Russell Roberts's Blog, page 35
March 25, 2023
Some Links
GMU Econ alum Stephen Miller explains that “economic development deals are a curse, not a blessing.” A slice:
The programs’ supporters insist that economic development incentives work. But their evidence is almost always flawed and anecdotal, with an emphasis on the jobs “created” by the businesses receiving incentives. An example in my own state is Alabama’s “winning” of a Mercedes plant in the 1990s. Given the evidence, that doesn’t look like a win to me, nor did it to The New York Times in 1996. Careful analysis shows that Alabama won the battle for Mercedes but ultimately lost by overpaying, as is usually the case with these programs.
Proponents often cite economic impact studies in support of the incentive packages, but — and I cannot stress this enough — economic impact studies are not evidence, not even a little bit. They are predictions, often wildly optimistic, of the overall increase in economic activity based on a multiplier effect steeped in the Keynesian economic logic of circular flows. Enormous benefits are always predicted by these studies, but do they materialize?
Based on simple division, each Mercedes job cost Alabama taxpayers roughly $170,000. If the incentives succeeded, there would be clear evidence that the benefits exceeded the costs, not for Mercedes and its suppliers, but for the taxpaying public. No such evidence exists. The evidence could be gathered, but lawmakers tend to lose interest in quantifying economic impact once taxpayers’ money has been spent. Such studies could be done with current statistical inference techniques, comparing economic growth in areas where new businesses have received economic development incentives to those where new businesses have located but did not receive the incentives. It would be irresponsible for lawmakers to renew or expand incentive programs without first gathering this information.
In speeches and tweets, Biden has credited the construction of new manufacturing facilities to what he calls “my economic plan.” But what Biden calls his economic plan bears more than a little similarity to Trump’s vision of restoring American might through government largesse targeted at private industry.
It’s industrial policy on a massive scale, and it amounts to a plan to deploy Foxconn-style manufacturing subsidies nationally in an expensive bid to protect American industry and national security.
Biden’s projects may not fail quite as spectacularly as Foxconn’s, but history suggests the results probably won’t be much better. Indeed, there are already signs that his economic plan is running into trouble.
Biden’s industrial policy is, not surprisingly, far more expansive than Trump’s. And unlike the Foxconn facility, which was subsidized by the state of Wisconsin, it has been bolstered by major legislation from Congress. Biden’s industrial policy rests primarily on three pieces of legislation: the bipartisan infrastructure law signed in 2021, and the Inflation Reduction Act and the CHIPS Act signed last year. Together, this trio of bills provided hundreds of billions in subsidies, tax breaks, and inducements for domestic manufacturing, with a particular emphasis on semiconductor production and clean energy and transportation.
But these subsidies are already being used as vehicles to pursue unrelated goals: The Commerce Department, for example, recently announced that companies receiving subsidies from the CHIPS Act would have to provide child care for their workers.
Eric Boehm makes clear that fiscal reality isn’t optional.
Here’s part 26 of George Selgin’s splendid series on the Great Depression and the New Deal.
Fraser Myers reports on “how lockdown exposed our illiberal elites.” Two slices:
Our establishment – in party politics, in the civil service, in the media and in the legal profession – likes to make a great show of its commitment to liberalism and human rights. It is also keen to pose as being on the side of the ‘most vulnerable’ in society. And yet lockdown took a wrecking ball to our most fundamental civil liberties, and the destructive impacts of it were felt most keenly by the poor and isolated. Why has lockdown been given a free pass?
England was put into full lockdown on three occasions. It was illegal to leave the house without a valid excuse for seven gruelling months, between spring 2020 and summer 2021. The period of lockdown represented, in the words of one Court of Appeal judge, ‘possibly the most restrictive regime on the public life of persons and businesses ever’ – more restrictive, that is, than even those infamous Blitz-era curfews. The liberal assumption that we are free to do whatever we please unless the law expressly forbids it was turned on its head. Instead, we were banned from doing anything outside the home, unless an exemption was specifically granted.
Even outside of full lockdown, the state’s micromanagement of everyday life was extraordinary. There were bans on singing, casual sex and ‘mingling’. There were curfews. There were rules on where you could sit or stand, and on which foodstuffs constituted a ‘substantial meal’. We ceased to be a free country.
Clearly, our ‘liberal elites’ are anything but liberal. Because, during the Covid era, these stringent rules elicited barely a peep of protest from them. It was the same when parliament was shut down and declared ‘non-essential’ at the beginning of the pandemic. When health secretary Matt Hancock began imposing new rules by decree, the objections were minimal. On the contrary, liberals learned to love the lockdown and all that it represented.
The opposition Labour Party – led by former human-rights barrister Keir Starmer – similarly refused to oppose the measures. Labour grandee Harriet Harman, who is leading the parliamentary inquiry into Johnson’s rule-breaches, was once the legal officer for the National Council for Civil Liberties (today known as Liberty). Did she have anything to say about the house arrest of every healthy man, woman and child in the nation during lockdown? Of course she didn’t.
What of the damage caused by this experiment in authoritarianism? The economy now lies in ruins. In lockdown, the UK economy experienced its largest fall in output since the Great Frost of 1709. Inflation, prompted in part by aggressive quantitative easing during lockdown, is now through the roof. The poorest in society have paid the largest price.
…..
The irony in all this is that our not-so-liberal elites have spent years now warning about the threat posed by authoritarianism. Ever since the Brexit vote they have claimed that the UK is in danger of drifting ever rightwards and away from liberal, democratic values. They have somehow interpreted the mass vote to leave the illiberal and anti-democratic EU as a harbinger of an illiberal and anti-democratic shift in British electoral politics. And yet, when an authoritarian moment actually arrived in Britain, when basic civil liberties and democratic norms were upended overnight, they all either stared at their shoelaces or actively cheered it on.
Background: The Centers for Disease Control and Prevention (CDC) has been a major source of information during the COVID-19 pandemic, guiding policies and practices in many aspects of life. As such, it is imperative that the information be free of errors, or, if errors are made, that they are corrected quickly.
Methods: We sought to compile instances of numerical and statistical errors made by the CDC during the COVID-19 pandemic by reviewing CDC publications, press releases, interviews, meetings, and Twitter accounts. Further, we catalogued mortality data from both the National Center for Health Statistics and the CDC COVID Data Tracker and compared reported results.
Results: We documented 25 instances when the CDC reported statistical or numerical errors. Twenty (80%) of these instances exaggerated the severity of the COVID-19 situation, 3 (12%) instances simultaneously exaggerated and downplayed the severity of the situation, one error was neutral, and one error exaggerated COVID-19 vaccine risks. The CDC was notified about the errors in 16 (64%) instances, and later corrected the errors, at least partially, in 13 (52%) instances.
Conclusion: A basic prerequisite for making informed policy decisions is accurate and reliable statistics, even during times of uncertainty. Our investigation revealed 25 instances of numerical or statistical errors made by the CDC. Our investigation suggests 1) the need for greater diligence in data collection and reporting, and 2) that the federal entity responsible for reporting health statistics should be firewalled from the entity setting policy due to concerns of real or perceived systematic bias in errors.
Still doubt that covidians are authoriarian?
Kunal Purohit decries the terrible damage done to young Indians by lockdowns.
In defiance of the rest of Ontario, the Haldimand-Norfolk health district adopted focused protection, resulting in 30% lower Covid mortality. Its health director, Dr. @strauss_matt, is one of the few heroes of this pandemic.
Steven Greenhut explains the damage done to property rights by governments’ reaction to covid. A slice:
As that (probably fake) George Washington quotation put it, “Government is not reason, it is not eloquence—it is force.” Government officials aren’t wiser than the rest of us, so when they tried to deal with a serious public health problem, they did so in a forceful, ineloquent, and unreasonable manner. Unfortunately, many of its worst approaches leave permanent scars.
Quotation of the Day…
… is from page 60 in that part of Edward Chancellor’s excellent 2022 book, The Price of Time: The Real Story of Interest, in which Chancellor discusses John Law’s ill-fated Mississippi Company (footnote deleted):
The irrepressible [John] Law never admitted the flaws in his System. The French ambassador Count de Gergy, who visited Law in Vienna shortly before he [Law] died in 1729, reported that he had ‘never seen a man more stubborn than him about his cursed System, and in such as way that is probable that from the start of its operations he really believed his projects to be infallible’. Central bankers, who resort to printing money, manipulating interest rates and fuelling asset price bubbles, exude a similar air of infallibility.
DBx: Pictured here is John Law.
March 24, 2023
Some Links
In September 2022, the school dropped its mission statement about engaging “academically talented students in grades 5-12 in advanced intellectual study.” In six subsequent iterations, Masterman’s motto — “Dare to Be Excellent” — disappeared from the school crest. For the 2022-2023 school year, according to the parents’ report, admissions criteria were significantly lowered, and the promise of a middle school accelerated curriculum was dropped.
Lee Stitzel interviewed my GMU Econ colleague Dan Klein on academic freedom and excellence.
Also from Dan Klein is this essay on Ronald Coase on Adam Smith. A slice:
In “Adam Smith’s View of Man,” Coase writes, “It is sometimes said that Smith assumes that human beings are motivated solely by self-interest. Self-interest is certainly, in Smith’s view, a powerful motive in human behaviour, but it is by no means the only motive.”
Coase makes no bones about his message. In the first paragraph, Coase announces, “The inclusion of other motives in his analysis does not weaken but rather strengthens Smith’s argument for the use of the market and the limitation of government action in economic affairs.”
Coase’s message needs renewed amplification today because it has become fashionable among left-leaning scholars to claim Smith as one of their own. They do this to sustain their denial of the fact that leftism is an outlook that strives for the governmentalization of social affairs. Coase’s essay serves as a corrective to the left’s appropriation of Smith.
. A slice:
National security is an elusive concept. Politicians have long understood the potency of waving the national security flag to push policies, even if unrelated to national security. Since the cost of government meddling in the economy is often large (even when used to achieve legit security goals), the burden of proof should be put squarely on the shoulders of those advocating for blanket or targeted bans.
Yet, that’s rarely the case. Leaving aside whether it’s even possible to partially or fully decouple from Chinese products, calls to isolate the U.S. economy are concerning. First, decoupling would carry some often-overlooked security risks. Global trade can, at the margin, increase national security by interlocking economies and discouraging armed conflict.
Furthermore, a country that grows is more politically stable and resilient and has revenue to invest in national security. Taking steps toward decoupling requires isolationist policies like tariffs, export and import bans, and sanctions—growth killers in both countries with important destabilizing effects.
Ron Bailey asks: “Is the ‘climate time-bomb’ really ticking toward imminent catastrophe?” Here’s his conclusion:
So how much warming is likely to occur? University of Colorado climate change policy researcher Roger Pielke Jr. and his colleagues conclude in their 2022 Environmental Research Letters study that IPCC’s worst-case scenarios are highly implausible. Consequently, the good news is that global average temperature by 2100 is likely to be between 2 and 3 degrees Celsius higher than the 1850-1900 baseline with a median estimate of 2.2 degrees Celsius. That is only slightly higher than the Paris Agreement’s 2.0 degree Celsius threshold.
These calculations and projections do not suggest that humanity has “less than a decade to stop catastrophic warming.”
In addition to creating more loopholes than it closes, a tax on unrealized gains would have a chilling effect on investment. We make saving and investment decisions with the expectation that our assets will increase in value over time and that we don’t pay tax on those increases until we sell them. Often, we are making these plans with a long view, thinking years if not decades ahead. Taxing unrealized gains would jeopardize this planning, with consequences that would ripple throughout our economy, from small businesses to the farms and enterprises that families have spent generations building.
In the Wall Street Journal, Tirien Steinbach — the woman who is paid by Stanford University Law School to undermine the free-speech policies at Stanford University Law School — has confirmed that she will continue to undermine the free-speech policies at Stanford University Law School until she is fired.
I noted recently that “DEI” people talk like liberals but act like Pol Pot, and Steinbach is a nice example of this trend. “Free speech isn’t easy or comfortable,” she says, but “it’s necessary for democracy, and I was glad it was happening at our law school.” But, quite obviously, she wasn’t. And she still isn’t — as is made abundantly clear by her repeated attempt to convince those reading that the real problem at Stanford was that Judge Duncan wanted to talk in the first place.
Montaigne tweets: (HT Jay Bhattacharya)
What struck me most about Public Health during the pandemic was its statistical incompetence.
PH touted studies even a decent AP stats student should see are junk.
Freddie Sayers of UnHerd wonders why Britain doesn’t regret lockdowns. Two slices:
For the dissenting minority, the past three years have been very different. We have had to grapple with the possibility that, through panic and philosophical confusion, our governing class contrived to make a bad situation much worse. Imagine living with the sense that the manifold evils of the lockdowns that we all now know — ripping up centuries-old traditions of freedom, interrupting a generation’s education, hastening the decline into decrepitude for millions of older people, destroying businesses and our health service, dividing families, saddling our economies with debt, fostering fear and alienation, attacking all the best things in life — needn’t have happened for anything like so long, if at all?
To those who place emphasis on good quality evidence, it has been particularly exasperating. In the early days of 2020, we had only intuitions — there was no real data as to whether lockdowns worked, as they had never been tried in this way. As millions tuned in to our in-depth interviews on UnHerdTV with leading scientists, we made sure to hear arguments in favour of lockdowns as well as against. Devi Sridhar made the case for Zero Covid; Susan Michie said we should be locking down even harder; Neil Ferguson (whose last-ever tweet was a link to his UnHerd interview) told me how exciting it was that the world was attempting to stop a highly infectious disease in its tracks.
…..
In the past year, however, we have for the first time been able to look at the Covid data in the round. Many of the countries which appeared to be doing “well” in terms of low levels of infections and deaths caught up in the second year — Norway ended up much closer to Sweden, while countries such as Hungary, which were initially praised for strong early lockdowns, have ended up with some of the worst death tolls in the world. Due to the peculiarly competitive nature of the lockdowns, the results were neatly tracked, allowing clear comparison between countries and regions. While we spent the first year arguing about deaths “with” Covid as opposed to deaths “from” Covid, all sides in this discussion have now settled on overall “excess deaths” as the fairest measure of success or failure: in other words, overall, how many more people died in a particular place than you would normally expect?
My view on these results is quite simple: in order to justify a policy as monumental as shutting down all of society for the first time in history, the de minimis outcome must be a certainty that fewer people died because of it. Lockdown was not one “lever” among many: it was the nuclear option. The onus must be on those who promoted lockdowns to produce a table showing a clear correlation between the places that enacted mandatory shutdowns and their overall outcome in terms of excess deaths. But there is no such table; there is no positive correlation. Three years after, there is no non-theoretical evidence that lockdowns were necessary to save lives. This is not an ambiguous outcome; it is what failure looks like.
If anything, the correlation now looks like it goes the other way. The refusal of Sweden to bring in a lockdown, and the neighbouring Scandinavian countries’ shorter and less interventionist lockdowns and swifter return to normality, provide a powerful control to the international experiment. Three years on, these countries are at the bottom of the European excess deaths league table, and depending on which method you choose, Sweden is either at or very near the very bottom of the list. So the countries that interfered the least with the delicately balanced ecosystem of their societies caused the least damage; and the only European country to eschew mandatory lockdowns altogether ended up with the smallest increase in loss of life. It’s a fatal datapoint for the argument that lockdowns were the only option.
More On Why Adam Smith Was No Protectionist
Here’s the fourth in my series countering Curtis Ellis’s attempt, at American Greatness, to justify protectionism.
Editor:
You’ll forgive me for sending another letter as I continue to counter the fusillade of fallacies that is Curtis Ellis’s attempted defense of protectionism (“An American System for America Prosperity,” March 18).
Straining to portray Adam Smith as a protectionist, Ellis notes Smith’s worry that removing trade restrictions immediately might throw too many workers all at once into the ranks of the unemployed. The specter of this “disorder” did indeed lead Smith to concede that it might be better that “the freedom of trade should be restored only by slow gradations.” (Observe, by the way, that Smith’s ultimate goal here is the restoration of free trade.)
But Ellis fails to note that, immediately following this concession, Smith backtracked from it, arguing that this “disorder”
would in all probability, however, be much less than is commonly imagined…. [T]hough a great number of people should, by thus restoring the freedom of trade, be thrown all at once out of their ordinary employment and common method of subsistence, it would by no means follow that they would thereby be deprived either of employment or subsistence.
Smith then observed that there was no great “disorder” in Britain at the close of the Seven Years War when many men were suddenly released from the military into the civilian labor force. Smith believed this fact to be especially telling because discharged soldiers, in Smith’s view, are much less fit for new jobs in the market economy than are workers who’ve lost jobs to imports.
Smith ended his discussion of this point with a more fundamental argument:
The legislature, were it possible that its deliberations could be always directed, not by the clamorous importunity of partial interests, but by an extensive view of the general good, ought upon this very account, perhaps, to be particularly careful neither to establish any new monopolies of this kind, nor to extend further those which are already established. Every such regulation introduces some degree of real disorder into the constitution of the state, which it will be difficult afterwards to cure without occasioning another disorder.*
In short, Smith advised, don’t erect trade barriers to begin with. Smith’s advice here is precisely the opposite both of what Ellis advises, and what Ellis would have us suppose was offered by Adam Smith.
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
* All quotations from Smith are from Book IV, Chapter II of An Inquiry Into the Nature and Causes of the Wealth of Nations (1776).
Quotation of the Day…
… is from page 150 of the late Harvard and AEI economist Gottfried Haberler’s 1974 book, Economic Growth & Stability: An Analysis of Economic Change and Policies (footnote deleted; link added):
The broad fact is that in the [19th-century] United States the conditions for economic and industrial development were so favorable that tariff protection cannot have been more than a comparatively minor element in the whole picture. It surely has speeded up the growth of particular industries in certain locations, but the great sweep of overall growth was shaped by other more basic factors, especially the successive waves of immigrants from Europe, and was only marginally influenced, favorably or unfavorably, by tariff policies. These policies, it should be noted, have not been uniformly protectionist; periods of high protection alternated with periods of comparatively low duties. But whatever the overall impact of protection, which certainly was not profound and may well have been unfavorable both quantitatively (reducing the secular growth rate of GNP) and qualitatively (fostering the growth of urban slums), more important are the lessons taught by certain internal developments inside the U.S. economy.
[Frank] Taussig drew attention to the fact that inside the United States industrial centers sprang up, in the Middle West, later in the Far West and South, although these regions lacked tariff protection from the competition of the old established industries on the Atlantic Seaboard. This was contrary to what one would have expected on infant industry grounds.
March 23, 2023
More On Hayek
Here’s the second part of my recent conversation with Rosemarie Fike on Hayek. We devote a part of this conversation to what would likely have beeen Hayek’s attitude to covid lockdowns.
Some Links
George Leef is correct: People should indeed be seething mad over covid. Two slices:
When a few people dared to question the need for or legality of the COVID policies, officials replied that they were only doing what “the science” said was the right response, usually followed by the insinuation that doubters were dangerous, retrograde people who didn’t care about putting lives at risk. Even infectious disease experts who disagreed that there was any scientific justification for the panoply of rules were ridiculed, smeared, and “deplatformed.” The last time there was such a concerted attack on freedom of speech in the US was during World War I, when the Wilson Administration pulled out all the stops in an effort to silence critics of the war.
The COVID response led to a huge contraction of liberty. But officials and their many allies scoffed: “So what? Foolish people shouldn’t be allowed to make up their own minds when experts know what’s best.”
But now, despite efforts to suppress it, information has leaked out, showing that the COVID policies were a great mistake, imposed by arrogant officials who were not following science, but rather were following their own authoritarian instincts. They were not telling people the truth about COVID, but lying to justify their assertion of power. They weren’t doing what was in the public interest, but rather what was in the interest of certain pressure groups.
…..
Another medical expert who has sought to enlighten the public on the appalling behavior of government officials during COVID is Dr. Marty Makary of Johns Hopkins. He points out in this article that:
the Centers for Disease Control and Prevention weaponized research itself by putting out its own flawed studies in its own non-peer-reviewed medical journal, MMWR. In the final analysis, public health officials actively propagated misinformation that ruined lives and forever damaged public trust in the medical profession.
Indeed, we shouldn’t trust the medical profession, nor the “public servants” who shoved their knee-jerk authoritarian “solutions” to COVID down our throats, nor the journalists who were accomplices in the disaster.
Mr. Biden’s proclamation never made sense. By October 2021 it was clear that the shots don’t stop viral spread. Foreigners are no more infectious than citizens and green-card holders, who weren’t subject to the mandate and have faced no Covid travel restrictions since June. The policy also hampers tourism, which was down 35% in 2022 compared with 2019. In Europe, which lifted restrictions last year, the decline was only 21%.
Jeffrey Anderson, writing at City Journal, decries “the mask of ignorance.” A slice:
Specifically, Cochrane found, “Wearing masks in the community probably makes little or no difference to the outcome of influenza-like illness (ILI)/COVID-19 like illness”—or “to the outcome of laboratory-confirmed influenza/SARS-CoV-2”—“compared to not wearing masks.” Moreover, “The use of a N95/P2 respirators compared to medical/surgical masks probably makes little or no difference for the outcome . . . of laboratory-confirmed influenza infection.” Each of these claims was made with “moderate certainty,” the second highest of four certainty classifications. (“Moderate certainty” means that “the true effect is likely to be close to the estimate of the effect.”)
The mask advocates’ grasping-at-straws response to this review has been that Cochrane doesn’t know what it’s doing (despite its “worldwide” reputation for providing “the highest standard” of medical research). Or they say that Cochrane produced a fine study, but people didn’t read it correctly. Or randomized controlled trials aren’t to be trusted when it comes to masks (RCTs are universally considered the gold standard in medical research). Or we need more and better RCTs on masks, though 16 have already been conducted on surgical or cloth masks, none of which has provided compelling evidence that they work.
The mask advocates’ refusal to recognize that medical science does not support their steadfast belief is truly remarkable. Clearly, something more is going on here than a genuine debate about which health-care measures work.
Part of it, perhaps, is that progressives don’t like it when they can’t control something. Masks let them feel as if they can control the virus—and other people, to boot, the next best thing to controlling the virus.
There’s also the matter of identity. For some, a mask conveys quasi-religious symbolism—we believe in Health—and serves as a sort of spiritual symbol, a totem. No one wants to be told that their totem is powerless.
Evidence suggesting masks’ ineffectiveness has remained relatively constant over time. In addition to the individual RCTs conducted across the years, which I discussed in detail in a 2021 City Journal essay reviewing the evidence, Cochrane published a review on November 20, 2020, that closely resembles its January 2023 review. Cochrane’s earlier review found that wearing a mask “probably makes little or no difference to the outcome of laboratory-confirmed influenza . . . compared to not wearing” a mask, and that using an N95 “compared to” a surgical mask “probably makes little or no difference for the . . . outcome of laboratory-confirmed influenza infection.” In fact, the 2023 review repeats all of this language verbatim.
It shattered our pretence of rationality, too, as we retreated into superstition. True, this often had a modern, scientific basis, but many of the rituals, from masks outside to almost liturgical sanitation of hands, had as much effect on transmission as spells invoking the protection of imps would have done. Yet still they were followed, with a panicked presumption that a) they would work and b) that, by doing them, one would somehow be shown as a “good person”. The scientific method mutated into “The Science” (TM) which stood as pagan totem: its name chanted in invocation, its sacrifices mandatory.
Many of the same logical fallacies remain in rude health. Even now, pro-lockdowners ignore the example of Sweden because its experience of Covid doesn’t fit their mantra – “we had no choice”. Justifications (but not opinions) have shifted with the evidence. When Sweden appeared to be doing badly, it was “because it failed to lock down”. Now the data have moved in Sweden’s favour, it’s because “Sweden had an unofficial lockdown all along”. The Telegraph’s Lockdown Files exposed the self-fulfilling logic behind many decisions. Coercion became its own justification, as when Matt Hancock feared cutting isolation times would dilute the message and “imply we’ve been wrong”. Whether you agree with lockdown or not, this is an appalling way to govern.
Many economic commentators proved remarkably slow to grasp what commonsense onlookers had been saying all along; that spraying money around is bound to lead to inflationary disaster. With a few notable exceptions, such as the Sunday Telegraph’s Liam Halligan and Kate Andrews of the Spectator, most reached the Economist’s view in December 2020: “A surge in inflation looks unlikely.” There were probably face-saving reasons at play here, as well as ignorance. Having argued for “generous” support schemes, some in the economic establishment perhaps had too much skin in the game to take a truly impartial view.
Two lockdown facts:
1. Lockdowns happened because the laptop class thought it could isolate itself from society without facing economic harm.
2. Lockdowns failed because societies are deeply unequal and needed the essential working class to keep society going.
[DBx: I’ll add a third fact – one that I know Jay agrees with. It’s this: Lockdowns failed also because modern society is both too spontaneous and too complex not to be terribly disrupted by such a ham-fisted intervention.]
Barry Brownstein counsels the embrace of liberalism.
This is indicative of a deeper economic dysfunction born of the combination of extended periods of unusually low interest rates, costly bank regulations that stifle business lending and still don’t avert panics, the tax and red-tape burdens on the productive private economy, terrible energy policies and so much more.
Writing in the Wall Street Journal, Judy Shelton busts some prevalent myths about inflation. Here’s her conclusion:
In other words, when capital is allocated through meaningful price signals that reward long-term investment in productive economic opportunities, people become gainfully employed and real growth leads to greater prosperity.
Quotation of the Day…
… is from page 29 of F.A. Hayek’s great 1973 essay “Liberalism,” as this essay appears as chapter one of Essays on Liberalism and the Economy (2022), which is volume 18 (expertly edited by Paul Lewis), of The Collected Works of F.A. Hayek:
And the kind of comprehensive single organisation of the whole society, which would be necessary in order to secure that each gets what some authority thinks he deserves, must produce a society in which each must also do what the same authority prescribes.
DBx: Hayek died on this date, March 23rd, in 1992.
March 22, 2023
Revisionist History?
Here’s a letter to a long-time correspondent who remains wholly convinced of the brilliance of Trumpian trade ‘theory.’
Mr. McKinney:
You describe my “refusal to accept tariffs as the leading reason for American economic expansion” in the 19th century as “a blatant example of revisionist history.”
Please re-read my post. Among the scholars quoted there are Nobel-laureate economist Douglass North writing in 1960, and Frank Taussig writing in 1888. A professor of economics at Harvard, Taussig was among the most prominent American mainstream economists of the late 19th and early 20th centuries. And Taussig’s book from which I quote – The Tariff History of the United States – has long been and remains a widely acclaimed classic. Although now very old, it will continue to stand – along with Douglas Irwin’s 2017 book, Clashing Over Commerce – as an indispensable history of U.S. trade policy.
Taussig (135 years ago) and Irwin (six years ago) – and North (63 years ago) – reject the notion that America’s economic growth in the 19th-century was furthered by trade restrictions. It’s possible that Taussig, Irwin, and North (and a slew of other trade scholars and economic historians) are wrong and that you and Curtis Ellis (and a slew of other economic nationalists) are right. But right or wrong, nothing about the rejection of the argument that America’s economic growth was caused by, or even furthered by, trade restrictions is “revisionist history.” Instead, it’s history that’s long-standing and scholarly – and that happens to reach objective conclusions that disrupt protectionists’ fantasies.
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
Bonus Quotation of the Day…
… is from page 148 of the late Harvard and AEI economist Gottfried Haberler’s 1974 book, Economic Growth & Stability: An Analysis of Economic Change and Policies:
Proponents of infant industry protection and “import substitution” almost invariably claim that the now developed countries – the United States, Germany, France, Japan, etc. – owe their development in the nineteenth century to protection from overpowering competition of the old established British industries. Actually the verdict of history is very different.
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