Time to shed those fuzzy fallacies and fairy tales

ARE the groves of academe more idyllic than the business world? Are cars making our life more comfortable? Most people probably would answer “yes?to both questions. But wait. Heed the cheerful warnings of Thomas Sowell in “Economic Facts and Fallacies,?published this year by Basic Books. Sowell is scholarin- residence at the Hoover Institution at Stanford University.

Professors in the United States often don’t have students?best interests at heart, says Sowell. Indeed, once they have tenure, they can’t be fired.

This is the case in many other countries. Sowell is especially candid when he reveals that American professors sometimes abuse their power, sometimes choosing textbooks based on kickbacks from publishers. Oops. I never knew some American professors would play this trick. I thought Chinese professors had the “patent?on trading their souls for money, until I read “Economic Facts and Fallacies.? Sowell’s book, written with great style and economic insight, is a wake-up call for us to be on guard against the sloppy thinking that passes for wisdom.

The fallacy about the “idyllic groves of the academe?results mainly from information asymmetry ?outsiders don’t know as well as the insiders how a university is really run. While a fallacy resulting from information asymmetry is understandable, a “fallacy of composition,?as Sowell calls it, shows human stupidity that should have been easily overcome.

Nowadays many people in China prefer to have a private car in the belief that it will make life more comfortable. And many local policy makers support this fallacy with another fallacy: Roads can always be broadened to accommodate more cars. This is a typical fallacy of composition, which confuses the attributes of a part with those of the whole entity. Yes, you are more comfortable if you alone drive in an empty or not-socrowded street. Yes, you can broaden a street to accommodate a few more cars. But when everyone drives a car and every street has been expanded to its limit, your life gets worse ?you can’t move easily, you lose mobility.

“Many desirable things are advocated without regard to the most fundamental fact of economics, that resources are inherently limited and have alternative uses,?Sowell says. If an American professor is worried about his country’s limited resources, a Chinese professor has all the more reason to be worried, because China’s population more than triples that of America and China has more nonarable land than America. However, many Chinese professors have encouraged families to buy apartments and have regarded private cars as an engine of China’s economic growth. While those Chinese “economists? may have deliberately spread such false ideas to suit their private agendas, it is extraordinary that the general public has been so willing to accept them without critical examination, or basic common sense. Media has played a notorious role in perpetuating misconceptions, Sowell says.

I can’t agree with him more. Lacking the ability (or the willingness) to think clearly and critically has led many journalists ?Chinese and foreign ?to sell fallacies to the public. Yesterday I read an article in a major local newspaper in Shanghai, alleging that “there would be a new round of price hikes for dairy powder next month.? This statement sounded as though the whole dairy industry would witness further price jumps.

But the story later explained that only Nestle and a very few other brands have decided to raise prices. Flip through any Chinese newspaper and the chances are that you will find one fallacious statement or conclusion after another.

A common problem, according to Sowell, is the “open-ended fallacy,? which extrapolates from limited data. Can the media, the general public, and even pundits be free of economic fallacies? Maybe, but not everyone is free of fallacies all the time. Even Sowell suffers from sort of a fallacy. For example, he says: “Throughout history, the world has abounded with differences that are today called ‘disparities? or ‘inequalities,?even in situations where they cannot be explained by discrimination.? Well, this implies that we have no reason to worry about those differences today because they were there in history. Indeed, there’s nothing new under the sun.

But people’s minds and attitudes change. What was moral 1,000 years ago may not be so now. It’s indeed difficult to be free of fallacies, but Sowell’s book is a guide in one’s search for wisdom.

--Wang Yong