Russell Roberts's Blog, page 1480
February 8, 2011
Some Links
My former colleague (from my five very happy years on the faculty at Clemson U.) Bruce Yandle, and my good friend Jody Lipford, evaluate the effect that NAFTA has had on Mexico's environment.
George Will is a national treasure. At this link you'll find this wisdom-stuffed passage:
Those Americans who know which Republican will win next year's Iowa caucuses can complain about those who did not know that when a Tunisian street vendor set himself on fire, he would set a region afire. From all other Americans, forbearance would be seemly.
It also would be amazing, because there is a cottage industry of Barack Obama critics who, not content with monitoring his myriad mistakes in domestic policies, insist that there must be a seamless connection of those with his foreign policy. Strangely, these critics, who correctly doubt the propriety and capacity of the U.S. government controlling our complex society, simultaneously fault the government for not having vast competence to shape the destinies of other societies.
The indispensable Mark Perry has some data on food prices in the U.S. of A.
We Are Not Promethean Gods
Here's a letter to the Wall Street Journal:
Yesterday Pres. Obama pleaded with members of the U.S. Chamber of Commerce: "Ask yourselves what you can do for America. Ask yourselves what you can do to hire American workers, to support the American economy, and to invest in this nation" ("Obama Vows to 'Knock Down' Business Barriers," Feb. 8).
The job of entrepreneurs, investors, and business owners and managers is to invest and to produce in ways that are most likely to yield the highest profit in the market. Period. By doing so, businesses follow the best available signals to guide them to promote the well-being of others. The additional goals that Mr. Obama wants business people to pursue sound splendid when trumpeted in public speeches but, in practice, are far too nebulous to be workable. No business person can possibly know enough to do consistently and successfully what Mr. Obama asks.
As on so many issues, Adam Smith's wisdom remains relevant: "By pursuing his own interest he [the business person] frequently promotes that of the society more effectually than when he really intends to promote it. I have never known much good done by those who affected to trade for the public good."
Sincerely,
Donald J. Boudreaux
UPDATE: My friend Peter Minowitz writes in response: "Here's a minor riposte – Given your [DBx's] dedication as a letter writer, you presumably think that meaningful benefits are routinely created by 'those who affect[ed] to WRITE for the public good.' Trying to promote the wealth of NATIONS, Smith too was a conspicuously public-spirited author (this also applies to TMS)." To which I say only, Touche! Good point.
February 7, 2011
Some Links
Mary Anastasia O'Grady of the Wall Street Journal asks if Cuba will be the next Egypt.
John Tierney, science writer for the New York Times, explores the question of ideological bias in the academy. (Boast: research by my GMU Econ colleague Dan Klein is favorably mentioned in John's essay.)
Troy Camplin weighs in provocatively on the unrest in Egypt. (HT George Leef)
Writing in today's Los Angeles Times, David Boaz exposes phony solutions for real social ills.
Truth on the Market's Larry Ribstein skewers occupational licensing.
Bill Anderson is none-too-impressed with Paul Krugman's assertion that north-African political unrest and currently rising food prices are "evidence" that global warming is finally taking its terrible toll on human existence.
Finally, two letters-to-the-editor by Cafe Hayek reader Matthew Curran are worth reading. One is found here; the other here.
Driving Home the Economic Irrelevance of Borders
Unlike last year, I didn't geaux and watch this year's Super Bowl. The reason is that George Selgin was in town and I didn't want to miss the opportunity to have dinner with him yesterday. (We both enjoyed seafood gumbo, fried shrimp, and red beans 'n' rice at the newly opened The Cajun Experience in D.C.)
But reader David DeRemer sent me a link to this Super Bowl ad by Chrysler, the signature line of which is "Imported from Detroit." David asks:
Does this ad imply Chrysler recognizes the parallel between intercity commerce and international commerce?
David's question is spot-on, wise, and relevant: why should folks living in New Orleans or Seattle be applauded if they import cars from Detroit but slapped with additional taxes if they import cars from Munich or Seoul? No reason that I can think of.
To those of you who do believe that American drivers have some sort of obligation to favor purchasing new cars made in America instead of purchasing new cars made outside of America, read this post from 2005.
Hot to Jump to Conclusions
Stirred by political turmoil in Egypt and by a recent spike in food prices, Paul Krugman writes in today's New York Times
But the evidence does, in fact, suggest that what we're getting now is a first taste of the disruption, economic and political, that we'll face in a warming world.
The "evidence" that he refers to is extreme weather events, such as last year's Russian heat wave, happening at the same time that food prices have turned upward and some citizens are in revolt against their governments.
Weather patterns might or might not be evidence of global warming, but today's political turmoil and spike in food prices are emphatically not reliable evidence of a world being "disrupted" by humankind's continued reliance on fossil fuels.
Even granting that global warming is caused by industrialization, temperature increases caused by human activity date back at least to 1880. But for nearly a century now, human suffering from extreme weather events has declined dramatically. Here's science analyst Indur Goklany:
Long term (1900–2008) data show that average annual deaths and death rates from all such [extreme weather] events declined by 93% and 98%, respectively, since cresting in the 1920s. These declines occurred despite a vast increase in the populations at risk and more complete coverage of extreme weather events.
It's irresponsible for Krugman to ominously predict increasing "disruptions" based only on a recent food-price spike and a few instances of political unrest – especially given that the long-term trend is for extreme weather events to cause less and less human suffering.
February 6, 2011
Mercantilism is Like Cockroaches: Grotesque Yet Indestructible as a Species
Here's another letter to American Thinker:
Distressed by U.S. trade with China, Raymond Richman and Howard Richman write that "Although exports to China did increase both American GDP and American income, imports from China subtracted even more from both GDP and income" ("Obama Picks a Progressive Lawyer for Top Economist," Feb. 3).
This fact is true only in the most technical of manners, given that GDP is defined such that any excess of imports over exports reduces its measured value. But Messrs. Richman and Richman are misled by this accounting artifact into arguing that imports from China reduce our prosperity while exports increase our prosperity.
What is the point of exporting if not ultimately to import – and to import as much as possible for any given amount of exports? According to the mercantilist (that is to say, twisted) logic employed by the two Mr. Richmans, American prosperity would be maximally promoted if, in exchange for American goods and services exported to China, the Chinese shipped to our shores only bags stuffed with Monopoly money.
Sincerely,
Donald J. Boudreaux
Color Me Frustrated
Here's a letter to American Thinker; some worries are even more specious than others:
Raymond Richman and Howard Richman find it ominous that America's merchandise trade deficit with China is high ("Obama Picks a Progressive Lawyer for Top Economist," Feb. 3). But, quoting these authors, "What nonsense!"
The tangibility of economic output is as irrelevant as is that output's color, odor, and the number of syllables in its name. A dollar's worth of textiles and other merchandise has exactly the same value as does a dollar's worth of web design and other services. And we Americans have a huge comparative advantage in supplying services.
Fretting over the fact that we import more merchandise each year than we export is pointless. Suppose government measured the value of bananas, pencils, and other yellow imports and exports and found that we consistently import more yellow things than we export. Would Messrs. Richman and Richman find ominous America's yellow-thing trade deficit? If not, they should chill over America's merchandise trade deficit.
Sincerely,
Donald J. Boudreaux
Pessimism, Stagnation, and Politics
Over at EconLog, Bryan Caplan asks why free-market types resist the stagnation thesis.
I myself have long argued that there's no obvious ideological reason for free-market types to reject the stagnation thesis, at least as far as it allegedly applies to the U.S. since the early 1970s. See the second half of this post from 2008.
Go With the Flow
Here's a letter to the Baltimore Sun:
Noting that as recently as 1994 most Americans had no idea what the Internet is – and that "google" became a verb less than ten years ago – Leonard Pitts warns us against smugly believing that we can predict the future in any detail. The title of his essay says it well: "Time makes fools out of all of us" (Feb. 6).
No one needs this warning more than does Pres. Obama. Although his rhetoric about "investing in the technologies of the future" makes a good sound bite, Mr. Obama has no inkling what these technologies are. Nor does anyone else. And nor can anyone else acquire such knowledge.
Economies grow chiefly and always in surprising ways. This growth results from millions of creative minds ceaselessly cooperating with, and competing against, each other. The results are inherently unforeseeable and always in progress.
Even more importantly, government attempts to direct the course of technological advance and economic growth – by politically favoring some patterns of investment over others, and by replacing consumers with bureaucrats as the ultimate judges of which forms of economic activity are worthwhile – only stymie these processes.
Sincerely,
Donald J. Boudreaux
Did anyone who produced or purchased this baby in the late 1980s foresee wi-fi, smart phones, or Viagra? (HT Kim Rodieck)
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