Russell Roberts's Blog, page 449
February 12, 2020
Quotation of the Day…
… is from pages 222-223 of the original edition of Lee Francis Lybarger’s 1914 book, The Tariff (original emphasis):
The motives back of Protection are personal and selfish, and so can arouse great and powerful influences. The motives back of Free Trade are purely intellectual, moral, and patriotic. That has made an unequal contest. On the one side there were “millions in it” for the beneficiaries of a Protective Tariff – and office, place, and power for the men who could successfully defend it.
On the other side, there was scorn and contempt and ridicule and a complete shutting out from all public office – the only possible reward being the consciousness of being in the right. And while there have been scores of brave and noble men who have preferred this reward to being in the wrong with all its emoluments, yet in a practical age that is not a very powerful motive.
DBx: I largely agree – which, of course, is among the reasons why I choose to use the above as a Quotation of the Day. Protectionism artificially enriches the few at the larger expense of the many, and so protectionism’s chief motive is greed. Corporate owners and managers, and workers in protected firms, seek import tariffs and export subsidies not selflessly to promote the general welfare but, rather, selfishly to promote their own material well-being – again, at the larger expense of their fellow citizens.
Yet these greedy actions would not succeed were it not for widespread economic ignorance. This ignorance is exploited by the greedy. The greedy take advantage of this ignorance to dupe ordinary people into believing that they, the ordinary people, will be enriched if they, the ordinary people, have their economic options reduced at gunpoint.
And this economic ignorance is further spread – and, hence, fortified – by some well-meaning intellectuals who are themselves duped by it.
February 11, 2020
Bonus Quotation of the Day…
… is from page 620 of the final (2016) volume – Bourgeois Equality – of Deirdre McCloskey’s soaring trilogy on the essence of bourgeois values, on their transmission, and on their essential role in modern life:
That’s the point: creative destruction is good for the society as a whole, viewed democratically.
Sympathetically considered, the right and the left unhappiness with the rich modern world can be viewed, too, as an understandable present-mindedness. A focus on our present woes is accompanied by a vague nostalgia about the past. It’s like standing too close to a pointillist painting, such as Georges Seurat’s A Sunday Afternoon on the Island of La Grande Jatte in its room at the Art Institute. At close range we see the dots as dots only and lament the disorder. We ache for the real telephones and beloved horses in our homeland. If we stand back, however, the disorder resolves into an attractive scene, with many, many humans now having lives of wide scope. The ongoing history, so lamentably destructive of dots of remembered hours of gladness, lost, alas, like a youth too soon, reveals its attractions when seen in longer perspective. The attractions are masses of people better off now than two centuries ago, and a massy democracy. The global Northerners on the left who view the Great Recession as the last crisis of capitalism (if, to repeat, one forgets all the previous diagnoses of a last crisis) or who decry the allegedly slow growth of real wages in the rich countries since 1980 (if, to repeat, one does the economic science erroneously, ignoring, for example, the sharply improving quality of goods), and who therefore advocate more and more and more regulation of markets, are standing too close to the picture.
DBx: Yes.
From Donald Trump, Marco Rubio, and Oren Cass on the right to Robert Reich, Bernie Sanders, and Elizabeth Warren on the left, all such skeptics of free trade and of what my Mercatus Center colleague Adam Thierer calls “permissionless innovation” are standing much too close to the dots. For the politicians in this group, this perspective is key to their political power, and so they actively take it. For the intellectuals, I assume, this perspective is the result of innocent intellectual error. Either way, however, this perspective is blinding. It’s distorting. Its results are malignant.
An Open Letter to a Solon in Illinois
Rep. Camille Lilly (D – 78th District)
Illinois House of Representatives
Springfield, IL
Rep. Lilly:
You propose legislation that “Provides that no gas may be pumped at a gas station in this State unless it is pumped by a gas station attendant employed at the gas station.” It’s reported that your “office says the idea behind the bill is to create more jobs in the state.”
I here resist the temptation to insist on the necessity of making boring calculations such as of the number of non-gasoline-station jobs that would be destroyed as a result of motorists spending more money to fuel their cars and, hence, having less money to spend at local restaurants, theaters, and other retail establishments.
Instead, I embrace the spirit of your proposal. Yet when I do so I see that your proposal is far too modest! You should think much bigger!
For example, rather than prevent people merely from pumping their own gas, the government should also prevent people from washing and parking their own cars. Just as a prohibition on self-service gas pumping will create jobs for gas pumpers, a prohibition on self-service car-washing will create jobs for car washers, while a prohibition on self-service parking will create jobs for car parkers.
Indeed, even the above is too modest. How about a prohibition on self-service driving! That way, lots of jobs will be created for chauffeurs!
The possibilities are limitless. You should survey the full range of tasks that ordinary Illinoisans do for themselves and consider outlawing all such self-service in the name of creating jobs. Think of the number of jobs, and the attendant riches, that will bless the state of Illinois if you and your colleagues outlaw also the likes of, say, self-dressing and self-grooming (create jobs for ladies’ maids and men’s valets!), self-cooking (create jobs for household chefs!), and self-telephone-dialing (bring back all those jobs for switchboard operators!).
If your economic logic is sound, the possibilities for enriching Illinoisans with other such prohibitions are enormous!
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
Some Links
You should read what Richard Salsman says about Say’s Law.
You should also read what Mike Munger writes about the Coase Theorem.
In the world of floating exchange rates, myriad factors influence currency movements each day, and there is no economic or political consensus on how to value currencies. Investors tend to rush into the dollar when global uncertainty spikes. Heavy selling of a currency is often provoked by political instability or fiscal imbalances and ballooning debt. The strong U.S. dollar today is partly a result of capital inflows in the wake of tax reform. That’s a sign of economic strength.
Democrats do not in general advocate cuts to entitlements for affluent people, either. And, in fact, some of the most popular items on the current Democratic agenda are wealth transfers to people who are relatively well-off and in some cases very well-off. The most prominent example of that is the proposal to pay off Americans’ college loans for them. The wage premium for college graduates has fluctuated a bit over the years, but college graduates on average still earn much more than non-graduates, and they end up about twice as wealthy. Most of the borrowers with college loans are able to repay them out of a relatively small portion of their incomes, and the people who are the most burdened by their student loans are, counterintuitively, those with the least debt: We see those shocking stories about recent graduates with six-figure debt burdens, but borrowers with $5,000 or less in student debt are almost twice as likely to be in default as those with $100,000 or more.
Pittsburgh Tribune-Review: “The myth of the rational voter”
In my Pittsburgh Tribune-Review column for May 7th, 2008, I discussed my colleague Bryan Caplan’s great 2007 book, The Myth of the Rational Voter. You can read my discussion beneath the fold (link added).
Quotation of the Day…
… from page 193 of David Mamet’s 2011 book, The Secret Knowledge:
Demagoguery is the attempt to convince the People that they can be led into the Promised Land – it is the trick of the snake oil salesmen, the “energy therapists,” the purveyors of “health water,” and, on the other side of the spectrum, the politician and that dictator into which he will evolve absent a vigilant electorate to admit its errors.
February 10, 2020
A Conversation with Bob Murphy
A few weeks ago I was interviewed over Skype by Bob Murphy. I very much enjoyed talking with Bob.
An audio-only version of this interview is available here.
Free Trade Straw Men
Straw Man: Free trade is cynically imposed on the country at the behest of soulless and greedy corporations.
Fact: Free trade is naturally what exists when government refrains from bestowing special privileges on domestic producers. A government no more “imposes” free trade on its citizens by refraining from taxing and subsidizing their commerce with foreigners than it imposes freedom of movement on its citizens by refraining from shackling them with leg irons.
Furthermore, what greedy corporations want is not free trade at home for the products they sell, but protectionism. Because free trade intensifies the competitive pressures under which corporations operate, greedy corporate owners and managers seek, not free trade, but tariffs and other forms of protection from competition.
You show me a tariff, and I’ll show you a domestic company that lobbied for it.
Straw Man: Free trade is officiously imposed on the country by out-of-touch and arrogant elites.
Fact: This straw man is today, like the populists who frantically fight it, multiplying like Tribbles. Yet it’s doubly preposterous.
First, free trade is simply a condition of freedom for all people – including, of course, for all ordinary man and woman – to choose to purchase imports, and not to have their tax dollars used to subsidize exports. Elites who impose their vision of society on others butt into the affairs of those whom they seek to control. Arrogant and officious elites do not leave ordinary people free to do whatever ordinary people peacefully choose to do – which is to say, such elites oppose a policy of free trade and the principles that support it.
Second, what is elitist – by its very nature – is protectionism. It is the protectionist, not the free trader, who obstructs the spending choices of ordinary people. It is the protectionist, not the free trader, who not only claims to have divined the knowledge of what are ‘the industries of the future,’ but who is so arrogantly confident in his prophecy that he feels entitled to force others to act as he commands.
Protectionists, of course, often peddle their schemes under the banner of helping to protect the masses from the pretensions of elites. But the fraudulence of this advertising is immediately exposed upon realizing that it is protectionists, not free traders, who presume to superintend and override the peaceful commercial choices of ordinary men and women.
Some Links
Richard Ebeling rightly warns of the new totalitarians. A slice:
Theirs is a collectivism of social class, race, and gender. They are the ideological offspring of the communists and fascists of the 20thcentury. They blend together a synthesis of Marxism and Nazism into the new world of political correctness and identity politics. They view themselves as radical “progressives,” determined to overthrow and abolish the capitalist, racist and sexist sins of the past, and put in its place an amorphous “democratic socialism” that is premised on a new tribalism of group identity and belonging.
Speaking of idiotic ideas, here’s Kyle Smith on those now on the loose among Hollywood’s glitterati.
Amy Wax explains that “woke” lawyering undermines the rule of law.
Gary Galles teaches that economics taught well teaches humility.
Kevin Williamson justifiably fears democratic socialism. A slice:
The problems of socialism are problems of socialism — problems related to the absence of markets, innovation, and free enterprise and, principally, problems related to the epistemic impossibility of the socialist promise: rational central planning of economic activity. The problems of socialism are not the problems of authoritarianism and will not be cured by democracy. Socialism and authoritarianism often go hand in hand (almost always, in fact), but socialism on its own, even when it is the result of democratic elections and genuinely democratic processes, is a bottomless well of misery. The Soviet gulags and hunger-genocide, the Chinese prison camps, and the psychosis of Pyongyang are not the only exhibits in the case against socialism, and the case against socialism is also the case against democratic socialism, as the experience of the United Kingdom attests.
Pittsburgh Tribune-Review: “Politics & ‘involvement'”
In my Pittsburgh Tribune-Review column for April 9th, 2008, I dissented from the commonly held notion that the greater is people’s involvement in politics the better. You can read my dissent beneath the fold.
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