Russell Roberts's Blog, page 1462

Will Wilkinson on Charles and David Koch

.  Here's a key 'graf:

I don't think many people understand how little these institutions [Cato Institute, Institute for Humane Studies, and the Mercatus Center] depend on the Kochs' continued generosity. Of the brothers, Charles is the ideas man, and his idea has always been to build a set of complementary institutions which, once mature, can thrive without his (or his brother's) financial help. That said, I have no doubt that these institutions either would not have existed, or would have existed in a very different form, were it not for the Kochs' institution-building philanthropy. Having committed about a decade of my life to a few of these institutions, I'd like to think that those labouring within them have had some affect on American culture and politics—have had some small success in increasing awareness of and strengthening the public case for the value of individual rights, free markets, limited government, and peace. I don't think there's been a huge effect, but surely there's been an effect.

Some Links

Charles Kenny, in the Sept./Oct. 2010 issue of Foreign Policy, explains that the 20-aughts were among the very best years in human history by a number of relevant measures.  (HT Fred Dent)  Here are the final two paragraphs:

Perhaps technology also helps account for the striking disconnect between the reality of worldwide progress and the perception of global decline. We're more able than ever to witness the tragedy of millions of our fellow humans on television or online. And, rightly so, we're more outraged than ever that suffering continues in a world of such technological wonder and economic plenty.

Nonetheless, if you had to choose a decade in history in which to be alive, the first of the 21st century would undoubtedly be it. More people lived lives of greater freedom, security, longevity, and wealth than ever before. And now, billions of them can tweet the good news. Bring on the 'Teenies.

Carpe Diem's Mark Perry seizes the opportunity to bring to our attention these clips of the late, great Milton Friedman.  Here, here, and here.

Arnold Kling on Tyler Cowen on Michael Spence & Sandile Hlatshwayo.

Bryan Caplan on Matt Zwolinski on the deserving poor.

One of my many fine colleagues over at GMU Law, Ilya Somin, applauds California Gov. Jerry Brown's efforts to abolish that state's 400 local "redevelopment agencies."  I join in the applause.

Overlawyered's Walter Olson exposes the very bad idea of bonuses for prosecuting attorneys.  (HT Larry Ribstein)

And here's Bjorn Lomborg, writing in USA Today, on "Earth Hour."

Just Another Facile Politician

Here's a letter to the Boston Globe:

Jeff Jacoby nicely documents Newt Gingrich's flippancy over U.S. military intervention in Libya ("Gingrich vs. Gingrich," March 27).  The former House Speaker has a long history of such thoughtlessness cloaked as deep reflection – most notoriously, I believe, is his 1995 proposal to execute drug dealers.

Never mind that drug dealers – like furniture stores, bagel shops, yoga instructors, and all other merchants – sell only to willing buyers; so Mr. Gingrich would execute people for engaging in consenting capitalist acts. Even supporters of the drug war should see that making drug-selling a capital offense carrying the same penalty as murder would remove a major incentive for drug dealers to avoid acts of heinous violence. What incentive, were Mr. Gingrich's proposal enacted, would a drug dealer have to refrain from murdering anyone he suspects might reveal him to the police?  He can't be executed twice.

A Gingrichian world in which drug dealing is punished as harshly as murder is a world in which there are no disincentives for drug dealers also to become murderers.  That the former Speaker of the House either missed this fact or ignored it testifies to the true depth of his intellect.

Sincerely,

Donald J. Boudreaux

Tariffs: Protective and Revenue

I normally do not reply to Muirgeo's comments, except to correct egregious blasphemies against worthy scholars (such as his frequent repeats of the misreadings of Adam Smith trumpted by the likes of the fatuous William Greider) and when – as today – they present a teachable moment.

Muirgeo, in his effort to justify the alleged economic benefits of tariffs, asks:

Do you realize during the majority of this nations [sic] history most of its tax revenue came from tariffs?

Indeed, this claim is true.  But it does not make the case for government policy that Muirgeo assumes it to make.

Precisely because Uncle Sam, until WWI, depended chiefly for his revenues upon those that could be extracted from import tariffs, these tariffs could not generally be so high as to choke off trade.  A truly protective tariff brings in little or no revenue: tariff revenues are not paid on goods and services not imported into the country.

So Uncle Sam had an incentive not to go full-bore in raising tariffs.

On the other hand, protectionist interests were generally politically powerful (for protectionists were a chief constituency of the GOP – which helps to explain why the GOP still has the reputation of being the party of "the rich," because it was rich industrialists who were the principal beneficiaries of whatever protection was supplied by 19th-century tariffs).  So to the degree that Uncle Sam in the 19th century used tariffs to protect domestic industries from foreign competiton, Uncle Sam likely reduced the revenues he raked in.

So protective tariffs likely kept Uncle Sam from bloating in size (thus reducing whatever temptation he would have had to involve himself in aspects of the economy that would have further reduced economic growth), while the need to rake in positive sums of revenue from tariffs likely kept protectionism in 19th-century America less restrictive than it would otherwise have been.

I say "likely" in the previous paragraph because it's an empirical question which effect, if any, dominated the other.  Did the national government's need for revenue in fact keep tariffs lower (and, hence, less 'protective') than otherwise?  If so, U.S. tariff policy – in intent and in effect – might not have been as protectionist as it is portrayed.  Or did the forces of protectionism dominate?  If so, then while these resulting restrictions on imports (and – it follows – on exports) unquestionably reduced the rate of American economic growth from what it would have been with less-restrictive tariffs, the accompanying strict limits on Uncle Sam's revenues at least partly offset the negative consequences of the protective tariffs by keeping the national government smaller and less intrusive than it might otherwise have been.

I wonder if empirical research has been done on this question.  I'll ask Doug Irwin.

Is Earth Hour Wantonly Wasteful?

Responding negatively to this post in which I encouraged people to leave their lights on last night as a means of celebrating Human Achievement Hour, Emerson White comments:

Wanton waste is not how humans achieved so much. How about you leave the lights that you are using on and leave the rest off so some brilliant capitalist can do something with the energy that you don't waste.

I agree.  Wanton waste is not how humans achieved so much.  But as commentors vikingvista and Sandre point out, each in his different way, it's not at all the case that turning on the lights for Human Achievement Hour is wasteful.  It is, instead, a productive matter of choice.

Those of us who celebrated Human Achievement Hour were indeed making a statement – expressing our opinions – as opposed to keeping the lights on merely to perform some narrowly utilitarian tasks.  But if this expressive action be wasteful, then it was no less wasteful for those who celebrated Earth Hour to express their opinions by turning their lights off.

According to the implicit logic in Emerson White's comment, by arbitrarily going one whole hour with significantly reduced energy and artificial lighting, human labor was wantonly wasted.  Productive activities that could have been performed – doing the laundry, cleaning the basement, studying for that mechanical-engineering or poetry exam, tinkering in the garage on a project that might be the next-generation's supercomputer – were arbitrarily not performed.  One full hour of human labor down the drain, never to be recovered.  For one entire hour, human labor was wasted for no purpose other than to make a political statement.  Wasting labor wantonly is not how humans achieved so much.  (Human labor, by the way, is one of the few resources that is becoming increasingly scarce over time.  As the real prices of petroleum, magnesium, coal, and most other 'natural resources' trend downward over time, the real price of human labor in industrialized and industrializing economies continues to rise.  So it is especially egregious to waste human labor.)

Of course, while I disagree with the factual and economic premeses upon which Earth Hour is based, I do not really believe that Earth Hour celebrants were being wasteful.  Each made and executed a private choice for his or her own private, subjective reasons and, in the process, took no property of others.  Earth-Hour celebrants weren't wasteful – but nor were Human Achievement Hour celebrants.

Human Achievement Hour, 2011

Join Fred Smith and his CEI colleagues tonight from 8:30pm – 9:30pm to celebrate Human Achievement Hour.  Keep your lights on!

Cleaned – and Educated – by Capitalism

Do not miss this wonderful TED talk by Hans Rosling.  He celebrates the washing machine – a device to us moderns so banal, so obvious, even – to some of us – so harmful to the environment, what with its use of electricity and chemicals and water.  (HT Thomas Boudreaux)

This video captures so very well a vital element in the story of economic growth.

Another Open Letter to Sen. Sherrod Brown

[John Stossel and his team at Fox Business tried to get Sen. Brown to publicly debate trade with me.  Brown refused, alleging that I'm an unworthy opponent.]

Sen. Sherrod Brown (D-Ohio)

United States Senate

Washington, DC

Dear Sen. Brown:

How disappointing that you refuse to debate trade with me in a public forum.  If I am, as you allege, too "ideological" on matters of trade, then surely you – a member of the world's greatest deliberative body – will have no trouble mopping the debate floor with me.

But if your letter in the March 25 Wall Street Journal is evidence of the strength of your case, I frankly do understand why you refuse to appear in public to defend protectionism.  After all…

… the facts show that, contrary to your claim, American manufacturing needs no "rebuilding"; it's not in decline;

… even if American manufacturing were in decline, so what?  American workers who produce $1,000 worth of, say, the service-sector output called "biomedical research" or "web design" generate as much value as do workers who produce $1,000 worth of the manufacturing-sector output called "#10 nails" or "t-shirts";

… if Beijing is promoting Chinese exports by devaluing the renminbi, then it is inflicting harmful inflation on the Chinese economy as it simultaneously subsidizes Americans' consumption; these consumption subsidies are especially beneficial to poorer Americans who spend larger shares of their incomes on Chinese-made goods than do richer Americans; why do you wish to deny poorer Americans the opportunity to stretch their dollars as far as possible?

… a chief reason why America's bilateral trade deficit with China has, as you report, increased over the past ten years by 170 percent is that you and your fellow members of Congress have during that time irresponsibly spent far more than you received in tax revenues; so you had to borrow.  Frankly, it's the height of hypocrisy for you to be a member of a chorus that sings, with one breath, of the purportedly "stimulating" effects of deficit spending, and then, with your next breath, scream shrill and atonal chants about how malicious it is for foreigners to be among Uncle Sam's creditors.

Debating in favor of a proposition like protectionism that has neither facts nor reason – and also, by the way, not a smidgen of morality – in its favor is indeed an unattractive prospect.

Sincerely,

Donald J. Boudreaux

Professor of Economics

George Mason University

Fairfax, VA 22030

Conscience on the Battlefield

Here's the great Leonard Read's timeless essay "Conscience on the Battlefield."  (I never met Read [1898-1983], but I've read much of what he's written.  He's in my pantheon of The Greats.)

But Is It an Appetizer or Dessert?

I have long used as a hypothetical example of a product whose production would be a waste of resources "chocolate-covered pickles."  I use this example in class, and I use it in my book Globalization.  Pickles are fabu; chocolate is tasty – but the combination seems to be so hideous that "chocolate-covered pickles" works as a great example of an easy-to-produce product that the market will never supply.  Or so I thought.  (HT Phil Murray)

Never, ever underestimate the creativity of entrepreneurs, the diversity of consumer tastes, or the limits of your own knowledge of what you know about what other people find pleasure in.