Russell Roberts's Blog, page 321

Some Covid Links

(Don Boudreaux)

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Scott Atlas asks if the truth about Covid-19 restrictions will ever prevail. Two slices:

Here’s the reality — almost all states and major cities, with a handful of exceptions, have implemented severe restrictions for many months, including closures of businesses and in-person school, mobility restrictions and curfews, quarantines, limits on group gatherings, and mask mandates dating back to at least the summer.  These measures did not significantly change the typical pattern or damage from the SARS2 virus.  President Biden openly admitted as much in his speech to the nation on Jan. 22, when he said “there is nothing we can do to change the trajectory of the pandemic in the next several months.”  Instead of rethinking the results of implemented policies, many want to blame those who opposed lockdowns and mandates for the failure of the very lockdowns and mandates that were widely implemented.

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America is now a country where differing interpretations of science in order to seek the truth is the new anathema.  I fear that “the science” has been seriously damaged, and many have simply become fatigued by the arguments.  That is even worse, because fatigue will allow fallacy to triumph over truth. Perhaps Harvard Medical School Professor Martin Kulldorff was correct when he lamented, “After 300 years, the Age of Enlightenment has ended.”

The Times of London blatantly misrepresents the impact of Covid. (Among the chief ways that Covid Derangement Syndrome spreads is that the pathogen causes the media to become even more sensationalist and irresponsible than usual, which in turn enables the pathogen to infect and distort the minds of millions.)

“Too Many Experts, Too Little Knowledge“.

For those of you who doubt the tyranny of Covid lockdowns, Jordan Schachtel has some news that you might wish to consult.

And for those of you who doubt the cruelty and utter derangement of Covid lockdowns, Charles Oliver reports on an incident that you might wish to learn about.

Katherine Mangu-Ward talks with Brown University economist Emily Oster about Covid and schooling.

Mark Ellse works to put the U.K.’s Covid death toll in proper perspective.

Covid lockdowns have revived the speakeasy! (HT Phil Magness)

Here’s a screenshot from Phil Magness’s Facebook page – a screenshot that does not speak well of Anthony Fauci.

Quotation of the Day…

(Don Boudreaux)

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… is from page 250 of my late, great teacher Leland Yeager’s, and David Tuerck’s, superb and still-relevant 1966 book, Trade Policy and the Price System (footnote deleted; the author quoted within this quotation is Walter Salant):

In a dynamic economy, all sorts of changes strike innocent victims. If they could count on the same sympathetic hearing that victims of import competition traditionally get, other victims would readily present the same sort of heart-tugging human-interest appeals for relief, complete with stories of dedicated old craftsmen cast on the scrap-heap. The crises in an Upper Michigan community when a shift of demand from wooden to metal station-wagon bodies forced the closing of a Ford plant illustrates the general nature of issues raised by specific dislocations. Problems of trade liberalization “do not reflect an inherent conflict between the needs of the domestic economy and the needs of international economic policy, but rather the more general conflict between the security of an existing status of an individual or a firm or an industry an any change, whatever its cause.”

DBx: Yep. And in a country as large, with an economy as (pre-Covid) dynamic, as that of the United States, the number of jobs ‘destroyed’ (and created) directly by international trade is a tiny fraction of the total number of jobs ‘destroyed’ and created by economic forces generally – that is, by economic churn.

I pick only one small nit with Leland’s and David’s wording: people who lose jobs in competitive markets aren’t truly victims. Such people suffer burdens, of course. But a true victim is someone who suffers because his or her rights have been violated – he was murdered; she was raped; his pocket was picked; her car was stolen; their house was torched by an arsonist.

But people in markets have no legitimate expectation, beyond what they contract for, of continuation of the commercial patronage of others. This fact implies that others are under no obligation to continue to patronize someone  simply because these others have chosen in the past to purchase something from that someone. If and when these others chose to reduce their purchasing from that someone, that someone loses nothing to which he or she is entitled, either legally or ethically.

To play by the rules of a free and liberal society requires playing by this particular rule.

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(Yeager and Tuerck quote Walter Salant from a 1958 volume titled Foreign Trade Policy, but I can find no link to this volume on-line.)

“But If You Go Carrying Pictures of Chairman Mao…

(Don Boudreaux)

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… you ain’t gonna make it with anyone, anyhow.”

I share this video simply because I so love the Beatles.

Bonus Quotation of the Day…

(Don Boudreaux)

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… is from page 112 of my colleague Richard Wagner’s superb 2017 intellectual biography of our late Nobel-laureate colleague, Jim Buchanan: James M. Buchanan and Liberal Political Economy:

If a battleship is financed by taxation, it is clearly taxpayers who turn over the resources necessary to build the battleship. But what if bondholders provide those resources by buying government bonds? It’s not reasonable to claim that the bondholders bear the cost of the battleship. Indeed, they have gained personal advantage by buying bonds. The voluntary purchase of bonds means that bondholders have traded opportunities they value less highly today for opportunities they value more highly tomorrow. Buying debt enables the bondholders to achieve a superior intertemporal pattern of consumption opportunities. Bondholders rearrange their temporal pattern of consumption, consuming less today and more tomorrow, and experience an increase in their present valuation of their intertemporal pattern of opportunities. Present taxpayers, moreover, don’t pay higher taxes to finance the battleship, as the purchase of bonds by bondholders replaces the higher taxes that taxpayers would otherwise have paid. The only option is that it is future taxpayers who now face smaller consumption opportunities due to the burden they will bear to retire public debt. Hence, public debt allows the cost of public spending to be transferred forward in time.

DBx: Indeed.

And so there is no good reason to believe that the building of this battleship is justified – that is, that it is not an instance of excessive, and hence wasteful, government expenditure. The ability of today’s citizens to acquire for themselves a government good that is to be paid for by other people – namely, tomorrow’s taxpayers – means that today’s citizens will spend more recklessly than they would spend if they were required to fund all of today’s programs with currently collected taxes.

The size of the government budget is not independent of the means used to finance it. Let me repeat, with emphasis, this central reality: The size of the government budget is not independent of the means used to finance it. If among these available means is borrowing, the cost today to citizens and their political representatives of spending is lower than it would be were borrowing not an option (or were an option that is especially difficult to use). And the lower the cost of any activity, the more that activity will be pursued.

It follows that the more readily government is able today to fund its projects and programs with borrowed funds, the more projects and programs government will today undertake. The same point put differently is this: Deficit financing translates into greater government spending – into larger government budgets – into greater government influence over the economy – into more government waste and inefficiency.

Therefore, anyone who truly wishes to reduce government spending and imprudent uses of resources should be at the forefront of those who oppose the financing of government budgets with borrowed funds. I repeat yet again, this time with appropriate coloration: The size of the government budget is not independent of the means used to finance it.

There Ain’t No Such Thing As A Free Borrowed Lunch

(Don Boudreaux)

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Here’s an e-mail to my friend John Tamny:

John:

While there’s much to admire in your essay “Socialism, Not Debt, Causes Economic Collapse,” you dismiss too quickly the possibility of government debt being monetized and, hence, fueling inflation – as well as dismiss too quickly the findings of Carmen Reinhart and Ken Rogoff. In addition, you miss at least two other foundational objections to deficit financing. One is ethical while the other is economic.

The ethical: The bills for government programs paid for today with borrowed funds are handed to future generations. Our children and grandchildren are forced by government borrowing to pay tomorrow for whatever programs we undertake today. While borrowing for some projects might overcome the presumption that such spending of other people’s money is unethical, this presumption looms large. Yet it is ignored – I believe unethically – by those who are blasé about government borrowing.

The economic: Spending other people’s money is inefficient. The ability to launch and expand government programs with borrowed funds that will be repaid, not by the borrowers, but by other people naturally prompts today’s citizens and their political representatives to launch and expand some programs that they would otherwise choose to forego. Just as I will purchase a new Mercedes rather than a used Toyota if I get to spend, not my money, but your money without your permission – indeed, without even your knowledge – today’s citizens and politicians will purchase, at the expense of future generations, government goods and services for themselves that they would not purchase if they had to spend their own money.

In short, ability to borrow fuels excessive government growth, which reduces private-sector growth.

The fact that the U.S. and U.K. economies have grown despite their governments’ heavy borrowing does not mean that this borrowing has had no negative economic consequences. The only way that you could deny this conclusion is if you were to insist that real resources are not scarce – if you were to insist that real resources channeled by debt into today’s government programs materialize, not from the private sector, but out of thin air.

Knowing that you understand that real resources are indeed unavoidably scarce, I continue to be mystified that you remain so blasé about government borrowing.

Sincerely,
Don

“Herd Stupidity”

(Don Boudreaux)

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Back in October, British MP Desmond Swayne gave this brilliant, and passionate yet rational, speech in the House of Commons.

Some Covid Links

(Don Boudreaux)

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Several folks affiliated with AIER offer alternatives to lockdowns. A slice:

Edward Stringham. My main academic contribution has been to emphasize the centrality of private governance in the building of social order. Private governance requires freedom, so that people and institutions can experiment with solutions to any and all social, cultural, and economic problems. There is not one answer but many competitive answers. As part of private governance there is learning. We find successes and emulate them. We observe failures and avoid them. Through this process, society gets better at dealing with the exigencies of existence and the need for progress. All of this pertains to the management and mitigation of disease. There is no one answer but many. Without the freedom to discover, we will be worse off. Private governance does not dictate models but lets them evolve by permitting individuals and institutions to use intelligence to find the right paths. Central planning does not work for public health any more than it does for the production and distribution of any good or service.

Here’s push-back against Sam Bowman’s misleading case against anti-lockdowners.

Philip Johnston writes wisely about Covid-19 and the overreaction to it. Two slices:

For some, especially the very old and people with other serious conditions, this is undoubtedly a nasty virus. But for the vast majority, the coronavirus is the harbinger of a fairly mild illness. Mine was no worse than flu, perhaps not even as bad. Moreover, as 98 per cent of the country is not infected at present, though many have been over the past year, it must be asked once again whether the measures we are taking are proportionate to the risk.
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Those most vociferous in their support of the harshest measures are invariably least harmed by them – often people on full salaries, generous pensions and the ability to work from home in a large house with a garden. Yet they exempt from their strictures the very people without whom their isolation would be intolerable – shop workers, factory employees, delivery drivers and the rest who, as the ONS reported this week, are most likely to die if they contract the virus. Where is the morality there?

The criteria for ending the lockdown restrictions also appear to be changing. The policy was to suppress the virus until a vaccine comes along. Now that a vaccine has arrived, there is a developing assumption that the virus can somehow be eliminated.

For those of you who doubt that much of humanity is now truly deranged by its fear of Covid, here’s a report that you should be aware of.

And for those of you who continue to suppose that government can be trusted to “follow the science” in “managing” a pandemic, Jacob Grier has some information that you might wish to consult.

Micha Gartz explains what it means for a virus to become endemic.

“Disgraced COVID-19 studies are still routinely cited“.

Matt Welch reports on yet another instance of “teachers'” unions revealing their disregard for students.

Here’s John Stossel on Covidocrites. As slice:

Rhode Island Gov. Gina Raimondo attended a wine and paint event, just days after tweeting, “Stay home except for essential activities & wear a mask.”

Even after a photo showed her at the event, Biden nominated Raimondo to be secretary of Commerce.

“Instead of being booted out, they get a promotion,” complains Stepman.

Washington, D.C., Mayor Muriel Bowser ordered a 14-day quarantine for anyone going to several states, including Delaware, for “nonessential” activity. Then she went to Delaware for a Biden victory celebration, something that strikes me as about as “nonessential” as it gets.

Quotation of the Day…

(Don Boudreaux)

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… is from page 40 of my late, great colleague Walter Williams’s remarkable 1982 book, The State Against Blacks:

The racial effect of the minimum wage laws exist in the absence of racial preferences on behalf of employers. The minimum wage law gives firms effective economic incentive to seek to hire only the most productive employees, which means that firms are less willing to hire and/or train the least productive employee, which includes teenagers, particularly minority teenagers. But assuming away any productivity differences between black and white workers, minimum wage laws give firms incentive to racially discriminate in hiring. The reason is that the minimum wage law lowers the private cost of discriminating against the racially less preferred person.

DBx: Yes. The economics on this matter could not be more clear.

Suppose that some politician, pundit, or professor were to go on TV or Twitter and say the following: “Government should shield bigoted employers from having to pay the cost of behaving like bigots. It can and ought to do so by enacting legislation that compels blacks and other minorities to subsidize bigoted employers’ discrimination against blacks and other minorities.”

Of course, any such politician, pundit, or professor would immediately, and rightly, lose all credibility as someone whose advice should be taken seriously. Indeed, such a person would be expelled from office or fired pronto and become a modern untouchable.

Yet let a politician, pundit, or professor propose that the minimum wage be increased, and that person is hailed as a Progressive saint. But why? The consequences of the minimum wage are precisely what the untouchable bigot proposes in the first example. The only difference is that the untouchable bigot intends both to encourage unjust discrimination by subsidizing it and to have the subsidy paid for by the victims of discrimination, while the minimum-wage advocate is likely unaware of this vile consequence of his or her proposal.

While intentions are not irrelevant in judging a person’s moral worth, the consequences of any person’s proposals and actions ultimately matter more. Given the long-time documentation of the negative effects of minimum wages, especially on the most vulnerable people, it’s inexcusable today that proponents of minimum-wage legislation remain ignorant of its harmful – discriminatingly harmful – consequences.

Bonus Quotation of the Day…

(Don Boudreaux)

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… is from page 11 of David Epstein’s 2019 book, Range:

[H]ighly credentialed experts can become so narrow-minded that they actually get worse with experience, even while becoming more confident – a dangerous combination.

Economics, Economists, Big Data, and Big Questions

(Don Boudreaux)

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Thanks again to my Mercatus Center colleague Matt Beal for producing these short videos of me answering Adam Smith-related questions. (These were recorded in Summer 2020.)