Russell Roberts's Blog, page 369
September 30, 2020
Bonus Quotation of the Day…
… is from pages 111-112 of the 2000 Liberty Fund edition of Frederic William Maitland’s profound 1875 dissertation at Trinity College, Cambridge, A Historical Sketch of Liberty and Equality:
Locke, led astray by his notion that the consent of the majority is in some way the consent of all, scarcely sees that there may be reasons why limits should be set to the power of a majority in a democracy.
Some Links
“Who is dying from covid? Why?” – asks some Wall Street Journal reporters. Two slices (original emphasis):
The age data are stark: About 79% of recorded Covid-19 deaths are among people age 65 and over, while people under age 35 account for just 1% of known deaths from the disease. Nearly a third of Covid-19 deaths has hit people who are at least 85 years old, death-certificate data from about 188,000 deaths, the latest available, show.
This elderly population was affected substantially in the springtime, when significant outbreaks hammered northeastern states like New York, New Jersey and Massachusetts and spread through nursing homes. Deaths connected to long-term-care facilities recently topped 81,000 and have consistently made up about 40% of all U.S. Covid-19 deaths, according to a Wall Street Journal tally of state and federal data.
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Using the latter method, research suggests the virus kills about 0.6% of people it infects, but estimates vary widely and the rate varies significantly by age. This is far less than the death rate from other serious but less-widespread coronavirus infections—SARS and MERS, also known as Middle East respiratory syndrome—but about six times as deadly as the seasonal flu.
(This last point prompts me again to suggest that we take seriously this question asked last month by Bryan Caplan, but substituting the happier “six” for “ten”: “If coronavirus is ten times worse than flu, perhaps we should make ten times as much effort to combat it, not a thousand times?”)
Ron Bailey reports that the covid-19 herd-immunity threshold might be as low as 15 percent.
No one expected a Lincoln-Douglas debate, but did it have to be a World Wrestling Entertainment bout? Which may be unfair to the wrestlers, who are more presidential than either Donald Trump or Joe Biden sounded in their first debate Tuesday night.
And Eric Boehm understandably is especially appalled by Trump’s utterances.
My colleague Bryan Caplan documents the political-left’s increasing Orwellianism. A slice:
As far as I know, intolerant, thin-skinned, anti-intellectual educators have been around for… well, forever. What has changed is the Orwellian nature of their reaction to dissent.
Quotation of the Day…
… is from page 88 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 (links added):
The State’s projects that in fact prove foolish, such as the Concorde and the Carmichael mine, last for a long, long time, with tax-and-regulation subsidization. The Carmichael mine would be producing coal that nobody would buy at the high cost at which it can be mined well into the age of solar panels. The Concorde lasted from its first unprofitable flight in 1976 to its last unprofitable flight in 2003. Twenty-seven years of failing the test of commercial profitability is to be contrasted with NeXt’s one year, Edsel’s three years, New Coke’s three months, Google Glass 2012-2015, Juicero in 2017 for squeezing oranges (closed down five months after a massive investment in it by Silcom Valley). Declares [Mariana] Mazzucato: the invisible hand, which works quickly, should be replaced by a visible fist of the State, which keeps on pounding. We don’t think so.
September 29, 2020
Ridiculous Widespread Beliefs
A friend of mine, who wishes to remain anonymous, put this question to me: What are the five most ridiculous beliefs that many people hold about economics or politics – beliefs that should be recognized as ridiculous by any sane adult, regardless of education or exposure to economics? (My friend specifically requested that, in answering this question, I ignore covid.) Great question. Here’s my tentative answer, in order of ascending degree of ridiculousness.
1. Free trade is a plot by elites to enable corporations to profit at the expense of ordinary people.
2. The war on drugs protects us and our children from violence and other crimes.
3. Those immigrants – you know, the kind who mow your lawn, work as maids in the motel you last stayed at, deliver and install the new dishwasher you bought, and are part of the construction crew building the new road in town – are lazy welfare leeches who are stealing Americans’ jobs.
4. Government officials who do not know you care about you enough for you to trust them with power over you.
5. The most precious right an individual can have is the right to vote.
Bonus Quotation of the Day…
… is from page 179 of the 1985 (3rd) edition of the late Ralph Raico’s translation of Ludwig von Mises’s great 1927 book, Liberalism:
The antiliberal candidate promises special privileges to every particular group of voters: higher prices to the producers and lower prices to the consumers; higher salaries to public officeholders and lower taxes to taxpayers. He is prepared to agree to any desired expenditure at the cost of the public treasury or of the rich. No group is too small for him to disdain to seek its favor by a gift from the pocket of the “general public.” The liberal candidate can only say to all voters that the pursuit of such special favors is antisocial.
DBx: Mises, who died in 1973, was born 139 years ago on this date (September 29th).
Pictured above is Mises, with Fritz Machlup on his left.
Some Links
J.D. Tuccille warns of the dangers of government mandates.
Alan Reynolds writes sensibly about covid-19 numbers. A slice:
Mining the same vein for the USA, the CDC finds the number in the New York City metro area who have been infected and recovered is at least six times larger than the known tally of “confirmed” cases – making it tougher for the virus to jump to new hosts. This also means the true infection death rate (after uncounted mild and asymptomatic cases are included) is much, much lower than once imagined.
Richard Ebeling warns that “stakeholder capitalism” is really “stakeholder fascism.”
Matt Welch decries the witch-hunts sparked by identity politics.
Pittsburgh Tribune-Review: “Economics’ limits”
In my Pittsburgh Tribune-Review column for October 27th, 2010, I wrote about the limits of economic science. You can read my column beneath the fold.
Quotation of the Day…
… is from page 307 of Kristian Niemietz’s important 2019 book, Socialism: The Failed Idea That Never Dies:
Since economic activity cannot be coordinated by scarcity signals – i.e. market prices – the only substitute is command and control. When people do not behave in the way economic planners want them to behave, the state needs to use force to make them comply.
DBx: Do not overlook this reality: Industrial policy is not a series of recommendations that the state kindly offers to citizens. It is, instead, a set of commands that the state imposes on its citizens. The state will enforce these commands against any and all who resist them, with violence if necessary. Government officials will cage you if you refuse to obey their orders. And if you resist this caging with sufficient stubbornness, these same government officials will see to it that you are killed.
So-called “industrial policy” is not sweet counseling. It is brute force.
If you trust Donald Trump and his lieutenants and lackeys with such power, I pity you for your gullibility. Ditto if you trust with such power Joe Biden and his cronies and keepers. If you trust any human being with such power, you are a fool.
Unfortunately, the world is overpopulated with such fools.
September 28, 2020
What If?
Quite by accident I ran across this on-line version of the Cato Institute’s Policy Report from June 1981. On page 2 is an unsigned editorial titled “Felix Rohatyn Reconstructs America.” Reading this short, excellent essay from nearly 40 years ago prompted me to wonder: What if the U.S. government had then adopted industrial policy of the sort that the (now-late) Mr. Rohatyn endorsed?
Of course, it’s impossible to know the answer to this question for certain. The ghost of Mr. Rohatyn would likely insist that the American economy’s performance over the past 39-plus years would have been even more spectacular than it actually was. (This actual performance, let us not forget, has indeed been rather impressive. Really.) Agreeing with Rohatyn’s ghost, in spirit if not in all details, would be today’s proponents of industrial policy – conservatives such as Marco Rubio and Progressives such as Elizabeth Warren.
But what particular firms and projects would an early 1980s industrial-policy bureaucracy have supported? It’s likely that subsidies and tariffs would have been used to artificially expand America’s information-technology sector. That sector was then, as it is today, politically sexy.
Yet “information-technology sector” is merely a term, and it doesn’t refer to a single and distinct thing. Suppose that government in 1981 had artificially directed resources to one part of it (to, say, semiconductor manufacturing). It’s possible that the bulk of these resources would have come from unsexy uses such as tobacco farming and bicycle manufacturing. But it’s also possible that the bulk of these resources would have come instead from another part of the IT sector (from, say, software development). How would the industrial-policy pooh-bahs of the day have known?
Keep in mind that special privileges – especially in the form of tariffs – for one part of the IT sector might well damage other parts of this sector. For example, tariffs on semiconductors make the domestic manufacture of computers more costly.
It’s tempting to respond to my noting these complications by saying “Government would have encouraged all parts of the IT sector.” But again, these are words – words that convey a false impression of concreteness and distinctness. Who decides what is and what is not part of “the” IT sector? Was manufacturing desk telephones back then part of this sector? (Such telephones were still widely used.) How about the training of directory-assistance operators and support for their efforts?
Forty years ago it was commonplace for Americans to dial 411, get a live voice on the other end of the line, and ask the helpful person for the telephone number of John Doe who lives on Elm St. in the town of Springfield in a neighboring state. Directory assistance was a technology that dispensed useful information.
Perhaps the industrial-policy boys and girls would have directed resources to develop the then-cutting-edge technology that gave us telephone-connected fax machines. How have we Americans suffered as a result of no such strong government effort to make America great at telefax technology!
Or what about the production of cathode-ray tubes? In the early 1980s, nearly all monitors on personal computers were CRTs. Would the mandarins charged with directing resources toward “the industries of the future” have directed resources to CRT production? Should they have done so? And if so, from where would these resources have come? Not from out of the blue.
Oh – and what about the petroleum industry? It’s part of the IT sector, isn’t it? I mean, so many parts of computers, then as now, were made of plastic. Without wise government support for the likes of Exxon and Texaco, who knows what calamities might have been visited on America’s IT sector had there been a global disruption in petroleum supplies? And even apart from the use of petroleum as an input in IT products, the petroleum industry is such a large user of IT that – surely – subsidies to Big Oil would add beneficial stimulation to other segments of America’s IT sector.
Determining what is and isn’t part of America’s IT sector is a real challenge. But I reckon that the appropriate stance is to trust that no one is better able and willing to make this determination in a publicly spirited way than are politicians and their hirelings. Or, at least, it would be crass and ideological of me to oppose industrial policy simply because I have doubts that such a determination would be made sensibly.
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And what are the chances that the officials charged in the early 1980s with using industrial-policy to make America more “competitive,” to “support the industries of the future,” and to protect ordinary Americans from economic stagnation would have supported, say, Google? Would they have foreseen the emergence and evolution of this marvel? What about YouTube? Music and movie streaming? What about the smartphone and any of its countless apps? Would these officials – brilliant though they would no doubt have been – have anticipated the emergence of deep learning? How about of private-key encryption?
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It’s appalling that today’s proponents of industrial policy are silent about these realities. Their case for industrial policy amounts to nothing more than a naive prayer to the god-state to use its powers to make us happier.
Human Gullibility
What struck me most about reading Kristian Niemietz’s superb 2019 book, Socialism: The Failed Idea That Never Dies, was not its recounting of socialist failures and horrors. As sad as these are, the existence of, if not all of the details of, these tragedies are largely known to any informed person. What struck me most is the sheer and gargantuan gullibility of many intellectuals in the face of promises by state thugs to remake society using cages, bayonets, and guns. This gullibility is the subject of my latest column for AIER.
Here’s a slice from my essay:
Truly inexplicable, however, are the many statements by intellectuals – quoted throughout Niemietz’s work – who had nothing materially to gain by being conned by socialists’ propaganda. Here, for example, is the celebrated British economist Joan Robinson; she’s writing in 1965 about the North Korean “miracle” following her visit to that nirvana-in-the-making:
The outward signs of a “cult” are very marked – photographs, street names, toddlers in the nursery singing hymns to the beloved leader. But Prime Minister Kim Il Sung seems to function as a messiah rather than a dictator. After the war he went for 15 days to live in a remote village, and emerged with a program for agriculture and a style of work for the Party which would enlist the support of the peasants. He visits every plant and every rural district for “on-the-spot consultation” to clear up their problems. He comes to a hospital to say that the life of doctors and nurses must be devoted to the welfare of their patients, and this thought inspires their work every day. He explains to the workers in the heavy machine plant that their products are the basis of industrialization, and pride renews their zeal.
Robinson was quite certain that the North’s Great Leader was accomplishing wondrous feats. Indeed, so certain was she that, according to her, to prevent massive emigration northward out of South Korea the United States government was taking
great pains … to keep the Southerners in the dark. The demarcation line is manned exclusively by American troops, down to the cleaners, with an empty stretch of territory behind. No Southern eye can be allowed a peep into the North.
These ‘observations,’ please note, are from a scholar who, had she lived a few years longer, would almost certainly have been awarded – justifiably – the Nobel Prize in economics.
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