Russell Roberts's Blog, page 44

Bonus Quotation of the Day…

(Don Boudreaux)

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… is from page 265 of Thomas Sowell’s 1999 book, Barbarians Inside the Gates:

The political left has never understood that, if you give the government enough power to create “social justice,” you have given it enough power to create despotism. Millions of people around the world have paid with their lives for overlooking that simple fact.

The Infantile Woke

(Don Boudreaux)

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In my latest column for AIER, I express my irritation at the woke’s unremitting childishness. Here’s my conclusion:

One final childish trait of the woke is worth mentioning – namely, their infantile inability, or refusal, to put matters into proper perspective. It’s undeniably true that some individuals are racist while others are xenophobic, that some men are sexist, and that some people are homophobic. Such will always be the case, sadly so. But there’s no question that racism, xenophobia, sexism, and homophobia are far less commonplace in America today than they were even just a few decades ago. Yet the woke seize upon every reported instance of such intolerance – reports which themselves are amplified by social media – as evidence that American society is suffused with incurable racism, xenophobia, sexism, and homophobia. Because the woke are far more interested in displaying their own imaginary moral superiority than they are in understanding reality, they refuse to recognize the overwhelming civility and tolerance of modern American society. Like children, the woke’s understanding of the society they inhabit is defective. Unfortunately, unlike children, they occupy prominent places in the media, in the academy, and in officialdom.

Some Links

(Don Boudreaux)

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My intrepid Mercatus Center colleague, Veronique de Rugy, makes the case for letting many more immigrants into the United States. A slice:

Maybe most importantly, more people mean more brains. That translates into more innovation followed by more growth. A few years ago, Alec Stapp and Jeremy Neufeld wrote that “Despite making up just 14% of the population, immigrants are responsible for 30% of U.S. patents and 38% of U.S. Nobel Prizes in science. A team of Stanford economists recently estimated that nearly three quarters of all U.S. innovation since 1976 can be attributed to high-skilled immigration.”

We could certainly use many more immigrant doctors, nurses, engineers, and other professionals, but lower-skilled immigrants are also vital. Let’s not forget that these workers kept the economy going during the pandemic as the computer class worked from home. Immigrants’ children have also been proven to be upwardly mobile. So, we should let them in, too.

The bottom line is that we need more immigrants, and we need them now. If we wait until we’re in the dire straits now suffered by China and Japan, it will be too late.

Also weighing in to support more-open immigration is Wall Street Journal columnist James Freeman. A slice:

Madeline Zavodny, a professor at the University of North Florida and previously an economist at the Federal Reserve Bank of Atlanta and also at the Dallas Fed, used U.S. Census data to study the impact of immigrants in metropolitan areas nationwide.

Ms. Zavodny reports:

Metro areas with a higher share of immigrants have more dynamic economies and experience faster growth in the number of jobs created and new business establishments…

Across 248 metro areas, a 1 percentage point higher share of the population composed of the working-age foreign born in 2010 is associated with a 0.58 percentage point higher growth rate in the number of establishments during 2010-2019. Foreign-born workers accounted for up to three-quarters of the growth in business establishments in 248 U.S. metro areas between 2010 and 2019.

Business dynamism means that some jobs and companies also get destroyed–but many more are created and living standards rise as vibrant markets are able to improve goods and services more quickly.

Here’s Christopher Martin on Adam Smith on the rich and the poor.

What J.D. Tuccille writes about the war in Ukraine is realistic – and, because it’s so, also frightening. A slice:

It’s possible to be deeply sympathetic to Ukraine, which began the conflict as a flawed but relatively free country before it was attacked by its powerful neighbor, and also to worry where this is going. Ukraine has a claim on western support under the terms of the 1994 Budapest memorandum which guaranteed its security in return for nuclear disarmament, and the plan has clearly been to grind Russia down with assistance to Ukraine’s forces. But now that may be matched by support for Russia from China, turning a local war into a battle between alliances and threatening to broaden the conflict.

Art Carden reviews the new documentary Trust Us.

George Leef explains what shouldn’t – but, sadly, what in fact does – need explaining: “Unions should not be protected against suits for deliberate property damage.”

Eric Boehm is correct about Social Security; Paul Krugman is incorrect.

Here’s an update from Scott Lincicome, GMU Econ alum Gabby Beaumont‐​Smith, and Alfredo Carrillo Obregon on the government-induced baby-formula fiasco. A slice:

As we explained in a January briefing paper and related Wall Street Journal piece last week, the U.S. formula market remains highly vulnerable to another economic shock because government policies actively discourage dynamism, competition, and resiliency. Tariffs and non‐​tariff barriers block imports from almost every country in the world, including those with highly‐​competent regulatory regimes (e.g., in Europe, the UK, and New Zealand) and products that American families really want. Extraordinary domestic regulations and restrictive government contracts (via the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC)) create a major barrier to new U.S. players and amplify a few large companies’ market power. Combined, these policies created a U.S. market that crumbled when a single factory went offline a year ago and still hasn’t recovered.

Howard Husock explains that “Biden’s latest whack at the suburbs will change your neighborhood for the worse.”

Heaven help us, for the reckless, hypocritical admirer of Chinese communist authoritarianism, Neil Ferguson, is at it again.

Dan Richman tweets: (HT Jay Bhattacharya)

Watching Covidians twist their brain into a pretzel to discredit the Cochrane study is just amazing.

Michael Jackson decries covidians’ cruel battering of children. A slice:

In mid to late March 2020, approximately 150 countries across the globe followed each other lemming-like into lockdown – a feature of which was school closures. Children were ordered to stay at home. Lessons would be given online. There were, however, a few problems with this plan.

Firstly, children and young people were at minimal risk from Covid. The age-stratified risk profile of Covid was already becoming well established at the time of lockdowns, and children and young people were in the lowest risk category. The World Health Organisation formally recognised this as early as April 15, 2020, when they said, ‘Children are not the face of this pandemic…Thankfully, children have been largely spared from the severe symptomatic reactions more common among older people’. Schools weren’t, therefore, closed to benefit children, but to satisfy parents, politicians, media, and unions.

Secondly, lockdowns and school closures would inevitably have a profound effect on children’s health and wellbeing. UNICEF published the following on March 20, 2020: COVID-19: Children at heightened risk of abuse, neglect, exploitation, and violence amidst intensifying containment measures. Moreover, years before the pandemic, the strong associations between education and health and life expectancy were well established. Shutting schools for prolonged periods was not only going to be bad for children’s health and wellbeing but might even shorten their lives.

Twitter Admits That It Received “Legal Demands” from the US Government to Censor Covid Information

(Don Boudreaux)

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I thank my intrepid Mercatus Center colleague, Veronique de Rugy, for alerting me to this video. (And I thank Rep. Nancy Mace [R-SC] for her appropriate line of questioning.)

Quotation of the Day…

(Don Boudreaux)

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… is from page 425 of Deirdre McCloskey’s stupendous 2010 volume, Bourgeois Dignity:

Worker or capitalist, both are slaves to making things for others. Only the artist is free. Such progressive or conservative terminology is like calling an exchange of harsh words “verbal rape.” We need terms for the physical violence entailed in actual slavery and in actual rape, and should not cheapen them by applying them to our middle-class vexations in NW6 or Marin County.

DBx: Pictured here are workers at an Amazon plant – workers, emphatically not slaves.

Jordan Peterson Talks With Jay Bhattacharya

(Don Boudreaux)

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Some Links

(Don Boudreaux)

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Phil Magness explains that, contrary to claims peddled by today’s “national conservatives,” neither Thomas Jefferson nor James Madison would be on board with the NatCons’ proposed government interventions. Two slices:

James Madison reviewed a transcript of Clay’s speech a few weeks after its delivery in the Senate chamber. On April 24, 1824 the primary architect of the Constitution wrote the Kentucky Senator a lengthy letter. After crediting Clay for his eloquence, the former president proceeded to lodge his concerns: “candor obliges me to add that I can not concur in the extent to which the pending Bill carries the tariff, nor in some of the reasoning by which it is advocated.” Madison then presented Clay with a lesson in basic free-market economics:

The Bill, I think, loses sight too much of the general principle which leaves to the judgment of individuals the choice of profitable employments for their labor and capital: And the arguments in favor of it drawn from the aptitudes of our situation for manufacturing Establishments, tend to show that these would take place without a Legislative interference. The law would not say to the Cotton planter, you overstock the market, and ought to plant Tobacco: nor to the planter of Tobo, you would do better by substituting Wheat. It presumes that profit, being the object of each, as the profit of each is the wealth of the whole, each will make whatever change the state of markets and prices may require. We see, in fact, changes of this sort frequently produced in agricultural pursuits by individual sagacity watching over individual interest. And why not trust to the same guidance in favor of manufacturing industry, whenever it promises more profit than any of the Agricultural Branches; or more than mercantile pursuits from which we see capital readily transferred to manufacturing Establishments likely to yield a greater income.

Madison did hedge his commitment to a modest degree, deviating from a pure laissez-faire stance on economic matters. He declared himself “a friend to the general principle of ‘free industry’ as the basis of a sound System of political Economy,” but recognized certain “particular reasons for exceptions to the General Rule, not derogating from its generality.” He was therefore willing to entertain a “a moderate tariff that would at once answer the purpose of revenue, and foster domestic manufactures,” perhaps not unlike the bill he approved during his own presidency.

Historical context is important in interpreting this passage though, as it is not an endorsement of the full-fledged protectionist program sought by Clay. In the early 19thcentury, tariffs provided the single largest source of revenue for the federal government. This circumstance gave rise to the doctrine of the Revenue Tariff with “incidental protection” insofar as the tax measure could be designed to offer moderate encouragement to domestic industries as a secondary effect of filling the treasury. This was not Clay’s objective though; the Kentuckian sought significantly higher tariff rates to provide explicit protection to industry, even at the price of losing tax revenue.

…..

Whereas Madison framed his opposition to the American System as constructive criticism to Clay, Thomas Jefferson responded by directly mobilizing his political contacts to defeat the tariff and subsidies program. Clay’s package contained a large “internal improvements” scheme, designed to assist politically connected industries with infrastructure spending and similar federal handouts. These measures illustrated the worst aspects of pork-barrel politicking, which is precisely why they were able to attract special interest support in Congress.

By late 1825, Jefferson considered the situation desperate. In a letter to Madison, he denounced Clay’s American system in no uncertain terms. Not only did the “internal improvements” scheme reach beyond the enumerated powers of the federal government, it imperiled the entire constitutional order of the United States.

Also critical of “national conservatives” is Jack Butler. A slice:

It is true, though not very controversial, to assert that “the free market cannot be absolute.” But while globalization has presented many challenges to America, the picture the statement paints of America’s economic situation is both hyperbolic and selective. Both trade and automation have played a role in reducing manufacturing employment, yet manufacturing remains a significant driver of our economy. And while both Adam Smith and Milton Friedman would agree that national security is an acceptable free-market exception, we already have many policies in place to that end. Moreover, many people work hard to take advantage of that exception. If you want to know why sugar is so much more expensive in the United States than elsewhere, thank the Florida sugar lobby’s success in making its product a national-security priority.

Scott Lincicome criticizes the criticisms of stock buybacks. A slice:

At the risk of sounding like a broken record, I regret to inform you that the populists are mostly mistaken—often wildly—when it comes to the evils of stock buybacks. Yes, of course, some buybacks can prioritize short-term profits and corporate insiders over sound financial moves, but the idea that they are systemically corrupt or economically harmful (and thus deserve to be banned) suffers from major flaws.

First, there is no reason—either theoretically or empirically—to believe that buybacks prevent corporations from financing major capital investments, increasing worker pay, or otherwise thriving in the future. As already noted, corporations have multiple ways to finance their business operations, including via cash, equity, or debt—the last of which has been very attractive in recent years, thanks to extremely low interest rates. Indeed, Harvard’s Mark Roe found that the post-Great Recession increase in buybacks was essentially offset by new, ultra-low-rate debt (borrowed “nearly for free”) that also carried certain tax benefits. He thus concludes that “corporate America recapitalized its balance sheet with cheap debt” instead of equity, while its net cash position (i.e., money that could be spent on equipment, workers, etc.) remained basically the same. Money, it turns out, remains fungible. (BREAKING, I know.)

If the United States must have a Social Security program, then let’s have one more like Sweden’s, whose program is described, in the Wall Street Journal, by Johan Norberg. A slice:

In 1994 the Social Democrats agreed with the four center-right parties to create an entirely new system based on the principle that pensions should correspond to what the beneficiary pays into the system—a system in which the contribution, not the benefits, is defined.

The reforms were designed to make it impossible to run a deficit and pass the costs to future generations. Crucially, the agreement introduced a balancing mechanism nicknamed “the brake.” When the economy is doing worse than expected, pension benefits are automatically reduced, and when the economy picks up again, the brake is released.

Sweden introduced partial privatization of the kind the American left derides as a Republican plot to gamble our money away on the stock market. The Swedish government withholds roughly 2.3% of wages and puts it into individual pension accounts. Workers are allowed to choose up to five different funds in which to invest this money, according to their own risk preference, and can change them at any time free.

Commentators claim partial privatization would mean that pensions could be lost in a financial crash. That ignores that the money isn’t all invested or withdrawn at the same time, meaning that the performance in a single year isn’t crucial. The returns from the normal income pension is around 2% per year, but from the private accounts the average Swede has made an impressive average return of roughly 10% a year since its inception in 1995, despite the dot-com crash, the financial crisis and the pandemic.

“What’s the real DEI agenda?”

Anesthesiologist Marilyn Singleton writes eloquently, in the Washington Post, against the woke indoctrination sessions now required for physicians in California. Three slices:

When I graduated with a medical degree in 1973, a Black woman in a class of mostly White men, there was a real sense that the days of obsessing over skin color and making race-based assumptions about our fellow human beings was finally fading — and, hopefully, soon gone for good.

Apparently not. That racial obsession has come rushing back — in academia, politics, business and even in my beloved medical profession. But now it’s coming from the opposite direction. The malignant false assumption that Black people are inherently inferior intellectually has been traded in for the malignant false assumption that White people are inherently racist.

…..

Many of my friends and colleagues ask why I’m so upset by the law. Clearly, implicit bias training isn’t meant for me. It’s aimed at White people, who are far and away the biggest share of the medical profession. My answer is simple. I reject the unscientific accusation that people are defined by their race, not by their individual beliefs and choices. It is little consolation that studies are finding implicit bias training has no effect on its intended targets, and might even make matters worse.

…..

Since I became a physician, I have seen exactly one instance of racism in health care — and it was from a patient, not a fellow physician. As for my colleagues, I have been consistently impressed with the conscientious, individualized care they have provided to patients of every race and culture. When we all took our oath to “first, do no harm,” we meant it, and we live it. I can’t imagine spending my entire career thinking my peers can’t uphold that oath without constant racial reeducation.

The message to physicians is bad enough, but the message to patients is much worse. Black people are, in effect, being told that White physicians are likely to quite literally damage our health. If that’s the case, why on earth would you seek medical care, unless you could be absolutely certain of not being treated by a White physician? And if you do seek medical care, why wouldn’t you doubt every word from a White doctor who is inherently prejudiced against you?

My former Mercatus Center colleague Bob Graboyes weighs in on the castration of Roald Dahl.

GMU Scalia Law’s Bruce Kobayashi and Tim Muris decry the return of the economically misinformed mid-20th-century approach to antitrust enforcement. A slice (footnotes deleted):

Critics of antitrust enforcement since 1980, including those who now control Biden administration antitrust policy, also cite newer studies that show increasing industry concentration as well as evidence of a concurrent increase in aggregate markups. Yet, these newer studies suffer the same problems as the now-abandoned SCP [structure-conduct-performance] paradigm discussed in section II of this article. By itself, an association between a measure of concentration and measures of firm profitability is consistent with either a reduction in competition from the exercise of market power or an increase in competition from more competitive firms enjoying greater success. Further, the crucial study from [Harold] Demsetz, discussed in section II, ignoring arguendo the flaws of the accounting data used, is consistent with efficiency, not market power. As with the earlier literature, today’s evidence on the source of growing firm markups is consistent with efficiency, not market power.

“What remains of Team Mask is a bunch of deeply irrational people, and there is no reasoning with them“.

alex gutentag tweets: (HT Jay Bhattacharya)

It’s not accurate to say that mask mandates “did nothing.” Their purpose was to sow fear and division. They created an illusion of constant danger, normalized coercive medical requirements, and broke people psychologically. In this way mask mandates were very successful.

Quotation of the Day…

(Don Boudreaux)

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… is from page 68 of economists Phil Gramm’s, Robert Ekelund’s, and John Early’s important and data-rich 2022 book, The Myth of American Inequality: How Government Biases Policy Debate (footnote deleted; link added):

Government programs eliminated deprivation but increased idleness and stifled human flourishing. It happened just as President Roosevelt said in would in 1935: “To dole out relief in this way is administer a narcotic, a subtle destroyer of the human spirit. It is inimical to the dictates of sound policy. It is a violation of the traditions of America. Work must be found for able-bodied but destitute workers. The Federal Government must and should quit this business of relief.” Despite government’s stated intention to avoid dependence, government policies have created more dependence and, in the process, dramatically increased the inequality of earned income.

Capitalists Supply the Rope for Their Own Hanging

(Don Boudreaux)

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My former GMU colleague Tom Hazlett, who is now the Hugh H. Macaulay Professor of Economics at Clemson University, sent to me the following e-mail after reading my earlier post on Marxist historian Malcolm Harris’s assertion, made on NPR, that the fruits of capitalism “have been incredibly destructive”; I share Tom’s e-mail with his kind permission:

Curious that the airwaves over which NPR’s signals ride host communications encased in the technological advances of Marconi, Tesla, Westinghouse, Armstrong and the Radio Corporation of America. So kind of the capitalists to distribute the pearls of Marxian consciousness so far and wide.

DBx: Yep.

Capitalists, as they say, supply the rope with which they’ll be hung by collectivists. Unfortunately for capitalists, both the quality and the supply of that rope are high. Socialists have no corresponding worry. Any ‘rope’ their economies manage to produce would be as flimsy as tissue paper and as difficult to acquire as turnip blood.

Bonus Quotation of the Day…

(Don Boudreaux)

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… is from page 217 of 1992 Nobel-laureate Gary Becker’s and Guity Nashat Becker’s 1997 book, The Economics of Life:

Deficits are not the fault of incompetent politicians who must be moved onto the right path, but of successful efforts by special-interest groups to raise their handouts from government without paying higher taxes.

DBx: Yep.

It’s important to note that among the special-interest groups that seek to increase their government largess at the expense of the future citizens-taxpayers who will pay the price for today’s deficit-financed spending are government officials themselves. Greedy for office, politicians of all stripes promise to dispense benefits to voters today – benefits to be paid for by many people not yet born.