Russell Roberts's Blog, page 311

Quotation of the Day…

(Don Boudreaux)

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… is from page 8 of George Will’s 1992 book, Restoration:

America’s movement to revolution and independence began, particularly in Boston and Virginia, as a recoil against the overbearing executive power wielded by Royal Governors. The Continental Congress was America’s first weapon against that. But executive power is a perennial problem, and Congress must be counted on to be the primary check upon it.

DBx: Congress, sadly, is complicit in the cancerous growth of executive power, the increasing rule by executive order, and the vast expansion of the administrative state. America is moving closer and closer to having an elected monarchy.

And, of course, at the state level, Covid Derangement Syndrome has allowed U.S. governors to greatly bulk up their power to rule by arbitrary diktat.

Florida Unlockeddown

(Don Boudreaux)

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I’m grateful to my colleague Dan Klein for alerting me to this brand new short video by Ivor Cummins – a video that makes clear that Florida’s very mild restrictions in response to Covid were, and are, justified in comparison to the tyrannical and deranged restrictions imposed in other states, especially in California and New York.

Minimum Wages are Economically (and Ethically) Indefensible

(Don Boudreaux)

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This young correspondent is bulldoggish in defending minimum wages.

Mr. A___:

I’m curious why you’re so attached to the case for the minimum wage.

I can understand why labor unions support the minimum wage. (By making the competition artificially costly, it boosts demand for higher-paid unionized workers.) I can understand why well-meaning but economically uninformed people support it. (Failing to understand the causes and consequences of prices and wages, minimum wages strike them as sensible.) I can understand why politicians support the minimum wage. (As H.L. Mencken noted, they’d support cannibalism if they believed that doing so would improve their electoral prospects.)

But I cannot understand why any well-meaning person well-trained in economics supports such legislation.

Pardon me for being blunt: Whenever I encounter a well-meaning economist claim that government-enforced minimum wages are an effective means of improving the economic lot of low-paid workers, my reaction is the same as it would be were I to encounter a well-meaning physician claim that an effective means of weight-loss for overweight people is to cut off their legs just beneath the knees. Problem solved: each overweight person now weighs less than before!

And just as my assessment of this physician would not improve if he explains that, in theory, it’s possible that all overweight people have gangrenous lower limbs requiring amputation, my assessment of pro-minimum-wage economists does not improve when they explain that it’s possible that all or most employers of low-wage workers have monopsony power.

Such rejection of reality isn’t scientific; it’s motivated reasoning in service to ideological dogmatism.

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

Walter Williams Explains the Simple (Il)Logic of Using Minimum Wages to Help Poor Workers

(Don Boudreaux)

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With much silly talk now again ascendant in support of raising the minimum wage artificially and cruelly handicapping the lowest-skilled of low-skilled workers as they compete for employment, it’s a good time to again hear a truly great economics educator explain the matter. Here’s my late, great colleague Walter Williams.

Economics in the Style of Adam Smith

(Don Boudreaux)

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Here’s the tenth and final installment in my Ask Us Anything on Adam Smith. It was recorded this past summer and is produced by my Mercatus colleague Matt Beal.

Evidence that Labor Markets are Competitive

(Don Boudreaux)

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Here’s a follow-up note to an aspiring econ grad student:

Mr. A___:

Thanks for your follow-up e-mail. You write that Walmart’s recent announcement of hourly wage hikes, to $15, for nearly a half-million of its workers “is evidence that raising low income workers’ pay is good economic policy.” And so, you ask me, why do I “continue to oppose minimum wage increases.”

Do you not see a difference between wages being driven higher by market forces and wages being forced up by legislation? I do. And do you not see that what is good policy for an individual firm or person is not necessarily good policy for other firms or persons – and certainly not necessarily a policy so ‘good’ that it should be imposed by legislative diktat nationwide?

The objection to minimum-wage legislation is not an objection to low-skilled workers earning higher pay. Quite the opposite. It’s an objection to government stripping low-skilled workers of the right to offer to work at wages below the government-stipulated minimum as a means of making themselves sufficiently attractive to employers. The objection to minimum-wage legislation is an objection to overriding the nuanced, voluntary determination of wages on competitive markets with the heavy-handed, mandatory imposition of wages through coercive politics.

Walmart’s decision to raise its employees’ wages is Exhibit A against minimum wages. This decision shows that markets work. Walmart is raising these wages not because executives in Bentonville have become more philanthropic but because markets – including labor markets – are competitive. Note that Amazon and Target have already raised the wages of their workers in comparable jobs.

So by pointing to Walmart’s decision to raise wages, far from pointing to evidence in support of the case for raising the minimum wage, you point to evidence in support of the case for abolishing it. As I explained in my note to you yesterday, minimum wages imposed even in uncompetitive labor markets are much more likely to harm than to help low-skilled workers. But minimum wages imposed in competitive labor markets necessarily result in more harm than help to low-skilled workers.

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 Non-Covid Links

(Don Boudreaux)

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Wall Street Journal columnist Jason Riley reminds us of the minimum-wage’s racist origins. A slice:

Mrs. Pelosi’s reference to female workers is also misleading. Democrats have long held up single working moms as the typical minimum-wage earner, but that’s a myth. A 2014 analysis by economists Joseph Sabia and Richard Burkhauser found that the vast majority of workers who would benefit from a minimum-wage increase live in nonpoor households. According to Mr. Sabia, “only 13 percent of workers who would be affected live in poor households, while nearly two-thirds live in households with incomes over twice the poverty line, and over 40 percent live in households with incomes over three times the poverty line.”

Such findings would seem to underscore the limits of using minimum-wage laws to address poverty. Most workers who earn minimum wages are not a family’s sole breadwinner. They tend to be teenagers living at home or senior citizens working part-time to stay busy in retirement. According to Mr. Sabia, single mothers made up less than 5% of those who potentially would benefit from a minimum-wage hike.

Amelia Janaskie explains why government isn’t romantic. A slice:

One recent example is when former President Trump instated a 50 percent tariff on washing machines in response to Michigan manufacturer Whirlpool’s complaints that domestic producers were being endangered by foreign competitors. Because of pressure from Whirlpool and the focus on protecting US producers, government intervened, breaking up the market romance between consumers and foreign producers of washing machines.

Pierre Lemieux asks if Joe Biden will be a dictator.

Ben Zycher decries the Biden administration’s plan to revive Operation Choke Point. A slice:

That is why Choke Point and similar gameplaying in the capital market is ideal for the political left: No formal rule is being violated, the banks are in no position to resist, and the borrowers have no recourse. Equality under the law is thrown out the window because the left fundamentally believes in nothing as much as its own political power, while the bureaucracy—much ignored in the reality that it is an important interest group—is left to enhance its own powers at the expense of market forces.

Nick Gillespie talks with Conor Friedersdorf about the importance of taking a stand against both left-wing and right-wing P.C.

“Julian Simon’s worldview.”

Tim Worstall isn’t impressed with Biden’s scheme to ‘revive’ manufacturing. A slice:

If any industrial plan is based upon a commonly believed falsehood, then it’s unlikely to do the job of benefiting the republic.

Now, even if such a plan were intended to help, I’d still be against it. I believe in Oren Cass’s ability to decide what is good for us just as much as I do that of Rep. Alexandria Ocasio-Cortez. That is, not at all. The best — I would insist only — way for free people to create society is that we all do our own stuff and see what happens at the national level. But people don’t go into national politics to leave us all alone, do they? National destiny as something emergent from personal liberty isn’t going to please those who’ve made all that effort to get to where they can tell us to do stuff.

GMU Econ student Dominic Pino remembers Rush Limbaugh.

Some Covid Links

(Don Boudreaux)

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To those of you who believe that humanity’s response to Covid is rational, I put these questions: How do you square your claim with many governments refusing to state clear guidelines about what is an acceptable level of risk at which life can return to normal? How do you explain the fact that not a few people believe that the only acceptable level of risk from Covid is zero? Do you believe this latter level of risk, or even some number close to it, is reasonable? If your answer to this last question is ‘yes,’ you are among the unreasonable. Here’s a slice from the essay that prompted me to write what’s above:

“It’s one of the things we’ve cried out for again and again – could somebody in a position of political power tell us what is an acceptable number of infections?” Dame Angela, a member of the Government’s scientific advisory group SAGE and also co-chairs the SPI-M Sage sub-group, added: “We do need to decide what level is acceptable, and then we can manage our lives with that in mind.”

Mark Woolhouse, Professor of Infectious Disease Epidemiology at the University of Edinburgh, said it would be wrong to attempt to get Covid cases to zero.

“If you take the view that no Covid death is acceptable or something of that order, you are writing a blank cheque to do any amount of harm by the measures you have implemented to try and control it,” he said, but added that the current data was pointing to “earlier unlocking”.

David Henderson shares Charley Hooper’s evaluation of the evidence on the effectiveness of masks.

On masks, see also this long review of the evidence by Paul Alexander, et al.

James Moreton Wakeley decries the coddling of the political mind. Two slices:

Yet the nation remains under house arrest, the economy stalled, and the lives and hopes of the next generation continue to be offered upon the sacrificial altar. All to save us from a disease with a survival rate in excess of 99%.

Why, then, is the UK Government proving so reluctant to reconsider what is so clearly a failed and destructive policy? To start answering this question, one first has to realise that Covid is as much, if not more, a political problem than it is a medical crisis.

…..

This deus ex machina ending on which the Government has pinned its hopes is going hand-in-hand with sinister and often highly disingenuous attacks on those who question its approach. These attacks are spearheaded by ambitious MPs and Government allies in a media class that is cut from the same cloth as the politicians it has done so little to question over the past year. Lockdown has to be shown to be the only solution lest its advocates attract blame and retribution for the costs so painfully felt by a population subjected to unprecedented nightly lectures by its advocates.

Worship of the NHS, a media-driven urge always to ‘do something,’ and the groupthink of a political class willing to outsource their rational faculties to “The Science” – simultaneously claiming authority for their decisions whilst abrogating them of real responsibility – is only, however, part of the explanation. The fascinating, terrifying, and enlightening 2018 book by Greg Lukianoff and Jonathan Haidt, The Coddling of the American Mind: How Good Intentions and Bad Ideas are Setting up a Generation for Failure, identifies three ‘Great Untruths’ and associated cognitive distortions that the authors argue have not only damaged the integrity and purpose of higher academic institutions, but that have also intellectually debilitated an entire generation (‘iGen’ – those born after 1995).

Of course test and trace was destined to fail.

Arguing here against lockdowns is David Paton.

Malcolm Kendrick asks: How deadly is Covid-19? A slice:

If the Imperial College infection fatality rate of 0.9% is accurate, once around eighty per cent of the world’s population has been infected [at which point population wide immunity would be reached] we should see fifty-four million deaths. We are currently nowhere near that figure, and at the current rate of deaths, per year, it will take twenty-two and a half years to reach the fifty-four million figure.

John Tamny draws some lessons about Covid from Kevin Durant’s injury history. Here’s his conclusion:

And what about the lockdowns? By their very name they were anti-wealth creation. Workers and business owners suddenly saw their ability to create wealth curtailed. With less wealth created, there’s necessarily less progress. Lockdowns instituted with health in mind were logically anti-health precisely because they were anti-wealth. They were anti-resource without which the creative can’t vivify what’s on their minds.

What will it mean for the future? Very simply, this tragic imposition of command-and-control by politicians means progress against career-ending injuries for athletes will likely slow, the discovery of what will eventually render the internet primitive will similarly be rendered a more distant object, and then progress against diseases that still kill us will have been relatively suffocated. All so politicians could “do something.”

Richard Nurse rightly warns of the tyranny lurking in health passports.

Nicolas Orlando is appalled by the horror being driven like a spike through the soul of the British nation. Two slices:

The metamorphosis of the narrative from a temporary and regretful measure of collective restriction to a confident assertion of permanent masks, vaccines and health passports has happened without any debate. The message is clear: they want these lockdowns and you will submit.

They don’t like dissent. The ‘operation’ aimed fire at Lord Sumption for challenging policy in much the same way they aimed at esteemed Professor Sunetra Gupta for espousing herd immunity with the shielding of the vulnerable. The Great Barrington Declaration presented a solid case against the chosen policy.

…..

My own sense of the current darkness resides in C S Lewis. That Hideous Strength. The silent takeover of society by scientists, rallied by an infiltrated media system ‘nudging’ the minds of carefully controlled demographics to think that what is happening is in their favour. A dark world where the National Institute of Co-ordinated Experiments (NICE) seeks to banish nature from man to ‘perfect’ his evolution.

In my last piece for TCW I mirrored my feelings for lockdowns in the music of Shostakovich. His experience living under Soviet tyranny translated to music. It speaks to all of us who have felt the inevitable pain and despair that comes with living like this. His music says if you are despairing you are not alone. At the premier of the Fifth Symphony (post-official denouncement, it was his apology to ‘power’) the audience sobbed through the Largo. Suddenly someone understood.

I still don’t think many understand the scale of the horror that has been driven through our nation’s soul. This lockdown policy has been like those French nuclear tests in the Pacific Ocean. You get a shockwave on the surface which soon calms. The devastation of the life on the reefs below however is enduring.

For those of you who trust that all research that comes out of elite institutions is respectable science – and that reporting by the mainstream media is sufficiently critical – take a look at this report on ‘research’ out of Harvard. It’s not from the Babylon Bee, but it could have been.

Quotation of the Day…

(Don Boudreaux)

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… is from page 113 of John Mueller’s excellent 1999 book, Capitalism, Democracy, & Ralph’s Pretty Good Grocery:

Put another way, free trade furnishes the economic advantages of conquest without the unpleasantness of invasion and the sticky responsibility of imperial control.

DBx: Jones can gain by raiding, but only by inflicting harm on Smith at least equal to Jones’s gain. Jones can also gain by trading, but only by enabling Smith also to gain.

Raid or trade? The civilized choice is clear. It happens also to be the choice that results in economic growth – that is, that results in increases in the well-being of everyone. (Please, be silent about trade’s alleged “losers.” I’m talking about the long run – the time span over which adults assess social institutions and policies. Over the long run there are no losers from trade.)

And though it’s not always obvious, it is always true that those who propose to coercively obstruct trade are proponents of raiding. Protectionists, of course, deny that they are any such thing. So put this question to a protectionist: “Are you, Mr. or Ms. Protectionist, willing to allow tariffs to be voluntary? That is, are you willing to allow each buyer not to pay the tariffs if that buyer chooses not to pay them? Are you willing to have customs agents ask for voluntary contributions rather than demand required payments?”

The protectionist will respond, in so many words, “No!” Thus will your point be proven.

Talking with Kibbe About Covid

(Don Boudreaux)

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I’m honored that my old friend, and GMU Econ alum, Matt Kibbe had me on his show to discuss Covid-19. This show was taped one week ago.