Jeffrey Dorfman's recent column in Forbes ("10 Essential Truths Liberals Need to Learn") is not a partisan attack on liberals. It is a clear-cut summary of some basic laws of economics that hold no matter what your political beliefs happen to be. Unfortunately, too many Republicans, Democrats, and bureaucrats are guilty of ignoring these laws. In my experience, it's also true that too many investors fail to understand these fundamental truths. I've only listed the laws here; for an explanation of each be sure to read the whole thing: (HT: Mark Perry)
1) Government cannot create wealth, jobs, or income.
2) Income inequality does not affect the economy.
3) Low wages are not corporate exploitation.
4) Environmental over-regulation is a regressive tax that falls hardest on the poor.
5) Education is not a public good.
6) High CEO pay is no worse than high pay to athletes or movie stars.
7) Consumer spending is not what drives the economy.
8) When government provides things for free, they will end up being low quality, cost more than they should, and may disappear when most needed.
9) Government cannot correct cosmic injustice.
10) There is no such thing as a free lunch.
I'll add one to the list: Monetary policy can facilitate the creation of jobs only to the extent it fosters low and stable inflation.
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