What is the Biggest Fallacy in Economics?

Consider 'biggest' to mean a combination of widespread belief and extent of error.

Nomination :

That two goods exchanged have been agreed by the exchanging parties to have equal economic values.

Corollary: If one of the goods is money, then the economic value of the other can be represented by its money price in the exchange.

Any other nominations?

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That expenditures by "the

That expenditures by "the government" are somehow separated conceptually or fiscally from the remainder of the economy. Our society cannot afford to pay for its own health care; therefore, "the government" should pay for it.

David, Ah yes. I withdraw my


Ah yes. I withdraw my hasty invective against digging holes in the ground. Thank god for graves, ditches, septic tanks, foundations, and tiger traps!

This one is a little hard to

This one is a little hard to make clear for me but; the fallacy of failing to distinguish between actual individiual actors in an economy and groups which have multitudes of such actors, each with their own goals. Example: the trade deficit argument tossed about by many economists and talking heads.

"According to the doctrines

"According to the doctrines of universalism, conceptual realism, holism, collectivism, and some representatives of Gestaltpsychologie, society is an entity living its own life, independent of and separate from the lives of the various individuals, acting on its own behalf and aiming at its own ends which are different from the ends sought by the individuals." -- Ludwig von Mises (emphasis added)

These are the two biggest

These are the two biggest fallacies:

1) Minimum wages don't cause unemployment.

2) Free trade is not always good for everyone in the the long term.

These two are the most simple to prove wrong, the most pervasive, and the most damaging.

The myth of laissez-faire:

The myth of laissez-faire:

That wealth-optimizing "free markets" exist independent of society and social order. (Cost of controlling fraud and coercion, enforcing contracts, correcting market failures, generating and managing standard units of exchange, etc.)

That social order exists outside of social norms. (Whether an employee has exclusive rights to her body, or whether those rights are sold as part of the employment contract; laws of inheritance; tort law; etc.)

That property is self-evident and not socially defined. (Whether my right to smoke trumps your right to breathe clean air; whether my right to herd cattle trumps your interest in raising corn; whether my right to make and sell a copy of a book trumps the writer’s right to control her creation; whether you have a property right in your reputation, and the remedies for violation of that right; etc.)