Russell Roberts's Blog, page 298

Bonus Quotation of the Day…

(Don Boudreaux)

Tweet

… is from page 558 of the final (2016) volume – Bourgeois Equality – of Deirdre McCloskey’s soaring trilogy on the essence of bourgeois values, on their transmission, and on their essential role in modern life:

True, trading tends to be prudent, and on that count, if not on all counts, tends to be radically egalitarian in the matter of whom one deals with. A beggar’s dollar commands as much bread as a millionaire’s. In contrast to allocation by beauty or social class or party membership or racial preference or bureaucratic edict, the baker doesn’t care to whom he sells the loaf.

Scaring Us Into the Grip of Tyrants

(Don Boudreaux)

Tweet

Here’s a letter to the Wall Street Journal:

Editor:

I wish that I didn’t share Daniel Henninger’s pessimism about the course of American politics (“Biden Abandons Normalcy,” March 18). But all that he writes rings regrettably true.

As Mr. Henninger accurately observes, today’s progressives repeatedly prophesy existential “crises” to cow the populace into compliance with their illiberal, centralizing schemes. That the public is now so easily cowed by such fear-mongering is doubly depressing.

The sadly forgotten 16th-century French classical liberal Étienne de La Boétie put his finger on the problem – a problem that we Americans once prided ourselves for having escaped but which now seems to have us firmly in its gruesome grip:

It is pitiful to review the list of devices that early despots used to establish their tyranny; to discover how many little tricks they employed, always finding the populace conveniently gullible, readily caught in the net as soon as it was spread.*

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

* Étienne de La Boétie, The Politics of Obedience: The Discourse of Voluntary Servitude (Harry Kurz, trans., 1975 [originally posthumously published in 1577]), page 72.

Busting a Convenient Myth About the Labor Market

(Don Boudreaux)

Tweet

In this short Facebook post, my GMU Econ student Jon Murphy points to data that are nearly impossible to square with the claim that employers of low-skilled workers in America enjoy monopsony power. The inconsistency of the fact with the monopsony-power claim is important for policy. The reason is that the existence of monopsony power is a necessary condition (although not a sufficient condition) for minimum wages, mandated paid leave, and other such labor-market interventions to help all affected workers without harming any of them.

Here’s Jon’s full post:

Are minimum wage employers exploiting workers? If they are, they’re terrible at it.

According the the Bureau of Labor Statistics, the Quit Rate for minimum wage-type jobs (leisure and hospitality, retail sales, etc) runs significantly higher than the Quit Rate for average private employment. Indeed, at no point in the 20 years for which we have data (Dec 2000 was the first year collected) were private quits higher than minimum-wage quits.

This data isn’t too surprising; minimum wage advocates will sometimes point to high turnover rates and claim that a minimum wage could be an efficiency wage, thus decreasing turnover.* But high turnover rates indicate employers have little (in fact, no) exploitative power. It’s hard to exploit workers if they quit.

Additionally, these data undermine the “monopsony” argument for minimum wage. They suggest that minimum wage workers are more mobile than the model requires. What’s more, when we see that minimum wage workers do not stay at a minimum wage for long, it suggests that minimum wage employers do indeed face competition for workers: higher-skilled employers!

All data come from the JOLTS survey.

*There are arguments against the minimum wage as an efficiency wage thesis, but they are not relevant here.

Pop Quiz: Read Daniel Kuehn’s response to Jon’s point and identify the main flaw. (It’s an easy quiz to ace.)

Stop the Cartoonish Justifications for Lockdowns and Mask Mandates

(Don Boudreaux)

Tweet

In my latest column for AIER, I do my best to explain why pointing to the transmissibility of the coronavirus and shouting “externality!” or “non-aggression principle!” is insufficient to justify lockdowns, mask mandates, and other restrictions imposed for the purpose of fighting Covid-19. Here are two slices:

The law, however, often takes effects such as these into account in ways that economists miss. The most important of these ways lies in the specific manner in which the law creates – and refuses to create – property rights. The resulting, detailed pattern of property rights is important.

In Anglo-American law, a person is entitled to compensation only if he or she transferred title to valuable property with no intention of giving a gift, or suffered the loss of some property interest as a result of the actions of someone who violated his or her property rights. Therefore, the mere fact that Sarah’s action improves Silas’s well-being is insufficient to create an obligation that someone pay Sarah for her ‘positive’ action. Likewise, the mere fact that Silas suffers some harm from Steve’s construction activities is insufficient to justify imposing a tax on Steve for his noisy construction activities.

The law refuses to impose obligations in circumstances such as these because the law recognizes a feature of reality to which economists are often blind. While both economics and law understand that people, being gregarious creatures, are forever having impacts on strangers, the law – unlike the all-too-common careless economist – recognizes that people often repeatedly interact with each other through time in ways that cause the costs and benefits of “external” effects to tend to balance out for each person.

The law, in effect, recognizes that costs that Silas suffers today from Steve’s noisy construction on Sarah’s home are offset by other benefits that Silas will enjoy tomorrow, such as his own ability to emit noise that will annoy Sarah if and when he, Silas, chooses to renovate his home.

In other words, where careless economists see “externalities” – and, hence, “market failure” – the law often sees parties compensating each other in the form of in-kind activities. Silas is compensated to endure the construction noise from Sarah’s house with his own right to inflict such noise on Sarah if and when he has construction done on his house.

The law recognizes another feature of this in-kind compensation that takes place over time: such compensation is embedded in community members’ reasonable expectations. If Sarah confines construction on her home to the daylight hours, the law recognizes no right of Silas to be free of such noise. Silas is correctly treated as if he should expect to suffer such noise during the daylight hours. Likewise, Sarah and home-remodeler Steve are treated as if they should expect to be able to inflict such noise on nearby homeowners during the daylight hours.

Matters differ for the nighttime. If noise from Steve’s midnight hammering keeps Silas awake, the law will back Silas’s quest to prevent Steve from doing such hammering. People reasonably expect that their neighbors will not emit loud noises at night.

People’s reasonable expectations give rise to property rights. No property right of Silas is violated by Steve’s loud hammering at noontime; a very real property right of Silas is violated by Steve’s loud hammering at midnight.

This distinction should be, but frequently isn’t, recognized by economists. What this distinction means is that a genuine externality exists only when there is a violation of someone’s property rights. If you walk within eye-shot of me wearing a polka-dotted shirt, any discomfort that I might experience because I dislike polka dots is not an externality, even if I can objectively prove that my anguish at the sight of your shirt is intense. Because you have a right to wear polka-dotted shirts in public, and because I should reasonably expect to encounter people from time to time wearing polka-dotted clothing, you have not harmed me in any legal, economic, or ethical way.

Put differently, despite my aversion to polka dots, your wearing a polka-dotted shirt in public does not violate what libertarians call “the non-aggression principle.” (The non-aggression principle says that individuals should be free to do whatever they choose as long as they don’t aggress against non-aggressive others.) The fact that the law protects only property interests from third-party effects means that one cannot immediately go from “Sarah’s actions negatively affect third-party Silas!” to the conclusion that “Therefore, Silas has the ethical right, and should also have the legal right, to use coercion, if necessary, to prevent Sarah from negatively affecting him!”

…..

But not only did knowledgeable people learn early on that the severity of SARS-CoV-2 hardly rises to a level justifying such a major change in law and ethics, there was never as much as recognition of the longstanding rule that no one’s property interests are violated by the breathing of other people going about their normal lives. All of a sudden, starting one year ago, the hysterical fear of Covid – and the irresponsible stoking of this fear by politicians and the media – caused people simply to forget that no one has an enforceable right to be free of air breathed-out by others.

Pro-lockdown economists faux scientifically chant “Reduce externalities!” Libertarians with a weak commitment to liberty self-righteously claim to be the true upholders of liberty by repeating nonstop “We must honor the non-aggression principle!” But neither these economists nor these libertarians take the time to consider the complex real-world details from which individuals’ rights emerge and in which these rights are rooted and defined.

In free societies, Sarah’s potential negative impact on the welfare of third-party Silas has never been held to be a sufficient reason to coercively prevent Sarah from acting in ways that are thought to give rise to that negative impact. Any such rule would have ground society to a halt the moment it was adopted.

Unfortunately, such a rule was adopted – or, actually, imposed with jackboots – in 2020. I fear that this destructive rule will remain with us for a long time.

Martin Kulldorff and Jay Bhattacharya Decry the Abuse and Resulting Demise of Science

(Don Boudreaux)

Tweet

Professors Martin Kulldorff and Jay Bhattacharya, writing today at The Federalist, rightly decry the misunderstanding and misuse of science over this past year, and they defend five heroic scientists who refused to join the mob. Some slices:

The COVID-19 pandemic and lockdowns have not only been devastating for society, they have had a chilling effect on the scientific community. For science to thrive, opposing ideas must be openly and vigorously discussed, supported, or countered based on scientific merit.

Instead, some politicians, journalists, and (alas) scientists have engaged in vicious slander of dissident scientists, spreading damaging conspiracy theories, even with open calls for censorship in place of debate. In many cases, eminent scientific voices have been effectively silenced, often with gutter tactics. People who oppose lockdowns have been accused of having blood on their hands, their university positions threatened, with many of our colleagues choosing to stay quiet rather than face the mob.

…..

What these scientists have in common is that they have been proved right. With so many COVID-19 deaths, it should now be obvious to everyone that lockdown strategies have failed to protect the old.

While anyone can get infected, there is more than a thousand-fold difference in the risk of death between the old and the young. The failure to properly exploit this fact about the virus has led to many unnecessary deaths and the biggest public health fiasco in history.

Lockdowns have generated enormous collateral damage across all ages. Depriving children of face-to-face teaching has hurt not only their education but also their physical and mental health. Other public health consequences include missed cancer screenings and treatments, worse cardiovascular disease outcomes, and deteriorating mental health, to name a few. Much of this damage will unfold over time, something we must live and die with for many years to come.

…..

How do we climb back from this toxic and damaging scientific environment? How do we ensure that science moves forward through the open discussion of multiple ideas and perspectives? How can we return to an academic climate that encourages scientific discourse and academic freedom? Given the damage done by misguided pandemic policies, how can we restore the public’s trust in public health?

The responsibility for this rests on everyone in the scientific community, but especially on scientific leaders such as university presidents, provosts, and deans, scientific journal publishers and editors, and the directors of major scientific funding agencies such as the National Institutes of Health, the National Institute of Allergy and Infectious Diseases, and the CDC. These leaders need to defend and encourage open scientific debate with multiple perspectives.

On the science, vigorous and hard scientific debate should be encouraged, but smearing, slander, politicization, and conspiracy theories that insinuate guilt by association must be combatted and never tolerated. The future of science and society depends on it. If we fail, the 300-year Age of Enlightenment will come to an end.

Some Covid Links

(Don Boudreaux)

Tweet

TANSTAFPFC (There Ain’t No Such Thing As Free Protection From Covid): Micha Gartz documents Covid Derangement Syndrome’s terrible toll on children. (DBx: But who cares? All that matters is that children don’t die of Covid-19. If they suffer from, or die of, any other ailment or misfortune – cancer, child abuse, suicide, accidents – that’s perfectly acceptable. The only suffering and deaths worth preventing or lamenting – the only suffering and deaths that matter – are suffering and deaths from/with Covid. Or so humanity, beginning one year ago, seems to have concluded.)

The UN reports that Covid-19 lockdowns killed 228,000 South Asian children under the age of five.

Dr. John Lee talks with Julia Hartley-Brewer.

I’m always honored to be a guest of Dan Proft and Amy Jacobson.

Harry Warren, a student at the University of Edinburgh, decries the Scottish government’s deranged closure of libraries. A slice:

Under the somewhat bizarre Scottish government rules, students are still permitted to study in the library if they wear masks, maintain social distancing and pre-book to allow staggered arrivals and exits. Clearly, the Scottish Government believes mitigating policies, rather than bans, are enough to prevent the spread of Covid-19. Why then, will it not allow the same logic to apply to books when they are clearly low risk?

If this policy were just a well-meaning but ineffectual public health measure the government could be forgiven. Yet, the damage being done by the policy is tangible and worsening each day that dissertation and exam deadlines approach. All students are currently barred from accessing physical copies of library books and texts. Students who can afford it have simply navigated this problem by purchasing the required texts themselves. Those who have lost jobs because of Covid or who have had to pay for accommodation themselves do not have the resources to purchase hundreds of pounds worth of texts. As a result, richer students have effectively been gifted a substantial advantage over their poorer counterparts. How can someone compete academically when they cannot physically access the resources they need?

Lucy Wyatt sensibly wonders why the U.K. government suddenly abandoned, in March 2020, its own pandemic plan. A slice:

In other words, when the pandemic struck in 2020, the UK Government entirely ignored its own advice: it had no consideration for public morale, no concern over ‘substantial’ economic or social consequences and made no attempt to promote countermeasures such as antivirals. Yet it could hardly claim ignorance of the damaging effects its contrary decisions from March 2020 would have since such policy responses were specifically rejected, on those grounds, in the 2011 strategy.

The Government has not deviated from that position in over a year, even though there is little evidence that at any point in 2020 the NHS would have struggled to cope any more than in previous years once it achieved the requisite ICU capacity, which it did quite early on.

So what happened? Why did the Government change from being more than just usually incompetent to being cruel, irrational and incompetent, a government without care and compassion? Aware that its actions would not save lives, but destroy them?

Why did the Government need to instil such fear and anxiety? Was it to protect us from a pandemic that would overwhelm us or was it, wittingly or unwittingly, to create the illusion of a ‘PCR testing’ pandemic?

Here’s wisdom from Daniel Hannan. A slice:

My own view is that many lockdown prohibitions are disproportionate. We know that outdoor transmission of Covid-19 is rare and, as a general principle, we should trust people to use their common sense. I would therefore allow peaceful demonstrations to go ahead. But plenty of good and sincere people disagree with me. Indeed, if the polls are to be believed, most voters want restrictions tightened further.

Fair enough. Where to draw the line between liberty and security is a legitimate argument – and, during an epidemic, an especially difficult one. If you’re in favour of people being allowed to congregate outside, fine. If you’re against it, fine. But if you want bans on sports crowds, weddings and other gatherings, but think that a special case should be made for demonstrators whom you happen to like, then you need to go back to basics and understand what the rule of law means.

When I say “you”, I include all the Labour and Conservative MPs who have spent this week complaining about the application of a law that they themselves passed only last year. I have no doubt that they were genuinely shaken to see images of women at Clapham Common being roughly manhandled. But what did they imagine would happen when they voted to outlaw demonstrations?

Daniel Finkelstein argues that we were too ready to surrender our freedom.

Quotation of the Day…

(Don Boudreaux)

Tweet

… is from page 157 of John Mueller’s superb 1999 book, Capitalism, Democracy, & Ralph’s Pretty Good Grocery (links added):

In the end, William Riker’s perspective on all this seems sound: a liberal democracy is characterized not by “popular rule” but by various devices providing for “an intermittent, sometimes random, even perverse, popular veto” which “has at least the potential of preventing tyranny and rendering officials responsive.”

DBx: Indeed.

(Pictured above is the late, great University of Rochester political scientist Bill Riker.)

Bonus Quotation of the Day…

(Don Boudreaux)

Tweet

… is from a comment left by my emeritus Nobel-laureate colleague Vernon Smith on a Facebook post by Phil Magness – a Facebook post in which Phil quite justifiably scolds Imperial College ‘modeler’ Neil Ferguson:

Prediction has asymmetric consequences for the forecaster. If you are wrong, few care enough to give it recognition; if right you are a genius. The global warming models have been consistently wrong, but treated as if still relevant. And they violate the first principle of credible forecasting, viz that they be adjusted for own forecasting error.

Thomas Sowell on Economic Inequality

(Don Boudreaux)

Tweet

In this discussion from November 2018, the great Thomas Sowell busts myths about economic inequality.

You Can’t Make Up Stuff Like This

(Don Boudreaux)

Tweet

Here’s a letter to a high-school senior who regularly reads Café Hayek:

Colin:

Thanks for your e-mail in which you ask my opinion of your “teacher’s proposition to sue businesses who don’t pay workers enough to keep them off welfare.”

The idea is terrible, especially for poor workers. Adoption of your teacher’s scheme would turn all low-skilled workers into potential legal liabilities for their employers.

Of course this policy would render unemployable all workers who cannot now produce enough to enable them to earn wages sufficiently high to make them ineligible for welfare. Who’s going to hire a 100-percent-certain legal liability?

But your teacher’s policy would also render unemployable even many workers whose pay makes them currently ineligible for welfare. The reason is that employers know that governments can, and sometimes do, lower welfare-eligibility requirements. And so many workers who today are paid enough to be ineligible for welfare might tomorrow – simply because of a change in welfare standards – become eligible. Because these workers would suddenly subject their employers to your teacher’s proposed legal actions, these workers even today would be unemployable.

It distresses and angers me that such a proposal comes from your economics teacher. For your own good you should continue to be respectful to your teacher and do your best to do well in his class. But I cannot refrain from warning you that this economics teacher of yours seems to know less about economics than does a dust bunny.

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

(I thank a dear friend – you know who you are – for turning me on to dust bunnies.)