Russell Roberts's Blog, page 381

Bonus Quotation of the Day…

(Don Boudreaux)

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… is from page 83 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:

For a nation of non-angels we need restrained guardians, not more schemes devised by economists for pushing people around.

Some Links

(Don Boudreaux)

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My intrepid Mercatus Center colleague Veronique de Rugy calls for a reduction in government spending. A slice:

Enter the new paper by Cogan, Heil and Taylor, which finds that, when faced with an inevitable debt explosion in our future, the only viable and desirable option is for Uncle Sam to limit expenditures as a share of GDP, around the 20% ratio that prevailed before the pandemic. The authors find that this approach avoids the “potentially large increase in future federal taxes.” Better yet, they actually find that the policy would boost both short- and long-term GDP.

Richard Ebeling reminds us that Joe Biden’s passions are mostly for more power.

Eric Boehm reports on how Mike Pence recently, and proudly, displayed his economic ignorance – sadly an ignorance shared by Joe Biden.

Here’s David Henderson on the Wall Street Journal on the state of Georgia’s response to covid.

David Boaz writes about women’s rights.

Jeff Jacoby is understandably disturbed by the Trumpification of the Republican party. Here’s his conclusion:

Unquestioning support for the supreme leader is not a democratic value, as Republicans emphasized just four years ago. In its 2016 platform, the Republican National Committee blasted Barack Obama and the Democrats for having “changed what John Adams called ‘a government of laws and not of men’ into just the opposite.” This year there is no platform. There is only a resolution “enthusiastically” and “unanimously” endorsing whatever Trump wants. What would John Adams have called that?

Unmasking the Full Effects of Mask Mandates

(Don Boudreaux)

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With this op-ed in today’s Detroit News Steve Horwitz and I did not have the space to make all the points we wish to make about the likely consequences of mask mandates. Most notably, we don’t mention the Peltzman effect. But we nevertheless believe that there are some potentially harmful consequences of mask mandates that should be aired.

Here’s a slice from our op-ed:

But as with actual pollution policy, we cannot assume that the political process will produce a mask mandate that resembles what economists might draw on the blackboard. First, we have to ask what the actual gains from the mandate are likely to be, just as we have to be realistic about just how much pollution an actual tax would discourage. With masks, the question is how mandates work when compared to the next best alternative. How many more people would use masks if they are mandated versus simply relying on strong social pressure and private sector no-mask, no-service rules? It might not be many.

Pittsburgh Tribune-Review: “Piecing it together”

(Don Boudreaux)

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In the June 30th, 2010, edition of the Pittsburgh Tribune-Review appeared the second in my series of essays using the analogy with a jigsaw puzzle to explain emergent order. You can read my column beneath the fold.

(more…)

Quotation of the Day…

(Don Boudreaux)

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… is the frontispiece of David Levy’s and Sandra Peart’s new (2020) volume from Cambridge University Press, Towards an Economics of Natural Equals: A Documentary History of the Early Virginia School; specifically, it’s from a letter that the late Nobel-laureate, and at the time Professor of Economics at the University of Virginia, James Buchanan wrote on October 17th, 1960, to Kermit Gordon, then a program officer at the Ford Foundation:

There seems to me to be two essential ways of approaching the study of problems of political, social, and economic organization. The first way is that of setting up independently certain criteria or goals for achievement and to examine existing and potential institutions in the light of their performance or expected performance in meeting these criteria. This approach, for purposes of exposition here, may be called the “social welfare function” or “social engineering” approach. It seems to characterize much of the current scholarship in the social sciences, and in economics especially. The second approach is that which deliberately avoids the independent establishment of criteria for social organization (such as “efficiency,” “rapid growth,” etc.), and instead examines the behavior of private individuals as they engage in the continuing search for institutional arrangements upon which they can reach substantial consensus or agreement. It follows from this difference in approach itself that “individual liberty,” in the sense of individual participation in the choices of appropriate constraints on human action, will tend to assume a necessary, and hence more prominent, role in the second than in the first. It is also true that the second approach will normally tend to place more emphasis on market organization than the first, not because there is some pre-conceived dogma or creed in favor of this first form of social order, but simply because it does represent one system upon which substantial consensus has been, and is, expressed.

DBx: Agree with the substance of his argument or not (I happen to agree, strongly): How many economists active today are as deeply thoughtful, as seriously philosophical, as was Jim Buchanan? Precious few.

It’s a source of sadness to realize how far the economics profession has fallen since scholars such as Jim Buchanan, Frank Knight, F.A. Hayek, Fritz Machlup, Ronald Coase, Armen Alchian, Yale Brozen, Gordon Tullock, Leland Yeager, Harold Demsetz, and Julian Simon were in their prime.

Capitalism versus Socialism

(Don Boudreaux)

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This video featuring Andy Puzder is pretty good:

Bonus Quotation of the Day…

(Don Boudreaux)

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… is from pages 430-431 of my colleague Richard Wagner’s paper “Agency, Economic Calculation, and Constitutional Construction,” which is chapter 29 in the important 1988 collection, edited by Charles K. Rowley, Robert D. Tollison, and Gordon Tullock, The Political Economy of Rent-Seeking; with this quotation Dick addresses the claim that political representatives are agents of citizen-voters in a way quite akin to how corporate executives are agents of shareholders:

[T]he system of alienable ownership that characterizes corporations tends to produce unanimity among owners by restricting the scope for wealth transfers. But with the inalienable ownership that characterizes democratic governments, opportunities for wealth transfers expand. Hence the very question of the degree to which agents advance the interest of principals becomes problematic, because there is no longer commonality in interest among principals in the first place.

DBx: Here exposed is yet another weakness in the arguments of those who assert that intervention by democratically elected governments into markets is acceptable because such intervention merely reflects “the will of the people.”

Monetize That Thar Claim!

(Don Boudreaux)

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Dan Polsby, former Dean of the GMU School of Law, emailed to me the following note. Dean Dan sent it in response to this latest post of mine expressing skepticism of the claims by Oren Cass and some others that American workers are generally underpaid. (I thank Dan for his kind permission to share his email publicly.)

Entrepreneurs who have identified huge opportunities don’t (fortunately) need the skills to exploit their insight by themselves. They hire people who do have the necessary knowhow. Gold miners don’t know how to make gold, they may not be able to drive skiploaders to dig gold, they probably can’t refine gold (or maintain skiploaders!) nor move gold securely to market nor keep the books and figure out the taxes – so what? If all you know is that you’re sitting on a gold mine, and you know you don’t know how to exploit it, do you say, “aw shux, never mind, guess I’ll just plant some sorghum”? At a minimum, wouldn’t you sell it to someone who could do and arrange for such things? The claim must be that there is a gold mine out there, just sitting there in the sunshine all fat and happy, that literally nobody on earth is willing to exploit. That’s some claim.

……

DBx: Yup!

And There’s the Rub

(Don Boudreaux)

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My continuing conversation with Scott Rose:

Mr. Rose:

You continue to press back against my argument that intellectuals who claim that America is populated by hordes of underpaid workers should demonstrate the legitimacy of their belief by launching their own firms – firms that will profit by hiring these workers. Specifically, you write that “A researcher like Oren Cass can’t be necessarily expected to have the skillset necessary to run a business.”

I completely agree. I do not fault Mr. Cass and other intellectuals for having insufficient entrepreneurial ability, knowledge, and gumption to launch and operate successful firms in the market. I myself lack each of these admirable traits.

But if persons such as Mr. Cass have too little knowledge and ‘feel’ for running actual businesses, what reason is there to trust their claims to have discovered opportunities for businesses to earn profits? I say, “none.”

Of course, persons such as Mr. Cass are unaware that when they claim that the economy is filled with underpaid workers they thereby claim to have discovered opportunities for businesses to earn profits. Their failure to understand the nature and implications of their claim is a failure for which I fault them, for this failure reveals them to know too little about a subject on which they present themselves as knowing much: economics.

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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Stephanie Slade eloquently decries the rejection of libertarianism by many American conservatives. Here’s her conclusion:

In trying to direct the economy from Washington, conservatives would be doubling down on progressives’ mistakes. And in trying to duplicate their political success from 2016, Republicans may be tearing out their movement’s heart and soul.

Jacob Sullum bemoans Trump’s hostility to economic freedom…

… and Scott Lincicome documents the predictable, harmful consequences of the tariffs that Trump so absurdly embraces.

My intrepid Mercatus Center colleague Veronique de Rugy explains why there is no good reason to trust declarations that government will ‘this time’ perform better. Here’s her conclusion:

I could go on and on and list many more failures of government. But the bottom line is that all these failures are impossible for me to forget when I am promised by the same politicians who have been in power for decades that this time around things will be different. They sadly never are.

Brown University economist Emily Oster writes wisely about the media-stoked public overreaction to covid-19. A slice:

Because of the overwhelming bias in what gets reported about covid-19, the public lacks essential context for making reasoned, well-informed decisions. Researchers found, for example, that droplets containing the virus can, in theory, travel far in the air. That discovery was widely reported. Overlooked was the fact that, even if droplets can travel far in the air, we don’t have evidence that they usually do. So hiking trails and other open-air facilities were closed, despite the fact there are no documented cases of covid-19 caused by hiking.

When I read Greg Ip’s long, new essay in the Wall Street Journal about the costliness of the covid lockdowns I thought just what David Henderson thought: Where’s Ip been? Many of us – including David – have been expressing such thoughts for some time now.

Juliette Sellgren talks with GMU Econ alum Ben Powell about sweat shops.

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