Russell Roberts's Blog, page 134

Quotation of the Day…

(Don Boudreaux)

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… is from page 365 of Robert Higgs’s Spring 2000 Independent Review article, “The So-Called Third Way,” as this article is reprinted in the superb 2004 collection of some of Bob’s essays, Against Leviathan (link original):

The age-old dream of politicians is to starve and pluck the goose while making off with an ever larger gathering of golden eggs. As for the fluff about government’s promoting the public interest, [Anthony] Giddens needs to take a course in public choice, or at least to review Adam Smith’s Wealth of Nations. Governments are good at many things – for example, the surveillance of unoffending citizens at home and the bombing of hapless men, women, and children abroad – but promoting the public interest is not one of those things.

Regime Uncertainty Is Real … and Dangerous

(Don Boudreaux)

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Here’s a letter to the Wall Street Journal:

Editor:

Wayne Stoltenberg and Merrill Matthews make a compelling case that oil exploration, drilling, and refining will remain depressed for as long as government keeps threatening to suffocate that industry with regulation and taxes. (“Why Energy Companies Won’t Produce,” June 9). This depressed investment reflects an instance of what economic historian Robert Higgs calls “regime uncertainty,” which he describes as “a pervasive uncertainty among investors about the security of their property rights in their capital and its prospective returns.”*

Ominously, regime uncertainty’s lethality to economic growth need not be confined to a single industry. Higgs documents that such uncertainty was the root cause of the Great Depression’s length:** As FDR’s administration became increasingly hostile, in both word and deed, to free markets, the entrepreneurs and investors who drive economic growth became dormant economy-wide as they feared that they’d be robbed of the fruits of their efforts and investments.

If Progressives persist in their infatuation with socialism, while many prominent conservatives demand industrial policy and draconian regulation of Big Tech, regime uncertainty will surely expand beyond the energy industry to asphyxiate much, and perhaps all, of the economy.

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

* Robert Higgs, Depression, War, and Cold War (New York: Oxford University Press, 2006), page 5.

** Robert Higgs, “Why the Great Depression Lasted So Long and Why Prosperity Resumed after the War,” Independent Review, Spring 1997, pages 561-590.

Quotation of the Day…

(Don Boudreaux)

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… is from page 155 of the 2016 Third Edition of James D. Gwartney’s, Richard L. Stroup’s, Dwight R. Lee’s, Tawni H. Ferrarini’s, and Joseph P. Calhoun’s excellent Common Sense Economics:

Competition is a disciplinary force. In the marketplace, businesses must compete for the loyalty of customers. When firms serve their customers poorly, they generally lose business to rivals offering a better deal. Competition provides consumers with protection against high prices, shoddy merchandise, poor service, and/or rude behavior. Almost everyone recognizes this point with regard to the private sector. Unfortunately, the importance of competition in the public sector is often overlooked.

Some Links

(Don Boudreaux)

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George Will exposes the mix of silliness and evilness in today’s woke policing of “mispronouning.” A slice:

Represented by the Wisconsin Institute for Law & Liberty, the boys are arguing that their use of biologically correct, if politically incorrect, pronouns is speech protected by the First Amendment. The Constitution also forbids the district from compelling them to speak as district bureaucrats suddenly — how long ago did they embrace this orthodoxy? — prefer. Furthermore, the institute says it has spoken with another Kiel Area family “whose daughter was recently given an in-school suspension for ‘sexual harassment’ based on a single statement using an allegedly ‘wrong’ pronoun — and the statement was said to a third party, not even to the allegedly ‘misgendered’ student.”

Perhaps Kiel Area schools can waste time trying to bully children into conformity to this or that fad because the schools have so splendidly accomplished their actual task: education. It might, however, be best if schools that are eager to engage in pronoun policing not even attempt education.

John Stossel correctly describes Biden’s boast about his administration’s alleged fiscal responsibility as “utterly deceitful.”

David Henderson asks if you can find, in a graph of U.S. workplace fatalities from 1933 through 1993, the date that OSHA was created.

My intrepid Mercatus Center colleague Veronique de Rugy isn’t optimistic about the future of Social Security.

Lee Trepanier ponders the modern university. A slice:

In one of their more preposterous chapters, the authors claim “For many students . . . They want their values to be challenged; they want to be sharpened by their peers. They are excited to sit in classes where debates will erupt, where students with different views will speak up, where steel sharpens steel.” Really? Please let me know where I can find those students in this age of cancel culture. The Bipartisan Policy Center’s November 2021 report, “Campus Free Speech: A New Roadmap,” suggests that students routinely censor themselves, avoiding controversial topics so they do not find themselves exiled from campus life. There also have been reported multiple cases of free speech controversies at American universities where certain views are censored or prescribed statements are compelled. The academic culture has eroded to such a low point that new organizations, like the Academic Freedom Alliance, have formed to protect the freedom of thought, inquiry, discussion, and expression at our universities.

John O. McGinnis reviews Gerard Magliocca’s book on early U.S. Supreme Court Associate Justice Bushrod Washington (a nephew of George).

Eyal Shahar decries the death toll of covid panic. A slice:

The reaction of a handful of officials in March 2020 was unsophisticated, panic reaction. It is as simple as that. Accepting uncritically apocalyptic predictions of 100% excess deaths by the summer, they promoted lockdowns and masks, neither of which had any scientific basis. On the contrary, pre-pandemic research and plans have explicitly excluded such measures and argued against fearmongering and disrupting normal life. Likewise, arbitrary physical distancing (there is nothing “social” about it) proved useless for an infection whose main mode of transmission is aerosols (tiny, virus-carrying droplets that are suspended in the air and can travel long distances.)

The panic reaction (copy China!) of a few influential figures was quickly adopted by officials in Europe and the US. You could hardly find any calming message, or any official voice that questioned baseless, unprecedented counter-pandemic measures.

Once ignited, panic spreads in the public like a wildfire. We don’t have good defensive mechanisms against fearmongering, and it is nearly impossible to reverse panic by data. Back in April 2020, when COVID waves quickly peaked everywhere— uniformly and unrelated to human action — it was clear that whatever the death toll in 2020 might be, it would be far away from 100% excess deaths. The apocalyptic predictions and the panic reaction that followed turned out to be colossal mistakes. But almost everyone was already brainwashed. The genie could not have been put back in the bottle.

Quotation of the Day…

(Don Boudreaux)

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… is from pages 387-388 of the splendid 1978 collection, edited by Eric Mack, of Auberon Herbert’s writings, The Right and Wrong of Compulsion by the State; specifically, it’s from Herbert’s 1885 essay, “The Principles of Voluntaryism and Free Life”:

Let the voluntaryist boldly preach the doctrine of self-ownership everywhere. Let him seek to persuade the socialist that he has no right to offer comfort and advantage at the price of the sacrifice of personal liberty; that it is quite vain to try to destroy one kind of bondage by building up another in its place; let him persuade the capitalist that all wealth, founded on any kind of state favour or privilege and opposed to free trade, is wealth taken by force from others, and rests on wrong and unjust foundations; let him persuade the members of all churches that it is a travesty and a mockery of their own creed – rightly and simply understood – to attack any kind of moral evil with state punishments; that all such persecutions are in direct conflict with the principles of the Sermon on the Mount, and that Christians, above all men, are bound to fight with the weapons of reason, discussion and persuasion; let him seek to persuade all men, whether rich or poor, employers or employed, men of this country or other countries, that the organization of any kind of material force against each other is a barren and pitiful waste of life – that a victory gained over unwilling bodies and minds is a defeat, and not a victory, that in peace, friendly cooperation, unrestricted experiment, constant difference, almost unlimited toleration as regards the actions of others, free trade in every direction, the increased mobility, life experience and self-protection of the individual, the removal of all compulsory burdens and services, the abandonment of the evil power of mortgaging the faculties of future generations by the present generation, the abandonment of great political inducements for men to struggle with each other, which inducements to war must exist so long as each man desires the possession of power for himself and dreads to see it in the hands of his neighbor, and lastly in the perfect security of person and property, so that the conditions of successful effort may be recognized as constant and persisting – that in these things are the true watchwords of progress, to which it is our duty under every temptation to be faithful.

Government-Imposed Protection from Covid Can Be Hazardous to Our Health

(Don Boudreaux)

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Here’s the abstract of a new paper – “Non-Covid Excess Deaths, 2020-21: Collateral Damage of Policy Choices?” – by Casey Mulligan and Robert Arnott: (HT Jason Clemens)

From April 2020 through at least the end of 2021, Americans died from non-Covid causes at an average annual rate 97,000 in excess of previous trends. Hypertension and heart disease deaths combined were elevated 32,000. Diabetes or obesity, drug-induced causes, and alcohol-induced causes were each elevated 12,000 to 15,000 above previous (upward) trends. Drug deaths especially followed an alarming trend, only to significantly exceed it during the pandemic to reach 108,000 for calendar year 2021. Homicide and motor-vehicle fatalities combined were elevated almost 10,000. Various other causes combined to add 18,000. While Covid deaths overwhelmingly afflict senior citizens, absolute numbers of non-Covid excess deaths are similar for each of the 18-44, 45-64, and over-65 age groups, with essentially no aggregate excess deaths of children. Mortality from all causes during the pandemic was elevated 26 percent for working-age adults (18-64), as compared to 18 percent for the elderly. Other data on drug addictions, non-fatal shootings, weight gain, and cancer screenings point to a historic, yet largely unacknowledged, health emergency.

DBx: But… but… but the most important thing – the goal that looms in importance always above all – is to avoid even coming into contact with the singularly dangerous covid monster. Or so our masters have commanded us over the past two and a half years.

Some Links

(Don Boudreaux)

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Phil Magness explains how Milton Friedman fought segregation through the American Economic Association. A slice:

The AEA’s stance presented an opportunity for Friedman to act on a theory that his doctoral student, Gary Becker, proposed the same year in a dissertation written at the University of Chicago. Segregated businesses ultimately harmed themselves by denying their services to excluded racial groups, thereby losing them as customers. As Friedman later observed, economic decision-making could be used as a powerful weapon against discriminatory practices. In this case, if the Roosevelt Hotel would not allow black guests to stay on its premises, the economists would take their conference and its paying customers elsewhere.

Friedman would elaborate on this principle in his now-classic 1962 book, Capitalism and Freedom. As he wrote in that text, “It is often taken for granted that the person who discriminates against others because of their race, religion, color, or whatever, incurs no costs by doing so but simply imposes costs on others.” This view, Friedman continued, rested on an economic fallacy. “The man who objects to buying from or working alongside a Negro, for example, thereby limits his range of choice. He will generally have to pay a higher price for what he buys or receive a lower return for his work. Or, put the other way, those of us who regard color of skin or religion as irrelevant can buy some things more cheaply as a result.”

When Friedman advocated making the AEA’s hotel contract contingent upon their desegregating their facility, he aimed to drive home this point. If the Roosevelt Hotel [in New Orleans] would not integrate in time for the conference, it would not receive any business at all from the organization.

This report by Randy Holcombe of the research interests of economists today does little to promote my pride in my profession.

Reviewing Rainer Zitelmann’s Hitler’s National Socialism, Daniel Johnson reminds us that Hitler was a socialist. A slice:

Throughout his career, Zitelmann insists, Hitler was an anti-capitalist and he became more so during wartime, when he increasingly came to admire Stalin’s command economy as a far superior system than that of the West. The book is a tour de force of critical exegesis, ranging across the vast corpus of the dictator’s speeches, orders, correspondence, “table talk,” and other documents to grasp what he meant by National Socialism. What emerges is an ideology of remarkable consistency, more coherent and sophisticated than most historians have hitherto been willing to concede.

Eric Boehm reports that Joe Biden believes that Joe Biden’s tariffs on solar panels are a threat to U.S. national security. A slice:

Like most industries that involve building things, the solar industry in America needs two conditions to grow: reliable supply chains to provide access to goods produced anywhere in the world and greater private investment. Tariffs make the former more complicated and expensive while introducing uncertainty that scares away the latter.

Scott Lincicome writes that “globalization is alive, well, and changing.” A slice:

It’s undoubtedly true that international trade, like all forms of market competition, disrupts some American companies and workers that, through government protection, formerly had the U.S. market to themselves. However, the economic case for free trade remains rock solid. American consumers (who are also American workers, by the way) gain from new access to goods and services at lower prices and in greater varieties. These gains come not only from foreign-made items but also from similar domestic ones that are now forced to compete with imports on price and quality. Studies show that trade’s “consumer surplus” is far more significant than a few cents on the proverbial cheap T-shirt. Recently, for example, several economists have found that falling prices caused by Chinese imports into the United States during the 2000s generated hundreds of thousands of dollars in consumer benefits for each American job potentially displaced by the China Shock—the equivalent of giving every American “$260 in extra spending per year for the rest of their lives.” Similar gains occur outside the United States: European consumers, for example, save €60 billion per year (about $64 billion) from lower tariffs resulting from the European Union’s entry into the WTO. Studies also uniformly find that these benefits—again contrary to the conventional wisdom—tend to disproportionately aid the poor and the middle class, who have tighter budgets and concentrate their spending on tradable sectors like food, clothing, footwear, and consumer electronics.

Phil Magness reports that the straw man is not yet leaving Shanghai. (HT Tim Townsend)

The Wall Street Journal‘s Editorial Board decries the fraud fueled by the U.S. government’s fiscal incontinence – an incontinence worsened by covid hysteria. A slice:

The Small Business Administration (SBA) was in charge of the $814 billion Paycheck Protection Program, and a report last month from its inspector general is a bracing read. PPP provided forgivable loans to keep workers paid and businesses whole while the economy went into a government-ordered cryogenic freeze. To get the money into businesses quickly, local banks were authorized to approve PPP claims.

Yet the SBA “did not provide lenders sufficient specific guidance to effectively identify, track, address, and resolve potentially fraudulent PPP loans,” the IG says. The official fraud hotline has taken more than 54,000 complaints. Scams were “rapidly evolving” and included “false attestations on loan documents, inflation of payroll, falsified tax documentation, identity theft, and misuse of proceeds.”

Quotation of the Day…

(Don Boudreaux)

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… is from pages 588-589 of my former GMU Econ colleague Tom DiLorenzo’s excellent Fall 1984 Cato Journal paper, “The Political Economy of National Industrial Policy“:

The market is a process in which individuals voluntarily interact with one another in pursuit of their own interests. With appropriately designed institutions – such as well-defined, enforced, and respected property rights and freedom of contract, freedom of exchange, and the enforcement of contracts – self-interested behavior generates a spontaneous order. This order is chosen by no one, yet it tends to maximize the subjective values of all the market participants. Only in this sense can the market process be termed “efficient.” The maximization of subjective values, as individuals perceive them, is the end result of the market process and cannot be defined or “maximized” by any outside observer. A market situation can be judged “efficient” to the extent that it allows individuals to exercise their preferences subject only to the principles of mutual agreement and noninterference with the equal rights of others. The determination of what is efficient by some third party, such as government, would require interpersonal utility comparisons that are arbitrary and meaningless. In the absence of an omniscient and benevolent despot, market efficiency can he defined only in terms of the extent to which existing institutions facilitate mutually advantageous trade, subjectively valued.

My Review of Thomas Piketty’s ‘Time For Socialism’

(Don Boudreaux)

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My review of Thomas Piketty’s 2021 collection of his popular essays, Time For Socialism, has just been published at EconLib. (For inviting me to write this review I thank Amy Willis.) Here are two slices from my review:

In Piketty’s universe, the tools, enterprises, and economic processes that are necessary for modern prosperity just materialize, as if out of thin air. About the formation and operation of capital goods and services the reader gets no information beyond the alleged fact that, above a certain level, wealth—that is, the value of capital—”tends to grow mechanically.” An implication of this mysterious reality is that, because the value of capital depends upon the value of what it produces, the total output generated by capital also tends to grow mechanically. In Piketty’s universe, then, capital goods and services are neither caused by—nor affected by—entrepreneurship, risk-taking, and individuals’ private investment choices. Economic and social institutions thus have almost no impact on wealth creation. Ditto for economic and fiscal policies. Adam Smith’s 1776 inquiry into how institutions and norms cause the wealth of nations—Smith’s investigation into how different institutions and norms cause differences in the wealth of nations—must be for Piketty a project wholly sterile and inexplicable.

My best guess is that Piketty is enough of a Marxist to assume that that which “mechanically” generates businesses, factories, tools, and all other productive assets are the historical forces that form society. The toil of physically extracting from capital the outputs with which capital is pregnant is left to laborers, but Piketty’s belief that the value of capital “tends to grows mechanically” allows for only very minor variation over time in the total amount of final output that labor helps capital to birth.

…..

Given the bizarreness of Piketty’s economic vision, the reader is not surprised to find in his work fatal inconsistencies.

One such inconsistency arrives when Piketty asserts that “long-term economic performance is primarily determined by investment in training.” Well. Now that we’re told that improving the training of workers improves the performance of capital, it’s impossible to believe that the value of capital “tends to grow mechanically.” What’s left of the asserted non-role of capitalists in affecting the value of capital once we learn that economic growth is affected “primarily” by the choices humans make regarding how much, and presumably which sorts of, human training to demand and supply? After all, prominent among those who surely have incentives to provide at least some worker training are workers’ capitalist employers.

And so might the amount of worker training currently supplied by real-world employers be optimal? A strong case can be made that it is, especially given that when Piketty measures the growth over time of the value of non-human capital he finds that this growth appears to happen “mechanically.” But if, instead, privately provided worker training is suboptimal, what’s the best way to provide more and better training? Is the answer to entrust government, as Piketty predictably wishes, with more money to supply training? Or might a better way to improve training be through changes in labor law, or increases in the amount of training expenses that employers are allowed to deduct from their taxes? And how about, contrary to Piketty’s demand for a higher minimum wage, lowering or eliminating minimum wages, thus enabling more low-skilled workers to find employment—employment that gives workers valuable on-the-job experience and training?

Questions such as these are naturally asked by economists. Questions such as these are never asked by Piketty.

A second inconsistency is highlighted by Piketty’s insistence that worker training doesn’t merely positively affect economic performance, but that such training is the primary determinant of performance. This insistence, though, is at odds with Piketty’s exclusion of human capital from his measures of capital.

Some Links

(Don Boudreaux)

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Writing in the Wall Street Journal, Ilya Shapiro explains why he quit the Georgetown University Law Center. Two slices:

After a four-month investigation into a tweet, the Georgetown University Law Center reinstated me last Thursday. But after full consideration of the report I received later that afternoon from the Office of Institutional Diversity, Equity and Affirmative Action, or IDEAA, and on consultation with counsel and trusted advisers, I concluded that remaining in my job was untenable.
Dean William Treanor cleared me on the technicality that I wasn’t an employee when I tweeted, but the IDEAA implicitly repealed Georgetown’s Speech and Expression Policy and set me up for discipline the next time I transgress progressive orthodoxy. Instead of participating in that slow-motion firing, I’m resigning.

IDEAA speciously found that my tweet criticizing President Biden for limiting his Supreme Court pool by race and sex required “appropriate corrective measures” to address my “objectively offensive comments and to prevent the recurrence of offensive conduct based on race, gender, and sex.” Mr. Treanor reiterated these concerns in a June 2 statement, further noting the “harmful” nature of my tweets.

But IDEAA makes clear there is nothing objective about its standard: “The University’s anti-harassment policy does not require that a respondent intend to denigrate,” the report says. “Instead, the Policy requires consideration of the ‘purpose or effect’ of a respondent’s conduct.” That people were offended, or claim to have been, is enough for me to have broken the rules.

…..

Fundamentally, what Mr. Treanor has done—what he’s allowed IDEAA to do—is repeal the Speech and Expression Policy that he claims to hold dear. The freedom to speak is no freedom at all if it makes an exception for speech someone finds offensive or counter to some nebulous conception of equity.

Georgetown’s treatment of me shows how the university applies even these self-contradicting “principles” inconsistently depending on ideology. Contrast my case with these recent examples:

• In 2018, Prof. Carol Christine Fair of the School of Foreign Service tweeted during Justice Brett Kavanaugh’s confirmation process: “Look at this chorus of entitled white men justifying a serial rapist’s arrogated entitlement. All of them deserve miserable deaths while feminists laugh as they take their last gasps. Bonus: we castrate their corpses and feed them to swine? Yes.” Georgetown held this to be protected speech.

The Wall Street Journal‘s Editorial Board opines on Ilya Shapiro’s Orwellian treatment by Georgetown. A slice:

The episode underscores again that American academia is dominated by the censoring left. Mr. Treanor has shown himself to be a weak man who bends to the mob. When the left-wing mob won’t tolerate a thoughtful scholar like Mr. Shapiro, it shouldn’t be surprised if the response becomes a right-wing mob.

Excellent news! Chris Freiman will be a guest blogger at Bryan Caplan’s Bet On It.

David Henderson asks if Milton Friedman was a nobody.

Jeff Jacoby writes wisely. A slice:

Countless Americans have lost an essential component of citizenship: the ability to grant that their opponents are sincere and that at least some of their claims are not easily dismissed. Even if you are unwaveringly pro-life and regard abortion as a tragic act of violence, you should be able to recognize that to a woman who is in the first stages of pregnancy and desperate to avoid the turmoil, pain, expense, or trauma of bearing an unwanted child, the right to an abortion is a fundamental matter of liberty and bodily autonomy. Even if you are a fierce defender of Roe v. Wade and have always believed that abortion rights are indispensable, you should be able to concede the threshold scientific truth that a fetus at 12 weeks is unmistakably human, alive, and vulnerable.

“The truth is that the best argument on each side is a damn good one, and until you acknowledge that fact, you aren’t speaking or even thinking honestly about the issue,” wrote Caitlin Flanagan in a powerful essay in The Atlantic in 2019. “You certainly aren’t going to convince anybody.”

Doug Bandow explains how the brutal Chinese state used covid as an excuse to double-down on its tyrannical ways. A slice:

The real cost of Chinese policy, however, became evident with the PRC’s attempt to maintain a zero-COVID policy as the Omicron variant swept the globe. The plight of Shanghai, China’s economic engine and home to nearly 29 million people, has been in the news of late. The Chinese were long used to authoritarian social controls, but popular anger exploded at the imposition of brutal totalitarian restrictions. The authorities locked people in their apartments, broke down doors to remove residents, tossed Chinese into overcrowded quarantine facilities, denied people access to non-COVID medical care, left residents without food, and killed family pets. The city is finally emerging from a two-month lockdown, slowly. Reported Reuters: “the authorities have been allowing more people out of their homes and more businesses to reopen over the past week. But most residents remain confined to their compounds and most shops can only do deliveries.”

Tim Halliday and Ge Bai, writing in the Wall Street Journal, warn of “the high cost of constant covid testing.” A slice:

Testing labs in the U.S. have been earning windfall profits as a direct consequence of the Covid-19 pandemic. Using tax data from Hawaii, we found that statewide growth in private diagnostic labs’ monthly revenue tracked the volume of Covid-19 PCR tests in lockstep. Between May and December 2020, lab revenue grew at an average of 8% a month. Labs are making more than $10 a test in profit.

Why are these profits possible? The American healthcare system let labs set prices for Covid-19 tests well above their costs, costing taxpayers and private insurance companies dearly, for three reasons.

J.D. Tuccille is correct: “Lingering covid-19 restrictions are a costly hazard.” A slice:

Researchers find that children suffered “significant anxiety and depression during the coronavirus disease 2019 pandemic,” according to a May 2021 article in Pediatric Clinics of North America. “Social isolation, loneliness, lack of physical exercise, and family stress may contribute to these problems.”

Battles over closures, masks, and bungled remote learning poisoned families’ relations with school administrators. New York City schools still require masks on younger children despite protests. Other public schools used the pandemic to impose surveillance states.

Writing at The Hill, GMU Econ alum Ben Powell calls on Congress to “end the federal mask mandate once and for all.” A slice:

The U.S. Department of Justice’s appeal of a judge’s ruling against the federal mask mandate on public transportation illustrates why the House of Representatives needs to join the Senate and vote to permanently end the mandate. It made little sense before, and it makes even less sense now.

Jeanne Noble tweets…

From the epicenter of COVID theater, Berkeley reinstates mask mandate for schools only, while Alameda county reinstates mask mandate for everyplace “except schools” (but includes summer school/camps), despite falling case rates.

… and Margery Smelkinson chimes in: (HT Jay Bhattacharya)

This is what it looks like when public health wants to “just do something” to fight rising cases.

No science, no cohesion. Just strange rules which are transparently foolish and ineffective.