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LABOR-MANAGEMENT RELATIONS ACT: A Congressional act passed in 1947 that limited the power acquired by U.S. labor unions during the 1930 and into the 1940s. More commonly known as the Taft-Hartley Act, this outlawed unfair labor practices by labor unions to counterbalance earlier legislation that had outlawed unfair labor practices by firms. The Taft-Hartley Act also set up provisions to decertify unions, if members chose to do so, and allowed states to pass right-to-work laws, which would outlaw union shops.
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                           FALLACY OF DIVISION: The logical fallacy of arguing that what is true for the whole is also true for the parts. In the study of economics, this takes the form of assuming that what works for the aggregate, or macroeconomy, also works for parts of the economy, such as households or businesses. The contrasting fallacy is the fallacy of composition. The fallacy of division, together with the fallacy of composition, highlights the difference between macroeconomics and microeconomics. Macroeconomics operates according one set of laws and principles, while microeconomics operates according to another set. Assuming what works for the aggregate economy also works for parts of the economy leads to the fallacy of division.For example, during economic bad times (recession), the appropriate action for the Federal government (as "caretaker" of the aggregate economy) is to increase spending and reduce taxes. A recessionary period is not the time for government to act prudently, to save, to set aside extra funds for a rainy day. However, should a family or business try to operate in a similar manner, then they are bound to encounter problems, and to commit the fallacy of division. Saving less and spending more during a recession can be disastrous at the microeconomic family level. The aggregate economy is a complex system comprised of smaller microeconomic components. An analogy is the human body. Individuals and firms make up the aggregate economy like cells and molecules make up the human body. Rules that apply to entire body do not apply to the cells. Rules that apply to entire macroeconomy do not apply to the firms, households, markets, and industries. What is true at the macroeconomic level is not necessarily true at the microeconomic level. What is true for the whole is not necessarily true for the parts.
Recommended Citation:FALLACY OF DIVISION, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2025. [Accessed: May 22, 2025].
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Ragnar Frisch and Jan Tinbergen were the 1st Nobel Prize winners in Economics in 1969.
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