Russell Roberts's Blog, page 379
September 1, 2020
Bonus Quotation of the Day…
… is from page 84 of the May 9th, 2020, draft of the important forthcoming monograph from Deirdre McCloskey and Alberto Mingardi, The Illiberal and Anti-Entrepreneurial State of Mariana Mazzucato:
Such is the reiterated premise of Mazzucato’s books: that the State courageously ventures into the High Frontier, “taking the kind of risk the private sector is not willing to take.” She does not worry overmuch that the reason no private entity will so venture is that the venture is rubbish in an economic sense—and probably in any other sense ones cares to mention—and that courageous spending on the High Frontier lowers human welfare.
DBx: It’s flabbergasting that anyone over the age of five believes that giving Jones the power to spend Smith’s money will result in Smith’s money being spent more wisely than if Smith spends that money. Triply flabbergasting is the fact such a fairy tale is believed and trumpeted by someone trained as an economist.
Some Links
The paper’s conclusion is that the data trends observed above likely indicate that nonpharmaceutical interventions (NPIs) – such as lockdowns, closures, travel restrictions, stay-home orders, event bans, quarantines, curfews, and mask mandates – do not seem to affect virus transmission rates overall.
Colin Grabow debunks myths about the cronyist Jones Act.
My Mercatus Center colleague Jayme Lemke admires Holly Golightly.
GMU econ PhD candidate Jon Murphy makes the case for Smithian sympathy in public policy.
James Grant reviews, in the Wall Street Journal, Gregory Collins’s new book, Commerce and Manners in Edmund Burke’s Political Economy. A slice from Grant’s review:
Liberty was the touchstone of English monetary arrangements, Burke’s argument ran. “Cash,” as gold was known, was the one and only legal tender. Of course, bank notes were handier than ingots, but nobody had to accept such IOUs (not even the Bank of England’s) in lieu of gold itself. Weighing the soundness of the issuing bank, an Englishman could choose one or the other.
Not so the Frenchman. The pure paper assignat was money by law. Modern readers will scarcely take exception to such a system, as they know no other. “This note is legal tender for all debts, public and private” is the legend stamped on every dollar bill.
To Burke, however, it was the very absence of coercion that crowned the English monetary regime. “They forget,” he wrote of the revolting French, “that, in England, not one shilling of paper money of any description is received but of choice; that the whole has had its origin in cash actually deposited; and that it is convertible at pleasure, in an instant and without the smallest loss, into cash again. Our paper is of value in commerce, because in law it is of none.”
Material Benefits Aren’t Necessarily ‘Materialistic’
A noteworthy instance of this blindness is Cass’s description of the Covid pandemic as causing us Americans to die “in unprecedented numbers.” His claim is untrue. To see why, start by taking the upper end of Virginia Tech professor Ronald Fricker’s unusually high estimate of the number of excess deaths caused through July 2020 by Covid – specifically, an estimate that Covid has caused the total death rate in the U.S. to be as much as 12 percent higher than otherwise.
Pre-Covid, the United Nations predicted that in 2020 0.888 percent of Americans would die – approximately 2,914,000 persons. Therefore, if Prof. Fricker’s most pessimistic estimate is correct – and if (as almost certainly will not be the case) this estimate holds through January 2021 – Covid will, on an annual basis, raise the number of American deaths by almost 350,000, to a total of roughly 3,264,000. That’s 995 Americans dying per every 100,000. Put differently, on extremely pessimistic assumptions, Covid is on track to raise America’s annual death rate to just shy of 1.0 percent.
While unquestionably lamentable, this rate of death is hardly unprecedented. The annual rate of death in America did not fall to this level until the late 1940s. One hundred years ago (1920), for example, roughly 1,300 out of every 100,000 Americans died. That’s a death rate of 1.3 percent. (See the graph on page 67 of this study found at the Centers for Disease Control website.)
Americans’ rate of death fell as we became materially wealthier – as we gained more access not only to medicines such as antibiotics, but also to the detergents, the garbage disposals, the latex gloves, the laptops, and the many other seemingly frivolous goods that global markets routinely pack into the warehouses of Wal-Mart, Target, Home Depot, Safeway, Amazon, and other retailers. We also became better educated and better able to stay connected to family and friends.
Had this material wealth been produced in less abundance, the range of higher goals that ordinary Americans would today be able to pursue would be narrower. And this material wealth would indeed have been produced in less abundance had Americans been saddled with more of the tariffs, subsidies, and other government interventions for which Oren Cass tirelessly pleads.
‘Expertise’ Seizes Power
From Bill Evers’s Facebook page I learned of this recent New York Times op-ed by Christopher Caldwell.
Caldwell discusses the left-wing Italian philosopher Giorgio Agamben’s assessment of governments’ reaction to the coronavirus. That I agree more with Agamben’s take than I do with that of many people whose ideologies and priors are much closer to my own is a sign of these horrible times. (I imagine that Caldwell feels the same way as I do.)
Here are slices from Caldwell’s op-ed, but I recommend that it be read in its entirety (emphasis in bold added by me):
This is a common pattern in the Western countries (and American states) where Covid-19 fatalities are dwindling. The arguments for freedom may be strong — but they are put awfully crudely. The arguments for discipline and prevention may often be resented — but they have a lot of scientific authority behind them, and they carry the day. Better safe than sorry. Late last month, Italy’s parliament voted to extend the government’s state of emergency until Oct. 15.
In a society that respects science, expertise confers power. That has good results, but it brings a terrible problem: Illegitimate political power can be disguised as expertise. This was a favorite idea of the French philosopher Michel Foucault, who used it to explain how experts had expanded definitions of criminality and sexual deviancy. One of Italy’s most celebrated thinkers, Giorgio Agamben, has recently applied similar insights to the coronavirus, at the risk of turning himself into a national pariah.
…..
His argument about the coronavirus runs along similar lines: The emergency declared by public-health experts replaces the discredited narrative of “national security experts” as a pretext for withdrawing rights and privacy from citizens. “Biosecurity” now serves as a reason for governments to rule in terms of “worst-case scenarios.” This means there is no level of cases or deaths below which locking down an entire nation of 60 million becomes unreasonable. Many European governments, including Italy’s, have developed national contact tracing apps that allow them to track their citizens using cellphones.
Wars have bequeathed to peacetime a “series of fateful technologies,” Mr. Agamben reminds us, from barbed wire to nuclear power plants. Such innovations tend to be ones that elites were already agitating for, or that align with their interests. Epidemics, he suggests, are no different. He believes that the fateful inheritance of the coronavirus will be social distancing. He is puzzled by the term, “which appeared simultaneously around the world as if it had been prepared in advance.” The expression, he notes, “is not ‘physical’ or ‘personal’ distancing, as would be normal if we were describing a medical measure, but ‘social’ distancing.”
His point is that social distancing is at least as much a political measure as a public health one, realized so easily because it has been pushed for by powerful forces. Some are straightforward vested interests. Mr. Agamben notes (without naming him) that the former Vodafone chief executive Vittorio Colao, an evangelist for the digitized economy, was put in charge of Italy’s initial transition out of lockdown. Social distancing, Mr. Agamben believes, has also provided Italy’s politicians with a way of hindering spontaneous political organization and stifling the robust intellectual dissent that universities foster.
The politics of the pandemic expose a deeper ethical, social and even metaphysical erosion. Mr. Agamben cites Italians’ most beloved 19th-century novel, Alessandro Manzoni’s “The Betrothed,” which describes how human relations degenerated in Milan during the plague of 1630. People came to see their neighbors not as fellow human beings but as spreaders of pestilence. As panic set in, authorities executed those suspected of daubing houses with plague germs.
Quotation of the Day…
… is from pages 128-129 of the 1971 Augustus M. Kelley reprint of the 1880 Sixth American edition of Jean-Baptiste Say’s 1803 A Treatise on Political Economy (Traité d’économie politique):
There are some truths so completely self-evident, that demonstration is quite superfluous. This is one of that number. For who will attempt to deny, that the certainty of enjoying the fruits of one’s land, capital, and labour, is the most powerful inducement to render them productive? Or who is dull enough to doubt, that no one knows so well as the proprietor how to make the best use of his property?
DBx: Sadly, the world today is filled with people who are indeed so dull – so dull despite, in many cases, boasting terminal degrees in subjects such as economics, philosophy, and law from universities sporting names such as M.I.T., Columbia, and Harvard.
August 31, 2020
Politics Isn’t for Me
Here’s my response to someone who (I’m proud to report) “majorly enjoy[s] Cafe Hayek”:
Mr. Lawrence:
Thanks for your e-mail. I’m delighted that you like Café Hayek. And I’m touched that you urge me to “run for Congress to put [my] ideas into effect.”
Alas, I’m among the last people on earth to have any interest in seeking political office. The reason is more than that I would find campaigning to be intolerably tedious and shameful. The foundational reason is that I have negative interest in holding such office. If a guaranteed seat in Congress were offered to me without my having to lift a finger to win it, I’d turn it down flat and immediately. I am ethically and intellectually unfit to exercise even as much as 1/535th of a quantum of power over others. In addition, were I to possess political power I’d be tempted to sell my soul. And being human, I’m too likely to succumb to such temptation. Better to avoid it.
Even if nothing above is a good reason to avoid politics, I find justification in this insight from Lord Acton:
Institutions and laws have their roots not in the ingenuity of statesmen, but as much as possible in the opinion of the people.*
I have the good fortune not only to be a college professor, but also to love teaching. I teach economics. I give talks on economics. I write on economics. Nothing that I do during my earthly tenure is apt to have any impact on policy outcomes. But if I were to have any impact at all, it would only be through helping to shape the opinion of the people. Ultimately, we are governed exclusively by that.
Sincerely,
Don
* Lord Acton, Essays in Religion, Politics, and Morality (Indianapolis: Liberty Fund, 1988), page 569. (I can find no date for the quoted passage.)
Bonus Quotation of the Day…
… is from George Will’s most-recent column, titled “Biden needs a Sister Souljah moment”:
There is no “need” for revenue commensurate with the nation’s appetite for government spending because — disregard the polarization froth on the surface of our shallow political pond — the political class is united by this broad and durable consensus: Revenue scarcities shall never constrain spending as long as borrowing is possible, and what is considered possible shall never be influenced by moral qualms about mortgaging the futures of future Americans.
Steering the Economy Over a Cliff
Here’s a letter to the Wall Street Journal:
Editor:
Richard Sexton and Daniel Sumner rightly condemn efforts to prosecute farmers for so-called “price gouging” in the midst of the covid lockdowns (“New York’s AG Lays a Rotten Egg,” August 31).
Prices steer goods, services, and inputs into their most economically productive uses. Therefore, for government to restrict prices in markets from moving up and down as people adjust to changing realities of the economy is just as absurd and dangerous as it would be for government to restrict steering wheels on cars from turning left and right as drivers adjust to changing realities of the road.
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
David Boaz bemoans the deep confusion of Trumpians regarding trade and the economy – a confusion that would be comical if it did not come from people possessing political power. Here’s David’s conclusion:
At this year’s virtual convention there was a lot of talk about “freedom” and “liberty.” And also a lot of talk about restricting Americans’ right to trade with people in other countries. The president once again insisted that “other countries take advantage of us on trade” and denounced agreements that would reduce trade barriers.
When you don’t even debate ideas, you can end up thinking that you support both less government involvement in our free enterprise system and increased barriers to peaceful trade among individuals.
Arnold Kling riffs informatively on Helen Pluckrose’s and James Lindsay’s Cynical Theories. Here’s Arnold’s conclusion:
Liberalism seeks to deal with dissent by listening to it, debating it, and co-opting it. But [Critical] Theory does not have those mechanisms. Silencing dissent is its modus operandi, one might even say its mission. Regular readers know that I describe it as the religion that persecutes heretics. Left-leaning liberals have a hard time processing the threat that this represents. They would much rather focus on the threat that they perceive comes from Donald Trump.
I’m sorry to learn that Assar Lindbeck has died. (HT Tyler Cowen)
Here’s Joakim Book, Christian Bjørnskov, and my GMU Econ colleague Dan Klein on covid and Sweden. A slice:
Delivering the verdict on Sweden’s response to the corona pandemic must take this into account: going into 2020, Sweden was already in a more vulnerable position than its neighbors.
Art Carden applauds the power of “no.”
Juliette Sellgren’s podcast with Russ Roberts is wonderful. (Note that the name of Juliette’s podcast has been changed to “The Great Antidote.” Adam Smith would be pleased!)
To Where Is America’s Middle-Class ‘Disappearing’?
Here’s a letter that I sent two weeks ago to the Washington Post:
Editor:
Kudos to Robert Samuelson for reporting on Stephen Rose’s research on real income growth in America over the past 50 years (“The rise of the upper middle class,” August 17). But why is news that is unambiguously good – “most of those who have left the middle class have moved up, not down” – buried in the column’s bowels rather than featured as the lede?
By leading with the finding of rising income inequality, Mr. Samuelson implies that inequality is not only an evil in itself, but one that is more newsworthy than is the fact that most Americans have enjoyed an increase in absolute prosperity.
Focusing on income differences fuels envy and shrouds what is surely the most important achievement of the American economy in the past half-century: increased prosperity for almost everyone.
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
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