Russell Roberts's Blog, page 361

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(Don Boudreaux)

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Brad DeVos is understandably dismayed by the covid-lockdowns’ destruction of third places – that is, places for human beings to gather other than home and work. A slice:

Lockdown supporters dismissed concerns from their neighbors with dismissive and privileged statements. “Just work out at home.” “Make your own coffee and avocado toast.” “You can go a few months without your hairstylist.” On and on they went, dismissing people crying out for help as their depression grew.

It’s true we can make toast and do jumping jacks at home. This is obvious and misses the point. We depend on third places for our mental health. A widow sits at the coffee shop counter each morning because it could be her only social interaction of the day. A father goes to the gym to burn off stress. A mother goes to the salon to talk to other parents. A teenager attends a concert instead of sitting alone in a dark basement with dark thoughts.

My intrepid Mercatus Center colleague Veronique de Rugy very much likes the forthcoming book by Charles Koch and Brian Hooks; it’s titled Believe in People: Bottom-Up Solutions for a Top-Down World.

Jessica Melugin warns of the antitrust action against Google.

I do hope that Ibram X. Kendi accepts Coleman Hughes’s invitation to a public conversation.

Pierre Lemieux reminds us again that imports are not a drag on the economy. (Public discourse about trade is in a sorry state when so many people must continually be reminded by scholars such as Pierre that receiving more goods and services in exchange for those that you give up makes you richer, not poorer.)

Jonah Goldberg is rightly mystified by so many “Progressives'” absurd ‘understanding’ of the meaning of constitutional originalism.

Wall Street Journal columnist Holman Jenkins understands the nature of politics. A slice:

The two-party system has served America well for two centuries, but the government it oversees has evolved into a vast rent-seeking and redistribution apparatus the founders never envisioned. Reforms Americans might want seem permanently blocked by Beltway influencers: A cost-effective health-care system. A tax code that isn’t a piñata for special interests. A primary education system that doesn’t treat its neediest customers as chattels even as it provides good service to those who can use a competitive real-estate market to force local officials to respond to parental desire for better schools.

Quotation of the Day…

(Don Boudreaux)

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… is from pages 65-66 of David Friedman’s superb 1996 book, Hidden Order:

Most public discussions of trade issues are based on a system of ideas that disappeared from economics about a hundred years after the Copernican revolution eliminated Ptolemy’s system from astronomy. It is rather as if the New York Times had carried editorials worrying about how the Apollo expedition was going to avoid crashing into the first of the crystalline spheres – the one at the orbit of the moon.

DBx: Yes. And so matters remain nearly a quarter century after Friedman wrote these words. As we enter the third decade of the 21st century, prominent discussions of trade policy continue to be grounded in medieval ignorance.

Donald Trump, Peter Navarro, Joe Biden, Chuck Schumer, Bernie Sanders, Oren Cass – the list is long of people who continue proudly to peddle the economic equivalent of Ptolemy’s “theory” of celestial spheres. These people should, of course, be deeply embarrassed by their comically ridiculous pronouncements on trade. But their knowledge of economics is more than sufficiently abysmal to protect them from such chagrin.

No, In the Late 19th Century Oil and Steel Prices Were Not Monopolistically High

(Don Boudreaux)

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Here’s a letter sent several days ago to the Washington Post:

Editor:

Reporting on Google, Rachel Lerman writes that “U.S. antitrust laws were initially written in 1890 in an era where Standard Oil and, soon after, U.S. Steel, dominated their industries. They controlled so many aspects of the market that small companies had no choice but to work with them, driving up prices” (“Government kept to the sidelines as Google got big. Now regulators have the chance to rein the company back in.” Oct. 12).

Her claim about prices is mistaken. When Rockefeller founded Standard Oil in 1870, kerosene – that firm’s principal output – sold for 26 cents per gallon. By 1885, as Standard continued to grow because of Rockefeller’s unusual skill at achieving production and distribution efficiencies, the price of a gallon of kerosene had been driven down to 8 cents. By 1890 when the Sherman Antitrust Act was passed, kerosene’s price had fallen further to 7.375 cents per gallon.*

Similarly for prices of steel. Among the main uses of steel back then was making rails for railroads. The price per ton of Bessemer steel rails in 1880 was 30 percent lower than in 1870, and by 1890 the price of these rails had fallen by another 53 percent.**

These dramatic price declines – which were common also in other industries – belie the potted historical claim that the U.S. economy leading up to passage of the Sherman Act was gripped by monopolists. On the contrary, the evidence shows that the technological and organizational advances of that era made it unprecedentedly competitive.

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

* Donald J. Boudreaux & Burton W. Folsom, “Microsoft and Standard Oil: Radical Lessons for Antitrust Reform,” Antitrust Bulletin, Fall 1999.

** Thomas J. DiLorenzo, “The Origins of Antitrust: An Interest-Group Perspective,” International Review of Law and Economics, June 1985; and “Andrew Carnegie,” May 2017.

Some Links

(Don Boudreaux)

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With his usual great thoroughness, Phil Magness reports on lockdown denialism. A slice:

A quick aside: does anyone remember all those stories from over the summer, up to and including Dr. Anthony Fauci’s congressional testimony in August, in which the lockdowners lavished praise on Europe for supposedly shutting down the “right way” in the spring and successfully beating back the virus? Or how that experience supposedly showed that the United States did not lock down hard enough or that it reopened too soon? Those stories were shown to be utter nonsense at the time also – the U.S. lockdowns matched several European countries in stringency, and generally lasted 1-2 months longer than their European counterparts. But Europe’s new Covid case patterns have now vastly overtaken the same metric for the United States.

Unfortunately, lockdowner ideology continues to spread in the United States as well. True to form New York City recently reimposed zip code-based “hot spot” lockdowns last week – and promptly went to work issuing over $150,000 worth of fines to violators, once again targeting poor people and minority groups in the process. We will likely see this pattern spread in coming weeks much like Europe, only in the United States’s case it will come in addition to residual restrictions from the spring. Although the middle of the country has “reopened” for the most part, large sections of the Northeast and the West Coast – two of our major population centers – were still operating under more stringent restrictions as of two weeks ago than almost all of Europe.

As recently as 2011 the World Health Organization would likely have endorsed the Great Barrington Declaration.

J.D. Tuccille explains some of the consequences of the plague of government-imposed pandemic restrictions. A slice:

Inconsistency about whether mask wearing was virtuous or antisocial also bred defiance of mask requirements, turning the pieces of fabric into “a flash point in the virus culture wars,” as The New York Times put it. Blame for the controversy can be laid, at least in part, on confusion sown by government officials themselves.

“Seriously people- STOP BUYING MASKS!” U.S. Surgeon General Dr. Jerome Adams tweeted on February 29, in an effort to maximize masks available to health care workers. “They are NOT effective in preventing general public from catching #Coronavirus.”

By June, the Centers for Disease Control and Prevention had changed its messaging and was urging general use of masks. But that guidance was contradicted by the World Health Organization, which said that “the widespread use of masks everywhere is not supported by high-quality scientific evidence.”

Writing in today’s Wall Street Journal, David Henderson and Ryan Sullivan call for an end to the covid-19 closure of schools. A slice:

One reason economists care about lost earnings is that they increase the risk of death. Lower incomes mean people aren’t able to buy safer cars and afford healthier foods, which inevitably leads to shorter lifespans. Even if the reports overstate the financial losses dramatically, these are large losses and will surely lead to tragic health outcomes in the future. Moreover, mental-health surveys indicate that keeping young children isolated from each other for months has devastating psychological consequences.

With deep insight and subtle wit, my GMU Econ colleague Bryan Caplan ridicules so-called “diversity, equity, and inclusion” training indoctrination now popular on college campuses.

Dan Ikenson and Simon Lester argue that the pandemic is no justification for protectionism or a retreat from globalization. A slice:

International trade and cross‐​border investment produce some degree of reliance and risk, but in policymakers’ rush to indict trade and globalization, they dismiss the enormous benefits that Americans get from participating in the global economy as workers, consumers, producers, and investors. Those benefits would be casualties of a protectionist overreaction that would make us poorer, more vulnerable, and less resilient.

State Control of Private Parties’ Communications is Censorship

(Don Boudreaux)

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Here’s an open letter to EconLog commenter “David F”:

Mr. F:

Objecting to David Henderson’s refusal to call the content decisions and other rules made by private companies such as Google and Facebook “censorship,” you comment:

I think the founders would be amazed to discover that the biggest threat to free speech came not from the government but from corporations. I bet they would have crafted the first amendment accordingly if they had been able to foresee the likes of Twitter and Facebook.

I could not disagree more with your dismaying and unintentionally ironic argument.

By calling the communications choices made by private companies “censorship” and then summoning the state to prevent this so-called “censorship,” the long-standing and wholly justified liberal hostility to state control over the choices that private people make in their communications is subtly tapped into to justify state control over the choices that private people make in their communications.

In short, genuine censorship is endorsed in the name of preventing faux censorship. It’s insidious and dangerous. And those who endorse any such use of state power are playing with a flame-thrower that will inevitably be turned on them – a reality that was recognized and rightly feared by James Madison and other American liberals of the founding era.

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

Quotation of the Day…

(Don Boudreaux)

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… is from page 130 of the late, great Hans Rosling’s 2018 book, Factfulness:

Never, ever leave a number all by itself. Never believe that one number on its own can be meaningful. If you are offered one number, always ask for at least one more. Something to compare it with.

Be especially careful of big numbers. It is a strange thing, but numbers over a certain size, when they are not compared with anything else, always look big. And how can something big not be important?

DBx: Indeed. I wish more people would take this sound counsel to heart when hearing reports about Covid-19.

Adam Smith Would Have Opposed Industrial Policy

(Don Boudreaux)

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With special thanks to my Mercatus Center colleague Matt Beal for producing this series of short videos on Adam Smith, here’s one on industrial policy.

Explicable and Inexplicable Ignorance

(Don Boudreaux)

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In my latest column for AIER, I distinguish explicable ignorance from inexplicable ignorance. A slice:

Equally inexplicable is the widespread trust that people put in politicians. How, for example, can anyone who watched senators questioning Supreme Court nominee Amy Coney Barrett come away with an impression other than that these elected officials – Democrats and Republicans alike – are either stupendously stupid or monstrously Machiavellian?

Or consider this report by Peggy Noonan on a recent exchange between the Speaker of the House, Nancy Pelosi, and CNN anchor Wolf Blitzer; the subject was yet another proposed covid-19 “stimulus” bill:

He [Blitzer] said it’s not about him but people in food lines. Mrs. Pelosi: “And we represent them. And we represent them. And we represent them. And we represent them. We know them. We represent them and we know them. We know them. We represent them.” “Thank you for your sensitivity to our constituents’ needs.”

“I am sensitive to them because I see them on the street begging for food,” Mr. Blitzer said.

Mrs. Pelosi: “Have you fed them? We feed them.”

Nancy Pelosi presides over a chamber of politicians who vote on taxing and spending bills that transfer money from some Americans to other Americans – a fact that (inexplicably!) propels Ms. Pelosi to boast that she and her colleagues, not taxpayers such as Mr. Blitzer, feed poor Americans. On top of this appalling pretension, Ms. Pelosi expects CNN’s audience to believe that she and her Congressional colleagues “know” poor Americans in a way that non-politicians don’t.

As Peggy Noonan wrote about this interview, “It was bonkers.”

And yet most people continue to defer to people such as Pelosi … and to Trump, and Biden, and Cuomo, and Newsom, and to other such people, in Washington and in state capitals, who routinely parade in plain view their raw ambition, their delusions of possessing supernatural powers, and their lack of ordinary human decency.

Inexplicably, though, countless Americans demand that such untrustworthy people be given even more power. These Americans remain blind to the reality that power, once created, is inevitably seized by such people. This blindness is not merely inexplicable, but also fatal.

Wisdom from Vernon Smith

(Don Boudreaux)

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In response to my note to Ms. Lori Baio on the dangers of so-called “stakeholder capitalism,” my emeritus Nobel-laureate colleague Vernon Smith e-mailed to me this bit of wisdom (shared here with Vernon’s kind permission):

Don:

May each of us as individuals and as firms collect more in revenue for what we produce than we incur in cost for the resources consumed in producing that revenue.

Those who do not profit are a burden on others. Those who do account for the wealth of society.

May every person, every economic entity, be a center of profit.

Vernon

Some Links

(Don Boudreaux)

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Stacey Rudin eloquently exposes the inexplicable superstition that fueled – and that continues to fuel – most of the world’s hysterical reaction to the coronavirus. A slice:

Perhaps [Neil] Ferguson never believed the world’s most powerful governments would take his predictions seriously. The world had not acted on his past predictions, so maybe he expected more of the same. This time, however, the media — breathlessly reporting on hospital overflow in Northern Italy; bolstered by fear-driven groupthink on social media —had created the perfect environment for his paper to flourish. Whether by some powerful design or unintentionally, all humanity grasped at Ferguson’s recommendations like a lifeline. COVID would kill 2.2 million Americans and 500,000 Britons, we were told, unless we adopted Ferguson’s new type of NPI called “suppression.” If we did that, we could cut the death toll in half.

This piece by Ron Bailey offers more evidence – not that more is needed – that to trust government to protect us from contagious diseases is foolish.

Inspired by de Tocqueville, Mary Anastasia O’Grady laments Chile’s turn away from liberalism. A slice:

For sure heavy doses of Marxist indoctrination at Chilean universities and income “equality” claptrap from intellectuals and the media have tilted the country to the left.

But Alexis de Tocqueville put his finger on something in “Democracy in America,” when he wrote that “the hatred that men bear to privilege increases in proportion as privileges become fewer and less considerable, so that democratic passions would seem to burn most fiercely just when they have least fuel. . . . When all conditions are unequal, no inequality is so great as to offend the eye, whereas the slightest dissimilarity is odious in the midst of general uniformity.”

My Mercatus Center colleague Christine McDaniel has three wishes for trade policy.

Portentous?

My GMU Econ colleague Bryan Caplan is more worried, personally, about the political left than the political right – but perhaps for reasons different than you might guess.