The Importance of the “Full Picture” for Public Policy

In his latest column for the Pittsburgh Tribune-Review, George Mason University professor Don Boudreaux brings up a very basic economic point: “The first act is not the full story.”

“Experts” routinely ignore this point when proposing corporate welfare schemes. To illustrate this fact, Boudreaux examines the impact of trade on the domestic steel industry.

“It’s true that more imports of steel destroy some jobs in the domestic steel industry,” he writes, “But keep watching to see what happens next. The lower-priced steel enables domestic manufacturers of automobiles, farm equipment and machine tools to produce at lower costs.”

Thus, lower input prices for those industries enable greater output and, likely, greater employment.

Looking at the whole picture is vital to sound public policy. Doing so includes considering what 19th century economist Frédéric Bastiat calls “the seen and the unseen.”

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