Russell Roberts's Blog, page 395
July 13, 2020
Ownership and the Burden of Persuasion
Here’s a letter to a Café Hayek patron who wishes to remain anonymous:
Mr. J____:
Thanks for your e-mail.
In response to my argument that “Individuals should be allowed to spend and invest their incomes in whatever peaceful ways they choose. The burden of persuasion that must be met to justify the use of coercion to override these choices is very heavy,” you ask:
Where does this view come from? And where does the high burden of persuasion needed to justify an action contrary to it come from? I’ve seen it used many times by free market economists and libertarians.
This view seems to be a variant of emotivism, which is a theory that all moral judgments are nothing but expressions of preference, attitudes, or feeling. But if there are good reasons to reject emotivism, which I think there are, then it seems to me that the ethical argument doesn’t hold much, if any, weight, although the economic argument remains strong.
My answer is simple: Far from being a mere ‘expression of preferences, attitudes, or feeling,’ this presumption is implied in the very concept of property, which itself implies ownership – ownership by humans of things and of themselves. The alternative would be that each physical thing and each self – each plot of land, each chair, each automobile, each house, each pet, each hour of labor-service, each work of art – is up for grabs. Ditto for income earned from the use or sale of those things. Without a weighty burden of persuasion to protect owners’ claims to their property, ownership would be chimerical.
Only in a world without property would there be no strong presumption of ownership that must be overcome by those who would obtain whatever it is they wish to obtain against someone else’s wishes. As long as property rights exist, the strong presumption that owned things belong to their particular owners must also exist.
You might dislike the reality of private property. But to the extent that private property is a reality – and in the U.S. today it remains so, however much under siege – it carries with it a presumption that the claim that a property owner has to his or her property is significantly stronger than is any claim asserted by anyone else. This presumption is indeed rebuttable. But the very concept of property rights would be meaningless in the absence of any such strong presumption.
If the most recent person or group to demand “I’ll take that because [fill in the blank]!” is treated as having a claim to “that” – a claim to the thing demanded superior to the claim of its current ‘owner’ – then nothing would be owned. And all would be chaos.
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
Why Trust These People?
These People are politically driven. Even if (contrary to fact) there were a scientifically determinable single best course of government action in this crisis, what reason have These People given us to believe that they are capable of finding that course and of understanding it? And even if These People could find and understand this scientifically ‘best’ course of action, what reason have we to believe that they possess the political fortitude to implement and stick to it?
More fundamentally, These People have an atrocious track record when it comes to the economy. These People routinely display appalling ignorance of the most basic facts of economic reality.
These People regularly act as if the world is filled with free lunches and as if reality is optional.
When they raise minimum wages, These People deny that low-skilled workers will suffer any negative consequences. When they raise tariffs, These People proclaim that the resulting greater scarcities at home will bring about greater abundance. When they defend rent control, These People, applauding themselves for helping poor families, remain oblivious to the resulting reduced availability and worsening quality of rental housing.
These People concoct in their political petri dishes the economic cancer of occupational licensing and then unleash it on society. In doing so, These People see only the increased incomes of the monopolists whose competitors are killed off. These People are blind to the harm suffered both by consumers and by those producers denied the opportunity to offer their services to the public.
These People defend the government-school monster-monopoly. They pump ever-more taxpayer money into this monster’s maw and insist that the monster’s continuing failures justify not ridding it of its monopoly status but, instead, stuffing it with ever-more taxpayer money.
These People seem not to understand the first thing about incentives.
These People either actively support or do nothing to oppose the calamitous “war on drugs.” This fact shouldn’t surprise, I guess: after all, These People profit from the banana republic practice of civil asset forfeiture – a practice These People declare to be an important “tool” in fighting the “war on drugs.”
Very many of These People believe that adults are children who, absent the kindly intervention of These People, will guzzle too many sugary drinks, ingest too many trans fats, and vape excessively.
These People insist that the typical American is too irresponsible to save for his or her own retirement. Yet many of These People cannot arrange for the government in which they serve to live within its own means. These People spend borrowed money like mad today and, without shame – or, maybe worse, without realizing it – pass the bill on to future generations. These People clearly haven’t the backbone to deny the most frivolous and costly goodies to their constituents. These People, after all, won’t be in office when the bills come due – so what do These People care about what happens in the future?
Unmasking Irrationality
True story:
Late Friday afternoon I saw a man peddling a three-wheeled bicycle alongside the westbound lanes of Braddock Road (in Fairfax County, Virginia) at the intersection with I-495 (the DC Beltway). Although alone – no one other than occupants of passing automobiles was within a hundred feet of him – he was wearing a face mask.
I watched this gentleman steer his bike down the ramp onto the northbound lanes of I-495, presumably to peddle merrily along the shoulder of that major highway.
It’s distressing to reflect that many Americans likely share this man’s utter inability to assess risks rationally.
…..
Note that this post is not meant as a commentary on the wisdom or civility these days of wearing face masks. Instead, it’s a commentary on the sad reality that many people’s attitudes toward risks, and on the necessary trade-offs that we humans must make in our imperfect vale, are so demonstrably irrational that suspicion of politically imposed restrictions is justified.
Some Links
Furthermore, this already benign assessment assumes that Chinese import competition potentially hurts all U.S. manufacturing jobs. That assumption is proven incorrect by the San Francisco Fed study, which found that one‐third of all Chinese imports were intermediate goods that American companies used to produce globally competitive products. (Hundreds of manufacturing jobs at a Missouri custom hat company, for example, are threatened by President Trump’s tariffs on imported Chinese baseball caps.) These imports have helped, not hurt, U.S. manufacturing workers. In fact, Pol Antràs, Teresa C. Fort, and Felix Tintelnot found that U.S. manufacturing firms that increased direct imports from China between 1997 and 2007 experienced growing or steady employment, likely because of the importers’ ability to lower prices and raise output (even as nonimporting competitors suffered). With respect to these types of complex value chains, the WTO estimates that China in 2015 was the third‐largest user—behind only Mexico and Canada—of “Made In America” manufacturing inputs and the largest source of inputs for American manufacturers.
David Henderson points to evidence that government lockdown orders have significant effects.
Jeffrey Tucker asks when will this madness end.
It is maddening. With big spenders like the Republicans, you really do not need the Democrats. In fact, after the last four months, I am left wondering if we would have been better off, spending wise, if positions had been reversed and Democrats were in charge of the Senate and the White House. In that case, the Republicans would have had something that more closely resembled a backbone – something that would have prompted in them greater resistance to much of this spending.
Speaking of mad spending, did the Payroll Protection Program (PPP) hit its target? (HT Arnold Kling)
Elizabeth Nolan Brown reports on who is most likely to engage in “Virtuous Victim Signaling.” (HT Lyle Albaugh)
Iain Murray writes wisely about different conceptions of liberty.
Quotation of the Day…
… is from page 55 of the 1984 Penguin Classics edition of Alessandro Manzoni’s great mid-1820s novel, The Betrothed (I Promessi Sposi), translated by the late Bruce Penman:
Bullies, oppressors and all men who do violence to the rights of others are guilty not only of their own crimes, but also of the corruption they bring into the hearts of their victims.
DBx: To understand this reality is to better understand the terribleness of oppression: it spawns itself.
Second-generation oppression, however, is no less oppressive and no more justified than was the first-generation oppression that served as its irresponsible parent. The same is true of third-generation oppression. And fourth. And fifth. And forever. With oppression, predictable realities differ wholly from what is normatively desirable. Best never in the first place to oppress. But once this vile seed has been sown, justice – true, achievable justice – is possible only if the child renounces the parents’ wicked ways by refusing to become a poisonous, devastatingly destructive weed.
July 12, 2020
Spending Is Pointless Without Production
In today’s Dallas Morning News, my intrepid Mercatus Center colleague, Veronique de Rugy, and I write about today’s covid-sparked recession and “stimulus.” Here’s our conclusion:
The familiar cures from the past are simply not designed for today’s unique disaster. What America’s economy needs, above all, is not more government spending. We need freedom for businesses to open up and organize as they and their consumers see fit (to protect everyone), for consumers to spend what they want to spend, and for workers to return to work.
Bonus Quotation of the Day…
… is from page 87 of my late Nobel-laureate colleague James M. Buchanan’s August 2001 lecture “The Hayek Difference,” as the text of this lecture appears in Buchanan’s 2005 collection, Why I, Too, Am Not a Conservative: The Normative Vision of Classical Liberalism (link added):
Interpreting the market order as a catallaxy almost necessarily focuses attention on the choices and actions of the separate participants and upon the knowledge that these participants bring to the exchange process. Hayek recognized that this knowledge was, indeed, unique to these participants, in their separately confronted choice settings, and that no other knowledge could possibly inform the ultimate outcomes produced. And because this knowledge was itself subjectively perceived by the participants, it could not be available, actually or potentially, to anyone outside or beyond the interaction process. It follows that the market alone can utilize this knowledge.
DBx: Competitive markets are institutions for eliciting detailed, local, often changing information and giving to those persons who acquire it incentives to act on this information in ways that are as useful as humanly possible to as many fellows human beings as possible. Tariffs, subsidies, and other interventions imposed in the name of “industrial policy” block or distort both the eliciting and the use of this information.
For a country to try to improve its economic performance by using industrial policy makes no more sense than a Formula 1 driver to try to improve his performance by using a blindfold.
Some Links
George Will writes about fascism. A slice:
Fascism’s celebration of unfettered leaders proclaiming “only I can fix it” entailed disparagement of “parliamentarism,” the politics of incrementalism and conciliation. “Democracy,” said Mussolini, “has deprived the life of the people of ‘style’ . . . the color, the strength, the picturesque, the unexpected, the mystical; in sum, all that counts in the life of the masses. We play the lyre on all its strings.”
Bjorn Lomborg puts today’s environmental problems in perspective. A slice:
Remember that the world today is much better in almost every measurable way. In 1900, the average life expectancy was 32. Today, it has more than doubled to 72. The disparity in health between the rich and poor has reduced, the world is much more literate, child labor has been dropping and we are living in one of the most peaceful times in history. Indoor air pollution, previously the biggest environmental killer, has halved since 1990. Four out of five people were extremely poor in 1900 and today — despite the intense impact of the coronavirus — less than one in five is.
Peter Earle explains what epidemiologists can learn from (good) economists. A slice:
From a high level, epidemiological forecasts failed for the very reason that econometric predictions often flounder: the uncritical importation of modeling techniques from physics or applied mathematics into social science realms. This should not be especially revelatory. In “The Counter-revolution of Science” (1956), F. A. Hayek noted the pernicious effects of applying rigidly quantitative concepts where human action is at work, attributing them to “an ambition to imitate science in its methods rather than its spirit.”
Arnold Kling reviews René Levy’s Mending America’s Political Divide.
Scott Lincicome warns against falling for pleas to “Buy American.”
Here’s part 4 of George Selgin’s marvelous series on the New Deal.
Quotation of the Day…
… is from page 225 of Philipp Blom’s 2010 book, A Wicked Company:
The distance between our own, messy reality and an abstract ideal of individual and collective bliss is usually measured out in the blood of those who are unwilling to be fellow travelers or who are simply in the way.
DBx: No daylight separates the ethics of sociopathic mass-murderers from those of ardent pursuers of earthly utopias cleansed of all cosmic injustices, real and imagined.
July 11, 2020
Quotation of the Day…
… is from page 373 of Matt Ridley’s marvelous new (2020) book, How Innovation Works: And Why It Flourishes in Freedom; it’s the first line of the book’s final paragraph:
Innovation is the child of freedom and the parent of prosperity.
DBx: Innovation cannot be planned. Further, innovation necessarily disrupts plans.
If existing plans are many and competing, adjusted to each other with market prices reflecting resource scarcities and consumer preferences, innovation in one part of the economy ripples through causing changes in prices. The feasibility of some plans is enhanced while other plans must be significantly altered or even abandoned. But because there is no overall plan for the economy, there is no need for an overhaul of one giant plan.
Importantly, no one in a free market has the right to prevent innovation simply because some particular innovation will disrupt his or her plan.
To the extent that government imposes a plan on the economy or any significant sector of it, government’s tendency will be to stifle innovation. Government officials, after all, are no more able to foresee the details of the future than are we ordinary mortals. And so innovation will disrupt their plan.
An advocate of government planning can easily say that government would respond to innovation just as do entrepreneurs and consumers in the private market – namely, by changing its plan. But unlike private-market actors, government officials have the power to coercively prevent innovation or to suppress its introduction. In this way, government officials categorically differ from private-market actors, who have no such power (except when government acts on their behalf).
If government officials respond to innovation in much the same way as do private-market actors, the government’s plan doesn’t serve the purpose that it is meant to serve. The whole idea of industrial policy is to use government power to override market forces in the determination of patterns of production and consumption.
Advocates of planning can continue saying things – saying that government officials will accommodate innovations that further the purpose of the plan and will reject only those innovations that are likely to obstruct fulfillment the plan’s purposes. Saying such things is easy for word peddlers who imagine and write eloquently about what god-like creatures might do with other people’s money and property.
But an economy in which innovation plays a role is by nature open-ended. Its future cannot be foreseen in any detail. There is simply no way for government officials to know that innovation X will disrupt the government’s plan and that innovation Y will not. Remember: industrial-policy advocates regard as a feature, not a bug, of such government planning that it ultimately can and will override the information conveyed by market prices.
Able to spend other people’s money, government officials are simply too likely to reject innovations that threaten to disrupt their plans. Government officials are not entrepreneurs skilled at satisfying voluntarily expressed demands; they are politicians and commissars skilled at, in the case of politicians, winning elections, and in the case of bureaucrats, following orders. And in both cases these officials are in the habit of telling other people what to do rather than, as is the habit of entrepreneurs, asking other people what they want.
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