Russell Roberts's Blog, page 328

Three More Principles of International Trade

(Don Boudreaux)

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Here’s the fourth and final installment in my series, at AIER, titled “Twelve Principles of International Trade.” A slice:

10. Because wages reflect worker productivity, workers and firms in low-wage countries do not have an “unfair” advantage over workers in high-wage countries.

Contrary to popular mythology, high wages earned by workers in countries such as the US do not put them at a competitive disadvantage relative to workers and firms in low-wage countries, such as Vietnam. The reason is that, in markets, wages reflect worker productivity. The higher is a worker’s productivity, the higher is that worker’s wage. It follows that low-wage workers are paid as poorly as they are because they are not very productive. (If the low wages in some country are the result of that country not having an adequately functioning market economy, then the inefficiencies in that country are even greater than whatever are the remaining inefficiencies that keep wages low in liberalizing countries.)

The same relationship between worker productivity and pay holds at home. American teenagers, for example, are paid wages much lower than are American workers in their 30s, 40s, and 50s. The reason is that teenagers – having far fewer skills and much less experience than do older workers – are much less productive than are older workers. Teenagers’ lower wages reflect this lower productivity.

Yet no one declares that low-wage teenagers have an unfair competitive advantage over high-wage adults. No one advocates tariffs on goods and services supplied by teenagers lest the untariffed supply of such goods and services drive adults’ wages down to those earned by teens.

For the same correct reason that no one worries about free trade between adults and teens, no one should worry about free trade between high-wage fellow citizens and low-wage foreigners. High wages in the US reflect American workers’ high productivity. And these wages are no more likely to be driven down by free trade with low-wage countries than they are to be driven down by free trade with teenagers.

A more revealing name for “low-wage workers” is “low-productivity workers.” And so when you next encounter the charge that low-wage foreign workers enjoy an advantage over high-wage American workers, replace “low-wage” with “low-productivity,” and “high-wage” with “high-productivity,” to get this bit of silliness: “Low-productivity foreign workers have an advantage over high-productivity American workers.” This rewording clearly reveals why it’s a mistake for people in high-wage countries to fear trade with people in low-wage countries.

Some Covid Links

(Don Boudreaux)

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Jeffrey Tucker looks back at the 1957-58 Asian flu pandemic: there were no lockdowns. A slice:

The Asian flu of 1957-58 was a deadly pandemic with a broader reach for severe outcomes than Covid-19 of 2020. It killed between 1 and 4 million people worldwide, and 116,000 in the US in a time with half the population. It was a leading contributor to a year in which the US saw 62,000 excess deaths.

Globally, it might have been five times as deadly as Covid-19, as measured by deaths per capita. It was unusually lethal for younger people: 40 percent of deaths had occurred among people younger than 65, whereas the average age of death Covid-19 is 80 with only 10-20% of deaths under the age of 65.

What’s striking is how public health officials handled the pandemic. It had a diametrically opposite response than policymakers pursued in 2020. One might assume that this was due to negligence and a lack of sophistication in understanding the need to lockdown. Surely they didn’t know 65 years ago what we know today!

Actually, this is completely false. Public health experts did in fact consider school closures, business closures, and a ban of public events but the entire ethos of the profession rejected them. There were two grounds for this rejection: lockdowns would be too disruptive, disabling the capacity of medical professionals to deal competently with the crisis, and also because such policies would be futile because the virus was already here and spreading.

Ross Clark reports on the findings of the new paper by Eran Bendavid, Christopher Oh, Jay Bhattacharya, and John Ioannidis on the (in)effectiveness of lockdowns at protecting people from Covid-19.

Joakim Book and Christian Bjørnskov also report on the failure of lockdowns to prevent the spread of the coronavirus. A slice:

Much has been said about the terrifying models that in the spring projected such a staggering number of deaths from the novel coronavirus.

In hindsight, as bad as the pandemic has been, it never even approached the dismal numbers suggested ‒ the very numbers that rationalized society-wide lockdowns in Italy, the U.K., New York City, and then in many other places as the pandemic spread.

What researchers have struggled with since then is how to measure the impact of various actions taken. Do we even know if what we’re doing is working? Where’s the evidence for that, and are there other things we ought to do instead?

Naturally, proponents of lockdowns have long said that strong government action prevented all kinds of horrors. If anything, the poor outcomes we had in the spring and the fall indicated that we didn’t do enough. Skeptics, on the other hand, said that lockdowns did nothing but harm our societies ‒ physically, economically, and mentally ‒ and that infection rate curves moved the way they did regardless of what strong-worded politicians implemented, and often before their strong policies took effect. The August NBER paper by Andrew Atkeson, Karen Kopecky and Tao Zha, ‘Four Stylized Facts about COVID-19’ spells out the uncomfortable position for most policy-makers: the virus seems to spread rapidly, kill selectively, and in no way responds to anything that well-meaning politicians have thrown at it.

Wisdom from Lord Sumption. A slice:

What is a police state? It is a state in which individuals are answerable to the police for the most routine acts of daily life. It is a state in which the police and not the law decide what is allowed. It is a state in which people have to hide their doings from their neighbours for fear of the twitching curtain and anonymous call to the police. It is a state in which ministers denounce activities of which they disapprove and the police are their compliant instruments.

These things have happened in every totalitarian state of modern times. It is an unattractive spectacle. We are fortunate to live in a country with a tradition of ministerial reticence, the rule of law and sensitive policing. We are unfortunate to live at a time of national hysteria, when that tradition has been cast aside and every one of these classic symptoms of a police state can be seen all around us.

Prof. Martin Kulldorff corrects the record to cleanse it of some of the puerile and lazy false accusations made against him, against the Great Barrington Declaration, and more generally against the case against lockdowns – accusations, not incidentally, made by many people who publicly preen as objective devotees of science who open-mindedly follow the facts. A slice:

Berkowitz uses Sweden as an example of a failed pandemic strategy, but despite an older population, the reported COVID-19 mortality of 850/million is less than both Massachusetts (1,800/million) and the United States (1,020/million). Neighboring Finland and Norway locked down less than Sweden and report even lower mortality.

Sweden received international criticism for keeping schools open for all children ages 1-15 throughout the height of the pandemic. This led to zero COVID-19 deaths among the 1.8 million Swedish children in this age group, while teachers had the same risk as the average of other professions.

British MP Desmond Swayne delivers a brilliant and impassioned speech in an almost-empty House of Commons against the tyranny of lockdowns.

Quotation of the Day…

(Don Boudreaux)

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… is from page 130 of Deirdre McCloskey’s and Alberto Mingardi’s superb 2020 book, The Myth of the Entrepreneurial State:

At a certain point also some alleged liberals began to attack (classical) liberalism. The so-called “New Liberalism” in Britain in the 1880s, and then Progressivism in the US and socialism on the Continent, attacked the liberal ideas of writers like John Stuart Mill or Henry David Thoreau or Francesco Ferrara. That is to say, after a moment in the early 19th century in a few places of true-liberal ideology among advanced thinkers, the European clerisy commenced longing for hierarchy, to be run of course by the clerisy, which viewed itself, as [Mariana] Mazzucato views herself, as a new aristocracy, suited to lordship over mere citizens. The new illiberalism worldwide drew heavily on a genetic hardwiring in Homo sapiens in favor of charismatic lordship. The man on the white horse, advised by experts, must save noi, il populo they cried. No need for bottom-up. No need for liberty.

Bonus Quotation of the Day…

(Don Boudreaux)

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… is from page 58 of the great management scholar Peter Drucker’s insightful Winter 1984 California Management Review paper, “The New Meaning of Corporate Social Responsibility”:

Even the Japanese who reportedly invest in “winners” and starve “losers” – at least according to a currently popular American myth – are finding that it cannot be done politically. Indeed, the Japanese have found that they cannot give up support of a retail distribution system which everyone in Japan knows to be obsolete and frightfully expensive….

For Every Action…

(Don Boudreaux)

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… there is an equal and opposite reaction.

So says Newton’s Third Law of Motion.

What is true in the physical world is very often true also in the social world. Extremism on the political left causes extremism on the political right; extremism on the political right causes extremism on the political left.

Extremism and zealotry now reign unreined on opposite sides of the ideological spectrum. I am pessimistic.

Dan Polsby on the Reach of the First Amendment

(Don Boudreaux)

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In supportive response to this post of mine yesterday on the misbegotten insistence that private tech companies be restrained, as is government, by the First Amendment, former GMU Law School Dean Dan Polsby sent to me this e-mail. Adding a link, I share it here with Dan’s kind permission.

Don, people who didn’t have to think through Shelley v. Kraemer as a part of their formal education do not appreciate the can of worms one opens by making private decisions into quasi-state action. Granting these big tech networks have generated a problem (maybe more than one) that may need be addressed, but let’s consider the many legislative (and private!) remedies than can be deployed. Who in his right mind would want to give a committee of government lawyers the last word on what, exactly, these problems are and what they aren’t, and what the solution shall be?

Please Let’s Not Go Further Down the Road Toward Complete Politicization of Society

(Don Boudreaux)

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Here’s a letter to the Wall Street Journal

Editor:

Vivek Ramaswamy and Jed Rubenfeld correctly decry the practice of government officials threatening tech companies with penalties if those companies don’t control content in ways demanded by government officials (“Save the Constitution From Big Tech,” Jan. 12). But these authors incorrectly conclude that these threats, along with Section 230 immunity, render tech companies state actors whose content decisions should be subject to First Amendment challenges

We travel down a road to perdition if we allow private decisions made in response to government demands to transform, in the eyes of the law, private actors into state agents. While we might, in the past, have taken a few small steps down this perilous path, it would be a giant and rash leap to classify as state actors those private parties who supply platforms for other private actors to express opinions. Today Facebook because of its combination of coziness with, and fear of, Democratic politicians. Tomorrow the Wall Street Journal when it might be portrayed as being cozy with, and fearful of, Republican politicians.

Rather than treat private companies as state agents, a more direct and appropriate course is for courts to find in violation of the First Amendment any government official who attempts to influence private-parties’ decisions on expression by threatening those parties with government sanctions.

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 Covid Links

(Don Boudreaux)

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Michael Esfeld decries the abuse of science during this time of Covid-19. A slice:

We know many cases from history, in particular of the last century in Europe and especially Germany, in which coercive state measures were legitimized as absolutely necessary from a scientific point of view and had devastating consequences for the people affected. Is it different this time? Is it possible and permissible to stop the spread of a virus through central state planning with a massive intervention in people’s lives – and especially the lives of those people who do not have much time left to live – without causing great harm?

Billy Binion reports that New York State strongman Andrew Cuomo continues to muck matters up.

British MP David Warburton explains his reasons for voting against a national lockdown. A slice:

First, the numbers and how they are being reported. Yes, there is no doubt that the new evolving strains of the virus – though thankfully no more virulent – are more easily transmitted between individuals. But our increased rates of infection are more interesting. The mass scale of our PCR testing and self-reporting through the NHS app means that, for example, our case rate appears to be far higher than many European neighbours. And testing also creates some revealing anomalies: the virus seems to understand the soft border between the Republic of Ireland and Northern Ireland, for example, crediting those to the north with a far higher rate of infection. Our mortality rate – dreadful though it is – remains much the same as others’. So either the false-positive incidence of our testing is giving us a bleak picture, or we appear more resilient to the worst effects of the virus, which is obviously unlikely.

Everyone who attends hospital is now tested – itself, of course, a terrifically important step. Those who test positive are reported statistically as hospital Covid patients, whether they were asymptomatic or not; whether they attended hospital for a broken ankle or regular cancer treatment.  Naturally, when we then hear of hospitals managing thousands of Covid patients, such reporting will concern us all and lead the Government to seek to act.

Laura Dodsworth eloquently defends skeptics of lockdowns. A slice:

Lockdown doesn’t come without regulations. Supporting lockdown necessitates the implicit support of the regulations and enforcement of them. They aren’t just the nuclear option; they are the totalitarian option. They have also never been used or recommended before. Pre-emptive disaster and recovery planner, Lucy Easthope, told me that lockdowns have never been recommended for influenza or SARS epidemics. They were never recommended by WHO until a little update of their website this year post-introduction of lockdowns, or by the UK government.

The Heritage Foundation has compiled a list of lockdown hypocrites. It’s long.

According to Karen Harradine – and she’s correct – lockdown zealots are selfish. Two slices:

But all this evidence and rational scientific debate is ignored because, as I have shown, Covid-19 is now a quasi-religious cult, Sage its high priests and government ministers its executioners.

Lockdown zealots, the most devout of all, are behaving like primitive tribespeople, demanding human sacrifices so they can be kept ‘safe’. On the altar are our children, saddled with a generation of debt, the lonely elderly, the medically neglected and the millions left unemployed and homeless.

…..

Millions are at risk of suffering and death because of Covid-19 lockdowns. Do not blame Covid-19. Blame the reactions by politicians taken in responding to this virus and their lockdown useful idiots.

And here’s Nicholas Orlando on the terrors and tyrannical oppression of Covid lockdowns. A slice:

The cruel and sanctimonious taunts of the Covzealots are riding on the back of the power of the state’s virtuous medical tyranny that remains oblivious to widespread suffering amidst personal, family, social and economic tragedy.

“With no lockdown or mask mandate, Florida has roughly same hospitalization level as 2018 flu season.”

Some Non-Covid Links

(Don Boudreaux)

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Wall Street Journal columnist Mary Anastasia O’Grady laments the arrival in the United States of the politics of Latin America. A slice:

Participatory democracy as defined by extreme groups has been put into action in the U.S. before. The leftist upheaval in the streets of Seattle against the World Trade Organization ministerial conference in 1999 is one memorable example. It is no coincidence that elements of Mr. Trump’s base oppose free trade and globalization.

J.D. Tuccille wisely warns of the dangers of anti-sedition legislation.

Timothy Taylor reports on two papers that call into question the popular claim that middle-class Americans (pre-Covid-lockdowns, that is) are not prospering economically. A slice:

[Dartmouth economist Bruce} Sacerdote also refers back to the findings of an OECD study in 2019, which argued that “middle class” is associated in people’s minds with certain kinds of consumption: in particular, it’s associated with a certain level of housing, with relatively easy access to health insurance and health care, and with access to higher education. In the US and around the world, prices for housing, health care, and higher education have risen faster than average incomes. As he points out, one can “ask whether homeownership or college attendance for children in the family has risen or fallen for people in the middle quintiles of the income distribution. I find that since the 1980s, homeownership, square footage of housing consumed, number of automobiles owned, and college attendance have all been rising. The one exception is the modest dip in homeownership that occurred immediately after the financial crisis of 2008.”

Pierre Lemieux is correct: there is no “will of ‘The People'” – the reason being that ‘The People’ is not a sentient creature. (‘The People’ is a term used to describe a collection of sentient individuals, each of whom has a will but the collection of which simply does not.)

Juliette Sellgren talks with Trevor Burrus about guns.

Mark Perry reports on where we Americans are moving to and where we are moving from.

Also from Mark Perry is this exhibit of the idiotic ideas currently fashionable in “higher education” (so-called).

Wisdom from Arnold Kling:

It is a conservative’s nature to believe that society has gone off the rails. I believe that we have gone off the rails by having lost sight of the importance of children and grandchildren. I predict that many people today between the ages of 25 and 40 will find themselves becoming lonely and depressed by age 60 as they see the past as having little meaning and the future as having little purpose.

Note that being an aunt or an uncle can have some of the same satisfaction as being a grandparent. But with fewer siblings these days, becoming an aunt or uncle will be rare.

I believe that grandparents are the happiest people. This is based on introspection and observation. Show me a grandparent who does not love their grandchild.

Joakim Book reviews my GMU Econ colleague Garett Jones’s book 10% Less Democracy.

Quotation of the Day…

(Don Boudreaux)

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… is from page 130 of Deirdre McCloskey’s and Alberto Mingardi’s superb 2020 book, The Myth of the Entrepreneurial State (original emphasis; footnotes deleted):

After 1848, liberalism (or, as we call it not, classical liberalism) began to come under attack from enthusiasts for State action – by the nationalists from the right and the socialists from the left. The anti-liberals, inspired on both sides by Hegel, have this in common: they substitute for human action by individuals in society a single path ordered by the State. Said Lord Acton in 1882, “Whenever a single definite object is made the supreme end of the State, be it the advantage of a class, the safety or the power of the country, the greatest happiness of the greatest number, or the support of any speculative idea, the State becomes for the time inevitably absolute.” And you know what he said about absolute power.

DBx: This truth is one of many that proponents of industrial policy ignore or romantically wish away.