Russell Roberts's Blog, page 151
April 15, 2022
Quotation of the Day…
… is from page 141 of my colleague Peter Boettke’s 2019 talk “The Role of the Economist in a Free Society,” as this talk is printed in Pete’s 2021 collection, The Struggle for a Better World:
In his Nobel banquet toast, he [F.A. Hayek] said simply that if he had been consulted, he never would have advocated awarding Nobel Prizes to economists for the simple reason that no economic thinker should ever be provided with such public recognition, as it falsely provides a sense of authority that can be safely trusted to no economist.
DBx: Hayek was wise.
I believe that there were a few Nobel-laureate economists who proved not to let the Prize go to their heads – laureates who did not mistakenly come to feel that the Prize gave them knowledge that they, in fact, cannot possibly possess. Hayek was one of these wise souls, as were Jim Buchanan and Ronald Coase and Lin Ostrom. And as is Vernon Smith.
April 14, 2022
Wall Street Journal: “Was Milton Friedman a Secret Admirer of Keynes?”
In the August 4th, 2012, print edition of the Wall Street Journal I defended Milton Friedman against some of those persons – such as Paul Krugman – who misunderstood his work. (I’d not until now – see just below – shared the entire text of this essay in full at Cafe Hayek.)
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Was Milton Friedman a Secret Admirer of Keynes?
Liberals misread the great free-market scholar in order to hijack his legacy.
By Donald J. Boudreaux
Updated Aug. 3, 2012 7:03 pm ET
With the possible exception of Adam Smith, no person in history is more widely recognized as ably championing free markets than Milton Friedman. Justly so: For more than 60 years until his death in 2006, he pressed the case for capitalism and freedom with impeccable scholarship, good cheer, impressive vigor and unmatched clarity.
Despite his clarity, there are a handful of people whose inability or unwillingness to grasp Friedman’s arguments leads them to misrepresent his writings and policy recommendations.
Consider British journalist Nicholas Wapshott. He used the occasion of the 100th anniversary of Friedman’s birth (July 31) to claim, in the Daily Beast, that Friedman’s attitude toward government was much closer to that of pro-interventionist John Maynard Keynes than to that of Keynes’s famous free-market opponent, Friedrich A. Hayek.
Mr. Wapshott says that Friedman really was quite sanguine about a large and constitutionally unrestrained state, based on the alleged contents of a supposedly “lost” essay by Friedman. Contrary to the naive Hayek—who worried that power concentrated in big government inevitably corrupts politicians and invites its own misuse—Mr. Wapshott says, the essay (which was originally published in 1989) shows Friedman believed “that big government is not evil so long as it is honestly administered.” He adds that the essay “calls into question whether those today who rail against the size of the state are blaming the system when they should be rooting out corrupt politicians and public officials instead.”
So Milton Friedman was really a good-government progressive? No.
Friedman’s essay, “John Maynard Keynes,” was never lost. The original article, first published in German translation in a volume of commentaries on Keynes’s “General Theory,” was translated and republished in 1997 by the Richmond Federal Reserve Bank in its quarterly magazine, and it is readily available on the bank’s website.
The essay shows beyond a shadow of doubt what Friedman really thought about Keynes’s views on government: “I conclude that Keynes’s political bequest has done far more harm than his economic bequest and this for two reasons. First, whatever the economic analysis, benevolent dictatorship is likely sooner or later to lead to a totalitarian society. Second, Keynes’s economic theories appealed to a group far broader than economists primarily because of their link to his political approach.”
Friedman here articulates concerns long expressed by Hayek in the latter’s 1944 book, “The Road to Serfdom,” that big government of the sort that Keynes demanded is poisonous to freedom and prosperity. He saw clearly that Keynes’s “political bequest” was so dangerous that no amount of rooting out of corrupt officials would prevent a government armed with unlimited discretionary economic power from becoming tyrannical.
There’s an even more egregious misrepresentation of Friedman, this one by Paul Krugman, the economist and New York Times columnist. A few months after Friedman’s death in November 2006, Mr. Krugman penned an essay in the New York Review of Books, “Who Was Milton Friedman,” accusing him of being “intellectually dishonest.” He doubled down on this charge in a letter to the editor of the New York Review responding to critics of the essay.
The dishonesty, in Mr. Krugman’s telling, consists in an alleged contradiction. On one hand, Friedman the scholar claimed in his famous “Monetary History of the United States” that the Great Depression was worsened by the Fed’s failure to keep the money supply from falling. But, on the other hand, Friedman the public figure claimed that the Depression likely would have been far less severe in the absence of the Fed. “I’m sorry,” Mr. Krugman wrote in the letter, “but those are contradictory positions.”
Mr. Krugman’s charge is silly. Friedman understood that, without the Federal Reserve, private bank-clearinghouse associations—market institutions that were displaced by the Fed—would likely have prevented the money supply from collapsing and, hence, might well have kept the depression from becoming “great.” But Friedman also understood that the Fed, having substituted its own technocratic discretion for the market adjustments of clearinghouses, then had a responsibility to manage the money supply properly. It failed to do so. Friedman (and his co-author Anna Schwartz) properly criticized the Fed for this terrible failure.
Friedman’s argument here is no more contradictory or dishonest than would be the argument of, say, a physician who, having unsuccessfully warned a patient not to rely for medical care upon a witch doctor, points to the witch doctor’s failure to administer appropriate mouth-to-mouth resuscitation as the cause of the patient’s death.
Milton Friedman combined soaring academic credentials with a remarkable virtuosity at explaining to the public why free markets are economically and ethically superior to even well-intentioned government plans and regulations. He was throughout his long life and career a special target of those who would preserve what he and his wife, Rose, called “the tyranny of the status quo.” This status quo consists of interest groups, bureaucrats and politicians who—with help from cheerleaders in the media and the academy—use government to enlarge their own pocketbooks and to stroke their own egos, all at the expense of the general public.
If Friedman was secretly upbeat about powerful government or, worse, misleading the public, then the voice of one of history’s greatest advocates of free markets would be silenced. In fact, Milton Friedman’s advocacy of free markets was as principled, consistent and honest as it was brilliant.
Mr. Boudreaux is professor of economics at George Mason University and author of “Hypocrites and Half-Wits” (Free To Choose Press, 2012).
Bonus Quotation of the Day…
… is from page 7 of Eamonn Butler’s 2021 book, An Introduction to Trade & Globalisation:
Trade delivers non-economic benefits, too. There is good evidence that it promotes international trust, cooperation and understanding. It is associated with political freedom, the rule of law, honesty, freedom of speech and other liberal values. It even defuses nationalism and ethnic conflict, and promotes peace, fairness and equality. After all, people who want to reap the benefits of trade must learn to cooperate.
DBx: Of course trade doesn’t guarantee any of these excellent benefits. But “guarantee” is an inappropriate standard. Trade does indeed promote the creation of these excellent benefits. And that’s a splendid thing.
Pittsburgh Tribune-Review: “Spending & saving”
In my column for the July 10th, 2012, edition of the Pittsburgh Tribune-Review, I took on some myths about savings. You can read my column in full beneath the fold.
Some Covid Links
Scott Atlas reports that “the nation’s top scientists lied” about Covid.
The list of errors made by the CDC is so lengthy that a one-month process—an entirely arbitrary time period—will all but guarantee that the review is superficial and toothless. CDC guidance is responsible for some of the longest school closures in the world due to myopic policies that were overly focused on cases and transmission. School closures, where students of all ages were instructed to stay home and even avoid the outdoors, led predictably to significant rises in learning loss, mental health issues, obesity, and substance use disorders. The CDC’s shockingly unethical and underreported alliance with the American Federation for Teachers, the nation’s largest teachers union, also cast doubt on who exactly was steering the CDC ship as they crafted school guidelines.
The CDC also ignored natural immunity when drafting federal-level vaccine mandates and allowing exemptions to testing, policies that were then duplicated on the state level, resulting in the firing of thousands of healthcare workers and public employees. They oversold the benefits of masking post-vaccination, with no randomized controlled trials (RCTs) conducted to show efficacy, and failed to run any RCTs that might have addressed the weakness of data guiding many of their interventions.
elizabeth bennett tweets: (HT Jay Bhattacharya)
Typical clinic day now includes a 2-year-old who only has 5 words, an 8-year-old with new-onset obesity, and a preschool-age child with no social skills from being home bound. A disastrous avalanche of child health probs of our own making—not “from the pandemic.”
It’s from prolonged school closures, prolonged and ongoing forced masking of young children and child care providers, and relentless fear-mongering around kids and COVID, which continues today and in which @CDCgov and @AmerAcadPeds are complicit.
Fearing that local officials were letting the virus spiral out of control, Beijing flew Covid fixer Sun Chunlan to China’s business capital this month to impose one of the most drastic lockdowns to date. Some 25 million people have been forced to stay at home with no warning and no time to stockpile food.
The result has been a humanitarian debacle, as residents run short of food and medicine while delivery services fail to keep up. Desperate residents are protesting their imprisonment by shouting from windows.
Also decrying the dystopian Covid tyranny now suffocating the people of Shanghai is David Waugh. A slice:
China’s zero COVID approach is yet another example of the devastating risk introduced when totalitarian regimes implement centrally planned policy via brute force. Under the classical liberal ideal, governments are formed to protect individual rights. Nothing could be further from this in Shanghai. A city of over 25 million people is being dehumanized because of a spike in largely asymptomatic COVID-19 cases.
We were dangerously close in the United States to implementing zero COVID adjacent policies, particularly in our larger cities. Admirers of this approach are still with us in the Western world, even if they are in apparent retreat.
The experience in Shanghai permanently discredits their opinions with respect to COVID-19 policy. The rest of the world should take note and ensure “zero COVID” ideas are placed squarely in the past.
over time, that subjugation will change you to the point where you are no longer capable (or even desirous) of freedom.
Robby Soave criticizes Covidocratic elites for their on-going hypocrisy.
New York Post columnist Steve Cuozzo cautions against a renewal of Covid hysteria – and mandates – in Gotham. Two slices:
The New York Times might prefer the pandemic to last forever. Nothing ever beat the bug to empower governmental micromanagement of business and the social order, to say nothing of individual lives.
The paper daily warns us of the risk. It dutifully parrots every doomsayer who reminds us, “We may be done with the virus, but the virus isn’t done with us.” The latest mouthpiece was city Comptroller Brad Lander, who tested positive last week.
…..
The city’s Department of Health says Omicron-driven cases were running around 600 a day in early March. They’ve since risen steadily to 1,981 new cases logged April 8.
Yet six weeks since the “wave” began, hospitalizations have actually dropped. Per the DOH, hospital cases that were in the low 40s per day in late February fell, for whatever reason, to the 20s by mid-March — where they have remained in April.
Yes, hospitalizations are a “lagging indicator.” But they don’t lag by two whole months.
Deaths that were mercifully low (below 15 per day) in early March are today mercifully even lower — below five a day over the past week. This in a city of 8.3 million people.
A wise and imaginative leader would already be asking: how could a pandemic be fought in future without resorting to the blunt and inhumane instrument of lockdowns? Lockdowns which after all merely delay, not prevent, infections?
Quotation of the Day…
… is from page 55 of Deirdre McCloskey’s 2021 volume, Bettering Humanomics: A New, and Old, Approach to Economic Science (footnote deleted; original emphasis; typo corrected):
What explains the Great Enrichment is not material but a novel liberty and dignity for ordinary people, among them the innovating bourgeoisie. In a word, it was the first, modest moves toward social and economic and political liberalism, Adam Smith’s “obvious and simple system of natural liberty.”
April 13, 2022
Pittsburgh Tribune-Review: “The ‘good-citizen’ economist”
In my column for the June 27th, 2012, edition of the Pittsburgh Tribune-Review, I offer my opinion about the role of the economist regarding public policies. You can read my column in full beneath the fold.
Some Non-Covid Links
This, I believe, is what happened to many of America’s key institutions in the mid-to-late 2010s. They got stupider en masse because social media instilled in their members a chronic fear of getting darted. The shift was most pronounced in universities, scholarly associations, creative industries, and political organizations at every level (national, state, and local), and it was so pervasive that it established new behavioral norms backed by new policies seemingly overnight. The new omnipresence of enhanced-virality social media meant that a single word uttered by a professor, leader, or journalist, even if spoken with positive intent, could lead to a social-media firestorm, triggering an immediate dismissal or a drawn-out investigation by the institution. Participants in our key institutions began self-censoring to an unhealthy degree, holding back critiques of policies and ideas—even those presented in class by their students—that they believed to be ill-supported or wrong.
But when an institution punishes internal dissent, it shoots darts into its own brain.
…..
American politics is getting ever more ridiculous and dysfunctional not because Americans are getting less intelligent. The problem is structural. Thanks to enhanced-virality social media, dissent is punished within many of our institutions, which means that bad ideas get elevated into official policy.
Bill Peacock warns of the troubles that await us if the war on fossil fuels continues to discourage investment in fossil-fuel infrastructure. Here’s his conclusion:
But while markets are doing the best they can to meet consumer demand for energy from fossil fuels, the country is living on borrowed capital. America’s current energy infrastructure can keep the lights on, cars running, and homes heated for a while. But if efforts to shut down new investment succeed, it will only be a matter of time before Americans see long-term shortages. Wind turbines and solar panels won’t be able to provide the same level of reliability and affordability if we eliminate fossil fuels anytime in the near future.
Joel Zinberg explains that Obamacare is nothing to celebrate.
My colleague Bryan Caplan lays out “the ironclad argument against racism.” A slice:
Racism is wrong because collective guilt is wrong.
The intuition has been around for a long time: If a man commits murder, you shouldn’t punish his son. Why not? Because it’s not the son’s fault; he’s a different person than his father. And if that’s wrong, it’s even more wrong to punish someone because he lives on the same street, resides in the same city, practices the same religion, or is a citizen of the same country. Collective guilt may be emotionally tempting, but it is intellectually absurd.
Scott Sumner makes the case for free trade in a dangerous world. A slice:
Over the years, I’ve argued that Russia is a much greater threat to world peace than China (although China is certainly a non-trivial threat, especially to Taiwan.) Thus I’ve opposed the economic sanctions the US has applied to China, as well as the broader US trade war against China. My critics counter that we can’t afford to be economically integrated with a dangerous country such as China.
I respond that we cannot afford not to be integrated with China, precisely because it is dangerous. We need China to be so deeply enmeshed in the global economy that it would pay a heavy price if it were ostracized. A sullen isolated China, a North Korea with 1.4 billion people, would be a far greater threat to world peace. Our current policy of isolating China makes it more dangerous, not less. After WWII, the victorious powers realized that the best hope for peace was to have Germany closely integrated into the broader European economy. This idea led to the European Common Market, and later the EU.
The awkward truth of contemporary unionism is that it’s largely an effort to remove taxpayers from negotiations between white-collar union reps and the lawyer/politicians they help elect. Teachers, cops, and civil-service bureaucrats treat the tax base like a guaranteed revenue stream, which they try to maximally divert for their own self-interest at the expense of the people paying their salaries and guaranteeing their pensions. In the zero-sum game of government budgeting, blue-collar workers in the hinterlands will continue to foot the tab for paper pushers in the capital. At most, Biden will extend some of those benefits to the building trades, jacking up costs while claiming to save money.
Marcus Witcher and Rachel Ferguson praise Booker T. Washington.
President Trump signed onto an unnecessary $900 billion Covid relief bill in December 2020, and Democrats threw kerosene on the kindling with another $1.9 trillion in March 2021. The Federal Reserve continues to support negative real interest rates nearly two years after the pandemic recession ended. This inflation was made in Washington, D.C.
Quotation of the Day…
… is from page 11 of Matthew Hennessey’s hot-off-the-press 2022 book, Visible Hand:
Personally, I didn’t encounter Adam Smith and his ideas until I was nearly 30 years old, at which time I found them so compelling and self-evident that I felt instantly betrayed by the people who educated me.
April 12, 2022
On Thomas Piketty and Capital
Here’s a letter to the Wall Street Journal:
Editor:
Phillip Magness and my colleague Vincent Geloso nicely identify a critical error in Thomas Piketty’s work that is purported to show that income inequality in the U.S. was significantly reduced by the New Deal-era imposition of very high marginal income-tax rates (“Inequality and the Piketty Accounting Error,” April 12).
Piketty, whose recent book is titled Time for Socialism, often slices and dices data in ways that support his socialist agenda. An example of such motivated empirical work is the failure, in his 2014 Capital in the Twenty-First Century, to count in a nation’s capital stock its citizens’ human capital, which is the creativity, knowledge, and skills that reside between workers’ ears. Almost all of this capital is owned and controlled by the workers who possess it rather than by employers and financiers.
Piketty’s exclusion of human capital from what he does classify and measure as capital is egregious. Since the beginning of modernity ordinary people have increasingly raised their incomes by acquiring more human capital, largely through education and job training. And so by not counting as part of the capital stock this important source of income for most people, Piketty conveys the misleading impression that large numbers of ordinary men and women are bereft of capital when, in fact, they are not.
As noted by Deirdre McCloskey in her review of Piketty’s 2014 book,
The only reason in the book to exclude human capital from capital appears to be to force the conclusion Piketty wants to achieve. One of the headings in Chapter 7 declares that “capital [is] always more unequally distributed than labor.” No it isn’t. If human capital is included – the ordinary factory worker’s literacy, the nurse’s educated skill, the professional manager’s command of complex systems, the economist’s understanding of supply responses – the workers themselves, in the correct accounting, own most of the nation’s capital – and Piketty’s drama falls to the ground.
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
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