Russell Roberts's Blog, page 320

Quotation of the Day…

(Don Boudreaux)

Tweet

… is from page 234 of the 1969 Revised Edition of Lon Fuller’s profoundly important 1964 book, The Morality of Law:

Fidelity to the Rule of Law demands not only that a government abide by its verbalized and publicized rules, but also that it respect the justified expectations created by its treatment of situations not controlled by explicitly announced rules.

DBx: Yes. Law is not confined to the meaning of the words that government inscribes on paper. Indeed, words inscribed by government on paper are not necessarily law (as opposed to legislation) at all, and certainly the law in its fullness can never possibly be written down.

Bonus Quotation of the Day…

(Don Boudreaux)

Tweet

… is from Milton Friedman’s September 13th, 1970, essay in the New York Times Magazine – an essay titled “The Social Responsibility of Business is to Increase its Profits”:

The political principle that underlies the market mechanism is unanimity. In an ideal free market resting on private property, no individual can coerce any other, all cooperation is voluntary, all parties to such cooperation benefit or they need not participate….

The political principle that underlies the political mechanism is conformity. The individual must serve a more general social interest – whether that be determined by a church or a dictator or a majority. The individual may have a vote and say in what is to be done, but if he is overruled, he must conform.

Inconceivable Complexity

(Don Boudreaux)

Tweet

Enthusiasm for industrial policy has been on the rise for the past few years. Such enthusiasm is rising on the political right and left. Unfortunately but predictably, Covid-19 and the deranged response in the form of lockdowns have only intensified this enthusiasm.

We’ve long heard talk about consciously arranging to ensure that we keep on our shores “strategic industries” and the “industries of tomorrow,” the production of outputs “critical to our national defense,” firms whose operations have positive spill-over effects, and manufacturing jobs for this and that group of workers. Added to this litany in 2020 is the alleged need to “secure our medical supply chains.”

All of these calls are issued by people who mistake their ease of composing or speaking fine aspirational phrases for ease of altering political and economic realities. Each and every industrial-policy advocate has an understanding of political reality that is laughably childish and an understanding of economic reality that is appallingly simplistic.

So in light of the rising fever for industrial policy, I share again this remarkable video produced in 2012 by the Competitive Enterprise Institute. It reveals that the modern economy’s complexity is so great, so unfathomable, as to make industrial-policy schemes a mix of foolishness and dangerousness.

Some Non-Covid Links

(Don Boudreaux)

Tweet

George Will, inspired by Philip Howard, bemoans the paralysis induced by Progressivism. (I do disagree, though, with Howard who says that the stifling of decentralized decision-making is “not an unavoidable side-effect of big government.” At least, such stifling is unavoidable if government is big in ways other than merely taxing some citizens heavily and then rather mechanically transferring the cash to other citizens.)

My intrepid Mercatus Center colleague Veronique de Rugy laughed out loud at a recent essay that criticized Democrats for allegedly being too modest in boasting of their many ‘achievements.‘

Also from Vero is this call on Democrats to reform the criminal-justice system.

Steven Greenhut understands the insidious cruelty of minimum-wage legislation. A slice:

The biggest problem with a minimum-wage boost is that it would hurt the least-skilled workers the most. “These low-skill employees lose their jobs because of increased competition from more experienced and higher-skilled employees attracted to the new wage,” noted economist Craig Garthwaite in congressional testimony. That competition will obliterate entry-level opportunities for those without experience or many skills, he added.

Also writing wisely and informatively on minimum wages is Cato’s Chris Edwards.

Scott Lincicome is rightly critical of Pres. Biden’s embrace of “security nationalism.” A slice:

It’s good that the President isn’t buying into the death of American manufacturing because, as I explain in a new paper out today (executive summary below), the sector not only is still alive, but was actually doing quite well on both a global and historical basis before the pandemic. It’s also booming right now too. Standout industries include the ones most directly tied to national defense (e.g., weapons, aerospace, motor vehicles, and metals) and others often associated with security (e.g., energy, semiconductors, and medical goods). The paper also explains — citing both economic research and ample historical evidence — why “Buy American” and other economic nationalist policies intended to bolster national security and economic “resiliency” often end up backfiring, thus weakening the manufacturing sector and national security. By contrast, market‐​oriented policies, including trade liberalization, can boost the economy, discourage armed conflicts, and help the country mitigate or recover from economic shocks, including pandemics. Thus, if the President is concerned about national security and economic resiliency (instead of, say, politics), he should be eliminating Buy American restrictions, not “strengthening” them.

Simon Lester isn’t optimistic about the prospects of the Biden administration undoing some of the more destructive protectionist measures of the Trump administration. Here’s Lester’s depressing conclusion:

Of course, there is another possibility, which is that we end up with both Section 232 tariffs and these ratcheted up Buy American measures. At that point, for all of Biden’s calm tone and rhetoric, which has been refreshing, it will start to look like Biden is worse on trade than even Trump was.

Paul Cantor wonders if Shakespeare can survive woke.

My colleague Peter Boettke celebrates the great Thomas Sowell.

A Rare Unbiased Report on Covid and the Lockdowns

(Don Boudreaux)

Tweet

This report, from last month, is well worth watching.

Some Covid Links

(Don Boudreaux)

Tweet

Alec March interviews Sunetra Gupta. A slice:

‘It’s quite curious how much has been invested in this performance of social distancing and mask wearing,’ she volunteers. ‘A culture has been created of virtue signalling and shaming and this culture is adopted by the academics, clearly. It still continues to completely astonish me when I find on Twitter that a close colleague or friend has essentially resorted to defamation.’

Back in March Gupta did not oppose the first lockdown – partly because there was not evidence to suggest it was harmful.

But the scientist did take a sharply different view from that of Professor Neil Ferguson at Imperial College London, who believed the virus was new and could kill up to half a million people without a lockdown.

She believed the virus had arrived sooner than thought and fewer people were dying from it. ‘And actually that’s very clear now that the infection mortality rate is a lot lower than what was being suggested,’ Gupta says. ‘And what is also becoming very obvious is that the infection fatality rate in people under 50 is practically zero.’

Here’s yet another report, this one from the U.K. and written by a nurse there, on how unwarranted worry and panic can easily be stirred up by context-less reports of the number of patients with Covid-19 who are hospitalized. (Note that the photograph at the top of this report is from December 2017.) A slice:

Patients are tested on admission to determine whether to be put in “green” or “red” areas. I have seen first-hand patients admitted to hospital for completely unrelated conditions, nil Covid symptoms, but have a positive PCR test on admission. These go down as “Covid admissions” but they are actually admitted for conditions completely unrelated to the respiratory system, such as heart failure or kidney disease.

I am sure by now we all have known somebody who has had a positive Covid test result but no symptoms. This is true also for hospitalised patients being admitted for other reasons – massively inflating the “Covid admission” numbers.

I have also had first-hand experience of patients who have been admitted into hospital for an unrelated reason, and caught Covid whilst there (nosocomial infection)  – and then they also go down in the NHS statistics as Covid admissions.

Billy Binion reports on the hypocrisy, arrogance, dishonesty, incompetence, and downright dangerousness of New York State strongman Andrew Cuomo. A slice:

The governor, a self-declared foe of government incompetence, also presented medical providers with the vaccine edition of Sophie’s Choice. Earlier this month, he announced that hospitals that failed to use all of their vaccines would face up to a $100,000 fine; those thatvaccinated anyone out of the state-approved order of operations would face up to a $1 million fine. The kicker: Cuomo created a rigorous hierarchy of who was allowed to receive the vaccine at what point, meaning hospitals had no choice but to throw away expiring doses instead of finding willing vaccine recipients. Better to lose $100,000 than $1 million, I guess.

For more on strongman Cuomo’s administration, here’s Mairead McArdle. (HT Todd Zywicki)

Noah Carl puts the U.K.’s 100,000 Covid deaths in proper perspective. A slice:

Last year may have seen the largest number of excess deaths in England since the 1940s – but it actually wasn’t the deadliest year in terms of mortality rates. In fact, the age-standardised mortality rate (which measures the current level of mortality) was higher in 2008, 2007, 2006 and every year before that. This means that 2020 is the deadliest year since 2008.

As far as I’m aware, nobody claims that excess deaths measures the level of mortality – the BBC has actually reported the age-standardised mortality rates on at least two separate occasions – but headlines like “2020 saw most excess deaths since World War Two” might lead the public to believe that 2020 was the deadliest year since 1940, which isn’t true.

The two following statements are both true, but they give a different sense of Covid-19’s lethality. First: “2020 saw more excess deaths than any year since 1940”. And second: “2020 had a higher age-standardised mortality rate than any year since 2008”.

Emily Hill rightly rips into a prominent McCarthyite prolockdowner.

Here are the first three paragraphs of this report from the Times of London:

Leaving the country without good reason is to become illegal, Priti Patel announced yesterday.

The home secretary criticised social media stars for “showing off in sunny parts of the world” and said travellers would be required to fill out a declaration form explaining why they are flying, which will be checked by airlines.

Only “essential” travel will be allowed, and police will issue fines at borders. The government is reviewing the list of travel exemptions to ensure people are not abusing the system.

DBx: Why aren’t more people – especially more people who, pre-Covid, were prominent among the ranks of defenders of individualism and classical liberalism – fearful of this tyranny and speaking out loudly against it? Is Sars-CoV-2 so very different from other pathogens that we’ve encountered to justify trusting otherwise untrustworthy officials with the power that these officials have exercised over the past eleven months?

I despair, deeply. I simply cannot fathom the extent of the sheepishness – indeed, often the eagerness – with which so many people have embraced, and continue to embrace, the tyranny of lockdowns.

Quotation of the Day…

(Don Boudreaux)

Tweet

… is from page 268 of Richard W. Duesenberg’s deeply insightful 1962 article “Individualism and Corporations” (available without charge on-line here) as it appears in Liberty Fund’s 1981 single-volume collection of the New Individualist Review:

Freedom is the best means to security.

Bonus Quotation of the Day…

(Don Boudreaux)

Tweet

… is from page 148 of the original Cambridge University Press edition of the late Don Lavoie’s great 1985 book Rivalry and Central Planning:

Hence it is not enough to establish the technological feasibility of a production plan; it is also necessary to determine its economic cost – that is, the value of opportunities forgone by this plan. The complexity of deliberately tracing out such cost implications of each plan necessitates that this be done unconsciously by relying on the information supplied by a price system.

DBx: This reality is ignored by advocates of industrial policy. Their failure to grasp the enormous complexity of market arrangements combines with their ignorance of the role of prices to fool them into thinking that their schemes can work.

Boris Johnson Didn’t Wish to Hear Theresa May’s Criticism of His Lockdown Policy

(Don Boudreaux)

Tweet

A few months ago the current British P.M. walked out of the House of Commons in order not to hear criticism of his lockdown policy from the previous P.M. Too bad for the British people that Ms. May is no longer P.M.

Some Non-Covid Links

(Don Boudreaux)

Tweet

John Stossel tells us what Thomas Sowell can teach us about standing up to the mob.

Writing in the Wall Street Journal, GMU Econ alum Alex Salter – inspired by the work of the late Bill Allen and Armen Alchian – defends the economic way of thinking (“price theory”) from the increasingly dominant obsession with data mining. A slice:

The heights of the economics profession are increasingly inhabited by people who disdain price theory. Reliance on the economic way of thinking in solving problems is viewed as obsolete and unscientific. The data jockeys think they’re cutting-edge, but they’re merely repeating old mistakes. In the late 19th and early 20th centuries, economists of the German Historical and Old Institutionalist schools thought they could make do with history and statistics alone, unconstrained by theory. In the end, they got so bogged down in details that they came up with very little that lasted.

A common anti-price-theory trope is that its practitioners are political ideologues masquerading as scientists. The opposite is closer to the truth. Old-school economics recognized that trade-offs and constraints are everywhere. There are no free lunches. Armed with price theory, economists resisted the politically appealing but economically unsound proposals of both the right and left. Today’s economists, innocent of price theory, have no such armor.

The atheoretical approach of contemporary economists makes them particularly susceptible to the technocratic pretensions of the center-left. If, contrary to the claims of price theory, there are no enduring laws of economics, then there is no reason to stop the technocrats from tinkering. Many of these economists don’t realize they have been politically compromised. They see it as “just the facts, ma’am” pragmatism. In reality, it is ideology sneaking in through the back door.

Dan Mitchell asks if France is suffering from too much austerity.

Jessica Melugin works to help keep straight antitrust’s dismal historical record.

John Tamny could not put down Kevin Williamson’s new book, Big White Ghetto.

David Henderson doesn’t share Alan Blinder’s enthusiasm for Joe Biden’s “stimulus” scheme.

Richard Rahn calls the minimum wage “the cruelest tax on job growth.”

My Mercatus Center colleague (and GMU Econ alum) Shruti Rajagopalan spoke with the great trade economist Arvind Panagariya about free trade and industrial policy. A slice:

RAJAGOPALAN: In this South Korean story, how much of it is free trade and prosperity, and how much of it is industrial policy? Because this is one constant source of discussion between trade economists and development economists. How much is trade part, or outward embracing of global markets part, of the success story of South Korea?

PANAGARIYA: Shruti, in this, I must say that the proponents of this industrial policy school have so obscured the reality of South Korea, and I must say that a lot of the people on the side of free trade advocacy have not done a great job, actually, on defending. Often, they give in, “Yeah, yeah, yeah,” you know. This is what I separate out, when does Korea start? About 1963 is the turning point. This starts with liberalizing the economy, and 1963 to 1973 there is no industrial targeting.

Even when I started looking at all the evidence, I came in thinking that Korea was doing some industrial targeting all through. Then from ’63 to ’73, I see no industrial targeting….

…..

Some people like Ha-Joon Chang, et cetera, really tried to make their case by saying, “Oh, look, we protected the auto industry, and it is such a successful industry today.” This is a post hoc fallacy. Post hoc ergo propter hoc, whatever you say. “After this, therefore, because of this.” But I’ve never understood—just because you did something before, and eventually some industry succeeds, that doesn’t mean anything, and moreover, what about the ones that failed?

I don’t have it in the book but actually, Anne Krueger pointed out to me that they put up this very, very large ball-bearing factory in S. Korea, and it was so inefficient, there was no way it could compete on the global marketplace. And it was so large that the S. Korean market was not large enough to consume it, so it became a white elephant and eventually had to be closed down. Nobody remembers it. Only successes are remembered. Failures are gone. That also gives a bit of a bias to this.