Things I think about while driving:
What is the fallacy of fact and fallacy of theory that the reasonably well-informed layperson believes about economics that are most in need of correction? That is, which ones do the most damage?
Here's are my nominees:
For "Fallacy of Fact": that the economic well-being of the average American is on the decline.
For "Fallacy of Theory": that consumption (rather than savings/investment) is the source of economic growth.
Both of these are utterly wrong and believing either has a tendency to lead to policies that make matters worse, and bring out the very thing they are trying to avoid (i.e., worsening the economic well-being of the average American and destroying economic growth).
And one note about the irony of the consumptionist view: I have often found that my left-wing colleagues think that *I* (and other free market types) believe that consumption is the key to economic growth (if not personal Nirvana). When I tell them that not only do I not believe that and that it's bad economics, but that the most prominent expositor of that view was a strong critic of free markets, namely Keynes, they are left utterly unable to respond. It's kinda fun, actually.
Your nominees for the most dangerous fallacies of fact and theory?