Russell Roberts's Blog, page 429
April 9, 2020
What Not to Do
Earlier this morning I was a guest, via Skype, on a show that was recorded and will be released on YouTube. The advertised title of this discussion was “Peak globalization,” which I took be a heading for discussing whether or not the COVID-19 calamity is a good reason for rethinking globalization. I write here, deeply embarrassed, to explain what a defender of free markets should not do in such a situation: don’t do what I did, namely, lose cool and storm away.
Here, if you are interested, is the sorry account.
I discovered, when I called in to Skype, that I was one of three guests. One of the other guests was a woman in London (whose name I don’t recall – Joti, perhaps?). She is head of an outfit called, I think, the British Workers’ Party. The other guest was Richard Wolff, a famous American socialist economist. The American host, Peter, described himself as conservative.
Both of the other guests were confident that today’s crisis exposes the “contradictions of capitalism” and will finally awaken oppressed workers in the U.S. and U.K. to the realization that they – ordinary men and women – have been roundly oppressed and horribly exploited by capitalism. Several times Marx was favorably mentioned. To listen to both of these other guests one would conclude that since the rise of capitalism, capitalism has made ordinary people poorer and poorer and only a slender layer of capitalists richer and richer.
When I asked “How do you explain that the living standards of ordinary people have risen so spectacularly over the past 200 years in capitalist countries – in countries whose markets were freest?” – Wolff responded, with contempt visibly dripping from his lips, by accusing me of giving capitalism credit for the achievements of government.
The “highlight” (meaning, nadir) of this regrettable event came when the woman in London singled out the following as countries whose responses to COVID-19 deserve praise: China, Vietnam, Cuba, and North Korea. I kid you not.
Peter, the host, did register his objection to those countries’ violations of civil liberties – but then we paused briefly for a scheduled break. After the pause I expressed surprise at hearing praise for Cuba and North Korea. Wolff immediately – visibly agitated, angry, and condemnatory – accused me of being unable to escape a “cold-war mindset.” (!) My “cold-war mindset” prevents me from seeing, or admitting to, all the good that has been achieved in countries such as Cuba.
Literally, I was speechless. So that’s the first thing not to do: be speechless. (I thought, of course, of the standard reply: ‘Why don’t you, then, Prof. Wolff, move to Cuba?’ But I judged this response to be too pat, cheap, predictable, and, hence, lame. I just sat there, staring at my computer screen and at Wolff’s angry face.
By this point, I was almost 30 minutes into this torture when Peter, the host, finally brought the subject around to the one that I’d prepared for and believed the show would be devoted to: globalization. Peter (perfectly legitimately) asked me if the COVID-19 experience doesn’t imply that we Americans should produce all of our medical supplies ourselves.
I responded with an analogy that I stole from my Mercatus Center colleague Dan Griswold (and which will appear later today at Cafe Hayek as a “Bonus Quotation of the Day”): America’s experience with the coronavirus no more implies that we should abandon globalization than does a power outage at your home imply that you should remove yourself from the electricity grid.
Peter shot back that the analogy is inappropriate. When I attempted to defend it by summarizing studies on the relationship between trade-openness and health, Peter kept talking. He wouldn’t, at least for a few seconds that seemed an eternity, let me speak. After some time – 20 seconds perhaps (but I’m not sure; by this time my mind is reeling) – I said “I’m leaving. Goodbye.” I then – rattled, frustrated, angry, and above all deeply depressed at the state of the world – logged off of Skype.
I add, perhaps defensively, that the original scheduled time for taping was 25 minutes, although at the start of the taping Peter asked if we’d all be willing to go for about 35 minutes. We all agreed to do so. I stormed off at the 30-minute mark.
…..
I write the above to come clean about my failure. I’m ashamed of myself. It’s not only that Milton Friedman and Walter Williams, the greatest of the greats in such situations, would have acted in exactly the opposite way. It’s that even quotidian defenders of liberalism would have acted better than I did.
I abandoned my post. Far from courageously and ably defending markets and liberalism and openness, my actions have weakened respect for all that I hold dear. My only consolation is that I’m a minor player in the drama of defending markets and liberalism against the countless varieties of barbarism and ignorance that oppose it – and so relatively few people will notice and care.
I am – I repeat – sincerely sorry, deeply embarrassed, and very much ashamed of myself.
Answer Me This…
… how much more effective would the washing of hands be in America if government had never foisted on us those monuments to absurdity, low-flow faucets?
This point seems, and is, quite minor in the grand scheme. But a multitude of minor things add up to major outcomes.
I just washed my hands using a low-flow faucet. Not only, of course, was some of my precious time wasted, the maximum flow of water itself, being artificially weak, was surely less effective than would have been a stronger flow at cleansing my hands of any pathogens that were on them.
If I had a series at Cafe Hayek titled “Made Grimier by Government,” this post would be an entry there.
Don’t Exclude Nicaragua from the CAFTA-DR Trade Agreement
In this new op-ed, GMU Econ masters student Lourdes Bautista and I argue that, despite the loathsome authoritarianism of Daniel Ortega, it would be a mistake to exclude Nicaragua from the CAFTA-DR trade agreement. Here’s our conclusion:
As the United States evaluates the possibility of blocking Nicaragua from CAFTA-DR, U.S. officials should not overlook the implications. Keeping Nicaragua in CAFTA-DR will help stabilize the immigration exodus in Central America, ensure the delivery of supplies during the COVID-19 crisis, and prevent U.S. adversaries from taking a leading role in the region.
Quotation of the Day…
… is from page 256 of Deirdre McCloskey’s great 2019 volume, Why Liberalism Works: How True Liberal Values Produce a Freer, More Equal, Prosperous World for All:
When you progressives say “public-private partnership,” we liberals hear “public-private conspiracy.”
April 8, 2020
The Relevant Constraint
James Buchanan never tired of noting the influence on his own thinking of Knut Wicksell’s scolding of economists, in the late 19th century, for writing as if they are advising a benevolent despot. This Wicksellian insight is the key ingredient in the scholarship that won for Buchanan a Nobel Prize.
I, too, take this insight seriously. Yet it is because of the reality to which this insight points that I cannot muster up much practical interest in any of today’s discussions of many of the creative proposals for minimizing the health (and economic) consequences of COVID-19. Should “we” practice variolation as a means of minimizing the costs of the coronavirus? – is an example of an intellectually interesting question now being discussed.
Discussants include people (seriously) far smarter and better informed than me – people such as my GMU colleagues Tyler Cowen and Robin Hanson. Yet when I read such discussions I soon become depressed by the reality that implementation of such policies either must be done by governments, or at least be done with the permission of governments – governments that, in recent weeks, have greatly further expanded their powers and eagerness to intrude into people’s private affairs.
The typical politician, being an adept peddler of economic quackery, is unlikely to be an apolitical applier of sound medical and public-health science. Politicians have a sorry track record of taking scientific economics seriously as applied to public policy. Why should we believe that they are more likely to take scientific medicine more seriously as applied to public policy?
Insofar as scientifically credible proposals for dealing with COVID-19 involve collective action – and all seem to do so to some degree – what reason is there to think that any of these proposals will meet with the approval of politicians? What reason is there to believe that politicians can be trusted to carry them out or, even, not to interfere in ways that render their practice futile? Answer: none, unless it be by pure chance.
The typical politician, when he or she isn’t howling for higher tariffs to create jobs and “make America great again” or arranging for tens of millions of (future) taxpayer dollars to be given to the Kennedy Center as a means of fighting COVID-19, is screaming for minimum-wage hikes as a means to enrich the poor or proposing to make college affordable by having government forgive all student-loan debt and pump more taxpayer money into higher education. The typical politician, in short, is not someone for a serious person to take seriously, except as a threat to sensible action.
Being ‘governed’ chiefly by individuals who, if they aren’t merely confused by their own quackery, are rendered shameless by their lust for power, makes me unable to see much of a practical point in the serious discussions as are now underway about how to best deal with COVID-19.
You might respond that we have no good alternative – to which I say: Well, that’s a genuine tragedy. Truly it is. But reality isn’t optional. And in reality government is not – and will not become – wise, apolitical, or benevolent.
Answer Me This…
… how many more physicians would there be today absent government licensing requirements restricting who can practice medicine? And what medical services – and which creative treatment ideas – are we now not getting as a consequence of restrictive licensing?
(Please – especially for those of you who are new to Cafe Hayek – don’t react in horror by asserting that by asking these questions I overlook the damage that would, with fewer such licensing requirements, be inflicted on innocent people. I find it absurd to suppose that more than a minuscule number of people would, in a more competitive setting, fail to seek out reliable information on the quality of individual physicians. I find it equally absurd to believe that profit-seeking entrepreneurs would fail to supply such information. People routinely seek out, and are supplied with, quite reliable information about the quality of restaurants. Why would they not do the same – and with even more careful attention – when choosing which physicians to use?)
Some Links
It is critically important to bear in mind that the single most important reason for our improved position today, whatever we may say about specific governments and their specific policies, has been all of that previously normal free commercial and social activitythat generated the wealth of the present world economy.
All of that wealth arose from the normal and daily serving of the subjective valuations of each of us. As each person navigates the complex set of interrelations that comprise our various associations, we make choices based on knowledge that only we can have of those with whom we interact. To this store of knowledge, we add our personal valuations of what is right and good. We take council from others, and learn from their examples, but our choices derive from our personal set of subjective valuations.
Art Carden beautifully busts one of the most commonplace and dangerous myths about markets – and about the case that sound economists make in favor of markets. (Government policy would be vastly less destructive if many more people understood that social order is not only possible without being the result of human design, but that such order is typically better when it is not so designed.)
Pierre Lemieux is rightly fearful of the danger to the public of public-health officials.
My intrepid Mercatus Center colleague Veronique de Rugy and I recently wrote an op-ed (which is now under consideration at a major newspaper) on the folly of banning exports of medical supplies. Simon Lester reports on such a step that the Trump administration took yesterday. (Simon is less worried about this step than I am.)
Richard Rahn makes the case against government taking equity stakes in airlines.
Arnold Kling believes that the CARES Act is “the worst piece of legislation in U.S. history.”
Arnold, of course, isn’t alone in lamenting the CARES Act; so too does John Stossel.
Pittsburgh Tribune-Review: “Mencken’s timeless insights”
Quotation of the Day…
… is from page 132 of the 1978 7th edition of Carlo Cipolla’s 1962 book, The Economic History of World Population:
The selective process that favoured the success and the multiplication of the aggressive type [of human being] was certainly not interrupted by the Neolithic Revolution. It continued to operate well into ‘civilized’ times and to a large extent still operates today, when man can command immensely powerful forces, and his efficiency – for good or for evil – has increased in spectacular fashion. A single man or a small group of individuals – as recent history has dramatically demonstrated – can today bring about unspeakable catastrophes that affect not this or that group, this or that region, but the entire world and the entire human species….
It is disturbing to see that still today, even in the most advanced countries, in large sections of human society, aggressiveness is praised as a virtue – or at least as a valuable asset – and it is constantly advertised in the motion pictures and on television. We need a crusade against violence and aggressiveness. We need – more than anything else – to educate people to tolerance and gentility.
April 7, 2020
Some Links
Paradoxically, self-sufficiency – the kind of subsistence living that protects you from global pandemics or financial crises – is precarious. Local risks like storms, harvest failures, or forest fires cannot be dealt with by drawing on resources from elsewhere.
In contrast, depending on others via lengthy global supply chains exposes us to occasional shortfalls of specific goods and relative price changes when storms or viruses knock out some production. But price systems and capitalist entrepreneurs work hard to find more, to adapt, to substitute, and to create the very resources most urgently needed.
Indeed, they work harder, better, faster and stronger than any other system we know. Riding out storms and sharing risks across billions of people is a feature, not a bug, and the affluent capitalist nature of our institutions puts us in a better position to deal with them.
Dan Ikenson reports on Americans’ toilet-paper-trade deficit! A slice:
Milton Friedman liked to point out that exports are things we produce but don’t get to consume, while imports are things we consume without having to produce. Yet, when Americans get more stuff from foreigners than foreigners get from Americans, it’s called a “deficit.” Go figure!
Government: working hard to make matters worse.
In this video, Art Carden explores the anatomy of government failure.
Ross McKitrick celebrates the public-health benefits of plastic.
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