Russell Roberts's Blog, page 388

People Believe the Damndest Things

(Don Boudreaux)

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Here’s a letter to the Wall Street Journal:

Editor:

Your reporters write that “[e]conomists say that rebuilding after a disaster can have a positive effect on a country’s economy, stimulating growth through construction and other spending” (“Beirut Explosion Brings Lebanon to the Brink,” August 6).

Not so. While incompetent economists make headlines by predicting riches from ruination, every respectable economist rejects this nonsense.

Rebuilding following destruction necessarily consumes resources that, were there no destruction, would have been used to produce other valuable goods and services – valuable goods and services that, because of the rebuilding, will never be produced and consumed

As for those “economists” who continue to insist that ruination paves a path to riches, let them prove the sincerity of their belief by fire-bombing their own homes and automobiles. If they refuse to do so, your reporters – and everyone else – should refuse to take them seriously.

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 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:

He underscored the wretched condition of “people who have no selves other than those created by ‘experts’ who tell them what they are.” Others walk about with heads “so full of ideas that there is no room for sense.”

Quotation of the Day…

(Don Boudreaux)

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… is from page 196 of Matt Ridley’s excellent new (2020) book, How Innovation Works: And Why It Flourishes in Freedom:

The development of the computer is always supposed to have been accelerated by wartime funding, but the counterfactual of what would have happened if war had not broken out (in 1939 for Britain and Germany, in 1941 for America), is hard to discern. By 1945, without war, there would undoubtedly have been devices that were electronic, digital, programmable and general purpose. Indeed, without the need for secrecy, they might have evolved faster, as separate teams shared ideas faster and used their devices for other purposes than calculating the trajectories of artillery shells or decoding the secret messages of enemies. Had Zuse, Turing, von Neumann, Mauchly, Hopper and Aiken all met at a conference in peacetime, who knows what would have happened and how fast?

Scary Understanding

(Don Boudreaux)

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Here’s a letter to the Wall Street Journal:

Editor:

Although he’s a bit unclear in his conclusion, Vivek Ramaswamy seems to call for government to prevent Facebook and other private social-media companies from influencing the spread of ideas and public debate (“Antitrust Can’t Bust a Monopoly of Ideas,” August 5). And, irony of ironies, Mr. Ramaswamy cloaks his call for such intervention in the same principles that justify separation of church and state.

The separation of church from state is meant to prevent particular ideas and beliefs from being suppressed or promoted by the state. Implicit in this separation is the understanding that churches thereby are to be free to use whatever peaceful means are at their disposal to spread their ideas and influence beliefs. If some churches become ‘dominant’ and some beliefs pushed heavily and successfully (as was true in the U.S. for a long time for Christianity), that is no argument against the separation of church and state. And it certainly is no reason to violate this sacred principle by empowering the state to regulate churches.

The same logic applies to freedom of expression. This sacred freedom is freedom from interference by the state. To call on the state, in the name of protecting freedom of expression, to regulate what private companies say or allow to be expressed on their platforms is monstrously Orwellian and utterly hostile to a free society.

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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Kevin Williamson isn’t buying John Yoo’s defense of Trump.

Lamenting the Trump administration’s failure to renew Mike O’Reilly for another term at the Federal Communications Commission, the Wall Street Journal‘s editors rightly decry American conservatives joining with Progressives in disregarding the First Amendment. A slice:

But our reporting suggests that Mr. O’Rielly was scuttled for remarks about regulating speech. In vogue on the right and left is rewriting Section 230 of the Communications Decency Act of 1996, which empowers social-media companies to scrub objectionable content and shields them from liability for what users say on their platforms.

Ben Zycher reviews Joe Stiglitz’s review of Bjorn Lomborg’s new book.

Tim Carney warns of some health downsides of the lockdowns – lockdowns meant to promote health.

Jonathan Newman and Tony Gill explore the use of knowledge in a pandemic. A slice:

Our “policy” before COVID-19 was largely to let individuals, organizations, and businesses decide for themselves the appropriate way to deal with the flu and other contagious diseases. The measures taken by a healthy 20-year-old living by himself and working from home obviously differed from the measures taken by a elementary school principal with a large and growing number of cases among students and faculty. Individuals chose where to eat, who to eat with, and how late to stay out.

None of this seemed preposterous then, but advocating for a similar approach today in response to this virus is met with accusations of “denying science” and “killing grandmas.” If you don’t believe us, just type “why don’t we let people decide how to respond for themselves” on any social media platform where coronavirus is a topic.

Granted, COVID-19 is not the flu. Based on our present state of knowledge, it does appear to be more infectious and dangerous than the typical influenza, and those parameters have more severe impacts on different demographic groups, namely the elderly and individuals with preexisting health concerns. However, the statistics on communicability and lethality differ in degree, meaning our responses should differ in degree.

Here’s Alberto Mingardi on Matt Ridley’s How Innovation Works.

Mark Perry celebrates John Venn’s birthday with some Venn diagrams.

Quotation of the Day…

(Don Boudreaux)

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… is from page 405 of the 2014 collection, The Market and Other Orders (Bruce Caldwell, ed.), of some of F.A. Hayek’s essays on spontaneous-ordering forces; specifically, it’s from Hayek’s previously unpublished lecture at the University of Virginia titled “Economics and Technology,” which is the third of four lectures that Hayek delivered in UVA’s Newcomb Hall during the Spring 1961 semester; the title of this lecture series by Hayek is “A New Look at Economic Theory”:

Quite a different situation arises, however, when we have to choose between different methods of achieving the same product. There technology really provides no criterion for selecting one of them as better than the others.

The technologist probably will still sometimes regard one solution as more elegant or beautiful than another, but that does not mean that it serves human ends any better.

DBx: Science informs us of options and of some of the likely consequences of choosing option A rather than option B or option C or option N. Science cannot, however, inform us of which option we should choose. Neither society in general nor the economy more specifically is an engineering project.

For society, there is no “economic problem” to be “solved.” There are instead a multitude of individual economic desires – wishes, goals, plans – that can be met more fully or less fully. Fulfillment of these desires, wishes, goals, plans – call them what you will; I’ll call them plans – can be promoted better or worse by the prevailing economic system. An economy improves if a greater number of these plans are fulfilled; an economy worsens if fewer such plans are fulfilled. But there is, at least in a free society, no single and overarching plan that the actions of society’s members can be said, or should be said, to promote.

Bonus Quotation of the Day…

(Don Boudreaux)

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… is from pages 97-98 of the late Stanford University economic historian Nathan Rosenberg’s 1992 paper “Economic Experiments,” as this paper is reprinted in Rosenberg’s 1994 book, Exploring the Black Box: Technology, Economics, and History:

These technological achievements were thus based upon capitalist legal institutions, especially with respect to contracts and property rights, which legitimized the right to experiment with new organizational forms as well as with new technologies. The final arbiter of whether something new was socially desirable was not a government authority, or the religious clergy, or the guild members, or the merchants whose personal interests might be adversely affected by some innovation. Rather, the final arbiter was the marketplace. Capitalism did legitimize innovation, but only if it could pass the market test. It was indeed, as Marx recognized, the first form of social organization in which economic life was dominated by groups whose economic interests caused them to threaten the status quo.

The freedom to conduct experiments, in turn, required that yet other conditions be fulfilled. One of these conditions was that the economic sphere had to attain a higher degree of autonomy from external forces, especially freedom from arbitrary and unpredictable interventions by government authorities.

DBx: Indeed.

Industrial-policy advocates and other proponents of protectionism wish to restore the guild system. They arrogantly believe themselves equipped with the knowledge to know, independently of experience in actual markets, which innovations are worthwhile and which not. They present themselves to the public as possessing the ability to divine which industries are most likely to enable their fellow citizens to thrive and which are hostile to such thriving. They – priestlike – behave as if they are uniquely blessed with a vision of a glorious future as well as with the miraculous powers to arrange for that future to unfold.

Never, ever do these people explain the source of their knowledge and supernatural powers.

…..

Don’t miss my Mercatus Center colleague Adam Thierer’s book Permissionless Innovation.

Some Links

(Don Boudreaux)

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Writing in the Wall Street Journal, UCLA medical professor Joseph Ladapo decries the politicization of covid. A slice:

The problem with public-health strategies born of fear and disdain is that they create unrealistic expectations and smother dissent. The country has shifted from a period of public unity and cooperation in March to one of blame and opprobrium. Approaches to managing the pandemic that fall outside mainstream thought are shut down. States become willing to make trade-offs that would have been unthinkable in saner times.

Also in the Wall Street Journal is columnist Gerard Baker’s biting criticism of today’s reigning political superstitions. Here are his opening paragraphs:

The most intolerable irony of the past few miserable months has been listening to our self-appointed moral leaders lecture us on the nation’s irredeemable sinfulness from the comfort of their own secure, well-upholstered positions, while we endure daily the urban nightmare of a world created by their political allies.

As our cultural, media and corporate chiefs deliver their social and political wisdom from their redoubts in New York’s Hamptons, Palm Beach, Fla., and the greener pastures of the San Francisco Bay Area, America’s cities have been ravaged by successive predations of lockdown, disorder and violence.

Phil Magness asks “What’s next? Snorkles?”

Mark Pennington writes on “Hayek on complexity, uncertainty and pandemic response.”

Janet Bufton writes on cities, Jane Jacobs, and Adam Smith.

Richard Ebeling appropriately scolds Paul Krugman.

My intrepid Mercatus Center colleague Veronique de Rugy riffs on the Inspector General’s report that found that state governments are not spending all of the largesse dispensed to them by Washington under the CARES Act.

Quotation of the Day…

(Don Boudreaux)

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… is from page 176 of Steven Pinker’s 2018 book, Enlightenment Now:

Any evidence-based reckoning is bound to pour cold water on programs that seemed promising in the theater of the imagination. Conspicuous by their absence from the list of what works are bold initiatives like slum clearance, gun buybacks, zero-tolerance policing, wilderness ordeals, three-strikes-and-you’re-out mandatory sentencing, police-led drug awareness classes, and “scared straight” programs in which at-risk youths are exposed to squalid prisons and badass convicts.

DBx: What Pinker accurately calls “the theater of the imagination” can be – and often is – a very useful human tool. We conduct experiments in our minds, and use the results to help guide us in making decisions. But this tool works better the more its application is localized and individualized. Jill uses her imagination to explore the likely consequences to her of running up the hill with Jack instead of with Jason; Jack uses his imagination to explore the likely consequences to him of running up the hill with Jill instead of with Jennifer.

Each person incessantly operates the theater of his or her imagination for life-guidance. While the wisest amongst us guides their lives with information in addition to that provided by the theaters of their imaginations, everyone uses his or her theater.

But this theater’s usefulness rapidly disappears when what are staged are non-local, non-individual productions. Few people disagree that the theater of my imagination has no good stage or resident playwright for playing out alternative possibilities for your life. Yet many people lose this natural skepticism when I use my imagination for playing out alternative possibilities for your and countless other people’s lives.

If I, as an intellectual, stage in my imagination’s theater plays telling how a certain hike in the minimum wage might result in benefits for poor families, or how industrial policy might enrich our nation’s people economically as well as fortify our defenses against crafty foreigners, I am applauded as forward-looking, progressive, benevolent, and oh-so-impressively clever and smart. “Let’s have government turn these happy imaginings into reality!” But of course my imagination is too poor a theater to use as a guide for government attempts to craft society. My theater is equipped with far too small a stage and it employs a playwright of only individual human intelligence.

Here I am not being falsely modest, for what is true for me is true for every human being. Human imagination is indispensable for guiding each person’s private affairs. But such imagination produces only real-life calamities when its productions are taken as guides for the state to create dreamy realities.

….

An additional problem plagues imagination theater used to guide government intervention: unlike with real shows, such as those on Broadway, that are cancelled if they prove to be poor in the eyes of paying audiences, producers of shows staged by the state can compel audiences not only to pay for and to sit through lousy productions, but also to participate.

Again on Unemployment Benefits and Paid Leave

(Don Boudreaux)

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Here’s a letter to the Wall Street Journal:

Editor:

In “Economists vs. Common Sense” you question the credibility of research that allegedly shows that generous unemployment benefits do nothing to discourage unemployed workers from returning to work. Your questioning is wise. The economists who performed the research that you pan apparently have forgotten their economics.

A good bet is that many of these economists, as well as others who parade their findings as reason not to reduce unemployment benefits, are among the supporters of government efforts to expand paid family leave. How ironic. A chief justification for mandating paid family leave is the correct understanding that such leave increases the likelihood that workers who are ill, or who have sick family members, will take time off of work.

Whatever the merits or demerits of government offering generous unemployment benefits or of mandating paid family leave, because paid-leave advocates are correct that such leave increases workers’ likelihood of remaining home while being paid, it’s implausible to deny that the provision of generous unemployment benefits has a similar effect.

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