Russell Roberts's Blog, page 387

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(Don Boudreaux)

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My intrepid Mercatus Center colleague Veronique de Rugy decries the cronyism festering at the heart of the U.S. International Development Financing Corporation. A slice:

This happens all the time in government, and it is always a very big risk with any government agency under any administration when it starts to hand out money to private companies. Why? Because government decisions about where capital should flow are fundamental political decisions; they aren’t guided by economics, price signals, or profits and losses. This is why many of us are skeptical of the claims that industrial policy can ever work. The whole point of the exercise is that it allocates money to favored industries, sometimes the same industries and firms that have friends in high places, based on the judgement of politicians who aren’t spending their own cash and in order to satisfy their own preferred order of the world.

John Staddon – the James B. Duke Professor of Psychology and Professor of Biology, Emeritus, at Duke University – pushes back eloquently against a presumptuous and ignorant letter written recently by Duke University’s President. Here’s a great line from Prof. Staddon:

Empathy, guilt, and good intentions are a dodgy basis for sweeping resolutions.

How bad is covid really? A slice:

That is why it is nonsensical to compare covid to other major pandemics, like the 1918 pandemic that killed tens of millions of people. Covid will never even come close to those numbers. And yet many countries have shut down their entire economies, stopped children going to school, and made large portions of their population unemployed in order to deal with this disease.

George Gilder bemoans the new fascism.

Sonny Bunch reviews the great film Mr. Jones.

Michael Greve remembers Stephen F. Williams.

George Will exposes Donald Trump’s utter, destructive ignorance about trade. A slice:

Congress vests presidents with vast discretion for government’s management of trade, so corporations seek protection, and administrations often grant it, regardless of steep and demonstrable social costs. Those who govern us are governed by this principle: Concentrated benefits are visible and appreciated; dispersed costs are invisible and hence not resented.

Quotation of the Day…

(Don Boudreaux)

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… is from page 75 of the 1969 Arlington House edition of Ludwig von Mises’s 1944 Yale University Press book, Omnipotent Government: The Rise of the Total State and Total War (available free-of-charge on-line here):

However, the inference from Ricardo’s free-trade argument was irrefutable. Even if all other countries cling to protection, every nation serves its own interest best by free trade. Not for the sake of foreigners but for the sake of their own nation, the liberals advocated free trade.

DBx: Yep.

Note that the same feature that Mises here identifies about Ricardo’s analysis of international trade is also a feature of Adam Smith’s analysis of international trade. And it is a feature also of the analyses of most other economists – including Bastiat, Cannan, Haberler, Machlup, Bhagwati, Panagariya, and Irwin – who support a policy of free trade.

Among the most commonplace sophistries peddled by protectionists is this one: A policy of free trade followed by a government of a prosperous country is beneficial on net only if the economic welfare of foreigners is taken into account. Free-trade advocates at home are falsely portrayed by protectionists as rootless cosmopolitans, naive about human nature, who are willing to sacrifice the welfare of fellow citizens in order to increase that of foreigners.

Most protectionists, I suspect, hold this false belief about the case for free trade sincerely; their expression of this fallacy reflects a defect in their knowledge. But I’m sure that some protectionists know better; their expression of this fallacy reflects a defect in their ethics.

Quotation of the Day…

(Don Boudreaux)

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… is from page 256 of Joseph Epstein’s June 2015 essay “The Conversationalist” as this essay is reprinted (and retitled as “Michael Oakeshott”) in the 2018 collection of some of Epstein’s essays titled The Ideal of Culture:

The problem, Oakeshott felt, was not only that “politics is an uninteresting form of activity to anyone who has no desire to rule others” but that those it attracts are, too often, unimpressive human beings. At one point he calls them “scoundrels.” What isn’t required, but is too often evident, in politics is “manufacturing curable grievances.”

DBx: Or worse: manufacturing incurable grievances that people can be duped into mistakenly thinking are curable by the high’n’mighty.

Bonus Quotation of the Day…

(Don Boudreaux)

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… is from page 56 of the late Hans Rosling’s 2018 book, Factfulness:

The misconception that the world is getting worse is very difficult to maintain when we put the present in historical context.

DBx: Regular readers of this blog know how deeply I agree with the point made here by Rosling. But only time will tell how much damage will be done to humanity by its insane self-immolation in response to covid. That humankind was, as of mid-March 2020, much wealthier than it had ever been and headed for still more and more-widely-shared prosperity can hardly be doubted by anyone familiar with the historical record. (Those unfamiliar with this record can improve their knowledge by reading the Rosling book quoted here. Or Steven Pinker’s Enlightenment Now. Or Johan Norberg’s Progress. Or Edmund Phelps’s Mass Flourishing. Or Angus Deaton’s The Great Escape. Or Matt Ridley’s The Rational Optimist. Or Deirdre McCloskey’s Why Liberalism Works. Or, better yet, by reading all of these books. And spend time at HumanProgress.org.)

But the collective insanity of the past few months – the sheeplike willingness of ordinary people to endure draconian restrictions on their freedoms and the media’s uncritical embrace of such draconianism – the propensity to be frightened to the point of losing the human ability to recognize the need to make trade-offs – reveal to me just how very thin is the layer of good sense and sound institutions that protect modernity.

I want to believe that any day now humanity will come to its senses and return to normal – a development that would feature sensible precautions to protect those persons who remain in real danger because of covid. I long to believe that, say, five years from now we’ll all look back on 2020 as an exception to recent-history’s rule of progress. Yet I fear that we might not – at least not within my lifetime or that of my son – witness a restoration of enough of the liberal ideas and institutions that are necessary to sustain progress and to protect ordinary people from the tyrants who are always eager to prey on them.

I am not necessarily predicting this horrendous outcome, but now I would not be surprised if it comes to pass.

Some Links

(Don Boudreaux)

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My intrepid Mercatus Center colleague Veronique de Rugy understands moral hazard and how it contributes to government irresponsibility. A slice:

It’s one thing for state and local governments to ask the federal government for help to cover expenditures they couldn’t foresee, such as those related to the pandemic. But they shouldn’t be asking federal taxpayers to pay for their routine expenditures, especially when these governments have failed to plan appropriately for revenue shortfalls that inevitably occur, as they’re bound to encounter emergencies. Governments should prepare for them. They should cut spending and, if that’s not enough, they should turn to their own citizens for the funds needed to cover non-coronavirus expenditures. Those funds could be obtained through higher taxes or spending cuts elsewhere. Their routine spending should come from their taxes.

Kevin Williamson calls socialism “the world’s worst idea.”

Russ Roberts riffs on the humanity of capitalism. A slice:

Competition in sports is typically zero sum. The team with the higher score wins and the other team must lose. But economic competition is positive sum. Market share has to sum to 100 percent. When highly reliable Hondas and Toyotas showed up in the United States at very reasonable prices in the 1970s and 1980s, for example, they took market share from American companies. But the total number of cars sold wasn’t fixed. By making better and cheaper cars, the number of cars sold increased. And the quality wasn’t static, either. Spurred by Japanese competition, American car companies improved their products’ quality. And the American consumer was better off.

The essence of commercial life is positive sum. You hire me at a wage that makes it worthwhile for you to do so. I work for you because the wage is high enough to make me better off as well. Without both of us gaining, there’s no deal to be made.

Jim Bovard reports on the tyranny lurking in the ideology that dominates Progressive locales such as Montgomery County, Maryland.

GMU Econ undergraduate student Dominic Pino writes eloquently about liberalism and the common good.

Judge Stephen Williams has died.

Pierre Lemieux reports on how Trump’s tariffs are taking Americans to the cleaners.

Timothy Taylor reports on a poll that reveals Americans’ horribly distorted understanding of the consequences of covid.

Quotation of the Day…

(Don Boudreaux)

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… is from page 260 of Matt Ridley’s superb new (2020) book, How Innovation Works: And Why It Flourishes in Freedom:

Anticipating what people want is something innovators are often good at; academics less so.

Bonus Quotation of the Day…

(Don Boudreaux)

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… is from page 27 of the late Hans Rosling’s 2018 book, Factfulness:

My students were dedicated, globally aware young people who wanted to make the world a better place. I was shocked by their blunt ignorance of the most basic facts about the world.

DBx: Alas, so much of so-called ‘higher education’ today seems to be designed to keep students ignorant about the world. College students are taught, in effect, to revert to the mental processes they used in second grade. “He called me a bad name! I’m telling the teacher!” “She uses naughty words! I’m telling the teacher!” “They won’t share! I’m telling the teacher!” “THAT’S NOT FAIR!! I’m telling my mommy!”

Emoting is highly valued; reason is discounted. Evaluation too seldom penetrates beyond superficialities such as skin color, sexual preferences, sex, current income status. The world is presented to students as if it is a cartoon featuring good versus evil. Ignored are trade-offs, complexities, nuances, and honest and innocent disagreement. Students are taught that the world is a relatively simple place, a place that must be consciously run. (The notion of society as a spontaneous order is almost never taught; most academics deny the reality of spontaneous order.) If the world is run by good people who express lovely intentions, then (the ‘thinking’ goes) the world will be a good place. But if run by bad people, the world will be a bad place. And who are bad people? Answer: those who do not express the same good intentions that are expressed by the good people.

And all that many college students ‘feel’ they need to know is that which is told to them by their good professors – that is, the professors who excel at expressing excellent intentions.

Quotation of the Day…

(Don Boudreaux)

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… is from page 179 of Joseph Epstein’s May 1990 New Criterion essay “The big O: the reputation of George Orwell” as this essay is reprinted (and retitled as “Orwell”) in the 2018 collection of some of Epstein’s essays titled The Ideal of Culture:

But Orwell’s anti-Communism grew not alone out of his historical experience – with his self-acclaimed talent for facing unpleasant facts – but also out of his exposure to intellectuals under political pressure. He repeatedly said that “the intellectuals are more totalitarian in outlook than the common people.”

You Did PAY for That!

(Don Boudreaux)

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In my latest column for AIER I reflect on Barack Obama’s (in)famous assertion, made to successful business people, “You didn’t Build that.” A slice:

The second mistaken implication drawn from the scolding phrase “You didn’t build that” is that those persons who are successful remain perpetually in debt to each of the countless individuals whose efforts contributed to that success. In fact, in commercial society each of us depends nearly every second of our lives on the efforts of countless other people, almost all of whom are strangers to us. Yet this reality does not imply that everyone is forever running up economic and ethical debts to everyone else.

A few days ago, Joyce Chang cut my hair. Because I’ve gone to Joyce for my haircuts for 19 years, it won’t surprise you to learn that I’m pleased whenever I walk out of her shop. And I’m certain that had I gone 19 years without getting my hair cut, I would have been somewhat less successful economically. Were my hair to reach down to my lower back, I almost certainly would have received fewer speaking and TV-appearance invitations than I received.

So do I owe to Joyce that portion of my income that I’ve earned because my hair is kept in a style that doesn’t discourage people from inviting me to speak? Of course not. In addition to the fact that I could have had someone other than Joyce cut my hair, I pay Joyce each and every time she cuts my hair. I’ve taken nothing from her. I’ve borrowed nothing from her. The excellent service that Joyce supplies to me is one for which I compensate her fully.

And what holds true for my economic relationship with Joyce holds true for my economic relationship with each of the millions of other individuals whose productive activities improve my economic well-being. I pay my supermarket. I pay my wine merchant. I pay my physician. I pay my mortgage banker. I pay my auto mechanic. These payments erase any debts that I might otherwise have with these suppliers.

Similarly, I fancy that I’ve contributed to the well-being of others. Or such is my sincere hope. Since 1982 I’ve taught economics and legal studies to upwards of 10,000 students. Most of these young men and women went on after graduation to enjoy rewarding careers. But none of them owes me a cent. I was paid fully for the teaching services that I rendered to them.

In this regard, goods and services supplied by government are no different. With rare exception, every government official, every government employee, every government contractor, and every government supplier is paid fully for whatever it is government buys from him or her. And so even if everything that government does is unambiguously productive, people who succeed in markets owe nothing to the state.

Quotation of the Day…

(Don Boudreaux)

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… is from page 220 of Joseph Epstein’s September 2013 essay “Willa Cather” as this essay is reprinted in the 2018 collection of some of Epstein’s essays titled The Ideal of Culture:

She steered clear of politics in her writing, feeling that those with “zeal to reconstruct and improve human society seem to lose touch with human beings and with the individual needs and desires which make people what they are.”