Russell Roberts's Blog, page 18

Bonus Quotation of the Day…

(Don Boudreaux)

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… is from page 200 of the late Nobel-laureate economist Douglass North‘s 1961 paper “The United States in the International Economy, 1790-1950,” which is Chapter 7 of American Economic History (Seymour Harris, ed., 1961) (footnotes deleted; link added):

Immigration played by far the most important role of any external influence in United States economic development. It has been estimated that, had there been no immigration between 1870 and 1940, United States population would have been 102 million rather than 132 million, or almost a quarter less. Without any of the costs of rearing and training them, our labor force was augmented by almost a third during this period as a result of immigration. It therefore was an essential element in the changing factor proportions that made possible industrialization. The variety of skills and talents affected every aspect of our economic and social character. While in the short run immigration posed many problems for the United States, in the long run it was a vital contribution to economic growth and to the vitality of American political democracy.

DBx: In light of this historical reality, it‘s ironic that Oren Cass and his American Compass colleagues – who long for the government to restructure the American economy to create more manufacturing jobs – want to further restrict immigration.

To be clear, contrary to the belief of the people at American Compass – and, more generally, among folks in NatCon circles – there‘s nothing inherently superior about manufacturing jobs. We should no more lament the loss of jobs in manufacturing than our great-grandparents should have lamented the loss of jobs in agricutlure.

Also contrary to the suppositions of those with this fetish for more manufacturing jobs, if the government were to succeed in manufacturing more such jobs, not only would the average earnings of manufacturing workers be lower than are those earnings today, the average earnings of almost all ordinary American workers in all sectors – manufacturing, mining, agricultural, service – would be lower. Americans‘ standard of living would fall. And this standard of living would fall even further as a result of tighter restrictions on immigration, regardless of whatever impact such restrictions would have on the distribution of jobs across different economic sectors.

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(Don Boudreaux)

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Samuel Gregg writes, at National Review, about the friendship between Adam Smith and Edmund Burke. A slice:

One area where Smith and Burke strongly agreed concerned their commitment to liberal economic ideas at a time when mercantilist policies reigned throughout the European world. In the 1800 edition of his Life of Edmund Burke, Robert Bisset claimed that Smith told Burke that “after they had conversed on subjects of political economy, that he was the only man, who, without communication, thought on these topics exactly as he did.”

Though famous, this statement is of the anecdotal variety. Its veracity has not been corroborated by any other reference. Other sources, however, confirm that Smith and Burke were very much on the same economic page.

The most comprehensive studies of Burke’s economic thought, ranging from Donal Barrington’s 1954 Economica article “Edmund Burke as Economist” to Gregory M. Collins’s Commerce and Manners in Edmund Burke’s Political Economy (2020), provide ample proof of Burke’s attachment to commercial liberty, hostility to mercantilism, and his belief that the extension of economic freedom furthered civilizational growth. These texts also attest to Burke’s interest in what we would call economic theory to understand what was really happening. For Burke, this was a prerequisite for any improvement, to use a classic Enlightenment word, upon the status quo.

Smith’s Wealth of Nations was the text that systematized this outlook. Burke did not disguise his admiration of Smith’s intellectual achievement. Stewart reports that Burke “spoke highly of [Smith’s] Wealth of Nations,” describing it as an “excellent digest of all that is valuable in former Oeconomical writers” as well as identifying “many valuable corrective observations.”

Stefan Bartl understands the idiocy of mercantilism.

Ed Meese and Kelly Shackelford decry “the left’s war on the rule of law.” Two slices:

The first contours of the plan emerged in March 2020. As the justices prepared to rule on a Louisiana abortion law, Sen. Chuck Schumer stood in front of the Supreme Court and declared that Justices Brett Kavanaugh and Neil Gorsuch had “released the whirlwind” and would “pay the price.” He warned that they wouldn’t “know what hit” them if they went forward with “these awful decisions.” The pattern of attack that emerged since then makes it clear that Mr. Schumer meant what he said. The judiciary, and the justices themselves, are in the left’s cross hairs—sometimes literally.

…..

These attacks on the judiciary share the goal of restructuring the courts and delegitimizing the rule of law. They might be working. Recent polling shows public approval of the Supreme Court at historic lows. More than 90% of judges now believe judicial independence is threatened, primarily by the attacks and the left’s politicization of the judiciary. And more offensives against the courts are coming. A coalition of progressive groups will soon launch a nationwide campaign calling again for structural changes to the Supreme Court.

The left hasn’t always had such disregard for the integrity of the courts. In 2001, the American Civil Liberties Union said that maintaining the credibility of the Supreme Court was “critical” to “preserving civil liberties.” Failure to maintain judicial credibility, it said, would damage not only the high court but “the rule of law.” The ACLU was right.

If politically motivated schemes to transform the courts are successful, the judiciary will become little more than a political tool of the executive and legislative branches. Judges will lose their ability to enforce the rule of law with impartiality, and the last safeguard to our civil liberties will be gone.

The left’s grand scheme to delegitimize the courts is more than a threat to the judiciary. It is a threat to our constitutional republic. It must not succeed.

Jacob Sullum is correct: “Trump’s disregard for the rule of law is at least as bad as Biden’s.” Here’s his conclusion:

Whether it was building a border wall that Congress had declined to fund, launching military strikes without congressional authorization, or withholding funds from states that allowed broad use of mail-in ballots, Trump’s position was clear: He would do what he wanted, regardless of what Congress said

Biden has a similar attitude, as illustrated by his student loan plan, his gun control initiatives, and his ill-fated vaccine mandate. But Republicans are fooling themselves if they think Trump would be any better in this respect..

My intrepid Mercatus Center colleague Veronique de Rugy warns against government regulation of AI. A slice:

If [Sam] Altman wants to self-regulate, he should go ahead. But counting on politicians, who don’t understand the basics of AI, to regulate the industry wisely and productively is worrisome. And it’s silly to consider pausing AI development at a time when the U.S. is leading the industry. If it is paused, and another country comes up with competing technologies, be ready for calls for industrial policy and subsidies. This is why I agree with Neil Chilson of the Center for Growth and Opportunity when he notes that politicians are the ones who should take a six-month pause to understand AI before thinking about all the ways to regulate the industry.

Paul Schwennesen reports on the continuing embrace on college campuses of irrationality.

My colleague Pete Boettke has a new paper on his teacher, and our late colleague, Don Lavoie.

A headline in the Wall Street Journal: “Young Americans Are Dying at Alarming Rates, Reversing Years of Progress.” And two slices from the report:

The uptick among younger Americans accelerated in 2020. Though Covid-19 itself wasn’t a major cause of death for young people, researchers say social disruption caused by the pandemic exacerbated public-health problems, including worsening anxiety and depression. Greater access to firearms, dangerous driving and more lethal narcotics also helped push up death rates.

…..

Covid, which surged to America’s No. 3 cause of death during the pandemic, accounted for just one-tenth of the rise in mortality among young people in 2020, and one-fifth of it in 2021, according to the research led by Woolf, which uses data from the Centers for Disease Control and Prevention.

Joshua Gillihan was 11 years old when the pandemic closed his suburban Houston middle school in March 2020. He’d grown up confident with lots of friends, and played baseball and rode his dirt bike in their upper-middle-class neighborhood in Cypress, Texas, said his mother, Kim Gillihan. The shutdowns turned a temporary break from organized sports into an indefinite hiatus. Kim Gillihan watched as Joshua’s typical adolescent hangups about having to wear glasses and his appearance gave way to more worrisome levels of anxiety.

Ian Miller tweets: (HT Jay Bhattacharya)

Another embarrassing and indefensible policy comes to an end, as the University of California system ends its pointless and completely ineffective vaccine mandate

There’s no justification whatsoever for it to have lasted this long, other than a purposeful disregard for science

Quotation of the Day…

(Don Boudreaux)

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… is from page 500 of the 2011 revised and enlarged edition of Thomas Sowell’s 2009 book Intellectuals and Society (original emphasis; endnotes deleted; link added):

Freedom has likewise been redefined to mean things remote from what most people have long meant by freedom – namely, exemption from other people’s restrictions. Through verbal virtuosity, that is now called “freedom from” but not “freedom to.” For example, a well-known book by two Yale professors declared that “we shall try to unravel some of the complexities in the theory and practice of freedom” and redefined freedom as “the absence of obstacles to the realisation of desires.” Thus freedom “depends upon attaining important prime goals such as dignity, respect, love, affection, solidarity, friendship. To the extent that individuals lack these, they cannot be free.” As if this confusion of freedom with other things was not sufficient, they added that “security and freedom are much the same thing.”….

Through such verbal virtuosity, those who promote a dirigiste agenda can claim not to be reducing people’s freedom, but enhancing it, by having government provide things they could not afford otherwise. Thus such intellectuals need not debate critics who say that a dirigiste world reduces people’s freedom, but can evade such debates with verbal sleight of hand, by redefining freedom.

DBx: Words have meanings and they matter. Redefining things as that which those things are not commonly understood to be is, at best, confusing; sometimes it’s calamitous.

The Supermarket

(Don Boudreaux)

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Here’s a letter to a regular Café Hayek patron:

Mr. Runge:

Thanks for your e-mail.

You write that your sister, newly home from her sophomore year at Lehigh, informed you last night that “capitalism simply doesn’t work.” And you ask me to recommend material to share with her in hopes of prompting her to reconsider what you call her “flirtation with socialism.”

I could recommend Kristian Niemietz’s 2019 book, Socialism: The Failed Idea that Never Dies. Or Art Carden’s and Deirdre McCloskey’s 2020 Leave Me Alone and I’ll Make You Rich: How the Bourgeois Deal Enriched the World. Or Marian Tupy’s and Gale Pooley’s 2022 Superabundance. Or Jim Otteson’s 2021 Seven Deadly Economic Sins. Or Russell Roberts’s The Choice and The Invisible Heart. Or even this video. Relevant material all.

But if your sister resists reading assignments from her sibling, simply ask her to go to a supermarket. Safeway. Kroger. ShopRite. Wegman’s. Whole Foods. Walmart. It doesn’t matter. Ask her to wander down the aisles and behold all the items for sale. Really behold. Ask her to count the different kinds of items for sale. Ask her who makes that abundance of food and other grocery items possible. Ask her to take note of the packaging of each item. Ask her who designed those different packages. Who created the packaging materials? Ask her if she knows how to make plastic containers to hold mustard or glass bottles to hold merlot? Ask her if she knows anyone who knows anyone who knows anyone who knows how do so such things.

Ask her who picked the cucumbers? Who soaked them in vinegar and spices to pickle them? Who created the vinegar? Who found the spices? Who grew the bananas? The broccoli? The beets? Who squeezed milk from the cows? And from the almonds? Who caught the tuna? The tilapia? And who arranged the system of payments so that customers can purchase their groceries in a matter of seconds by swiping or tapping pieces of plastic?

Ask your sister what guarantees do supermarket owners have that customers will buy the items sitting on the shelves. Remind her that there are no such guarantees, yet despite this fact these strangers, every day, cram their shelves full of items from around the world and offer to sell them at affordable prices – items that no one is obliged to buy. And ask your sister if the supermarket she visits today will be open tomorrow and the day after tomorrow and next month. Ask her how she knows.

Ask your sister for the name and address of the country’s Grocery Czar or for the website of the Department of Supermarkets.

I know of no better and more accessible proof of capitalism’s success than the supermarket. One visit with an inquisitive, open mind to one of these modern emporia reveals the splendid (and in some cases literal) fruits of capitalist markets – the marvelous fruits of the division of labor, innovation, entrepreneurship, competition, finance, commerce and trade, and economic freedom.

Capitalism plants in every neighborhood across America monuments to its successes – monuments that, being so commonplace in the U.S. today, seem to be mundane. But they are in fact magnificent.

Tell your sister this.

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

Pittsburgh Tribune-Review: “Busting Depression myths”

(Don Boudreaux)

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In my column that appeared in the December 10th, 2013, edition of the Pittsburgh Tribune-Review I reminded people of the great work of the economic historian (and my dear friend) Robert Higgs. You can read my column beneath the fold (link added).

(more…)

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David Henderson, writing in the Wall Street Journal, remembers the late Nobel-laureate economist Robert Lucas. Two slices:

Lucas extended this thinking in a 1976 article that came to be called “the Lucas critique” of macro models. He argued that because these models were from periods when people had one set of expectations, the models would be useless for later periods when expectations had changed. While this might sound disheartening for policy makers, there was a silver lining. It meant, as Lucas’s colleague Thomas Sargent pointed out, that if a government could credibly commit to cutting inflation, it could do so without a large increase in unemployment. Why? Because people would quickly adjust their expectations to match the promised lower inflation rate. To be sure, the key is government credibility, often in short supply.

…..

Lucas was willing to change his mind when the evidence demanded it. In the early 1960s, he thought that taxing capital gains like ordinary income was “the single most desirable change in the U.S. tax structure.” By 1990 he had concluded that “neither capital gains nor any of the income from capital should be taxed at all.” He estimated that cutting the tax rate to zero would increase the capital stock by about 35%.

Also remembering Robert Lucas is GMU Econ alum Dominic Pino. Two slices:

“That [Keynesian] predictions were wildly incorrect and that the doctrine on which they were based is fundamentally flawed are now simple matters of fact involving no novelties in economic theory,” Lucas and Sargent wrote. The days of hydraulic Keynesianism, where the economy was a giant machine with buttons and levers that policy-makers could press with predictable outcomes, were over. In its place, equilibrium models of the business cycle would arise. Lucas and [Thomas] Sargent wrote that the way macroeconomists think about policy would shift away from designing the right intervention to focusing on “the need to think of policy as the choice of stable rules of the game, well understood by economic agents.”

In what became known as the “Lucas critique,” Lucas described the shortcoming that plagues macroeconomic modeling of policy changes. People adjust their behavior and expectations in response to policy changes, so the policy change alters the parameters of the model itself. The just-plug-in-the-numbers approach to macroeconomics was dealt a devastating blow. People aren’t particles in a laboratory; they’re living, thinking beings that adjust to new circumstances.

…..

If there’s one work by Lucas everyone should read, it’s his 1988 lecture “What Economists Do.” It’s short, 100 percent white-meat prose, and certified equation-free. “We are basically story-tellers,” said Lucas of economists. He proceeds to tell a story about an amusement park, which serves as a model for the U.S. economy, complete with a currency (tickets), a central bank (the cashier’s office), goods and services (concessions and rides), and consumers and producers (park attendees and park employees). He demonstrates how by increasing or decreasing the rate at which dollars are exchanged for tickets, he could create a boom or bust in the park’s economy.

Economists have to be story-tellers, Lucas says. “We do not find that the realm of imagination and ideas is an alternative to, or a retreat from, practical reality. On the contrary, it is the only way we have found to think seriously about reality.”

Few people thought more seriously, or with greater effect, about economic reality than Robert Lucas. R.I.P.

Also recently deceased is the economic historian Stanley Engerman – also remembered by David Henderson.

“You use the roads, don’t you?”

Jordan McGillis makes the case for greater freedom of trade in U.S. commercial aviation. A slice:

Air cabotage laws stemming from the Civil Aeronautics Act of 1938 ban foreign airlines from operating routes between U.S. airports. An impressive carrier like Japan Airlines can fly from Tokyo Narita to LAX, but it cannot fly passengers from Los Angeles to Seattle, Dallas, or anywhere else within the United States. As a result, U.S. airlines are insulated from the healthy competition that has generated a better air travel experience in other parts of the world.

Despite having the world’s highest-revenue domestic air travel market, U.S. domestic flyers are limited to mediocre carriers. The first U.S. airline to appear on the Skytrax global airline rankings, Delta, is all the way down at number 24. According to AirHelp’s on-time performance metric—the specific aspect of air travel the Biden plan targets—Delta is again the best domestically, but nine foreign airlines do better.

Rather than add to the complexity of domestic fare pricing with the threat of compelled cash payments, wouldn’t U.S. air travelers benefit more from having a wider array of airlines to choose among?

The Editorial Board of the Wall Street Journal reports on just how very insidious is the mania for ESG ‘investing.’ A slice:

Sunshine is what this ESG business demands. Pensioners and investors want a good return. What they don’t want, to pick one example, is for companies that sell paint or hamburgers to undertake costly external audits so that they can self-flagellate about the ills of the world.

From Britain, Steve Davies warns that “the Tories are on course for a shattering defeat.” A slice:

Now, however, politics is realigning around a different set of issues, to do with identity and particularly the divide between nationalism (and the power of national electorates) and supranational cosmopolitanism (and the rule of trans-national laws and agreements). Another emerging issue is divisions over the implications of new technologies and environmental questions. In this new world, conservatism is increasingly defined as being support of national identity and sovereignty against supranational globalism, along with scepticism about global capitalism and free movement of labour, goods, and capital, with a revival of mercantilist economics (such as industrial policy). The other element is one of asserting traditional identities against the challenges of new technologies and the body of radical left-liberal ideas commonly labelled as “woke”.

Some business models just aren’t very sound.

Michael P Senger tweets: (HT Jay Bhattacharya)

The purpose of COVID mandates was simultaneously to frighten the public into compliance, while also partially allaying that fear with a false sense of control contingent upon compliance. Demonization of the non-compliant was inevitable, if not intended.

Quotation of the Day…

(Don Boudreaux)

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… is from page 218 of Ludwig von Mises’s 1967 paper titled “A Hundred Years of Marxian Socialism” as this paper appeared for the first time, which was in the original 1990 edition of Money, Method, and the Market Process: Essays by Ludwig von Mises (Richard M. Ebeling, ed.):

The philosophy of the Enlightenment considered as its most precious achievement the principle of toleration, the liberty to uphold one’s opinions in religious and philosophical matters without being harassed by the government. It was no less anxious to give to everybody the right to choose the way by which he planned to integrate himself into the system of social cooperation. The great ideal of the age of classical liberalism was liberty, the freedom to make the plans for one’s own life.

Rather than Issue ‘Baby Bonds’….

(Don Boudreaux)

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Here’s a letter to the Wall Street Journal:

Editor:

Understandably wishing to enhance the economic prospects of young Americans, progressives propose giving to infants born into low-income families “baby bonds” (“Could $3,200 ‘Baby Bonds’ Help End Poverty in America?” May 13).

I’ve got a better idea – actually, two: Abolish the minimum wage and increase school choice. The minimum wage and inner-city government schools are huge obstacles to the economic flourishing of poor Americans. The former prices many unskilled young people out of jobs – and, hence, out of opportunities to get on-the-job training and experience – while the latter fails to equip young people with the basic skills necessary for most jobs in the modern economy. Taking these two steps alone would go much further than would the issuance of baby bonds to ensure brighter economic futures for children in low-income households.

Giving young people wealth earned by others while simultaneously denying them the opportunities and skills necessary to earn wealth themselves of course puts yet another burden on the public fisc. But a far worse consequence of baby bonds is that these help to hide the damage inflicted by minimum wages and the government-school monopoly on low-income young people’s opportunity, agency, responsibility, and dignity.

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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Wall Street Journal columnist Mary Anastasia O’Grady rightly deplores the blindness of many Americans to what tyranny has done, and continues to do, to the people of Cuba. A slice:

The New York Times report on Cuba’s attempt at a Covid-19 vaccine was laughable. Toilet paper is scarce in the socialist paradise. But in February 2021 the Times breathlessly hyped—in language dripping with contempt for the U.S.—the Havana line that a breakthrough was looming. “The vaccine heading for a final phase of trials is called Sovereign 2, in a nod to the pride the island takes in its autonomy, despite decades of hostility from its neighbor to the north. Already, Cuba is floating the idea of enticing tourists to its shores with the irresistible cocktail of sun, sand and a shot of Sovereign 2.”

Lots of Cubans were given a shot, but who knows what was in it? In August 2022, the Economist tallied excess-mortality data on the island to estimate the Covid-19 death toll per capita. It found Cuba’s rate to be “among the 20 worst” across the globe and far above the country average in the region.

Cuba’s revolutionary pact was that the regime would guarantee food and medicine and, in return, Cubans would surrender their liberty. Now that they have none of the above, they’re angry.

Arnold Kling writes with his usual insightfulness on “the intention heuristic.” Two slices:

What I call the intention heuristic takes two forms:

Good intentions necessarily lead to good consequences.

Bad consequences necessarily indicate that someone had bad intentions.

Consider the case of Communism. It might seem that “From each according to his abilities, to each according to his needs” constitutes a good intention. Yet Communism in practice has turned into a totalitarian nightmare wherever it has been tried.

…..

If you follow the first form of the intention heuristic, you would have to insist that Communism is actually good. The bad examples are “not real Communism.”

If you follow the second form of the intention heuristic, you would have to insist that Communists never had good intentions. Anyone who ever supported Communism did so in order to advance the cause of evil totalitarianism. That, too, is a simplistic conclusion.

True wisdom requires discarding the intention heuristic. It requires accepting that the world is complex and that each individual is complex.

Bruce Rottman rejects the religion of recycling.

GMU Econ alum Daniel Smith explains how subsidies for sports stadiums reveal tensions in Democratic Party politics.

Michael Strain warns of the consequences of “debt and dysfunction” in the United States.

Alexander Riley isn’t impressed with Michael Bérubé’s and Jennifer Ruth’s It’s Not Free Speech. (HT George Leef) Two slices:

It’s Not Free Speech is a shameful exercise in the deceptive assertion of the prerogatives of expertise by people who consistently break their own rules regarding how expertise is supposed to work. The authors, Michael Bérubé and Jennifer Ruth, demonstrate by their every word that their claim to respect expertise as something more than just an exercise of power in the service of an ideology is utterly hollow.

This is evident from the book’s first pages. The authors begin with ignorant vilification of two of the most courageous professors on American college campuses today, Amy Wax and Bruce Gilley. The authors, miming the rhetorical manner of the BLM street activist, casually refer to these fearless critics of anti-intellectual dogma as white supremacists. The evidence? Wax dared to argue that some cultures are more effective than others at preparing people for social success in the modern West, and Gilley argued that colonialism offered some benefits to the colonized. Both defended their claims in a scholarly manner, and they responded articulately to the kind of absurd charges made in this book.

But this book’s authors know that most of their readers—leftist academics—will need no skillful argumentation to agree with their denunciation. Those readers are also unlikely to ask how the book’s authors qualify as experts to evaluate the arguments of Wax and Gilley. For here we have a professor of English (Bérubé) and a professor of film studies (Ruth) asserting their right to adjudicate truth, without discussion of any particulars, regarding matters—the causes of racial inequalities and the consequences of colonialism—on which they have no relevant training or expertise.

…..

It takes but a few minutes of examining the curriculum in the typical African studies program to realize that it can be adequately summarized as political propaganda, in which the feeblest of far-left claims are presented as dogma and no contestations are tolerated. The authors do note that part of the scandal around [Damon] Sajnani had to do with his cheering, on his Twitter account, the killing of police officers, which probably tells you something about the direction and quality of his pedagogy. But Bérubé and Ruth are untroubled by this.

They believe that universities need special committees of “trained expert faculty” to decide what other faculty members can and cannot say, teach, and write on matters of leftist political concern, and especially on race. You can surely guess who will control such committees. It will be Sajnani and others in the various politicized “studies” fields populated by woke professors who believe what he believes.

It may well be that the universities are completely lost. Books like this one make clear the profound nature of the ideological disease they suffer.

Quotation of the Day…

(Don Boudreaux)

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… is from a personal e-mail sent to me on Friday by my emeritus Nobel-laureate colleague Vernon Smith; Vernon sent it after he read this post and I share it here with Vernon’s kind permission:

It is important to understand why capitalism does not need a prefix to do immeasurable good.