Russell Roberts's Blog, page 1440

The Make-Work Fallacy for the Gazillionth Time

Here's a letter to the Wall Street Journal:

Thomas Geoghegan's outburst against Boeing's plan to operate a factory in South Carolina is a swirl of disingenuous, illogical, and economically laughable assertions ("Boeing's Threat to American Enterprise," June 20).  To the extent that one deciphers this zany mess, Geoghegan's argument boils down to this: by taking advantage of a less-costly source of labor, Boeing undermines its own quality and America's industrial might while discouraging young people from going to college.

Nonsense.

Firms remain vibrant in a competitive economy by constantly reducing their production costs.  And switching production activities from high-cost workers to lower-cost workers is no less effective a means toward this goal – and no more unusual or ominous – than is switching production activities from high-cost workers to lower-cost machines.

Would Mr. Geoghegan argue that Boeing's consistently increasing mechanization of its operations over the years promoted American industrial decline?  Would he support government efforts to force Boeing to destroy all of its computers and have its aircraft designed instead by armies of engineers equipped only with slide rules and pencils?  Would he want Boeing's production-line workers to use only 1950s-era (or, better yet, 1920s-era) hand tools?  Does Mr. Geoghegan think that returning to such labor-intensive methods of aircraft design and production would improve the quality of Boeing's operations and products while simultaneously promoting America's industrial might and encouraging young people to go to college?

The head aches just to pose the questions – and aches worse to realize that his 'arguments' imply that he'd answer 'yes.'

Sincerely,

Donald J. Boudreaux

Munger on exchange and power

Mike Munger is this week's guest on EconTalk. It's superb. Maybe his best ever. Full of interesting insights into why some people judge certain transactions as unacceptable even though both parties are made better off. Check it out.

Open Letter to Paul Krugman

Prof. Paul Krugman

Dep't. of Economics

Princeton University

Dear Mr. Krugman:



Interviewed recently in "The Browser," you said that

if you ask a liberal or a saltwater economist, "What would somebody on the other side of this divide say here?  What would their version of it be?"  A liberal can do that.  A liberal can talk coherently about what the conservative view is because people like me actually do listen. We don't think it's right, but we pay enough attention to see what the other person is trying to get at.  The reverse is not true.  You try to get someone who is fiercely anti-Keynesian to even explain what a Keynesian economic argument is, they can't do it.  They can't get it remotely right.  Or if you ask a conservative,"What do liberals want?"  You get this bizarre stuff – for example, that liberals want everybody to ride trains, because it makes people more susceptible to collectivism.  You just have to look at the realities of the way each side talks and what they know.  One side of the picture is open-minded and sceptical.  We have views that are different, but they're arrived at through paying attention.  The other side has dogmatic views.

Let's overlook your failure to distinguish conservatives from libertarians – a failure that, for the point I'm about to make, is unimportant.

You're able to conclude that "liberals" are open-minded thinkers while "conservatives" are dumb-as-dung dogmatists only because you compare the works of "liberal" scholars to the pronouncements of conservative popular pundits.  However valid or invalid is the artistic license used by conservative celebrities such as Glenn Beck and Rush Limbaugh (and, for that matter, by "liberal" celebrities such as Rachel Maddow and Keith Olbermann) to entertain large popular audiences, you're wrong to equate the pronouncements of conservative media stars with the knowledge and works of conservative (and libertarian) scholars.

Because, as you claim, you study carefully the works of non-"liberal" scholars, you surely know that the late Frank Knight, Ludwig von Mises, F.A. Hayek, and Milton Friedman – influential economists whom you would classify as "conservative" – were all steeped in and treated seriously the writings of Keynes, Marx, Veblen, Galbraith, and other "liberal" thinkers.

The same is true for still-living influential non-"liberal" scholars.

I'd be obliged to conclude that you in fact, contrary your claim, do not carefully engage the works of non-"liberal" scholars if you insist that "liberal" scholarship is ignored by conservative and libertarian thinkers such as James Buchanan, Gordon Tullock, Ronald Coase, Armen Alchian, Harold Demsetz, Anna Schwartz, Gary Becker, Vernon Smith, Leland Yeager, Henry Manne, Deirdre McCloskey, Allan Meltzer, Richard Epstein, Tyler Cowen, Arnold Kling, George Selgin, Lawrence H. White, and James Q. Wilson, to name only a few.

You do a disservice to scholars such as these, as well as to scholarship generally, to assert that serious thinking is done only by you and your ideological cohorts.

Sincerely,

Donald J. Boudreaux

Professor of Economics

George Mason University

Fairfax, VA 22030

UPDATE: Thanks to commenter Yosef for reminding me of this recent boast of Mr. Krugman:

Some have asked if there aren't conservative sites I read regularly. Well, no. I will read anything I've been informed about that's either interesting or revealing; but I don't know of any economics or politics sites on that side that regularly provide analysis or information I need to take seriously.

On C-Span tonight (nope–next Sunday the 26th)

John Papola and I are scheduled to be on C-Span tonight next Sunday, June 26th at 8 pm ET for an hour, talking about the Keynes-Hayek rap videos with Brian Lamb. The show will be replayed at 11 pm.

On C-Span tonight

John Papola and I are scheduled to be on C-Span tonight at 8 pm ET for an hour, talking about the Keynes-Hayek rap videos with Brian Lamb. The show will be replayed at 11 pm.

Quotation of the Day…

… from George Harrison's Beatles's song Taxman:

Let me tell you how it will be;

There's one for you, nineteen for me.

'Cause I'm the taxman,

Yeah, I'm the taxman.

Should five per cent appear too small,

Be thankful I don't take it all.

'Cause I'm the taxman,

Yeah, I'm the taxman.

(if you drive a car, car;) – I'll tax the street;

(if you try to sit, sit;) – I'll tax your seat;

(if you get too cold, cold;) – I'll tax the heat;

(if you take a walk, walk;) – I'll tax your feet.

Happy 69th birthday today, btw, to Paul McCartney.

More On the Ordered Liberty Allegedly Promoted by the 'Drug War'

From 1989 through 2009, U.S. District Attorneys alone have seized nearly $14 billion dollars worth of assets through civil-asset-forfeiture procedures.  (Data are here; using the Minnesota Fed's inflation converter, I converted these current-dollar figures into 2011 dollars to determine that the grand total of such seizures during this 21-year span, measured in 2011 dollars, is $13,997,395,000.)

Note that this figure does not include the value of assets seized under civil-asset-forfeiture statutes by state- and local- government officials.

These assets were seized from their owners without any requirement that the seizing officials – in this case, agents of the U.S. Department of Justice – prove that the owners of these properties are guilty of the underlying criminal offenses that serve as the alleged justification for government to seize these properties.

I don't know the exact proportion, but a huge portion (I believe a sizable majority) of civil-asset-forfeiture seizures are done on suspicion that the owners of the properties are somehow connected with trade in prohibited drugs.

So here we have significant injuries inflicted on two major organs of any free and civil society by the "war on drugs" war on peaceful people (only some of whom use intoxicants that the government disapproves of): the rule of law and security of property rights.

Quotation of the Day…

… is from page 237 of (now GMU Law Dean) Daniel D. Polsby, "Regulation of Foods and Drugs and Libertarian Ideals: Perspectives of a Fellow-Traveler," Social Philosophy & Policy (1998), Vol. 15:

The "externalities" case for regulating marijuana and hallucinogenics such as LSD, as near as I can make out, seems to involve the claim that they are, in effect, a solvent of republican virtue – that a self-governing nation cannot be a nation of pot- or acid-heads.  Though there is surely a great deal of truth in this claim, such harms are far too marginal, and the embedded concept of public good far too general and unbounded, to support any serious regulatory effort beyond keeping the ingestion of these drugs out of public places; certainly the potential harms associated with these drugs do not justify their management by criminal law.  Republican democracy beats out its competition only if one does not insist on brutal coercions aimed at ensuring that everyone will be mentally competent to participate.

Some 'Drug War' Links

The late William F. Buckley understood the vileness of the "war on drugs" war on peaceful people (only some of whom use intoxicants that the government disapproves of).

More wisdom from W.F. Buckley on the 'drug war.'

Here's Buckley (circa 1991) debating Rep. Charles Rangle on the 'drug war.'

And here's Buckley (joined by others) writing eloquently against the 'drug war.'

Milton Friedman presents part of his case for ending the 'drug war.'

Here's a video narration of a 1984 Thomas Sowell essay arguing against the 'drug war.'

Jeffrey Miron points out that 'drug-war' violence is not caused by the 'drug' part but by the 'war' (i.e., 'war-on-drugs') part.

Here's a video of Jeff explaining the benefits that would emerge from ending the 'drug war.'

Large Numbers, Small Numbers, and Coasean Bargaining

Bargaining achieves Coasean efficiencies even if that bargaining is so strategic that it prevents exchanges that would take place in the absence of the strategizing – or so I argue in this 1996 Advances in Austrian Economics article.