2. www.antonydavies.org Laying the Groundwork for Thinking about Liberty

3. www.antonydavies.org As we know, there are known knowns. There are things we know we know. We also know there are known unknowns. That is to say, we know there are some things we do not know. But there are also unknown unknowns: the ones we don't know we don't know. —Feb. 12, 2002, Department of Defense news briefing

4. www.antonydavies.org Laying the Groundwork for Thinking about Liberty ~ or ~ One misguided zealot can wreak more havoc than a roomful of idiots.

5. www.antonydavies.org Things that are true. Knowledge MisconceptionThe Unknown Things students believe are true. 33% of UK adults believe that Mount Everest is in Europe. – National Geographic, 2007 61% of American adults either do not believe in evolution or have no opinion. – Gallup, February 2009

6. www.antonydavies.org Knowledge MisconceptionThe Unknown What We Think We Do

7. www.antonydavies.org Misconception Knowledge The Unknown What We Really Do

8. www.antonydavies.org Misconceptions Are the Enemy (a real conversation) As wages rise, more people enter the labor market. Cool.

9. www.antonydavies.org As wages rise, firms cut back on hiring. Got it. Misconceptions Are the Enemy

10. www.antonydavies.org Therefore, price floors create surpluses. No problem. Misconceptions Are the Enemy

11. www.antonydavies.org So, a minimum wage causes unemployment. But we need a minimum wage because companies would pay zero if we let them. Misconceptions Are the Enemy

12. www.antonydavies.org Misconceptions Are the Enemy

13. www.antonydavies.org Knowledge Misconception What We Need To Do The Unknown

14. www.antonydavies.org How Do We Dispel Misconceptions? 1.Data 2.Demonstrations

15. www.antonydavies.org Shameless plug www.antonydavies.org

16. Data source: Statistical Abstract of the United States, and Bureau of Labor Statistics

17. www.antonydavies.org Data source: Statistical Abstract of the United States, and Bureau of Labor Statistics

18. www.antonydavies.org Data source: Statistical Abstract of the United States, and Bureau of Labor Statistics

19. www.antonydavies.org How Do We Dispel Misconceptions? 1.Data 2.Demonstrations

20. www.antonydavies.org WorkersFirms Find a firm willing to hire you at whatever price you can negotiate. Goal: Get the highest wage you can. Hire workers at whatever price you can negotiate. Goal: Maximize profit.

21. www.antonydavies.org Firms Each firm gets a chart like this. The chart is the firm’s factory. Each unit the firm produces is automatically sold for $4.

22. www.antonydavies.org Suppose you can negotiate a price of $10 per worker. All the workers will be hired  0% unemployment.

23. www.antonydavies.org Only half of the workers will be hired  50% unemployment. Now, impose a minimum wage of $15 per worker.

24. www.antonydavies.org This demonstration can be done in 20 minutes and students immediately “get” two important lessons: 1.Minimum wage causes unemployment. 2.Left alone, firms will not pay zero.

25. www.antonydavies.org Demonstration and data remove misconceptions, opening the mind to more knowledge.

26. www.antonydavies.org Economic misconceptions are usually the result of pride and prejudice. Inoculate Against Misconceptions

27. www.antonydavies.org Prejudice Humans who work in the private sector are greedy. Humans who work in the public sector are altruistic.

28. www.antonydavies.org Truth The same humans with the same strengths, failings, and desires occupy both sectors.

29. www.antonydavies.org Schizophrenic Voters The same people you claim are selfish in the marketplace you also claim are selfless in the voting booth.

30. www.antonydavies.org Addict Voters People want to be forced to do the right thing! Save us!

31. www.antonydavies.org Pride Economic truths are opinion.

32. www.antonydavies.org Truth The whole point of economic theory is to describe the real world. Disconnects arise not from a failure of economics but from a lack of understanding of what economics is telling us.

33. www.antonydavies.org Pride Unwillingness to admit limitations.

34. www.antonydavies.org Truth It is impossible for an economy to provide everything that everyone wants. Corollary:A majority vote does not bestow magical powers to circumvent limitations.

35. www.antonydavies.org What is the point?

36. www.antonydavies.org What We Need To Do Dispel misconceptions with data and demonstration. Inoculate by warning against pride and prejudice.