Russell Roberts's Blog, page 367

Open Letter to Brink Lindsey and Sam Hammond

(Don Boudreaux)

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Messrs. Brink Lindsey and Samuel Hammond

Niskanen Center

Washington, D.C.

Brink and Sam:

I just read your new paper, “Faster Growth, Fairer Growth: Policies for a High Road, High Performance Economy.” I agree with much that you write, and I applaud your eloquence. But some key parts of your paper are mystifying – not least your unquestioned acceptance of the claim that America’s middle-class has stagnated economically for the past few decades. Equally mystifying is your endorsement of what you call “development policy.”

On the stagnation point, you ignore Michael Strain’s recent data-filled book that challenges the stagnation thesis. You also overlook the anti-stagnation research of – to name only a few scholars – William Cline, Steve Horwitz, Scott Lincicome, Alan Reynolds, Bruce Sacerdote, Scott Winship, and even that of Stephen Rose. (And although it’s now 21 years old, the work of Michael Cox and Richard Alm nevertheless remains relevant – and ignored by you.)

Because much of the justification for your proposed policies depends upon the truth of the claim that ordinary Americans have for decades stagnated economically, you do your readers a disservice by pretending that middle-class stagnation is an established fact when, in reality, it most emphatically is not.

As for “development policy” (which is your new name for industrial policy) you write that “strategic federal investments should focus on spurring the creation of new markets and capacities” and that “policymakers should focus on ensuring the next generation of high-tech manufacturers have the capital they need to scale.” Such words are so very fun and easy to write!

But who will be the flesh-and-blood officials possessing the genius to know which “new markets and capacities” are the ones that should be goosed up with “strategic federal investments”? From where will these officials get their knowledge of which particular markets and “capacities” are best to stimulate, and which high-tech manufacturers are of “the next generation”? On these all-important questions you are utterly silent.

You’re silent also about how your “development policy” will escape being sabotaged by rent-seekers. For two reasons this silence is especially curious. First, elsewhere in your paper you correctly identify many of the ways that rent-seekers distort government policies. Second, the very purpose of your “development policy” is to create rents for favored firms. What miracle repellant do you envision will keep rent-seekers away from the special privileges that you propose be created? Your readers are left to guess.

Your case for “development policy,” in summary, is to cure an imaginary problem (that is, middle-class stagnation) by giving more discretionary power to imaginary government officials (that is, men and women assumed to possess god-like knowledge and integrity).

Surely you can do better than this.

Sincerely,

Don

Pittsburgh Tribune-Review: “Foreign aid”

(Don Boudreaux)

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In my column for the December 15th, 2010, edition of the I tried yet again to bust a common myth about trade deficits. You can read this column beneath the fold.

(more…)

Talking Sense About the Senseless Tyrannical Reaction to Covid-19

(Don Boudreaux)

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Here are epidemiologists Dr. Martin Kulldorff, Dr. Sunetra Gupta, and Dr. Jay Bhattacharya, who met recently at AIER’s headquarters in Massachusetts to discuss the hysteria uncorked by Covid-19.

Some Links

(Don Boudreaux)

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I applaud AIER for hosting an important event regarding covid – one featuring top scientists – and for issuing a public declaration.

J.D. Tuccille documents some of the authoritarianism that is at the heart of the covid lockdowns. A slice:

These authoritarian tools may become permanent because government officials are rarely punished for doing something,even if the something is awful and counterproductive. It’s leaving things alone to be worked out by individuals according to their own priorities and preferences for which politicians get called out.

In addition, people who go into government tend to be the sort who naturally gravitate toward using power. And crises are excellent excuses for accumulating unprecedented authority and using it in novel ways.

“For authoritarian-minded leaders, the coronavirus crisis is offering a convenient pretext to silence critics and consolidate power,” Human Rights Watch cautioned in April.

Steve Landsburg offers a good reason for why we need billionaires.

Here’s another of Mark Perry’s great Venn diagrams.

Nick Gillespie and Jacob Sullum argue that freedom will be better served by Amy Coney Barrett than it was by Ruth Bader Ginsberg.

Here’s yet more evidence that Democrats are no less prone to practice cronyism for corporations than are Republicans.

Jeffrey Clemens and Michael Strain find evidence that minimum wages do help labor unions.

Quotation of the Day…

(Don Boudreaux)

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… is from page 89 of the May 9th, 2020, draft of the important monograph – forthcoming in October jointly from the Adam Smith Institute and AIER – by Deirdre McCloskey and Alberto Mingardi, The Myth of the Entrepreneurial State (footnote deleted):

And there is the ethical problem. Assumed omniscience and omnipotence on the part of planners typically goes along with a lack of ethical reflection. We ask: where do you get off, Ms. Economist, in thinking that you are qualified in science or entitled in justice to lord it over free adults?

DBx: This question about the ethics of coercing peaceful people to spend and invest in ways that they would otherwise not spend and invest has always struck me as foundational and obvious. Yet almost no one, other than classical liberals and libertarians, ask this question. Questions unasked are questions unanswered.

How strange and how sad that this question is so seldom asked.

Bonus Quotation of the Day…

(Don Boudreaux)

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… is from page 51 of Kristian Niemietz’s superb 2019 book, Socialism: The Failed Idea That Never Dies (original emphasis):

The idea that business owners are all in cahoots with one another, and act as one, is a socialist fantasy. Business owners compete with each other – often fiercely so. This greatly limits whatever ‘power’ any of them may wield.

A Curve Ball Isn’t an Existential Threat

(Don Boudreaux)

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In my latest column for AIER I argue that Covid-19 is a curve ball rather than a threat to humanity categorically different from any of many that we routinely encounter. A slice:

Last week the Wall Street Journal reported that Covid-19 is estimated to be “about six times as deadly as the seasonal flu.” In order to account for the (hardly as yet confirmed) assertions that many people who are not killed by Covid will nevertheless be left by it with long-lasting debilitating ailments, let’s estimate Covid’s danger as being 12 times that of the flu. Are we close to a doomsday-asteroid scenario?

No. Not remotely.

My George Mason University colleague Bryan Caplan, blogging at EconLog, asked this sensible question: “If coronavirus is ten times worse than flu, perhaps we should make ten times as much effort to combat it, not a thousand times?” Substituting “twelve” for “ten,” I ask the very same question.

What efforts do we exert to combat the flu? Very few, despite the fact that the flu annually kills, in the U.S. alone, tens of thousands of people. Individuals with flu-like symptoms go to their doctors. Many of these individuals also take some time off of work and take some medications. Governments do little beyond encouraging people to get seasonal flu shots, which many people get (while many others don’t).

A worthwhile research project for some graduate student or assistant professor would be to calculate an estimate of the monetary measure of society’s average annual effort undertaken in response to the flu. This figure can then be compared to the total size of the response to Covid. I don’t dare here guess the details of what such research would turn up, but I’m quite sure – as in willing-to-bet-my-pension-against-one-dollar sure – that the magnitude of the response to Covid is many multiples of 12 times the effort routinely devoted to combating the flu. Bryan Caplan’s suggestion that the response to Covid has been 1,000 times greater than the response to the flu seems to me to be, if anything, too conservative.

Some Links

(Don Boudreaux)

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Writing in today’s Wall Street Journal, Steve Landsburg expresses his justified dismay at Joe Biden’s support for raising the minimum wage. Here’s Steve’s opening:

For nearly four years, I’ve looked forward to voting against Donald Trump. But Joe Biden keeps testing my resolve.

It isn’t only that I think Mr. Biden is frequently wrong. It’s that he tends to be wrong in ways that suggest he never cared about being right. He makes no attempt to defend many of his policies with logic or evidence, and he deals with objections by ignoring or misrepresenting them. You can say the same about President Trump, but I’d hoped for better.

Also in today’s Wall Street Journal, Christopher Rufo exposes “critical race theory” for the racist nonsense that it is. A slice:

As I document in detailed reports for City Journal and the New York Post, critical race theory training sessions in public agencies have pushed a deeply ideological agenda that includes reducing people to a racial essence, segregating them, and judging them by their group identity rather than individual character, behavior and merit.

Although originally published 30 years ago, this essay on American ‘decline’ by Deirdre McCloskey remains relevant today.

Here’s a virus update from Arnold Kling. A slice:

What if the virus had made its appearance in 1990?

–I don’t think people would have self-quarantined. We didn’t have the infrastructure for low-cost direct-to-home delivery. We didn’t have the technology to allow people to work from home.

–I don’t think we would have had lockdowns. We didn’t have a generation of people raised to believe that it was unsafe for children to play without adult supervision. Shelter-in-place orders from the government would have been too unpopular for elected leaders to contemplate.

–We would not have been promised a vaccine. No one could have announced “We already sequenced the virus genome!” as if that meant a vaccine was coming any day now.

–We would not have had all of the treatment options available today.

–Our population would have had a lower proportion of high-risk individuals–fewer elderly, obese, and diabetic individuals.

–We would not have had social media to fill our heads with statistics and model forecasts and expert pronouncements to keep the virus foremost in our minds.

In short, I suspect we would have come out about the same in terms of population death rate, maybe a little more or maybe a little less. The economic consequences would have been much less. And it would not have blown up into a national trauma. For the trauma, we can thank the fact that we now live in the Digital City.

Timothy Taylor tweets out some of GMU Econ alum Scott Drylie’s research on Adam Smth’s views about the government’s role in elementary education.

David Henderson succinctly explains why cuts in the rates of taxation on income and capital gains raises real wages. (Hint: The reason has nothing to do with the simplistic Keynesian story about causing spending – and, hence, aggregate demand – to rise.)

Quotation of the Day…

(Don Boudreaux)

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… is from page 185 of Steven Pinker’s 2018 book, Enlightenment Now:

With the shift from a manufacturing to a service economy, many social critics have expressed nostalgia for the era of factories, mines, and mills, probably because they never worked in one.

DBx: Most people mistakenly suppose that the economy ‘creates’ jobs without taking heed of the preferences that workers have for different kinds of jobs – without paying any attention to the manner in which workers are willing to trade-off one aspect of employment, such as wages, for other aspects, such as job safety. The notion that most people seem to have about employment is that jobs of certain kinds mysteriously exist, and then workers must accept these jobs as they are. In this ‘understanding,’ the only hope for workers to have better pay and safer working conditions is for government to forcibly improve these conditions.

But in fact workers do care about the conditions in which they work. And the wealthier workers become, the less willing they are to toil in the relatively unpleasant and poor conditions that their fathers and mothers gladly accepted. Employers have no choice but to respond to these preferences, for market competition reveals and gives these preferences force in reality.

…..

The tale often told by the economically and historically uninformed is this stirring one: The good guys (governments and labor-unions) heroically stand up to the bad guys (crass and greedy business owners) in order to help the helpless little guys (workers). As an account of rising real wages and improved working conditions, this tale is almost total nonsense. But people love simple morality tales featuring heroes and villains confronting each other without any ambiguity over who is good and who is bad. And so this tale will never be displaced in the popular and political mind by the far less stirring – but in fact far more interesting – account of the economic forces that actually did, and continue to, improve wages and working conditions for ordinary people.

Quotation of the Day…

(Don Boudreaux)

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… is from page 482 of Israel Kirzner’s January 1984 Economic Affairs note titled “Incentives for Discovery,” as this note is reprinted in the 2019 collection of some of Kirzner’s papers (edited by Peter J. Boettke and Frédéric Sautet), Reflections on Ethics, Freedom, Welfare Economics, Policy, and the Legacy of Austrian Economics (original emphases):

In the economic context the problem is that no one knows in advance what is urgently “waiting” to be discovered….

So… to stimulate discovery of socially valuable opportunities for change, what is required is primarily an environment in which freedom of entry into newly discovered opportunities is not obstructed, either by concern to protect those with vested interests in older ways of doing things or by a social attitude toward pure entrepreneurial gain that condemns it as somehow unjustly exploited from honest toilers or defenceless consumers.

DBx: The truth of this observation about the reliance of economic growth upon open-ended, “permissionless” innovation and economic experimentation is undeniable. Or, rather, it is undeniable by anyone who understands that supernatural powers are denied to human beings – denied even to human beings vested with state-sanctioned coercive powers. (Despite the contrary widespread, if implicit, assumption, “state-sanctioned coercive” is not a term synonymous with “supernatural.”)

The truth of this observation by Kirzner, however, is denied by all who wish to use tariffs, subsidies, and other ‘tools’ of industrial policy to promote economic growth. Their very advocacy of promoting economic growth by replacing open competition with the power and discretion of government officials to decide which particular firms are to be protected from having to adjust to change and which particular jobs will be protected from being replaced by other jobs is premised on the belief that these government officials can foresee the future in great detail and can (and will) control it intelligently for the greater good as it unfolds. If this belief is not one that holds that government officials possess supernatural powers, please offer a better description of this belief.