http://www.econlib.org/library/Columns/ ... stiat.html
A couple of passages.
In my last column, I set out Bastiat and Mises' voter-centered explanation for the prevalence of bad economic policies. On the conventional view—widely accepted by economists, pundits, and the man in the street—the public demands policies in its own best interest, but the political system ignores their wishes. Bastiat and Mises dispute both parts of this story. They assert that democratic competition effectively drives politicians to do what the people want, but to their collective misfortune, many popular beliefs about economics are systematically mistaken. Sophisms—like "Exports make us rich, imports make us poor"—are widespread.
How popular is the status quo? The General Social Survey, or GSS, is one of the highest-quality and broadest-ranging sources of information on public opinion.1 It reveals several startling facts about the public's policy preferences.
Start with spending. Over 80% of respondents in 1996 either "favored" or "strongly favored" cuts in government spending, a clear strike against Bastiat and Mises.2 But making the question slightly more specific reveals that the majority opposes spending cuts on all of the biggest components of the budget, from Social Security and health care to national defense.3 A majority does intermittently favor cuts in space exploration and welfare.4 But opposition even to the latter is tenuous; government-funded job training is more than twice as popular as dropping recipients from the rolls and expecting them to find low-skill jobs.5 The only category of spending that the public invariably wants to cut is foreign aid6—which amounts to about 1% of the federal budget! Thus, if you carried out all of the cuts the public is willing to tolerate, the size of government would barely change.
The whole thing is worth a read (as is his first article in the series).Are the public's beliefs about economics systematically biased? To answer this question, we need to know more than just what the public believes; we also need a benchmark for accurate beliefs to which the public's can be compared. The Survey of Americans and Economists on the Economy,12 or SAEE—a wide-ranging comparative study of 1510 non-economists and 250 economists—fits the bill.
Systematic belief differences between economists and the general public appear for 33 out of 37 questions. Many of the belief gaps are enormous, and few would surprise Bastiat or Mises. The public is far more pessimistic about international trade than economists. A majority of the public, for instance, sees "jobs going overseas" as a "major" problem for the U.S. economy, while a majority of economists deny that this is a problem at all. Unlike economists, few non-economists even begin to grasp the possibility that downsizing could be economically beneficial. Only 26% of the general public buys the supply-and-demand explanation for the 1996 rise in the price of gas, versus 89% of economists.
