Russell Roberts's Blog, page 1505

Kling vs. Krulong

Macroeconomic wisdom from EconLog's Arnold Kling.

School Lessons

The government school system in Fairfax County, Virginia (where I live) is suffering problems because population in that county – as reported in today's Washington Post – "is growing swiftly but unevenly."  According to Fairfax County school official Denise James, "Some schools continue to be overcrowded and others are well under capacity.  Neither is a good environment for learning."

Indeed not.

But why don't supermarkets, restaurants, churches, apartment complexes, clothing stores, dog groomers, and other service providers in Fairfax County encounter the same problems that plague the school system?  After all, the county is growing just as fast and just as unevenly for these merchants as it is for Fairfax County Public Schools.  Yet we never hear that some coffee shops or department stores continue to be overcrowded while others are well under capacity.  Why might this be?

Might this mysterious malady afflicting the government school system, but not private enterprises, have something to do with the fact that county schools are funded with tax dollars rather than by voluntarily expressed consumer choices?  Might it be that politicians and bureaucrats – spending other people's money to educate largely captive customers – have much worse incentives to supply good schooling than would private entrepreneurs if school and state were as separate from each other as are church and state, shoe store and state, and supermarket and state?

Who Serves Corporate Interests?

26 November 2010

Sen. Sherrod Brown (D-OH)

United States Senate

Capitol Hill

Dear Sen. Brown:

In today's Washington Post you declare that "Demanding that trade agreements work for American exporters isn't protectionism; it's common sense."

In other words, whenever other governments dole out favors to foreign corporations at the expense of foreign consumers, you want Uncle Sam to dole out favors to American corporations at the expense of American consumers.

This isn't common sense, sir.  It's garbage-heap economics that serves as a convenient excuse for politicians to pick the pockets of hundreds of millions of Americans for the benefit of politically influential businesses.



My offer still stands to debate you on free trade and protectionism.  If you're so confident that the U.S. economy is improved by tariffs and other impediments to competition, you should be eager to enlighten an audience by debating someone so obviously lacking in "common sense" as me.

Sincerely,

Donald J. Boudreaux

Rethinking Central Banking

In my latest column in the Pittsburgh Tribune-Review, I discuss the important work of my GMU colleague Larry White and his long-time co-author George Selgin.

You can find a link to the Selgin-Lastrapes-White paper here.

Thankful for the Invisible Hand

The Boston Globe's Jeff Jacoby is thankful for the invisible hand.  And rightly and correctly so.

Jeff's column fits nicely with a note that I received this morning from a friend in South Korea:

I just saw some headlines from the U.S. about consumers standing in line for great prices.

If not for government tariffs, and general political meddling into the economy, every day could be Black Friday for consumers–without the long lines.

Yup!

Apparently It's Collectivism Only If It Is Pursued as a Means of Privation

Liberal Curmudgeon blogger Stephen Budiansky ridicules Rush Limbaugh, Glenn Beck, and others for describing early Plymouth colony as a failed experiment in collectivism.  (HT Tom Elia)

The thrust of Budiansky's ridicule is that, because the pilgrims initially went along with the collectivist arrangement out of a (mistaken) belief that it would make them rich, it's illegitimate to draw lessons for current policies from that early American instance of failed collectivization.

How, I ask ye, were the pilgrims' motives different from those of the vast majority of people who have endorsed collectivization over the years?  The great allure of communism and other species of collectivism (at least until the depredations and deprivations of the Soviet and Maoist utopias became undeniable) has always been that collectivization would create more wealth for everyone than would be created by allegedly wasteful, inefficient, rudderless private-property capitalism.

Had collectivism been sold for what it is – as a get-poor-quick scheme – its appeal would have been akin to that of ideologies that demand lifetime chastity.  America's pilgrims were, for a few years, simply another of the many groups of people throughout history who brutalized themselves by listening to the Sirens' song of collectivism.

Happy Turkey Day!

I love globalization!  Here's the penultimate paragraph from a very interesting essay by John Bemelmans Marciano in today's Los Angeles Times:

First Thanksgivings aside, these local birds just wouldn't do, and the English began importing turkeys to America. This preference carries over to the present day, and the bird Americans sit down to eat every Thanksgiving is not the northern wild turkey Meleagris americana but the Aztec land chicken Meleagris mexicana [which the Spanish, in the 16th century, had brought to Spain from Mexico].  And so Ben Franklin's preferred symbol of America — and the only creature that can annually count on a presidential pardon — is not a native Yank at all but a Mexican bird that immigrated to the United States via two transatlantic crossings.

Happy Gobble-Gobble everyone!

Fair Trade Is Less Fair (and Less Free) than Free Trade

Here's a letter to the New York Times:

Todd Tucker wants Uncle Sam to reject free trade in favor of "fair trade" (Letters, Nov. 22).

While every decent person applauds fairness and condemns unfairness, "fairness" is far too fuzzy a concept to guide public policy.  To see why, imagine what the state of First Amendment law would be like were only a few words of that amendment changed to make its guiding principle fairness rather than freedom:

"Congress shall make no unfair law respecting an establishment of religion, or prohibiting the fair exercise thereof; or abridging the fairness of speech, or of the press; or the right of the people fairly to assemble, and to petition the Government fairly for a redress of grievances."

Is there any doubt that replacing "free" with "fair" in this context would remove all teeth from the First Amendment?  In the same way, a policy of fair trade rather than free trade would, in practice, be a policy of unfree – and, by the way, unfair – monopoly privileges for politically influential domestic producers.

Sincerely,

Donald J. Boudreaux

Awaiting the Savior

My e-mail buddy Mario asked me to repost this December 2004 post of mine – a post that was written before I'd paid any attention to the current savior working in the Oval Office.  My vanity compels me to comply with Mario's kind request:

Messiah-Mongering

The Economist has a solid essay on modern personality cults – that is, the three that remain on the globe today. These are, according to The Economist, Kim Jong Il's brutal and bizarre dystopia in North Korea; Saparmurat Niyazov's totalitarian hell in Turkmenistan; and Gnassingbé Eyadéma's despotic reign in Togo.

No reader from the free world can read of these brutalmen's actions and of how they are (apparently) revered by so many of their countrymen without disbelief and disgust – and thankfulness that we in the free, modern world are not subject to the stupid brainwashing and utter lack of freedom that curse the lives of citizens of these countries.

But as I finished reading the Economist article, I couldn't help but ask myself: just how different is the free world? We're all human beings. North Koreans who truly believe Kim Jong Il to be the world's greatest composer of opera and the finest golfer ever to hit the links are not fundamentally different from you and me.

Is there something about human beings that, when circumstances trigger it, make us want to worship other human beings? I fear that the answer is yes.

What was the tawdry spectacle of public wailing in the wake of the death of Princess Diana if not a species of human-worship? None of the people who grieved publicly knew Diana personally – and yet they spoke of her as a saviorette – "the People's Princess" – and behaved as if their lives would be noticeably worse now that Diana has gone to her reward. The same ridiculous human-worship arose when Eva Peron died.

And, dear friends, we Americans aren't immune. Recall the famous picture of an old man crying his heart out at the funeral of FDR. And pictures abound of people weeping when they learned of JFK's assassination. I even recall a letter in a magazine – I apologize for forgetting which – written by a woman who confessed to suffering insomnia because of her grief at the death of the NASCAR driver Dale Earnhardt.

Being free, America was never brutalized by FDR, JFK, or Dale Earnhardt. (Even Santa Evita did not oppress Argentinians as much as the Dear Leader oppresses North Koreans.) Nevertheless, evidence of our susceptibility to messiah-mongering is not hard to come by – and we should be wary of it. Very wary, for we do suffer it in little doses.

People daily turn out to see the President and to stretch out their arms furiously just to touch his; they gape at him as if he were something superhuman. People expect the President (or the Governor, or the Mayor) to visit scenes of natural disasters and to hug and comfort many of the victims. Bill Clinton was much-praised for his political brilliance at telling us (via television) that he feels our pain.

More generally, our ethos increasingly insists that our lives are in jeopardy unless and until government regulates products and industries. Only when a grandee (or committee thereof) explicitly imposes his (or its) will upon the rest of us do many of us feel as though we are safe and secure.

Abolish the welfare state? Heaven forbid! Doing so would cast multitudes into needless suffering. Abolish the FDA? No! Doing so would result in the widespread poisoning of America. Abolish the minimum-wage? Not a chance! Doing so would cause the collapse of America's wage structure. Abolish government education? Never! America would quickly become a nation of ignoramuses.

The idea that each of us, through webs of voluntary actions, can do things that government now does (or pretends to do) – such as care for poor people or ensure that children are educated – is denigrated. I think that part of the reason for this denigration is that too many people believe that unless a savior is on the scene, wielding force that most of us are not permitted to wield, the problem is not addressed.

Heaven help us.

More on the Trade Deficit

Here's a letter to Chris Isidore, Senior Writer at CNNMoney.com (HT Richard Brewer):

You report that "as China's [trade] surplus builds, nations like the United States that are running trade deficits also face risks.  Consistently consuming more goods and services than the nation produces means the country needs to finance that deficit by selling assets, such as U.S. Treasuries, to their overseas trading partners" ("The trouble with 'global imbalances'," Nov. 23).

Contrary to popular mythology, a U.S. trade deficit does not mean that Americans necessarily are "consuming more goods and services than the nation produces."  When foreigners use the dollars they earn on their exports to America, say, to buy stock in The Dow Chemical Co. or to build a factory in Texas, America's trade deficit rises.  But these investments in American-based enterprises also increase the volume of output that 'the nation produces.'

I urge you to break the habit of equating trade deficits and trade surpluses with "imbalanced trade."  Explicit recognition that trade – that is, current-account – deficits are fully offset by capital-account surpluses would go a long way toward better informing Americans of the true nature of trade and, importantly, also toward tamping down the hysteria stirred up by the incessant barrage of uninformed reporting about trade and trade deficits.

Sincerely,

Donald J. Boudreaux