Rick Perry, the former Texas governor and current U.S. Energy secretary, toured a coal-fired power plant on Thursday to learn about the West Virginia energy industry. Then he proceeded to dig a hole of his own by offering a rather, um, simplified lesson in economics.
“Here’s a little economics lesson: supply and demand. You put the supply out there and the demand will follow,” Perry was quoted as saying.
It didn’t take long for Twitter to pounce after energy reporter Taylor Kuykendall posted Perry’s quote.
Perry, it seems, was guilty of an Economics 101 misinterpretation of an economic principle known as Say’s Law. Here’s how Investopedia explains it:
“The Say's law of markets is an economic rule that says that production is the source of demand. According to Say's Law, when an individual produces a product or service, he or she gets paid for that work, and is then able to use that pay to demand other goods and services. Say's Law is named after the 18th-century French classical liberal economist Jean-Baptiste Say, who popularized the notion. Say was an advocate of laissez-faire economics and was heavily influenced by Adam Smith. Say's Law is frequently misinterpreted as "supply creates its own demand," which is evidently false. If it were true, anyone could do whatever they wanted for a living and be successful at it.”
When he wasn’t teaching economics Thursday, Perry used his West Virginia visit to say that coal-fired power plants remain important for America’s future because they have "the ability to deliver a secure, economical and environmentally good source of energy."