It ain't what you don't know that gets you into trouble

It's what you know for sure than ain't so that does. And Mark Twain's observation has a great deal to tell us about how and why economic policy is so often so bad. For it's not just the politicians who are deeply misguided as to what the facts of the situation are: we the citizenry can be alarmingly inaccurate in the things we believe about the economy. As Tim Taylor points out:

There's an old saying often attributed to Daniel Patrick Moynihan that "Everyone is entitled to their own opinions, but not to their own facts." In public opinion surveys, of course, people are offered a chance to assert facts that reflect their own frame of mind. For example, Social Security is popular, while foreign aid is not, and therefore people (wishfully) hold the opinion that we must not be spending too much on Social Security, but are spending a lot on foreign aid that could cut with little domestic pain. But it's obviously tricky to have a productive social discussion about economic issues when there is little agreement on central facts.

Very much the same holds true in the UK: people overestimate the unemployment rate, how much is spent on overseas aid, underestimate how much pensions cost and so on. And then of course there's the very slightly more tricky things that we should be able to agree upon but generally don't: a higher minimum wage reduces the number of jobs, rent control is the best way of destroying urban housing short of aerial bombardment and so on. We even have our own version of that Moynihan quote, comment is free but facts are sacred.

Would that public discourse, the setting of public policy, took place within the boundaries of those facts rather than being misinformed by what people are sure is true but just ain't so.