Russell Roberts's Blog, page 26

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(Don Boudreaux)

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There is much wisdom in this essay by Tyler Syck. A slice:

The greatest tool required for the path toward virtue is a free society, one in which humans are capable of making moral judgments on their own. This is because all knowledge requires some form of experimentation—whether positivistic or dialectical. In short, we can only learn if people are free to try out different moral frameworks and witness the world in its unfiltered, largely unregulated, form. Of course, this means that people will make mistakes. In truth, a large portion of the population will fail to behave in a way that is morally righteous. This is the price of a free society and, for all its faults, a free society is the price of virtue.

George Will reports on yet another instance in the U.S. of the banana-republic practice of civil asset forfeiture. A slice:

Minnesota governments began doing this under a Depression-era (1936) delinquent-property-tax-forfeiture statute enacted when governments were, even more than usual, ravenous for revenue. As Tyler’s lawyers note, between 2014 and 2021 at least 1,350 Minnesotans lost their homes and equity averaging $155,000 per home. This is many times the average tax liability. Nebraska took a $1 million farm after a widow missed an $8,276 tax bill when she was moved to a retirement home. Such predatory forfeiture is done by a dozen states and the District of Columbia, which took a $200,000 home from a man with dementia and a $133 tax debt. (Michigan has mostly mended its ways since a county pocketed $24,500 from the sale of an octogenarian’s home seized because of his $8.41 tax underpayment, and a court frowned on government’s unbounded power to confiscate.)

Centuries of Anglo-American legal tradition, common law and Minnesota law recognize home equity as private property. The Supreme Court has noted that Magna Carta (1215) stipulated that tax collectors could seize property to acquire only the value of the tax bill. The court has held that the Fifth Amendment’s guarantee that property shall not be taken for public use without “just compensation” makes no “distinction between different types” of property, and that this takings clause protects “every sort of interest the citizen may possess” in a “physical thing.” And prior to Minnesota’s enactment of the 1936 law, the state’s Supreme Court held that after the state’s lien is satisfied, “any surplus realized from the sale must revert to the owner.”

The county tormenting Tyler says Minnesota law “recognizes no property interest in surplus proceeds.” So, her property right is extinguished by nonrecognition? Worse, the Kafkaesque county says she has no compensable property interest because the county took her property. This is legal reasoning worthy of the Ring Lardner character: Shut up, he explained.

Tunku Varadarajan remembers John Raisian. A slice:

In a conversation in 1990, Raisian asked Milton Friedman what ideas best characterized Hoover. “Freedom, freedom, freedom,” said the economist, then a senior fellow there. Raisian had just been appointed director and had sought guidance from Friedman, a sort of presiding deity at Hoover. Inspired by his words, Raisian coined a motto for the think tank, “Ideas Defining a Free Society,” and began his stewardship of an institution that became a byword for the promotion of individual liberty. One of his first initiatives was to throw open the doors to scholars and citizens from Eastern Europe—suddenly free after decades under the Soviet yoke—so they could learn the tenets of Western classical liberalism at Hoover.

Desmond Lachman explains that “the US dollar’s imminent death is greatly exaggerated.”

Pierre Lemieux reflects on the 20th century. A slice:

A related hypothesis—the counterfactual hypothesis—is that economic growth would have been more rapid without state intervention. Economists John Dawson and John Seater argued that the American GDP per capita would be more than three times its current level if federal regulation had remained at its 1949 level. Even per capita, a growth rate of 1.8% is not that fantastic. The counterfactual hypothesis has some historical support: it is certainly not the most regulated countries that spearheaded the Industrial Revolution—the United Kingdom and the Low Countries, rapidly joined by the United States. A mere counterfactual would not be sufficient to explain the strange mixture that the 20th century was, but we do have theories strongly suggesting that state dirigisme hinders prosperity, which is a natural consequence of the efforts of free individuals to improve their situations.

Kate Wand talks with George Selgin about cryptocurrencies, fractional-reserve banking, and other monetary matters.

My intrepid Mercatus Center colleague, Veronique de Rugy, continues to make a strong case for the abundance agenda.

The New York Times reports on the dystopian control over science exercised by the thuggish Chinese state.

Jay Bhattacharya tweets:

It’s oddly fitting that the people who spend much of their time decrying ‘misinformation’ are themselves unaware of the misinformation they spread.

Quotation of the Day…

(Don Boudreaux)

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… is from page 406 of the late, great UCLA economists Armen Alchian’s and William R. Allen’s Universal Economics (2018; Jerry L. Jordan, ed.); this volume is an updated version of Alchian’s and Allen’s magnificent and pioneering earlier textbook, University Economics:

Almost every socially benign advance in technology or production has harmed someone. The development of electricity harmed the whaling industry, which provided oil for lamps. The telegraph harmed the Pony Express owners and riders, but the worth of the benefits to the public far exceeded those costs. Supermarkets forced most small retailers to switch to employment as managers or clerks in big stores, and the public benefited by lower prices and more convenience. Electric refrigerators displaced ice deliverymen. The zipper hurt button producers. The automobile, radio, television, and computers all displaced producers of other goods and services, but the public at large gained.

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(Don Boudreaux)

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Juliette Sellgren talks with Scott Lincicome about the new American worker.

Mike Munger explains the challenge for classical liberals in the academy. A slice:

The first is the great success of liberal institutions in creating prosperity. Dierdre McCloskey has rightly called this period of about two-and-a-half centuries, which is frankly unprecedented in human history, the “great enrichment.” But this success has made the proponents of classical liberalism complacent, even lazy. We did not anticipate that the astonishing burgeoning of prosperity would cause, in dialectical inevitability, a backlash against inequality. We have abdicated our essential role of explaining the moral case for capitalism and spontaneous, decentralized institutions, and the political left has rushed in to take advantage of the vacuum.

Also writing about the illiberalism that is today overtaking the academy is Scott Sumner.

Eric Boehm applauds the GOP’s effort to restore spending caps.

Ben Zycher describes Earth Day 2023 as “utterly bereft of ideas.” A slice:

And one would be wrong. The basic imperatives of the Earth Day environmental left are eternal, immutable, unchanging, impervious to evidence, and utterly mindless. “Ensure that students across the world benefit from high-quality education to develop into informed and engaged environmental stewards.” Translation: Propagandize the young, Komsomol-style. “Sign the petition for a global plastics treaty.” Over three-quarters of ocean plastic pollution is discharged from rivers in Asia and other less-developed regions. (Your plastic straw is irrelevant.) Needless to say, the Earth Day proponents have not bothered to tell us how those governments can be induced to make the attendant massive changes; bribing them will not work because the western governments will prove curiously parsimonious, as the travails of the Green Climate Fund (part of the thunderously-applauded Paris Agreement) make clear.

Joel Kotkin decries “the inhumanity of the green agenda.” A slice:

In Enemies of Progress, author Austin Williams suggests that ‘the mantra of sustainability’ starts with the assumption that humanity is ‘the biggest problem of the planet’, rather than the ‘creators of a better future’. Indeed, many climate scientists and green activists see having fewer people on the planet as a key priority. Their programme calls not only for fewer people and fewer families, but also for lower consumption among the masses. They expect us to live in ever smaller dwelling units, to have less mobility, and to endure more costly home heating and air-conditioning. These priorities are reflected in a regulatory bureaucracy that, if it does not claim justification from God, acts as the right hand of Gaia and of sanctified science.

J.D. Tuccille reports how the “U.S. government borrows Russian tactic to muzzle pro-Russian critics.”

Jay Bhattacharya tweets:

Pfizer paid medical societies, including the American Academy of Pediatrics, millions of dollars throughout the pandemic. Entirely coincidentally I’m sure, these groups lobbied for mandating the covid vaccines, which made Pfizer billions of dollars.

On Brooke Group, Ltd. v. Brown & Williamson Tobacco Corp. (U.S. Supreme Court, 1993)

(Don Boudreaux)

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I just discovered that Ken Elzinga’s, David Mills’s, and my 1995 Supreme Court Economic Review paper, “The Supreme Court’s Predation Odyssey: From Fruit Pies to Cigarettes,” is available at JSTOR. (I post it here in my effort to archive at Cafe Hayek as many as possible of my writings.)

The abstract:

Brooke Group, Ltd. v Brown & Williamson Tobacco Corp. – the Supreme Court’s first predatory pricing decision under the Robinson-Patman Act since Utah Pie in 1967 – makes clear the Court’s heightened skepticism toward claims of predatory pricing. Under Brooke, plaintiffs must show not only that a defendant had a genuine possibility of bankrupting or disciplining its prey, but also that the defendant had a strong prospect of recouping its predatory losses. While applauding the Court’s decision, the authors question the Court’s refusal to accept a rule of per se legality to govern price cutting by members of noncollusive oligopolies. For reasons the Court itself spelled out, price cutting by members of noncollusive oligopolies is so unlikely a means of successful monopolization that such pricing behavior ought to be governed by a rule of per se legality.

Quotation of the Day…

(Don Boudreaux)

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… is from pages 13-14 of William Gladstone’s January 1890 contribution to a debate, with James G. Blaine of Maine, on free trade versus protectionism; these remarks are published in volume CCCXCVIII of the North American Review:

If the proper object for the legislator is to keep and employ in his country the greatest possible amount of capital, then the British Parliament (exempli gratiâ) ought to protect not only wheat but pineapples. A pineapple is now sold in London for eight shillings sixpence, which, before we imported that majestic fruit from the tropics, would have sold for two pounds. Why not protect the grower of pineapples at two pounds by a duty of 400 per cent.? Do not tell me that this is ridiculous. It is ridiculous upon my principles; but upon your principles it is allowable, it is wise, it is obligatory – as wise, shall I say? as it is to protect cotton fabrics by a duty of 50 per cent. No ; not as wise only, but even more wise, and therefore even more obligatory. Because according to this argument we ought to aim at the production within our own limits of those commodities which require the largest expenditure of capital and labor to rear them, in proportion to the quantity produced ; and no commodity could more amply fulfil this condition.

If protection be, as its champions (or victims) hold, in itself an economical good, then it holds in the sphere of production the same place as belongs to truth in the sphere of philosophy, or to virtue in the sphere of morals. In this case, you cannot have too much of it; so that, while mere protection is economical good in embryo, such good finds its full development only in the prohibition of foreign trade. I do not think the argument would be unfair. It really is the logical corollary of all your utterances on the high wages which (as you believe) protection gives in America, and on the low wages which (as you believe) our free trade, now impartially applied all round, inflicts upon England. But I refrain from pressing the point, because I do not wish to be responsible for urging an argument which tends to drive the sincere Protectionist deeper and deeper into, not the mud, but (what we should call) the mire.

DBx: Indeed so.

Protectionism is the intellectual equivalent of flat-earthism and the ethical equivalent of a doctrine that not only approves of, but celebrates, theft.

Bonus Quotation of the Day…

(Don Boudreaux)

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… is from page 17 of the late Ronald Max Hartwell’s 1983 paper “The Origins of Capitalism: A Methodological Essay,” which is chapter 2 of the excellent 1983 collection, edited by the late Steve Pejovich, Philosophical and Economic Foundations of Capitalism:

It was the gradual freeing of man’s entrepreneurial talents from the bonds of custom and command that finally resulted in the remarkable economic growth of the industrial revolution.

DBx: Yes.

Proponents of industrial policy wish to imprison human beings’ entrepreneurial talents behind the iron bars of government-imposed economic ‘plans.’ While Oren Cass and other advocates of industrial policy insist that they are promoting a good higher than ‘mere’ economic growth (as if longer, healthier, and culturally richer lives are ‘mere’), they nevertheless don’t admit – or, worse, they do not see – that their schemes are inconsistent with genuine innovation.

If genuine innovation is allowed, it necessarily turns plans that today appear excellent into plans that tomorrow must be ditched and replaced even if the goals of the original plan are to continue to be pursued. Plans are designs that muster particular means in particular ways in the hope of achieving particular ends. Because innovation will disrupt the means available for carrying out the plan (not to mention also likely presenting new ends that warrant consideration), industrial policy – if it is to be seriously pursued – must stamp out innovation.

But if industrial-policy proponents, understandably embarrassed of being correctly accused of wishing to stamp out innovation, proclaim their openness to innovation, it’s then necessary to probe just how they intend to accommodate innovation. The only possible answer is that they will allow the introduction only of those innovations that they (think they) can figure out how to fit into their industrial-policy plans. Yet not only will this approach dampen the incentive to innovate – so innovations will be fewer – the industrial-policy shamans will also have to try to predict future innovations if their plans aren’t to quickly fall apart. Such prediction, however, is impossible. (If you deny that such prediction is impossible – that is, if you believe that such prediction is possible – then prove your case by predicting even some of the innovations that will occur, say, within the next 12 months. If you can do so, you can then easily use your god-like knowledge to become by far the world’s richest person in one-year’s time. If you’re not the richest person on April 23, 2024, then please reassess your understanding of innovation – or your understanding of the human mind.) The practical result of any such scheme would be that ‘the plan’ soon is abandoned in favor of the practice of government officials deciding, almost on a daily basis, not only which innovations to allow and which to suppress, but also how to change – again, almost on a daily basis – the allocation of resources so that the hoped-for results materialize.

In short, industrial policy is as compatible with innovation as a seder dinner is with a spiral ham.

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Many are the people who’ve observed that environmentalism is more a religious than a scientific phenomenon. For evidence of the accuracy of this observation, see this call, in Time, to make Earth Day a religious holiday. (HT: Phil Magness who, on his Facebook page, comments “Yes, please do this. I want the ability to invoke the 1st amendment’s establishment clause as a basis for noncompliance with any and all of the enviro-fanatic religion’s regulatory edicts.”)

Writing sensibly about “Earth Day” is Gary Galles.

Peter Suderman writes:

How To Blow Up a Pipeline is an effective film in more ways than one. Not only is it a tense, terse, small-budget heist-style thriller, more indebted to Reservoir Dogs than An Inconvenient Truth, it’s also a subtle—if entirely unintended—indictment of the climate movement’s violent fringe activists.

Talking with Aaron Ross Powell, Deirdre McCloskey explains that religion and liberalism are compatible with each other.

David Henderson applauds states that ease teenagers’ ability to work.

I almost never disagree with my long-time friend and GMU colleague Todd Zywicki, but – while conceding this issue’s exceptional difficulty – I here side with Kent Lassman.

Vivek Ramaswamy decries how “politicians steer trillions of public funds via ESG.”

Michael P Senger tweets: (HT Jay Bhattacharya)

Honestly, for the last three years the entire COVID discussion has just been lockdown supporters doing every mental gymnastic imaginable to keep from admitting to themselves that they supported totalitarianism. It’s more like psychotherapy than science.

Quotation of the Day…

(Don Boudreaux)

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… is from page ix of David Schmidtz’s hot-off-the-press 2023 book, Living Together (original emphasis):

But behavioral economics at its worst licenses the very hubris that it flatters itself for debunking. Having observed that people overestimate their competence as decision-makers, nudgers (Adam Smith called them “men of system”) decide to run other people’s lives, imagining they’ll be better at that than their theory predicts they’d be at running their own.

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(Don Boudreaux)

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The Wall Street Journal‘s Editorial Board decries the Biden administration’s unjust and hazardous policy of imposing fees on mortgage borrowers with good credit in order to subsidize mortgage borrowers with bad credit. Two slices:

Under the rule, which goes into effect May 1, home buyers with a good credit score over 680 will pay about $40 more each month on a $400,000 loan, and upward depending on the size of the loan. Those who make down payments of 20% on their homes will pay the highest fees. Those payments will then be used to subsidize higher-risk borrowers though lower fees.

Under the rule, which goes into effect May 1, home buyers with a good credit score over 680 will pay about $40 more each month on a $400,000 loan, and upward depending on the size of the loan. Those who make down payments of 20% on their homes will pay the highest fees. Those payments will then be used to subsidize higher-risk borrowers though lower fees.

Federal Housing Finance Agency (FHFA) director Sandra Thompson says the rule will “increase pricing support for purchase borrowers limited by income or by wealth.” The Biden Administration may want more homeownership, but selling people houses they can’t afford has never been a good idea. See the subprime loan collapse of 2008.

…..

The biggest problem here is fairness. Taxpayers already subsidize mortgages for low-income borrowers through the Federal Housing Administration. Now they want to punish those who have maintained good credit while rewarding those who haven’t. In the name of making housing more equal, they are pursuing an inequitable policy.

George Will writes with wisdom about the Fox News settlement. A slice:

First, pecuniary motives led Fox News to pander to Trump adorers who, furious that on election night the channel had correctly called Arizona for Joe Biden, were fleeing like lemmings to Newsmax, an unwavering defender of the indefensible. ([Tucker] Carlson to his producer: “We’re playing with fire, for real. With Trump behind it, an alternative like Newsmax could be devastating to us.”)

Second, when not toadying to Trump, some Fox News personnel were saying, in effect, that they wished that he, like the Wicked Witch of the West, would melt away. (Carlson: “I hate him passionately … He could easily destroy us if we play it wrong.”)

Fox News’s anticipated defense in a trial was to be: We were just neutrally reporting, not endorsing, newsworthy accusations of vast election fraud, accusations made by public figures. So, imagine the faces of the lawyers for Rupert Murdoch, chair of Fox Corp., when during a sworn deposition he said (as reported by the Wall Street Journal, a Murdoch property) that some of Fox News’s on-air personnel “endorsed” charges that the election had been stolen.

Fraser Myers reports on “the great blue-tick hissy fit.”

David Brooks applauds the robustness of American capitalism. A slice:

American companies continue to generate amazing value. If in 1990 you had invested $100 in the S&P 500, an index of American companies, you would have about $2,300 today, according to The Economist. If you had invested that $100 in an index of non-American rich-world stocks, you would have about $510 today.

Of course, China has risen to superpower status during these years. But that hasn’t eclipsed American prominence. In 1990, the U.S. economy accounted for about 25 percent of global G.D.P. In 2022 it still accounted for roughly 25 percent, The Economist found.

The mighty rolling river sweeps up new generations. The millennial and Gen Z generations are practically defined by a story of economic hardship. Many people believe that the coming generations will not enjoy the same living standards as their parents

It may have been possible to accurately tell that story in the wake of the financial crisis, but as Jean Twenge shows in a new piece for The Atlantic, it’s not possible to accurately tell that story today. She writes, “By 2019 households headed by millennials were making considerably more money than those headed by the Silent Generation, baby boomers and Generation X at the same age, after adjusting for inflation.”

Millennials, according to the Census Bureau, had household incomes $9,000 higher than Gen X households and $10,000 higher than boomer households at the same age, in 2019 dollars.

Here’s David Henderson on Hayek on “You didn’t build that.”

Reason recycles five decades of analyses of the environment and environmental fears.

Eric Boehm reports what shouldn’t be, but what to many people nevertheless is, surprising: “Biden’s student loan pause overwhelmingly benefited wealthier Americans.”

Quotation of the Day…

(Don Boudreaux)

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… is from page 49 of the Text Creation Partnership’s on-line edition of David Hume’s 1751 Enquiry Concerning the Principles of Morals:

[A] Rule, which, in Speculation, may seem the most advantageous to Society, may yet be found, in Practice, totally pernicious and destructive.