Russell Roberts's Blog, page 42

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(Don Boudreaux)

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My GMU Econ colleague Vincent Geloso warns against the error of using WWII as an example of successful fiscal stimulus. A slice:

In no way can wartime spending be used to justify fiscal stimulus.

We know this thanks to the work of economic historians Alexander Field, Richard Vedder, Lowell Gallaway, and Robert Higgs, who picked apart this narrative by pointing out three facts.

The first is that the price indices needed to adjust income for inflation were plagued by the problems that wartime price controls created. Once adjusted price deflators were used, more than two thirds of the wartime gains commonly reported in the data were eliminated.

The second is that many assumptions needed to estimate economic output in the form of Gross Domestic Product (GDP) vanish or are weakened in wartime. One must account for, for example, the depreciation of capital goods, which means selecting a depreciation rate. Qualitative and quantitative evidence at the firm level suggest that businesses used capital more intensively during the war, and thus that capital depreciated faster — something that is not taken into account. Corrections for the rising depreciation rate during the war only lower the estimated growth rates.

GMU Econ alum Dominic Pino wonders just which workers are Biden appointees “pro.” A slice:

The Washington Post story about the nomination of Julie Su as secretary of labor begins, “President Biden on Tuesday nominated Julie Su to be the next labor secretary, elevating a longtime advocate for workers to implement a key part of the administration’s agenda.” The print version of the same story carried this headline: “Biden nominates longtime pro-worker advocate to lead Labor Department.”

Which workers?

Probably not truck drivers, who had their business models upended by California’s A.B. 5 law, of which Su was “an architect,” according to the Post, during her tenure as California’s labor secretary from 2019 to 2021.

Probably not other independent contractors, who had to be reclassified as employees under A.B. 5 in many different industries. Independent contractors, contrary to media impressions, are mostly not “gig workers” and are commonly found in countless industries holding well-paying full-time jobs. When surveyed, they overwhelmingly say they prefer their independent status over traditional employment.

Probably not fast-food workers, many of whose jobs would be automated away if California enacts the FAST Act and raises the minimum wage to $22 per hour. Su supports the FAST Act as well, but it was so radical that even Californians said it went too far. They put the law on hold through a petition drive, and it will be up for a referendum in 2024.

Here’s the conclusion of Princeton senior Adam Hoffman’s thoughtful op-ed in the New York Times: (HT my intrepid Mercatus Center colleague, Veronique de Rugy)

If colleges don’t want to produce a new generation of conservative firebrands, they need to pump the brakes on campus progressivism. Campuses that are more welcoming to conservatives are in universities’ own interest.

David Henderson shares some of Deirdre (then Donald) McCloskey’s brilliant 1988 defense – expressed in a letter to the president of Penn State – of both academic freedom and maturity of thought.

My intrepid Mercatus Center colleague, Veronique de Rugy – reflecting on Biden’s interventions – exposes an inescapable weakness of industrial policy. A slice:

Let’s call it the “Biden way”: When our president can’t get his policies through Congress, he tries to impose them in other ways. Just look at his student loan forgiveness plan, which faced a stiff Supreme Court challenge this week, and his imposition of stricter “Buy American” provisions to the infrastructure-spending bill. Now, he wants to reshape corporate America by attaching the big string of “high-quality” child care to, of all things, semiconductor subsidies.

This strategy, while popular with other presidents, has only one redeeming aspect: It beautifully illustrates how politics diverts industrial policy and similar attempts to direct the economy away from their stated goals. See, politicians say they want to subsidize this and that to improve manufacturing or bolster national security, but invariably sabotage themselves by weighing the policies down with rules and requirements that have nothing to do with the plans.

John Stossel decries the cronyist Jones Act.

At 1:00pm Eastern Time today, Vinay Prasad will talk with Nick Gillespie and Zack Weissmueller about why we should stop trusting public health.

Jon Sanders asks a germane question: “Hospitalized with, or hospitalized for?” Two slices:

Among the muddied data were COVID hospitalizations and, consequently, deaths. Former AIER president Edward Peter Stringham wrote in July 2020 about what a Texas medical care facilities managing partner had told Alex Berenson (who later took Twitter to court for suspending him at the request of the Biden administration over his COVID questioning) about cases and hospitalizations. The partner said that “discharge planners are being pressured to put COVID as primary diagnosis — as that pays significantly better. … You open up your hospitals for normal medical care and you test everyone (sic) of those patients — the result is a higher percentage of patients who have COVID — now.”

…..

On January 13, CNN medical correspondent Leana Wen publicly called for accurate accounting of COVID hospitalizations and deaths. In a Washington Post column, Wen highlighted data from Massachusetts showing that “only about 30 percent of total hospitalizations with COVID were primarily attributed to the virus” and discussed the problems from overcounting COVID hospitalizations.

The following day, CNN anchors questioned her assertions, with Poppy Harlow asking if she had “thought about” whether her information might “give fodder to conspiracy theorists and those who downplay COVID, to anti-vaxxers.” Wen, to her credit, noted that others’ criticism was that “You should have said this two-and-a-half years ago.” Wen said, “I think at the end of the day we just need the truth.”

On that count, Wen is right. We just need the truth.

el gato malo tweets: (HT Jay Bhattacharya)

the great barrinton declaration was based in 100 years of evidence based medicine and pandemic guidelines.

what the “experts” did instead was a complete circus of proscribed and long disproven pseudoscience.

and it all failed while incurring ruinous cost.

take the L. you earned it.

The Economic Ignorance Is Stunning

(Don Boudreaux)

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Here’s a letter to a correspondent from Virginia;

Mr. H__:

Thanks for sending me a link to Donald Trump’s announcement of his proposed “system of universal baseline tariffs on most foreign products that rewards domestic production while taxing foreign companies.” I can’t tell, however, if you think this proposal to be worthy or wacky. I hope the latter, because that’s just what it is.

To repeat for the umpteenth time, we ordinary Americans are made, not more prosperous, but poorer whenever government obstructs our access to economic outputs – which is just what tariffs do. Americans’ prosperity can no more be enhanced by “universal baseline tariffs” on goods, services, and inputs offered for sale in America by non-Americans than Virginians’ prosperity can be enhanced by universal baseline tariffs on goods, services, and inputs offered for sale in Virginia by non-Virginians.

That Trump apparently is blind to this reality is sufficient reason to dismiss him an economic ignoramus. But Trump triples-down on his ignorance by implying that his tariffs will tax only foreign companies and impose no costs on Americans.

Here’s the thing: If – as would not be the case, but as he wishes – his tariffs would impose no costs on Americans, then the prices of imports and of their domestic substitutes will remain unchanged. The result would be no protection of American producers from foreign competition. But if instead – as would be the case, and as Trump also wishes – his tariffs would protect American producers from foreign competition, then his tariffs would indeed tax Americans by artificially raising the prices of the goods they purchase. In this case, the tax would not fall, contrary to his ignorant implication, only on foreign companies.

It’s true that Trump is hardly the only economic ignoramus lusting after political power; the republic swarms with such pests. But the fact that the likes of Pres. Biden, Sen. Sanders, and Rep. Ocasio-Cortes are just as clueless as is Trump doesn’t reduce the unintentional hilarity of his recent pronouncement.

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

Quotation of the Day…

(Don Boudreaux)

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… is from page 249 of Thomas Sowell’s 1999 book, Barbarians Inside the Gates:

The grand fallacy of the political left is that evil is localized in some set of “oppressors” from whom we can be “liberated.” That is also its great attraction, for it allows people to attribute their dissatisfactions to other people.

Pittsburgh Tribune-Review: “Impressive material progress”

(Don Boudreaux)

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In my column for the November 5th, 2013, edition of the Pittsburgh Tribune-Review I celebrated the material progress enjoyed by all ordinary Americans. You can read my column beneath the fold.

(more…)

As a Facebook Commenter Said…

(Don Boudreaux)

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… it’s no surprise when two uninformed people peddle the same nonsense. This particular bit of nonsense, by the way, can be easily detected as such by anyone who, having successfully completed at least fifth grade – and who isn’t utterly blinkered by ideology – reads what Ludwig von Mises wrote.

Some Links

(Don Boudreaux)

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Mike Munger ponders the role of economics – and especially that of Austrian economics – in policy debates.

The Wall Street Journal‘s Editorial Board decries the inevitable consequences of industrial policy. Three slices:

Government subsidies are never free, and now we are learning the price U.S. semiconductor firms and others will pay for signing on to President Biden’s industrial policy. They will become the indentured servants of progressive social policy.

Democrats last year snookered Republicans into passing their $280 billion Chips Act, which includes $39 billion in direct financial aid for chip makers and a 25% investment tax credit. Republicans hoped this would satisfy West Virginia Sen. Joe Manchin, but after Chips passed he quickly flipped and endorsed the Inflation Reduction Act.

Now the Administration is using the semiconductor subsidies to impose much of the social policy that was in the failed Build Back Better bill. On Tuesday Commerce Secretary Gina Raimondo rolled out the new rules for chip makers and summed up the politics to the New York Times: “If Congress wasn’t going to do what they should have done, we’re going to do it in implementation” of the subsidies.

…..

Ms. Raimondo is no socialist, but here she is doing the bidding of the Democratic left. Does she have a promotion in mind? She justifies this gigantic intervention in the private economy by claiming that chip makers won’t be successful unless they “find a way to attract, train, put to work and retain women.” But companies don’t need the government to tell them how to attract and retain workers. Ms. Raimondo’s mandates will merely raise business costs.

The irony is rich because chip makers have shifted manufacturing to Asia to reduce costs. Producing chips in the U.S. is 40% more expensive than overseas. One reason is the U.S. permitting thicket. But chip makers that receive federal largesse will still have to comply with more regulation under the National Environmental Policy Act.

Oh, and Commerce is also demanding that companies receiving more than $150 million share “with the U.S. government a portion of any cash flows or returns that exceed the applicant’s projections above an established threshold.” No buying back stock for five years either. What a wonderful life if you’re a politician. First, pile on regulation that increase business costs. Then dangle subsidies to drive your social policy and demand a cut of business profits in the bargain.

…..

We took a lot of grief from the big-government right for opposing the Chips Act, but these conservatives look like chumps for voting for an industrial policy that is now an engine for progressive policy. And one subsidy is never enough. The chip subsidies are “a good first step,” Semiconductor Industry Association president John Neuffer recently said.

Welcome to French industrial policy, where the government pays business to invest in what, where and how government wants. Let’s hope it turns out better here.

Matt Taibbi reports on “the west’s betrayal of freedom.” (HT Arnold Kling) A slice:

By 2016, however, the WEF types who’d grown used to skiing at Davos unmolested and cheering on from Manhattan penthouses those thrilling electoral face-offs between one Yale Bonesman and another suddenly had to deal with — political unrest? Occupy Wall Street was one thing. That could have been over with one blast of the hose. But Trump? Brexit? Catalan independence? These were the types of problems you read about in places like Albania or Myanmar. It couldn’t be countenanced in London or New York, not for a moment. Nobody wanted elections with real stakes, yet suddenly the vote was not only consquential again, but “often existentially so,” as American Enterprise Institute fellow Dalibor Rohac sighed.

So a new P.R. campaign was born, selling a generation of upper-class kids on the idea of freedom as a stalking-horse for race hatred, ignorance, piles, and every other bad thing a person of means can imagine.

Bobbi Herzberg reviews the collection of Edmund Burke’s writings that has recently been assembled by my GMU Econ colleague Dan Klein and GMU Econ alum Dominic Pino. Here’s her opening paragraph:

How can one champion basic political rights, but constrain the methods used to obtain such rights? It is this struggle to balance individual liberty and social order that marks the work of Edmund Burke and comprises the subject of this slim volume, Edmund Burke and the Perennial Battle, 1789 – 1797, edited by Daniel Klein and Dominic Pino. Burke’s work during these years highlighted the tension between political freedom and maintaining security and order in social settings. He opposed the French Revolution as an unnecessary overstep, but also provided a legitimate basis for challenging power and existing institutions to expand rights for those previously excluded by those in power. He argued that the desire for system change must always be tempered by respect for the existing culture and institutional structures that are embedded in a long history of social interaction.

Here’s more deep insight from Alberto Mingardi on Bruno Leoni – this time, specifically, on Leoni and libertarianism.

Bill Shughart makes clear that “the FTC is guilty of violating the laws that authorized its creation.” A slice:

Antitrust (competition) laws routinely are weaponized by business entities seeking to win advantages in the courtroom that they cannot win in the marketplace. Concerns about the consequences of the Illumina-Grail merger were not voiced by consumers. As the Journal suspects, it is plausible to conclude that the FTC’s opposition to the Illumina-Grail combination was instigated by “other companies working on early cancer detection [that] were years behind. They [the rivals] worried that Illumina’s head start and deep pockets could make it harder to compete.”

In this letter to the editor of the Wall Street Journal, Ed Crane, gets to the heart of the terrible problem with America’s Social Security:

Johan Norberg correctly points out the relative success of Sweden’s partial privatization of Social Security (“How Sweden Saved Social Security,” op-ed, Feb. 23), but he omits the more compelling case for complete privatization, namely, ownership.

Diversification, both in timing and investment vehicles, virtually eliminates the bogus dot-com crash crisis scenario. Plus, there is no 40-year period in U.S. history, including the Great Depression, during which stocks haven’t outperformed money-market funds or their equivalent.

But the drafted participants in our Social Security system nevertheless have no ownership of the assets they are forced to contribute to nonexistent retirement accounts. Such assets go directly into the federal government’s general revenues. How much you pay in so-called payroll taxes and how much you receive at retirement is entirely up to 535 politicians. That is another way of saying it isn’t your money, which is why you can’t leave these hard-earned taxes to your loved ones—no inheritance under our mandated Social Security system. It is such a bad deal.

Edward H. Crane
President emeritus, Cato Institute
Falls Church, Va.

“Time and time again, so-called disinformation watchdogs fail their own tests—the lab leak is just the latest example” – so reports Reason‘s Robby Soave. A slice:

The Global Disinformation Index (GDI)—a British nonprofit that smeared Reason as an unsafe news website using dubious criteria—might want to take a closer look at newly uncovered disinformation being spread by… the website of the Global Disinformation Index.

GDI is partly funded by the U.S. State Department, and seeks to discourage advertisers from working with news outlets like Reason on the theory that we misinform our readers. (NewsGuard, a more transparent advising organization, rates Reason 100 out of 100 “for the highest adherence to journalistic practice.”) It has recently come under considerable criticism from conservative and libertarian news websites following the publication of an expose in The Washington Examiner.

GDI earned itself additional criticism this week, after the U.S. Energy Department endorsed the lab leak theory of COVID-19’s origins. Previous reports by GDI warned advertisers to blacklist news sites that attempted to blame the pandemic on a lab leak, and implied that any website asserting a cover-up on the part of the Chinese government was promoting racist disinformation with the capacity of harming Asian people. GDI’s messaging on the lab leak theory was clear and consistent: News websites that explored this topic should be demonetized.

The [U.S. House] Select Subcommittee on the Coronavirus Pandemic tweets: (HT Jay Bhattacharya)

“The greatest perpetrator of misinformation during the pandemic has been the United States government”

-Dr. @MartyMakary

Quotation of the Day…

(Don Boudreaux)

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… is from page 105 of Joseph Ellis’s 2001 book, Founding Brothers:

Though we might wish otherwise, the history of what might have been is usually not really history at all, mixing together as it does the messy tangle of past experience with the clairvoyant certainty of our present preferences.

Some Links

(Don Boudreaux)

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Reason‘s Nick Gillespie talks with Superabundance co-author Marian Tupy about Julian Simon, human creativity, and the myth of a universe of a fixed amount of resources.

Nebraska’s Attorney General. Mike Hilgers, explains why he is challenging – in a hearing today before the United States Supreme Court – Biden’s lawless student-loan ‘forgiveness.’ A slice:

“No country can be called free which is governed by an absolute power,” Thomas Painewrote in 1776. The Founders realized the danger of vesting absolute power in one branch of government, and so they divided power into three branches. Legislation is passed in Congress, where a large and diverse nation’s elected representatives weigh in. This process may slow (or even stop) policies favored by Republican or Democratic administrations, but it provides a clear avenue for change: Persuade more people; win more elections.

That hasn’t stopped the Biden administration from usurping Congress’s authority. The administration has repeatedly used the pandemic as an excuse to justify acting without congressional authority, but the Supreme Court stopped many of these efforts. In 2021 the high court ended a moratorium on the eviction of renters imposed by the Centers for Disease Control and Prevention. In 2022 the justices blocked a vaccine mandate that the Occupational Safety and Health Administration forced on employers.

GMU Econ student Michael Peterson rightly criticizes Biden’s industrial policy. A slice:

The market forces so derided by protectionist supporters like President Biden are the very features that generate economic growth. Without markets free from government meddling, there’s simply no way individuals, let alone enlightened trade officials, can allocate resources to industries with the highest potential to satisfy consumer needs.

Did deregulation lead to more railroad accidents?

GMU Econ alum Gabby Beaumont-Smith documents the fact that Trump’s Section 301 tariffs were costly to Americans.

George Leef – on a tip from Barry Brownstein – reports on a truly scary dystopian policy proposal in Washington State.

My GMU Econ colleague Bryan Caplan explains “[w]hy self-reports understate [immigrant] assimilation.”

Angela Davis, it turns out, is a great, great, great, great, great, great, great, great, great, great grandbaby of William Brewster, who immigrated to America on none other than the Mayflower.

My Mercatus Center colleague Michael Farren calls on government to get out of the way of innovators.

Matt Ridley wonders why so many scientists remain reluctant to give more credit to the increasingly likely reality that covid leaked from a Chinese lab.

At 2:00pm EST today, Jay Bhattacharya, Martin Kulldorff, and Marty Makary will testify before a select committee of the U.S. House of Representatives on “Preparing For the Future By Learning From the Past: Examining COVID Policy Decisions.”

Cornell University’s David Shmoys and Stanford University’s Jay Bhattacharya discuss policy responses to covid. (HT Rick Geddes)

Johns Hopkins University’s Marty Makary details “10 myths told by covid experts – now debunked.” Two slices:

Misinformation #5: Young people benefit from a vaccine booster

Boosters reduced hospitalizations in older, high-risk Americans. But the evidence was never there that they lower COVID mortality in young healthy people. That’s probably why the CDC chose not to publish their data on hospitalization rates among boosted Americans under 50, when they published the same rates for those over 50.

Ultimately, White House pressure to recommend boosters for all was so intense, that the FDA’s two top vaccine experts left the agency in protest, writing scathing articles on how the data did not support boosters for young people.

…..

Misinformation #10: One in five people get long COVID

The Centers for Disease Control and Prevention claims that 20% of COVID infections can result in long COVID. But a U.K. study found that only 3% of COVID patients had residual symptoms lasting 12 weeks. What explains the disparity?

It’s often normal to experience mild fatigue or weakness for weeks after being sick and inactive and not eating well. Calling these cases long COVID is the medicalization of ordinary life.

What’s most amazing about all the misinformation conveyed by CDC and public health officials, is that there has been no apologies for holding on to their recommendations for so long after the data became apparent that they were dead wrong. Public health officials said “you must” when the correct answer should have been “we’re not sure.”

Early on, in the absence of good data, public health officials chose a path of stern paternalism. Today, they are in denial of a mountain of strong studies showing that they were wrong.

Quotation of the Day…

(Don Boudreaux)

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… is from page 264 of F.A. Hayek’s December 1961 speech in New York City titled “The Moral Element in Free Enterprise,” which appears as chapter twenty of Essays on Liberalism and the Economy (2022) – volume 18 (expertly edited by Paul Lewis) of The Collected Works of F.A. Hayek:

It is, on the one hand, an old discovery that morals and moral values will grow only in an environment of freedom, and that, in general, moral standards of people and classes are high only where they have long enjoyed freedom – and proportional to the amount of freedom they have possessed.

Bonus Quotation of the Day…

(Don Boudreaux)

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… is from page xiv of the 2003 Third Edition of economic historian Eric Jones’s 1981 book, The European Miracle:

Europe alone managed [in the early modern era] the politically remarkable feat of curtailing arbitrary power, thus reducing risk and uncertainty, encouraging more productive investment, and promoting growth.