Russell Roberts's Blog, page 16

America Has Not Deindustrialized

(Don Boudreaux)

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Here’s a letter to Reason:

Editor:

Stephanie Slade masterfully defends classical liberalism and free-market conservatism from the fusion of confusion with authoritarianism that is national conservatism (“The Rise of Right-Progressivism,” June 2023). But she mistakenly concedes to the NatCons their claim that America has deindustrialized.

Despite incessant assertions to the contrary, America emphatically has not deindustrialized.

Industrial capacity in the United States rose steadily over the past several decades and hit an all-time high in December 2016. Despite covid, it has stayed quite close to that level ever since. Today (April 2023) it is only one percent lower than its all-time high. Not surprisingly, therefore, American industrial production has also risen steadily over the past few decades, hitting an all-time high in September 2018. Although falling a bit during covid, it has recovered nicely; today it, too, is only one percent off of its all-time high.

Like progressives – their close cousins – NatCons are not only allergic to the economic way of thinking, they are also ignorant of basic economic facts.

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

Some Links

(Don Boudreaux)

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North Carolina’s governor declares a state of emergency over the legislature’s veto-proof approval of a school-choice bill. (DBx: Wow. Just wow.)

My intrepid Mercatus Center colleague, Veronique de Rugy, isn’t impressed with Biden’s proposed debt-ceiling deal.

Here’s Robert Wright on the debt ceiling and Section 4 of the 14th Amendment.

The Wall Street Journal‘s Editorial Board decries today’s budgetary shenanigans. A slice:

At issue are accounting tricks that Congress has used in recent years to hide the size of their blowouts. Most federal spending is “mandatory”—dictated by prior law, automatic, and dedicated to long-term programs like Social Security, Medicare and Medicaid. Congress separately each year sets discretionary spending levels—appropriations bills that set priorities for everything from the Pentagon to education to housing assistance.

In the wake of the Covid spending excess, Democrats (aided by some Republicans) sought to disguise their spending by categorizing some of their discretionary outlays as “mandatory” or “emergency” funding. These dollars go to the same accounts and fund the same projects as any other discretionary spending, but because of their categorization they aren’t counted in the discretionary category.

John Stossel points out the hypocrisy of Ron DeSantis.

Stephanie Slade is rightly critical of national conservatives. A slice:

But the invocation of “right-liberalism” is ironic as well as facile, because the post-liberals who disparage it are unapologetic proponents of actual left-wing policies, such as tariffs, industrial subsidies, and aggressive antitrust action, even against companies that don’t meet the traditional definition of monopolies. It would be no exaggeration to designate this cohort right-progressives. And just about the only thing that makes them right is that they hope to use their power, once attained, to enforce aspects of traditional religious morality rather than left-wing identity politics.

Johan Norberg tells us of the great 18th-century Swedish classical liberal Anders Chydenius.

George Will writes with his trademark wisdom about abortion. A slice:

The loudest voices on both sides have been loud throughout the five decades when voters’ voices did not matter because the judiciary rather than legislatures made abortion policy. But the loudest voices have never been the most numerous. An ambivalent majority is permanently troubled by the irresolvable tension between a woman’s claim of personal autonomy and the inviolability of personhood.

A life that is human begins at conception. This is a tenet not of abstruse theology but of elementary biology. This life, with a distinctive genetic imprint, will reach adulthood, absent a natural mishap or a deliberate intervention to end it. The vexing question is: When, if ever, should personhood be ascribed to that life, with legal protections enveloping it, regardless of the woman’s preference?

Why do people take politicians seriously?

Dr. Eli David tweets: (HT Jay Bhattacharya)

Remember when they tried to defeat a respiratory virus by sending multiple policemen armed with guns and rifles to arrest someone violating the lockdown by sitting on the beach alone?

Quotation of the Day…

(Don Boudreaux)

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… is from page 213 of Robert Higgs’s important July 1987 Reason article titled “,” as an expanded version of this article appears under the title “The Normal Constitution Versus the Crisis Constitution” in the superb 2004 collection of some of Bob’s essays, Against Leviathan:

The Normal Constitution can be preserved against the inroads of the Crisis Constitution only if the politically influential elites who make policies and mold the opinions of the masses are willing to resist the passions of national emergency.

DBx: Yes. But I fear that governments’ – and the media’s – experience during covid has only further whetted their appetites to exercise more power ostensibly for the purpose of protecting the masses from some great calamity.

Some Links

(Don Boudreaux)

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Art Carden draws important lessons from Elvis Presley’s Graceland mansion about the realities of economic growth. Here’s his conclusion:

Allegedly, American officials wanted Soviet officials to see Graceland because it showed how this is the land of opportunity. Even a poor kid from Tupelo, Mississippi could make it big in the Land of Opportunity. The real “capitalist achievement,” however, isn’t Graceland. It’s the fact that compared to the stuff of the average person’s day-to-day life in 2023, Graceland just isn’t that impressive.

David Henderson ably defends himself – and the late Robert Lucas – from John Tamny’s misunderstandings.

Writing in the Wall Street Journal, Phil Gramm and Mike Solon identify the core of what’s at stake in the fight over the debt ceiling. A slice:

Before the pandemic, the Congressional Budget Office in January 2020 projected that total discretionary outlays in fiscal 2024 would grow to $1.549 trillion—which, adjusted for higher inflation, amounted to $1.694 trillion. The most recent CBO estimate projects that fiscal 2024 discretionary spending will clock in at $1.864 trillion—a 10% real increase from the pre-pandemic estimate. Nondefense outlays have risen 18.8% over the same period, while defense outlays have fallen 0.28% in after-inflation dollars.

Chris Edwards warns of the collateral damage of increased ‘enforcement’ by the IRS.

Mike Munger explains that all housing is indeed still affordable. A slice:

But consider the unseen. Suppose that we do not allow new construction, and we use rent-control to keep costs “fair” for the existing residents. Then the prices of what few homes and apartments come on the market will skyrocket, and the market will collapse into a system of “know-who,” where flats are not advertised but allocated by connections and bribery.

Also from Mike Munger is this lovely remembrance of the late Geoff Brennan.

This letter in the Wall Street Journal by Dan Thornton is spot-on:

Dan Katz and Stephen Miran are right to note that recent government actions have heightened risk (“The FDIC Guarantees Instability,” op-ed, May 11), but they fail to note the fundamental problem: Transferring the cost of failure from the risk-takers to others increases overall market risk.

Investors try to get the highest return on investments by maximizing the difference between the expected return from success and the expected cost of failure. When the government steps in and transfers the cost of failure to taxpayers, present and future, or others, such as well-managed banks, the expected cost of failure decreases and risk-taking increases. This is what the government has been doing since 2007 in a misguided attempt to stabilize financial markets. It hasn’t worked. It never will.

Dan Thornton
Des Peres, Mo.

Tom Slater – with inspiration from the great Zora Neale Hurston – exposes “the dangerous nonsense of white guilt.” A slice:

One of the reasons that woke identitarianism is so dangerous is that it risks reviving white identitarianism. The far right has for years been latching on to the new racial victim politics to present white people as the truly put-upon group.

:

German government report names the pandemic as a precedent for environmental policy, says lockdowns show that behavioural restrictions are possible & can win majority support with the right messaging.

Scott Atlas delivered this year’s graduation speech at the New College of Florida (to an audience populated with uncivilized brutes).

Let_Oregon_Learn tweets: (HT Jay Bhattacharya)

For those of you living in Blue states in 2020, when did you realize we were hosed? For me it was when Kate Brown shut down State Parks and hiking trails. It was so ludicrous and pointless that I knew all science and actual reasoning was thrown out the window… When did you know?

Quotation of the Day…

(Don Boudreaux)

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… is from page 307 of Thomas Sowell’s 2002 collection, Controversial Essays:

People who pride themselves on having ideas often fail to understand that only after ideas have been filtered through real-world experience do we know whether they are right or wrong. Most turn out to be wrong.

DBx: Yes.

This insight helps to explain the deformity of much of today’s so-called “higher education.” “Higher education” is a heavily subsidized industry for producing ideas, but in this industry’s archipelago of many factories there are precious few sound means of testing the workability and relevance of these ideas in the outside world.

The NatCons Are Deeply Confused

(Don Boudreaux)

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Here’s a letter to National Review:

Editor:

Samuel Gregg eloquently demolishes the national-conservatives’ case for reorienting the economy away from serving our interests as consumers and toward serving our interests as producers (“Let Consumer Sovereignty Reign,” May 21). As Mr. Gregg explains, true production occurs only insofar as our efforts as producers satisfy our demands as consumers – demands expressed by income earners spending their own, and only their own, money in whatever peaceful ways they choose. Ironically, were the U.S. government to override these demands in order to freeze workers in the jobs that they currently perform, America would by slow degrees be transformed from a nation of people who produce for each other into one in which people are parasitical on each other.

Implicit in Mr. Gregg’s piece is a point that deserves to be made explicit. It’s this: The desire of workers to keep particular jobs that no longer serve consumers as well as possible is itself a consumption demand. This demand can be satisfied – ‘purchased’ – by workers in those jobs agreeing to cut their pay to levels that allow their employers to profitably employ them. But were government instead to protect those jobs with subsidies or tariffs, government would unjustly elevate these workers’ consumption demands over the consumption demands of their fellow citizens. The ability of fellow citizens to consume would be artificially suppressed in order to artificially enhance the ability of protected workers to consume.

In the end, therefore, the NatCon policy of elevating production over consumption turns out to be nothing of the sort. It is a policy that instead would subsidize the consumption of some by suppressing the consumption of others – and, in the process, reduce America’s overall productivity.

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

Quotation of the Day…

(Don Boudreaux)

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… is from page 144 of Bruce Caldwell’s and Hansjoerg Klausinger’s 2022 Hayek: A Life, 1899-1950 [reference deleted; link added]:

During the [first world] war [Ludwig von] Mises had gained a reputation for his financial acumen, yet in the face of the the Austrian hyperinflation it was not necessary for him to turn to the subtleties of his own monetary writings, as the simple insights from the quantity theory of money sufficed for suggesting a solution. This is highlighted by the “apocryphal story” recalled [by Hayek] in an interview, according to which “Mises was asked during that inflation how to stop it. And he said, ‘Meet me at 12 o’clock at this building.’ And it turned out at 12 midnight they met him at the printing office, where they were printing the money. And they said, ‘How can we stop this inflation?’ And he said, ‘Hear that noise? Turn it off.'”

Bonus Quotation of the Day…

(Don Boudreaux)

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… is this comment left at my Facebook page yesterday by Richard Fulmer:

Yes, classical liberalism and free markets have enriched countless lives and have allowed billions of people to pull themselves out of poverty, but…

Old Radical Left: They don’t adhere to our vision of a classless utopia, so burn it all down.

New Radical Left: They originated at a time when slavery and racism were accepted, so burn it all down.

Woke Left: They don’t affirm, celebrate, and subsidize me and my choices, so burn it all down.

Populist Right: They don’t outlaw woke thought, so burn it all down.

Some Links

(Don Boudreaux)

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GMU Econ alum Will Luther busts the myth of “greedflation.” Two slices:

Understanding what really pushed prices higher over the last two years—more money chasing fewer goods—also suggests another way to test the greedflation view: considering inflation in monetary regimes that constrain the growth rate of money.

On the gold standard, for example, miners generally ensured that the money supply grew in line with money demand—no more, no less. The result was a relatively stable purchasing power—at least over long periods of time—and, hence, a relatively stable price level. As Rafael Guthmann points out on Twitter, the gold standard experience creates a big problem for the greedflation view.

…..

Milton Friedman was right. “Inflation is always and everywhere,” he wrote, “a monetary phenomenon, in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output.” Politicians on the left would like us to believe inflation is caused by greedy corporations. And some academics are all too happy to provide them with theoretical cover. But the theories on offer are inconsistent with standard price theory and historical experience. Higher corporate profits didn’t drive prices higher. Rather, loose monetary policy pushed prices and profits up.

Let’s hope that George Will is correct that today’s fight over the debt ceiling is politics as usual. And let’s also hope, along with Will, that we Americans somehow manage to change for the better what has become usual in our politics. Here’s his conclusion:

Progressives’ unvarying agenda is to concentrate power in Washington, to concentrate Washington power in the executive branch, and to concentrate ever more of that power in administrative agencies that are effectively exempt from being accountable to people who are accountable to voters. Hence progressives’ impatience with the Constitution and its separation of powers.

This rivalry between the branches usually gives each party the power to stymie the other sufficiently to compel compromise. Unless the president considers this institutional architecture unreasonable, even unintelligible. Ohio’s John Sherman (1823-1900), senator and secretary of state, warned us: “The Constitution provides for every accidental contingency in the executive — except a vacancy in the mind of the president.”

David Henderson warns that U.S. government budget deficits “are piling up toward an unsustainable future.” A slice:

The future looks even grimmer. The Congressional Budget Office, an agency that tries to maintain its independence from factions in Congress and reasonably succeeds, periodically estimates future deficits and debt. In its latest estimates, published last week, the CBO projects budget deficits year by year. In 2033, the budget deficit is expected to be $8.7 trillion, which would be 7.3 percent of GDP. This is up from $1.4 trillion in 2022, which is “only” 5.5 percent of GDP. By 2033, the federal debt held by the public is expected to reach 118.9 percent of GDP.

Are these numbers likely to be wrong? Yes. You can never accurately predict ten years into the future. But I’m reasonably confident that by 2033, the federal debt held by the public will exceed 100 percent of GDP unless Congress and the president take serious action in the next few years.

Juliette Sellgren talks with Marian Tupy about his and Gale Pooley’s excellent book, Superabundance.

Nick Gillespie talks with Elizabeth Nolan Brown and Scott Winship about the misguided effort – of people on the left and right – to increase birth rates through the use of state power.

Eric Boehm applauds U.S. Supreme Court Associate Justice Neil Gorsuch’s condemnation of covidians’ abuse of emergency powers. Two slices:

Justice Neil Gorsuch says all three branches of government share some of the blame for what he calls the “breathtaking scale” of emergency powers wielded by public officials during the COVID-19 pandemic.

“While executive officials issued new emergency decrees at a furious pace, state legislatures and Congress—the bodies normally responsible for adopting our laws—too often fell silent,” Gorsuch wrote. “Courts bound to protect our liberties addressed a few—but hardly all—of the intrusions upon them.”

Gorsuch’s sweeping and powerful statement was attached to the Supreme Court’s recent ruling in Arizona v. Mayorkas, one of several cases dealing with the Title 42 orders that allowed federal immigration authorities to expel migrants seeking asylum in the United States. Title 42 had been invoked by former President Donald Trump as the COVID-19 pandemic began in March 2020, and it was repeatedly extended by both Trump and President Joe Biden before finally being brought to an end last week.

But Title 42 was just one in a litany of COVID-related emergency powers that drew Gorsuch’s ire.

“Since March 2020, we may have experienced the greatest intrusions on civil liberties in the peacetime history of this country. Executive officials across the country issued emergency decrees on a breathtaking scale,” Gorsuch wrote before rattling off a list that included stay-at-home orders, school closures, attendance limits on churches, a federal ban on evictions, and the Biden administration’s attempt (blocked by the Supreme Court) to impose a national vaccine mandate via a federal workplace safety regulator.

As some Gorsuch critics have been quick to point out on Twitter, it might be a bit of an exaggeration to call this the “greatest” attack on civil liberties in American history. There are unfortunately more than a few other contenders for that ignominious crown: slavery, Jim Crow, the internment of Japanese Americans during the Second World War. All were, like COVID-19 emergency powers, the result of legal exercises of state power that violated basic civil rights.

But what the country experienced over the past few years does not have to top that list to be worthy of serious disdain. Gorsuch’s statement shouldn’t be regarded as a hot take about the worst civil liberties violations in American history, but a thoughtful review of how governments failed in this instance—so that they might do a better job in the future.

…..

Emergencies may sometimes require that the lawmaking process be temporarily short-circuited, but it’s imperative that state legislatures, Congress, and courts at all levels tighten up the circumstances in which emergency powers may be invoked. Gorsuch is right: When officials take shortcuts to make policy, civil liberties are often the cost.

Peter Robinson talks with Jay Bhattacharya about covid, covidians, and covidian tyranny.

Quotation of the Day…

(Don Boudreaux)

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… is from page 64 of the 1985 (3rd) edition of the late Ralph Raico’s translation of Ludwig von Mises’s great 1927 book, Liberalism:

The usual procedure adopted by the critic is to imagine how wonderful everything would be if only he had his own way. In his dreams he eliminates every will opposed to his own by raising himself, or someone whose will coincides exactly with his, to the position of absolute master of the world. Everyone who preaches the right of the stronger considers himself as the stronger. He who espouses the institution of slavery never stops to reflect that he himself could be a slave. He who demands restrictions on the liberty of conscience demands it in regard to others, and not for himself. He who advocates an oligarchic form of government always includes himself in the oligarchy, and he who goes into ecstasies at the thought of enlightened despotism or dictatorship is immodest enough to allot to himself, in his daydreams, the role of the enlightened despot or dictator, or, at least, to expect that he himself will become the despot over the despot or the dictator over the dictator. Just as no one desires to see himself in the position of the weaker, of the oppressed, of the overpowered, of the negatively privileged, of the subject without rights; so, under socialism, no one desires himself otherwise than in the role of the general director or the mentor of the general director.

DBx: Yes.

One of the distinguishing features of true liberalism is its recognition that to empower government to determine in any specific way the allocation of resources – that is, to empower the state to affect resource allocation beyond what’s required to protect everyone’s property and contract rights and, perhaps, also to supply a few genuinely public goods such as national defense – is to give to particular individuals the right and the power to pursue their preferred concrete ends while simultaneously denying to other individuals the right and ability to pursue their concrete ends.

The liberal doesn’t merely fear that such power will be abused. Of course it will be. The liberal also understands that such power inevitably corrupts those who possess it. And the liberal further recognizes that such power is unjust. Injustice inheres in the ability to obstruct some people’s pursuit of their concrete ends; injustice inheres in the ability to artificially enhance the ability of other people to achieve theirs.

The liberal is never sure that the ends that he or she has chosen for himself or herself are best. But the liberal is damn sure that he or she is in no position to wisely choose ends for others.

The liberal is truly humble, a trait that is often mistaken for either indifference or intellectual dullness. Yet the liberal’s refusal to interfere in Jones’s affairs doesn’t signal the liberal’s indifference to Jones’s well-being. Nor is it a sign of the liberal’s inability to dream up a beautiful theory of how his or her interference in other people’s affairs could work wonders. Instead, the liberal’s refusal to interfere in other people’s affairs signals – in addition to the liberal’s mature and civilized respect for the autonomy of other people – the liberal’s understanding that such interference is too likely to make not only the object of his or her interference worse off, but also other people worse off as well.

One further point: the liberal doesn’t wish to corrupt his or her own character by presuming to be so superior to others that he or she is entitled to impose his or her opinions and preferences on others.