Russell Roberts's Blog, page 256

A Photo of Someone Who Almost Surely…

(Don Boudreaux)

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… believes in the soundness of critical race theory. (HT Roger Meiners)

Quite a Contrast

(Don Boudreaux)

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Back in 1987, a man of great intelligence, learning, and moral integrity had a short public discussion with a man quite his opposite.

Only Monopolists With Sinecures Can Get Away With Such Nonsense

(Don Boudreaux)

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Here’s a letter to the Wall Street Journal:

Editor:

You rightly support parents who resist the poisoning by K-12 public schools of schoolchildren’s minds with Critical Race Theory (“The Teachers Unions Go Woke,” July 8). But of course such resistance would be much easier and more sure in a regime of school choice. In such a regime, each school’s funding would depend exclusively on its ability to attract parents.

No lawsuit or political campaign can be as effective as would genuine competition among schools at obliging teachers actually to teach rather than to indoctrinate.

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

…..

My favorite of all the things that I’ve ever written remains this 2011 piece in the Wall Street Journal comparing K-12 schools to supermarkets. If the provision of groceries were run as is the provision of K-12 education, the decision of which particular groceries customers would ‘purchase’ would be made, not by consumers, but by supermarket-workers’ unions and store management. Everyone would be forced to pay for what is ‘offered’ – and, if one dared to object to the particular offerings, suffer being accused of “politicizing” the provision of groceries.

Some Non-Covid Links

(Don Boudreaux)

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George Will rightly applauds the recent U.S. Supreme Court decision upholding the right of privacy of donors to non-profit organizations. Here’s his conclusion:

Like most fads among political fanatics, today’s cancel culture will recede. Its most lasting effect might be the court’s acknowledgment of it in a precedent that strengthens protections for free political speech. Such speech is never without opponents, who today include most congressional Democrats, with their itch to regulate everything, and their Schumeresque desire to use anti-privacy disclosure regulations to deter speech that displeases them.

Arnold Kling’s review of Andrey Mir’s book Postjournalism prompted me to order that book. A slice:

Mir sees the contemporary online subscription as in large part a donation. The subscriber is supporting a cause. Mir calls this “donscription,” short for donation/subscription.

Subscribing to a preferred media source is like supporting your favorite sports team or the college from which you graduated. Donscribers are not really interested in acquiring information. They want to raise the status of their preferred narrative. “Asking for subscription as donation causes the media to politicize, radicalize and polarize agendas, contributing to general discord in society.”

“The never-released Trump administration report is a reminder that ‘national security’ is usually a bogus reason to impose tariffs” – so reports Eric Boehm. A slice:

Once you’ve established that national security means protecting favored domestic industries, all manner of outright protectionism is allowed via Section 232 of the Trade Expansion Act of 1962—a flawed law that gives the president broad, unilateral power to impose tariffs on national security grounds.

Jessica Melugin warns of the dangers of antitrust. A slice:

Antitrust intervention suffers from the same problems classical liberal economists have long observed with other government interventions in markets. This includes the “knowledge problem.” Regulators do not have better information than market signals provide.

My intrepid Mercatus Center colleague Veronique de Rugy decries just how far we Americans have strayed in our ideals from those of America’s founding generation. A slice:

But no actions have been more detrimental to the ideals of the Declaration of Independence than the states enforcing slavery, “black codes,” Jim Crow laws, and other discriminatory rules on minorities while the courts—including the Supreme Court—shut their eyes to the rights violations. This was compounded by the counterproductive war on drugs, with its militarization of the police and a justice system that destroys the lives of thousands of Americans every year, simply because they consume and trade a substance the government disapproves of.

And writing in the Wall Street Journal, Joseph Epstein decries woke culture – a ‘culture’ rooted in ignorance and pregnant with awful tyranny. A slice:

Although the culture war would appear to be over, to surrender to the dreariness of woke culture—which tramples on art, is without intellectual authority, allows no humor, and is vindictive toward those who oppose it—is unthinkable.

George Leef’s proposal makes great good sense: Hold individual colleges officials responsible whenever they violate people’s rights.

David Henderson loves Scott Johnston’s 2019 novel, Campusland.

Joakim Book warns of the tyranny inherent in hubris – hubris that is today in high supply. Here’s his conclusion:

All specific controversies are downstream of a much broader, Smithian and Hayekian problem: the belief that somebody, somewhere, knows better how to arrange the pieces of humanity’s chessboard. You don’t. Believing so is the mind of a tyrant, but somehow we celebrate them for their brilliance and think them enlightened when they propose to centrally plan our lives and our economies.

Quotation of the Day…

(Don Boudreaux)

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… is from page xi of the 2008 third edition of James W. Ely’s important book The Guardian of Every Other Right: A Constitutional History of Property Rights:

Defense of economic rights figured prominently during the American Revolution and at the Constitutional Convention of 1787. The founding generation stressed the significance of property ownership as a safeguard for political liberty against arbitrary government as well as the economic utility of private property.

Natural and Artificial Inducements to the Acquisition of Skills

(Don Boudreaux)

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Here’s a letter to Deirdre McCloskey, who e-mailed me this morning:

Dear Deirdre:

I’m delighted that you like the point I make in my post on the applicability to a high-wage country, such as America, of the Stolper-Samuelson theorem. This point does seem to be both valid and important: Changes in relative wages caused by a freeing of trade induce many low-skilled workers who are said to ‘lose’ as a result of free trade to acquire more skills. These higher skills enable these workers to join the ranks of workers who are said to ‘win’ as a result of free trade.

You then interestingly ask if my point unintentionally supplies ammunition to proponents of minimum wages: “Poor workers, when the minimum wage is raised above these workers’ current wages, will have more incentive to make themselves worth the higher minimum wage, eh?”

You’re correct, of course, that many workers will be induced by a hike in the minimum wage to acquire more skills than otherwise. (This effect, by the way, will be offset at least somewhat by the minimum-wage-induced reduction in entry-level jobs – jobs that for many workers are a major source of skill acquisition.) But – and I’m sure you agree – not all inducements to skill acquisition are economically justified. Inducements naturally generated by market forces warrant a presumption of ‘efficiency’; inducements artificially created by government interventions do not.

Free trade encourages a pattern of skill acquisition that is as consistent as is practically possible with resource scarcities and with consumer and worker preferences. Not so, I think, with the skill acquisition induced by a minimum-wage hike. Any skill acquisition induced by a minimum-wage hike will be super-optimal both in quantity and timing.

But even if this last point is incorrect, free trade differs from minimum wages in a more fundamental way. With free trade, each low-skilled worker who either won’t or can’t acquire higher skills in response to the rise in wages of high-skilled workers will nevertheless find employment as long as she is free to accept wages low enough to make her profitable to employ. In stark contrast, with a minimum wage in place, a low-skilled worker who either won’t or can’t acquire higher skills will find herself unemployed because she is not free to accept wages low enough to make her profitable to employ.

Of course, you better than I know all of the above. I write it out chiefly to polish and solidify my own understanding of the matter.

Thanks! I trust that mid-summer is treating you well and that we’ll soon again be able to get you back out in person for a visit to GMU Econ and Mercatus.

Sincerely,
Don

Return(s) to Stolper-Samuelson

(Don Boudreaux)

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In the Comments section of David Henderson’s July 4th, 2021, EconLog post titled “Two Objections to Free Trade,” commenter “Frank” argues that the Stolper-Samuelson theorem shows that free trade can indeed create losers of the sort that free-trade proponents typically overlook. Specifically, according to Stolper-Samuelson, it’s theoretically possible for a freeing of trade between a high-wage country and a low-wage country to reduce in the high-wage country the wages of its low-skilled workers both relative to the wages of its high-skilled workers and absolutely.

Stolper-Samuelson is familiar to all competently trained economists. But what is also familiar – or should be – to all competently trained economists is the fact that the conditions required in reality for this outcome of Stolper-Samuelson to materialize are highly unlikely. As Paul Samuelson himself conceded in his famous textbook (quoted in the last column here), “Although admitting this as a slight theoretical possibility, most economists are still inclined to think that its grain of truth is outweighed by other, more realistic considerations.”

Among these more realistic considerations is the fact that workers’ skill levels are neither exogenous nor fixed. That is, the existing pattern of workers’ skill levels is largely due to the prevailing returns to different people of acquiring particular skills, and this pattern changes as economic conditions change.

Almost no human being is destined from birth to be a low-skilled worker, a middle-skilled worker, or a high-skilled workers. The skill level that a worker obtains, while obviously determined to some degree by that person’s preferences and ‘natural’ abilities, is determined also by the expected net returns to him or her of pursuing the acquisition of one set of particular skills relative to the expected net returns to him or her of pursuing the acquisition of some other particular skills.

If America has, compared to China, an abundance of high-skilled labor relative to low-skilled labor, this reality reflects the relatively high net expected returns to workers in America of acquiring high skills. Economic forces are at work also in China. There, the net expected returns to workers of acquiring high skills is not sufficiently high to induce in China so many workers to become high skilled to result in that country having, compared to America, an abundance of high-skilled labor relative to low-skilled labor.

Recognizing that each worker’s skill level – and, hence, the prevailing pattern of skills in a country – is heavily determined by the net returns workers expect from acquiring different skills, it’s too simplistic to conclude that a freeing of trade between a high-wage country and a low-wage country will in the long-run harm low-skilled workers in the high-wage country. The resulting relative rise in (say) America of the wages of high-skilled workers will induce more American workers than otherwise to acquire higher skills. Some American workers who, had trade not been made freer, would have remained as low-skilled workers, instead become high-skilled workers. And “some” might in reality be “many.” Indeed, the larger is the initial Stolper-Samuelson effect, the more strongly are workers in America induced to acquire higher skills.

There are, I believe, other problems with using Stolper-Samuelson to analyze trade policy, but I leave those for perhaps another post at another time.

Quotation of the Day…

(Don Boudreaux)

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… is from page 274 of my Mercatus Center colleague Adam Thierer’s excellent 2020 book, Evasive Entrepreneurs (footnote deleted):

Rational optimists must make the case for technological change again and again because, as history has illustrated, tech critics are relentless in pushing for whatever their preferred status quo may be at any given point in time. Despite the overwhelming empirical evidence that innovation has driven remarkable improvements in human well-being, most critics and many average citizens, for whatever reason, either ignore that evidence or simply refuse to believe it.

Bonus Quotation of the Day…

(Don Boudreaux)

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… is from pages 125-126 of Thomas Sowell’s 2018 book Discrimination and Disparities (footnote deleted):

If longevity and universality are criteria, then slavery must be among the leading candidates for the most appalling of all human institutions, for it existed on every inhabited continent for thousands of years, as far back as the history of the human species goes. Yet its full scope is often grossly underestimated today, when slavery is so often discussed as if it were confined to one race enslaving another race, when in fact slavery existed virtually wherever it was feasible for some human beings to enslave other human beings – including in many, if not in most, cases people of their own race.

Antitrust and Innovation

(Don Boudreaux)

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As today, economists and legal scholars thirty years ago were focused on the role of antitrust in the high-tech economy. But economists and legal scholars thirty years ago were, compared to too many of their counterparts today, far better informed about history, about the nature of government regulation (including, specifically, about antitrust), and about sound economics.

In a 1993 issue of Public Choice I reviewed an important 1992 volume on antitrust and innovation. This book should be dusted off and read today.

I paste the full text of my review beneath the fold (links added).

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