Russell Roberts's Blog, page 129
June 25, 2022
Extra! Extra! Read All About It! The Court Bucks Majority!
Here’s a letter to the Washington Post, but from it nothing should be inferred about my opinion on abortion or about the quality of the reasoning in, or the conclusion of, Dobbs.
Editor:
Your headline this morning – “Supreme Court goes against public opinion in rulings on abortion, guns” – says less about the Supreme Court than it does about the poorly informed state of today’s journalists. The very reason for having a judiciary the members of which are not elected but, instead, are appointed to lifetime terms – and whose charge is confined to settling disputes that arise under the law, including that of the Constitution – is to insulate the judiciary from fickle and often-dangerous political passions. According to Alexander Hamilton in Federalist 78, a great benefit of an independent judiciary is that it will protect the Constitution against perils that arise “whenever a momentary inclination happens to lay hold of a majority … incompatible with the provisions in the existing Constitution.”
One may legitimately criticize a court for its particular interpretation of the Constitution. But it’s never legitimate to suggest that a court errs whenever it “goes against public opinion.” As a headline, then, “Supreme Court goes against public opinion” makes no more sense than would the headline “Dog bites man.”
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
…..
I understand, of course, that justices and judges are human; they often do succumb to majoritarian political pressures. But the design, of course, is for the federal judiciary to be insulated from, and hence resistant to, such pressures.
Quotation of the Day…
… is from page 50 of the first edition of University of Washington economist Eugene Silberberg’s excellent 1995 textbook, Principles of Microeconomics (original emphasis):
The law of demand is the central behavioral proposition in economics. Its veracity is not really open to debate; to deny this proposition is to deny economics. The phrase economic explanation to a large extent means an explanation based on the law of demand. In Chapter 1 we outlined the idea that people respond so as to reduce the impact of changes in constraints. This proposition is given operational significance, that is, an interpretation in terms of the observable phenomena of prices and quantities, in the form of the law of demand. Consuming less of a good after its price has risen is one way in which we mitigate the deleterious effects of an increasingly severe constraint.
DBx: Indeed so.
And yet much public policy is built on the presumption that the law of demand does not apply universally. Perhaps the best example of such denial is the widespread support for minimum-wage legislation. The belief of many minimum-wage proponents is that raising the minimum wage will simply cause employers to pay workers higher wages, without any further adjustments. Employers’ incomes (profits) will fall while workers’ incomes will rise.
Disappointingly, it’s easy today to find professional economists who twist themselves into intellectual knots to lend apparent justification to this popular, fallacious belief. Yet the only theoretically possible scenario in which a rise in minimum wages will not reduce or worsen at least some low-skilled workers’ employment opportunities requires employers to possess both monopsony power in labor markets and monopoly power in output markets. (And the combination of such powers is a necessary, but not sufficient, condition for the minimum wage to work. Another necessary condition is that the legislated minimum wage not be set too high.) Of course, the likelihood in reality that there will prevail in a market-oriented economy this combination of monopsony and monopoly is so minuscule as to be ignorable.
June 24, 2022
On Dobbs and the Ninth Amendment
Below is a letter Reason. Please note that this letter is exclusively about Constitutional interpretation and implies nothing about my views on the morality of abortion, or about what I believe states should or should not do now that Dobbs has been decided. (Without implicating them, I thank Roger Meiners and Adam Pritchard for feedback on an earlier version of this letter.)
Editor:
Long an admirer of Damon Root, I worry when I find myself disagreeing with him. But disagree I do with his conclusion that Justice Alito’s ruling in Dobbs “is an insult to the 9th amendment” (“Alito’s Abortion Ruling Overturning Roe Is an Insult to the 9th Amendment,” June 24).
Like Damon, I hold the 9th amendment in high regard and wish that it were used more often to safeguard Americans’ unenumerated rights. Further, I agree both with Damon’s account of the history of this sadly neglected amendment, as well as with his observation that, when the Bill of Rights was ratified, the common law recognized a right to abortion until “quickening.”
But I don’t see how a ruling – Dobbs – that returns to the states the power to restrict access to abortion runs afoul of the 9th amendment. That amendment reads in full: “The enumeration in the Constitution, of certain rights, shall not be construed to deny or disparage others retained by the people.” This wording – along with the very history that Damon recounts – clearly indicates that the 9th amendment is meant to protect unenumerated rights from being violated by the national government, which is the government that’s created and governed by the Constitution. The 9th amendment neither applies to the states nor enlists the national government to protect unenumerated rights from being violated by state and local governments.
While the 9th amendment would protect the right to abortion before quickening from being violated by the national government, this amendment in no way constrains state and local governments.
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…
This conclusion was inherently nonscientific – modeling that something might occur, and then because it did not occur with a given intervention, concluding that the intervention was effective. That was not proof of anything at all; it was circular reasoning. Why couldn’t the explanation be that the model’s prediction was wrong? Indeed, modelers had concocted a scenario in which [covid] cases would keep spreading as if everyone was equally susceptible, without regard for increasing immunity or seasonal effects – all known to have occurred in every respiratory virus pandemic over the past 130 years.
DBx: I say again that few academics have fueled as much destruction of life, liberty, property, and prosperity as has the reckless Imperial College modeler Neil Ferguson. Not to be excused, of course, are the legions of politicians and bureaucrats who took his and his team’s model-predictions seriously and without regard for collateral damage from lockdowns.
Some Links
The CDC displayed a slide at a conference that falsely claimed Covid-19 was the fourth or fifth leading cause of death for all pediatric age groups. A writer who is publicly known only by the name Kelley immediately saw that the claim was “completely and utterly false.” Among several errors, which are so blatant as to seem like intentional massaging of the numbers, Kelley discovered that all data from a 26-month period were being crammed into one year, and that deaths were attributed to Covid, regardless of whether the death was caused by Covid, if the disease was mentioned on the death certificate. The CDC slide, which cited a pre-publication British study that is now being re-examined, also bumped up the numbers by altering the definition of pediatric (ordinarily understood to mean under 18) to include 18- and 19-year-olds.
The danger to children from Covid is very, very low. For instance, babies and toddlers are 25 times likelier to die of an accident than of Covid. And all-cause pediatric mortality in the pandemic era for young children (up to 12) is 30 percent lower than it was a generation ago, in 1999. All-cause mortality for children over 12 has spiked in the pandemic era because of accidents, drug abuse, and other factors unrelated to disease. Covid barely registers as a cause of death for teens or small children.
The current global discontent with economic life is overwhelmingly a function of one other word: lockdown. Lockdowns are normally associated with prison riots, not the world’s economies. One may admit that the first months with the mysterious Covid-19 virus were a time of generalized panic, and governments defaulted to the epidemiologists’ standard fix of social quarantining. But then leadership essentially let the public-health bureaucracies take over their countries’ economic life.
What’s impossible not to notice is how the lockdowns exposed the intricacies of the world’s market economy. We are hearing a lot now about long Covid, the physical aftermath of the virus. As debilitating is long economic Covid.
Long economic Covid is why anyone you sit next to at dinner can dilate on the arcana of interrupted global supply chains. We’re now coming to realize how the market economy’s performance and benefits are taken for granted. All those goods—made, purchased, packed and shipped—were as reliably available as turning on a light. Actually, one of the things we’ve learned during this time is that even turning on a light isn’t like turning on a light. Disrupt the always-on but complex power grid, as in Texas and California, and the lights stop coming on.
This persistent post-pandemic disruption is the result of government choices. In 2020, the public sector told the private sector simply to stand down. When the pandemic lockdowns were extended deep into 2021—in the U.S., France, U.K. and elsewhere—the global economy’s extraordinarily complex grid of relationships fractured at every level.
Layoffs were widespread, ending paychecks overnight. Trucking hasn’t recovered. Airlines are struggling with flight-canceling staff shortages. Manufacturers can’t fill orders for lack of basic parts, workers or a reliable transport system.
We have arrived at stupid.
David Stockman describes “the spasmodic chaos of the post-lockdown US economy.” Two slices:
Accordingly, the business sector is flying blind: It can’t forecast what’s coming down the pike in the normal manner based on tried and true rules of cause and effect. In many cases, the normal market signals have gone kerflooey as exemplified by the recent big box retailers’ warnings that they are loaded with the wrong inventory and will be taking painful discounts to clear the decks.
Yet it is no wonder that they stocked up on apparel and durables, among others, after a period in which the Virus Patrol shutdown the normal social congregation venues such as movies, restaurants, bars, gyms, air travel and the like. And than Washington added fuel to the fire by pilling on trillions of spending power derived from unemployment benefits that reached to a $55,000 annual rate in some cases and the repeated stimmie checks that for larger families added up to $10,000 to $20,000.
Employed workers didn’t need the multiple $2,000 stimmie checks because in its (dubious) “wisdom” the Virus Patrol forced them to save on social congregation based spending.
…..
When it comes to Washington-induced whipsaws, however, there are few sectors that have been as battered as the air travel system. During April 2020, for instance, passenger boardings were down a staggering 96% from the corresponding pre-pandemic month, as in dead and gone. Moreover, this deep reduction pattern prevailed well into the spring of 2021.
The airline shutdowns were not necessitated by public health considerations: Frequent cabin air exchanges probably made them safer than most indoor environments.
But between the misbegotten guidelines of the CDC and the scare-mongering of the Virus Patrol, even as late as January 2022 loadings were still down 34% from pre-pandemic levels.
The industry’s infrastructure got clobbered by these kinds of operating levels. Baggage handlers, flight attendants, pilots and every function in-between suffered huge disruptions in incomes and livelihoods—-even after Washington’s generous subsidies to the airlines and their employees.
And then, insult was added to injury when pilots and other employees were threatened with termination owing to unwillingness to take the jab. The result was an industry to turmoil and sometimes even ruin.
The people who constitute “World Health Network” are repackaged zero-covid zealots, many in the discredited iSAGE group. I guess since they could not scare the world into perpetual Shanghai style lockdowns with covid, so they are trying again with monkey pox.
Phil Magness, writing on his Facebook page, is correct:
It turns out that the reason plagiarism is such a widespread problem in academia…is that an alarming number of academics will excuse or even defend plagiarism when one of their friends does it.
Damon Root argues that “Alito’s leaked abortion opinion misunderstands unenumerated rights.”
GMU Econ alum Nathan Goodman compares Austrians and Marxists on imperialism.
Quotation of the Day…
… is the closing paragraph, on page 17, of Edwin Cannan’s excellent November 13th, 1931, Sidney Ball Lecture – a lecture titled “Balance of Trade Delusions“:
But even so we manage to carry on, and whether on or off the gold standard we certainly shall not benefit by reviving the three-hundred-year-old and long-ago exploded superstition that the balance of trade must be watched over and kept right by Parliament – a superstition which can only be ranked with the once equally widespread belief that witchcraft must be smelt out and witches burnt at the stake.
June 23, 2022
Biden Gives New Meaning to “Bully Pulpit”
Here’s a letter to the Wall Street Journal:
Editor:
You report that “Mr. Biden ordered U.S. refiners last week to come up with short-term solutions to increase capacity – or else” (“A Gas Tax Holiday From Reality,” June 23). The president’s actions are as brutish and stupid as are those of a schoolyard bully who, having scared away his playmates, warns them to come back and play – or else. Neither Mr. Biden nor the bully should be surprised to discover that their bullying won’t work.
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…
… is from pages 148-149 of the 2021 35th anniversary edition of Steven Rhoads’s excellent 1985 book, The Economist’s View of the World: And the Quest for Well-Being (footnote deleted; links added):
Just as landlords adjust when forced to keep rents low, employers adjust when required to pay low-skilled workers more than a market wage. If they have previously offered workers inexpensive insurance or partial daycare coverage, they can discontinue these nonage benefits. Perhaps more important, they can discontinue on-the-job training. Jacob Vigdor, one of the University of Washington economists who conducted the Seattle study, worries that, by harming employment opportunities for junior workers, we may be removing the bottom rung of the ladder to future, better-paid jobs.
Some Links
GDP and productivity levels were exaggerated during the pandemic as many goods were unavailable or low in quality in ways the GDP data didn’t capture. Even though public-school teachers stayed home, for instance, national accountants assumed that they were as productive as ever merely because they continued to be paid. As they get back to traditional teaching, this won’t be officially recognized as economic progress for the same reason the pandemic regress was never acknowledged.
In normal years, workers’ productivity rises by about 1%. That alone is a strong economic tailwind causing GDP growth, making recession by the reduced GDP definition less likely than otherwise. Unfortunately, Mr. Biden’s economic policies will likely cause productivity growth to fall. A 2020 analysis by one of us (Mr. Mulligan) and three co-authors concluded that Mr. Biden’s economic agenda would cause full-time equivalent employment per capita to be 3.1% lower than otherwise and real GDP per capita to be 8.5% lower than otherwise. If that effect were spread over five years, the reductions relative to the baseline growth would be 0.6% and 1.7% a year, respectively. That by itself makes a recession likely in one of those five years.
This Facebook post by Chris Freiman is insightful:
I fail to see a principled moral distinction between vouchers that can be used for private religious school and other forms of public spending. Even something like publicly supplied water can be used for religious purposes—someone might use it for a baptism. Granted it’s easier to regulate the use of vouchers than water, but the ease of regulation isn’t morally relevant. Even if the state *could* easily prevent people from using publicly supplied water for a baptism, it would be wrong to do so. Citizens should be free to use their state-supplied resources to pursue their own good in their own way, whether their good is religious or not.
Also insightful is this follow-up Facebook post by Freiman:
It’s strange to see so many folks on the left reject public support for private religious education when it comes to school choice but support student loan forgiveness for all, including those who attended BYU, Liberty, Oral Roberts…
A key theme of Lin Ostrom’s work was polycentricity. A monocentric system is one in which all the problems faced by a community or organization are addressed in a top-down fashion by a single authority, such as the federal government. Such a unit determines the one best solution and then imposes it on everyone else. By contrast, a polycentric approach gets people and groups working together to devise a means of solving problems, embodying the view that those best qualified to do so are usually those who live with them day to day. A central government may have the power to impose a solution and even punish those who do not abide by its dictates, but such approaches are often poorly tailored to local conditions and deprive people of the opportunity to work it out for themselves, thereby stunting their development as citizens.
The lack of new U.S. refinery investment isn’t exactly breaking news: According to the EIA, for example, the last major refinery to be built in the United States was in 1977, while there hasn’t been a significant refinery expansion in several years. But, still, the recent decline in national refining capacity remains quite stark when you compare it to pre-pandemic trends dating back decades.
…..
The study’s author finds that this heightened climate policy uncertainty is associated with lower CO2 emissions and suggests future research on how it affects firm-level investment in climate-sensitive industries like energy. But it would seem obvious (to me, at least) that uncertainty plays a role in refinery investment over the longer term too: If it takes 15-20 years to recoup a refinery investment and there’s a big-but-unclear risk that climate regulation will make said investment unprofitable in only a decade or sooner (see, e.g., California), then you’re probably not making that investment.
Gary Galles decries the deep confusion surrounding international trade and trade policy. A slice:
Few Presidents have wrapped their protectionism in the American flag to the extent Donald Trump did. But all recent Presidents have continued a long line of protectionist policies, and Joe Biden is clearly on that list.
Such policies are based at least in part on the idea that “good” American producers should be given special treatment over “bad” foreign producers for the good of our country. But that leaves an important group out of the political equation–American consumers. And our joint interests as consumers is what we have most in common. Consequently, as Leonard Read put it, “Consumer interest is the premise from which all economic reasoning should proceed,” and since “my interest is progressively served by an increase of goods and services obtainable in willing exchange for my offerings … As a consumer, I choose freedom.”
John Stossel applauds the Babylon Bee.
Then, you have the money dispensed to corporations. In one way or another, that spending made up a huge share of the COVID-19 relief. Indeed, whether through the airline bailouts or the Payroll Protection Program, shareholders collected trillions of dollars in government handouts they didn’t need. Most of the PPP funding, for example, went to companies whose workers were never at risk of losing their jobs since they were well-suited to work from home.
The lockdowners even claimed that Covid had allowed a breakthrough in economic engineering: officials had worked out how to put free market economies into hibernation, to pause activity at will. It was the economics of Sleeping Beauty: the private sector would rebound as soon as Dishy Rishi chose to kiss it back to life again. Hayekians who believed capitalism was a complex, fragile spontaneous order that couldn’t be disrupted with impunity had finally been proved wrong. Even if the economy did find it difficult to continue exactly where it left off, we could simply unleash more QE or Joe-Biden style public spending to fix everything.
It was dangerous, delusional nonsense. Everything that could go wrong went wrong, starting with surging inflation and myriad other unintended consequences. The insane amounts of cash pumped into the economy by zero rates, money printing, furlough, test and trace and subsidised loans chased too few goods, services, homes, shares and cryptocurrencies, pushing prices drastically higher and annihilating central bankers’ credibility.
Alex Gutentag tweets (HT Jay Bhattacharya):
Many parts of the US kept schools closed long after they reopened in Europe. We were one of the only countries to mask toddlers and are the only country vaccinating infants. This isn’t something to be proud of. Our treatment of children is uniquely irrational and unscientific.
Quotation of the Day…
… is from page 229 of Robert Higgs’s September 1986 Freeman essay, “To Deal With A Crisis: Government Program or Free Market?” as this essay is reprinted and slightly revised in the excellent 2004 collection of some of Bob’s essays, Against Leviathan:
An emergency governmental program is said to have the important attribute of speeding the process of adjustment. Undeniably, coercive programs often work more quickly, but is this aspect of their operation really an advantage?
Coercive programs “save time” only because they compel wastefully hasty adjustments. They do not save valuable resources. Rather, they redistribute the costs of adjustment in comparison with the distribution of the costs when responses are determined by voluntary arrangements in free markets.
Russell Roberts's Blog
- Russell Roberts's profile
- 39 followers
