Russell Roberts's Blog, page 441

Quotation of the Day…

(Don Boudreaux)

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… is from page 279 of George Will’s splendid 2019 manifesto, The Conservative Sensibility (footnote excluded):

Envy is the common denominator of the many flavors of populism and, paradoxically, envy intensifies as equality of social conditions increases. “When inequality is the general rule in society,” wrote Tocqueville, “the greatest inequalities attract no attention. When everything is more or less level, the slightest variation is noticed. Hence the more equal men are, the more insatiable will be their longing for equality.” This longing is the fertilizer of envy.

DBx: Yes. And note two additional ironies, each of which has been pointed out by wise thinkers, but neither of which is sufficiently noticed by the general public or by intellectuals.

First, for government even to attempt to satisfy this longing for greater equality in monetary incomes or wealth, society must necessarily retreat from equality under the law. Government must treat individuals differently based solely upon their degrees of success in commercial markets. The state will treat unequally two individuals who are alike in all ways save their preferences for work in commercial markets.

The man who chooses a career that yields a more-sure income stream, but a stream with a smaller potential downside or upside compared to the potential income stream earned by a woman who chooses a career that yields a less-sure income stream – but a stream with a higher potential downside or upside – is treated more solicitously by government than is the woman if the woman succeeds in her career and less solicitously than is the woman if she does not succeed. With government committed to bringing about more economic equality through income or wealth ‘redistribution,’ this disparate treatment must prevail despite the fact that neither the woman nor the man acts or has acted in any way that violates anyone else’s rights.

Second, for government even to attempt to make the ‘distribution’ of monetary incomes or wealth more equal requires that power in society become less equal. The state – meaning, the group of flesh-and-blood individuals who succeed in politics – must be given power possessed by no one else.

That we should retreat in horror at the prospect of differences in monetary incomes earned peacefully but welcome warmly differences in power created to ‘redistribute’ these incomes seems, to me, to be perverse.

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Bonus Quotation of the Day…

(Don Boudreaux)

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… is from Michael Strain’s new (2020) book, The American Dream Is Not Dead (But Populism Could Kill It):

There is a limit to how far a business can push its wages below those being offered elsewhere in the market. That business will find its workers increasingly averse to putting in a hard day’s work and will find it increasingly difficult to hire and retain workers. Market forces are very influential in real-world business decisions.

Pittsburgh Tribune-Review: “Toddler brains”

(Don Boudreaux)

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In my column for the September 17th, 2008, edition of the Pittsburgh Tribune-Review I lament the childish simple-mindedness of too many “solutions” offered by politicians, pundits, and professors.  You can read my column beneath the fold.

(more…)

Some Links

(Don Boudreaux)

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My intrepid Mercatus Center colleague Veronique de Rugy exposes flaws in the FAMILY Act – a proposed new scheme to have government orchestrate more paid family leave. A slice:

Finally, but importantly, economic research reveals that employees — and women in particular — in countries where government has implemented such benefits face more discrimination, fewer advancement opportunities, fewer hours of employment and lower wages. These are the unseen costs of such programs that the act’s supporters ignore.

Writing at National Review, my Mercatus Center colleague Dan Griswold explains that trade and technology improvements really do help ordinary American workers. A slice:

Gains in median household income have also been more impressive than the official statistics tell us. After adjusting for the more accurate PCEI deflator and shrinking household sizes, William Cline calculates that real median household income has risen 50 percent during the past 50 years, rather than the 21 percent reported by the U.S. Census Bureau. A closer look at the data also shows that the share of households with middle-class incomes of $35,000 to $100,000 (in real dollars) has indeed shrunk during that time, but only because more households have moved up to the $100,000-plus bracket while the number of households in the under-$35,000 bracket has gone down.

Beyond financial compensation, U.S. workers enjoy a safer and healthier environment than they did decades ago. From 1992 to 2017, the rate of workplace deaths dropped by 30 percent, and the rate of workplace injuries dropped by 69 percent. During that same period, crime rates have fallen sharply nationwide, while average life expectancy has increased from 75.2 to 78.5 years. (One prominent exception to the positive trends is drug overdoses, especially involving opioids, and the attendant “deaths of despair.”)

George Will considers some likely consequences of the surge of Joe Biden. A slice:

After Tom Steyer spent about $400 for each of his 61,048 South Carolina votes, Mike Bloomberg’s approximately $500 million bought this pearl beyond price: the affection of American Samoa. These redundant refutations of the theory that money can make vanity candidacies viable should calm those campaign “reformers” whose superstition is that the power of political money is such that government should regulate it (and by doing so stipulate the permissible quantity of political speech it can finance).

James Pethokoukis (referencing Steven Kaplan’s debate with Gabriel Zucman) pulls back the curtain further on destructive proposals to tax wealth.

I endorse Bruce Yandle’s proposal for dealing with the Coronavirus.

Thank goodness for the Institute for Justice.

Quotation of the Day…

(Don Boudreaux)

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… is from page 17 of Richard Epstein’s magisterial 2014 study, The Classical Liberal Constitution:

The classical liberal traditions of the founding generation prized the protection of liberty and private property under a system of limited government.

Who Wrote It?

(Don Boudreaux)

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Here’s a letter to someone who chalks up my opposition to industrial policy to my being “ideologically hidebound”:

Mr. or Ms. “Temperans”:

You write that my opposition to industrial policy “won’t be taken seriously by anyone of any count” because this opposition “only reflects the extremist radical fringe which is Geo. Mason’s economics school.”

Hmmm…. I wonder if you can tell me which of my extremist radical fringe GMU Econ colleagues penned this warning against government efforts to pick industrial winners:

The trades, it is to be observed, which are carried on by means of bounties [that is, subsidies], are the only ones which can be carried on between two nations for any considerable time together, in such a manner as that one of them shall always and regularly lose, or sell its goods for less than it really costs to send them to market. But if the bounty did not repay to the merchant what he would otherwise lose upon the price of his goods, his own interest would soon oblige him to employ his stock in another way, or to find out a trade in which the price of the goods would replace to him, with the ordinary profit, the capital employment in sending them to market. The effect of bounties, like that of all the other expedients of the mercantile system, can only be to force the trade of a country into a channel much less advantageous than that in which it would naturally run of its own accord.

Was it Walter Williams? How about Pete Boettke? Or Chris Coyne? Bryan Caplan? Tyler Cowen? Dan Houser? Dan Klein? Pete Leeson? David Levy? Tom Rustici? Virgil Storr? Alex Tabarrok? Dick Wagner? Larry White? Perhaps some other GMU Econ colleague of mine? Or maybe this expression of opposition to governmental attempts to determine the pattern of production and trade was offered by one of my colleagues at George Mason’s Mercatus Center – someone such as Veronique de Rugy, Dan Griswold, Matt Mitchell, or Adam Thierer?

Give up? In fact, this brief against what we today call industrial policy was written by that well-known radical fringe figure Adam Smith. In 1776.

You can find it on page 506 of the 1981 Liberty Fund edition of his An Inquiry Into the Nature and Causes of the Wealth of Nations. It’s a wonderful book. I recommend it. Highly. Very highly.

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

Bonus Quotation of the Day…

(Don Boudreaux)

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… is from page 180 of the original edition of late Don Lavoie’s great 1985 book Rivalry and Central Planning:

The specific tool of this market coordination is the orientation of individual entrepreneurs to their profit and loss accounts in terms of money prices. Profit opportunities tend to encourage more socially coordinated use of resources without requiring any market participant to know more than the information required within his own particular sphere of specialization. Thus economic calculation of profit and loss serves as an unconscious coordinating mechanism for society as a whole, thereby performing a task that is beyond the cognitive ability of any member of society.

DBx: Advocates of industrial policy – whether on a scale grand or petit – propose to substitute the puny amounts of statistical knowledge and information that can be had by government officials (none of whom spends his or her own money) for the vast amounts of detailed knowledge and information that are used and acted upon daily by millions of individuals (each spending his or her own money).

In effect, advocates of industrial policy propose to replace knowledge-thick market processes, in which individuals without the power to coerce have strong incentives to create value for as many others as possible, with ignorant government officials possessing the power to coerce and imposing legalistic – and special-interest tilted – blueprint-like schemes. What could go wrong?

Some Links

(Don Boudreaux)

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Fareed Zakaria eloquently busts Bernie Sanders’s myths about Scandinavia. A slice:

Sanders’s vision of Scandinavian countries, as with much of his ideology, seems to be stuck in the 1960s and 1970s, a period when these countries were indeed pioneers in creating a social market economy. In Sweden, government spending as a percentage of gross domestic product doubled from 1960 to 1980, going from approximately 30 percent to 60 percent. But as Swedish commentator Johan Norberg points out, this experiment in Sanders-style democratic socialism tanked the Swedish economy. Between 1970 and 1995, he notes, Sweden did not create a single net new job in the private sector. In 1991, a free-market prime minister, Carl Bildt, initiated a series of reforms to kick-start the economy. By the mid-2000s, Sweden had cut the size of its government by a third and emerged from its long economic slump.

Peter Suderman talks with James Pethokoukis about Bernie Sanders and socialism.

George Mason University economics alum Raymond Niles explains how legislation meant to stop so-called “price gouging” can be lethal.

My GMU Econ colleague Bryan Caplan explains that also lethal is socialism.

Here’s wisdom from John Stossel.

Mark Pulliam argues that there is no valid conservative case for labor unions.

Shikha Dalmia makes the case that Americans need no “project” of nationalism. A slice:

What is strikingly absent in America, at least until the “Salute to America” that President Donald Trump held in the National Mall last year, is state pomp and circumstance—military parades with soldiers in crisp uniforms smartly saluting political authorities. As Tocqueville observed, American patriotism is very different from the old-fashioned Old World kind that regarded the nation as a father that created its citizens. Americans, by contrast, love their country because as free and productive citizens, they see themselves as its creators. The nation is their offspring, not their father. (Or the result of their actions, not their designs, as F.A. Hayek might have put it.)

Quotation of the Day…

(Don Boudreaux)

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… is from Tom Palmer’s April 12th, 2005, address (“Challenges of Democratization“) to members of the Iraqi National Assembly as this address appears on page 421 of Tom’s excellent 2009 book, Realizing Freedom:

It is important that the issues to be decided by democratic processes be limited if democracy is to be harmonious and stable. In a stable constitutional democracy many issues are not decided by democratic elections, but are reserved to the free choices of individuals and groups, whose rights are protected by the constitution.

DBx: This crucial insight is increasingly lost in the United States. Democracy does not entail or imply that all decisions be made by majority-rule, or that majorities get to decide which decisions will be made collectively and which will be left to individuals acting outside of politics. Democracy is a means of making a limited number of “collective” decisions in a manner in which each affected person has some say.

And while reasonable people can and do disagree over just where to draw the line separating collective decisions from decisions that are rightly left to non-politicized individuals and groups, failure to recognize the need for such line-drawing – or drawing the line too far in the direction of having an excessively large number of issues decided by voters and their representatives – results in chaos and the tyranny of either majorities or of special-interest groups that thrive under such chaos.

But pick anyone – left, right, or center – who today endorses this and that expansion of government’s discretionary power to superintend and override privately made decisions and you will find someone who is oblivious to the truth conveyed in Tom’s above remark.

Bonus Quotation of the Day…

(Don Boudreaux)

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… is from page 51 of the late economic historian Stanley Lebergott’s brilliant 1993 book, Pursuing Happiness: American Consumers in the Twentieth Century:

In 1900, cooking, baking, food preserving, and canning were nearly all done at home. Most clothing was made, washed, and repaired at home. Not to mention house cleaning, child care, and medicating the sick. Since families took less than two days of vacation a year, virtually all recreation was likewise produce at home.

DBx: Conservative, economic nationalists such as Oren Cass should read – carefully – all of Lebergott’s work, but especially Lebergott’s splendid and spectacularly insightful 1993 volume, from which the above quotation is extracted. (This volume is less than 200 pages – a fact that, when combined with Lebergott’s brilliance at writing, makes reading this book a pleasure and not a tax, even for non-economists.)

Were they to read Lebergott’s 1993 book, Cass and others who swoon with nostalgia for the good ol’ days when the little ladies stayed at home to perform traditional wifely tasks might have second thoughts about the wisdom of their insistence (as Cass puts the matter) “on recognizing the importance of non-market labor performed within the household….” Or, at any rate, second – and third, and fourth – thoughts about this insistence might be had by their spouses.