimum wage goes up when we have a long record that says otherwise?

I have seen this numerous times on social media: Somebody makes a claim by appealing to what is supposedly said in Econ 101, and then somebody making the opposite claim simply concedes the point. Both end up believing something that isn’t true. Please, take a look at the big-picture historical record before conceding any point that you are trying to make. Don’t accept theory as a valid point unless you know that the historical record actually backs it up. Refer to the quote above by Emerson. Take action, and look up the record. Such action will be worth more than an appeal to theory.

The historical record is extensive. If there is no pattern in such an extensive record to support a claim based on theory, then the theory is not a valid argument for the claim.

Finding the relevant historical record can be a daunting task, even though those numbers are publicly available. As a service, I have compiled many of the big-picture numbers in the following tables. Look them over for patterns, and to see if they agree with common perceptions that you are aware of. You can bookmark this for future reference. Besides a record of economic data over the years, these tables will also point out some common misconceptions about the results of specific policies in the past – which party or which president got which results, for example.

U.S. GDP 1929-2013
U.S. Federal Revenue, Spending, and Deficits 1929-2013
U.S. Annual Employment Data 1943-2013
U.S. Miscellaneous Economic Data 1929-2013 (Inflation; minimum wage; top marginal individual and corporate tax rates; percent of employed belonging to labor unions)

“N/A” in the table indicates data that is not available.


A version of this essay is included as a chapter in the book Common Misconceptions of Economic Policy by Jerry Wyant. You can purchase this book in paperback form from Amazon and other online book distributors. The list price is $12.99 (only $9.99 using discount code TA9GTK7E when ordering, depending on the distribution channel). Or if you prefer, you can download a digital version on your device (Kindle, Nook, etc.) for $4.99.

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Jerry Wyant