Russell Roberts's Blog, page 217

Avoid this Reductio

(Don Boudreaux)

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Excellent arguments – economic and ethical – against minimum-wage legislation are abundant. Yet among these sound arguments is not a frequently used reductio ad absurdum. I do my best, in my most recent AIER column, to explain. A slice:

People who are skeptical of government intervention into markets often respond to calls for hikes in the minimum wage by using a reductio ad absurdum – such as, “Why raise the minimum wage to only $15 per hour? If the minimum wage works as promised, why not instead raise it to $50 per hour, or even to $150?!”

In reaction to this reductio, economists justifiably wince. For two reasons, this reductio is a weak argument against the minimum wage.

Minimum Wages Have Benefits as Well as Costs

When I analyze minimum-wage legislation with my freshman economics students, I always emphasize the fact that the analysis itself cannot determine if such legislation is good or bad. Such a determination is not in the province of science. Economic analysis can reveal only the likely consequences of a minimum wage. Assessing the merits or demerits of these consequences necessarily involves value judgments. And because minimum-wage statutes, like nearly all government interventions, have both upsides and downsides – in popular parlance, they generate some ‘winners’ and some ‘losers’ – value judgments cannot be avoided when considering how to weigh the benefits reaped by the ‘winners’ against the losses imposed on the ‘losers.’ Science cannot tell us the maximum amount, if any, of a loss the ‘losers’ can suffer in order for the policy nevertheless to be justified.

Economic analysis reveals convincingly that a minimum wage very likely reduces the employment options open to low-skilled workers, including stripping some of them of jobs altogether. But this analysis also reveals that a minimum wage results in some other workers being paid wages higher than they’d be paid without a minimum wage. Most people today assess the first consequence as a cost and the second consequence as a benefit. (In passing, it’s worth noting that the employment loss that is today generally regarded as a cost of a minimum wage was not always so regarded. As Princeton University economist Thomas Leonard documents in his 2016 book, Illiberal Reformers, early 20th-century advocates of minimum wages judged unemployment caused by minimum wages to be a feature rather than a bug. These advocates endorsed the minimum wage precisely because they saw it as a means of excluding from the labor pool workers who these advocates regarded as ‘inferior.’)

A minimum wage, therefore, confronts us with a trade-off: reduced employment options (and lower incomes) for some workers, and higher take-home pay for others. Again, science cannot tell us how much, if any, of minimum-wage’s cost is acceptable in light of the corresponding benefits. But science does tell us that the higher the minimum wage, the greater will be its negative impact on employment. And the minimum wage can be set so high that all, or nearly all, of the workers who are meant to be helped by the minimum wage wind up unemployed, with the result being all cost and no benefit.

This reality is the first reason economists wince at the reductio. Many economists support modest hikes in the minimum wage on the grounds that – in these economists’ personal estimations – the negative employment effects, while real, are outweighed by the benefits reaped by those workers who are paid higher wages. (See, for example, economists’ responses to Question B in this 2013 survey conducted by the University of Chicago’s Booth School of Business.) Because the larger the hike in the minimum wage, the larger is the negative impact relative to the positive impact, to support a small hike in the minimum wage on the grounds that the negative impact is outweighed by the positive impact does not logically commit someone to support a larger hike. It’s perfectly consistent for someone to regard as acceptable the negative impact of a minimum-wage hike that’s modest while regarding as unacceptable the negative impact of a minimum-wage hike that’s large.

While there’s no logical inconsistency involved in favoring a minimum wage of, say, $15 per hour while opposing one of $50 per hour, it’s important to realize that when economists make such an assessment they express a value judgment. In doing so they step outside of their role as scientists. They speak simply as fellow human beings. Economists have no more expertise than do non-economists at making value judgments about the acceptability or unacceptability of the trade-offs entailed by any hike in the minimum wage. For example, David Card – who, in part because of his research on minimum wages, is one of the co-recipients of the 2021 Nobel Prize in Economic Science – is no better positioned than are you or your Uncle Vinnie to judge whether the negative effects of a proposed hike in the minimum wage are worth incurring in exchange for the positive effects.

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Some Covid Links

(Don Boudreaux)

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Geoffrey Vaughn decries the still-raging hysterical over-reaction to Covid on America’s college campuses. A slice:

Brown University, one of the Ivies in case you forgot, enacted further restrictions in response to what it described as “82 confirmed positive COVID-19 asymptomatic tests in the past seven days.” Brown has over 7,000 undergraduates and 3,000 graduates. 82 asymptomatic test results, or just over 1% of undergraduates or less than that of all students, induced further restrictions. What are those restrictions?

There are effectively no dining halls at Brown anymore. All their dining services are take-out and students are strongly discouraged from going to restaurants off campus. What’s more, they have been instructed to restrict their social encounters. Under the heading of “Refrain from Small-Group ‘Hopping,’” they have been given the following instruction: “Students are expected to consistently engage with the same small social group, rather than attending or “hopping” among multiple small-group gatherings over the course of a day or short period of time.”  Are these young adults or little children?

I pick on Brown only because they are so honest. Their rules are openly posted online and, what’s more, they admit in those very rules that, “there is no evidence of spread in classrooms.” Such evidence has not stopped other institutions, my own included, from requiring vaccines, masks inside and out, multiple PCR tests per week, and all sorts of other restrictions. Brown is not an outlier, by any means. Some colleges and universities are now more restrictive than nursing homes.

Scott Atlas defends himself against Deborah Birx’s tale. A slice:

“It is an Orwellian attempt to rewrite history to blame those who criticized the lockdowns that were widely implemented for the failure of the lockdowns that were widely implemented,” he said, adding that Birx’s recommendations “were implemented by governors throughout nearly the entire nation during 2020.”

“Those policies failed to stop the dying, failed to stop the infection from spreading, and inflicted massive health damage and destruction, particularly on working class and lower-income families and on our children,” Atlas told Fox News. “History’s biggest failure of public health policy lies directly at the hands of those who recommended the lockdowns and those who implemented them, not on those who advised otherwise. Period.”

Here’s a report of just one of countless grotesque injustices inflicted by the Covidocracy and tolerated by a people suffering from Covid Derangement Syndrome.

And here’s a report of yet another injustice committed by California’s Covidocracy.

Toby Young offers an explanation for why we anti-lockdowners have largely lost the public debate. A slice:

One explanation — the one I like best — is that we made the mistake of trying to appeal to reason. This was a point made by David McGrogan, a professor at Northumbria law school, in a piece for my sceptical website. ‘I am somebody who encourages students to investigate and debate facts for a living. So this has been a very bitter pill for me to swallow indeed, but the reality is that most people are just not actually interested in finding out the truth for themselves. They are much more interested in conforming with what they perceive to be the “moral truth” — the prevailing moral norm.’ The reason the vast majority of the public supported lockdowns is because they believed they were the ‘right’ thing to do.

Of course, the lockdown enthusiasts wouldn’t have been so quick to conform to that ‘moral truth’ without believing that lockdowns actually did what they said on the tin. But I was astonished by how many intelligent people just swallowed the government line without subjecting it to proper scrutiny — particularly as lockdowns meant the surrender of our liberty on an unprecedented scale, as Lord Sumption has pointed out ad infinitum. It was as if such people were yearning for the social solidarity usually available only during wartime. And the flipside of that — denouncing anyone who refused the accept the restrictions — also had wide appeal. No doubt the [British] government helped this process along by spending hundreds of millions bombarding us with propaganda, much of it designed by behavioural psychologists to penetrate our reptile brains.

Here’s a report, in Spiked, of Long Lockdown in Britain.

“How did Florida end up with one of the best COVID-19 case and death rates in the US despite Gov Ron DeSantis refusing to implement mask or vaccine mandates?”

Covidocratic tyranny continues to intensify in dystopian Australia, as James Macpherson – with appropriate sarcasm – describes. Three slices:

While it is true that citizens were issued with stay-at-home orders for 262 days, they were not literally locked down. Andrews needs the power to physically barricade people in their homes, welding shut front doors if necessary. It’s the very least a tyrant could be expected to do.

Still other Covid-loving human rights worriers will point to government-mandated curfews as evidence the Victorian strongman already has too much authority.

And yes, Andrews did order people off the streets between 9pm and 5am earlier this year. But what sort of mickey-mouse curfew is it when police enforcing that curfew don’t have the power to shoot citizens on sight?
…..
During the past two years Victorian police — under [Dan] Andrews’ watchful eye — have been able to pepper spray, beat and kick citizens for not wearing masks. And yet, after all these things that Dear Leader has done for them, people still want to stroll in the open air, feeling the warmth of the sun on their uncovered faces.

The Eternal Lord of all the Beasts of the Earth and Fishes of the Sea has tried coaxing recalcitrant Victorians with carrots. Now, reluctantly, he must wield his statist stick.

Authorities have closed children’s playgrounds, cordoning them off with police tape, and yet small children still ride their bikes through parks, laughing playfully, as if it is their God-given right. Covid-denying, anti-vax, Murdoch press reading, far-right conspiracy theorists. All of them.

And their parents too.
…..
They do not understand that only when Despot Dan can decide to shut down the entire state on a whim will he have the power required to keep Victorians drained and dispirited so that he can tweet that he’s their daddy and that he’s bloody proud of them.

We are safe because Dan is strong. This legislation makes him stronger than ever, which means Victorians are safter than ever.

I urge the Victorian Parliament to pass the Public Health and Wellbeing bill without delay. Long may Dan stand over us.

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Quotation of the Day…

(Don Boudreaux)

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… is from page 49 of Adam Smith’s celestial essay “The History of Astronomy,” as this essay appears in Liberty Fund’s 1982 collection of Smith’s Essays on Philosophical Subjects (a collection originally published by Cadell and Davies, in London, 1795):

But a savage, whose notions are guided altogether by wild nature and passion, waits for no other proof that a thing is the proper object of any sentiment, than that it excites it.

DBx: Yes.

A primitive mind, like a childish mind, focuses on only the first sensations that strike and stimulate it. These initial sensations are all that such a mind comprehends and is willing to comprehend. Entranced by these initial sensations, the primitive or childish mind refuses to look past, above, beyond, beneath, or behind these initial impressions. Reality, to such a mind, is limited to initial impressions. Because reason, rather than emotion or any of the physical senses, is the chief tool for exploring regions beyond initial impressions, people too lazy or immature to employ any capacity beyond emotion and sensation remain blinded by first impressions. Unfortunately, such lazy and immature people are quite common. Many are even called “intellectuals.”

Some Covid Links

(Don Boudreaux)

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The Brownstone Institute shares another excerpt from Paul Frijters’s, Gigi Foster’s, and Michael Baker’s 2021 book, The Great Covid Panic. A slice:

Reducing the movements of healthy people was not going to move the needle in terms of stifling virus transmission among the truly vulnerable elements of the population. Worse, the logic of trying to keep movement limited meant there was almost no escape for governments from doing the wrong thing: once they and their health advisors had convinced the population that normal interactions were a serious risk, every move to ‘open up’ was seen as potential endangerment that could be exploited by political opponents.

I’m pleased and honored to have again been a guest, with John Tamny, on The Bill Walton Show.

Martin Kulldorff decries the sudden loss of long-held medical knowledge.

Noah Carl reports on reasons not to put much confidence in the predictions offered by Neil Ferguson and other “experts.” A slice:

A more recent study reached slightly different conclusions. Earlier this year, the epiforecast group at the London School of Hygiene & Tropical Medicine hosted a forecasting competition in which they invited members of the public to predict weekly case and death numbers in the U.K.

The competition ran from 24th May to 16th August. Both experts and non-experts were eligible to compete, experts being those who declared themselves as such when they signed up (so we’re presumably talking about epidemiologists and people with a background in forecasting).

What did the researchers find? In this case, the self-declared experts performed slightly worse than the non-experts, although neither group did especially well.

Why did the two studies reach different conclusions? I suspect the answer lies in the composition of each study’s non-expert group. In the first study, the non-experts were random members of the public, whereas in the second, they were laymen who chose to take part in a forecasting tournament.

The psychologist Philip Tetlock has gathered a large amount of evidence that, when it comes to quantitative forecasting, experts aren’t any better than well-informed laymen (even if they do have an edge over the man on the street).

I suspect the non-experts who took part in the Covid forecasting tournament were the kind of well-informed laymen that Tetlock identified in his research. After all, you’d have to be pretty geeky to find out about such a tournament in the first place.

Overall, the evidence suggests that no one’s particularly good at forecasting the epidemic. Where the ‘experts’ do have an advantage is in making their predictions appear scientific.

Fraser Nelson reports on the “staggering costs” of a possible renewed lockdown in Britain.

The higher the rate of testing for SARS-CoV-2 infections, the higher will be the percentage of the population found to be infected.

Robert Dingwall criticizes the magical thinking from which much of the case for mask mandates springs. A slice:

The bitter controversy over the use of masks or face coverings in community settings that has erupted in the USA and can also be seen in the UK and Mainland Europe has many of the characteristics of the contest between magic and science. Advocates of masks have struggled to demonstrate a causal connection between face covering and the transmission of the SARS-COV-2 virus. Their critics might well be forgiven for claiming that mask mandates are based on magical thinking and questioning whether the power of the state should be used to enforce this. Surely we have moved on from the Salem witch trials?

Quotation of the Day…

(Don Boudreaux)

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… is from page 50 of Mariano Grondona’s 2000 essay “A Cultural Typology of Economic Development,” which is chapter 4 in Culture Matters, Lawrence E. Harrison and Samuel P. Huntington, eds. (2000):

Yet the questioning mind that is the one that creates  innovation, and innovation is the engine of economic development.

Some Non-Covid Links

(Don Boudreaux)

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Dan Klein remembers the late Fred Foldvary.

David Henderson is less impressed than is Fred Hiatt with Washington Post columnist Catherine Rampell.

My GMU Econ colleague Larry White asks the appropriate question about proposals for better payment arrangements.

Matt Ridley explains how to rev up innovation in the United Kingdom. A slice:

One of the key elements that is required for innovation to flourish is freedom. By that I mean the freedom for trial and error, particularly the freedom to experiment, to be wrong, to fail, to start again. This freedom for entrepreneurs was a feature of 17th to 19th century Britain, not just the North East where I live, but across the UK, making it quite distinct from continental Europe (except Holland).

I believe this economic freedom is also the key to understanding China, because one of the reasons for China’s economic success is that – although not free politically – it has been free economically for entrepreneurs, at least until recently. There is an important lesson for the UK.

Nick Gillespie talks with Garry Kasparov.

“Institutions Matter, But Not as Much as Neo-institutionalists Believe” – so argues Deirdre McCloskey. A slice:

Humans of course have always innovated. But not until recently have they innovated rapidly enough to overcome Malthus. An ancient and modern contempt in many minds for the innovator, and the resulting control of innovation in most places, has radically slowed innovation. Merchants in Confucian countries were ranked below peasants, and only barely above might-soil men. No play of Shakespeare celebrates a bourgeois. Even Antonio the merchant of Venice is a right fool for love, love for the aristocratico Bassanio. And bourgeois Shylock, though he does speak in dignified blank verse, is held in a contempt usual in an England emptied of Jews until Oliver Cromwell. The contempt for the bourgeoisie (and Jews) was routine until the idea of liberalism sharply changed social attitudes, by a Bourgeois Revaluation, at first in the Dutch Republic of the 16th and 17th centuries, and then with a Dutch king and a Dutch stock market and a Dutch national debt in England, and then Scotland, and then the world.

Sheldon Richman is correct: Inflation is evil.

Samuel Kronen writes about Shelby Steele.

Philip Klein explains that Terry McAuliffe’s insistence that parents shouldn’t tell schools what to teach was not a gaffe; it’s an accurate reflection of Progressives’ mindset.

Ilya Somin remembers Anthony Downs, who died earlier this month. A slice:

Economic Theory of Democracy also includes several other major innovations, including insightful discussion of information shortcuts as a tool for overcoming voter ignorance, crucial advances in the application of the median voter theorem to analyses of electoral competition, and much else. In a single book published before he turned 27, Downs achieved far more than most scholars accomplish in a lifetime.

And he didn’t stop there. In later years, Downs turned his attention to housing and urban policy, and published influential analyses of bureaucracy, rent control, housing shortages, and traffic congestion. On the latter issue, Downs was a leading advocate of peak‐​hour congestion pricing, which (in part thanks to him) most experts now recognize as the most efficient solution to the problem of traffic jams. In 2010 he spoke at a Cato Policy Forum on traffic congestion.

Hey There, Comrade!

(Don Boudreaux)

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Here’s a letter to the Wall Street Journal:

Editor:

Most American progressives today deny that their proposals have anything to do with socialism. But these denials ring hollow. As “A Banking Regulator Who Hates Banks” (Oct. 25) makes plain, the Biden administration has fully embraced genuine, no-qualifiers-necessary, honest-to-badness socialism.

Among the roles for government desired by Comptroller of the Currency nominee Saule Omarova is that which resides at the core of all socialist and communist programs: control by the state of the allocation of capital. It is the exercise of this role that Ludwig von Mises and F.A. Hayek, in the interwar years, proved would severely impoverish the denizens of any socialist economy.

Who with even a modicum of knowledge of history doubts that such impoverishment was indeed a universal feature of every such socialist regime? And who with even a modicum of common sense supposes that America’s fate under socialism would differ?

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

Bonus Quotation of the Day…

(Don Boudreaux)

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… is from page 505 of my Mercatus Center colleague Jack Salmon’s excellent Fall 2021 Cato Journal paper, “The Impact of Public Debt on Economic Growth“:

While weaknesses in the economic literature undoubtedly exist, they do not invalidate the broadly well‐​founded conclusion drawn from the survey of 40 empirical studies – that high levels of public debt have a negative impact on economic growth.

Some Covid Links

(Don Boudreaux)

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Noah Carl patiently picks apart a recently expressed argument, in the Daily Kos, in support of Zero Covid. Here’s Carl’s conclusion:

The author then invokes the spectre of long Covid, noting that persistent symptoms “are not rare”. However, if he’d referred to the latest estimates from the ONS, he’d know that only 2–3% of patients still report symptoms after 12 weeks, and this is before you factor in widespread immunity.

Even if ‘Zero Covid’ were achievable, which it almost certainly is not, the costs of getting there would be enormous. We’d not only need a massive annual re-vaccination program, but also constant vigilance at the border, as well as large-scale testing in perpetuity.

“Whatever the price of defeating COVID-19 may be,” the Daily Kos article concludes, “it must be paid.” And that more or less sums up the case for, and against, ‘Zero Covid’. For you can’t take a proposal seriously if there’s no estimate of costs.

J.D. Tuccille, citing the work of Robert Higgs, explains that crises fuel unwarranted expansions of government power – and, thus, are today making ‘Long Lockown’ a real and frightful thing. A slice:

“Crises have always granted reformist policymakers powers to bypass legislative gridlock and entrenched interests,” Cornell University historian Nicholas Mulder gloated in March 2020. “The coronavirus crisis is already allowing the implementation of ideas that would have been considered very radical just months ago.”

That explains why we’re likely to be stuck with some elements of the expanded state apparatus and extended government powers that were allowed to metastasize during the 18-months-and-counting of the pandemic. Much of the public has lost its taste for large and expensive government, but its brief shift in sentiment allowed enough of an opening for the ratchet to click forward into a new position. And many people really have returned to their usual preference for smaller, cheaper government.

“Given a choice, half of Americans say they prefer fewer government services and lower taxes, while 19% want higher taxes and more services,” adds Gallup. “Twenty-nine percent want taxes and services as they are now.”

After a taste of lockdowns and mask mandates, the public may, by and large, want to push officialdom to the sidelines where it can do less damage. But that’s not what lawmakers and presidents have been up to during these long months of viral fears, spending, and dictates. It’s certainly not what’s in the far-reaching, multi-trillion-dollar, 2,465-page bill that’s pending in Congress.

Charles Oliver reports yet another small yet ominous incident sparked by Covid Derangement Syndrome.

Laura Dodsworth rightly fears the authoritarianism that is at the core of ‘nudge.‘ A slice:

Is it a nudge too far when someone is hurt by the nudging? How about deliberately increasing people’s sense of personal threat because they understand the risk of Covid to their own demographic, to make them more scared in order to make them comply with the lockdown rules.

Fear is a very destabilising tactic. I interviewed people who were quite undone by fear for my book A State of Fear: how the UK government weaponised fear during the Covid-19 pandemic. Some of them identified that it was specifically government messaging and advertising, the 24/7 doom-mongering in the media, the steep red lines on graphs of worst case scenarios, the use of terms like Covidiot to shame and other and encourage social conformity.

The once-liberal world is creating a new class of untouchables.

Margery Smelkinson tweets:

Students without age-appropriate immunizations in MD
2019: 62
2021: 23,000

Covid myopia mean forgoing childhood vaccines for high-risk diseases in order to “stay safe” from a virus that has very low-risk of childhood disease.

Robert Dingwall urges his fellow Brits not to succumb again to the panic that keeps the straw man threatening to pay yet another visit to that country. Here’s his conclusion:

The promoters of a moral panic selectively represent data to justify a claim to judge their fellow citizens according to their personal standards. These values never need to be justified because their virtue is self-evident. If we cannot describe the present campaign as such a panic, the concept has no meaning. The lesson for governments is that it is usually best to hold one’s nerve.

Quotation of the Day…

(Don Boudreaux)

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… is from page 35 of Adam Smith’s profound essay “The History of Astronomy,” as this essay appears in Liberty Fund’s 1982 collection of Smith’s Essays on Philosophical Subjects (a collection originally published by Cadell and Davies, in London, 1795):

Those panic terrors which sometimes seize armies in the field, or great cities, when an enemy is in the neighbourhood, and which deprive for a time the most determined of all deliberate judgments, are never excited but by the sudden apprehension of unexpected danger. Such violent consternations, which at once confound whole multitudes, benumb their understandings, and agitate their hearts, with all the agony of extravagant fear, can never be produced by any foreseen danger, how great soever. Fear, though naturally a very strong passion, never rises to such excesses, unless exasperated both by Wonder, from the uncertain nature of the danger, and by Surprise, from the suddenness of the apprehension.

DBx: This truth expressed centuries ago speaks to us today. The arrival on the scene, nearly two years ago, of Covid-19 has indeed worked to “deprive for a time the most determined of all deliberate judgments” and to “confound whole multitudes, benumb their understandings, and agitate their hearts.” And in this case the deprivation of reason and compromising of judgment was furthered by panic pornographers – many of whom hold government offices – and who continue to peddle their obscene and dangerous material to now-addicted audiences.