Russell Roberts's Blog, page 31
April 7, 2023
Quotation of the Day…
… is from page 186 of James Gwartney’s insightful 2013 paper “The Public Choice Revolution and Principles of Economics Texts,” which is chapter 13 of Public Choice, Past and Present: The Legacy of James M. Buchanan and Gordon Tullock (Dwight R. Lee, ed., 2013):
In essence, public choice applies the tools of economics to both the market and political processes. Without having knowledge about the operation of both, one is in a poor position to understand how alternative institutions and policies will affect outcomes.
DBx: Indeed so. Yet most economists continue to ignore public choice or to discount its significance. The sad result is that most economists have no adequate understanding of how governments work in reality compared to how markets work in reality.
April 6, 2023
Bonus Quotation of the Day…
… is from page 101 of Gregg Easterbrook’s 2004 book, The Progress Paradox:
In Ivy League universities or similar places, depressing or pessimistic news is received with a welcoming sigh, as if the preferred outcome, while favorable news or optimistic trends are viewed as at best some sort of deception.
DBx: Of course.
If our self-anointed saviors are going to marinate in the gratification of saving us, there must be some some serious threats from which we need saving and from which we can be saved only by our self-anointed saviors.
There Is No “Will of the People”
Here’s a letter to the Wall Street Journal:
Editor:
You wisely applaud states that prohibit ranked-choice voting (“A Welcome Rethink on Ranked-Choice Voting,” April 6). The goal of those who advocate this voting system are electoral outcomes that better reflect “the will of the people.” But this goal is chimeral, and, thus not worth the cost of pursuing with complex and confusing voting schemes. The best we can do is to ensure a wide franchise with one person, one vote.
The late Kenneth Arrow won the economics Nobel Prize in part for formulating Arrow’s Impossibility Theorem – a proof of the impossibility of designing a method of collective decision-making that results in outcomes determined only by the preferences of the decision-makers. Regardless of the collective-decision-making method used, Arrow showed, outcomes will always be determined in part by arbitrary circumstances having nothing to do with people’s preferences.
An implication of Arrow’s theorem is that there is no “will of the people” comparable to the will of an individual. Because no collective is sentient, no collective has preferences. A set of preferences – “a will” – exists only at the level of the individual. Attempts, therefore, to engineer voting to better reflect the “will of the people” are attempts to engineer voting to better reflect that which doesn’t exist.
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
Some Links
Whatever optimism George Will might have about the future of American politics springs from a pessimistic place. Here’s his conclusion:
John McCain’s mordant humor made him say that it is always darkest before it turns pitch black. However, it is possible that this acutely embarrassing moment in U.S. history actually is rock bottom, with a bounce coming.
GMU Econ alum Scott Drylie uses the life of Queen Elizabeth II to tell a truly great story. A slice:
Royal life was, indeed, short. From Henry II (born 1133) until George I (born 1660), monarchs’ average lifespan was fifty years. But when including childhood mortality of royals, average life expectancy was hardly better than that of commoners tilling fields in Sussex—the high 20s to low 30s—with little to no improvement over these years.
Royal life was also nasty. Death frequently came by dysentery, smallpox, pneumonia, and tuberculosis. Add in conditions such as bleeding ulcers, syphilis, scurvy, and disorders of the skin, kidney, and mind. It is clear that royal living was always mixed with dying, pleasures with pains. The portrait of a graceful death by “natural causes” is a modern one.
Royal life was also brutish. Roughly 60 percent of royal children died before the age of five—a rate worse than their subjects! Royals tended to live in urban areas. Urbanity meant disease. By trying to overcome a solitary existence, they invited a brutish one. Unimaginable wealth still ended in entirely imaginable deaths.
The rationale for the price controls is to save taxpayers and seniors money. But the savings on existing drugs are minuscule in comparison to the loss in health resulting from a decrease in drug innovation, which is already taking place. The Congressional Budget Office finds the Inflation Reduction Act will cut drug spending by $238 billion by 2031. Meanwhile, a University of Chicago analysis (of which I am a co-author) predicts the cuts in innovation in new drugs will lead to health losses valued at $18 trillion during the same period.
Eric Boehm is correct: “Trump’s Indictment Illustrates How the Wackos Have Hijacked Politics.”
Arnold Kling decries the perverse incentives that adversely select ‘leaders.’
Quotation of the Day…
… is from page 56 of the 2011 revised and enlarged edition of Thomas Sowell’s 2009 book Intellectuals and Society:
The crucial distinction between market transactions and collective decision-making is that in the market people are rewarded according to the value of their goods and services to those particular individuals who receive those goods and services, and who have every incentive to seek alternative sources, so as to minimize their costs, just as sellers of goods and services have every incentive to seek the highest bids for what they have to offer. But collective decision-making by third parties allows those third parties to superimpose their preferences on others at no cost to themselves, and to become the arbiters of other people’s economic fate without accountability for the consequences.
DBx: Why is this important point typically ignored by people, left and right, who call for the replacement of decision-making done decentrally – decision-making done by individuals each with his or her own skin in the game – with decision-making done by government officials? Why, for example, do proponents of industrial policy seem seldom, if ever, to recognize the problem here described by Sowell?
April 5, 2023
Consumption Is Indeed – As Adam Smith Said – “the Sole End and Purpose Of All Production”
No two people have exactly the same tastes and preferences. You might prefer a king-sized bed to a queen-sized one while I prefer the queen-sized version. But every person has consumption desires. And for every person these desires are what motivate him to engage in economic activity – that is, to work and to exchange. Work and exchange can, and often do, directly supply satisfaction independently of whatever is created by the work, or of whatever is obtained through the exchange. But working and exchanging are overwhelmingly means to achieve consumption goods and services.
I’ve known many people – including myself – who love their jobs. But I’ve never met anyone who was so in love with that job that he or she would continue to do it without pay. Even jobs that people love are means, not ends.
Likewise, my grandfathers and my father all enjoyed woodworking as a hobby, as does my son today. But I’ve never known any of them to be indifferent to the final physical results of their carpentry efforts. Each of these men worked to build things – kitchen cutting boards, bookcases, an addition to the house – that, when completed, supplied human satisfaction. None of these men ever sawed, hammered, sanded, drilled, or glued merely for the sake of sawing, hammering, sanding, drilling, or gluing. On those rare occasions when the results of their woodworking were worse than what they anticipated – say, the bookcase wasn’t level or the kitchen cutting board was aesthetically unappealing – they were disappointed. They assessed the time and effort spent to produce the defective outputs as wasted.
The economist, then, reasons from this reality that production is not simply the exertion of human effort to transform inputs into outputs. Production is the creation of value — “value” meaning additions to consumer welfare. For the economist, production and consumption are two sides of the same economic coin; one is inseparable from the other. As is obvious, nothing can be consumed unless it is first produced. But also, and as is much less obvious, nothing is produced unless it is destined to satisfy consumption desires.
The non-economist often misses the inseparability of the concept of production from that of consumption. The non-economist often thinks of production and consumption as being alternative, competing values. I can’t count the number of times that I’ve heard or read someone accuse economists — and especially economists who support free markets — of having a shallow, or excessively materialistic view of humans. “Life is about more than consumption!” we’re told. “People also find meaning in family, community, and work!”
To the ears of many non-economists, the word “consumption” seems to mean only the satisfaction of physical desires. The word here carries an almost negative connotation; it conjures images of individuals self-interestedly and narrow-mindedly satisfying ‘low’ desires with little concern for persons beyond themselves and their immediate families, or for values beyond base sensual gratification.
On this understanding of “consumption,” life is indeed about more — much more — than consumption. But, again, this understanding of “consumption” is emphatically not economists’ understanding. On economists’ understanding, consumption includes not only the likes of eating, watching the Super Bowl, and bedecking oneself with jewelry. Consumption includes also the satisfaction we get from living in safe and thriving communities, from enjoying our jobs, from interacting pleasantly with our neighbors, our fellow church members, and our co-workers. It includes the joy and knowledge derived from traveling, reading, and attending public lectures.
Consumption, as economists understand it, is that wide array of actions the experience of which we anticipate will directly make our lives more fulfilling. The fact that production is a necessary means to enable consumption is undeniable. Yet precisely because production is a means, while consumption is an end, there is no conflict between the ‘social value’ of consumption and the ‘social value’ of production. More consumption requires more production, and more production enables more consumption.
Bonus Quotation of the Day…
… is from page 227 of Robert Higgs’s September 1986 Freeman essay, “To Deal With A Crisis: Government Program or Free Market?” as this essay is reprinted and slightly retitled and revised in the excellent 2004 collection of some of Bob’s essays, Against Leviathan:
It is instructive to consider how we have dealt with past crises. Since the early twentieth century, the usual method by which Americans (and many others) have responded – namely, by creating emergency government programs – has resulted in permanent losses of economic freedoms and permanent impairments of economic institutions.
DBx: Indeed.
And yet when March 2020 arrived very many people justified or excused the lockdowns and other covid mandates as if these unprecedented authoritarian hammer-blows would inflict little or no permanent damage on the liberal market order.
To my dying day I will never begin to understand the willingness with which so many people allowed themselves to be manhandled by the likes of Fauci, Birx, Trump, Trudeau, Boris Johnson, and other government officials – allowed themselves to be mistreated as dimwitted and contemptible animals – allowed themselves, with almost no resistance, to be abused and fed lies.
Some Links
News media are also beginning to acknowledge facts that refute the original reasons behind lockdowns. Those facts shouldn’t be partisan. Both the Trump and Biden administrations rejected the science — D.A. Henderson’s classic 2006 review of pandemic data clearly demonstrated lockdowns were not effective, and were extremely harmful. Both administrations rejected the alternative — targeted protection — that had been recommended since March 2020. And the lockdowns failed to stop the death (see evidence presented by Christian Bjornskov, Eran Bendavid, Virat Agrawal, Jonas Herby, and Phil Kerpen).
A new paper out now from the Norwegians on Long COVID in kids and young adolescents takes a sledgehammer to the media narrative of the condition.
Marty Makary criticizes the CDC for continuing to push covid boosters on kids.
Writing in the Wall Street Journal, Columbia University Professor of Law Philip Hamburger says this:
The TikTok bill moving through Congress is a strange double-edged sword—a blunt tool against foreign data collection and a sharp weapon against domestic dissent.Platforms such as TikTok corrupt youth and collect data for the Chinese government. But the bill—styled the Restricting the Emergence of Security Threats that Risk Information and Communications Technology Act, or Restrict—would give the U.S. government sweeping power over communications. The bill could and would be used domestically to stifle constitutionally protected speech.
The bill applies to a host of transactions—including the “use of any information and communications technology product or service”—in which an entity subject to a foreign adversary’s jurisdiction has an interest. Most tech companies are at least partially subject to Chinese jurisdiction. Under the proposed statute, the commerce secretary could therefore take “any mitigation measure to address any risk” arising from the use of the relevant communications products or services, if the secretary determines there is an “undue or unacceptable risk to the national security of the United States or the safety of United States persons.”
We live in an era in which dissenting speech is said to be violence. In recent years, the Federal Bureau of Investigation has classified concerned parents and conservative Catholics as violent extremists. So when the TikTok bill authorizes the commerce secretary to mitigate communications risks to “national security” or “safety,” that means she can demand censorship.
Mark Pulliam eviscerates the silly thesis advanced in The Big Myth by Naomi Oreskes and Erik Conway. Four slices:
Subtitled “How American Business Taught Us to Loathe Government and Love the Free Market,” The Big Myth argues—or rather harangues, for over 500 pages—that free-market economics don’t work, and that Americans’ affection for capitalism is due solely to a massive, “fabricated,” “meretricious” propaganda campaign. This bold thesis is both far-fetched and unconvincing—silly, even.
…..
The Big Myth boasts enthusiastic blurbs by various leftist academics, writers, and politicians, including Duke University professor Nancy MacLean, whose 2017 hatchet job on Nobel Prize-winning economist James Buchanan, Democracy in Chains, was widely and roundly condemned; Jane Mayer, co-author of Strange Justice (1994), a tendentious account of the Clarence Thomas confirmation hearings; and ultra-partisan US Senator Sheldon Whitehouse (D-RI). Detect a pattern? The Big Myth is an apocalyptic sermon directed to the woke choir: “Our futures depend on rejecting [the big myth],” which “has blocked the efforts we must take to reverse the heating of our planet and protect the very existence of the world as we know it.” Repent! The end is near!
…..
The twentieth-century movement Oreskes and Conway condemn has reversed—without their objection—in recent decades. Aren’t woke capitalism, the World Economic Forum, and foundations established by progressive Big Tech moguls merely the modern counterpart to (and converse of) American business’s PR efforts a century ago? If Hollywood had an agenda in the 1940s and 1950s, hasn’t the tide now turned powerfully in the opposite direction? Can one fairly complain about past “conservative” influence in various spheres without at least acknowledging the contrary (and still-prevailing) trends that followed? The Big Myth simply ignores the left’s countervailing influence—“the long march”—over America’s institutions.
…..
The Big Myth is the left’s QAnon: a fantastical conspiracy theory that only the most deluded and credulous followers could take seriously. The Big Myth promotes, rather than dispels, a big myth—the myth that socialism and government control work, and that capitalism and freedom don’t.
Here’s the abstract of a new paper by Peter Boettke, Rosolino Candela, and Konstantin Zhukov:
When and why are illicit markets regarded as morally legitimate? We address this question in the context of Soviet and post-Soviet Russia, where the moral legitimacy of commerce has waned since the collapse of the Soviet Union. We do so by analyzing the continued resiliency and robustness of illicit markets and their moral perception in Soviet and post-Soviet Russia, where de facto private property rights have remained insecure in spite of de jure political and economic reform. Given the continuity of illicit markets across both periods, we argue twofold. First, what has remained constant in the moral nature of illicit markets across both periods has been the entrepreneurial drive to realize gains from trade by circumventing and evading a predatory state. Secondly, given this constancy in the form of illicit market exchange, we contend that changing moral attitudes toward commerce have resulted from the changing manifestation of illicit market exchange, in response to the predatory nature of the state. In both the Soviet and post-Soviet period, the state has remained a means to create monopoly privileges. However, whereas in the Soviet period, illicit markets served as a means to “grease the wheels” of commerce, economic transition in post-Soviet Russia corrupted the moral legitimacy of a market economy by transforming illicit markets into a means to “grease the palms” of government officials in the name of “privatization.”
Quotation of the Day…
… is from page 114 of economists Phil Gramm’s, Robert Ekelund’s, and John Early’s important and data-rich 2022 book, The Myth of American Inequality: How Government Biases Policy Debate (footnote deleted):
The [Thomas] Piketty income data do not include transfer payments, which make up a majority of the income of the bottom 40 percent of the [U.S.] population. His data also overestimate the income of higher-income individuals by imputing to them income such as unrealized capital gains, which they do not actually receive.
His calculations show a dramatic increase in income inequality in postwar America because he ignores the massive infusion of transfer payments to the low end of the income distribution and imputes income that was never received to the high-end households. If he had included transfer payments as income to the recipients and counted only income that high-income taxpayers actually received after taxes, his empirical evidence of growing income inequality in postwar America would have collapsed.
April 4, 2023
If Solitary Confinement Is Cruel and Unusual Punishment … Aren’t, Also, Lockdowns?
I share here, with permission, an e-mail sent to me today by Washington University economist Ian Fillmore:
Hi Don,
John Oliver makes a good case against solitary confinement:
I wonder if it occurred to him that isolating people is damaging and cruel both in prison and out of prison. He argues that solitary confinement, whatever its uses, is simply too damaging and cruel to be justified. Prison officials must rule it out and find other, more humane, ways to maintain order and safety inside our prisons. By the same token, lockdowns and school closures, whatever their uses, are too damaging and cruel to be justified, and government officials must rule them out and find other, more humane, ways to prevent the spread of disease.
Ian Fillmore
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