Russell Roberts's Blog, page 124
July 9, 2022
Bonus Quotation of the Day…
… is the opening paragraph of Deirdre McCloskey’s feature essay – titled “A Libertarian Is the Only Real Egalitarian” – in the May/June 2022 Cato Policy Report:
A libertarian – which mean a true “liberal” in the original sense of the word – wants a society with no human-made, involuntary ups and downs, no masters and slaves. That’s all there is to it.
DBx: Yes!
For even greater precision of meaning, I would say, instead of “with no human-made”, “with no human-designed“. But this, on my part, is nit-picking. Deirdre’s opening paragraph is a gem.
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With inflation running at a four-decade high, it’s time to reconsider the idea that the economy will benefit if corporations sacrifice their bottom lines in favor of environmental, social and governance considerations. The truth is that diverting corporate attention away from long-term profitability depresses output and raises prices.
In 2019 the Business Roundtable, an association of large companies’ CEOs, abandoned its longstanding dedication to the idea that the “purpose of a corporation” is to maximize shareholder value. Instead, the group argued, businesses should follow a “multistakeholder” model. If corporate management gave a shifting set of ESG concerns priority over long-term profit maximization, the roundtable believed, firms could create “an economy that serves all Americans.”
It hasn’t panned out that way. When companies focus solely on maximizing profits, their principal aim is to produce more at lower cost. Admittedly, some profitability strategies—such as constraining supply—are at odds with maximizing output. But that’s impossible without an organized and powerful monopoly. Even companies with great monopoly power lose that power over time as competitors arise. In a competitive market, corporations serve themselves and consumers by making more for less.
Bravo for pro-abortion-choice economist John Cochrane (and others) for resisting the American Economic Association’s political grandstanding. (HT Arnold Kling)
Pierre Lemieux writes wisely about child care and government’s role – or not – in supplying it. A slice:
To avoid being what James Buchanan called normative eunuchs, we may consider another factor: personal responsibility, which is inseparable from the ethical belief in equal and sovereign individuals. In this perspective, each individual adult (or voluntary family grouping) must make his own trade-off between, on the one hand, the joy and learning benefits of having and rearing children and, on the other hand, the opportunities that must thereby be forgone. Time and other resources are limited.
And how did our forebears, who were poorer than us, do it? Anyone today who is willing to be, net of child care, as poor as our forebears were could raise as many children as they did with as little help from Big Brother as they had. This remains true despite changes in relative prices between their time and ours; for example, housing and domestic servants have become much more expensive relatively to domestic appliances and robots, which have become much cheaper (they previously had an infinite price).
Tunku Varadarajan, writing in the Wall Street Journal, reports on the vileness of teachers’ (so-called) unions. Two slices:
If you’re looking for proof that teachers unions don’t care about the interests of schoolchildren, you can find it in the impoverished Bronx neighborhood of Soundview. A school building on Beach Avenue has been shuttered for almost a decade, and the United Federation of Teachers is suing to keep it closed.
On Aug. 22, a new charter high school, Vertex Academies, will begin classes here. In the local school district, only 7% of students who enter ninth grade are ready for college four years later. For black students, the figure is 4%. The new school promises to deliver “a high-quality education to 150 minority students from low-income backgrounds” in its first year, says founding principal Joyanet Mangual.
Vertex will use the premises of the defunct Blessed Sacrament School, where Sonia Sotomayor was valedictorian in 1968. When the school shut down in 2013, the justice declared herself “heartbroken.” Her mother had scrimped and saved to send her there: “She watched what happened to my cousins in public school, and worried if we went there, we might not get out,” Justice Sotomayor told the New York Times.
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Yet he and Ms. Mangual take heart from the parents who have flocked to Vertex in search of “salvation” for their children. Many of them are first-generation immigrants, such as the Hispanic gardener at the school’s playground who doesn’t speak a word of English. He brought his eighth-grade daughter to Ms. Mangual and pleaded for her to be admitted to Vertex. The girl had to fill out all the forms, much as Ms. Mangual did for her own father when he was applying for jobs 20 years ago. These immigrants have “come to the United States,” Mr. Rowe says. “Even if they’re living 10 to a family, by hook or by crook, their kids are going to do well.” Assuming the teachers unions don’t get in their way.
“The stillbirth of The Liberty Institute.”
Joel Zinberg applauds the U.S. Supreme Court’s excellent ruling in West Virginia v. EPA.
Gary Galles busts popular myths about supposedly “underpaid workers.”
Phil Magness writes sensibly on his Facebook page:
I was never a fan of Abenomics for reasons that are probably not hard to deduce. That said, it’s useful to contrast NPR’s depiction of Shinzo Abe’s legacy in their assassination coverage (“divisive,” “ultranationalist”) with NPR’s generally reverential obituary for Fidel Castro, which buried any hint that he was a mass-murdering Marxist autocrat to the bottom of the article and even cast it as a “debated” part of his legacy.
It’s long past time to cut off any and all tax dollars from this dumpster fire of a news outlet.
Here’s the abstract of a new paper (as yet peer-reviewed or published) by Neeraj Sood, Shannon Heick, Josh Stevenson, and Tracy Høeg: (HT Noah Carl)
There is still considerable debate about whether mask mandates in the K-12 schools limit transmission of SARS-CoV-2 in children attending school. Randomized data about the effectiveness of mask mandates in children is still entirely lacking. Our study took advantage of a unique natural experiment of two adjacent K-12 school districts in Fargo, North Dakota, one which had a mask mandate and one which did not in the fall of the 2021-2022 academic year. In the winter, both districts adopted a masks-optional policy allowing for a partial crossover study design. We observed no significant difference between student case rates while the districts had differing masking policies (IRR 0.99; 95% CI: 0.92 to 1.07) nor while they had the same mask policies (IRR 1.04; 95% CI: 0.92 to 1.16). The IRRs across the two periods were also not significantly different (p = 0.40). Our findings contribute to a growing body of literature which suggests school-based mask mandates have limited to no impact on the case rates of COVID-19 among K-12 students.
Quotation of the Day…
… is from page 88 of Matthew Hennessey’s excellent 2022 book, Visible Hand:
Prices coordinate markets. Like buoys on a lake, they help market participants – buyers and sellers – navigate when they can’t see shore. They provide markers on an unmapped route.
DBx: Yes; and it’s an apt analogy (except, of course, that market prices – unlike the positioning of actual buoys – are not determined by anyone; market prices are emergent phenomena).
Among the most important lessons learned by students in a well-taught Econ 101 course is that market prices are not arbitrary. Prices are mutually agreed-to terms of exchange. Prices are not set by sellers; prices are not set by buyers. Prices are the monetary terms of exchange that arise whenever buyers and sellers actually, mutually agree to exchange with each other. (It’s important always to remember that wages are prices.)
Market prices reflect the purchasing (and doing-without) alternatives that buyers believe are available, and prices reflect also the selling (or use) alternatives that sellers believe are available. Each price thus conveys, in a concentrated and ‘objective’ form, the worth of each unit of a good or service to buyers (given what buyers’ believe to be their alternatives) and to sellers (given what sellers’ believe to be their alternatives). Everyone can then observe the prices at which exchanges have recently taken place. Everyone can use this information to peacefully navigate his or her way in the market. These navigations both are guided by prices and contribute to changing the prices whenever the ‘navigators’ – the market participants – discover on their journeys new information, decide they wish to change their destinations, or have hunches about new and better routes.
The notion that navigation on the deep sea of the modern market can be improved by dispensing with market prices and wages is hopelessly wrong. Equally mistaken is the notion that market navigation can be improved by government-imposed controls on prices and wages. Prices and wages that aren’t the results of actual market exchanges are worse than useless; they’re misleading. They give bad directions. They are lies.
Advocates of price controls – including advocates of minimum wages – are advocates of lying; they are advocates of using the government to spread misinformation. These advocates – unhappy, for whatever reason, with the information conveyed by market prices – childishly suppose that the underlying reality can be changed simply by changing the contents of the messages that deliver this information.
I offer the following bit of advice to students who take economics courses: If you’re so unfortunate as to have a teacher who insists that minimum wages and other price controls can be useful devices in the real-world for improving market outcomes, be very suspicious of this teacher. He or she likely is quite a poor economist, regardless of his or her formal credentials. That teacher might well be a superb guide to whiteboard-displayed theoretical curiosa, but he or she is almost certainly an unreliable guide for understanding the operation of real-world economies.
July 8, 2022
Bonus Quotation of the Day…
… is from page 436 of the 5th edition (2015) of Thomas Sowell’s excellent Basic Economics:
Going into debt to create long-term investments makes as much sense for the government as for a private individual’s borrowing more than his annual income to buy a house. By the same token, people who borrow more than their annual income to pay for lavish entertainment this year are simply living beyond their means and probably heading for big financial trouble. The same principle applies to government expenditures for current benefits, with the costs being passed don to future generations.
DBx: Yes. And when today’s politicians and citizens-taxpayers can pass on to future generations the obligation to pay for today’s spending, today’s spending is higher and less carefully considered than it would be if today’s taxpayers were required – say, through a balanced-budget amendment – to pay for this spending.
You Can’t Make This Stuff Up
Here’s a letter to the Wall Street Journal:
Editor:
French president Emmanuel Macron wants to fight inflation by drenching the economy with more money (“Macron Seeks to Step Up France’s Inflation Fight,” July 8). Mon Dieu! Let’s hope that M. Macron doesn’t become a firefighter, for were he to do so he’d fight fires by drenching them with gasoline.
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
The Great Barrington strategy of “focused protection” helped minimize the pandemic’s collateral damage until vaccines became available. The Biden administration then undertook a strategy of herd immunity via vaccination. But when this strategy failed, it doubled down with vaccine mandates.
From the outset of the pandemic, the mainstream medical establishment and government bureaucracy were aligned behind a lockdown-at-all-costs strategy. The Trump White House tapped Scott Atlas, a Hoover Institution fellow and radiologist, for a contrarian perspective. Dr. Atlas endorsed the elements of the Great Barrington strategy. The House report criticizes him for a memo in which he argued that “stopping all cases is not necessary, nor is it possible. It instills irrational fear into the public. Non-prioritized testing is jeopardizing critical resources for truly critical testing and is creating problematic delays in test results for the most important populations.”
He was right on every point.
Laura Rosen Cohen applauds the courage of those who dissented from the mainstream covid hysteria. A slice:
Alex Washburne, a Montana-based mathematical biologist and statistician who has published in ecology, evolution, epidemiology and finance, tried to sound the alarm bell on the massive collateral damage of lockdowns very early on. His background in finance and economics led him to believe that “the COVID response was greatly imbalanced and risked causing harm in the service of public health.”
Politically independent, but greatly concerned about conservation, climate change and social liberties, he says it was the Covid response that made him realize the limits of left-liberalism. Nobody would publish him. He became a scientific outcast and learned a number of life lessons from the treatment he received from the scientific community and what he saw as public health policy disasters.
“Covid showed me ways in which socioscientific inefficiencies…can lead to an insular expert class that mismanages critical risks our society faces and, without checks and balances, they can weaponize their myopic expertise (e.g. epidemiology) to mislead society and cause harm…”
As a result of the backlash he faced, Washburne eventually left academia and founded Agora, a new scientific startup and incubator ‘safe space’ for scientists of different backgrounds and divergent political views to collaborate.
“Woman, 19, died in agony from cancer after pleading to see her doctor in person for more than a YEAR about a painful lump on her back – as family say GPs ‘used Covid as an excuse to see fewer people'” – so reports the Daily Mail. (DBx: But, covidians will insist, the all-important fact, the truly wonderful fact, is that this young woman didn’t suffer and die from covid – which, of course, is what matters above all.)
The straw man – 21 months after he was declared to be extinct – continues to terrorize China.
The editors of The Telegraph are wise about living with covid. Here’s their conclusion:
Certainly, the latest wave has put more people in hospital; but the real damage to “our NHS” has been caused by the lockdown measures and the backlog they caused. We do not need anything like that again.
Newman Nahas is largely correct when he tweets: (HT Jay Bhattacharya)
Let’s be clear. Covidians never gave a damn about granny. They used her as a pretext to urge for policies they thought could keep THEM safe.
Reacting to a photo of ink pens classified as “clean” or “dirty,” Jay Bhattacharya tweets:
Every single one of these transparently useless gestures in covid theater served to undermine public trust in public health. It is public health that is responsible for the sorry state it finds itself in, unfortunately to the detriment of the public’s health.
Jeffrey Singer applauds the FDA’s decision to allow pharmacists to prescribe Paxlovid.
My GMU Econ colleague Dan Klein explores the connection between classical liberalism and democracy. A slice:
The mythologized democracy, Hayek suggested, in the 20th century especially, projects a fantasy of consensus—as in the small band of our ancestors of our Paleolithic past, when there were just 40 of us in a small band. This is in our genes still, and in our instincts. We decided by consensus in the small band.
Modern collectivist politics plays upon these Paleolithic instincts by projecting the nation as a band. On this fantasy, there is no reason to limit or check the actions of the band as a whole. Its consensus knows what is good for the band and faithfully advances that good.
If we are the government, by democracy, why would we want to put limits and checks on ourselves when striving to advance our own common interest?
Tocqueville foresaw the emergence of a quasi-religion of collectivist politics perfumed by democratic mythology. Big collectivist government now fully replaces God as a source of meaning and validation. The nightmare that he warned us of is a continuation of the displacement of God and religion by temporal powers.
Hayek, too, thought along these lines, and saw that this unlimited democracy came from thinking about the government as us.
The problem in all of this is that the nation is not a small simple band of 40 people. In the modern complex world, government lacks knowledge, benevolence, competence. Interpretations are not shared, and accountability is slight. Government lacks correction mechanisms. It never admits its mistakes. It breeds an administrative state, the permanent bureaucracy, the deep state, you might say, and it breeds self-serving ideologies. The administrative state is staffed mainly by people who support the [political] parties most eager for governmentalization. They push incessantly for governmentalization.
“Boris Johnson leaves behind a bigger, bloated state.”
Reason‘s Eric Boehm reports that the FDA “finally admits that it caused the baby formula shortage.”
GMU Econ alum Dominic Pino, now with National Review, is always worth reading.
Quotation of the Day…
… is from page 53 of Deirdre McCloskey’s newly published 2022 volume, Beyond Positivism, Behaviorism, and Neoinstitutionalism in Economics:
If industrial policy and other central planning were good ideas, the economists could have made private fortunes exploiting the imperfection justifying them, and centrally planned economies would have been sterling triumphs rather than miserable failures.
DBx: Yes. Yes. Yes.
The world overflows with professors, pundits, and politicians who claim to have identified this or that way that markets ‘fail’ or feature ‘imperfections’ that can be ‘solved’ by government intervention. Yet most such ‘failures’ and ‘imperfections,’ if they really exist and are significant enough to matter, are opportunities for personal profit for the professors, pundits, or politicians who claim to be certain of the reality of these ‘failures’ or ‘imperfections.’
Yet I’ve never encountered any such failure-finding or imperfection-identifying professor, pundit, or politician who’s willing to put his or her own money where his or her mouth or keyboard is. The only money such persons are willing to put at risk is money belonging to other people – namely, to taxpayers and consumers. Why are such professors, pundits, and politicians taken seriously? It’s a genuine mystery.
If Jones tells me that he believes that Acme Corp. stock is underpriced but he himself refuses to invest his money in purchases of Acme Corp. stock, I conclude – with much confidence – that Jones doesn’t believe his assertion about this particular market failure. I’m certainly not going to be led by Jones’s claim to invest my money in Acme Corp., and I would oppose any effort by Jones to seize my money against my will in order to invest it in shares of Acme.
Whether the professor, pundit, or politician is asserting the existence of monopsony power in labor markets, monopoly power in output markets, unwarranted racial or sexual discrimination in this, that, or many markets, or inattentiveness of markets to this or that worker or consumer preference, chances are very high that the alleged ‘failure’ or ‘imperfection’ is one that, were it real, is pregnant with profits for anyone who successfully ‘solves’ the ‘failure’ or diminishes the ‘imperfection.’ The fact that the professors, pundits, and politicians who frequently allege the existence of market ‘failures’ or ‘imperfections’ as reasons for government interventions never put their own money and effort where their mouths are is proof as good as proof in human affairs gets that these people’s economic assessments are untrustworthy.
July 7, 2022
Bonus Quotation of the Day…
In the end, the most egregious failure of the [Trump White House Coronavirus] Task Force was its complete and utter disregard for the harmful impact of its recommended policies. This was outright immoral, an inexplicable betrayal of their most fundamental duty. I have no doubt it will go down as one of the greatest public health failures in history.
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First and worst, these policies are destined to be counterproductive. Subsidies to suppliers of green energy, for instance, increase the cost of that energy and hinder the innovation that could make it more commonplace. The Democrats’ prescription-drug policy would be costly and in the long run perhaps even deadly. As the Paragon Institute’s Brian Blase recently wrote in a newsletter, “Former Chairman of the Council of Economic Advisers Tomas Philipson … estimates that these proposals would lead to 135 fewer new drug approvals over the next two decades. This reduced innovation would translate into a loss of life years many times larger than the life years lost from COVID-19.”
To set the scene, briefly, the 1619 Project aims to “reframe the country’s history, understanding 1619 as our true founding, and placing the consequences of slavery and the contributions of Black Americans at the very centre of our national narrative.” Since it was launched, 1619 has been rebutted and debunked by American historians of comparable or even higher standing than Hackett Fischer (a very select group). Among those who have pointed out its many distortions, lies and inaccuracies is Gordon S. Wood, perhaps America’s greatest living historian, who has said he was surprised the project “could be so wrong in so many ways”. When another esteemed historian, Leslie M. Harris, expressed her reservations about one of 1619’s core claims — that the American Revolution was fought in large part to preserve slavery in North America — to a New York Times fact-checker, she was ignored.
Since publication, The New York Times has stealthily edited contentious passages while Hannah-Jones seems to spend most of her time arguing on Twitter, accusing her critics of being old white dudes who Just Don’t Get It. In one swiftly deleted tweet, she appeared to revel in the idea that the violent eruptions of the summer of 2020 be called “the 1619 riots”. None of these problems with the 1619 Project as a work have dampened its impact on American public life.
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The story told by Hackett Fischer stands in stark contrast to the demotivating, almost paralysing lesson of the 1619 Project: slavery not as America’s original sin but something hardwired into its DNA, a past that cannot be escaped. It is a dispiritingly static view of the country. Rather than displaying a curiosity at the paradox that has animated so much American history — “How is it,” asked Dr Johnson in 1775, “that we hear the loudest yelps for liberty among the drivers of Negroes?” — the 1619 approach dogmatically sweeps aside everything other than the existence of slavery as minor details in the story of the United States.
African Founders, by contrast, demonstrates that there doesn’t need to be a trade-off between “centring” the experience and stories of black Americans and an appreciation of the gift of American liberty. Indeed, the takeaway from Hackett Fischer’s work is that the latter cannot be achieved without the former.
Here’s wisdom from economist Gary Galles about free riding, expressive voting, and charity.
There is no doubt social media can create or exacerbate certain social pathologies among youth. But pro-censorship conservatives wants to take the easy way out with a Big Government media ban for the ages.
Ultimately, it’s a solution that will not be effective. Raising children and mentoring youth is certainly the hardest task we face as adults because simple solutions rarely exist to complex human challenges–and the issues kids face are often particularly hard for many parents and adults to grapple with because we often fail to fully understand both the unique issues each generation might face, and we definitely fail to fully grasp the nature of each new medium that youth embrace. Simplistic solution–even proposals for outright bans–will not work or solve serious problems.
“Minor Tariff Relief Appears To Be Coming; More Is Needed.”
TANSTAFPFC (There Ain’t No Such Thing As Free Protection From Covid)
Adding to the list of useless things that I fully intend to ignore: the CDC’s four-tier covid travel warning system.
We love scoffing at the past, feeling that we live in more enlightened times. But a glance at recent history suggests that modern faith in our mental faculties may be misguided. Did we not, in fact, go a bit mad during lockdown? It wasn’t just the draconian rules, the institutionalised snooping, the weekly clapping, but something closer to a national psychosis. For a time, particularly in the early days of the pandemic, there was a strong sense that if you weren’t fully on board with lockdown, if you failed to celebrate it and observe its rituals, you were a bad team player – even unpatriotic. Then, suddenly, the mania seemed to pass.
The all-consuming climate recalled the aftermath of Princess Diana’s death; an enforced national mourning which punished dissenters harshly. It’s easy to write off a small troop of convulsive dancers as maniacs, denuded of their contact with reality. But when an entire country seems to have fallen victim to derangement, it becomes rather harder.
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You’d hope that the lessons of the lockdown have been learned, and that collective hysteria really has become a thing of the past. Alas, the chancers are probably already gearing up for their next opportunity.
Most education reporters amplified the covid panic narrative, which led to the catastrophic decision to close schools. @anya1anya is a rare exception and for that I am grateful.
I like her humility here: “We could have been a lot louder.” Amen.
Also from Jay Bhattacharya is this tweet:
The @nytimes should take responsibility for the disinformation campaign it has waged in support of lockdowns, school closures, and institutionalized covid hypochondria these past 2+ years. This campaign included smears of dissenting scientists, as I can personally attest.
Quotation of the Day…
… is from page one 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:
Yes, it’s true that the globe is warming, and that humans are exerting a warming influence upon it. But beyond that – to paraphrase the classic movie The Princess Bride: “I do not think ‘The Science’ says what you think it says.”
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