Russell Roberts's Blog, page 396

Bonus Quotation of the Day…

(Don Boudreaux)

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… is from page 101 of Pierre Lemieux’s excellent 2018 monograph, What’s Wrong With Protectionism?:

Perhaps, with some optimism, we may hope that, in the future, an understanding of the economics of trade will persuade citizens to demand that their own government recognize their liberty to import. We may also hope that people on the Left or on the Right will realize that the only way to protect oneself against a government one does not like is to reduce government power in general, and that free trade is one important means of reducing government power.

DBx: Yes.

If the goal is increased prosperity and peace, free trade is embraced as an important policy. But if the goal is to exercise power either directly or as a courtier to the powerful, a policy of free trade is rejected. Those who crave power, and those who thrill to its exercise, have no use for a policy that leaves peaceful people be. Minding one’s own business in this way is so bourgeois, so mundane, so-1776ish and 1980s-like, and so unimaginative in its lack of grand plans and social blueprints. For the arrogant and the officious, it’s just no fun!

Pittsburgh Tribune-Review: “Life, death & choices”

(Don Boudreaux)

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In my column for the February 12th, 2010, edition of the Pittsburgh Tribune-Review I unspun a story spun by the Obama administration to drum up support for Obamacare. You can read my column beneath the fold.

(more…)

Some Links

(Don Boudreaux)

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Bruce Yandle is correct: no “stimulus” will stimulate to the extent that the economy remains in lockdown.

Speaking of Bruce Yandle, a new collection of original papers, all written in the Yandle tradition, has just been published by Mercatus. This collection is edited by Roger Meiners and me. (Roger and I are especially grateful to Stefanie Haeffele for her expert help in making this project a reality.)

My Mercatus Center colleagues Dan Griswold and Jack Salmon explains that “Trump’s new rule on student visas will be costly to US higher education and technological leadership.” A slice:

Foreign-born students make a huge contribution to America’s technological leadership in the world. Among foreign-born STEM doctorate students, 72 percent of graduates remain in the United States for at least 10 years after graduation; the highest rates are among Chinese and Indian graduates at 90 percent and 83 percent, respectively. Of all billion-dollar startups in the United States, 22 percent – including Zoom, Tesla, SpaceX, and Instagram – had at least one immigrant founder who first came to the country as an international student.

Kevin Williamson describes Thomas Sowell’s new book, Charter Schools and Their Enemies, as “a bloodbath for Sowell’s intellectual opponents.”

David Harsanyi calls for separation of school and state. A slice:

State-run schools have undercut two fundamental conditions of a healthy tolerant society. First, they’ve created millions of civic illiterates who are disconnected from long-held communal values and national identity. Second, they’ve exacerbated the very inequalities that trigger the tearing apart of fissures.

Nick Gillespie talks with Michael Shellenberger, author of Apocalypse Never: Why Environmental Alarmism Hurts Us All.

Barry Brownstein laments that Bill Gates is now a full-time “philanthropist” rather than a full-time business executive.

My intrepid Mercatus Center colleague Veronique de Rugy applauds a legal challenge to New York City’s destructive rent-control regime.

Quotation of the Day…

(Don Boudreaux)

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… is from page 95 of the late Stanford University economic historian Nathan Rosenberg’s insightful 1992 paper “Economic Experiments,” as this paper is reprinted in Rosenberg’s 1994 book, Exploring the Black Box: Technology, Economics, and History:

Capitalism has provided multiple sources of decision-making and initiative, strong incentives for proceeding one step at a time, and the possibility for drawing upon a wide range of human potential – all valuable features of activities that are carried out in an environment of high uncertainty. The notion that planning and centralization of decision-making are likely to be more efficient appears to be the opposite of the truth when there is a high degree of uncertainty and when goals and objective cannot be clearly defined in advance.

Bonus Quotation of the Day…

(Don Boudreaux)

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… is from page 4 of Deirdre McCloskey’s important 1990 volume, If You’re So Smart: The Narrative of Economic Expertise:

And the tale of expert social engineering is unbelievable, really. It cannot answer the simplest folk skepticism: If You’re So Smart, what ain’t you rich?

DBx: Indeed.

The world is overpopulated with people each of whom seems truly to believe that he or she is blessed with special intelligence or insight about reality’s complex details – intelligence or insight that, sadly, is denied to nearly all of his or her fellow human beings. And these geniuses are so confident in their schemes that none hesitates to propose that millions of his or her fellow human beings be coerced in order to conform their actions to the genius’s Vision.

Geniuses on the right – Daniel McCarthy, Oren Cass, Marco Rubio. Geniuses on the left – Elizabeth Warren, Robert Reich, and Bernie Sanders. Geniuses everywhere. But, strangely, none has become even modestly wealthy by serving fellow human beings in the voluntary arena that is the market. What reason, I ask, is there to trust that these individuals – who would use coercion to superintend the spending of hundreds of millions of consumers and the investments of countless entrepreneurs – have even an inkling of understanding about what they talk and write, and sometimes shout, about so glibly?

Bad Argument for Protectionism #8,933,092,991,654,722

(Don Boudreaux)

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The world suffers no shortage of arguments for protectionism. And given protectionism’s long (and sordid) history, no such argument is original. (The last time an original argument in support of protectionism appeared on this earth was likely during the presidency of Millard Fillmore.)

And so it comes to pass that EconLog commenter “James” pushed back against David Henderson’s entirely reasonable and compelling argument that the USMCA (which went into effect on July 1st, 2020 by replacing NAFTA) is a lamentable step back from free(r) trade toward protectionism. One of the USMCA’s features that David rightly complains about is its increase in the amount of North American “content” that must be in automobiles produced in North America if these vehicles are to be sold here duty-free. Another feature is the agreement’s requirement that certain auto workers in Mexico be paid the equivalent of at least $16 per hour.

James thinks these features of the USMCA to be just dandy. Here’s the bulk of the comment that I left at EconLog in response:

James:

You write:

The auto industry changes [with USMCA] on whole seem good for America. Judging from the poor quality products that come out of Mexico and China the US consumer should also benefit from the North American content requirement and the minimum age requirements. Wins all around

You here overlook two critical points. First, because auto sellers in the U.S. have every incentive in the market to supply that level of quality that consumers are willing to pay for, your insinuation that the quality of “products that come out of Mexico and China” is too low is unwarranted. American consumers can on their own determine the level of quality they desire in their automobiles; they do not need the U.S. government to make this determination for them.

Second, the domestic-content and minimum-wage rules in the USMCA have nothing to do with ensuring product quality and everything to do with protecting parts producers, and certain workers, in the U.S. from foreign competition. Therefore, far from ensuring that autos and auto parts will be of the quality that consumers expect, these provisions – by dimming the intensity of competition – will likely cause product quality to fall.

If 5-2=3, How Can 5+2=3?

(Don Boudreaux)

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Here’s a letter to the Wall Street Journal:

Editor:

With China’s (re)turn to totalitarianism, knotty questions about trade policy are in America’s future. Regrettably, our ability to grapple with these challenges is weakened by economically uninformed analyses of the sort offered by Greg Ip in “As Chinese Trade Surpluses Persist, So Will Risk of Trade Wars” (July 8).

The flaws with this column are inadvertently summarized in its nonsensical sub-heading: “By suppressing consumption, China imposes a production glut on the world, to the detriment of its own workers and trading partners.”

Beijing’s restriction of the Chinese people’s ability to consume does indeed harm the Chinese people: they have less to consume. But any resulting “glut” of output on global markets which increases the amounts of goods available for consumption by us Americans and others outside of China is, to us, not a detriment but an economic benefit. We have more to consume – meaning that Beijing’s policy makes us richer.

It’s impossible not to scratch one’s head at a columnist who, after correctly noting that a people are harmed when their access to goods and services shrinks, insists also that a people are harmed when their access to goods and services expands.

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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My Mercatus Center colleague Dan Griswold pushes back against those who argue that the United States should withdraw from the World Trade Organization (WTO). A slice:

Since the General Agreement on Tariffs and Trade was adopted by the United States and other major trading nations in 1947, the average level of global tariffs levied against U.S. exports has dropped sharply from 22 percent to under 5 percent. That trend has continued under the 1994 Uruguay Round Agreement, which established the WTO while beefing up the dispute settlement mechanism to keep barriers down.

The result has been a healthy increase in U.S. trade, including exports. Since the creation of the WTO, U.S. exports of goods and services have jumped from $700 billion in 1994 to $2.5 trillion in 2019. As a share of the domestic economy, exports have climbed from under 10 percent to 12 percent. The WTO has also encouraged lower U.S. barriers to trade, to the benefit of tens of millions of consumers here at home, as well as import-consuming U.S. producers.

Pierre Lemieux reviews Arvind Panagariya’s important 2019 book, Free Trade & Prosperity.

My intrepid Mercatus Center colleague Veronique de Rugy is surprised that people are surprised.

GMU Econ alum Shruti Rajagopalan talks with Mario Rizzo and Glen Whitman about so-called “libertarian paternalism” and “nudging.”

Eric Boehm isn’t buying the Trump administration’s claim that coronavirus “stimulus” spending saved 51 million jobs.

The great Jim Gwartney offers some predictions about the U.S. economy post-covid.

Jesse Singal eloquently responds to the unhinged reaction to the recent letter in Harper’s calling for a return to liberal values (although I don’t quite follow the “hit dog will holler” analogy).

Quotation of the Day…

(Don Boudreaux)

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… is from pages 8-9 of Peter Schweizer’s 2013 book, Extortion: How Politicians Extract Your Money, Buy Votes, and Line Their Own Pockets:

Politics in Washington is a lot like professional wrestling. What seems like vicious combat to the uninitiated is actually choreographed acting. Professional wrestlers face off in the ring, shouting and pointing fingers and appearing to hate each other. But in fact, they are partners in a commercial enterprise to entertain and extract money from the audience.

DBx: Yep.

Near the end of his excellent – and favorable – review, in Regulation, of my GMU Econ colleague Garett Jones’s new book, 10% Less Democracy, David Henderson expresses understandable displeasure when he learned from Garett that Senator Orrin Hatch (R-UT) and the late Sen. Ted Kennedy (D-MA) would often affectionately bear-hug each other in the corridors of the Capitol. (Garett once served as an aide to Hatch, and David remembers Kennedy’s abominable behavior after the tragic incident at Chappaquiddick.) While Peter Schweizer’s point does nothing to diminish David’s (or anyone else’s) distaste for Kennedy, it does help us to better understand the character of the great majority of people who successfully seek and retain power.

Mr. Jones (and the Execrable Walter Duranty)

(Don Boudreaux)

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How can I have spent 43 years immersed in the literature of liberalism and have never heard, until just a few days ago, of the heroic Gareth Jones? Jones (1905-1935) is the man who exposed the lies that New York Times reporter – and Pulitzer Prize-winner – Walter Duranty spewed to cover-up the Ukrainian mass murder carried out in the 1930s by Stalin.

A few days ago I watched the 2019 movie Mr. Jones. It is spectacular, if deeply grim – grim as it must be to tell the terrible truth that it tells.

Here’s the final paragraph of Kyle Smith’s review of this remarkable film:

Back in Moscow, Duranty shrugs at all this: “You can’t make an omelet without breaking a few eggs,” he says, speaking for all of the genocidal murderers who viewed people as brunch. Duranty really did publish this grotesque cliche (already in common use at the time) in the March 31, 1933, edition of the Times. He and Mr. Jones faced two very different fates after the events depicted in this film; one of them was murdered in 1935 and the other died in Orlando, Fla., at a ripe old age. You can probably guess which is which. To this day, Mr. Jones is all but unknown and his courage is unsung by his inky heirs, whereas Duranty’s Pulitzer Prize remains on the books even after a thousand other things have been canceled. Meanwhile, Mr. Jones joins the unconscionably brief list of brutally honest films about Communism.

And here’s David Boaz.