Russell Roberts's Blog, page 384

Stated Intentions Are Not Results

(Don Boudreaux)

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Here’s a letter to a Café Hayek reader:

Mr. Rose:

Thanks for sending along Eric Levitz’s recent New York essay “‘Working Class’ Conservatism Doesn’t Work Without Unions.” I must report that I share none of your enchantment with it. An author who describes the Trump administration’s economic policies as “fanatically libertarian” clearly is uninformed – either about the policies or about libertarianism (or both).

But we can chalk up one libertarian-ish move (though surely not motive) to the administration – a move that Levitz, however, misunderstands. Specifically, he complains that “the administration has even opposed environmental regulations that enjoy industry support.” Levitz is obviously unaware of an important reality – namely, environmental regulations are notorious for artificially enhancing the very phenomenon that Levitz fears: the economic power of politically influential corporations.

Environmental regulations routinely raise the costs borne by politically potent producers by less than they raise the costs borne by their politically weaker rivals. Innocent-looking regulations thereby grant to some corporations market power denied to them by free markets.

A journalist who is unaware of this reality has not done his or her homework.

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

Bonus Quotation of the Day…

(Don Boudreaux)

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… is from page 589 of Will & Ariel Durant’s 1961 volume, The Age of Reason Begins:

Mechanical inventions multiplied as industry grew, for they were due less frequently to the researches of scientists than to the skill of artisans anxious to save time.

“They Blinded Us From Science”

(Don Boudreaux)

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This report, written by Sonal Desai, on Americans’ enormous misconceptions about the risks posed by covid-19 is well worth a careful read. It’s not long. (I thank my colleague Dan Klein for alerting me to this report.)

Here are some highlights:

Six months into this pandemic, Americans still dramatically misunderstand the risk of dying from COVID-19:

On average, Americans believe that people aged 55 and older account for just over half of total COVID-19 deaths; the actual figure is 92%.
Americans believe that people aged 44 and younger account for about 30% of total deaths; the actual figure is 2.7%.
Americans overestimate the risk of death from COVID-19 for people aged 24 and younger

by a factor of 50; and they think the risk for people aged 65 and older is half of what it actually is (40% vs 80%).

These results are nothing short of stunning. Mortality data have shown from the very beginning that the COVID-19 virus age-discriminates, with deaths overwhelmingly concentrated in people who are older and suffer comorbidities. This is perhaps the only uncontroversial piece of evidence we have about this virus. Nearly all US fatalities have been among people older than 55; and yet a large number of Americans are still convinced that the risk to those younger than 55 is almost the same as to those who are older.

…..

For the last six months, we have all read and talked about nothing but COVID-19; how can there be still such a widespread, fundamental misunderstanding of the basic facts? Our poll results identify two major culprits: the quality of information and the extreme politicization of the COVID-19 debate:

People who get their information predominantly from social media have the most erroneous and distorted perception of risk.
Those who identify as Democrats tend to mistakenly overstate the risk of death from COVID-19 for younger people much more than Republicans.

This, sadly, comes as no surprise. Fear and anger are the most reliable drivers of engagement; scary tales of young victims of the pandemic, intimating that we are all at risk of dying, quickly go viral; so do stories that blame everything on your political adversaries. Both social and traditional media have been churning out both types of narratives in order to generate more clicks and increase their audience.

The fact that the United States is in an election year has exacerbated the problem. Stories that emphasize the dangers of the pandemic to all age cohorts and tie the risk to the Administration’s handling of the crisis likely tend to resonate much more with Democrats than Republicans. This might be a contributing factor to why, in our survey results, Democrats tend to overestimate the risk of dying from COVID-19 for different age cohorts to a greater extent than Republicans do.

…..

This misinformation also causes another fundamental problem. The policy decision of what activities to keep shut and for how long is a very difficult and consequential one. It requires balancing two opposite effects of uncertain scale: on the one hand the benefits in terms of slowing COVID-19 contagion, on the other hand the harm to the economy and to people’s long-term health and livelihoods. This decision is strongly influenced by public perceptions of dangers, not only because politicians are sensitive to the public’s concerns but also because politicians are people too, subject to some of the same biases. Our poll results suggest fundamental misperceptions of the risk of death or serious adverse health consequences from COVID-19 could be distorting these decisions.

Some Links

(Don Boudreaux)

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Nick Gillespie debunks the recent and inexcusably mistaken “highest single-day of COVID-19 deaths” report. Here’s Nick’s conclusion:

The COVID-19 story is a tough one, with new information emerging all the time. But the media, never infallible in the first place, seem increasingly prone to running stories that are not even internally consistent but instead are a hodgepodge of anxiety and apocalypticism. Under such circumstances, it’s more important than ever to develop razor-sharp media-literacy and bullshit-detection skills. Whether or not a coronavirus vaccine ever arrives, but can at least inoculate ourselves against the more obvious failures of the Fourth Estate.

Bruce Yandle writes that the U.S. economy isn’t improving fast enough.

James Pethokoukis: “If prosperity and freedom aren’t enough for you, there’s also the ‘moral’ case for market capitalism.”

Ben Zycher applauds the Trump administration’s reform of Obama’s misguided methane-emissions rule.

William McGurn praises the courageous Jimmy Lai. A slice:

Soon Jimmy will go to trial on charges from sedition to colluding with foreign powers. It’s utter rot, of course. If he finds himself facing prison, it is only because Communist China, for all its size and power, fears any Chinese who insists on speaking the truth.

In this way Jimmy might be thought of as Hong Kong’s Thomas More, the difference being that while King Henry VIII wanted More to speak up, Beijing wants Jimmy to shut up. In the more than two decades since Hong Kong was handed back to China, most Hong Kong elites have cut their consciences to accommodate their new overlords. Which leaves Jimmy Lai and his printing press as Hong Kong’s single most important counter to official propaganda.

My colleague Bryan Caplan wisely isn’t buying Paul Krugman’s skepticism about what economics can say about economic growth.

Art Carden reviews Steve Horwitz’s Austrian Economics: An Introduction.

Quotation of the Day…

(Don Boudreaux)

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… is from page 107 of the late Hans Rosling’s 2018 book, Factfulness:

Yet here’s the paradox: the image of a dangerous world has never been broadcast more effectively than it is now, while the world has never been less violent and more safe.

Fears that once helped keep our ancestors alive, today help keep journalists employed. It isn’t the journalists’ fault and we shouldn’t expect them to change. It isn’t driven by “media logic” among the producers as much as by “attention logic” in the heads of consumers.

DBx: It is indeed a paradox, one with a significant impact. As the world becomes more and more safe, even small negative deviations from this trend become more and more unusual and, hence, noticeable and “newsworthy.” And these deviations – not understood in historical context – cause outsized anxiety and fear.

Ironically, this anxiety and fear can become self-fulfilling. Because, as Rosling notes, we human beings do not reason well regarding the long run when we are gripped by fear, fear leads us to make choices that in fact will make us worse off in the long run. Most obviously, fear leads us not only to tolerate the state grabbing more power over us, but even to demand that the state slap on us more binds and shackles. Yet bound and shackled, we cannot continue to innovate and create the prosperity that alone can truly reduce our exposure and susceptibility to the physical hazards that for so long mercilessly mowed down our ancestors.

Bonus Quotation of the Day…

(Don Boudreaux)

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… is from pages xi-xii of Kristian Niemietz’s superb 2019 book, Socialism: The Failed Idea That Never Dies:

Yet while socialists distance themselves from contemporary and historical examples of socialism, they usually struggle to explain what exactly they would do differently. Socialists tend to escape into abstraction, and talk of lofty aspirations rather than tangible institutional characteristics.

DBx: The same escape into abstraction and expressions of aspirations is performed also by all advocates of industrial policy.

Nothing is easier than to express lovely aspirations. Equally easy is simply to suppose that the state possesses the combination of god-like power and god-like goodness necessary to transform these aspirations into reality. Much, much more difficult is the task of describing the institutional details that flesh-and-blood human beings will confront and the actions these individuals will realistically take to acquire the knowledge necessary to achieve outcomes remotely close to the lovely aspirations.

Panic Is Imprudent

(Don Boudreaux)

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Here’s a letter to a Café Hayek commenter:

Ms. Fernandes:

Regarding your comment on this blog-post of mine: You write as though covid kills all, or nearly everyone, who it infects. But it does not come remotely close to being so lethal.  

I don’t deny that covid is unusually harmful. What I do deny is that the response of nearly every government worldwide has been proportional to the harm posed by covid. Governments’ responses have been, and continue to be, colossally excessive. Such excess is the result of panic all out of proportion to the underlying danger. To steal a point made yesterday by my colleague Bryan Caplan, if covid is ten times more dangerous than a ‘normal’ flu, then a response ten times stronger might be appropriate; what we’ve gotten instead is a response that is closer to 1,000 times stronger – one totally disconnected from reality. 

And this response, I’m convinced, poses a far greater danger to humanity than does covid. 

Orders for an indefinite suspension of economic activity are issued by government officials. Even in calm times, these officials routinely display obliviousness to economic realities. They treat material prosperity as if it grows automatically, with the only question being how it is distributed. They operate under the delusion that the economy will remain strong if government floods it with enough money, writes enough checks, and orders that prices not rise and that wages not fall. Most of these officials believe that they increase their fellow-citizens’ access to goods and services by using tariffs to decrease their fellow-citizens’ access to goods and services. 

Politicians seem unaware of the unavoidable necessity of making economic trade-offs – and so they incessantly attempt the impossible task of avoidance. But politicians are keenly aware of the boosts to their power that occur whenever people are gripped by what the late Hans Rosling calls “the fear instinct.” 

Reasonable people disagree over what is the optimal response to covid. But no reasonable person trusts that the same government officials who in calm times act in utter ignorance of economic reality are, in these panicked times, acting intelligently and prudently. And so every reasonable person stands on solid ground when condemning today’s draconian responses. 

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 the closing passage, on page 367 of the 1990 Transaction Publishers reprint, of W.H. Hutt’s great 1936 volume, Economists and the Public:

Finally, we have suggested that economic liberty, with the equality of opportunity which it has always implied, is an attainable ideal. We have, in other words, offered a glimpse of the sort of Utopia which could take shape in the dreams of a realist – the liberal ideal. So we commend these thoughts to other dreamers of a better world who have faith in reason.

DBx: This conclusion is so very poignant, especially when read in August 2020. While humanity in 1936 was in the midst of an usually dastardly spasm of irrationality – one that would soon re-erupt into massive blood-spilling – it was only about ten years away from the start of a slow, not-always-sure, but steady-enough climb out of insanity toward reason and civilization.

But in what condition is humanity in 2020? Irrationality is lauded by many – and especially by many elites – as the highest form of human sentiment. Across the political spectrum nationalism is rising. Identity politics reigns. A modern-day inquisition stampedes furiously through the land, searching for signs of less-than-enthusiastic devotion to the sacred creed.

Economists who thought of economics – and who did economics – as did Hutt are fewer and fewer. The single largest remnant of us are holdout in Fairfax. For pointing out the limits of science we are accused of being unscientific. For defending reason we are called unreasonable. For advocating peaceful commerce unrestrained by state-sponsored schemes we are dismissed as naive. For proposing that individuals be left free to pursue whatever peaceful ends with whatever peaceful means they choose – a freedom protected by a strong presumption against prescription and proscription by the state – we are accused of being enemies of humanity.

The most destructive sorts of romanticism and ignorance are now in the saddle. And what struggles there are today pit not defenders of reason and liberty against enthusiasts for romanticism and power, but instead people who disagree only over which particular romantic, mad ends the unlimited power of the state will be used to impose.

Sledgehammered or Stampeded: Either Fate is Horrific

(Don Boudreaux)

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In my latest column for AIER, I explain why the public’s reaction to the covid lockdowns have crushed my optimism, leaving in its place only pessmism. A slice:

The image that keeps coming into my head is of a sledgehammer. With brute force, a blunt and heavy instrument was swung down on society by the state. Sledgehammers crush. They demolish. That’s their only function. They do not build. And for as long as the dreadful weight of this particular sledgehammer – the massive mallet that is the COVID-19 lockdown – continues to press down on the rubble that it caused, there is very little opportunity for the human creativity and work effort unleashed by markets to bring about the kind of improvements that Rosling documents.

Will humanity recover? Will we – when the sledgehammer is lifted – rise, dust ourselves off, and climb back on to the happy track that we were on before March 2020? Of course it’s possible. But there’s now a novel reality that makes a renewed continuation of pre-COVID progress much less likely: the sledgehammer itself.

When this sledgehammer is lifted off of us, it won’t be lifted for long. We now know that this awful hammer is there, looming overhead. We have good reason to worry that government officials are likely to smash it down upon us when another communicable pathogen emerges and makes news – as such a pathogen inevitably will, for viral pathogens have been part of human existence from the start. How will entrepreneurship and investment be changed by this ever-present threat of a smashing sledgehammer? The creation, funding, and operation of venues in which individuals come into close physical contact with each other – either for recreation or for work – will surely be much less attractive.

More generally, the newly demonstrated willingness of state officials to destroy, with just a few executive diktats, hundreds of billions of dollars of capital value cannot but push some entrepreneurs and investors into inactivity. Why build, or build grandly, when some pompous governor or mayor – someone whose only ‘skill’ and most intense itch is to exercise power over fellow human beings – can, with a mere signature, smash down a sledgehammer and turn to mush the fruits of years of hard work and sacrifice?

And how will those in power – and those who seek power – be affected by the display by so many people of a sheepish willingness to be ordered by the state into house arrest? Did prime ministers, governors, and mayors know in mid-March just how easy it would be for them to herd millions of the rest of us away from the activities that we human beings have for generations enjoyed? Were these officials aware of their power to convince so many people under their command that each individual poses a poisonous threat to every other individual?

To prosper, we human beings must cooperate in production – Adam Smith called it the division of labor – and trade extensively. Most of these activities require face-to-face contact among individuals who see each other as partners in cooperation and exchange rather than as threatening carriers of death. And to enjoy what we produce also requires face-to-face contact, for we are a social species.

In possession of dictatorial power unknown just a few months ago, government officials – a group undeserving of much trust even in the best of times – will not shy away from wielding their newly discovered powers. The results will be ugly.

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Over at EconLog today, my GMU Econ colleague Bryan Caplan makes a related point – one refreshingly more analytical and insightful than my own. Here’s Bryan’s conclusion:

Yes, perhaps I’m mistaken about one or two of these crises.  What clear, though, is that society’s method of certifying and addressing crises is deeply defective – and that’s highly unlikely to change.  While I’ve got to live with that, I get a small sense of comfort from staying aloof from the madness.  Staying aloof, and quietly thinking, “You will not stampede me.”

Bonus Quotation of the Day…

(Don Boudreaux)

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… is from page 228 of Dwight Lee’s characteristically insightful paper “Corporate Social Responsibility and Corporate Welfare,” in which he contrasts corporate philanthropy with corporate rent-seeking; Dwight’s paper is chapter 11 in the hot-off-the-press festschrift, The Legacy of Bruce Yandle (2020), edited by Roger Meiners and me:

No one can see how much wealth would not have been destroyed if corporation A had not taken corporate welfare. Similarly, no one can see how much additional wealth is being produced because corporate B did not take corporate welfare.

DBx: Bruce Yandle – the man for whom this festschrift is published – is second-to-none in using economics to help us to see that which would otherwise remain invisible.

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I thank again my Mercatus Center colleague Stefanie Haeffele for her hard and creative work to make both the conference and the book a reality. I thank also Dan Rothschild, Executive Director of the Mercatus Center, for his strong support from the start for this project.