Russell Roberts's Blog, page 385

Some Links

(Don Boudreaux)

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David Henderson explains that the real source of monopoly power isn’t success in markets but, instead, government intervention. A slice:

Governments in the United States limit competition in four main ways (1) restrictions on entry into an idustry, (2) tariffs and import quotas, (3) regulation that appears neutral but is not, and (4) patents and copyrights.

(DBx: Calling on the government to police against monopoly is like calling on the KKK to police against racism.)

Max Gulker writes insightfully about the response to covid.

“The authoritarian personality.”

John O. McGinnis identifies public-sector labor unions as sources of increased trouble, especially during crises.

David Simon refutes Alan Blinder’s recent claim that CO2 emissions are making the earth “inhospitable.”

Here’s part 7 of George Selgin’s great series on the New Deal.

Quotation of the Day…

(Don Boudreaux)

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..… from pages 194-195 of David Mamet’s 2011 book, The Secret Knowledge (original emphases):

The Left says of the Right, “You fools, it is demonstrable that dinosaurs lived one hundred million years ago, I can prove it to you, how can you say the earth was created in 4000 BCE?” But this supposed intransigence on the part of the Religious Right is far less detrimental to the health of the body politic than the Left’s love affair with Marxism, Socialism, Racialism, and the Command Economy, which one hundred years of evidence shows leads only to shortages, despotism, and murder.

DBx: Sadly, not only are people on the political left becoming more infatuated with the command economy, so, too, are many people on the political right. This disturbing fact is true even (especially?) of professors, pundits, and politicians on the right who press hard for conventional religion to play a greater role in people’s lives.

Destroying Predatory Institutions Differs Categorically from Destroying Physical Assets and Resources

(Don Boudreaux)

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Here’s a response to someone who asks a question that is surprisingly (to me) common:

Mr. Schubert:

Thanks for your e-mail and excellent question. You write:

“You have argued on your blog that the oft-made claim that destruction can be good for the economy is spurious (the economic logic behind your rebuttal seems impeccable to me). On the other hand, Milton Friedman has claimed that: “Only a crisis ‐​ actual or perceived ‐​ produces real change. When that crisis occurs, the actions that are taken depend on the ideas that are lying around.” If Friedman is correct, then it seems to me an empirical issue whether the damage done by a crisis (e.g., destruction) is greater or less than the good that may result from the consequent change. Of course it would be nice to have the positive change without the crisis, but if the two are in fact linked, then mightn’t destruction be beneficial?”

The difference is this: The crises to which Friedman referred – as did Mancur Olson, more systematically, after him – involve destruction of political and social institutions, not of physical assets and resources. And while an upending of political and social institutions that suppress growth can possibly clear the way for alternative institutions that encourage growth – and while such an upending might be accompanied by some destruction of physical assets and resources – neither Friedman nor Olson ever wrote that growth is promoted by the destruction of physical assets and resources. Each was too good an economist to have ever suggested such a thing.

Genuine economic growth is, of course, encouraged when predatory institutions are destroyed and replaced with non-predatory ones. But unlike with the destruction of valuable physical assets and resources, the destruction of predatory institutions does not itself divert resources from valued uses to which these resources would otherwise have been put. And so unlike with the destruction of valuable physical assets and resources, destroying predatory institutions and replacing them with non-predatory ones is all gain with no opportunity cost (except that which is suffered by decommissioned predators).

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 pages 81-82 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:

Ronald Reagan, who about government knew a little, once commented that: “the best minds are not in government. If any were, business would steal them away.” Mazzucato, of course, would think his is merely a neo-liberal rant. But it is on the contrary a rather obvious market equilibrium, unless public service is in fact a way to get rents.

Some Links

(Don Boudreaux)

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My intrepid Mercatus Center colleague Veronique de Rugy bravely stood her ground during a recent meeting of rent-seeking interests:

At the public meeting, the EXIM Board heard from a variety of external stakeholders with diverse views on PEFCO’s future. Veronique de Rugy expressed her concern with renewing EXIM’s partnership with PEFCO, stating, “In light of the current economic crisis some may feel that the now is not the time to reconsider or even reform PEFCO. But not even the most pessimistic economic scenarios contemplate that the current crisis will last 25 years. Assuming that the liquidity argument holds, if the guarantee agreement between EX-IM and PEFCO is renewed again, it should be renewed for only one year, at the end of which the need for or appropriate role of PEFCO should be revisited in light of prevailing economic conditions.”

Scott Sumner explains that consumption is not production.

Steve Horwitz reviews Janek Wasserman’s The Marginal Revolutionaries.

Tyler Cowen wonders why the T-cell immune response didn’t bark.

James Altucher worries that NYC is dead. (HT Manny Klausner) A slice:

NYC has never been locked down for five months. Not in any pandemic, war, financial crisis, never. In the middle of the polio epidemic, when little kids (including my mother) were becoming paralyzed or dying (my mother ended up with a bad leg), NYC didn’t go through this.

This is not to say what should have been done or should not have been done. That part is over. Now we have to deal with what IS.

Hans Bader isn’t buying the media’s claim that Kamala Harris is “moderate.”

Jeffrey Tucker continues to write wisely about the covid lockdowns.

Arnold Kling briefly assesses other ideological tribes.

Speaking of Kamala Harris, George Will ponders her campaign-trail criticism of Joe Biden’s opposition to bussing.

Citing Trump’s treatment of TikTok, the great Bruce Yandle describes the rise of “gatekeeper capitalism” – and the dimness this development casts on Americans’ future.

Quotation of the Day…

(Don Boudreaux)

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… is from chapter 10 of Henry Adams’s 1907 volume, The Education of Henry Adams, as quoted on page 233 of Joseph Epstein’s April 9th, 2014, American Spectator essay, “The Cracked Vessel,” as this essay is reprinted (and retitled as “George Kennan”) in the 2018 collection of some of Epstein’s essays titled The Ideal of Culture:

The effect of power and publicity on all men is the aggravation of self, a sort of tumor that ends by killing the victim’s sympathies; a diseased appetite, like a passion for drink or perverted tastes; one can scarcely use expressions too strong to describe the violence of egotism it stimulates.

Pittsburgh Tribune-Review: “Who you callin’ ‘Shorty’?”

(Don Boudreaux)

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In my column for the May 27th, 2010, edition of the Pittsburgh Tribune-Review I defended speculators – and in particular, short-sellers. You can read my column beneath the fold.

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Quotation of the Day…

(Don Boudreaux)

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… is from page 3 of Armen Alchian’s and William Allen’s Universal Economics (2018; Jerry L. Jordan, ed.); this volume is an updated version of Alchian’s and Allen’s magnificent and pioneering earlier textbook, University Economics:

The study of economics deals with this yoke of scarcity and the modes of behavior intended to minimize the pains and maximize the gains of getting along – behavior which is restricted and channeled, sometimes helpful and efficiently but often hurtfully and wastefully, by the social ground rules and institutions we adopt and have had imposed on us.

DBx: The propensity of people to believe that, through government, people can escape the binds of scarcity remains distressingly vast. Of course, no one admits to believing the bald claim that government can work the miracle of causing scarcity to disappear or to become irrelevant. But survey any successful candidate’s campaign promises – promises that spark cheering crowds and feet flocking to polling places – and you will find among these many assertions that imply either the absence of scarcity or a childish failure to take the reality of scarcity seriously. This same belief in miracles is found in much public commentary on economic matters.

Protectionists promise increased riches from policies that intentionally decrease people’s access to riches. Profligate spenders promise increased riches from the mere printing of money or from the mere mailing of government checks. Popular pundits and reporters promise riches from the devastation left by hurricanes and other natural disasters. Nearly everyone outside of the relatively small group of people who understand that F.A. Hayek and Milton Friedman were not henchmen working for sadistic oligarchs is certain that using minimum wages to raise employers’ costs of employing workers does nothing to dissuade employers from employing workers. These same people are convinced also that using government-imposed price ceilings to reduce suppliers’ gains from supplying goods and services – and to reduce consumers’ incentives to economize on the use of goods and services – does nothing to diminish the availability of goods and services.

And so it goes. At the level of popular and political discourse, the belief that government is a godlike creature capable of working wondrous miracles (if in the right hands) – or of working dastardly miracles (if in the wrong hands) – comes with little in the way of even attempted intellectual justification. The supernatural powers are simply taken for granted.

At more elite levels – on college campuses, in think tanks, and in some of the more ‘intellectual’ publications – the reality of miracles is believed to be proven scientifically if some clever associate professor or Senior Fellow can articulate a set of conditions that, were these conditions to be found in reality, splendid outcomes would materialize. And in the eyes of these associate professors, Senior Fellows, and those many persons who thrill to their demonstrations of the possibility of splendid outcomes engineered by the state, it is simply out-of-bounds, scientifically, for anyone to point out that these secular priests are as detached from reality as was any 19th-century voodoo queen peddling her mysticism in the French Quarter.

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:

True, considering the role of habit in human life, to achieve a glorious social project a direct order through a bureaucracy backed by the threat of coercion might be faster than market-communicated suggestions that the price is too high or the quality too low. We don’t actually think so. And coming down instead on the statist side depends on assuming in the first place that the coerced project is sensible, as it regularly is not.

DBx: As a rule, any idea or scheme that people must be coerced to follow is lousy. A civilized and productive individual persuades, without coercion or trickery, other persons to act in accordance with his or her suggestions. McDonald’s persuades people to dine at its establishments. Amazon, Google, and Facebook persuade other people to use their services. Apple persuades other people to buy its products. Wal-Mart, Ikea, and Dollar General persuade other people to shop in their stores.

In stark contrast, government coerces. And as H.L. Mencken observed, “The kind of man who demands that government enforce his ideas is always the kind whose ideas are idiotic.” Good ideas need only persuasion to make them acceptable; ideas that must be coercively imposed are nearly always – yes – idiotic. Alas, our world is over-populated with men and women whose ideas are idiotic – and proven to be so by the fact that these ideas must be imposed with coercion.

Why in heaven’s name do so many people suppose that those who can coerce are more likely than are those who must persuade to take into careful consideration the wishes of other people? It’s the darnedest puzzle, one that I’m certain that I will never solve.

…..

Pictured above is former U.S. Secretary of Labor Robert Reich – a long-time advocate of industrial policy.

Pittsburgh Tribune-Review: “Sorry, Milton: Let ’em in”

(Don Boudreaux)

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In my column for the May 12, 2010, edition of the Pittsburgh Tribune-Review I dissented from Milton Friedman’s famous claim that the welfare state and open immigration are incompatible with each other. (I was unaware, when I wrote this piece, that – as Shikha Dalmia explains – Friedman did not really say what he is commonly alleged to have said. [See also Jim Peron’s comment at the bottom of the link to my Trib column.])

You can read my column beneath the fold.

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