![]() On a more negative side, we can see that when a government entity attempts to save an industry by pumping money in, it may not actually be doing good, since perhaps more jobs would be lost elsewhere in the economy. The fallacy of composition is wrong because it ignores interactions within an ecosystem. However, at the same time, there was a record low amount of unemployment, and the overall number of jobs rose around the nation. For example, in the 1990s, there was a reported loss of jobs in specific American firms and industries. The fallacy of composition is mistakenly assuming that what applies to something small always automatically applies to the whole. Thus, when we look at the national economy, we need to understand the fallacy of composition. This is because we are dealing with a lot of different cogs in the economic machine, which are each affected by others. However, because we are looking at a greater whole, these applications may take more time before the results reveal reality. When we look at the national economy, many of the same principles of economics, such as supply and demand, can be applied. Otherwise, let’s get into chapter 15! Chapter Summary If you want to look at my previous summaries of this book, click here. ![]() ![]() In this chapter, we look at the problem of national output. ![]() We have now arrived at Part V of Thomas Sowell’s Basic Economics, where we will be talking in depth about “the national economy”, which is really simply applying economic principles on a larger scale rather than specific markets. ![]()
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