Russell Roberts's Blog, page 127

Don’t Worry: It’s Okay; The Money We’re Spending Isn’t Ours

(Don Boudreaux)

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Here’s a letter to the Wall Street Journal:

Editor:

In their devastating criticism of Pres. Biden’s and Progressive Democrats’ scheme to gin up votes by forgiving student-loan debt, Phil Gramm and Mike Solon correctly explain that “the taxpayer, not the Democratic National Committee, ultimately pays for student-loan forgiveness” (“Student Loan Forgiveness Is a Political Bribe,” June 30).

Note the irony: The same people – Progressives – who shriek most hysterically about the prospect of rich individuals and corporations exercising their Constitutional right to affect electoral outcomes by spending their own money are today leading the charge to affect electoral outcomes by spending other people’s money.

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 Thomas Sowell’s October 21st, 2002, letter to my late colleague Walter Williams, as this letter appears on page 315 of Sowell’s 2007 collection, A Man of Letters:

Turning out generation after generation of people who do not know what it is to weigh opposing arguments is producing intellectual couch potatoes who know only how to repeat whatever they have been indoctrinated with. They are precisely the kind of gullible people that the Nazis targeted in their years of struggle for power. I think it was Jefferson who said that freedom and ignorance cannot co-exist indefinitely.

DBx: So very true.

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Thomas Sowell shares a birthdate with Bastiat. Fortunately for humanity, Sowell – who today turns 92 – is still alive. May he live many more years!

Some Links

(Don Boudreaux)

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Nick Gillespie talks with Georgetown University Professor of Law Randy Barnett.

Damon Root explains further his views of abortion rights under the 9th and 14th amendments.

Understandably disturbed by the FDA’s attempt to shut-down Juul, my intrepid Mercatus Center colleague Veronique de Rugy warns of the dangers of the administrative state as she reminds us of the benefits of vaping relative to smoking conventional cigarettes. A slice:

The FDA has forgotten why it entered the battlefield in the first place. Every year in the United States, 480,000 people die due to cigarette smoking. They die of illnesses caused by the repeated inhaling of tar, an especially dangerous product of combustion. And here’s the key point: They may be smoking for the buzz of nicotine, but they don’t die from nicotine. This simple fact explains why e-cigarettes came to be. The importance of the innovation lays precisely in its ability to deliver nicotine without the combustion and tar.

Pierre Lemieux is rightly troubled by “the peculiar logic of collectivist-speak.”

Writing in the Wall Street Journal, Phil Gramm and Mike Solon decry the buying of votes with student-loan forgiveness. A slice:

The debate has centered on how debt forgiveness will play politically because no other justification exists. The average student loan borrower leaves college with a debt of $28,400. What do students get for that debt? Over the course of their earning lives, those with only some college gained a lifetime earnings increase relative to someone who only completed high school that is 10 times the average debt incurred. On average a graduate with a bachelor’s degree earns 40 times as much; a graduate with a master’s earns 53 times; and a doctoral graduate earns 80 times as much as the debt. Law and medical degree holders earn almost 100 times as much. Even as the share of the population with a college degree has tripled to 30.7% from 10.5% in 1967, the value of that degree has grown. The wage premium for having a college degree has grown to 96.2% today from 55.9% in 1967.

If Mr. Biden forgives $10,000 of debt for some 45 million borrowers, it would almost certainly be the largest gift to such a large number of voters in American history.

James Hanley warns against falling for the hyperbole of climate-change hysterics.

Mark Jamison describes the war on Big Tech as incoherent. Here’s his conclusion:

These contradictions in the attacks on Big Tech should cause the attackers cognitive dissonance. As best I can tell, this does not seem to be occurring. This is just as distressing as the poor policies the critics advocate, because their propensity to believe contradictory arguments must be affecting their other policy and regulatory decisions.

GMU Econ alum Alex Nowrasteh reports on another happy consequence of increased immigration into the United States: lower rates of labor unionization. A slice:

We found that immigration reduced union density by 5.7 percentage points between 1980 and 2020, which accounted for 29.7 percent of the overall decline in union density during that period. This effect was concentrated in the private sector and for male workers with a smaller effect for female workers and no effect on public sector unionization. We found this happens because immigrants have a lower preference for unionization and because immigrants increase diversity in the workforce that, in turn, decreases solidarity among workers and raises the transaction costs of forming unions.

“South Korea, Poster Child for Containment Strategy, Now Has Same Excess Mortality as Sweden” – so reports Noah Carl.

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

Brendan O’Neill talks with Liz Cole and Molly Kingsley about how lockdowns harmed children.

Joseph Ladapo is rightly dismayed by, and critical of, a Congressional committee’s false statements Florida’s covid policy. (HT Jay Bhattacharya)

Quotation of the Day…

(Don Boudreaux)

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… is from Liberty Fund’s expanded English-language edition (2017), expertly edited by David Hart, of Frédéric Bastiat’s great work Economic Sophisms and “What Is Seen and What Is Not Seen”; specifically, this passage is from the new translation of Bastiat’s May 1847 essay “The People and the Bourgeoisie” (footnote deleted):

Can one assimilate wealth obtained by force to that acquired through work? And if the people consider any rise in status, even the natural rise generated by industry, thrift and the exercise of every virtue to be an obstacle to be overturned, what motive, stimulus or raison d’être will there be left to human activity and foresight?

It is dreadful to think that an error so pregnant with disastrous possibilities is the outcome of the profound ignorance in which modern education swaddles the current generations with regard to anything that relates to the way society works.

DBx: Plus ça change, plus c’est la même chose.

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Bon anniversaire to the great Bastiat, who was born in Bayonne on this date 221 years ago. (There’s some confusion about the date of Bastiat’s birth; Mark Perry, like some others, reports it as June 29th and not June 30th. I’m still inclined to go with the date of June 30th, although I have no especially strong feeling about the matter.)

Let’s Keep Our Own Trade Free

(Don Boudreaux)

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Here’s a letter to a correspondent:

Mr. M__:

Thanks for your thoughtful e-mail.

With China especially in mind, you ask “How do we get other countries’ governments out of our economy in the same way we desire to get our government out of our economy? And how is such trade any more ‘free’ than its managed, politicized domestic counterpart?”

I agree that in a global economy whenever the government of country X intervenes into country X’s economy it thereby, to some extent, intervenes also into the economies of all other countries with which the people of X trade. And I agree, too, that we Americans would therefore be better off without some of these economic interventions by other governments. But these facts do nothing, I believe, to undermine the case for a policy of unilateral free trade.

First, some economic interventions by foreign governments make us better off than we’d otherwise be. When the Chinese government subsidizes Chinese exports to America, we Americans benefit from this policy of Beijing arranging for the Chinese people to pick up part of the tab for some of what we consume. While I oppose these Chinese subsidies, I do so because they unjustly harm the people of China. If I cared only about the welfare of Americans – or if I wished ill to the Chinese people – I’d support these Chinese subsidies and hope for more of them.

Second, in those not-uncommon instances when foreign-governments’ economic interventions do make us worse off than we’d be absent these interventions, as a practical matter we’re likely to suffer even more harm if our government retaliates. One reason is that our government’s retaliation – which, for its duration, unquestionably makes us even worse off – is not only unlikely to cause foreign governments to stop intervening, it’s likely to incite foreign governments to further intensify their economic interventions. Practically, then, our government’s retaliatory economic interventions will almost certainly be, for us, all pain and no gain.

I elaborate on this issue in this short 2011 article for Economic Affairs.

You ask if our trade with people living under highly interventionist governments can truly be called “free” and not “managed.” While such trade certainly isn’t free, and is managed, for those unfortunate foreigners, it is free and not managed for us as long and insofar as our freedom to buy and sell as we wish remains unobstructed by our government.

In discussions of policy, the terms “free trade” and “protectionism” refer to the policies of the home government. As you yourself note, we Americans have little ability to directly determine the policies of foreign governments; we have under our control only our own policies. Were our government to follow a policy of free trade, it would avoid managing our trade as it leaves each of us free to trade with the world as we find it, which is practically the best we can hope for. We lucky Americans could and should then pity the unfreedom of our foreign trading partners without demanding that our government impose on us similar shackles – shackles that would indeed make trade even more managed and less free.

Among the most pernicious of the many myths peddled by protectionists is the notion that no one can be free to trade unless everyone is free to trade. Please do not fall for this fallacy.

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

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Free Markets

(Don Boudreaux)

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David Beito shared, yesterday on his Facebook page, this image. It conveys much truth.

Progressives and people gripped by the sin of envy focus on the difference, under capitalism, between the height of the tall-person’s eye level and that of the other two persons, and especially that of the short person. Classical liberals and libertarians (and many, tho’ by no means all, conservatives) focus instead on the absolute increase achieved by capitalism in the eye levels of everyone, but especially in that of the short person.

And yet the above image, as profound as it is, doesn’t fully capture the benefits of free, innovative markets. While the amount of monetary income received, and monetary wealth owned, by the super-rich might well in capitalist societies be much greater in absolute terms than is the amount of monetary income received, and monetary wealth owned, by the non-rich, in capitalist societies access to consumption outcomes becomes ever-more equal across all groups of people.

It’s true that super-rich people such as Jeff Bezos and Lady Gaga enjoy absolutely better consumption experiences than do I and nearly everyone else. But the difference in the amount and quality of what the super-rich consume today and what ordinary people consume today is much less than was this difference centuries, or even decades, ago. Well-fed Louis XIV always had hard roofs over his head and hard floors beneath his feet; many of his subjects literally confronted serious risks of starvation and slept on thresh-covered dirt floors beneath roofs of vermin-infested thatch. Today, Mr. Bezos and Ms. Gaga own more and larger hard roofs and hard floors than do Joe and Jane Sixpack, but Joe and Jane also have hard roofs and hard floors. And Joe and Jane are at no more risk of starvation than are Jeff and Lady.
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Today is the 15th anniversary of the introduction of the iPhone. This marvelous device – now nearly ubiquitous – of course enables middle-class and poor people to communicate with others in ways that differ little from the ways that Mr. Bezos and Ms. Gaga can communicate. (The telephone itself contributed much toward this outcome.) But the iPhone also enables each user to keep accurate time, stream music of all sorts, monitor the news, instantly acquire driving or walking directions, check the weather forecast, do advanced mathematical calculations, perform financial transactions, summon surface transportation…. You can add to this impressive list. Smartphones make the consumption opportunities of the middle-class and poor closer to those of the super-rich.

Finally, don’t forget that, in the course of no more than a mere century, innovative capitalism arguably made middle-income Americans materially wealthier than was the wealthiest American just 100 years earlier.

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Some Links

(Don Boudreaux)

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My Mercatus Center colleague Daniel Rothschild writes about Auburn, Maine – a very YIMBY city! A slice:

[Mayor Jason] Levesque ran on a pro-residential development platform, arguing that the city had to make one of three choices: dramatically hike taxes, gut public services or bring in new residents. It took him more than a year in office before he realized that the city’s zoning code and land use policies were the key impediment to building more housing and attracting new residents. Since then, he’s advocated strenuously for clearing away barriers to building new housing in Auburn, adopting an “all of the above approach” that includes single-family homes, multi-family homes, apartments and accessory dwelling units (or ADUs). And truly, all options are on the table: a former synagogue was recently converted into 10 apartments.

GMU Econ alum Caleb Fuller explains why studying economics – sound economics – instills gratitude. Two slices:

No one can spend more than a few minutes studying economic history without noticing something astonishing.

The Great Fact. The Great Enrichment. The Great Escape. Whatever your preferred terminology, it is a story that has been described a million times, though it can’t be told enough. We are, for the first time in history, stupefyingly rich. Here it is, visually. To take but one snapshot, the average per capita income of an Englishman has risen about thirty times in the last three centuries—that after millennia of no income growth at all.

Which of us, if we had a time machine, would voluntarily trade places with Louis XIV, France’s extravagant “Sun King,” symbol of the age of royal absolutism? He’s a good example because he stood—and died—right on the precipice of prosperity.

Let’s focus on just one aspect of Louis’ pilgrimage in this vale of tears: his health. Before dying an agonizing death from gangrene (as he relinquished his soul, he cried out the words of Psalm 72, “O Lord, make haste to help me”), King Louis experienced lifelong diabetes, boils, vertigo, gout, and migraines. If Louis was an outlier, it was only because he made it to the ripe old age of seventy-six. Thomas Hobbes’ most famous words, that life in the state of nature is “nasty, brutish, and short,” is an apt description of all life on planet earth for 99% of human history. The average “elite” born prior to the Great Enrichment enjoyed a standard of living most of us would reject as intolerable.

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All those capital goods wouldn’t be worth much without people to work them. The division of labor is a global phenomenon, now more so than ever. Even Adam Smith observed in 1776 that the common woolen coat which shields the average day-laborer from the elements is the product of a host of anonymous “others” cooperating. No isolated individual could create a pencil, let alone a decent coat, most certainly not a smartphone. We live, as Paul Seabright puts it, “in the company of strangers.”

What was true in Smith’s day is amplified a hundred-fold in ours. Just look at the volume of international trade since World War II. Since exchange is not zero-sum—it benefits both parties—we not only depend on a host of anonymous others, but we also bless them through our reliance.

David Henderson ponders commenters, as well as arguments for more liberal immigration.

John Stossel talks to two libertarians, each with a different view of abortion.

Damon Root isn’t favorably impressed with Justice Alito’s understanding of the history about Lochner.

My Mercatus Center colleague Alden Abbott warns of the “DOJ’s Threatened Reign of Error” – a reign that will arrive with that agency’s proposed criminal-monopolization prosecutions.

Justin Monticello reports that “covid-19 exposed the truth about the CDC.” Two slices:

Today, trust in the agency has plummeted because COVID-19 exposed the truth: The CDC is thoroughly corruptible, and federal regulators will never be impartial experts. They respond to political incentives just like everyone else, and a fact-driven, purely technocratic state is an impossible dream.

The Trump administration pressured the CDC to narrow the scope of testing so case counts would drop, blocked officials from doing interviews, and edited its flagship scientific reports. The CDC provided a scientifically dubious public health rationale for rejecting migrants at the southern border. President Joe Biden continued that policy, and under his purview, CDC guidance on school closures was surreptitiously written by leaders of the country’s second-largest teachers union.

…..

Not only did the agency consider political factors when making what were most often presented as purely science-based decisions, but officials frequently hid, ignored, or distorted legitimate data either out of incompetence or to appease their political bosses.

The CDC has also been a superspreader of COVID misinformation. To justify universal mask mandates, Walensky spent months citing a junk study on their efficacy in schools, exaggerating the risks of breakthrough infections among the vaccinated, and misrepresenting a study on outdoor COVID transmission, according to its author.

The CDC claimed the delta variant was as transmissible as chickenpox, which isn’t true—it turns out the agency had used inaccurate data from a New York Times infographic. It also promoted an infographic on cloth masks using data that were not statistically significant. Meanwhile, the CDC has not run a single randomized controlled trial on the efficacy of masking since the beginning of the pandemic.

Thorsteinn Siglaugsson reports on yet another gross exaggeration of the risks posed by covid to children.

Bad news from France.

James Lim, MD, tweets: (HT Jay Bhattacharya)

In our zeal to save humanity from a single pathogen we’ve forgotten what it means to be human.

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Quotation of the Day…

(Don Boudreaux)

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… is from pages 543-544 of the 1988 collection of Lord Acton’s writings (edited by the late J. Rufus Fears), Essays in Religion, Politics, and Morality; specifically, it’s a note drawn from Acton’s extensive papers at Cambridge University; (I can find no date for this passage) (brackets original to Fears):

[It is] the first quality of a Liberal to claim the same thing for others and for oneself, to dislike exception and prerogative, to think of all men and all countries, to acknowledge the rights of the individual, derived from nature and universal, in preference to the primitive rights of a country or of a clan, obtained by force and not from heaven.

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More on Nancy MacLean’s Egregious ‘Scholarship’

(Don Boudreaux)

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My latest AIER column is the second of a two-part series looking back five years to the publication of ‘historian’ Nancy MacLean’s scandalously reality-challenged book purporting to show that the late Nobel-laureate economist James Buchanan was a oligarch-loving racist. (As I’ve often said since June 2017, one of the few relevant facts that MacLean gets right about Buchanan is the spelling of his name. She does seem to be a good speller. Not much in her book beyond that is correct.)

Here’s a slice from my latest column:

Finally, I share here my letter, of August 1, 2017, to MacLean – a letter to which I received no reply:

Prof. Nancy MacLean
Department of History
Duke University
Durham, NC

Prof. MacLean:

On page 151 of your book Democracy in Chains you write that my late Nobel laureate colleague James Buchanan (in his 1975 book, The Limits of Liberty) “was outlining a world in which the chronic domination of the wealthiest and most powerful over all others appeared the ultimate desideratum, a state of affairs to be enabled by his understanding of the ideal constitution.” Yet you supply no quotation from Buchanan’s book to support this harsh accusation.

So I challenge you to find in any of Buchanan’s writings a single passage that you are willing to offer to the public as evidence that Buchanan had as an ultimate desideratum a political system in which “the wealthiest and most powerful” exercise “chronic domination … over all others.” If you find such a passage I will post it on my blog and offer to you a public apology for having accused you, on my blog, of falsely portraying Buchanan on this score.

Note that I am not asking for evidence that Buchanan proposed policies that you believe will lead to the domination of the many by the wealthy few. Buchanan certainly did endorse much greater freedom than you would accord to individuals to interact as they choose in markets. But being a scholar, you surely understand that even if you are correct that Buchanan was wrong not to predict that the free markets and limits on government that he endorsed would lead to the domination of the many by the wealthy few, his different assessment of the likely consequences of free markets and limited government does not establish the accuracy of what you accuse him of – namely, desiring the domination of the many by the wealthy few.

If you fail to offer to me (or to post in some other public venue) – by, say, the end of September 2017 – evidence from Buchanan’s own writings that his goal was the domination of the many by the wealthy few, I will interpret this failure as proof that you in fact have no such evidence. And the conclusion that I, and others, will reasonably draw is that you simply fabricated this offensive charge.

Sincerely,
Donald J. Boudreaux

A full list of the many posts that I’ve written at Café Hayek in response to MacLean’s shoddy ‘scholarship’ is available here. ‘Scholarship’ is here in scare-quotes because, as I note in this post from November 4, 2017, “Nancy MacLean is to scholarship what Cap’n Crunch is to nutrition” – children swallow it eagerly, while sensible adults never touch the stuff.

…..

I fear that I am, with the above comparison, unfair to Cap’n Crunch.

Some Links

(Don Boudreaux)

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Art Carden and Phil Magness summarize their new paper that eviscerates the attempt by Sandy Darity, M’balou Camara, and Nancy MacLean to portray the late W.H. Hutt as a white supremacist. Here’s their conclusion:

Elsewhere, we show that their charges of “white supremacy” against Hutt arise from plain misconstructions and misrepresentations of Hutt’s own words. In one telling passage, they write that Hutt blamed Africa’s “natural handicaps” on alleged “genetic” characteristics of black Africans. He did nothing of the kind. The “handicaps” in the passage they misquote refer to geography, the tropical disease environment of the continent before the advent of modern medicine, and political institutions – not genes. Elsewhere in documents MacLean and her co-authors cite (but evidently did not read with any care), Hutt explicitly states that he does not believe in race-based hereditary theories.

In our paper, we go on. And on. And on, for about four dozen pages with a long bibliography. With William Darity and M’Balou Camara, Nancy MacLean claims to have “set the record straight” with “irrefutable” evidence that Hutt was a white supremacist. They have in fact set nothing straight, and their argument, far from being “irrefutable,” wrecks itself upon the rocks of at least one major citation error, selective use of documents, and willful misreadings of Hutt’s words devoid of their original context.

Michael Strain again exposes as fallacious the incessantly asserted claim that middle- and working-class Americans have stagnated economically since the 1970s.

My GMU Econ colleague Bryan Caplan traces out the connection between residential-land-use regulation and fertility.

Writing in the Wall Street Journal, Corey DeAngelis applauds Arizona for significantly expanding school choice. A slice:

The state’s efforts come after what many have called the year of school choice. After months of power-hungry teachers’ unions fighting for school closings and political indoctrination in the classroom in 2021, 18 states chose to enact or expand programs to fund students instead of systems. Arizona just one-upped all of them.

Most of the nation’s existing school-choice initiatives are limited to certain students based on eligibility categories such as income or special needs. Arizona’s expanded program eliminates such distinctions by allowing all families to take most of the state portion of their children’s taxpayer-funded education dollars to the providers of their choosing. The funding—about $7,000 a student—will follow the child to an “education savings account” directed by his parents or guardians. The funds may be spent on any approved education expenditures, such as private-school tuition and fees, tutoring, instructional materials and curriculum.

Jacob Sullum reports on a newly issued, unanimous, and welcome U.S. Supreme Court ruling: “SCOTUS Rules That Doctors Who Write Prescriptions in Good Faith Can’t Be Convicted of Drug Trafficking.”

Prompted by what he believes is Noah Smith’s mistaken evaluation of Milton Friedman, Arnold Kling offers his own understanding of Friedman’s macroeconomic legacy. A slice:

Milton Friedman’s project was to undermine the theories that supported policy discretion. He had several objections.

First, regarding the idea of using temporary tax cuts to spur the economy, he proposed the Permanent Income Hypothesis. He never said that all consumers optimize their spending patterns using stochastic calculus—the Euler Equation was an element of the technically elegant but utterly stupid consensus that emerged in the decades after Friedman roiled the profession. It was part of Olivier Blanchard’s survey that infamously concluded that “the state of macroeconomics is good” .

Friedman merely claimed that the propensity to consume out of a temporary tax cut would be lower than the propensity to consume out of a permanent tax cut. If so, then temporary tax cuts might not be very stimulative when enacted. Instead, much of the tax cut would be saved, and it might be spent in later years, even after the economy had recovered. If you want evidence that Friedman was roughly correct, all you have to do is notice that economists believe that consumers have savings left over from the COVID relief checks, and that this is now fueling inflation. I cannot think of any economist who disagrees with the view that spending out of temporary tax cuts is likely to be less than spending out of permanent tax cuts.

Writing in Spiked, Matt Ridley makes the case that covid leaked from a lab.

Jay Bhattacharya tweets:

Governments around the world should be issuing universal amnesty for covid era violations of nonsensical, tyrannical public health orders. Instead, gov’ts are prosecuting people in 2022 for the crime of sitting on an outdoor bench in April 2020.