Russell Roberts's Blog, page 114

Quotation of the Day…

(Don Boudreaux)

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… is from page 305 of Joseph Epstein’s 1999 book, Narcissus Leaves the Pool:

Edward’s [Shils’s] once great respect for intellectuals and academics had dwindled considerably after the 1960s. More and more he tended to think of academics and intellectuals as essentially quacks pushing untested ideas at no personal risk…. He frequently reverted to the Hebrew word chachem, meaning greatly learned wise man or woman, always used sarcastically to refer to the false wise men and women of our day. His list of the false contemporary chachemim would put the lights out in several major universities.

DBx: Indeed so.

Pictured above is Edward Shils (1910-1995).

Some Links

(Don Boudreaux)

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Heather Mac Donald notes a telling difference that separates the Wall Street Journal from the New York Times. A slice:

On Monday, the Wall Street Journal published an op-ed by George Soros, billionaire hedge fund manager and founder of the Open Society Foundations. Soros defended the resources he has poured into the campaigns of progressive prosecutors ($40 million over a decade, according to a June report). His efforts on behalf of criminal-justice reform are both popular and morally righteous, he claimed. American law enforcement is “rife with injustices,” Soros wrote, as evidenced by the fact that “black people in the U.S. are five times as likely to be sent to jail as white people.” (It was not clear whether Soros literally meant “jail,” whether he was using the term as a synecdoche for both prisons and jails, or whether he knew the difference between the two.)

What happened next was startling: nothing. To be sure, the conservative commentariat outside the Wall Street Journal sprang into action, penning articles, editorials, and letters to the editor challenging Soros’s claims. But within the Wall Street Journal’s editorial offices, quiet reigned. No editorial writer or columnist tweeted that Soros’s op-ed put him in danger. There were no calls for the opinion page to retract or renounce the op-ed, or for the opinion editor to resign.

Yet Soros’s piece fundamentally contradicted the Journal’s editorial position on policing and prosecution. The paper has argued in its editorials that the American criminal-justice system is not racist. Nor are decriminalization and decarceration a blow for racial justice, despite being fiercely pursued by Soros-backed district attorneys. Such policies harm law-abiding blacks most of all, the Journal’s opinion section maintains, by leaving them defenseless against criminals.

Despite Soros’s challenge to its longstanding editorial line, the opinion section proceeded as if publishing contrary views were a normal part of being a newspaper opinion page.

Contrast that calm with the outcry at the New York Times in June 2020, when the paper published an op-ed by Arkansas senator Tom Cotton. Cotton argued that then-President Donald Trump should consider calling out the military in response to the race riots that had been triggered by the killing of George Floyd in Minneapolis and that were then engulfing urban areas. The senator explicitly distinguished the rioters from “peaceful, law-abiding protesters”; the latter should not be confused with “bands of miscreants,” he said. But the police were at present overwhelmed, outnumbered, and disproportionately targeted by the violence, Cotton noted. Cotton grounded his argument in historical precedent, invoking, among other examples, President Dwight Eisenhower’s deployment of the 101st Airborne to protect Little Rock Central High School’s desegregation efforts.

The Cotton op-ed threw the New York Times into crisis. It was apparently life-threatening to the paper’s black employees.

Writing at Reason, my Mercatus Center colleague Michael Farren explains the damage lurking in industrial policy. A slice:

The political zeitgeist has been moving back toward industrial policy, seemingly coincident with rising populism since the 1990s—despite abundant evidence that central planning is poisonous to innovation. Whether it’s encouragement via subsidies or constraint via regulation, using the government to guide the economy is akin to thinking that just a little bit of cyanide won’t hurt.

Samuel Gregg isn’t impressed with David Brooks’s recent criticism of capitalism. A slice:

And here’s the problem: The more you allow the government to intervene in the economy—whether through regulation, subsidies, tariffs, or industrial policy—to try and, say, diminish wealth differentials, the greater the opportunities for what economists call rent-seeking. This is when an individual or business tries to attain wealth by extracting resources from others (e.g., the government) but without actually doing much by way of economic productivity—in short, without adding value. There’s no reason why government interventions to address some of the wealth differentials and their effects that Brooks laments would not become yet another source of rent-seeking.

The Cato Institute’s Chris Edwards looks carefully at the Orwellian named “Inflation Reduction Act.” A slice:

The budget modelers at Penn‐​Wharton estimate that the Senate bill would reduce the deficit by $86 billion in 2031, at most. That would be just 4 percent of the projected deficit that year and just 0.2 percent of U.S. GDP. So the bill’s impact on inflation through reducing deficits and demand would be close to zero.

Tax Foundation calculates that the Senate bill would reduce deficits by $178 billion over 10 years, which is just 1 percent of expected deficits over the period. Both Tax Foundation and Penn‐​Wharton find that the Senate bill would actually increase deficits the first few years, and thus have the opposite effect on inflation as the “reduction” promised by the bill’s title.

Pat Lynch remembers Geoff Brennan.

Debbie Lerman reports on how Deborah Birx got a White House job.

Maj. Gen. James Eifert, writing in the Wall Street Journal, warns of the ill-consequences of the Pentagon’s covid-vaccine mandate. A slice:

While the Pentagon suggests that military readiness is at risk with anything less than “maximum vaccination,” it’s vital that we consider the real consequences of enforcing its mandate. My Florida National Guard formations face the potential loss of about 1,000 unvaccinated guardsmen out of 12,000 total airmen and soldiers. That leaves us shorthanded as our state enters hurricane season, while more than 1,000 soldiers and airmen are also deployed on federal missions around the world.

Since March 2020, even before the vaccine, none of my military units have suffered any reductions in readiness as a direct result of the virus. The only loss in military readiness we’ve experienced has been the result of quarantine requirements, wholesale base lockdowns, travel restrictions and training cancellations.

Sound policy must be more beneficial than detrimental; the military’s Covid mandate decidedly isn’t. The benefits of vaccination are limited. Existing vaccines don’t prevent transmission of the dominant variants. And the virus has become less capable of rendering severe clinical outcomes, while effective treatments are now available for those who do get sick.

Even at its worst, Covid posed far less of a threat to young, healthy military cohorts than it did to other populations. There have been only 95 U.S. service-member deaths attributed to Covid from a total military population of 2.154 million. That’s a mortality rate of 0.004%—and a case-survival rate of 99.98%, based on the 421,807 infections the Pentagon has reported as of July 1. By contrast, the military’s suicide rate during 2020 was about seven times as great (0.027%). Any loss of life is regrettable—but shouldn’t our military be able to accomplish its missions while accepting a health risk this small?

Quotation of the Day…

(Don Boudreaux)

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… is from page 192 of former Caltech physics professor and provost – and former Energy Department undersecretary during the Obama administration – Steven Koonin’s excellent 2021 book, Unsettled? What Climate Science Tells Us, What It Doesn’t, and Why It Matters:

And there is peer pressure: more than a few climate contrarians have suffered public opprobrium and diminished career prospects for publishing data that doesn’t support the “broken climate” meme.

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(Don Boudreaux)

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My Mercatus Center colleagues Alden Abbott and Andrew Mercado explain “what the administration misunderstands about the current crisis, and how the Jones Act makes everyone worse off.” A slice:

Another constraint on shipping companies’ ability to service US ports quickly is the Jones Act. Because the vast majority of ocean-based shipping companies are not based in the United States and do not meet Jones Act requirements, they cannot pick up cargo in one US port and drop it off in another US port. This generates a substantial inefficient underutilization of shipping capacity. Whether by additional ship, truck, or rail, these extra steps add cost, complexity, and time to the shipping process that would not be relevant if a single foreign ship could service more than one US port.

George Will writes about the changing economics of the news business. A slice:

[Andrey] Mir believes that all this has produced “post-journalism,” by which the mainstream media supply not news but “news validation,” the validation of news that is disturbing “within certain value systems.” This business model — media as “agents of polarization” — results in the stratification of newspapers because, Mir says, it produces large rewards for only a few nationally significant newspapers.

My intrepid Mercatus Center colleague Veronique de Rugy is rightly critical of how airlines in the U.S. responded to their receipt of gargantuan covid subsidies.

In this letter to the editor of the Wall Street Journal, Michael Doran makes a good point:

In “The 20-Year Experiment Holding the U.S. Back” (op-ed, July 29), John Berlau and Josh Rutzick make a good point about the Sarbanes-Oxley Act’s responsibility for the demise of smaller initial public offerings and many public companies. But the lynching of these firms at the hands of Congress and various government agencies was a tragedy in multiple acts, not only one.

In the 1980s and ’90s, smaller investment banks offered smaller IPOs and made a market in the stocks after the deal closed. They did this not only to support their clients, but also because it was profitable. Under the old over-the-counter trading system, spreads were large, but that made it attractive to trade these smaller-cap stocks and ensured that there would be a market.

Under progressively tighter best-execution regulations, together with the decimalization that eliminated the cushion in a one-eighth or even a one-sixteenth spread, it became unprofitable to trade small-cap stocks, and the number of market makers willing to try shrank dramatically. Without aftermarket liquidity, smaller IPOs became impossible to sell. Once again, in regulators’ zeal to improve the market, they killed it.

By forcing private companies to stay private for longer, regulators reduced the public’s access to information about those companies, locked retail investors out of opportunities, restricted promising young companies’ access to capital and empowered venture-capital and private-equity funds, which have virtually no reporting requirements.

Jane Shaw writes wisely about Hayek’s atavism thesis.

. A slice:

Novak especially misses the “political” in the sense that these prophets of regulation wanted to rule, to remake American society in their own image, to establish a new regime. They were truly social engineers in the sense that Paul Johnson so ably outlined in Modern Times. The curse of the 20th century, Johnson observed, was the belief that experts, technocrats, bureaucrats, or planners “can shovel human beings around like concrete.” In this way, “our democracy” was fundamentally anti-democratic. “Substantive” democracy cannot abide the procedural (what the progressives dismissed as “formal”) democracy of political parties, representation, elections, and, above all, accountability of bureaucrat-engineer-experts to the people. Herbert Croly, a giant figure in the progressive movement, was honest enough to say in 1909, “the average American individual is morally and intellectually inadequate to a serious and consistent conception of his responsibilities as a democrat.” It is telling that Novak largely keeps Croly off-stage in New Democracy.

Rand Paul plausibly accuses Fauci of lying about gain-of-function research.

Ian Miller reports on a new low in mask studies.

Responding to an ignorant physician who accuses the authors of the great Great Barrington Declaration of being “backed by Koch brothers money,” Jay Bhattacharya tweets:

For this doctor, pointing out the damage that the lockdown policies he supported on the poor, the vulnerable, small business owners, and the working class is “faux populism.” Though working doctors are not members of the laptop class, many have values aligned with it.

(DBx: I call the physician who prompted this apt response by Jay “ignorant” because the term fits perfectly. Only ignorant people resort to ad homimen argumentation. And when the central fact that allegedly justifies the ad hominem attack is itself untrue, the ignorance at work is revealed to be especially intense.

I propose a study: Someone should research the prevalence of ad hominem arguments used by pro-lockdowners compared to the prevalence of such arguments used by anti-lockdowners. I strongly suspect that of the two groups – pro-lockdowners and anti-lockdowners – the former rely far more frequently on ad homimen argumentation.)

Progressives and Their Consistent Failure to Understand the Incomprehensible Complexity of Reality’s Details

(Don Boudreaux)

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Commenting on this EconLog post by Pierre Lemieux, Thomas Lee Hutcheson writes:

I judge that Capitalism does a pretty good job of aligning the interests of profit-making firm owners with those of people. Economic theory helps understand circumstances in which the alignment is less than perfect — externalities like pollutants and CO2 and methane emissions being perhaps the biggest exception. Theory also helps understand how to tax raise resources to transfer to those whose participation or inability to participate in the market economy yield insuffuent levels of consumption, especially of services like health care.

Much evil has been done in misapplying theory to make Capitalism align better with the interests of people (and more in tryin to replace Capitalism with other systems).. As Libertarians generally understand how and why this mis-alignment occurs, I invite then to join with Liberals and Progressives to find ways to reform the policies that seek that better alignment.

Mr. Hutchison’s view is mainstream. Pick an economist or political scientist at random and you’ll likely find someone who will nod approvingly at Mr. Hutcheson’s remarks. But I believe these remarks to be wholly, if innocently, in error. Below is a slightly edited reply that I left at EconLog to Mr. Hutcheson’s remarks:

Thomas Lee Hutcheson: With respect, you confuse blackboard theories with reality. Almost anything can be shown on a blackboard, and welfare economics is full of lovely pictures explaining just how god would intervene in reality if god were a government official. But god isn’t in charge. The human world is manned only by imperfect human beings. These human beings – including Nobel-laureate economists – cannot begin to comprehend the complexity of modern economic reality. In its details, this complexity is literally incomprehensible to mere mortals, and it will remain so.

The only way to make welfare-economics demonstrations of ‘optimal’ interventions into the market remotely plausible is to reduce the complexity of the modern economy to such a degree that its details become close to being comprehensible to we mere mortals. But any such reduction in the complexity of the modern economy to make it conform to the unstated assumptions of welfare economics would first torture and then destroy the patient that the welfare-economics doctors are trying to make more perfect.

Of course the real-world economy is imperfect; each of us can see countless imperfections every day. And just as many people pray to god to cure their cancer or to improve their job prospects, many people – especially Progressives – pray to the state, which they treat as a god, to make the world more perfect by eliminating these imperfections. But this move is based only on faith.

Far too much of welfare economics is secular theology that is mistaken for science. Apart from failing to come to grips with the enormous, incomprehensible reality of modern market economies, Progressives commit another scientific error: The assumption of individual self-interest that drives many of welfare-economics conclusions about alleged market failures is dropped when Progressives theorize about the politicians, bureaucrats, and judges who are to be in charge of correcting market failures.

Why do Progressives consistently turn a blind eye to the reality that human beings in government are at least just as self-interested as are human beings in the market? The typical welfare economist and typical Progressive consistently fails to explain where the flesh-and-blood persons in government will acquire the detailed knowledge necessary to intervene in ‘improving’ ways – equations and graphs on blackboards, in textbooks, and in journal articles do not supply such knowledge – and why the self-interest of these government officials will be put aside as they attempt to move us closer to imagined perfection.

…..

One of the many features that distinguish true liberals from Progressives, and from conservatives in the Trumpian mold, is the following. True liberals understand that reality is imperfect, but that markets generate outcomes that are pretty good – outcomes that are vastly better, for ordinary people, compared to what life was like before capitalism and what it would be like without capitalism. We liberals, appreciating the enormous treasures of modernity made possible by what Deirdre McCloskey calls “market-tested (or trade-tested) betterment,’ don’t agonize over the relatively minor deviations here on earth from heaven. (Compared to what life was like before capitalism, we moderns are damn close to being in heaven; we’re certainly far nearer to heaven than we are to the hell in which nearly every human being lived until just a few hundred years ago.)

Progressives and other statists seem to have little appreciation for just what the market order has in fact accomplished. Taking for granted the benefits of modern capitalism and able to imagine heaven on earth, Progressives and other statists resort to coercion to attempt to move society from pretty good to perfect. This attempt is not only destined to fail on its own terms, it’s also invariably fatal.

Quotation of the Day…

(Don Boudreaux)

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… is from pages 3-4 of Joseph Epstein’s 1999 book, Narcissus Leaves the Pool:

As for how easy my physical life has been, let me count the ways: I have never been tortured; I have never been shot or stabbed; I have never, after the age of ten, been in a serious fight; I have never fallen from a horse; I have never been hungry or thirsty for more than a few hours. Perhaps only an American in the twentieth century can make such a happy claim, but in the physical realm I have known almost nothing of pain, deprivation, or humiliation.

In the sixteenth century, certainly no one would have been so privileged.

Some Links

(Don Boudreaux)

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Phil Magness explains that Biden, in attempting to redefine “recession,” is stealing a page out of a corrupt playbook used by Nixon. Here’s Phil’s conclusion:

There’s a lesson for the Biden administration in the Nixon episode, although it is different from the lesson they appear to have taken. The White House’s definitional wordsmithing could not overcome the onset of worsening economic realities in 1974, and its frequent appeals to the NBER determination could not run down the clock against a prolonged recession. Faced with similar risks today, Biden’s advisors may well be stumbling their way into a repeat of the 1970s economic malaise.

Pierre Lemieux exposes the inanity (to describe it mildly) of the phrase “people before profits.”

Arnold Kling is pessimistic about the prospects of academic economics.

Eric Boehm is correct: The Orwellian-named “Inflation Reduction Act of 2022” will not reduce inflation. A slice:

Meanwhile, other provisions in the Inflation Reduction Act would sit uncomfortably beside Congress’ other major initiatives this year. Just last week, the Senate voted to hand $66 billion in new subsidies to computer chip manufacturers as part of an overall effort to boost domestic manufacturing of high-end electronics. But the corporate tax increases included in the Inflation Reduction Act would fall most heavily on the manufacturing sector, according to the JCT.

As a result, senator voting for both bills would effectively be voting to hike taxes on the very industries they just voted to subsidize. So much for improving American manufacturers’ competitiveness!

Writing in the Wall Street Journal, GMU Scalia Law School professor J.W. Verret offers sound advice to the Securities and Exchange Commission regarding cryptocurrencies. A slice:

The SEC’s position—that most tokens are securities and must register or face enforcement—is obtuse. It’s also an approach that works to the benefit of the scammers and hucksters who have abused the crypto space.

Geoff Shullenberger tweets: (HT Jay Bhattacharya)

The parents who are flying the Democratic coop because of school closures/mandates are one of the more interesting and potent organic political forces of our time, which is why the media is currently working overtime to defame them as dupes of “misinformation”/Koch brothers etc.

Scott Morefield decries Politifact’s attempt to rescue Deborah Birx from her misrepresentations about covid vaccines’ ability to prevent transmission.

Good Medicine; Wrong Prescription

(Don Boudreaux)

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Here’s a letter to the Wall Street Journal:

Editor:

House members Jake Auchincloss and Stephanie Murphy wisely urge their fellow Democrats, as well as Republicans, to support free trade (“Free Trade Can Fight Inflation,” August 2). Free trade does indeed put downward pressure on prices.

But today’s inflation is fueled, not by high tariffs, but by reckless fiscal and monetary policies. And so any Member of Congress who supports the Biden administration’s and the Fed’s financial incontinence but then recommends that the resulting inflation be reduced with tariff cuts is akin to a fentanyl pusher who encourages his customers to continue to ingest his toxic ware but then recommends that the resulting damage to brain and body be reduced with daily exercise.

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

Quotation of the Day…

(Don Boudreaux)

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… is from page 78 of David Mamet’s 2022 book, Recessional: The Death of Free Speech and the Cost of a Free Lunch:

Leftist identity groups now merge, now compete for power, united, finally, in a codependent submission to a lie. That is, that America is an evil land, but even the foolish Left wants to earn a living, and drive a car, and so lives in state-sponsored denial. This enervating state can be sustained only if there is no possibility of individual apostasy, which is to say of freedom.

Goods and Services With Price Ceilings of $0

(Don Boudreaux)

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In my latest column for AIER I write about that relatively small group of goods and services that are legal to give away (and to accept as gifts) but illegal to sell for positive money-prices (and to pay money as a condition of receipt). A slice:

If I’m suffering renal failure and want to undergo a kidney transplant, I’m free to ask you to donate your kidney to me, and you’re free to give it to me. But I’m not free to offer to you for your kidney what Anglo-American contract lawyers call “consideration.” The practical upshot of this prohibition is that it’s unlawful for me to offer to you, and for you to accept, some amount of money in exchange for your kidney. Ditto if I want to adopt your young child, or if I want you to have sex with me. You can volunteer to transfer to me your parental rights or to provide me with your intimate companionship, but I may not lawfully pay you for these services and you may not solicit payment for them.

Especially in the cases of transfers of parental rights and of kidney donations, this legal situation is bewildering. Not only are you free to give to me your parental rights or your kidney, if and when you do so society generally applauds you for your mature good sense (in the case of adoption) or for your unusual generosity (in the case of a donated body organ). Yet if you dare get paid as much as a few nickels as consideration in either of these exchanges, you’re regarded as having participated in an act that scandalously offends both law and human decency.

Why? Why do we applaud kidney donors but threaten to jail kidney sellers? After all, sellers no less than donors transfer kidneys from persons willing to part with them to persons eager to have them. Are there horrible consequences that don’t exist with uncompensated donations but that arise the moment donors receive some money in exchange for their valuable agreement to sell a kidney?

Most people, upon encountering the question asked immediately above, will respond “Of course there are!” But when pressed to identify specific ill-consequences that allegedly would haunt society if the government allowed prices of the likes of transplantable body organs, parental rights in infants, and sex with adults to rise above $0, the answers are quite weak.

In bold italics below are two of the most commonplace answers.

“Allowing the sale of kidneys would exploit poor people!”

This response is bizarre. How can someone go from being non-exploited when that person is free to receive nothing more than nothing in exchange for one of his or her kidneys to being exploited when he or she is free to bargain for a positive price for the kidney?

The retort to my response invariably is that, by allowing people to be paid to donate kidneys, poor people will be so desperate to earn cash that they’ll feel compelled to do what is not in their long-run best interest.

Apart from the arrogance of such a retort, those who resort to it implicitly presume that the market price of kidneys will be too low to make any such decision to sell ‘really’ worthwhile. But because even poor Americans today live well above subsistence, the market price of kidneys would not reflect any desperate need on the part of suppliers to survive the immediate future. The market price would be high enough to enable a considered judgment about the costs and benefits of selling a kidney.

By the way, if poor Americans truly did live on the edge of survival, then denying to them the opportunity to improve their or their families’ prospects by selling kidneys would be even more cruel than it is in reality. Better to be alive and walking with one kidney – which, remember, is really all that most persons will need for the entirety of their lives – than to be dead and buried with two.