The Fallacy of Ignoring the Law of Supply and Demand from "summary" of Economics in One Lesson by Henry Hazlitt
The error of ignoring the law of supply and demand is widespread in economic thinking. This fallacy often leads to misguided policies and harmful consequences. For instance, many people believe that minimum wage laws benefit low-wage workers by increasing their pay. However, this argument overlooks the basic principle that when the price of something goes up, the demand for it tends to go down. When the government dictates a higher minimum wage, employers may respond by hiring fewer workers or cutting back on employee hours. This reduction in demand for labor can result in higher unemployment rates, especially among low-skilled workers who are most vulnerable to wage hikes. In the end, those whom the policy was intended to help may end up worse off than before. Similarly, rent control laws ...
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