Russell Roberts's Blog, page 390

Quotation of the Day…

(Don Boudreaux)

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… is from page 75 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:

The State on which Mazzucato dotes is itself, as we have noted repeatedly, dependent on coercion. Saying so repeatedly, we realize, will irritate our statist friends, who are pure of heart, and would not think of coercing anybody—except all those people subject to any governmental policy, which in a modern administrative State is everybody except a few mountain men in Idaho.

DBx: Yep.

State officials have one and only one ‘resource’ that non-state actors don’t have – namely, widespread acceptance of their initiation of coercion against peaceful others. Reasonable people can and do argue over the extent to which society requires such a ‘resource.’ But at the bottom of each and every plea for state intervention into the economy, and of nearly all pleas for state intervention into society generally, is a plea for such coercion. This fact is changed not one bit by the sincerity of the hope of those who plead for such coercion that it will work upon merely being threatened – that is, without having actually to be unsheathed and wielded.

Unlike non-state actors – unlike business people, unlike consumers, unlike neighbors, friends, and passers-by on the sidewalks of Boston or Barcelona or Bucharest – the state does not ask. It commands. It demands. And it backs its commands with credible threats to coerce those who disobey.

Statists with some genuinely liberal sensibilities – a group that includes most statists in the developed world – dislike the revelation of this reality of state action. The revelation reduces the prospects of the state retaining the grandeur, the mystique, the sense that the state is somewhat divine, that are essential for state officials to continue to enjoy widespread public acceptance of their initiation of coercion against peaceful people. But the moment anyone suggests that a proposal for state intervention be one only of requests rather than of commands, the hard truth rears its head.

I would have little problem with state officials, in their capacities as state officials (remember, these officials are mortals just like your neighbor Sharon and your annoying co-worker Steve), asking all employers never to pay hourly wages below some minimum that these officials have somehow divined is ‘optimal.’ Likewise, I’d not bother to object if state officials were merely to ask buyers who purchase imports to send along to the state a bit of extra money each time buyers make such purchases. Such requests would annoy me because of their evident officiousness. But being mere requests, I’d have no real reason to object.

Yet remember: the state doesn’t ask; it commands. The only thing the state has that makes it a state is the authority to initiate coercion – actual face-smashing, knee-busting, blood-spilling coercion – against peaceful people.

Not Everything Is Scarce. Example: Economic Ignorance

(Don Boudreaux)

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Here’s a letter to Bloomberg:

Editor:

In “The U.S. Can’t Import Its Way to Economic Prosperity” (July 30), Conor Sen claims to reveal troubling imbalances in Americans’ patterns of commerce. Readers made fretful by this revelation, however, can rest easy: Mr. Sen is very confused. For proof, look no further than Mr. Sen’s identification of U.S. universities admitting large numbers of foreign students as an example of “an excessive focus on importing economic activity rather than investing in and developing it locally.”

First, educational services provided by Americans to foreigners are U.S. exports, not imports. Writers for Bloomberg should know this basic fact. Further, because by Mr. Sen’s own argument foreign students pay a great deal for these services, American universities thereby earn more resources to ‘invest and develop locally’ and, thus, to enhance their capacity to teach and carry out research.

Most worryingly, though, Mr. Sen seems unaware that trade is reciprocal. Americans cannot through trade rely more heavily on foreigners without foreigners relying more heavily on Americans. And because each trade is done by persons who could choose not to do that trade, each and every trade improves the well-being of all parties to it. Therefore, like President Trump, candidate Biden, and the bevy of conservatives and progressives who today carp incessantly about the buying and selling decisions made by their fellow Americans, Mr. Sen has absolutely no basis for asserting that the pattern of commerce that results from Americans’ freedom to trade should be “more balanced.”

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 Joseph Epstein’s May 2015 essay “The Unassailable Virtue of Victims“:

The contemporary victim tends to be angry, suspicious, above all progress-denying. He or she is ever on the lookout for that touch of racism, sexism, homophobia, or insensitivity that might show up in a stray opinion, an odd locution, an uninformed misnomer. People who count themselves victims require enemies. Forces high and low block their progress: The economy disfavors them; society is organized against them; the malevolent, who are always in ample supply, conspire to keep them down; the system precludes them.

Some Links

(Don Boudreaux)

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Today is the 108th anniversary of the birth of Milton Friedman. Mark Perry celebrates.

Writing in the Wall Street Journal, Richard Epstein applauds the Trump administration’s revision of federal regulations under the National Environmental Policy Act of 1970. A slice:

Environmentalist critics work on the flawed assumption that the longer the review period, the greater the environmental protection. But that’s untrue for the large majority of important projects. As I detail in a report for ConservAmerica, these new projects typically replace older, more dangerous projects and use superior technologies unavailable generations ago. When NEPA review delays a state-of-the-art pipeline, for instance, that requires greater shipment of fossil fuels by rail and truck, which is far more likely to cause major spills with extensive collateral damage.

John O. McGinnis is impressed with Matt Ridley’s new book, How Innovation Works. A slice:

Ridley is also very perceptive about how vested interests in society prize the status quo and thwart innovation. Farmers who did not want to compete with innovative ways of growing things combined with the Left to prevent the introduction of genetically modified crops in Europe, despite the fact they are as safe as traditional crops, which of course themselves have been genetically modified by human selection over centuries.

Here’s the conclusion of Mike Munger’s latest, excellent essay at AIER:

Most people seem to think that the problem with government power is that the wrong people are in office. That’s not right; the problem is that we want to rely on a physician who suffers an illness that cannot be cured.

Phil Gramm rightly is frightened by Joe Biden’s lurch leftward. A slice:

The Biden-Sanders “Unity” manifesto envisions the socialism of an all-encompassing welfare state, with virtually every need a right, and every right guaranteed by taxpayer funding. Housing becomes a right, and “no one should have to pay more than 30 percent of their income for housing.” Public colleges will be “tuition-free” for “roughly 80 percent of the American people.” Student loans are expunged, payments are capped and eventually forgiven. School lunches, along with breakfast and supper, will be universally free.

David Henderson recommends what he calls a “fantastic” video featuring Bill Maher and Jordan Peterson.

Inspired by Anne Applebaum, George Will explores the roots and nature of populist authoritarianism. A slice:

Authoritarianism is a temptation for people recoiling against complexity and intellectual pluralism, and yearning for social homogeneity. Applebaum says, “The noise of argument, the constant hum of disagreement — these can irritate people who prefer to live in a society tied together by a single narrative.” In today’s United States, such authoritarianism flourishes most conspicuously on the left, in the cancel culture’s attempts to extinguish rival voices.

Quotation of the Day…

(Don Boudreaux)

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… is from page 276 of Matt Ridley’s excellent new (2020) book, How Innovation Works: And Why It Flourishes in Freedom:

The same is true of America, which became the most advanced and innovative country in the world in the early decades of the twentieth century without significant public subsidy for research and development of any kind before 1940. The few exceptions tend to confirm the rule; for example, the government heavily subsidized Samuel Langley’s spectacular failure to make a powered plane, while wholly neglecting the Wright brothers’ spectacular success, even after they had proved their point.

On Adam Smith on Mercantilism

(Don Boudreaux)

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If you read Adam Smith’s monumental 1776 work, An Inquiry Into the Nature and Causes of the Wealth of Nations, you cannot miss – especially when you get to the peak of the work’s crescendo (Book IV) – Smith’s complete disdain for mercantilism. Mercantilism was nonsense in Smith’s day – and he exposed this nonsense with brilliance and relish.

Mercantilism remains nonsense in our day. In any era it is nonsense on steroids. The fact that mercantilism is a dogma cherished by the likes of Donald Trump, Peter Navarro, and Sherrod Brown (among many others) does nothing to recommend it or to scrub it free of any of its countless fallacies.

Here’s the first of a series of short videos in which I answer questions about Adam Smith’s understanding of trade and trade policy. (For producing these videos I thank my Mercatus Center colleague Matt Beal.)

Bonus Quotation of the Day…

(Don Boudreaux)

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… is from page 8 of my late Nobel-laureate colleague James M. Buchanan’s opening essay, by the same title, of his 2005 collection, Why I, Too, Am Not a Conservative: The Normative Vision of Classical Liberalism:

There is no half-way house here; other persons are to be treated as natural equals, deserving of equal respect and individually responsible for their actions, or they are to be treated as subordinate members of the species, akin to that accorded animals who are dependent.

DBx: The truth expressed here is unfashionable and politically incorrect (although just why this fact is so, I cannot figure out). But it is undeniable.

Some Links

(Don Boudreaux)

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My intrepid Mercatus Center colleague Veronique de Rugy reminds us to look at the unseen consequences of unemployment-“insurance” payments. A slice:

What’s more, even if one supports expanding UI during rough times, we must remember that whether the money is borrowed or taxed, this redistribution of income comes out of the real economy at the expense of other investments that are likely more valuable. This important reality looms especially large as the economy reopens, and businesses have a long road ahead just to survive.

GMU Econ alums Diana and Michael Thomas wisely warn that a people fearful of each other cannot thrive economically. Here’s their conclusion:

This general acceptance of a fear of others that separates us from each other exacerbates all our worst proclivities and maximizes the economic destruction of the pandemic. We need to return to a robust market to preserve the division of labor. Perhaps you think this is an exaggeration, and we hope you are right, but we also hope you will join us in asking for some moderation in the panic around the new virus.

In this video, Taleed Brown and Jeffrey Tucker describe the coronavirus lockdown as among the worst policy decision in the history of America.

Scott Lincicome isn’t impressed with the proposed government scheme to turn Kodak into a pharmaceutical company.

Ben Zycher defends Nobel-laureate economist William Nordhaus from environmental leftists.

James Pethokoukis talks with Arthur Diamond about sustaining innovative dynamism.

Eric Boehm is rightly appalled by the insulting theater of arrogant, pretentious, ignorant, and clownish members of Congress grilling the top executives of Amazon, Apple, Facebook, and Google.

Never has F.D.R. Spoken to Me – but On One Point He Does So Now

(Don Boudreaux)

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I have never been a fan of Franklin Roosevelt. His presidency, in my view, made America a worse place than it would have been had the chief occupant of the White House in the 1930s been someone more in the mold of Grover Cleveland or Calvin Coolidge. What I know of F.D.R. as a person is also unflattering. He was a venal opportunist, and sometimes cruel.

Yet earlier today, as I walked alongside a lake in northern Virginia, one of the most famous of F.D.R.’s many well-turned phrases sprung to mind as I watched people, several of whom were wearing masks and young enough to be my children, spring away from me as if I were a werewolf.

“Omigosh, F.D.R. was correct after all,” I thought, “and perfectly so, at least on one narrow but important point: ‘The only thing we have to fear is fear itself.'”

Economics’s Vital Role

(Don Boudreaux)

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Here’s a letter to the Washington Post:

Editor

Megan McArdle eloquently explains that humans’ perceptions of reality are often shockingly distorted and biased (“Americans can survive seeing two versions of ‘the dress.’ But not two versions of protests.” July 30). This sobering fact makes the discipline of economics vital.

Economists have always been acutely aware that reality frequently fails to reveal itself fully and accurately to the naked eye. Adam Smith famously explained how the market’s “invisible hand” prompts each individual to pursue his or her own goals in ways that enable millions of strangers to better achieve their goals. Among the most noted essays penned by the 19th-century French economist Frédéric Bastiat is “What is Seen and What is Not Seen.” The efforts of the best economists have been to make visible the invisible hand – to reveal the economic forces at work outside of most people’s line of sight.

Unfortunately, many people enjoy their illusions and despise a discipline that erases them. Other people – especially those seeking political power – have a positive interest in their fellow citizens remaining in the dark about economic reality; all the easier to keep citizens unaware of emergent order, frightened with bugaboos, and blind to the dangers and costs of increasing the power of government to do battle against imaginary monsters.

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