Russell Roberts's Blog, page 113

Quotation of the Day…

(Don Boudreaux)

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… is from page 60 of F.A. Hayek’s July 1946 speech at Stanford University titled “The Prospects of Freedom,” as this speech appears – for the first time in print – as chapter 3 of the hot-off-the-press Essays on Liberalism and the Economy (2022), which is volume 18 (expertly edited by Paul Lewis), of The Collected Works of F.A. Hayek:

There are many achievements of the liberal period which we take so much for granted that we no longer are aware on what they depend, and which we may easily lose if we do not relearn the lessons which those who gained us these liberties understood.

National Conservatives Demand the Economic Equivalent of a Square Circle

(Don Boudreaux)

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Here’s a follow-up letter to an enthusiastic young “national conservative.”

Mr. F__:

Thanks for your follow-up e-mail, in which you write that

The new conservatism of scholars like Oren Cass improves on free market economics by understanding that although the free market is really good at supplying material goods it sucks at supplying noneconomic values like employment which isn’t a slave to market whims.

You misunderstand and underestimate markets. Anyone who truly wants employment that’s immune to what you call “market whims” – which are what I call the economic preferences of fellow human beings – can secure such employment. Most obviously, such a person can become self-sufficient: grow or catch his own food, build his own shelter, make his own clothing. The truly self-sufficient person is utterly immune to “market whims.”

Self-sufficiency is the only means of completely avoiding the effects of “market whims.” But because self-sufficiency is also deeply impoverishing, almost no one goes this far despite having the option to do so. Fortunately, less-radical moves are possible.

Someone intent on reducing, but not eliminating through self-sufficiency, his or her exposure to “market whims” can refuse to hone a specialized skill. That person can instead work at odd jobs. This generalist can toil Monday waiting tables, Tuesday mowing lawns, Wednesday washing cars, Thursday walking dogs, and Friday as a carpenter’s go-fer. With no specialized skill, this worker’s range of employment options will be wider than that of a specialized worker. Any change in “market whims” is thus much less likely to affect this person. Some employment in the local community will almost always be available at wages that this worker is accustomed to earning. But, of course, these wages will be low. Being unspecialized entails being very low-skilled, and being very low-skilled entails earning very low income. It’s an inescapable reality.

Each of the above two options is available to any and all individuals. What is not available, though, is the option of being largely immune to “market whims” and enjoying access to the ample fruits that come only from working with specialized skill in the market to satisfy fellow human beings’ “whims.”

The bottom line, Mr. F__, is this: The aspiration that writers such as Oren Cass have for workers is the economic equivalent of a square circle. Such writers want workers, on one hand, to enjoy the material abundance that can be produced only by highly specialized workers whose efforts are coordinated by market prices toward the satisfaction of consumer demands expressed on markets (“market whims”). But such writers also want workers, on the other hand, to be shielded from the price system whenever it moves in ways that reduce workers’ incomes in their existing jobs. This aspiration is lovely. It’s also impossible.

Sincerely,
Donald J. Boudreaux
Professor of Economics
and
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030

Calling Mark Perry

(Don Boudreaux)

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I wonder how many “national conservatives” simultaneously believe each of the following two propositions.

Proposition 1: Non-economic flesh-and-blood local-community connections are so important to ordinary people – that is, to people who aren’t cosmopolitan elites – that the state should intervene against market forces in order to protect ordinary people from having to experience disruptions in familiar patterns of community relationships, even if such intervention reduces the people’s monetary incomes.

Proposition 2: Without strict controls on immigration, the U.S. will be swamped by immigrants seeking better economic lives for themselves and their families.

I’m quite sure that the number of people who believe that both of these propositions are true is large. I’m also quite sure that no more than a tiny fraction of these people understand that logically squaring these propositions with each other is nearly impossible.

Bonus Quotation of the Day…

(Don Boudreaux)

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… is from pages 57-58 of Bernard Bailyn’s profound 1967 book, The Ideological Origins of the American Revolution:

What gave transcendent importance to the aggressiveness of power was the fact that its natural prey, its necessary victims, was liberty, or law, or right. The public world these writers saw was divided into distinct, contrasting, and innately antagonistic spheres: the sphere of power and the sphere of liberty or right. The one was brutal, ceaselessly active, and heedless; the other was delicate, passive, and sensitive. The one must be resisted, the other defended, and the two must never be confused.

DBx: The sphere of liberty is not weak or passive in creating prosperity and opportunity. Within this sphere there teems today billions of individuals, each creating and working and striving, with market prices, profits, and losses coordinating these uncountable efforts into a mighty productive force. Insofar as creating widespread prosperity goes, no method is remotely as powerful as is the market order in which innovation is encouraged.

Ironically, however, the sphere of liberty is indeed a weak defender of itself. The liberal market order works so successfully and so smoothly that its fruits are taken for granted. This success – so routine, so substantial – conveys the mistaken impression that earthly perfection is possible. One ill consequence is that the market-order’s failure to achieve perfection is taken by many people as reason enough either to displace it altogether with state-directed economic arrangements, or at least to meddle in the market order to ‘improve’ its performance. Proponents of meddling – that is, of economic intervention – no less than proponents of central planning are utterly oblivious to the complexity of the details of the emergent process that they propose to ‘improve’ with their meddling.

Most humans have an abiding faith in the power of coercion when exercised by their preferred team members. For nearly everyone other than true liberals, the state is godlike – or can and will be godlike if the right team controls it. This primitive, benighted superstition is embraced today by even those individuals who fancy themselves to be the most hard-nosed empirical scientists.

Resisting the sway of this superstition on the public mind is a never-ending task.

…..

Bernard Bailyn died two years ago today.

More on the Dangers of National Conservatism

(Don Boudreaux)

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Please pardon the length:

Mr. F__:

Thanks for your e-mail.

After reading my recent letter sent to National Review, you allege that I “don’t take seriously enough what [Roger] Scruton saw as the need for an economy that does not menace local communities.”

With respect, I believe that Scruton’s argument here crumbles under close scrutiny.

Let’s first note two relevant but easily missed facts. One is that a community is not a sentient creature and, as such, cannot be menaced; any sensations of being menaced by changes in a community are experienced only by that community’s flesh-and-blood inhabitants. The second is that any changes in the economics of a community – at least any changes not brought on by natural phenomena such as devastating earthquakes – are changes brought on by the choices and actions of fellow human beings, including fellow citizens.

Recognition of this second fact makes clear a third, inescapable fact: To protect some individuals from feeling ‘menaced’ by economic changes that might affect their communities requires restricting other individuals’ freedom of choice and action. That is, to protect Jones from feeling ‘menaced’ by economic change that alters his community life requires that the state menace Smith with restrictions on her commercial choices and actions.

Yet what ethical principle justifies the use of (threats of) coercion to directly menace Smith in order to prevent Jones from feeling menaced by changes in his community? What system of morals elevates Jones’s (very human) desire not to encounter changes in his community over Smith’s (very human) desire not to suffer restrictions on her peaceful commercial interactions with other adults, both near and far? I know of no such ethical principle or system of morals that are consistent with a non-totalitarian society.

I imagine that you’ll respond by insisting that we confront a choice of menacing Smith in order to prevent menace to Jones, or menacing Jones by refusing to menace Smith. Such a response would be a step in the right direction beyond Scruton’s argument, for this response implies what is implicitly denied by Scruton – namely, that the cost of protecting communities from being ‘menaced’ by economic change is perhaps too high to justify any such protection.

But your imagined response also is flawed substantively, at least for those of us – including Scruton – who generally support the principles of a free society. To prevent the sensation of ‘menace’ about which Scruton (and you) worry implies that we’re entitled to coercively prevent our fellow citizens from changing their choices and actions – to prevent our fellow citizens from choosing and acting differently from how they chose and acted in the past.

Scruton’s argument implies that Jones has a right to compel Smith to spend and invest her income in ways that satisfy the desires, not of Smith and her family, but of Jones. Scruton’s argument, in other words, is that each of us is free to choose to peaceably spend and invest our own incomes only insofar as such choices cause no emotional discomfort to others.

Put yet another way, Scruton’s argument – by implying that Jones, to avoid being ‘menaced’ by economic change, can veto Smith’s peaceful commercial choices – ultimately implies not merely that the state can and should restrict us and our fellow citizens from dealing commercially with foreigners, but also that we ultimately have no true commercial freedom at all.

The logical conclusion of Scruton’s argument (and of today’s “national conservatives”) is that any economic change – which is nearly all economic change – that threatens to alter how we engage on face-to-face bases with others can and should be suppressed by the state if such change discomforts a sufficient number of people (or discomforts or inconveniences people who are politically influential). The patterns of community engagement thereby ‘protected’ by being frozen into place would be, not the charming, lovely, and comforting personal relationships imagined by Scruton and you, but, instead, a poverty-ridden prison.

Sincerely,
Donald J. Boudreaux
Professor of Economics
and
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030

Some Links

(Don Boudreaux)

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George Will identifies the terrible parallels between Mussolini and Putin. A slice:

As in Mussolini’s Italy, there is in Putin’s Russia what the Economist calls a “culture of cruelty” where “domestic abuse is no longer a crime” and “nearly 30% of Russians say torture should be allowed.”

As the Economist notes, Alexander Yakovlev, a democratic reformer who worked under Mikhail Gorbachev, warned us in the late 1990s: “The danger of fascism in Russia is real because since 1917 we have become used to living in a criminal world with a criminal state in charge. Banditry, sanctified by ideology — this wording suits both communists and fascists.”

Mike Rowe talks with FIRE’s Greg Lukianoff about freedom of speech.

Also talking about the importance of freedom of speech are Tunku Varadarajan and Nadine Strossen. Two slices:

That view has increasingly made her an outlier on the left. “The trope you hear over and over and over again is that free speech is a tool of the powerful,” Ms. Strossen says, “that it’s only benefiting white supremacists like the people in Charlottesville, or Donald Trump on Jan. 6, or antilabor crusaders, big, bad corporations … or fat cats.”

She points to a 2018 dissent in which Justice Elena Kagan accused five of her colleagues of “weaponizing the First Amendment.” The majority in Janus v. Afscme held that labor-union “agency fees”—mandatory payments exacted from nonmembers in lieu of dues—violated the free-speech rights of government employees who declined to join the union. “So according to Justice Kagan, it was ‘weaponizing’ free speech, to subvert the liberal cause or the progressive cause of labor,” Ms. Strossen says. Although she’s grown inured to this sort of rhetoric, “it was disheartening to hear it from the Supreme Court.”

Contrast that with another free-speech landmark, Brandenburg v. Ohio (1969). The liberal Warren court held unanimously that the First Amendment protects speech advocating violent or unlawful conduct, except when the speaker intends to incite “imminent lawless action” and the speech is “likely” to have that effect.
…..

She elaborates in her 2018 book, “Hate: Why We Should Resist It With Free Speech, Not Censorship,” and in our interview when we turn to higher education. Campus authorities frequently justify the suppression of “so-called hate speech”—Ms. Strossen is punctilious about including that dismissive qualifier—with what she calls the “false and dangerous equation between free expression and physical violence.”

“When people hear the term ‘hate speech,” she says, “they usually envision the most heinous examples—a racial epithet; spitting in the face of Dr. Martin Luther King. But in fact, when you see what’s been attacked as so-called hate speech on campus, it’s opposing the idea of defund the police, opposing the idea of open borders.” Any questioning of transgender ideology or identity is cast as “denying the humanity of trans people, or transphobic.” Ms. Strossen hastens to add that “I completely support full and equal rights for trans people,” but she says critics are “raising concerns that I think deserve to be raised and deserve to be discussed.”

Pierre Lemieux is correct: “‘Buy local’ is one of the most simplistic political slogans. It obliterates complex analytical ideas such as the division of labor and comparative advantage.” Here’s his conclusion:

The injunction “buy local” is only meant to elicit political emotions or, as Hayek would have likely said, tribal emotions.

A shocking headline! (not): “Biden’s Giveaways Largely Benefit Well-Off Americans.”

Daniel Hannan makes the case that “[t]he miserable truth is that our leaders don’t want us to have cheap energy.” A slice:

No, we are in this mess because, for most of the twenty-first century, we have ignored economic reality in pursuit of theatrical decarbonisation. Actually, no, that understates our foolishness. Decarbonisation will happen eventually, as alternative energy sources become cheaper than fossil fuels. It is proper for governments to seek to speed that process up. But this goes well beyond emitting less CO2. Our intellectual and cultural leaders – TV producers, novelists, bishops, the lot – see fuel consumption itself as a problem. What they want is not green growth, but less growth.

As Amory Lovins, perhaps the most distinguished writer to have been involved in the move away from fossil fuels, put it in 1970:

“If you ask me, it’d be little short of disastrous for us to discover a source of clean, cheap, abundant energy because of what we would do with it.”

The idea that cheaper energy is a positive good – that it reduces poverty and gives people more leisure time – has been almost wholly lost. We have convinced ourselves that if it isn’t hurting, it isn’t working. The reason we slip so easily into talk of banning and rationing is not just that the lockdown has left us readier to be bossed about. It is that we have come to regard the use of power [DBx: i.e., energy] as a sinful indulgence.

Mario Loyola explains how “Miami ‘caught a wave’ and became the hot new tech hub.” A slice:

Government and private-sector responses to the pandemic created new reasons to move. Remote work weakened connections to offices in California, Illinois and New York. Those same states stuck to oppressive Covid-19 mandates, softened their crime policies, and pushed woke indoctrination in schools. Gov. Ron DeSantis went in the opposite direction, defying what he called the “woke mob,” reopening quickly, and declaring Florida “the freest state in these United States.”

About this lawsuit, Houman David Hemmati tweets: (HT Jay Bhattacharya)

California’s Medical Board, has been extorting MDs not to speak out against actual COVID misinformation by labeling what we say as misinformation and threatening licenses to practice. Docs just sued the medical board. Read the suit. Brilliant!

Quotation of the Day…

(Don Boudreaux)

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… is from page 153 of Deirdre McCloskey’s splendid 2022 volume, Beyond Positivism, Behaviorism, and Neoinstitutionalism in Economics:

The master and permanent monopoly – because armed, and hired by the monopolists – is the very government called on to attack the private and temporary monopolies – who are “armed” only metaphorically with attractive offers to consumers such as the iPhone.

DBx: Yep.

Anyone today who believes that antitrust is necessary, or even useful, to protect consumers from monopolists is ignorant of economic history or of the history of antitrust’s origins and enforcement – or, most likely, ignorant of both.

National Conservatives Should Learn Some Economics

(Don Boudreaux)

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Here’s a letter to National Review:

Editor:

In his defense of many of the conservative critics of free markets – critics who participated in the recent American Economic Forum – Nate Hochman (“Conservative Economics Can’t Ignore the National Interest,” August 4) favorably quotes the late Roger Scruton:

Although I’m very much in favor of the free market, I’m very suspicious of the globalized form of it, and the way in which it does not respond to the demands of local communities and local forms of value. So this is a problem for real conservatism – to develop an economic doctrine that does not menace the local communities on which we all depend.

While I share Hochman’s respect for Scruton and appreciate the value of local communities, Scruton – like many others – is mistaken to assume that such communities are uniquely ‘menaced’ by the “globalized form” of the free market.

The only way that access to foreign suppliers can “menace” local communities is if those suppliers offer to community members new and attractive bargains – that is, new kinds of goods or services, or lower prices on familiar goods and services. The more attractive and frequent are such bargains offered to community members, the greater are the resulting changes in communities’ economic arrangements and patterns.

Every reasonable person easily sees the challenges of dealing with such changes. Yet too many otherwise reasonable people – including Scruton and, it seems, also Mr. Hochman – are blind to the fact that such changes are not uniquely caused by globalization. These changes occur whenever any supplier offers to community members new and attractive bargains.

The economics of local communities are changed no less if the retail prices of shoes, bed linens, and electric toasters are reduced by a new inventory-control method put into place by an entrepreneur in Arkansas than if these prices fall because of cuts in tariffs or because of improvements in ocean shipping. Particular factory jobs are destroyed no less by labor-saving technology invented in Massachusetts, California, or Florida than by labor-saving trade with Malaysia, Korea, or Finland. Particular local merchants lose customers no less to effective marketing or price-cutting by on-line merchants in other states than to effective marketing or price-cutting by exporters in other countries.

All economic growth entails economic change, and all economic change is disruptive. No myth today is more prevalent among “national conservatives” (and, not coincidentally, also among Progressives) than that which insists that economic changes that arise through fellow citizens’ commerce with foreigners differ in kind or are more unrelenting than are economic changes that arise through fellow citizens’ commerce with each other.

Another point warrants mention: Because we Americans have traded extensively with non-Americans for decades, many of the local-community economic patterns that national conservatives are keen to protect are themselves the product of globalization. Large numbers of American manufacturers, mining companies, and farmers export. Restricting globalization will disrupt these companies and their workers and, hence, their communities. And these disruptions, unlike those caused by free trade, are harmful, as they result in people losing some freedom by being shackled by their own government in ways that make them less rather than more prosperous.

I applaud national-conservatives’ desire to improve the lives of ordinary Americans. But unless and until national conservatives get serious about learning some economics, their policy proposals will have consequences quite the opposite of what they intend.

Sincerely,
Donald J. Boudreaux
Professor of Economics
and
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030

Bonus Quotation of the Day…

(Don Boudreaux)

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… is from page 158 of F.A. Hayek’s 1950 essay “Economics,” written for Chambers’s Encyclopaedia, as this essay is reprinted as chapter 11 in the hot-off-the-press Essays on Liberalism and the Economy (2022), which is volume 18 (expertly edited by Paul Lewis), of The Collected Works of F.A. Hayek:

Economics, as a theoretical discipline, aims at explaining those uniformities in the economic activities of society which are not the result of deliberate design but the produce of the interplay of the separate decisions of individuals and groups.

DBx: Yes. In its mode of analysis, modern economics, properly done, is quite akin to modern biology.

Some Links

(Don Boudreaux)

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Starting at 4:00pm EDT on August 19th the Cato Institute will host a live on-line policy forum titled “Pandemic Policy Postmortem: Lessons from Sweden.” The scheduled speakers are Jay Bhattacharya, Jeanne Lenzer, Johan Norberg, Vinay Prasad, and Jeff Singer.

Ramesh Thakur understandably worries about “the tyranny of coronaphobia.” Two slices:

I’ve had two big worries during the pandemic, starting from the very beginning and still ongoing. Both relate to my sense that ‘coronaphobia’ has taken over as the basis of government policy in so many countries, with a complete loss of perspective that life is a balance of risks pretty much on a daily basis.

First, the extent to which dominant majorities of peoples in countries with universal literacy can be successfully terrified into surrendering their civil liberties and individual freedoms has come as a frightening shock. There is this truly confronting video of the police in Melbourne assaulting a small young woman – for not wearing a mask!

On the one hand, the evidence base for the scale and gravity of the Covid-19 pandemic is surprisingly thin in comparison to the myriad other threats to our health that we face every year. We don’t ban cars on the reasoning that every life counts and even one traffic death is one too many lives lost. Instead, we trade a level of convenience for a level of risk to life and limb.

On the other hand, the restrictions imposed on everyday life as we know it have been far more draconian than anything previously done, even during World War II or the great 1918-19 flu. In present circumstances, the argument for the crucial importance of liberties has been made most eloquently by former UK Supreme Court Justice Lord Sumption in a BBC interview on March 31st, and repeated several times since.

But it’s also an argument that Benjamin Franklin, one of the founding fathers of America (and therefore suspect in the post-Black Lives Matter and statues-toppling environment), made back in the 18thcentury: ‘Those who would give up essential Liberty, to purchase a little temporary Safety, deserve neither Liberty nor Safety’.

Yet, the evidence for the effectiveness of draconian lockdowns is less than convincing. As one Lancet study concluded, ‘Rapid border closures, full lockdowns, and wide-spread testing were not associated with COVID-19 mortality per million people’.

…..

I confess I still don’t understand the global outbreak of collective panic and hysteria, the shelving of all existing pandemic management plans, the failure of medical professions to speak out, and the astonishing public compliance with authoritarian policies.

Victoria Fox tweets: (HT Jay Bhattacharya)

I can’t believe “lockdown skepticism” was promoted as the fringe anti-science position. Like lockdown is a regular occurrence and we’re the strange ones for questioning it. Or imprisoning people and shutting down the world is a completely normal reaction to a pandemic!

TANSTAFPFC (There Ain’t No Such Thing As Free Protection From Covid.)

Francis Fukuyama eloquently summarizes the three justifications for liberalism – the pragmatic, the moral, and the economic. Two slices:

Liberalism sought to lower the aspirations of politics, not as a means of seeking the good life as defined by religion, but rather as a way of ensuring life itself, that is, peace and security. Thomas Hobbes, writing in the middle of the English civil war, was a monarchist, but he saw a strong state primarily as a guarantee that mankind would not return to the war of “every man against every man.” The fear of violent death was, according to him, the most powerful passion, one that was universally shared by human beings in a way that religious beliefs were not. Therefore the first duty of the state was to protect the right to life. This was the distant origin of the phrase “life, liberty, and the pursuit of happiness” in the US Declaration of Independence. Building on this foundation, John Locke observed that life could also be threatened by a tyrannical state, and that the state itself needed to be constrained by the “consent of the governed.”

Classical liberalism can therefore be understood as an institutional solution to the problem of governing over diversity, or, to put it in slightly different terms, of peacefully managing diversity in pluralistic societies. The most fundamental principle enshrined in liberalism is one of tolerance: you do not have to agree with your fellow citizens about the most important things, but only that each individual should get to decide what they are without interference from you or from the state. Liberalism lowers the temperature of politics by taking questions of final ends off the table: you can believe what you want, but you must do so in private life and not seek to impose your views on your fellow citizens.

…..

The connection between classical liberalism and economic growth is not a trivial one. Between 1800 and the present, output per person in the liberal world grew nearly 3,000 percent. These gains were felt up and down the economic ladder, with ordinary workers enjoying levels of health, longevity, and consumption unavailable to the most privileged elites in earlier ages.

(DBx: In this essay, Fukuyama makes two errors, neither of which substantially detracts from this essay’s excellence. One error is Fukuyama’s claim that strong property rights in Europe first emerged in the Netherlands and England during the early modern era. In fact, there was no significant change in property-rights protection there and then. The second error is Fukuyama’s too-simplistic history of U.S. trade policy. I recommend that Fukuyama read Doug Irwin’s Clashing Over Commerce.)

In this hour-long lecture, Eric Daniels offers a strong defense of capitalism.

In the Wall Street Journal, Barton Swaim reviews Claire Rydell Arcenas’s new book on the influence on Americans of John Locke. Here’s Swaim’s conclusion:

In a short epilogue, Ms. Arcenas recalls staying in a rented apartment in Montana. The place had a Gadsden flag (“Don’t Tread on Me”) displayed on the front porch. Inside was a small library. At eye level, “sandwiched between volumes on the history of the pistol and the US Constitution, stood John Locke’s Two Treatises on Government.” Ms. Arcenas tells this story with a hint of derision and takes the image as one more sign that Locke is used as a “partisan pawn in debates over the political heritage of the United States and its commitment (or not) to minimal government and individual rights.”

I’m not sure. The trans-Atlantic liberal order Locke helped to bring about finds itself under assault from all sides by people determined to replace it with tyranny of one kind or another. A guy who keeps a copy of the “Two Treatises” next to the Constitution and a history of firearms may well understand the greatness of John Locke and the value of liberalism better than anybody.

Richard Fulmer busts the latest version of the myth that central planning of an economy can work – meaning, can improve the economic lot of ordinary people.

Peter Wallison applauds the U.S. Supreme Court’s recent ruling in West Virginia v. EPA. Here’s his conclusion:

In sum, we may now have entered a new era; one where a conservative Supreme Court majority seems ready to take back from administrative agencies the power to define what Congress has or has not said in legislation. To most observers this might seem logical; the judiciary was always intended to interpret the laws made by Congress. But in fact, for many years Congress has passed the difficult policy questions to administrative agencies, and these non-elected officials have made the policy decisions. This is not what the Framers intended or what is appropriate for a democratic republic.

Although many will see West Va. v. EPA as the Court flexing its conservative muscles, it is better seen as an attempt by the Court to restore the original constitutional structure in which Congress makes the policy decisions that underlie the laws. In doing so, it will end a century of judicial support for a form of progressivism that has driven the growth of the administrative state.