Russell Roberts's Blog, page 455

Some Links

(Don Boudreaux)

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My intrepid Mercatus Center colleague Veronique de Rugy gives credit where credit is due – in this case to the Trump administration for its wise roll-back of an Obama-era labor policy

John O. McGinnis exposes the appalling ideology and bias of the New York Times.

Have you ever heard of the genuine hero Wilson Greatbatch?

Stuart Anderson gets the language right about travel bans.

Kevin Williamson has fun revealing the Everestian economic ignorance now on the loose in Sacramento.

Here’s a deep and important insight from Bryan Caplan about economists’ careless use of market-failure arguments (and economists’ inexcusable disregard of public choice).

My GMU Econ and Mercatus Center colleague Pete Boettke writes about the four pillars of economic wisdom. A slice:

Economics brings truth and the light to the darkness, and pierces through the fog to make sense of all human endeavors, whether in pursuit of the highest ideals or the basis of crass motives.  If you are being taught economics by Gordon Tullock, or for that matter Pete Leeson (The Invisible Hook and more recently WTF), be prepared to be shocked out of your comfortable complacency and instead learn about the logic and underlying governing dynamics of the world around you.

Quotation of the Day…

(Don Boudreaux)

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… is from page 354 of James Buchanan’s 1968 contribution to the Encyclopedia of the Social Sciences, “Debt, Public,” as this essay is reprinted in Debt and Taxes (2000), which is volume 14 of the The Collected Works of James M. Buchanan:

The core of the fallacy lies in the equating of the community as a unit, in some aggregated national accounting sense, with the individuals-in-the-community, in some political sense as participants, direct or indirect, in collective decision making.

DBx: Just because two or more people choose to come together to supply for themselves some good or service that they will share – as, for example, three neighbors of mine once did when they pitched in to jointly buy a snow blower – does not imply that those people have thereby become a single entity with sentience or with a set of preferences that make them, as a group, akin to any of the flesh-and-blood individuals who comprise the group.

This truth, admittedly, is subtle. It is also vital. Failure to make this distinction has been, and continues to be, a source of mischief and even tyranny. And this truth holds no less when the individuals in question are compelled together to supply ‘collective’ goods than when they come together each voluntarily.

Let’s Really Have Political Realism

(Don Boudreaux)

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Here’s a comment left at the site Law & Liberty:

Among the justifications that Daniel McCarthy offers for protective tariffs is the claim that tariffs can be used to keep prices of goods over time lower (“Economic Nationalism as Political Realism,” Jan. 22). For example, if today’s low-priced U.S. imports bankrupt American firms, foreign firms tomorrow will gain monopoly power which they’ll then exploit to raise prices to monopolistically high levels. By preventing predatorily low prices today (the argument goes), tariffs protect us from monopolistically high prices tomorrow.

That tariffs might work in this way isn’t impossible. In this complex world of ours, almost anything is possible. But only a tiny fraction of possibilities are plausible, and an even smaller number are probable. And nothing is more improbable than governments using tariffs to keep tomorrow’s prices lower than they would otherwise be.

Economic theory reveals several reasons for the deep improbability of any such successful use of tariffs. These reasons include the fact that foreign firms aren’t a single entity: even if all American producers of, say, steel are driven out of business, there are hundreds of steel producers in dozens of different countries and, therefore, competition amongst these firms to sell their steel in America would ensure that prices here are kept at competitive levels. Importantly, this reality renders self-destructive the efforts of any government to bankrupt all American steel producers by subsidizing steel exports.

But still, Mr. McCarthy might ask, what’s the harm in allowing our government officials nevertheless to use tariffs in case they judge that today’s low prices will bring about higher prices tomorrow. The answer is that government officials are political creatures who, as such, dispense tariff protection in order to protect special-interest groups today rather than to protect the general welfare tomorrow. (For powerful evidence, I recommend to Mr. McCarthy and your readers Douglas Irwin’s definitive 2017 history of U.S. trade policy, Clashing Over Commerce.)

Mr. McCarthy rightly calls for political realism. It is, therefore, ironic that his case for protectionism rests on assumptions about trade and trade policy that are fantastically unrealistic.

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

Bonus Quotation of the Day…

(Don Boudreaux)

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… is from the closing paragraph of John Phelan’s new essay “Capitalism is the greatest anti-poverty scheme ever discovered“:

As someone said recently, when your worldview starts with ‘How do we limit the amount of rich people?’, you reach for socialism. When your worldview starts with ‘How do we limit the amount of poor people?’, you reach for capitalism.”

Quotation of the Day…

(Don Boudreaux)

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… is from page 187 of the 1976 Liberty Fund edition of Sir Henry Sumner Maine’s profound 1885 volume, Popular Government:

Vox Populi may be Vox Dei, but very little attention shows that there never has been any agreement as to what Vox means or as to what Populus means…. In reality, the devotee of Democracy is much in the same position as the Greeks with their oracles. All agreed that the voice of an oracle was the voice of a god; but everybody allowed that when he spoke he was not as intelligible as might be desired, and nobody was quite sure whether it was safer to go to Delphi or to Dodona.

Free To Choose: 40 Years On

(Don Boudreaux)

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Milton Friedman’s remarkable PBS series, Free To Choose, produced by Bob Chitester, debuted 40 years ago this month.

I remember it well. January 1980 was the first month of my final semester as an undergraduate. (By then I was hopeful of being accepted into NYU’s PhD program – which I soon thereafter was, and which I entered that September.) I had by the middle of my senior year of college – and largely due to my great mentors at Nicholls State University, Bill Field and Michele Francois – already studied, and been greatly influenced by, many of the works of Friedman, Hayek, Mises, Buchanan, Bastiat, Schumpeter, W.H. Hutt, Ludwig Lachmann, Israel Kirzner, and Armen Alchian. The science of economics was exciting (as it remains for me in 2020), and my commitment to libertarian principles – largely because of what economics taught me – was already quite powerful.

Friedman’s show was a watershed event.

I’m pleased to learn that the Free To Choose Network started in 2017 to collect short two-minute clips from this great program. Here’s the first one.

Johan Norberg Channels Julian Simon

(Don Boudreaux)

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In this short video, Johan Norberg busts the myth that resource scarcities – which are indeed unavoidable – impose or imply limits to economic growth that raises everyone’s living standards.

An Open Letter to Daniel McCarthy

(Don Boudreaux)

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Here’s an open letter to Daniel McCarthy:

Mr. McCarthy:

Your attempted justification, at Law & Liberty, of industrial policy and protectionism carried out in the name of economic nationalism fails on many fronts. But worst of all, perhaps, is your slaying of the straw man “market liberal” who supports free trade.

This “market liberal,” you tell us, argues for free trade from “unhistorical abstractions” because he naively believes that the “market exists in a social vacuum” as it is left “pristine” and undistorted by governments abroad and at home.

Yet other than Samuel Gregg – whose superb article inspired your essay, and whom you concede is aware that Beijing distorts the Chinese economy – you name not a single such “market liberal.” Not one. Where is this ignorant and foolish pedant?

The answer is nowhere. He doesn’t exist. And to prove it I’m willing to put my money where my mouth is.

Please join me in picking a panel of three judges: one chosen by you, one by me, and the third by the editor of Law & Liberty. I then challenge you to find in the works of scholars noted for strongly supporting a policy of free trade evidence of this mysterious and clueless “market liberal” about whom you write. You can submit evidence from as many works as you like – works on trade from scholars long ago such as Adam Smith, Frederic Bastiat, and William Graham Sumner, to more recent scholars such as Jagdish Bhagwati, Milton Friedman, Daniel Griswold, Daniel Ikenson, Douglas Irwin, Deirdre McCloskey, Arvind Panagariya, and Leland Yeager.

I will pay to you $100 for every passage that you find in such works, and that is agreed by two or more of the judges, to indeed reflect the belief of a serious advocate of free trade that markets exist in a social vacuum and that the case for free trade requires that markets be “pristine” and undistorted by state interference domestically and abroad.

My confidence that I’ll pay nothing is high. But if the judges do rule in your favor on any such passage, I will, after paying you, post that passage, along with its accompanying context, on my blog (Café Hayek) in order for the public to judge for itself if you truly did find evidence that your straw man is real.

Do we have a deal?

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

(Don Boudreaux)

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Russ Roberts is interviewed on the many pitfalls of measuring economic change. A slice:

Q: Is there a more accurate way to measure wealth in 1975 vs. today?

A: A recent study found the bottom half of the income distribution today makes the same on average as the bottom half 35 or 40 years ago. That’s extraordinarily depressing, if true. It implies the top is just doing way too well. But a handful of studies have instead taken people in 1975 and followed them through time to see if the rich truly did get all the gains. When you do that, you find out that the people at the bottom have the largest percentage gains and often the largest absolute gains over time.

George Will celebrates the forces of freedom in China that resist Beijing’s tyranny.

Dan Mitchell writes on government’s adverse impact on labor markets.

Bruce Yandle is rightly unimpressed with Peter Navarro’s argument that today’s strong economy is the result of Trump’s tariffs punitive taxes on American consumers.

My Mercatus Center colleague Matt Mitchell decries government-imposed obstacles to better and more-affordable health care.

Nick Gillespie has an interesting take on Trump’s impeachment trial.

Alex Nowrasteh wants to quiz you on your knowledge of immigration.

Quotation of the Day…

(Don Boudreaux)

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… is from page 85 of George Will’s 2019 excellent book, The Conservative Sensibility:

Note a contradiction in progressivism that has become steadily more severe in the century since [Woodrow] Wilson wrote. Progressivism has no objection to steady enlargement of the “conceptions of state duty.” Quite the contrary, such enlargement is the progressive agenda – the expansion of the central government’s supervision of society’s complexities. But as solicitous government permeates society with its superintending, society responds in an inconvenient way. As government’s interests multiply, so do interest groups. As government seeks to supplement and even supplant market forces in the allocation of wealth and opportunity, there is a corresponding and commensurate multiplication of factions determined to influence the action of activist government.

DBx: Yes – and, of course, also an increasingly large number of conservatives are now guilty of this same contradiction.