Russell Roberts's Blog, page 365

Some Links

(Don Boudreaux)

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In today’s Wall Street Journal is this letter by my intrepid Mercatus Center colleague, Veronique de Rugy:

In your otherwise excellent editorial “Pelosi’s Taxpayer Ransom Demand”(Oct. 7), you write that “aside from money for beleaguered industries like airlines, there was very little stimulus at all.” This is a terrible mistake. You assume that the airline bailout would be stimulative. Yet, as you have noted in the past, and as academic research also shows, bailouts benefit mostly shareholders and creditors rather than workers. If this bailout were about workers, it would cost less than $2 billion—$50,000 (for six months of payroll) times 32,000 furloughed employees—not $25 billion. Bailouts create disincentives to restructure industries efficiently, and they create many moral hazards.

In short, bailouts spend taxpayers’ money not merely wastefully, but also destructively.

Jagdish Bhagwati would have been a much better choice for receiving this year’s Nobel Prize in Economics.

I’m a big fan of philosopher Christopher Freiman. And don’t miss Juliette Sellgren’s excellent podcast with Freiman.

Jenin Younes exposes the weaknesses of Gregg Gonsalves’s attacks on the Great Barrington Declaration.

George Leef weighs in against the absurdity of the ad hominem attacks on the Great Barrington Declaration.

I am not someone who always agrees with Heather Mac Donald, but I agree – and strongly – with nearly all that she writes here. A slice:

“Be safer?” The United States has wiped out decades of hard-won prosperity by following the spirit-crushing injunction to “stay safe.” The lockdowns have destroyed the dreams of thousands of entrepreneurs and have put millions out of work, leaving cities like New York moribund ghost towns. The school closures are consigning millions of children worldwide to stunted lives due to delayed, if not now permanently deferred, acquisition of reading, writing, and socialization skills. Children are being inculcated into a culture of fear.

Pittsburgh Tribune-Review: “On truth’s side”

(Don Boudreaux)

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In my column for the December 29th, 2010, edition of the Pittsburgh Tribune-Review I wrote about one aspect of my philosophy of teaching economics. You can read my column beneath the fold.

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The Absurdity of Ad Hominem

(Don Boudreaux)

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Joakim Book patiently and thoroughly exposes the weaknesses in ad hominem arguments – in this case with reference to ad hominem attacks on AIER’s Great Barrington Declaration. Two slices:

As soon as the Bought-and-Paid-For objection is raised, two strange things happen. First, we start investigating the funding relationships behind the research in a totally unworthy fashion – remarkably akin to identity politics: what someone says is downplayed in favor of the skin color, gender, class, or demographics of the person saying it, or in this case their funding bodies. That is, we cease following the proud tradition of the Enlightenment and turn back time a few centuries in the application of scientific inquiry: devout believer or heretic destined for the stake?

Second, we disregard the evidence of the case in question! Instead of looking at what matters for the case at hand we look at what doesn’t matter: the identity of the researcher, her previous allegiances or funding backgrounds.

…..

Instead of arguing with the scientists of the declaration, on the merits of the scientific questions themselves, [Nafeez] Ahmed investigated AIER’s funding relationships. Surely, anyone saying something that Ahmed disagrees with must be a quack. Sure enough, Ahmed managed to dig up a (tiny) relation to the Charles Koch foundation: a $68,100 donation from 2018 (for reference, the publicly-available financial statements of AIER show a balance sheet of $37 million, with another $167 million held in Split-Interest Agreements).

Because AIER has apparently taken even a small amount of money from someone that the author dislikes, anything ever written on this site can be safely disregarded. What an easy life Ahmed lives! Find a disturbing argument, look up the financials, and if you find something distasteful, reject – without substantive evidence – everything they say.

Perhaps we can extend the logic of this senseless position even further. Everyone is financed by somebody: after all, even researchers and writers need to eat. If money “taints” your opinion – newsflash, it doesn’t – then how come it is only Koch brothers and oil company investments that do? Why not advertising money? Or government grants? What about whoever pays Ahmed’s salary? Or indeed anyone associated with a university: after all, every university with an endowment – until recently, when divestment became a symbolic aim for concerned student campaigns – holds investments in a wide range of securities, including oil, gas, and mineral extracting firms.

DBx: One especially comical feature of the accusation that AIER’s opposition to covid lockdowns springs from a 2018 contribution that AIER received from the Koch Foundation is that Tyler Cowen and the Mercatus Center this past Spring awarded funds to Imperial College modeler Neil Ferguson. The reason for this grant of funds was Tyler’s admiration of the fact that Dr. Ferguson’s model served as the spark for massive lockdowns in the U.K. and the U.S. But here’s the thing: Until last year, Charles Koch served on the board of Mercatus and has been, and continues to be, a contributor. Clearly, if the Koch Foundation is buying opposition to covid lockdowns, it’s doing a poor job!

And I myself am on the Mercatus board and have a deep, and proud, affiliation with Mercatus. I’m also a weekly – and proud – columnist for AIER. My position on covid and the lockdowns is quite different from that of Tyler; my position is much closer to that of Jeff Tucker and of AIER’s other writers. But I’m quite sure that Tyler and others who are more sympathetic to covid restrictions than I am hold their beliefs sincerely and for the best of motives. The notion that expressions of policy positions at odds with one’s own are mercenary is lazy and puerile. It’s a style of argument that one would not be surprised to find current during the dark ages, yet this style of argument – “argument” – remains quite in fashion in the 21st century, and not least among many people who believe themselves to be advanced thinkers.

…..

Another lazy and puerile accusation against AIER’s Great Barrington Declaration comes from the Niskanen Center’s Sam Hammond. According to Mr. Hammond, writing at Twitter, AIER issued this declaration in order to goose-up the stock market! Mr. Hammond accuses AIER of having a “conflict of interest” in calling for an end to all covid lockdowns.

Well now. I suppose that everyone who, in addition to AIER, opposes the lockdowns can be found in some way to have material interests that might be served by ending the lockdowns. David Henderson, I’m certain, has investments in the stock market. Now we see why David opposes lockdowns! Lockdown skeptic Holman Jenkins writes a regular column for a publication titled, for heaven’s sake, The Wall Street Journal. Case closed! My friend Lyle Albaugh watched helplessly, almost in tears, as his and his wife’s, Betsy’s, small business of 32 years was destroyed by the lockdowns – and Lyle and Betsy have money in the stock market – so clearly Lyle’s opposition to the lockdowns is purely mercenary. J.D. Tuccille of Reason has been increasingly stern in criticizing the lockdowns; I don’t know him personally, but a good guess is that Mr. Tuccille has got some equity investments, so that explains that!

My dear friend and intrepid Mercatus Center colleague Veronique de Rugy has, I know, some of her wealth in the stock market – so, check, Vero’s skepticism of the lockdowns must also be mercenary and selfish rather than sincere and aimed at promoting the public good. Ditto for my friend and GMU Econ colleague Dan Klein.

And I, I here confess, have the bulk of my own modest wealth in the stock market. So I, too, am surely mercenary in opposing lockdowns. Or so must think Mr. Hammond.

What a convenient argument! No need for real thinking or actual argumentation. No need to deal with complexities and trade-offs. No need to understand that well-meaning people often differ sincerely in their understandings of reality. No need for any such civilized engagement with, and respect for, others. No! Simply find a single possible venal motive and, boom!, case closed. Brilliant! Twitter scholarship at its finest!

…..

I do not believe that the identity of a person or organization that advances an argument is completely irrelevant. Knowing that identity is a piece of information with some relevance. It signals what perhaps might be genuine bias. But knowledge of a person’s or organization’s identity and source(s) of funding is hardly sufficient to carry the day. Ultimately, the merit of that person’s or organization’s argument must be assessed by the internal logic of the argument and its correspondence with empirical reality.

The fact that Nafeez Ahmed, Sam Hammond, and some others dismiss anti-lockdown arguments with ad hominem accusations is evidence as powerful as evidence gets that these people have no idea what an intellectually respectable argument is.

Quotation of the Day…

(Don Boudreaux)

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… is from page 474 of my late Nobel-laureate colleague James Buchanan’s 1994 paper “Economic Theory in the Postrevolutionary Moment of the 1990s,” as this paper is reprinted in Economic Inquiry and Its Logic (2000), which is volume 12 of the Collected Works of James M. Buchanan:

Economic theory, as such, was born with the scientific discovery of the spontaneous coordination that emerges from the separated, locally directed, and self-interested actions of participants in a nexus of exchange.

DBx: Almost immediately in An Inquiry Into the Nature and Causes of the Wealth of Nations, Adam Smith marvels – even to the point of using several exclamation points! – at the extensive spontaneous coordination of individual efforts brought about by markets. An ordinary woolen coat of the mid-18th century, Smith observed with wonder, requires that the knowledge and actions of countless strangers somehow be coordinated – and they are coordinated, not by conscious design, but by prices set in competitive markets.

By the 20th century economists had identified, in principle, what the results of such coordination would look like if it were ‘perfect’ – that is, if such coordination were directed by the mind of god. And then economists looked upon the real world, and they were displeased. God seems not to operate in reality, at least not as an allocator of resources.

What to do? Why, summon the secular-god, State, and charge it with bringing about an allocation of resources closer to perfection. (Such summoning of gods is what passed during the past 100 years – and still passes today – in many elite quarters for economic “science.”)

Obsessed with deviations from perfection, many economists came to take the actual achievements of markets for granted. And when someone takes something for granted, that someone no longer studies that thing. That someone thus loses all but a superficial understanding of the thing.

Quotation of the Day…

(Don Boudreaux)

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… is from pages 94-95 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 (footnote deleted):

During the last century, government spending at all levels rose as a percentage of GDP in virtually all countries. With such an enormous growth it is of course highly unlikely that no public spending at all would end up in the neighborhood of innovation-producing projects, along with a large number of economic idiocies…. When, out of its massively expanded spoils from coerced taxation and regulation, the State directs funds by scattershot to research establishments, and incidentally to favored voters, it will crowd out, we say, some private research. But it is bound from time to time to hit a sweet spot, by accident. The accident does not mean the government had expert knowledge of where the sweet spot was located, or that scatter shooting was even approximately the best way to fund useful knowledge.

Sarah and Don Discuss Adam

(Don Boudreaux)

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A few months ago the lovely Sarah Skwire put to me the “Smith Questionnaire.” It was great fun!

Yet More on Industrial Policy

(Don Boudreaux)

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Here’s a letter to a self-described “fan” of Brink Lindsey’s and Sam Hammond’s proposed “development policy” (which is their neologism for industrial policy):

Mr. Griff:

Thanks for your e-mail.

You advise that I “be more forgiving of demands for industrial policy. We must keep pace especially with China by doing more than them to grow their economy.”

With respect, I’ve never understood this argument. If industrial policy strengthens an economy, then regardless of its use or nonuse elsewhere we should use it. But if industrial policy weakens an economy, then regardless of its use or nonuse elsewhere we should avoid it. Q.E.D.

More fundamentally, while the adoption of industrial policy appears superficially to be “doing more” to meet economic challenges, it in fact it is a retreat into doing less – much less.

Industrial policy, no matter how impressive on paper, substitutes the ideas of a relatively minuscule number of government officials spending other people’s money for the ideas of (literally) billions of entrepreneurs, investors, and consumers spending their own money. In competitive markets, anyone with a peaceful idea is free to try it out, yet no one can compel others to go along. In stark contrast, with industrial policy the only ideas that are used are those that are pre-approved and imposed by government officials. How can an economy possibly be improved by coercively displacing an ocean of billions of creative ideas with a puny puddle of bureaucratic ones? The best course is to reject industrial policy in order to let the market handle matters.

I know, my plea sounds banal. So please forgive me for closing by quoting at length from an essay that I wrote years ago but which remains relevant:

Saying “Let the market handle it” is to reject a one-size-fits-all, centralized rule of experts. It is to endorse an unfathomably complex arrangement for dealing with the issue at hand. Recommending the market over government intervention is to recognize that neither he who recommends the market nor anyone else possesses sufficient information and knowledge to determine, or even to foresee, what particular methods are best for dealing with the problem.

To recommend the market, in fact, is to recommend letting millions of creative people, each with different perspectives and different bits of knowledge and insights, each voluntarily contribute his own ideas and efforts toward dealing with the problem. It is to recommend not a single solution but, instead, a decentralized process that calls forth many competing experiments and, then, discovers the solutions that work best under the circumstances.

This process is flexible and it encourages creativity. It also denies to anyone the power to unilaterally impose his own vision on others.

In brief, to advise “Let the market handle it” is a shorthand way of saying, “I have no simplistic plan for dealing with this problem; indeed, I reject all simplistic plans. Only a competitive, decentralized institution interlaced with dependable feedback loops — the market — can be relied upon to discover and implement a sufficiently detailed way to handle the problem in question.”

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 Links

(Don Boudreaux)

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Wall Street Journal columnist Holman Jenkins is, thankfully, relentless in writing sensibly amidst the senseless hysteria over covid-19. A slice:

We don’t lie to ourselves about the extent of the flu but use this information to extrapolate its true extent. And though the government’s annual influenza estimates may not be perfect, they certainly are not off by an order of magnitude.

I introduced this subject Wednesday and will keep pounding away as one must with obvious truths that, for some reason, are psychologically resisted. Not adjusting Americans’ understanding of how far and wide the disease has likely spread, perhaps to as much as 20% of the population, was once fine but soon will become unsupportable. I get emails almost every day from angry readers accusing me of covering up a case fatality rate of almost 3%, as reported by numerous newspaper and university web sites using deaths (which are reasonably ascertainable) divided by a “confirmed” case count that is statistically meaningless and grossly understates the virus’s true spread.

Ironically, this is partly a story of success. If Washington were brave enough to start publishing realistic coronavirus estimates, we’d have much better data to go on than we have with the flu. Our testing is vastly more extensive. Serological studies are starting to provide excellent evidence on the true extent of the epidemic. We have a better handle on asymptomatic spread. And yet we continue to publish and promote a “confirmed” case count that is statistically meaningless and catastrophically misleading and can only become more so as the virus grows in prevalence.

James Bovard explains that one species of terrorism in Michigan doesn’t justify any other species of terrorism in Michigan. A slice:

The Michigan conspirators are receiving vastly more coverage than a recent Michigan Supreme Court decision, which effectively labeled Whitmer a lawless dictator who had extended a “state of emergency” far beyond what an unconstitutional state law allowed. Instead of obeying the ruling of the highest state court, Whitmer responded by having the Michigan Department of Health and Human Services issue “new COVID-19 emergency orders that are nearly identical to her invalidated emergency orders,” as the Mackinac Center noted.

Four months earlier, the Michigan Court of Claims condemned Whitmer for contorting a Michigan workplace safety law to unjustifiably inflict additional penalties on businesses and individuals who failed to submit to her pandemic commands.

But, according to the media, locking down Michigan isn’t tyranny – it is public service.

There’s ample-enough reason to criticize Trump; baseless accusations are not necessary. Robby Soave explains.

Unfortunately, Joe Biden’s position on trade isn’t as sound as Mike Pence makes it out to be. Eric Boehm explains.

David Henderson very much likes Casey Mulligan’s new book, You’re Hired: Untold Successes and Failures of a Populist President. A slice:

Like many people who have been appalled by some of Trump’s tweets, I had assumed that he was up in the wee hours carelessly knocking out his bombastic messages. I’m still not a fan of many of Trump’s tweets, but a chapter titled “I Wish That He Would Stay Off Twitter” tells two important things about the economics tweets. First, Trump’s economic advisers gave him a lot of input on the economics tweets. Second, whereas I had thought that Trump’s exaggerations undercut him, Mulligan argues, with evidence, that they were part of a strategy for getting good news covered. If Trump told the truth about good economic news, the media would often not cover it. But if he exaggerated, “the press might enjoy correcting him and unwittingly disseminate the intended finding.” My Hoover colleague John Cochrane, in a recent post about the book, notes that Trump’s tweets are his version of Franklin D. Roosevelt’s Fireside Chats. Recall that, hard as it is to imagine today, FDR faced a largely hostile conservative press. Trump faces hostile left-wing media.

Quotation of the Day…

(Don Boudreaux)

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… is from page 647 of the late, great Armen Alchian’s November 9th, 1978, address to the Southern Economic Association titled “Private Rights to Property: The Basis of Corporate Governance and Human Rights,” as this address appears in volume 2 of The Collected Works of Armen A. Alchian (2006):

Our political leaders, current and past, sanctimoniously revile foreign politicians for suppressing human rights. Russia, South Africa, Chile, Poland, you name them. And rightly so. But our politicians make a joke of their own actions. At the same time they are criticizing other countries, they are imposing more restraints on our human rights by reducing private property rights, which I regard as fundamental to the exercise of human rights, civil liberties and the dignity of man.

Bonus Quotation of the Day…

(Don Boudreaux)

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… is from page 131 of H.L. Mencken’s A Second Mencken Chrestomathy (1995):

The curse of man, and the cause of his worst woes, is his stupendous capacity for believing the incredible. He is forever embracing delusions, and each new one is more preposterous than all that have gone before.

DBx: Indeed so. We human beings are just intelligent enough to delude ourselves into believing the absurd to be obvious and the obvious to be absurd. And as Mencken says, this condition is indeed a curse.