Russell Roberts's Blog, page 4

Quotation of the Day…

(Don Boudreaux)

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… is from page 249 of my GMU Econ and Mercatus Center colleague Peter Boettke’s 2012 volume, Living Economics:

According to ancient legend, a Roman emperor was asked to judge a singing contest between two participants. After hearing the first contestant, the emperor gave the prize to the second on the assumption that the second could be no worse than the first. Of course, this assumption could have been wrong; the second singer might have been worse. The theory of market failure committed the same mistake as the emperor. Demonstrating that the market economy failed to live up to the ideals of general competitive equilibrium was one thing, but to gleefully assert that public action could costlessly correct the failure was quite another matter. Unfortunately, much analytical work proceeded in such a manner. Many scholars burst the bubble of this romantic vision of the political sector during the 1960s. But it was [James] Buchanan and Gordon Tullock who deserve the credit for shifting scholarly focus.

DBx: Yes. And because they played this role – and played it honestly, brilliantly, and with tenacity – both Buchanan (1919-2013) and Tullock (1922-2014) are despised by those who remain faithful to the dogma that the state is godlike. ‘Researchers’ who are either too dull-witted to grasp even the basics of public-choice scholarship, or who are hopelessly benighted by their religion, publish ridiculously distorted claims about Buchanan and Tullock and their work. Because these claims, if swallowed, protect from critical scrutiny dogmas that are dear to congregants of the Church of the State, these congregants repeat these claims uncritically.

Were public-choice scholarship dry and barren, it would be ignored. This scholarship would pose no real challenge to the dogmas of those persons, left and right, whose faith assures them that investing government officials with more power is a means of creating on earth something closer to heaven. The vicious, unscholarly, ad hominem, and downright ignorant attacks on Buchanan and Tullock and their work, and on their alleged motives, is proof as solid as proof gets that congregants of the Church of the State sense that public choice devastates their faith. So these congregants wildly attack public choice with all the fervor and intellectual soundness with which the most doctrinaire and bellowing backwoods preachers attack the theory of natural selection.

Phil Magness Exposes As Shoddyship Some So-called “Scholarship”

(Don Boudreaux)

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Phil Magness, by e-mail, just alerted me to a new paper by William Darity, M’Balou Camara, and Nancy MacLean. (I’ve not read this paper. It is behind a paywall and I refuse to pay for access to it.) But Phil, on Twitter, offers this passage from it:

After coming to the University of Virginia, where he was invited for a multi-year term as a visiting professor by James Buchanan in 1965, [W.H.] Hutt spoke in his first year to a summer gathering of young conservatives, offering them a libertarian defense of social segregation.

‘The right of free association implies the right not to associate as well as to associate,’ he tutored them, pointing to exclusive clubs as aspects of a ‘free society’. Buchanan had published his own ‘An Economic Theory of Clubs’ the year before, pointing to ‘excludability’ as a key feature, something on display in his own state and region. In the wake of the Brown v. Board of Education decision and the Civil Rights Act of 1964, many racist whites fled public facilities for private ones with the ability to exclude blacks.

Phil correctly describes the above remarks as what “may also be the most intentionally dishonest reading of Buchanan’s ‘Economic Theory of Clubs’ that has ever been written.”

Darity, Camara, and MacLean insinuate that Buchanan’s justly famous February 1965 Economica paper, “An Economic Theory of Clubs,” is somehow a defense or justification of racial segregation. They intimate that Buchanan wrote this deeply scholarly paper – to what? – to justify his allegedly racist views and the attitudes of racists generally? Seems so. (Note, by the way, that these three ‘scholars’ who pretend to do history research can’t even get correct the year of the paper’s publication; it was published not, as they seem to say, “the year before” 1965, but in 1965.)

WHAT. UTTER. NONSENSE.

Buchanan’s paper filled a gap in the taxonomy that economists used to describe the ‘privateness’ or ‘publicness’ of goods. Most goods (and services) are “private goods”; these are goods that are both “excludable” and “rivalrous.” (The first term refers to the ability to withhold the good from Jones while supplying it to Smith. The second term refers to the fact that if the good is supplied to Smith for Smith’s consumption, Jones cannot be supplied with a like unit of this good at zero cost. Think of a hamburger. McDonald’s supplies a Big Mac to Smith who agrees to pay for it, but ‘excludes’ Jones from a Big Mac if Jones refuses to pay for it. Also, if McDonald’s were nevertheless to supply a hamburger to Jones after arranging to supply one to Smith, McDonald’s would incur an additional positive cost to do so.)

Classic “public goods” are the opposite of “private goods.” A “public good” is both nonexcludable and nonrivalrous. Think of the abatement of air pollution in the Los Angeles basin. If pollution is abated there, everyone in the L.A. basin gets to enjoy the cleaner air; no one there can practically be excluded from breathing the cleansed air. This good is also nonrivalrous: Once Jack in the L.A. basin is supplied the cleaner air, no additional cost is required to enable Jill also to consume the cleaner air. Jack and Jill aren’t in ‘rivalry’ with each other – or with Sam and Sarah and Bob and Betty – for a unit of greater air-cleanliness.

Clubs, Buchanan pointed out, are neither pure private goods nor pure public goods. Access to a club is excludable, but club goods are – when club membership is small – nonrivalrous, but rivalrous when club membership is large. (As membership grows, the rivalrousness of the club goods intensifies.) Thinks of a swimming club. Non-payers can be excluded from swimming in and lounging around the club’s pool, and when membership is small, the pool is nonrivalrous: adding a new member does not detract from the ability of existing members to enjoy the pool. But the pool becomes rivalrous when membership grows so large that Smith’s use of the pool means that Jones cannot enjoy the pool as he would if Smith weren’t a member.

Clubs are a common feature of human society, but until Buchanan wrote his paper there was no good economic theory of them. Buchanan offered such a theory. And all clubs condition membership on some condition or conditions – that is, all clubs exclude.

As Elinor Ostrom noted in her Nobel lecture:

Studying how individuals cope with diverse public problems in the world led us to reject [Paul] Samuelson’s two-fold classification of goods. Buchanan (1965) had already added a third type of good, which he called “club goods.” In relation to these kinds of goods, it was feasible for groups of individuals to create private associations (clubs) to provide themselves nonrivalrous but small-scale goods and services that they could enjoy while excluding nonmembers from participation and consumption of benefits.

The fact that Darity, M’Balou, and MacLean read devilish meaning into Buchanan’s use of the word “excludable” indicates only that they are utterly clueless about the scientific meanings of the terms that economists use. “Excludable” has scientific meaning in economics, and it is that meaning to which Buchanan clearly adhered throughout his article.

…..

Read Buchanan’s paper. You tell me if you find in it as much as a shadow of a hint of a whiff that this paper is a surreptitious effort to endorse or to justify racial segregation.

Take Responsibility

(Don Boudreaux)

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It won’t happen, but it’s an appealing thought.

Editor, Wall Street Journal
1211 6th Ave.
New York, NY 10036

Editor:

Prompted by Lordstown Motors’ bankruptcy, you astutely criticize industrial policy by observing that “[n]either Mr. Trump nor President Biden were present at the Lordstown bankruptcy filing, and the politicians never have to account for what goes wrong” (“The Lordstowns of Industrial Policy,” June 28). Your observation suggests a wholesome idea: Require that any politician who attends, photographers in tow, a ribbon-cutting ceremony for an industrial-policy project also attend, with photographers in tow, that project’s bankruptcy hearing.

Investors who stake their own funds on projects that fail pay a heavy personal price for their poor judgment, thus disciplining them to improve their judgment. It only seems right, then, that politicians who stake other people’s funds on projects that fail should likewise pay a heavy personal price. If required to be personally and visibly associated with their destruction of other people’s wealth, politicians might be less cavalier at showering that wealth on industrial-policy boondoggles.

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 2203

Make of This What You Will

(Don Boudreaux)

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This morning, National Public Radio’s Steve Inskeep interviewed the current Chairman of the Council of Economic Advisors, Jared Bernstein. Naturally, political appointees are political cheerleaders for their party, so I wasn’t a bit surprised by Bernstein’s happy talk about the alleged wonders of Bidenomics (which isn’t to say that this talk wasn’t annoying, as is all such propaganda, regardless of the party spewing it).

What did surprise me, however, was Inskeep catching Bernstein spreading false information and calling him out on it. (The most-relevant part occurs from about the two-minutes-fifteen-seconds mark until just after the four-minute mark.) Inskeep said that, while labor-force participation is now rising, it still hasn’t fully recovered. Bernstein then contradicted Inskeep, saying that “labor-force participation of working-age people” has indeed recovered to its level of 15 years ago. Inskeep countered that he – Inskeep – is looking at data from the St. Louis Fed that shows that the labor-force participation rate is several percentage points lower than it was 15 years ago. (Inskeep prefaced his remark with “I don’t want to argue with an economist about statistics, but….”)

Bernstein – unable to deny the truth of Inskeep’s point – then rather haughtily said that he “wanted to avoid going into the weeds,” but, darnit, Inskeep forced him to do so. Bernstein explained that the labor-force participation rate that he is talking about is of adults ages 25-54. (I suppose that Bernstein and other Bidenomisists do not regard 23-year-olds and 55-year-olds as “working-age people.”) The labor-force participation rate to which Inskeep referred was the conventional one of people 16 years and older. Bernstein justified his use of this cropped portion of the labor force as a means – given our aging population – of excluding retirees. This justification perhaps sounds reasonable to someone unfamiliar with the definition of “labor force,” but because as the labor force is defined it already excludes retirees, Bernstein’s attempt to weasel out of being caught telling what is essentially a lie fails.

As I listened I kept hoping that Inskeep would make this latter point, but he didn’t.

Another point that I hoped Inskeep would make but that he also did not is that, while Bernstein’s cropped “labor force” of course excludes people of retirement age, it excludes also people ages 16-24. What about them?

Nevertheless, I remain grateful that Inskeep didn’t let Bernstein get away with conveying the false impression that the labor-force participation of all Americans 16 and older is back to its height of 15 or so years ago. (By the way, this rate’s all-time high was reached in January 1999, when it hit 84.6 percent – or 1.2 percentage points higher than the current [May 2023] rate of 83.4 percent).

(And FYI, any NPR listener who took Inskeep’s description of Bernstein to imply that Bernstein has a degree or degrees in economics is mistaken.)

Some Links

(Don Boudreaux)

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Jack Nicastro, writing at National Review, is understandably unimpressed with American Compass’s case for industrial policy. Three slices:

Some on the right want conservatives to pursue more activist industrial policy. The think tank American Compass, founded by former Mitt Romney economic adviser Oren Cass, has been among the leading organizations calling for this change. In its recent publication, “Rebuilding American Capitalism: A Handbook for Conservative Policymakers,” the section on industry demonstrates poor economic reasoning and would be a recipe for failure.

…..

Just because something is assembled somewhere, however, does not mean that it is produced there. The value-added chain is quite long, and many of its most important stages are immaterial. Taiwan and China do have significant market shares of some aspects of the global semiconductor value chain, but according to an October 2020 report, America dominates overall — no CHIPS act required. The U.S. controls over 60 percent of the “fabless” market, which designs but does not manufacture nor assemble chips, while China’s share is less than 20 percent. The American share of the integrated-device-manufacturers (IDM) market, which designs, manufactures, and assembles chips, is approximately 50 percent, compared with China’s near-zero. Intel chips are not assembled in the U.S., but they are ideated, innovated, and iterated upon here.

…..

One industry allegedly in need of help from such a bank is “the commercial maritime industry,” which it would help “modernize.” But that industry is already the beneficiary (or victim) of more protectionism and government support than nearly any other. The Jones Act was passed to ensure “adequate domestic shipbuilding capacity” in the event of war by restricting “water transportation of cargo between U.S. ports to ships that are U.S.-owned, U.S.-crewed, U.S.-registered, and U.S.-built,” as the Cato Institute describes in a report. The Jones Act achieved the opposite of its stated purpose, but American Compass thinks it will get the protectionist formula right this time.

Speaking of industrial policy, the Wall Street Journal‘s Editorial Board draws lessons from yet another bankruptcy of a firm-of-the-future, Lordstown Motors. A slice:

Lordstown is another example of the peril of politicians allocating capital. The lesson is worth keeping in mind as the press releases fly and the politicians show up for photo ops. Far too often, and despite taxpayer subsidies, the government picks losers.

Ron Bailey decries “Biden’s $42 billion broadband boondoggle.”

Art Carden explains that “America needs more McJobs.” A slice:

These aren’t dead-end “McJobs,” as they are sometimes derisively called. They’re important opportunities to learn how to function in the labor market and, importantly, how to serve others. One of the most important things about working for pay in a service enterprise is that it takes you off the throne. It makes you contend with the fact that you are not the star of the cosmic narrative. Other people matter, other people have preferences and problems, and it is presumptuous to expect them to ignore those preferences and problems and do what you want for no other reason than because you want it done. It turns out that the best way to do what you want is to govern your selfish passions and help other people do what they want.

Unfortunately, I expect this argument to pass unnoticed before blind eyes. H.L. Mencken allegedly said that the definition of “fundamentalism” is the fear that someone, somewhere might be having a good time. 21st-century progressive fundamentalism is the fear that someone, somewhere might make money, and progressives look askance at fast food companies and retailers that make a great deal of money. This is not in itself vicious; if it is done via exchange – which, as it happens, is how fast food companies and retailers make their money – it is positively virtuous. In competitive labor markets, these firms’ profits do not come at the consumer’s or employees’ expenses. They do not take it. They earn it by making consumers and employees better off relative to their best alternatives.

“McJobs” aren’t just worth having. They’re vital. They make it easier for the people who have them to accumulate valuable skills and labor market experience, which research has shown leads to higher future earnings. The market process allows low-skill people to specialize in what they do best while freeing up high-skill people who can concentrate their efforts on things they do best. Everybody wins, and in some small way, you have a part in every achievement by every bleary-eyed customer for whom you dutifully pour coffee on their morning commute.

Writing in the Wall Street Journal, Richard McKenzie points out that one underappreciated cause of the increase in the concentration of wealth in the U.S. is that Americans are living longer. A slice:

Americans’ increasing life spans have disproportionately increased the elderly’s considerable wealth advantage. They’ve had more time to save and invest because of advances in medical science during their lifetimes.

From 1940 to 2019, Americans’ life expectancy rose by almost 16 years, while the share of the U.S. population 65 and older grew from 9.8% to 16.7%. The elderly have progressively more healthy years to work. Most important, increased life spans have meant that older Americans’ wealth portfolios have been able to compound for longer.

To illustrate, consider a 65-year-old today who has a portfolio of $1 million, fully invested in an S&P index fund, enabling him to hold off for years shifting assets into lower yielding bonds. Suppose he chooses to work an additional 10 years, expecting almost the same number of retirement years as a 65-year-old had in 1940, but all the while allowing the $1 million portfolio to compound for 10 years. If the S&P increases at its historical inflation-adjusted rate of 7.2%, his real wealth will grow to about $2 million—without any additional investments. The retiree will move from the top 12% of wealth holders to the top 6%. The person with $6 million at 65 will move from the top 3% to the top 1% at 75.

GMU Econ alum Caleb Fuller notes that the negative employment effects of minimum wages might well be very widespread (and, hence, much more difficult to detect empirically).

Elaine Schwartz draws some lessons about the market system from the movie Air.

Randy Holcombe is placing no bets that Putin will long remain in power.

George Will eloquently describes the calamitous condition of K-12 government “education” (so called) in America. Two slices:

Mysteriously (or perhaps not), California’s most recent standardized test revealed declines in math and English language arts — yet rising grades. Larry Sand, writing in City Journal, reports that 73 percent of 11th-graders received A’s, B’s and C’s in math, while the test showed that only 19 percent met grade-level standards. Among eighth-graders, the disparity was 79 percent and 23 percent. Among sixth-graders’ English scores, it was 85 percent and 40 percent. Amazingly (or perhaps not), the high school graduation rate has risen as students’ proficiencies have fallen.

Grade inflation, sometimes called “equity grading,” and “social promotions,” which combat meritocracy as a residue of white supremacy, leave a wake of wreckage. “According to World Population Review,” Sand says, “California now leads the country in illiteracy. In fact, 23.1 percent of Californians over age 15 cannot read this sentence.”

…..

Remote learning during the pandemic, say [Robert] Pondiscio and [Tracey] Schirra, “pried open the black box of America’s classrooms.” Progressives, anxious to slam it shut again, portray any public involvement in public education, other than paying for it, as an infringement of the hitherto unenunciated right of teachers to unabridged sovereignty over other peoples’ children. But as UCLA law professor Eugene Volokh has said, “Someone’s got to decide what is going to be taught in K-12 schools.” Teachers, principals, legislatures, school boards — the First Amendment does not say whom.

Progressives and their most muscular allies, the teachers unions, stand athwart parents shouting, “Mind your own business!” This is a political argument conservatives can link to the issues of school choice and charter schools, each of which polls well. As North Carolina’s Republican-controlled legislature has noticed.

That state’s Democratic governor, Roy Cooper, is following the example of the federal government, which currently is operating under 41 declared “emergencies.” And he is emulating the executive grandeur exuded by presidents of both parties who acquire special powers with such declarations. Cooper has declared a “state of emergency for public education.”

His cri de coeur, which enlarged his power not a whit, was occasioned by the state legislature moving to expand the state’s school choice program beyond low-income families. He says that expanding the ability of parents to choose between public and private schools will “choke the life out of public education.” From this prediction, we can infer Cooper’s bleak assessment of many public schools’ inability to compete when parents have choices.

Quotation of the Day…

(Don Boudreaux)

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… is from page 169 of the original edition of volume III (“The Political Order of a Free People,” 1979) of F.A. Hayek’s Law, Legislation, and Liberty (first emphasis original; second emphasis added; footnote deleted):

That progress may be faster than we like, and that we might be better able to digest it if it were slower, I will not deny. But, unfortunately, progress cannot be dosed, (nor, for that matter, economic growth!) All we can do is to create conditions favourable to it and then hope for the best. It may be stimulated or damped by policy, but nobody can predict the precise effects of such measures; to pretend to know the desirable direction of progress seems to me to be the extreme of hubris. Guided progress would not be progress.

Bonus Quotation of the Day…

(Don Boudreaux)

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… is from page 99 of Stanford University economist John Taylor’s 2012 book, First Principles:

[E]conomic prosperity comes and goes as adherence to the principles of economic freedom comes and goes.

Reality Is Far More Complex Than Politicians Pretend

(Don Boudreaux)

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Here’s a letter to the Wall Street Journal:

Editor:

Nikki Haley is correct that the Chinese state is a bad actor against which we must be vigilant (“My Plan to Confront the Chinese Threat,” June 27). But such vigilance would be undermined by overreaction. And Ms. Haley’s promise to “push American businesses to leave China as completely as possible” is overreaction.

American businesses’ ties to the Chinese economy help fuel the innovation that Ms. Haley rightly understands to boost military preparedness. It’s therefore crucial to understand that a near-complete abandonment by American businesses of the Chinese market would obstruct these firms’ access to at least two important spurs to innovation: low-cost inputs and opportunities to capture larger economies of scale.

Stifling all the innovation now driven by Americans’ economic engagement with the Chinese people might be a price worth paying if most, or even much, of this engagement were heavily tilted in favor of the Chinese. But trade being mutual, this isn’t the case. As the Cato Institute’s Clark Packard writes about trade with China, “a lot of two‐​way trade and investment is largely benign – and in no way ‘strategic,’ i.e., at the nexus of technology and national security. Sabine Weyand, the European Union’s Director‐​General for Trade, recently noted in an essay for Internationale Politik Quarterly that 94 percent of EU trade with China is ‘unproblematic’ and that only about six percent is the result of a one‐​sided dependency for EU member nations. A comparable analysis for the United States would almost certainly produce similar results.”

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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Jonah Goldberg is not impressed with Patrick Deneen’s new book, Regime Change. Two slices from Goldberg’s review:

Grant this to Patrick Deneen, the author of Regime Change: Toward a Postliberal Future—he doesn’t repeat the progressive mistake. Instead, he proudly holds the yardstick up to the present and finds the past better in almost every regard. I don’t just mean the 1950s or the 1850s, arguable—yet contestable!—claims. Rather, he insists that, by the time of Lexington and Concord, the horse had already left the barn: things had gone catawampus for the West a century earlier.

As with his previous book Why Liberalism Failed, Deneen looks upon the great expanse of progress since the Enlightenment and shudders. His complaint isn’t merely that the West’s embrace of liberalism meant too many sacrifices in pursuit of progress; it’s that embracing progressas a concept—both moral and material progress—was a kind of original sin.

Deneen never adequately defines progress in Regime Change, but he is constantly throwing shade on the term. The left’s belief in moral progress gave us wokeness and other horribles. The right’s belief in material progress gave us everything from closed factories and climate change to anomie. As with his previous book, Deneen writes like a prosecutor, downplaying inconvenient facts and evidence in his brief—or leaving them out entirely—while pounding the table about damning circumstantial evidence and anecdotes.

Thus, looking back at some five centuries of rising life expectancy, exploding living standards, population growth, literacy, etc., Deneen could declare in Why Liberalism Failed: “Among the greatest challenges facing humanity is the ability to survive progress.”

…..

Even poor Adam Smith is charged as a co-conspirator. His crime lay not so much in pointing out that the division of labor was essential for economic progress, but for saying that prosperity was worth pursuing at all. Smith acknowledged that the division of labor could “stunt the reflective capacities” of some workers who would increasingly specialize on specific stages of the means of production. But, Smith argued, the concomitant prosperity generated from such efficiency made it an acceptable trade-off. (Life expectancy in the U.K. when Smith was writing was about 39 years, and about a third to half of children didn’t survive childhood.) But for Deneen, growing material prosperity for all wasn’t worth it. Men, you see, lived much richer lives when they made more expensive pins from scratch by themselves in the isolation of their dimly lit workshops. (I do wonder why Deneen simultaneously laments the opening of factories in the 18th century and the closing of them in the 21st.)

The Wall Street Journal‘s Editorial Board applauds the U.S. Supreme Court’s decision to hear the case of Moore v. U.S. A slice:

We recently urged the Justices to take this appeal from a bad ruling by the Ninth Circuit Court of Appeals. The case concerns a provision in the 2017 tax reform that levied a one-time mandatory repatriation tax on foreign companies, as Congress scrambled to find revenue to pay for tax-rate cuts.

But the tax applied to American shareholders, even passive investors like Charles and Kathleen Moore of Washington state. They were hit by a surprise $14,729 tax bill, though they had never seen a dime of income from their investment in a friend’s company in rural India. They were taxed instead on the unrealized income of the foreign company.

And there’s the rub. The Moores sued for a refund, but a three-judge panel of the Ninth Circuit ruled that “realization of income is not a constitutional requirement.” This defies the traditional understanding in U.S. tax law, and in Supreme Court doctrine, that income must be realized before it can be taxed. That is, the income must be real income, not merely an increase in the value of an asset in market value or on some company’s books.

David Bier rightly warns of the danger and illiberalism packed into the Secure the Border Act of 2023 (a bill that has passed the U.S. House of Representatives). A slice:

Last month, the U.S. House of Representatives passed the Secure the Border Act of 2023. Among other things, the bill would mandate that all employers use the E‑Verify program to prove that their new hires have federal authorization to work. A coalition of conservative advocacy organizations praised this provision because it would “turn off the ‘jobs magnet’ for illegal immigration.”

But is this good? Should the U.S. government really have the power to “turn off jobs”? The answer for people who believe in limited government is clearly no. The government in a free society should not have the power to decide who can work; free people shouldn’t have to request permission to work; and the founders of this country could not possibly have imagined a scenario where the federal government held a kill switch for everyone’s right to earn a living.

Eric Boehm reports on yet another massive waste by government of taxpayers’ money.

Brendan O’Neill reports on “the classist lunacy of Net Zero.”

Kim Iversen talks with Jay Bhattacharya about the cruelty and irrationality of covid lockdowns and mandates.

Quotation of the Day…

(Don Boudreaux)

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… is from the late GMU Econ alum Steve Horwitz’s March 11th, 2013, contribution (“Breaking Open the Black Boxes of Political Economy“) to a Liberty Matters forum titled “James Buchanan: An Assessment” (original emphasis):

Starting with Ludwig von Mises’s 1920 paper [“Economic Calculation in the Socialist Commonwealth”] and 1922 book [Socialism], and extending through Hayek’s famous essays in the 1930s and 40s, the Austrians argued that central economic planners would lack the knowledge necessary to allocate resources with any semblance of economic rationality. As [Geoff] Brennan points out, Buchanan accepted this argument, but chose to ask a different question: If political actors did have the knowledge necessary, would they have the incentives to act on that knowledge in the right way? It is worth noting that one can view the Austrian contribution as asking the inverse question: Even if planners’ incentives are properly aligned, can they acquire the knowledge to do the right thing that they really wish to do?

DBx: Steve (pictured here) died, at the too-young age of 57, two years ago today.