Russell Roberts's Blog, page 363

Quotation of the Day…

(Don Boudreaux)

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… is from page iv of the 1969 Arlington House edition of Ludwig von Mises’s 1944 Yale University Press book, Omnipotent Government: The Rise of the Total State and Total War (available free-of-charge on-line here) (emphasis added):

The program of economic freedom is not negativistic. It aims positively at the establishment and preservation of the system of market economy based on private ownership of the means of production and free enterprise. It aims at free competition and at the sovereignty of the consumers. As the logical outcome of these demands the true liberals are opposed to all endeavors to substitute government control for the operation of an unhampered market economy. Laissez faire, laissez passer does not mean: let the evils last. On the contrary, it means: do not interfere with the operation of the market because such interference must necessarily restrict output and make people poorer. It means furthermore: do not abolish or cripple the capitalist system which, in spite of all obstacles put in its way by governments and politicians, has raised the standard of living of the masses in an unprecedented way.

DBx: Reasonable people can and do disagree in their assessments of how well people in market settings ‘solve’ problems compared to how well people in political settings ‘solve’ problems. But in both cases it is always and only people – flesh-and-blood, real-world, puny-brained, and imperfect men and women – acting to ‘solve’ problems. To change the institutional setting is not to invest human beings with, or to strip them of, supernatural powers and motivations.

If the previous paragraph sounds trivial, it is – or, rather, it should be. Unfortunately, a great number of proposals to substitute government-designed constraints and rewards for the constraints and rewards that inhere in competitive markets ignore this reality. These proposals are built on the implicit assumption that individuals in political settings somehow gain access to knowledge unavailable in private settings, and somehow become significantly less self-interested than they are when acting in non-political settings. Just how this access to knowledge is achieved, and how this transformation of motivation is accomplished, are never specified. It’s as if miracles occur.

…..

For the record, in the above I wrote ‘solve’ (in quotes) to signal awareness of the fact about which Thomas Sowell reminds us: Most social matters have no solutions; they have trade-offs.

Bonus Quotation of the Day…

(Don Boudreaux)

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… is from page 2 of the 5th edition (1966) of Karl Popper’s 1945 study, The Open Society and Its Enemies:

Can we expect to get more than the irresponsible reply of the soothsayer if we ask a man what the future has in store for mankind?

DBx: So true. Yet the world is over-populated with soothsayers, largely because it is overpopulated with people who not only swallow soothsaying silliness, but who positively demand that they be force-fed such absurd delusions.

Some Links

(Don Boudreaux)

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Here’s the first of a two-part series, at EconLog, by David Henderson on why he is unfavorably impressed with Tyler Cowen’s reasons for rejecting the Great Barrington Declaration. A slice (coming immediately after David quotes Tyler’s complaint that the Declaration “fails to emphasize data”):

We know that vulnerability to death from COVID-19 is more than a thousand-fold higher in the old and infirm than the young.

That’s data, and pretty relevant data.

Cowen points out correctly that the best policies of today are [probably] not the best policies two months from now. But the big advantage of the focus the Declaration proposes is that it allows for that.

Dr. Sunetra Gupta – one of the three authors of the Great Barrington Declaration – defends the reality of herd immunity against those who dismiss it.

Mike Yeadon explains why he believes that Britain’s Scientific Advisory Group on Emergencies (SAGE) vastly overestimates the dangers of covid-19. (HT Lyle Albaugh) It’s a long read but one that, in my opinion, is worthwhile.

I always enjoy being a guest on Dan Proft’s radio program.

Robby Soave reports on the perverse priorities of officials at the San Francisco Unified School District.

John Cochrane is trying to understand the political left.

Juliette Sellgren’s podcast with Jonathan Rauch on cancel culture is superb.

Here’s part 8 of George Selgin’s excellent series on the New Deal.

Quotation of the Day…

(Don Boudreaux)

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… is from page 207 of George Will’s great 2019 book, The Conservative Sensibility:

As government has grown bigger in size, scope, and pretensions, it has become more attentive to small factions that do not claim to represent the will of the majority. The most that each faction claims is that a majority would favor what the faction favors if the majority were thinking clearly. Or that it knows better what is best for the majority. Or that it does not give a tinker’s damn what other factions think.

Competition Is a Discovery Procedure

(Don Boudreaux)

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Brink Lindsey and Sam Hammond have a fan in one Rodger Griff:

Mr. Griff:

Thanks for your follow-up e-mail.

You wonder how I “can argue that government officials know too little to succeed at industrial policy and at the same time think that private businessmen and investors know enough to succeed in business.” I am, you say, “contradictory.”

But I’m not contradictory. My argument is that no one knows which products, methods of production, and kinds of businesses are better today for the home economy and which will be better tomorrow for this economy. This ignorance cannot be overcome by econometric studies, committee meetings, thinktank position papers, or democratic elections. The only way to discover what are better uses of resources is market competition. Only competition among producers who are free to enter and leave the market – producers who are allowed to gain customers never through force but only through persuasion – will reveal which uses of resources are worthwhile and which aren’t. Such knowledge is simply unknowable in the abstract and beforehand.

I hesitate to use sports analogies, because they too easily mislead. (Economic competition shares some features with sports competitions, but is in many other ways entirely different.) But here’s one analogy that’s perhaps worthwhile:

Proponents of industrial policy are akin to an Olympics official who, before a foot race is run, declares confidently that his research reveals to him that the fastest runner is Jones – and therefore orders that the race not be run. The official then, with much fanfare and self-satisfaction, hands a gold medal to Jones.

Clearly, this academic method of discovering who is the fastest runner is fraudulent. Equally fraudulent at discovering better uses of resources is industrial policy.

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 95 of the May 9th, 2020, draft of the important monograph – forthcoming this month jointly from the Adam Smith Institute and AIER – by Deirdre McCloskey and Alberto Mingardi, The Myth of the Entrepreneurial State:

The wielders of the scatter gun declare earnestly that they are serving such needs [of promoting science to spur economic development] by lavishing financial buckshot on space telescopes and number theory and the particle accelerator at CERN in Geneva, and giving out subsidies to millions of students to master such subjects. They are mistaken. The target is in the other room, labeled Technology and Engineering, and is well funded, thank you very much, by profit-making companies. Not STEM, but TE.

DBx: It’s a common practice of those who make a case for U.S. government industrial policy to lament the flatness over the decades of funding directed toward research & development by the federal government. (Just why complaining about the performance of politicians is believed by industrial-policy proponents to help make the case for putting more of the economy under the control of politicians is a mystery, one that I’ll here ignore.) But as the above graph shows, and as Deirdre and Alberto note, the relevant picture looks quite different – specifically, much better – when we take into account expenditures on R&D by private businesses – you know, the short-sighted entities that industrial-policy advocates insist perform poorly unless controlled more tightly by politicians and bureaucrats.

The above graph is found in this 2018 article by St. Louis Fed economists Ana Maria Santacreu and Heting Zhu.

On the Origins of American Antitrust Legislation

(Don Boudreaux)

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I’m deeply honored to be the first of Juliette Sellgren’s guests – on her wonderful podcast, “The Great Antidote” – to be the first to appear for a second time.

In this podcast, recorded earlier this week, Juliette and I discuss the history of American antitrust legislation. This legislation was not meant to promote economic competition; it was intended to protect politically influential firms from the competition that was being unleashed by new, entrepreneurial firms – especially those taking advantage of the economies of scale made possible by railroads and electronic communications.

(I do apologize for mistakingly saying that the great Gustavus Swift was born to German parents. He was, in fact, born to descendants of English settlers in America.)

The Black Death

(Don Boudreaux)

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Someone (who I don’t know) sent to me a friendly e-mail applauding my recent AIER piece on covid-19 being no categorically unique threat to humanity. This person tells me that one of his relatives believes quite the opposite – specifically, that covid-19’s eventual impact on humanity might come to rival that of the Black Death of the mid-14th century. The Black Death, recall, wiped out, in a mere five years, one-third of Europe’s population.

So my correspondent’s relative believes that covid-19 might well, within five or so years, wipe out approximately 110 million Americans.

My. Oh. My.

I have no first-hand confirmation that my correspondent’s relative really said such a thing, and you have no first-hand confirmation that I’m here writing truthfully. But given the continuing hysteria with which people are reacting to covid-19, I believe that my correspondent writes the truth about his relative (and you should have no trouble believing the truthfulness of my report). People’s risk assessments regarding covid-19 seem to have absolutely no grounding in reality.

2020 truly is, as Holman Jenkins wrote, “our year of living derangedly.”

Some Links

(Don Boudreaux)

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George Will urges that today’s economically and historically uninformed antitrust wolves be kept, despite their rabid howling, in their den. A slice:

Warning against “monopoly fatalism,” the Cato Institute’s Ryan Bourne says: Time was, the A&P grocery chain was the entrenched “Amazon of its day,” with almost 15,000 stores by 1935. Seen one recently? Between 1976 and 1978, the government worried that IBM might have a monopoly on the “office typewriter industry.” A November 2007 Forbes cover story asked, “One Billion Customers — Can Anyone Catch the Cell Phone King?” Apple? No, Nokia. But Apple’s iPhone had arrived in June 2007. Bourne says Kodak’s domestic position in photography once “was even more dominant than Apple’s position in the mobile vendor market today.” “Who Will Break iTunes’ Monopoly?” asked a 2010 British headline. Fifty years ago, Xerox’s almost 100 percent of the photocopier market aroused antitrust complaints. Twenty-five years ago, the browser for about 90 percent of Internet users was the Netscape Navigator. In 1997, the year Google was founded, Yahoo dominated the search engine market. Twenty years ago, AOL had an estimated 90 percent of the instant messaging market. “Will Myspace ever lose its monopoly?” asked a Guardian technology writer in 2007, when it was the most-visited website. In 2008, it had an estimated 73 percent of all traffic on social networking sites. Remember when WordPerfect was considered an unchallengeable word-processing program?

My intrepid Mercatus Center colleague Veronique de Rugy isn’t impressed with Donald Trump’s artistry at bargaining. A slice:

Most of the economic issues continue to come from the restrictions on commerce in many states and the fact that consumers are wary of catching or spreading the COVID-19 virus. No level of magical thinking and spending will really boost the economy under these circumstances.

Stacey Rudin uncovers reasons for the confusion behind the recent mixed messages on lockdowns from the WHO. A slice:

It’s difficult to reconcile this [pro-lockdown] stance with the data from states and nations which did not lock down for COVID19. For example, Swedish all-cause mortality is on average for 2020 — incredibly, the nation had higher per-capita mortality just five years ago, in a year in which there was no pandemic. This undeniable, easily-verifiable fact is shocking in light of the decimation of world economies on the premise of “stopping” a “highly deadly” pathogen. Far from “unethical,” allowing the virus to “run free” produced a much better result than tight lockdowns such as those imposed in Argentina and Peru — yet [WHO director-general] Tedros is ignoring this.

John O. McGinnis warns of the evil lurking in politicians’ demands to “follow the science.” A slice:

If the conveyor belt of science dictating politics has fallen out of favor in administrative law and is even more obviously inapplicable to politics in general, why are so many politicians returning to its rhetoric? The reason is that, even if it is an intellectually bankrupt tradition, it remains politically useful. Scientism is an attempt to shut down political debates.  It shifts the discussion from questions of value, which are accessible to all, to questions of facts which are in the domain of the experts, thus shifting the terrain of the debate. It also hampers the evolution of expert consensus, because when science becomes a front for politics, dissenting from the party lines becomes harder even for experts. And it allows progressives to portray their opponents as ignorant. That has been a common trope of progressive politics: conservatives are the stupid party.

Bryan Caplan makes the case that “the freedom to do bad things is important.  Much more important, though, is the freedom to do good things that sound bad.”

Scott Lincicome writes sensibly about the heavy costs of Trump’s trade wars war on Americans who buy imports.

Ron Bailey corrects the misperception created by a new U.N. report on losses caused by natural disasters.

Paul Romer Misreads the Great Barrington Declaration

(Don Boudreaux)

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David Henderson, over at EconLog, did a short blog post on a tweet by Nobel-laureate economist Paul Romer – a tweet that is critical of the Great Barrington Declaration. Here’s the tweet:

Doesn’t sound like China is going to sign up for the “Great Barrington” plan for surrendering to the virus.

Wouldn’t it be refreshing to live in a country where everybody understands that it is the government’s job to do whatever it takes to protect public health? https://t.co/9RqSf7LMaH

— Paul Romer (@paulmromer) October 14, 2020

And here’s David’s excellent response.

And here’s a modified version of a comment that I left on David’s post:

Another criticism of Paul Romer’s statement warrants mention: He misinterprets the Great Barrington Declaration. It is not a libertarian call for the government to play no, or a suboptimal, role in protecting public health. And it is certainly not a “plan for surrendering to the virus.” It is, instead, a statement about what are the best means of protecting public health.

It’s true that the sponsor of the Declaration, AIER, is a pro-liberty organization. It’s true also that the authors of the Declaration argue in this case in favor of fewer government-imposed restrictions. But the authors argue as they do so because they believe that what they call “Focused Protection” (as opposed to the centralized, unfocused manner in which lockdowns have been imposed) is, far from a ‘surrender to the virus,’ a superior means of protecting public health.

Of course, the Declaration’s authors might be mistaken. But mistaken or not, theirs is not a manifesto for “surrendering to the virus.”

Yet Romer reads the Declaration as an ideologically driven effort to minimize the role of government even though doing so is, in his view, to ‘surrender’ to the virus. The fact that he reads the Declaration in this manner suggests not only that he believes that the medical sciences (and the economics) are all settled on the Truth that lockdowns are the best means of protecting public health, but also that the authors and signatories of the Declaration accept this Truth but are driven by anti-government ideology to ignore it. The authors and signatories, as Romer interprets them, are so intent on pursuing an anti-government ideology that they’re willing to ‘surrender to the virus.’

This reading is so utterly unjustified that it causes me to wonder if Romer has actually read the Declaration.

While improved public health is the main focus of the Great Barrington Declaration, its authors recognize also, if only implicitly, that this desirable goal must be traded-off against other desirable goals. This fact about the Declaration only makes it stronger. It is more than odd that an economist writes, as Romer above does, as if protecting public health is not to be traded-off against any other desirable goal. As commenter AMT insightfully says above, ““Whatever it takes” sure doesn’t sound likely to pass a cost/benefit analysis….”