Tracing consequences both seen and unseen.
Justin M. StoddardNoncensus
Posted at 9:06 pm on March 29, 2010, by Justin M. Stoddard

If you’ve had occasion to listen to the radio for any amount of time recently, you’ve probably heard the slew of commercials about the ongoing Census. What you’ll hear, unfortunately, is not an explanation of the original purpose of the census, but instead a rather inane and commonly incorrect interpretation of basic economics.

The one I hear most goes something like this (and I’m paraphrasing):

Imagine you live in a growing city approaching one thousand people. Imagine a transportation system that has 3 buses. If you don’t fill out the census, how will we know if we need more buses? Do you want to be on a really crowded bus? Of course not! Fill out your census so we can know how many people live here so we can buy more buses!

I’m not as droll as the narrator of this piece, but I can attest that this is the thrust of the argument. If you don’t fill out the census, public transportation will become ineffectual because, well, apparently that whole “three overly crowded buses” in a small metropolitan area is not enough to signal to the powers that be that…”hey, we need more buses!”

Ironically, what this commercial hints at is the complete failure of centralized planning (a rather funny unintended consequence). A public transit system needs a form filled out every 10 years letting them know how many people live in the area in order to function? Really?

Would several competing, privately owned mass transit companies need this information? Of course not. Private companies pay attention to the ‘signaling’ their costumers telegraph their way. It’s not too difficult to literally SEE buses becoming overcrowded. What inferences would you draw from that observation? Perhaps it’s time to put another bus on the road?

If markets were more fully involved in supplying transit services, when people demand more buses, the market will provide more buses, until supply and demand meet at a parity. But that’s another post altogether. I just can’t tell if this propagation of incorrect economics is willful or just ignorant. Perhaps both?

Edit: Marginal Revolution just picked up on this phenomenon, independent of myself.

[Cross-posted at Shrubbloggers.]


Filed under: Economic Theory
Comments: 5 Comments
 

5 Comments »

  1. http://twitter.com/rileygirt

    Comment by Vroman — March 30, 2010 @ 3:24 am

  2. ?

    Comment by Eric D. Dixon — March 30, 2010 @ 4:20 am

  3. ???

    Comment by Audrey — March 30, 2010 @ 7:39 am

  4. Marginal Revolution picked up on this as well: http://www.marginalrevolution.com/marginalrevolution/2010/03/the-socialist-calculation-debate-as-seen-on-a-metro-bus.html

    Comment by Justin M. Stoddard — March 30, 2010 @ 3:14 pm

  5. […] at The Lesson Applied.] — Justin M. StoddardComments (0) […]

    Pingback by The Shrubbloggers » Noncensus — March 31, 2010 @ 1:32 am

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Henry Hazlitt"[T]he whole of economics can be reduced to a single lesson, and that lesson can be reduced to a single sentence. The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups."
Henry Hazlitt, Economics in One Lesson
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