Russell Roberts's Blog, page 383

Quotation of the Day…

(Don Boudreaux)

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… is from page 37 of Kristian Niemietz’s superb 2019 book, Socialism: The Failed Idea That Never Dies:

Socialism’s failure, and capitalism’s relative success, has much more to do with capitalism’s capacity to generate economically relevant knowledge.

DBx: Indeed so. And note that the amount of economically relevant knowledge generated by capitalism does not begin to diminish only when an economy becomes fully socialized. Whenever resources are allocated by command backed by coercion, some economically relevant knowledge is destroyed – that is, not generated. The reason is that the value of these resources in different, alternative uses is prevented from being discovered by voluntary bids expressed to resource owners who are free to accept or to reject.

An economy in which the state directs the production only of toothpicks will fail to generate only an infinitesimal amount of the economically relevant knowledge that would otherwise be generated. Increased failure to generate economically relevant knowledge will occur if the state expands its control of resource allocation to include not only toothpicks but also toothpaste. Yet still, of course, the amount of knowledge thereby not generated will remain minuscule.

But the more the state controls, the greater is the amount of economically relevant knowledge not generated. This reality is important to grasp because much of the discussion today of government intervention into the economy is premised on the mistaken notion that the Mises-Hayek demonstration of the impossibility of full-on socialism becomes relevant only when an economy is close to, or at, full-on socialism.

Bonus Quotation of the Day…

(Don Boudreaux)

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…  is from page 5 of Michael Strain’s excellent 2020 book, The American Dream Is Not Dead (But Populism Could Kill It):

[T]he [American] Dream is at immediate risk from populists on the left and the right – from their policies, from their narratives of victimhood and grievance, and from their assaults on the value of personal responsibility and the idea that people can better their outcomes.

DBx: Yes. Populism of any sort, and rooted in whatever soil and watered from whatever river or (as is typical) sewer, is a vile curse.

Some Links

(Don Boudreaux)

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In writing about a recent bizarrely bad decision by the FDA, David Henderson gives reason for Art Carden to revise upward his “estimate of the probability that government failure is a much larger problem than market failure.”

Joakim Book proposes canceling mainstream environmentalism. And don’t miss this related Quotation of the Day from Mark Perry.

Arnold Kling writes about the libertarian personality.

Walter Olson warns of the dangers of Letitia James’s banana-republic proposal to abolish the National Rifle Association.

Scott Lincicome reports on more good reasons to reject the zombie myth of American middle-class stagnation.

My Mercatus Center colleague Christine McDaniel is pleased that Joe Biden, in his nomination-acceptance speech, said very little about trade (although what little he did say is Trumpian in substance if not in style).

Here’s Nick Gillespie on the “dull infomercial” that was the Democratic National Convention. A slice:

The national conventions long ago stopped being a place where any real news might happen or where unscripted events would reveal something authentic or telling. The shift to online-only underscores the reality that the DNC and RNC are infomercials pitched to the parties’ bases rather than events designed to reach out to uncommitted voters. The rest of us will simply have to bide our time for a more substantive discussion of the country’s uncertain future.

In this short video I explain Adam Smith’s attitude toward physiocracy.

Don’t miss this bit of timely wisdom from Steve Landsburg.

Quotation of the Day…

(Don Boudreaux)

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… is from page 100 of Cass Sunstein’s excellent 2005 book, Laws of Fear (footnote deleted):

Individuals are highly responsive to emotions expressed by others. Those surrounded by depressed people are more likely to become depressed.; those surrounded by enthusiastic and energetic people are more likely to feel enthusiastic and energetic. The particular mechanisms behind emotional contagion are not fully understood, but fear is a prime example of an emotion that turns out to be contagious. It is therefore predictable that a group of frightened people will end up becoming still more fearful as a result of internal conversations.

Bonus Quotation of the Day…

(Don Boudreaux)

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… is from page 221 of Cass Sunstein’s excellent 2005 book, Laws of Fear:

In a sense, sensible governments “overprotect” liberties, compared to the level of protection that liberties would receive in a system of (optimal) case-by-case balancing. Because optimal balancing is not likely to occur in the real world, rule-based protection is a justifiable second best.

DBx: Rules are vitally important, and Cass Sunstein deserves applause for being among the relatively few progressives who understand the reason of rules. Fear, and the panic that it fuels, too easily lead people to demand that government suspend their and their fellow-citizens’ liberties – and government officials are all too eager to oblige.

Note that what Sunstein calls “rule-based protection” is second best in comparison only to government as it would be carried out by an omniscient, omnipotent, and omni-benevolent god.

When are We Free To Choose?

(Don Boudreaux)

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Here’s a letter to a rising college junior who describes himself as a “friendly skeptic of neoliberalism”:

Mr. Martinez:

Thanks for your e-mail. It’s very kind.

You’re correct that I oppose trade restrictions, but incorrect to infer that I therefore “oppose letting the people choose their economic course.”

With free trade, people’s scope to make economic choices is at a maximum. With free trade each individual gets to choose, without condition, to purchase, or not, whatever is offered. You can buy that imported car while I choose to buy the one made in Michigan. You don’t need my permission and I don’t need yours.

Free trade, experience leaves no doubt, increases people’s material prosperity. But its principal benefit is that it’s peaceful and enlightened. When trade is free each person respects the dignity and autonomy of others. Voluntary exchange reigns without any initiation of coercion. Free trade, root and branch, is civilized.

With protectionism, people’s scope to make economic choices is constricted. With protectionism, each person’s choice is obstructed by strangers – namely, government officials – who use threats of coercion to, at best, impose burdensome conditions on that choice or in some cases prohibit it altogether. Protectionism, at root, is barbarous even if its branches cast a lovely apparition.

I understand that you mean by “letting the people choose” letting today’s majority of voters impose restrictions on how they and the minority conduct their economic affairs. But this language is quite misleading. If I vote with the majority to prevent you from buying imports, I’m part of a group that shrinks your scope for choosing. Not content to myself refuse to buy imports, I arrogantly insist on compelling you to do same. I and some other of your fellow citizens refuse to let you choose your economic course.

Those who are guilty of opposing letting people choose their economic course are not free traders, but protectionists.

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

Quotation of the Day…

(Don Boudreaux)

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… is from page 216 of Virginia Postrel’s marvelous and still-relevant 1998 book, The Future and Its Enemies:

Dynamists too have fear on their side: fear of stagnation, of poverty, of pain. Stasist prescriptions, we can say with conviction, stifle the very processes through which people improve their lives – from the invention of new medical treatments to the creation of art. In their quest for stability, statists make society brittle, vulnerable to all sorts of disasters. They disregard and disrespect important knowledge, the specific knowledge through which we each shape our lives. They scorn pleasures not their own, improvements they did not conceive. They lock individuals into narrow status boundaries, blocking opportunity and self-definition. They are frighteningly intolerant.

DBx: Assemble in a room one hundred ‘sincere’ proponents of protectionism – that is, one hundred people who endorse protection for reasons other than that it will protect from competition their particular firms or jobs. A majority – and likely one that’s sizable – will have among their justifications for tariffs and other trade restrictions the express desire to make the details of the world look like they wish the details of the world to look. “We should have more manufacturing jobs!” “We should have less foreign ownership of our domestic supply base!” “We should enable people to earn higher wages in small towns!” “We should be embarrassed that so many of our flags are imported!” “We should import fewer critical supplies!” “The steel industry [or fill-in-the-blank with whatever industry some protectionist fancies] is too important for our country to let it decline because of cheap imports!” “The trade deficit is too large!” “It’s criminal that we buy goods produced in foreign sweatshops!”

The remaining protectionists are either motivated exclusively by concerns about national security or are simply ignorant of economics, with no belief about protectionism beyond the mistaken notion that it will make the domestic economy more prosperous. Yet while nearly all of the protectionists in the majority also have a poor grasp of economics, again, their chief motivation is to use the state to make the details of the economy look like these protectionists wish these details to look. Their motivation is no less selfish – yet much more arrogant – than is the motivation of the merely greedy protectionists who care only that their firms or jobs not be subject to competition from imports.

Bonus Quotation of the Day…

(Don Boudreaux)

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… is from page 77 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:

Harmful bigness in the private economy does not survive without the protection of the State.

DBx: Yep.

Some Links

(Don Boudreaux)

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Andrew Sullivan is hopeful that Helen Pluckrose’s and James Lindsay’s new book, Cynical Theories: How Activist Scholarship Made Everything About Race, Gender and Identity, will help to expose the intellectual bankruptcy and ethical folly of so-called “critical theory” and its deformed off-spring “wokeness.” Here’s his conclusion:

The rhetorical trap of critical theory is that it has coopted the cause of inclusion and forced liberals onto the defensive. But liberals have nothing to be defensive about. What’s so encouraging about this book is that it has confidence in its own arguments, and is as dedicated to actual social justice, achieved through liberal means, as it is scornful of the postmodern ideologues who have coopted and corrupted otherwise noble causes.

This is very good news—even better to see it as the Number 1 Amazon best-seller in philosophy long before its publication date later in August. The intellectual fight back against wokeness has now begun in earnest. Let’s do this.

George Will reminds us that the New Deal was really a rather poor deal. A slice:

Historical data seems powerless to dent progressive nostalgia for the New Deal’s fictitious triumph of economic revival through job creation. And, now, this nostalgia has seeped into climate policy: Democrats advocate a Green New Deal, invoking the now-talismanic phrase first publicly spoken by Roosevelt 88 years ago when accepting his party’s presidential nomination.

Since 2017, however, most congressional Republicans have indulged an even older nostalgia. Channeling the ghost of President William McKinley, they have acquiesced in the current president’s protectionism. This policy of government picking economic winners and losers does not just pose a danger of becoming crony capitalism, it always and everywhere is crony capitalism.

Also debunking myths about the New Deal is GMU Econ alum Dan Mitchell.

My intrepid Mercatus Center colleague Veronique de Rugy makes the case against taxing wealth.

Pierre Lemieux applauds H.L. Mencken for making an accurate prediction.

Richard Ebeling rightly decries the absence of the individual in nationalist and populist conservatism.

“[T]he orders sanctioning TikTok and WeChat reek of capricious economic nationalism wrapped in a gossamer‐​thin security rationale. They are comically hypocritical, dangerous to free expression, and a ruinous attack on the open global digital market the United States used to champion so vigorously.” – so concludes Julian Sanchez.

Quotation of the Day…

(Don Boudreaux)

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… is from page 21 of Kristian Niemietz’s 2019 book, Socialism: The Failed Idea That Never Dies:

Over the past hundred years, there have been more than two dozen attempts to build a socialist society. It has been tried in the Soviet Union, Yugoslavia, Albania, Poland, Vietnam, Bulgaria, Romania, Czechoslovakia, North Korea, Hungary, China, East Germany, Cuba, Tanzania, Benin, Laos, Algeria, South Yemen, Somalia, the Congo, Ethiopia, Cambodia, Mozambique, Angola, Nicaragua and Venezuela, among other countries. All of these attempts have ended in varying degrees of failure. How can an idea which has failed so many times, in so many different variants and so many radically different settings, still be so popular?

DBx: How indeed?

Niemietz directly takes on, and thoroughly debunks, the popular retort that none of these schemes was truly socialist. As he points out for most cases, when each scheme was launched western intellectuals embraced it as – and referred to it as – socialist. These intellectuals assured the world that this and that glorious attempt to improve the economy by giving to the state enormous powers to allocate resources would prove the superiority of socialism over decrepit, failing, irredeemable capitalism. It is only after each such scheme not only failed to deliver its promised material bounty, but also showed itself beyond any doubt to be tyrannical, that intellectuals denied that it was ever “true” socialism.

But let us, for the moment, pretend that intellectuals are correct in their assertion that none of these attempts to implement socialism actually followed a recipe that, in the end, is discovered to have been that for “true” socialism. The case for socialism remains demolished: Any system that is so difficult to implement despite all the trying is not a feasible system for real-world human beings. And because these many failed attempts to implement “true” socialism not only do not increase prosperity, but also generate grotesque poverty mixed with state brutality, socialism is far too dangerous a scheme to be tried. If socialism works only when implemented just so and with no imperfections – if slight deviations from perfect implementation result not in slight deviations from perfect prosperity and equality but, instead, in the actual horrors that the world has witnessed – socialism is not for this world.