Russell Roberts's Blog, page 422
April 29, 2020
T. Norman Van Cott, R.I.P.
I was saddened to awaken this morning to news that Ball State economist T. Norman Van Cott died on Monday. Although Prof. Van Cott had been ill for some time, Steve Horwitz tells me that he died of complications from covid-19.
Readers of Cafe Hayek have often encountered links that I offered to his always-clear and relevant writings. The most recent was this link from just over a month ago. Prof. Van Cott had that too-rare ability to explain economics creatively and accessibly.
One of my favorite pieces by him is a splendid article that he co-authored with his Ball State colleague Cecil Bohanon – and which first appeared in the Spring 2005 issue of The Independent Review – titled “Tariffs, Immigration, and Economic Insulation: A New View of the U.S. Post–Civil War Era.” This article documents the contributions to 19th-century American economic growth of the U.S. policy then of largely unrestricted immigration. (When economic nationalists – especially Trumpians – today, in their attempts to justify raising tariffs, trot out the flimsy post hoc fallacy that 19th-century American economic growth was fueled by high U.S. tariffs, I often ask these protectionists, as I point to the Bohanon-Van Cott article, if they are willing, in exchange for a return to 19th-century tariff policy, also to return to 19th-century immigration policy. Blank stares ensue, followed only by huffing and puffing.)
My thoughts are with Prof. Van Cott’s family, friends, and colleagues. He’ll be much missed.
Quotation of the Day…
… is from pages 6-7 of Robert Higgs’s indispensable – and now more relevant than ever – 1987 book, Crisis and Leviathan (footnote deleted):
Reading between the lines of many historical works, one encounters the Modernization Hypothesis. It maintains that a modern urban-industrial economy simply must have an active, extensive government; that laissez-faire in the late twentieth century is unimaginable. Declamations about the absurdity of horse-and-buggy government in the Space Age or the impossibility of turning back the clock of history give rhetorical thrust to the idea. Exactly why a modern economy must have Big Government usually remains obscure….
Yet one cannot correctly infer that, merely because of growing complexities, economic affairs have required more governmental direction for their effective coordination. Many economists, from Adam Smith in the eighteenth century to Friedrich Hayek in the twentieth, have argued that an open market is the most effective system of socioeconomic coordination, the only one that systematically receives and responds to the ever-changing signals transmitted by millions of consumers and producers. This argument turns the Modernization Hypothesis on its head: while the government might be able to coordinate economic activities in a simple economy, it could never successfully do so in a complex one.
April 28, 2020
Pittsburgh Tribune-Review: “Biased imagination”
The core of the point that I try to make in my March 18th, 2009, column for the Pittsburgh Tribune-Review is relevant today. You can read my column beneath the fold.
Some Links
The problem with the counsel government officials are getting from medical doctors and other scientists is not that it is bad advice. It is that government officials seem to think they have the power to make it dispositive advice without first demonstrating to us that it is necessary, that less Draconian restraints on liberty will not do.
Gonzalo Schwarz recently interviewed the Nobel-laureate economist James Heckman.
Don’t miss the recent “Quotation of the Day” featured by Mark Perry.
Wall Street Journal columnist Holman Jenkins continues to write wisely about the covid-19 crisis. A slice:
Not even the U.K. Imperial College study that so alarmed the world’s policy makers recommended indiscriminate lockdowns and shelter-in-place orders. If we meant what we said, we’ve overshot in many places. Beds are empty. A ventilator shortage did not materialize. We failed to set aside enough capacity to treat other medical conditions like strokes and heart attacks. This is costing lives.
My colleague Pete Boettke issues a public-choice warning about the media. A slice:
Attention-grabbing headlines don’t find it compelling to identify unintended consequences, but villains and heroes. Bad people do bad things, but good people do good things — and great people do GREAT things. This is the preferred narrative, and the media fuels that. They anoint saints, and condemn devils in the public, private and independent sector. The saints must be selfless, and the devils must be self-serving.
Quotation of the Day…
… is from pages 411-412 of George Will’s wisdom-filled 2019 book, The Conservative Sensibility:
Most of the political calamities through which the world has staggered since 1919 have resulted from the distinctively modern belief that things – including nations and human nature – are much more malleable than they actually are. It is the belief that nations are like Tinkertoys: They can be taken apart and rearranged at will. It is the belief that human beings are material that can be sculpted by the tools of political artists. In the one hundred years since 1919, many more than 100 million people have perished in violence intended to force the world into new configurations. The violence has served ambitious attempts at social engineering – attempts to create racial purity or a classless society or the New Soviet Man.
DBx: Yes.
In the modern era two complementary failures have plagued humankind, especially since the mid-19th century. One failure is the refusal to see that society and the economy are emergent orders, designed by no one. The second failure is acceptance of the horribly mistaken notion that the creator and operator of society is the state.
These failures result in people debating and often physically fighting to determine which particular human beings will be in charge of the state and, hence (as these debaters and fighters see matters), which human beings will be in charge of redesigning and operating society. The false belief is that if the ‘right’ leaders are chosen, then all will be well and perhaps even sublime, while all problems (real and imaginary) are blamed on evil or incompetent leaders. It’s all very childish, yet childishness of a deranged sort that leads too often to horrors.
These debaters and combatants too seldom question their juvenile premises regarding the nature of society and of the state.
This notion that society is akin to a Tinkertoy contraption built by the state is at the root of governments’ mad sledgehammering of society over the past two months.
A child, discovering that some termites had crawled onto her Tinkertoy house, can suddenly and without much thought – and likely to good effect – disassemble the house and rebuild it when and how she chooses. Many government ‘leaders,’ mistaking society for a Tinkertoy house, acted very much as did this child…. Or, rather, not quite: The child is correct in her understanding that her Tinkertoy house is a simple contraption that did not build itself and can be disassembled and reassembled at will. In contrast, government ‘leaders’’ (and their cheerleaders’) belief in the relative simplicity of society and the economy is disastrously incorrect.
April 27, 2020
Bonus Quotation of the Day…
… is from this new EconLog post by GMU Econ alum and my Mercatus Center colleague Rosolino Candela:
Inhibiting the ability for consumers to communicate their demand to sellers through price controls is analogous to cutting a telephone cord in the middle of an emergency phone call.
So You Want Our Country to Be Self-Sufficient in Medical Supplies, Do You?
3. Suppose that researchers at Sinopharm Group, China’s largest pharmaceutical company, develop – and patent – a blockbuster drug that cures leukemia. Should we refuse to import this drug given that importing it would mean that we Americans are no longer self-sufficient in medical supplies? What if a research team at Boehringer Ingelheim, one of Germany’s biggest pharmaceutical firms, invents – and patents – a kidney-dialysis machine that sells for half the price of existing machines and cuts each patient’s time on the machine by 75 percent? Should our wish to remain self-sufficient in medical supplies prevent us from importing any of these new machines?
4. In 2019 we Americans imported $193.1 billion worth of medical products. No country imported as much as did ours. Americans’ large volume of such imports, when combined with purchases from the rest of the world, enabled foreign manufacturers to produce, for selling globally, drugs and devices on larger and more-efficient scales than would otherwise have been profitable. Production on these larger scales, in turn, reduces the per-unit costs and prices of many of the drugs that we import.
And so if we were to produce for ourselves all that we now import, our manufacturers will not find it profitable to produce these products on such large scales. The cost to us Americans of producing ourselves all that we now import would thus be higher – likely substantially higher – than the nearly $200 billion that we now annually spend on imported medical supplies.
These higher costs, of course, would raise the prices that Americans pay for health care – a reality that prompts this question: What is the maximum price, in terms of a rise in health care costs, that Americans should be forced to pay for self-sufficiency in the production of medical supplies (or ‘essential’ medical supplies)? Is self-sufficiency worth whatever price we must pay to obtain it? If not, can those who plead for such self-sufficiency give us practical guidance on what is the price beyond which self-sufficiency might no longer be worthwhile?
“We” Have No Unitary Budget
Here’s a letter to The Economist:
Editor:
You dangerously downplay the burden of government debt by writing that “[w]hen the national debt is owned by its citizens, a country in effect owes money to itself” (“After the disease, the debt,” April 23rd).
In offering this assertion you make no more sense than you would have made had you written “when the national amount of theft is done by its citizens, a country in effect steals money from itself.” I’m not equating thievery with government borrowing; unlike stealing, there are legitimate reasons for governments to borrow. But I am saying that, just as the costs of thievery do not disappear or shrink if thieves steal only from fellow citizens, so, too, do the costs of government borrowing not disappear or shrink if the government borrows only from fellow citizens.
Despite the frequent use of plural first-person pronouns when discussing a country, “we” (for example) Americans are not a single, sentient entity with “our” budget, “our” income, “our” assets, and “our” liabilities. And “our” government is not “us.” We are, instead, 331 million different individuals, living in 128 million different households each with its own budget – and outside of our households combining our efforts together, in countless different ways, in millions of distinct firms and other organizations each with its own budget. Only one of these organizations is the United States Government.
Therefore, to assert that government debt held by citizens is debt that “a country” owes “to itself,” and is thus not akin to the debt burden that is had by a private household, is mistakenly and misleadingly to anthropomorphize a nation.
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
…..
See also Pierre Lemieux’s EconLog post on this matter.
Quotation of the Day…
… is from page 111 of Bas Van Der Vossen’s and Jason Brennan’s excellent 2018 book, In Defense of Openness (original emphasis):
To fully respect people, we must not just make sure that they have enough welfare, happiness, or utility. We must also protect their abilities to provide for themselves, take charge of their lives, and raise their own prospects as well as the prospects of those around them. We must treat them as active and productive agents, as contributors to their own lives and those around them, and not just as consumers or receptacles of goods.
….
The productive human rights capture this respect for people as active agents. They express that what matters is not only that we avoid poverty, but also how we avoid poverty.
DBx: By “productive human rights” Van Der Vossen and Brennan here refer to a subset of what are commonly called “economic rights” – those of the (true) liberal rights of adults to engage in commerce as they each individually choose, governed only by the wide boundaries set by the common law of property, contract, and tort. These rights are violated by occupational-licensing restrictions, by tariffs, by minimum-wage statutes, and by other such legislatively or bureaucratically imposed restraints on voluntary production and exchange.
April 26, 2020
Some Links
It’s astonishing that a senator first elected during the Tea Party rebellion supposes that the details of American society are, or should be, ‘structured’ by Washington. Moreover, he is hopelessly vague. What does he mean, for example, by prizing “financial gains over Main Street investment?” Who is the “we” here? Does he mean that policymakers have allowed the corporate world to structure its activities the way it did without constraints? Or does he mean this has happened because of policymakers’ incentives? Does Rubio distinguish between policymakers consciously arranging for the corporate world to be structured as it is, from policymakers simply keeping aloof and allowing whatever structures the market creates to emerge? And what exactly does he mean by “resiliency?” What does he mean by “efficiency?” How precisely is resiliency at odds with efficiency? Not clear at all, but what is sure is that this vagueness does most of the work for his poorly designed argument throughout the piece.
David Hart issues an urgent call for intellectual change. A slice:
In a crisis people revert to their default moral position, which in the modern world is the cry for “the government to do something.” This, as libertarians know (and perhaps only libertarians know), is a call for the government to use its coercive powers to force people to do certain things (or not do certain things), to tax, to spend, to “stimulate” (distort) the economy, and so on. If people had a different default moral position – that the use of coercion is wrong, that individual rights to life, liberty, and property are “sacred” – then they would not tolerate the government violating these things.
I hope that Jeffrey Tucker is correct in these predictions of blowback.
Bradley Ruffle and Candace Smith wonder what will become of the handshake.
George Will writes, eloquently, here and here about two upcoming cases before the U.S. Court of Appeals for the District of Columbia.
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