Russell Roberts's Blog, page 130
June 22, 2022
I Oppose Further Government-orchestrated Efforts to Reduce Carbon Emissions
Commenting on this recent EconLog post by Scott Sumner, Thomas Lee Hutcheson writes:
The point of a carbon tax (tax on net emissions of CO2 and methane) is that is is exactly as large as it needs to be (requiring the least amount of lifestyle changes) to minimize those future costs. If future costs are not large, neither will be the tax on net emissions of CO2 and methane. The idea is to minimize the sacrifice.
In response to Mr. Hutcheson’s comment, I wrote (and posted as a reply at EconLog) the following (here slightly amended):
Mr. Hutcheson: Who will determine in practice what is the optimal carbon tax “to minimize those future costs.” And how will this determination in practice be made? We already tax carbon fuels, and we’ve done so for a long time. How do you know that the current array of taxes – include those on retail gasoline sales – aren’t optimal? Perhaps these taxes are now even super-optimal. There is no way to know.
We can, of course, draw graphs on whiteboards and create models with specified parameters and reaction functions. The former are analytical tools that only enable us to understand and describe some general, abstract features of optimally set taxes. The latter – the models – unavoidably are infused with many assumptions – some explicit, some implicit – the realism of many of which we cannot really know. Our knowledge is especially meager if the modelers purport to make predictions for decades out.
Of course, we can’t know future-generations’ preferences. But this fact is minor. More importantly, we can’t know what discoveries and innovations will happen in the future. To truly know what is the optimal level of taxation of carbon we’d have to know the different kinds of discoveries and innovations that would emerge under each of the countless different possible alternative levels and systems of carbon taxation. We cannot begin to know any such thing.
The fact that humanity continues to emit carbon does not tell us that the current level of emissions is too high. Nor is such information given to us by fact that the earth continues to warm (even if, as I willingly grant, all of this warming is the product of human activity). We do not know and we cannot know.
In the face of such inescapable ignorance, a perfectly legitimate course of action is to do nothing – or nothing further – to tax or regulate with the aim of reducing carbon emissions. Indeed, I believe that this course of (government in)action is the best one available, at least until god chooses to share with us its detailed knowledge about such matters. I hold this belief with reinforced confidence because of the fact that carbon fuels themselves have overwhelmingly powered (and continue to power) the countless innovations that have made human existence safer and more comfortable.
Do the following mental experiment. Suppose you could go back in time to circa 1900 and prevent the introduction and use of air-conditioning. Suppose further that you know that if you chose to prevent air conditioning, the world in 2022 would have less carbon in its atmosphere. That result would indeed be an advantage. But not an advantage without cost.
How much less carbon in the atmosphere in 2022 would you think is minimally necessary to justify a world without air conditioning? How much less carbon in the atmosphere today would you think is minimally necessary to justify a world with 50 percent less air conditioning? With ten percent less air conditioning? How could someone in 1900 have known such a thing?
Now do the same mental experiment, not with air conditioning, but instead with automobiles.
All one can do in such mental experiments is to guess, and to guess rather wildly at that. And, frankly, that’s all one can do when attempting today to calculate the optimal carbon tax.
I believe to be preposterous the widespread presumption that we possess, or can come to possess, sufficient knowledge to inform us what will be the likely full consequences of further raising carbon taxes. In practice, we cannot know if any increase in such taxes will move us closer to or further from optimality. In the blinding light of this inescapable ignorance, I say that we at least avoid further artificially raising the cost of carbon fuels – fuels which were a major source of power for the industrial revolution and continue today to be the major source of power to produce the standard of living that affords rich-world denizens the luxury to fret about climate change.
Pittsburgh Tribune-Review: “James M. Buchanan, R.I.P.”
In my column for the January 23rd, 2013, edition of the Pittsburgh Tribune-Review I remembered my Nobel-laureate colleague Jim Buchanan, who at the age of 93 died two weeks earlier. You can read my tribute to Jim beneath the fold (link newly added).
Note that the James Buchanan who I remembered was a real person, unlike the “James Buchanan” that a Duke University “historian” (so called) and her poorly informed, or ideologically blinkered, apologists portray in their fictional works masquerading as factual works.
Some Links
George Will warns that “‘stakeholder’ capitalism is parasitic progressivism.” Two slices:
Semantic infiltration is the tactic by which political objectives are smuggled into discourse that is ostensibly, but not actually, politically neutral. People who adopt a political faction’s vocabulary also adopt — perhaps inadvertently, but inevitably — the faction’s agenda. So, everyone who values economic dynamism, and the freedom that enables this, should recoil from the toxic noun “stakeholder.”
The Oxford Reference definition is “all those with interests in an organization,” including “shareholders, employees, suppliers, customers, or members of the wider community (who could be affected by environmental consequences of an organization’s activities).” Which means: everyone. “All” in the “wider community” who claim an “interest.” Anyone can make such claims; no one can refute them.
…..
In a dynamic society, resources are efficiently disposed by corporate managements whose primary duty, which other corporate activities do not compromise, is to maximize shareholder value by profitably supplying the demand for goods and services. Furthermore, in a congenial society, boundaries are respected: Most people say about most things, “this is none of my business.”
Self-proclaimed stakeholders, parasitic off others’ labor and accumulation, assert that everything is their business. Actually, although everyone has a right to advocate progressivism, no one has a right to insist on a stake in deploying others’ property for the stakeholders’ political ends.
Here’s a thought that Ryan Grim’s essay on wokism sparked in Arnold Kling.
Carson v. Makin is centered on Maine’s tuition assistance program, one of the oldest school choice programs in the nation. Created in 1873, the program funds students from a town without a public school to attend a school of their parents’ choice—whether private or public, in‐state, or out‐of‐state. For more than a century, parents could direct these funds towards religious schools. In 1980, Maine Attorney General Richard S. Cohen released an opinion that said funding a child to attend a school with a “pervasively religious atmosphere” would be unconstitutional. In response, the legislature changed the law to prohibit families from using the tuition assistance at religious schools.
The Institute for Justice filed a federal lawsuit in 2018 on behalf of three sets of parents—Alan and Judy Gillis, David and Amy Carson, and Troy and Angela Nelson—whose children qualified for the program but were prevented from directing funds towards the schools they preferred because those schools provided religious instruction. The district court initially found for the state and the First Circuit affirmed on appeal. Last July, the Supreme Court agreed to hear the case.
In today’s ruling, as it did previously in Espinoza v. Montana Department of Revenue, the Court flatly rejected the respondent’s claims that allowing religious schools to receive the tuition funds violates the first amendment.
Now House Democrats want to codify racial equity as part of the Fed’s mandate. Their bill would require the Board of Governors and FOMC to “exercise all duties and functions in a manner that fosters the elimination of disparities across racial and ethnic groups with respect to employment, income, wealth, and access to affordable credit.”
The bill directs the Fed to include race in monetary policy, the operation of payment systems, and the supervision of banks and non-banks deemed by the Financial Stability Oversight Council to be systemically important.
Central bankers have a hard enough time balancing full employment with stable prices. Adding a racial equity mandate could cause their models to go catawampus. How small would the black-white unemployment gap have to be, and how high would prices have to climb, before the Fed considers raising interest rates?
Who’d a-thunk that the outcome reported here by Eric Boehm about covid funding would ever occur?
For more on the grotesque waste uncorked by covid hysteria, see this piece by Peter Suderman.
Aaron Kheriaty warns of the dangers of the attempt in California to punish dissent by physicians from the official position on covid vaccines. (DBx: Every reasonable person, regardless of his or her position on the efficacy and safety of covid vaccines, should be appalled by this attempt.)
Ian Miller explains that vaccinating toddlers against covid is unwise.
Marty Makary, Vinay Prasad, and Neeraj Sood are among the many physicians who signed a letter, addressed to top U.S. government covidocrats, urging elimination of many remaining covidocratic diktats. (HT Jay Bhattacharya) A slice from the letter:
Many European countries, U.S. states and Canadian provinces have already updated their COVID-19 policies to reflect that vaccines and infection-acquired immunity have reduced the risk of a severe COVID-19 outcome for youth, and to acknowledge that all mitigation measures have unintended consequences. Massachusetts, the United Kingdom, Denmark, Norway, British Columbia and elsewhere have recommended an end to routine screening testing and mandatory isolation periods for children. Most have also eliminated any COVID-19 vaccine requirements for children to fully participate in public life.
The CDC’s COVID-19 school guidelines continue to cause significant disruption to children’s education and to working parents, while providing no demonstrable public health benefit in limiting COVID-19 spread. These policies have serious unintended consequences–-such as school closures, increasing school absences, forcing parents to miss work, and the expense and time of testing. At this point, nearly all U.S. adults and children are protected by either vaccination or infection-acquired immunity, and the U.S. is seeing far lower hospitalization and mortality rates than in prior surges.
Quotation of the Day…
… is from page 15 of Edwin Cannan’s splendid November 13th, 1931, Sidney Ball Lecture – a lecture titled “Balance of Trade Delusions“:
The easiest and least thankless method of dealing with a very large income is to invest a large proportion of it, and even with moderate incomes the rule is that the bigger they are the larger is the proportion likely to be saved. Redistribute net income in the direction of taking from the rich and giving to the poor, and you are pretty certain to diminish savings.
DBx: Yes. And diminished savings brings about diminished production and improvement of capital goods and services – that is, diminished production of capital goods as well as diminished improvement and maintenance of existing capital goods. Compared to what they would otherwise have, workers have fewer and worse tools and infrastructure with which to work. In turn, diminished production and improvement of capital goods and services ensures that worker pay will be lower than it would have been without such a diminution of savings.
June 21, 2022
Pittsburgh Tribune-Review: “Busting middle-class myths”
In my column for the January 7th, 2013, edition of the Pittsburgh Tribune-Review, I follow-up on a theme struck in my previous column – that theme being the myth of the economic stagnation of the American middle class. You can read my column beneath the fold.
Some Links
Writing in the Wall Street Journal, Bjorn Lomborg decries “the rich world’s climate hypocrisy.” A slice:
The developed world became wealthy through the pervasive use of fossil fuels, which still overwhelmingly power most of its economies. Solar and wind power aren’t reliable, simply because there are nights, clouds and still days. Improving battery storage won’t help much: There are enough batteries in the world today only to power global average electricity consumption for 75 seconds. Even though the supply is being scaled up rapidly, by 2030 the world’s batteries would still cover less than 11 minutes. Every German winter, when solar output is at its minimum, there is near-zero wind energy available for at least five days—or more than 7,000 minutes.
This is why solar panels and wind turbines can’t deliver most of the energy for industrializing poor countries. Factories can’t stop and start with the wind; steel and fertilizer production are dependent on coal and gas; and most solar and wind power simply can’t deliver the power necessary to run the water pumps, tractors, and machines that lift people out of poverty.
Bryan Caplan makes about government a point that should be obvious to everyone but isn’t.
Eric Boehm explains that “the Defense Production Act has become a license for central planning.”
Jeffrey Tucker is rightly critical of that staunch advocate of covidocratic compulsion Devi Sridhar.
“Covid lockdowns have caused a ‘global mental health crisis’ in children due to ‘deep impact of school closures’, WHO admits” (HT Will Jones)
Vinay Prasad tweets: (HT Jay Bhattacharya)
The other big problem is that many universities have collected millions of dollars in grants for long covid. That guarantees we will have a lot of long COVID.
Every time a hospital opens a center to test people with more tests who might have long COVID, they guarantee more
Lockdowns caused enormous collateral public health damage, which we now much deal with.
Lockdowns harmed the economy, which we now must deal with.
Lockdowns exposed ignorance and herd thinking in universities, public health agencies and the media, which we now must deal with.
Quotation of the Day…
… is from page 195 of the original edition of Robert Higgs’s marvelous 1987 book, Crisis and Leviathan:
The commitment of both masses and elites to individualism, free markets, and limited government suffered a blow in the 1930s from which it is unlikely ever to recover fully. In place of the old beliefs there now prevails a greater toleration of, and even a positive demand for, collective schemes that promise social security, protection from the rigors of market competition, and very often – to be blunt – something for nothing.
DBx: Few persons have ever led so successful an attack on liberalism and the competitive market order as did Franklin Roosevelt. He was a textbook example of the sort of human being feared by all who warned of the abuse of power in democratic societies.
June 20, 2022
Looking Back on a Disgraceful Academic Performance of Five Years Ago
Five years ago there appeared the most appalling instance of academic malpractice that I’ve ever personally engaged with. In her book Democracy in Chains: The Deep History of the Radical Right’s Stealth Plan for America, published in June 2017, Duke University “historian” Nancy MacLean purports to reveal that my late Nobel-laureate economist colleague, James Buchanan, was a white supremacist who throughout his long tenure in the academy aimed to undermine democracy and to oppress the poor and working classes, and who eventually became a willing tool of rapacious oligarchs.
No one who knew Jim Buchanan personally, or who even just read relevant parts of his vast scholarly output, recognizes the fictional “Buchanan” who appears in MacLean’s book. Thus in the previous paragraph I put the descriptor “historian” in quotation marks to reveal up front my low assessment of the quality of MacLean’s historical research and reporting on Buchanan’s work. Her book is a screed of fiction passed off as a work of fact.
Long-time readers of my blog, Café Hayek, know that I spent a great deal of time and energy during the Summer and Fall of 2017 exposing some of the countless fallacies and grotesque misimpressions that constitute the substance of MacLean’s book. My efforts are surely less thorough and effective than are those of more talented scholars, including AIER’s own Phil Magness, who joined in the effort to set the record straight against MacLean’s fabrications about Buchanan, and about the school of public-choice research that Buchanan co-founded with his brilliant long-time colleague and co-author Gordon Tullock. (Disclosure: I was, for many years at George Mason University, a colleague also of Gordon Tullock.)
I share here – as I will in my next column – some of my many efforts to expose the errors that run throughout MacLean’s book, as well as throughout some of the attempts by others to defend her fictional tale.
First is this (slightly amended) June 28, 2017, letter to New Republic News Editor Alex Shephard:
Mr. Shephard:
In the introduction to your interview of Democracy in Chains author Nancy MacLean, you write that my late Nobel laureate colleague James Buchanan insisted “that democracy and liberty – defined as free market capitalism – were incompatible and that it was necessary to limit participatory democracy to protect the property rights of the extremely wealthy. Though he did no empirical work, he was remarkably influential in the field of public choice theory, which essentially argued that markets could never fail and governments always did.”
Your characterization of Buchanan verges on libelous. For starters, Buchanan did not believe that “markets could never fail.” Here’s just one of many quotations from Buchanan’s published works that disprove your accusation: “Markets fail; governments fail.” (This quotation is from page 130 of Jim’s 1976 paper “Methods and Morals in Economics” as this paper is reprinted in volume 19 of The Collected Works of James M. Buchanan.) Much of Buchanan’s work is a careful comparison of what he always insisted are the imperfect outcomes of markets with the imperfect outcomes of politics. It’s true that Buchanan’s comparisons of politics with markets led him to conclude that imperfect markets outperform imperfect politics more often than most people suppose. But it is emphatically untrue that he believed that “markets could never fail and governments always did.”
Worse is your assertion that Buchanan believed that democracy and liberty are incompatible. Although Buchanan – like every other serious person who’s pondered the matter – opposed unlimited majority rule, throughout his life he sought ways to ensure that each and every adult has an equal voice in the political arena. Jim understood that a key benefit of such political equality is the maximum possible protection of individual liberty.
Finally, even if we ignore Buchanan’s proposal for confiscatory inheritance taxation, it is grotesque of you to suggest that Buchanan wished to protect the private property rights only of “the extremely wealthy.” Jim advocated strong and equal protection of everyone’s private property rights. So I challenge you (or Prof. MacLean, or anyone else) to put your money where your mouth is: search for passages in Buchanan’s writings showing that he wished to protect only the property rights of the rich, and that he was hostile, or even indifferent, to the property rights of the non-rich. For each such passage you find I’ll pay you $1,000. But if you’re unable to find any such passage you pay to me $100. Deal?
Sincerely,
Donald J. Boudreaux
Shephard did not respond to the above letter.
Bonus Quotation of the Day…
… is from page 119 of the late Michael Novak’s 1981 essay “In Praise of Bourgeois Virtues,” as this essay is reprinted in the 1999 collection of some of Novak’s pieces, On Cultivating Liberty: Reflections on Moral Ecology (Brian C. Anderson, ed.):
Human offspring require some twenty years of nurture. Three thousand years of civilization must be passed on to children during those years; without that, progress would halt.
And So It’s Long Been
Here’s a letter to the Wall Street Journal:
Editor:
Andy Kessler eloquently exposes as nonsense the assertions by many of today’s intellectuals that reality is whatever our words say it is – that, for example, bees are fish, puddles are navigable waters, and violent rioting is “mostly peaceful” (“Bees Are Fish and Other Fake Narratives,” June 20). Such intellectual chicanery, alas, is not new. In 1776 Adam Smith observed that “[t]here is nothing so absurd, says Cicero, which has not sometimes been asserted by some philosophers.”*
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
* Adam Smith, An Inquiry Into the Nature and Causes of the Wealth of Nations (Indianapolis: Liberty Fund, 1981 [1776], page 876.
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