Russell Roberts's Blog, page 136
June 3, 2022
Anti-Antitrust
Here’s a note to a first-time correspondent:
Mr. F__:
Thanks for your e-mail.
You “unconditionally disagree” with the opposition to antitrust that I express in my quoted remarks in Emily Washburn’s recent Discourse essay. In your view, “Google and other Big Tech giants are so giant that we do not have the time to wait on free market influences to discipline them.”
I stand by my argument. History is full of worries that ‘dominant’ firms du jour will remain dominant until and unless they are attacked with the weapons of antitrust. What history is not full of – indeed, what can scarcely be found – is evidence that these worries are justified.*
History, by the way, is also full of evidence that antitrust authorities routinely act to diminish competition in markets.** Deputizing antitrust authorities to police markets against monopoly power is like deputizing the Ku Klux Klan to police markets against racial discrimination. The only germane difference separating the two cases is that the KKK at least is forthright about its goals.
You assert that “the sheer size of these businesses makes them invulnerable to competition.” Again, such assertions have been heard repeatedly throughout the past 150 years with very little convincing evidence ever being mustered in support. One reason the actual record is unkind to such assertions is this: The larger is the firm and its market share, the greater are the rewards for entrepreneurs who successfully compete against it. A firm’s unusually large size and market share spark in competitors unusually intense creativity and determination. As long as entry and exit in industries is open to all willing entrepreneurs, only by continuing to please consumers better than rivals will firms that are large and profitable today be firms that are large and profitable tomorrow.
And so to answer your final question: Not only do I believe that antitrust is unnecessary to keep markets competitive, I’m quite sure that insofar as antitrust is used, the net result is reduced competition and innovation. I would, if I could, abolish antitrust immediately and completely.
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
* See Dominick Armentano, Antitrust and Monopoly 2nd ed. (Oakland, CA: Independent Institute, 1996), and Donald J. Boudreaux and Burton W. Folsom, “Microsoft and Standard Oil: Radical Lessons for Antitrust Reform,” Antitrust Bulletin, Fall 1999.
** See Robert H. Bork, The Antitrust Paradox 2nd ed. (New York: Free Press, 1993), and Fred S. McChesney and William F. Shughart II, eds., The Causes and Consequences of Antitrust (Chicago: University of Chicago Press, 1995).
Bonus Quotation of the Day…
… is from page 93 of the late Gertrude Himmelfarb’s 1992 paper “Liberty: ‘One Very Simple Principle’?” as this paper appears in the 1994 collection – On Looking Into the Abyss – of some of Himmelfarb’s writings:
One of the paradoxes of contemporary liberalism is that it has become increasingly libertarian in moral affairs and at the same time increasingly dirigiste in economic affairs. In the moral realm, the individual is as close to being “sovereign” – or, we would now say, “autonomous” – as [John Stuart] Mill could have desired. In the economic realm, however, the state exercises a degree of control at least the equal of the “social tyranny” that he so feared.
DBx: There is still much truth and relevance in this observation from 30 years ago. And it’s certain that modern “liberalism” (so falsely labeled) is today even more hostile to economic freedom than it was in 1992.
But even as regards some of what Himmelfarb calls our ‘moral affairs,’ modern “liberalism” is less liberal – more dirigiste – than it was three decades ago. This faux liberalism has for years been sinking into deeper and deeper hostility to free speech – a sinking only accelerated by covid hysteria. And covid hysteria itself has revealed that the alleged attachment of many faux liberals to personal liberties (other than to the liberty to have abortions and to the liberty to protest in ways applauded by the woke) is either weak or mythical.
Some Covid Links
However, a new re-analysis of the data used in the study, produced by Ambarish Chandra and Tracy Høeg, finds that school masking is not associated with pediatric case rates.
Chandra and Høeg’s analysis, which uses a larger population and longer time interval, is more comprehensive than the CDC’s. Their results show no relationship between mandating masks in schools and COVID case rates in students. The authors also highlight problems with the initial CDC study, including context surrounding biases in the CDC’s medical journal and related scientific publications.
New Yorkers, you’re worldly. You have friends in other cities, other countries. Ask them: Are you still masking 2- to 4-year- olds?
After they get over the shock that anyone would have ever masked 2- to 4-year-olds, ask them what they think about New York mandating it today. Tell them that until a few weeks ago, these same kids were forced to mask outdoors. It’s June 2022, and New York City has decided that all remaining COVID-19 mitigation burdens should rest only on the shoulders of one group: toddlers.
Your friends will ask: But why?
There is no answer. There has never been any science to suggest masking any children, much less small children, was a good idea. But for the kids learning language, learning how to read facial expressions, learning how to emote in the world, to still be masking when no one else has to, shows a deep disregard for children as a whole.
Tell your friends that your city has a good reason to continue to harm children with this masking and hear them laugh in your face. No other city, no other state, is force-masking toddlers. Most countries have never masked this age group whatsoever. New York is on an island of abject foolishness all on its own.
The idea that these kids must be masked because there is no vaccine for them is just plainly untrue. Children are uniquely not susceptible to COVID. We’ve known this for over two years. Instead of being grateful for this blessing, we’ve treated 2-year-olds as if they’re 80. If 2- to 4-year olds were dying of COVID at the same rate as older people, they would have been at the front of the vaccine line, not at the very back.
…..
How dare the mayor continue to show his face around the city when this idiotic policy continues to exist? How much longer will children continue to have their development paused while the mayor hobnobs, maskless, of course, with celebrities?
But the real question is: When will New Yorkers finally have had enough of the anti-science way their city fought the virus? When will they snap out of the conformist silence they’ve all sunk into, stand up and say “this is wrong.” Ask your friends, New Yorkers, ask them.
(DBx: One of the many still-relevant – and depressing-to-ask – covid-related questions for me is why so many parents with toddlers continue to believe that their unvaccinated young children are at grave danger from covid. I have met over these past two years probably 15 or 16 sets of parents who genuinely believe that, until their very young children are fully vaccinated against covid, these children face significant odds of suffering and even dying from covid. When appropriate, I gently share with these parents the fact that covid poses almost no danger to children. Invariably I’m answered with blank stares, as if my message reveals me to be a kindly but ignorant fool who is best ignored. My most recent encounter with such a parent was just days ago. An intelligent, highly educated, worldly, and very caring mother of a three year old told me that she will feel a great deal of relief when her young daughter finally gets vaccinated against covid. Why do so many people still not know, or not believe, a central fact about covid – namely, its steep age profile – that should relieve every parent of worry about their young children suffering from this virus?)
In response to this news about the return of the masking of schoolchildren in Sacramento, Tracy Høeg tweets: (HT Jay Bhattacharya)
👇 what happens when people are misled about what the scientific data show
👇 what happens when physicians & scientists who know masking children does little to nothing & harms outweigh the benefits are silenced:
Kids pay the price
Yet after sitting on the fluvoxamine application for nearly five months—most other EUAs have been approved within two—the FDA notified Dr. Boulware this month that “the treatment benefit of fluvoxamine was not persuasive when focusing on clinically meaningful outcomes.” How is prevention of severe illness not a clinically meaningful outcome?
The FDA quibbled that the “timing of the trials spanned different periods” of the pandemic and “demographics of the patient populations were not uniform.” Huh? These are trial strengths since they show the benefits can be generalized across different patient populations, settings and variants. That has proved not to be the case for monoclonal antibodies or even vaccines, which have become less effective against new variants.
The agency also said there are plenty of alternative treatments available. Never mind that the Biden administration has been warning it may need to ration antiviral and monoclonal treatments unless Congress coughs up billions to purchase more. A 10-day course of fluvoxamine costs about $5 compared with $500 to $700 for Paxlovid and molnupiravir. Monoclonals cost about $2,000.
Who’d a-thunk that government would use fear of covid to spend money excessively and wastefully?
Alex Gutentag explains that the covid cult inflicted lasting damage on children. Two slices:
As the severity of these repercussions comes to light, some outlets—notably those that most aggressively advocated for lockdowns and masking—have been eager to suggest that we are now aware of the overwhelmingly negative consequences of these policies thanks to “new research” that has only just become available to fair-minded people, who can therefore be forgiven for having adopted the course they did. But to many doctors and scientists, the damage to kids caused by COVID-19 panic was neither inevitable nor surprising. Rather, it was the result of the public health establishment’s conscious choice to eschew rational cost-benefit analysis in favor of pet cultural theories and political gamesmanship. For those who applied the scientific method to the available evidence, the consequences were already clear just a few weeks into the pandemic. “It was not at all true that people in healthcare and public health were unaware of what was going on with children,” Dr. [Jeanne] Noble told me. “They were not ignorant.”
What happened to the United States’ kids was not the result of an innocent mistake. It was the product of a concerted campaign of censorship and demonization of dissenting voices in support of premises that turned out to be wildly harmful to children. Scientists, doctors, and parents who urged schools to reopen based on available evidence were systematically ignored and silenced by politicians, public health bureaucrats, and legions of dedicated online COVID-19 activists, while the most vulnerable children in U.S. society suffered the consequences. Only by telling the story of how that betrayal happened is it possible to start understanding the why.
In 2020, Dr. Jay Bhattacharya, professor of medicine at Stanford University, was invited along with other scientists to the White House. “It was supposed to be a conversation between us and Deborah Birx and Tony Fauci,” Dr. Bhattacharya told me, “but both Birx and Fauci declined to be there.”
Due in part to his background in health economics, Dr. Bhattacharya knew that school closures would have long-term consequences for children. It is a consistent finding in the field, he said, that “when children stay in school longer, they lead healthier lives, they lead longer lives, and they are less likely to be poor throughout their lives.”
It was clear already in the spring of 2020 that the risk of severe COVID-19 for children was far lower than the risk posed by long-term school closures. Children were shown to be less efficient spreaders of COVID-19 than adults, negating the argument that they would become unique vectors of disease and endanger their teachers or the adults with whom they lived. “That meant that schools are special,” Dr. Bhattacharya said. “They’re not this dangerous environment that people envision them to be.” When Sweden kept schools open for children up to age 16 without masks in the spring of 2020, for example, not a single child died, and teachers were not at elevated risk for severe COVID-19.
Armed with this knowledge, Dr. Bhattacharya’s main goal at the White House meeting was to make the case for reopening schools. “I came with a document with all the scientific evidence I’d been reading about,” he said. “I was shocked to see that the leaders of the public health response, people like Deborah Birx, were not interested in talking about that evidence. In fact, they wouldn’t want to even be in the same room with me.”
…..
Time and again, a narrow group of public health officials and academics demanded public and professional obedience to certain policies without acknowledging or even weighing the possible downsides. When Dr. Bhattacharya served as an expert witness in defense of Florida’s school-reopening order, it struck him, he told me, that the experts on the other side refused to consider the harms caused by school closures: “It’s as if they’d come to a pre-ordained conclusion rather than reasoning their way to what the right thing to do was.”
There was “a small cartel of experts who controlled the policy, who controlled the messaging, who controlled even who was allowed to participate in this debate or discussion,” Dr. Bhattacharya said. “We can never let that happen again.”
Kate Dunlop describes China’s “cruel and pointless massacre of pets” as “an exercise in power.” A slice:
Killing pets and other animals to save us from the next ‘potential’ zoonotic jump is not on the same terror level but keeps the masses in line and the fires of fear stoked. The links between animal cruelty and human violence are long established and well understood. Abusing companion animals who are a source of comfort to people with little else is a well-trodden path for domestic abusers and political tyrants alike. Such cruelty convinces people that they are powerless and increases their passivity and fear. Where the state is the abuser, it leads to widespread apathy in the population and greater compliance.
Between September 2020 and January 2021, there were roughly 800,000 laboratory tests reported for the flu. Total. Not per day. Total. In ~4 months. That’s not a low number either, a report from the 2015-2016 flu season estimated less than 900,000 tests were run.
The United States in recent years has never tried to find every single case of the flu as we have been attempting to do with COVID. We’ve now run over 1 billion COVID tests. See how well mass testing works to control the spread of a highly infectious respiratory virus?
This obsessive desire to find every possible positive test result for a disease that will inevitably infect everyone can, and undoubtedly has, led to a significantly higher proportion of deaths from other causes being attributed to COVID. The more you look, the more you’ll find.
Quotation of the Day…
… is from pages 40-41 of Matthew Hennessey’s excellent 2022 book, Visible Hand:
The simple fact governing everything we do in life is this: We can’t have everything we want. And if we want something, we almost always have to give up something we value to get it.
June 2, 2022
Some Counterintuitive Results of Understanding the Subjectivism of Cost
Among the great pleasures of mastering the economic way of thinking is the access one gains to a stream of intriguing surprises. Without doubt, the most famous and important of these surprises is the understanding that productive economic order can arise without anyone planning such an order. In a reasonably well-functioning system of private property rights, each person’s pursuit of his or her own individually chosen goals contributes to a pattern of resource use that better enables the satisfaction of the individually chosen goals of countless strangers.
But sound economic reasoning reveals many other, if much less momentous, surprising truths.
Here’s one: High costs are good. This claim sounds nutty. After all, don’t we all prefer low costs to high costs? Yet the truth of the claim that high costs are good becomes clear when the nature of cost is correctly understood.
As the late Nobel-laureate economist James Buchanan explained in his 1969 book, Cost and Choice, cost is the barrier to choice. Cost is the benefit that a chooser believes he or she sacrifices whenever he or she makes a choice.
Suppose you want one scoop of ice cream and discover the availability of three different flavor options: chocolate, vanilla, and anchovy. You dislike anchovy and immediately dismiss it as an option, leaving you practically to choose between chocolate and vanilla, both of which flavors you like very much. Suppose, though, that you have a slight preference for vanilla. When you choose vanilla, you sacrifice the opportunity to enjoy the scoop of chocolate. The satisfaction that you imagine you would have experienced had you instead chosen the scoop of chocolate is the cost that you incur to choose the scoop of vanilla. (Note that because you forgo the experience of actually eating chocolate ice cream at that moment, you can never confirm beyond doubt that your choice to then eat vanilla ice cream was in fact the best one. The cost you experience is only what you imagine your enjoyment of the chocolate ice cream would have been had you chosen differently. While quite real, this cost is ultimately measured only in your imagination.)
Because you’re very fond of chocolate ice cream, your cost of choosing vanilla was ‘high.’ Compare this cost to what you’d have incurred had your only two options been chocolate and anchovy. Your choosing chocolate under such a circumstance isn’t very costly at all, given that the only other flavor option, anchovy, is one that you thoroughly dislike.
So in which situation would you prefer to find yourself? One in which your options are vanilla or chocolate? Or one in which your options are chocolate or anchovy? Clearly, the best situation is the former, as we’ve already established that, as among the three flavors, you prefer vanilla above all. But the cost that you incur in the first situation is higher than is the cost that you incur in the second. The value to you of what you sacrifice when you choose vanilla over chocolate is higher than is the value to you of what you sacrifice when you choose chocolate over anchovy.
The core lesson here is that the better are your options, the higher is the value to you of what you sacrifice when you choose your most-preferred option among all of those options that are available. Put differently, to incur a high cost is to reject a highly valued option; but to reject a highly valued option means choosing and experiencing an option that’s valued even more highly than the option that’s rejected.
If the cost you incur when making a choice is high, then the value to you of the option that you do choose is even higher.
Some Non-Covid Links
A related phenomenon is the belief that “do something” will produce the desired result. But what if we have arrived at the point where something close to the opposite is true? Step back and it’s hard not to notice: The American political system has accreted so many solutions and sub-solutions to so many problems that what we have created is a system mired in sludge.
The political left is forever in the streets screaming the system “doesn’t work” for many people. Who could disagree? But they should take a closer look at what the “system” actually has become—whether the public schools, health care, criminal justice, mental health, climate or for that matter, the Pentagon.
It’s a morass of laws, follow-on laws, rules, administrative procedures, court decisions and revisions of revisions that have produced both unresponsive sludge and, increasingly, disasters. A sad political truth is that over time, do something often produces less of its intended good.
David Simon rightly criticizes some economists’ dire predictions about global warming. A slice:
The data show that as the earth has warmed, deaths caused by natural disasters have sharply declined. Since 1920, the earth’s average temperature has risen by 1.11 degrees Celsius. Yet since 1920, even as world population has quadrupled from less than two billion to almost eight billion, data from EM-DAT – The International Disaster Database (presented by University of Oxford economist Max Roser and researcher Hannah Ritchie) show that the number of people killed each year by natural disasters since 1920 has declined by over 90%.
The data show that global warming has not resulted in more hurricanes. In a 2021 report, the U.S. EPA admitted the following: “The total number of hurricanes (particularly after being adjusted for improvements in observation methods) and the number reaching the United States do not indicate a clear overall trend since 1878.”
The data show that global warming has not resulted in more land burned by fires. Data from the Journal of Geophysical Research: Biogeosciences, Remote Sensing of Environment, and Earth’s Future (presented by environmental statistician Bjorn Lomborg) show that the percentage of global land burned per year in 1905 through 2020 and most of 2021 has been declining.
The truth is they were anticipated, and many people did warn about inflation. Some of those warnings appeared in these pages from conservative economists. Prominent Democratic economist Larry Summers also warned in March 2021 that too much spending and easy monetary policy could spur an excess of economic demand over supply.
Why were those warnings ignored? The answer is a combination of politics and mistaken economic models. Democrats ran all of Washington and wanted to justify a huge expansion of the welfare state. Their economic household remedy is always more government spending and easy monetary policy. Most of the press endorsed the Democrats’ $1.9 trillion spending blowout in March 2021 as necessary, though the economy was growing rapidly at the time.
While the Federal Reserve was making its monetary mistakes, progressives didn’t object. They embraced the fad of Modern Monetary Theory that low interest rates could finance any amount of government spending more or less forever.
All of this has been another failure of progressive economics. By focusing solely on macroeconomic demand, while ignoring supply-side and regulatory bottlenecks, their policies fueled the inflation we have today. They also ignored the role of excess money, forgetting economist Milton Friedman’s famous lesson. As President Biden declared in an April 2020 interview, “Milton Friedman isn’t running the show anymore.” That is one campaign promise he has kept.
Yet the most striking part of Biden’s op-ed comes at the end. He notes correctly that “we need to keep reducing the federal deficit, which will help ease price pressures.” That’s true. But it is also obvious that he has no intention of cutting spending — the most effective way to achieve his goal. After all, he proudly lists additional spending programs he’d like to implement while calling for more handouts for crony industries.
The president goes on to brag about the deficit reduction that took place since he took office — a reduction, he asserts, that happened because he succeeded in “winding down emergency programs responsibly.” That’s fascinating, since the only reason there was any such winding down is that BBB — which would have made permanent many of these emergency programs — was killed when Democratic Sens. Kyrsten Sinema and Joe Manchin joined Republicans in opposition.
The example of India should serve as a reminder to America’s own trade restrictionists that self-sufficiency is not a smart economic goal. Of course, India’s case as a developing economy is different from America’s as a developed one. The U.S. domestic market is much larger than India’s on a per capita basis, but our economic output is much larger as well, and the same basic logic of Ahluwalia’s case holds for any country. We’d be foolish to limit our massive economic output to domestic customers only.
Our all-domestic baby-formula market is a clear example of the weakness of self-sufficiency. Sole-source government contracts through WIC eliminate competition. Secular price increases result. Calls for government assistance to consumers follow. It’s the same pattern as in India: One government “fix” leads to a pile-on of government intervention that ends up making everyone worse off. Now we’re in a situation where one factory closes down and there are widespread shortages.
The allure of focusing on the domestic market trapped India in decades of economic stagnation. The U.S. is far wealthier than India, but we shouldn’t be buying into the same logic behind the domestic-market myth in pursuit of the same wrongheaded economic goal.
Quotation of the Day…
… is from page 281 of Frank Knight’s 1950 Presidential address to the American Economic Association – an address titled “The Role of Principles in Economics and Politics” – as this address is slightly modified and reprinted in the 1956 collection of several of Knight’s papers and speeches, On the History and Method of Economics:
I mistrust reformers. When a man or group asks for “power to do good,” my impulse is to say, “Oh, yeah, who ever wanted power for any other reason, and what have they done when they got it?” So, I instinctively want to cancel the last three words, leaving simply, “I want power”; that is easy to believe. And a further confession: I am reluctant to believe in doing good with power anyhow.
DBx: The world would be much safer and more peaceful, as well as more prosperous, if more people regularly exercised this simple but profound bit of wisdom as here explained by Knight.
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June 1, 2022
Some Non-Covid Links
The president’s op-ed shows that no one is yet willing to take ownership of this catastrophic failure. The Federal Reserve has adopted a more hawkish message when it comes to inflation, but it continues to issue projections of inflation falling back to trend, persisting in this oblivious optimism although Fed policies are still accommodative for the current inflationary environment. The central bank’s purportedly anti-inflation monetary policy will leave real interest rates in negative territory even after several rate hikes. In other words, the Fed’s message for well over a year now has been that inflation will fall on its own after supply disruptions are resolved. But its predictions have been consistently wrong, and it has revised its forecast upward at every meeting.
George Will decries politicians’ recklessness with other people’s money. Here’s his conclusion:
Once government begins to pursue the chimera of ever-more-perfect fairness, it finds — actually, it incites — more and more factions claiming that justice demands their inclusion in the government’s ever-expanding plans for smoothing life’s rough surfaces. Congress can talk about refilling the Restaurant Revitalization Fund, but it can never be full enough to service all factions who can claim, with some plausibility, that they experienced unfairness not easily distinguished from that suffered by factions who benefited from the first $28 billion.
There comes a point where the right policy is: Stop smoothing. And stop digging.
Transforming the American economy into a progressive utopia would require the FTC to become a powerful legislature. To expedite FTC-crafted legislation, or rulemaking in agency-speak, the Commissioners last year approved substantial changes, on a 3–2 party-line vote. They did so with neither public comment about the changes nor input from most of the agency’s professional staff.
FTC leaders should have learned from the past. To avoid the mistakes of the 1970s, the Commission must use processes that guarantee scrutiny of its proposals, provide for an inquiry into their facts, and ensure a critical evaluation of proposed remedies and their likely effects. Congress sought to establish just such a process when it first codified rulemaking authority.
Instead, the Biden FTC’s changes are all about accelerating the progressive agenda. The Commission’s explanation doesn’t say the goal is writing better rules or avoiding mistakes. The new rules will produce greater political control of rulemaking and less public input, violating both the agency’s statutory authority and sound public policy. For example, the changes remove the statutory requirement that the Commission explain its reasons “with particularity,” allowing instead a general statement of reasons. The many critiques of 1970s rulemaking identified the Commission’s failure to articulate clear legal and substantive theories as a root cause of the problems.
Bonus Quotation of the Day…
… is from page 408 of Albert Venn Dicey’s monumental 1905 volume, Lectures on the Relation Between Law & Public Opinion in England During the Nineteenth Century:
The augmentation, moreover, of the public revenue by means of taxation is not only a diminution of each taxpayer’s private income and of his power within a certain sphere to do as he likes, but also an increase in the resources and the power of the state….
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