Russell Roberts's Blog, page 391
July 30, 2020
Covid Is Working With Milton and Rose Friedman
In today’s Wall Street Journal David Henderson has a splendid op-ed in which he predicts at least one huge benefit arising out of the covid calamity – namely, a genuine and significant decrease in the power of America’s K-12 government-schooling racket. Let’s hope that David is correct. I’m cautiously optimistic that he indeed is.
David blogged at EconLog about his op-ed. And pasted below is a slightly amended version of comment that I left on David’s blog post (with links added):
Excellent op-ed, David. (Because I subscribe to the WSJ I was able to read the op-ed in its entirety.)
Reality is indeed stranger than fiction. If your thesis is sound – as it seems to me to be – 2020’s covid calamity will wind up doing more to promote school choice than was done by Milton Friedman and his wife Rose’s intrepid efforts to reduce the power of the K-12 government-schooling racket. I do not here intend to diminish the importance of the Friedmans’ efforts. Their criticisms of the K-12 government-school monopoly, along with their explanations of the benefits for children and families that would arise as a result of increased competition among schools, surely will play some positive role in sustaining the coming decentralization of schooling that you predict – as will, no doubt, Thomas Sowell’s newly published book on charter schools. (Let me put in a pitch here also for Sheldon Richman’s wonderful book Separating School & State: How to Liberate America’s Families.)
But in this case parents’ actual experiences will, as you explain, supply most of the thrust toward improved schooling.
As maddening as it is to behold the arrogance and greed of teachers’ unions, your essay allows me now, in a somewhat perverse way, to enjoy reading about, and hearing of, their efforts to prevent children from returning physically to classrooms. These “teachers” are likely overplaying their hand. Soon (again, if you’re correct) they’ll be down quite a few chips.
Yesterday afternoon I spoke with the manager of my favorite local restaurant. He’s got two young children – six and eight. He’s angry that Fairfax County school officials want to “teach” his kids on-line. “That’s crazy!” he exclaimed. Understand that this guy isn’t at all political. He’s a normal, decent guy – mid-thirties, I think – working hard in a business that is hard in the best of times and agonizing in this bizarro time.
This guy likely has never heard of Milton and Rose Friedman. But the reaction to covid is now opening his eyes to the ugly reality of the K-12 government-schooling racket. And as you eloquently explain in your WSJ op-ed, he’s not alone.
Quotation of the Day…
… is from Joseph Epstein’s February 2017 essay in Commentary, “Hope I Die Before I Get Young: The sixties, forever with us“:
If the sixties killed liberalism, it also did a pretty good job on adulthood. Most men and women who went through the sixties even now find it difficult to oppose any doctrine or behavior that is leftist in its origins or inspirations, for to do so would be to betray their youth. Among his many wise political apothegms, Orwell wrote that liberals fear few things more than being outflanked on the left. In the 1930s, this fear brought many liberals into the Communist Party, put them on the side of the Stalinists in Spain, caused them to overlook the monstrousness of Lenin and sanitize the cruelty of Trotsky, and turned the Democratic Party over to identity politics. History has never been an effective teacher, and so 30 and more years later, liberals, out of fear of being outflanked once again, everywhere gave way to radicals, so that dogmatic academic feminism, victimological African-American Studies, and the rest found a secure place in the first watering and then dumbing down and thorough politicizing of university study that eventually seeped through the general culture.
DBx: Note the irony of the photo above. Mindless radicalism has turned to devour itself: In 2020 it’s de rigueur to oppose free speech and to accuse those of us who support it of being apologists for the rich, powerful, and privileged.
July 29, 2020
“How Do You Know?”
The title of this post is my answer to young Ben Crockett who asked me, in this interview, what question or questions we should put to politicians itching to intervene into the economy. (I thank Ben for having me as a guest on his program.)
Bonus Quotation of the Day…
… is a “little squib” (her description) that Deirdre McCloskey left recently in the Times (London) Respond portal and shared with me by e-mail:
Both Senator [Tom] Cotton [R-AR] and the 1619 Project have the economic history wrong. (Ironically, the erroneous economic premise they share was exactly that asserted in 1850 by Southern apologists: “we” all need slaves.)
Admittedly their claim that slavery was “a necessary evil upon which the union was built” echoes Lincoln’s noble sentiment in his Second Inaugural Address–that the bondsman’s labor 1619-1865 was what piled up US wealth. But it is false. If it were true, the numerous slave societies of olden times, such as Rome in 30 BCE or Norway in 700 CE, would have long ago experienced the Great Enrichment, of 3,000 percent per person for the poorest in Britain and Japan and many other non-slave places 1800 to the present. Likewise, by now Canada, say, with no slaves or much of any connection with slavery, would have remained very poor. Switzerland. New Zealand. Botswana.
What “built”” the US and every other country now prosperous was not stealing from poor people, or for that matter piling up routine investment, but massive innovation—cheap steel, electricity, vaccines, the modern university, mobility of labor and capital, the internal combustion engine, sewage treatment, artificial fertilizer, radio, radar, free trade, jet planes, the green revolution, containerization, computers, and above all the shamefully delayed but in the end thoroughly achieved liberation of slaves, poor men, women, colonial peoples, immigrants, free Blacks, gays. Under what Adam Smith called “the obvious and simple system of natural liberty”—in a word, liberalism– -people were permitted for the first time to have a go. It was their new liberty to innovate, not slavery or forced investment, that made billions rich, and will make the entire world rich. Or it will do so unless the 1619 Project and Senator Cotton, populists of left or right, with their Just-So understandings of history, kill it.
To Repeat…
Here’s a letter to a new reader of Café Hayek:
Mr. Singletary:
You think me “simplistic” for calling on proponents of industrial policy to put their money where their mouths are by launching their own businesses instead of demanding that government obstruct the commerce of others. Specifically, you argue that “high tariffs are needed” because “reshoring valuable but lost manufacturing jobs can’t happen if we continue to get undersold by low wage workers.”
If workers really do value what you call “valuable but lost manufacturing jobs” as much as you and other industrial-policy proponents believe, then those workers would be willing to ‘pay’ to be employed in such jobs by taking pay cuts. An entrepreneurial Oren Cass or Daniel McCarthy could put their money where their mouths are by launching manufacturing firms in the U.S. and offering to employ workers at wages sufficiently low to enable these firms to survive. If enough Americans really do value working in these “lost manufacturing jobs” as much as Cass and many other advocates of industrial policy insist, these Americans will be happy to have the opportunity to work at such jobs. And by filling this market niche, entrepreneurial industrial-policy proponents would profit handsomely.
Of course, if too few Americans are willing to take such jobs at the low wages that are necessary to make such U.S.-based manufacturing firms profitable, then we have proof that Americans do not really value these “lost” jobs as much as many industrial-policy supporters allege.
Either way, there’s absolutely no justification for government to “protect” such jobs.
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
Phil Magness exposes additional model mistakes.
John Stossel applauds the private space race.
Samuel Gregg reviews Gregory Collins’s Commerce and Manners in Edmund Burke’s Political Economy. A slice:
Burke’s interest in theory also embraced how rationality functioned in the marketplace. That was especially evident in his reflections upon free exchange and contracts in agriculture and the labor market. There were significant limits, Burke argued, to what government officials could know about all the different factors considered by the various parties to an exchange. Burke consequently concluded that, once they went beyond deterring and punishing force, fraud and collusion, government interventions were likely to have many unforeseen negative effects. Such awareness of what would later be called the knowledge problem was rare at the time.
Eric Boehm is always worth reading.
Greg Mankiw rightly warns against charging corporate CEOs with the responsibility of looking out for the welfare of corporate ‘stakeholders’ at the expense of corporate shareholders. The knowledge problem is thick throughout reality, and reality isn’t optional.
Pittsburgh Tribune-Review: “Ignorance ain’t bliss”
In my column for the April 28th, 2010, edition of the Pittsburgh Tribune-Review I complained about politicians being ignorant of the contents of bills that they vote on. You can read my column beneath the fold.
Quotation of the Day…
… is from page 99 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:
The historical outcome of this long-term freedom to conduct experiments which, as I have argued, has been the central feature of western capitalism, has been an economy characterized by a truly extraordinary pattern of organizational diversity. This diversity may usefully be thought of as the end result of a process of social evolution in which a wide range of organizational forms has been introduced, and in which firms have been allowed to grow to sizes that were influenced by underlying conditions of technology, location, market size, range of products, etc. The particular outcomes achieved with respect to firm size, pattern of ownership, product mix, etc., have been essentially determined by a market process in which the underlying conditions of different industries have generated patterns of survival reflecting their own special circumstances, not some a priori notion of a single best model to which they were expected to adhere.
DBx: Yes.
Economic competition is not only about keeping prices as low as possible. If consumers cared only about prices then even billionaires and NBA superstars would be driving stripped-down Nissan Versas. Nor is economic competition about ensuring that every aspiring producer in every industry will survive in competition with industry incumbents or with new upstarts.
Economic competition creates new products, new product features, new organizational forms, new contractual terms, new methods of production and of marketing and of delivery and of service. In markets, those features that serve consumers best survive, but only as long as no other features come along to out-compete them. Yet other features, invariably in markets, do come along.
No less invariably, this competition sparks complaints. Of course, many of these complaints come from business owners and workers who, not wishing to suffer losses of incomes, must adjust their productive activities to the new pattern of consumer demands. But complaints come also from other quarters – most notably, from intellectuals.
The dynamism of market competition is controlled by no one – and, if it is to continue to operate effectively, is controllable by no one. Many people fear this dynamism. It causes reality to differ from what they remember – sometimes accurately, many times inaccurately – of the past. And the ever-changing details of dynamic market competition, unable to be understood by intellectuals and certainly outside of their control, are thus assumed by intellectuals to be dangerous or at least inferior to the details of economic activity that intellectuals fancy they can design and implement.
Yet in nearly all cases of intellectuals (or politicians) complaining that markets are mistreating consumers or workers, enormous profits would be available to these intellectuals (or politicians) if they were to launch their own private enterprises to take advantage of the alleged market failures. But they almost never do so. If these intellectuals (or politicians) are unwilling to put their own money where their mouths are, why should anyone allow them to put other people’s money where their mouths are?
July 28, 2020
Compulsion Initiated Against Neighbors Isn’t Neighborly
Here’s a letter to a new correspondent:
Mr. Schinkel:
Thanks very much for your e-mail. You write, in response to my latest column at AIER, the following:
I am not sure how you would incorporate the globalization play in terms of China salaries and wages versus cost of living in the U.S. It seems to have resulted in a lot of cheap stuff but no labor security or sufficiency in terms of cost of survival. Perhaps a more community focused form of free enterprise would be helpful?
Two points.
First. Chinese workers’ relatively low wages reflect Chinese workers’ relatively low productivity. (When countries are ranked according to worker productivity, U.S. workers are the world’s fourth-most-productive. Chinese workers aren’t even in the top fifteen.) Just as the low price of a handsaw does not give sellers of that tool an unfair or inefficient advantage over sellers of higher-priced electric saws, the low wages of less-productive workers does not give those workers an unfair or inefficient advantage over higher-paid more-productive workers.
Second. How would “a more community focused form of free enterprise” work in practice? If history offers guidance, the answer’s clear: Politically powerful producer groups – unwilling personally to pay the costs, by taking lower incomes, of keeping the businesses and jobs that they profess to cherish – will use government to foist these costs onto fellow citizens. Fellow citizens will be compelled to pay these costs directly in the form of subsidies and indirectly in the form of the higher prices that result from tariffs.
I’m all in favor of letting people work at whatever jobs they wish. But it strikes me as decidedly unneighborly – as an affront to the true spirit of community – for workers and business owners to use government to force fellow citizens to pay for these workers and business owners to indulge preferences that these workers and business owners aren’t themselves willing to pay to indulge.
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…
… is from near the 20-minute, 30-second mark of Russ Roberts’s splendid August 2019 EconTalk podcast with George Will; specifically, it’s Will commenting on (one of the many) figments of the distorted economic imaginations of Trumpians and Progressives (original emphasis):
And what the Trumpian Right and the Progressives want is to pull up the drawbridge, raise the walls, and somehow coerce the manufacturing jobs [to] come back to the United States. We have people in the White House who talk about repatriating our supply chains. Now, these people have no clue what the supply chain of a Boeing Dreamliner looks like. Or even a much simpler gadget like an iPhone looks like. Repatriating the supply chains–trying to repatriate Boeing supply chains–would simply make Airbus the indisputable winner in the commercial aviation competition.
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