Russell Roberts's Blog, page 471
December 7, 2019
Some Links
Rubio serves in a legislature whose constant resort to funding the government with continuing resolutions testifies to its incompetence concerning even its most elemental function: budgeting. Yet he expects this government to wisely define the “common good” and deftly allocate wealth and opportunities accordingly.
John Stossel is understandably unhappy with Hollywood’s hostility to free markets. A slice:
Greedy miners want to kill nature-loving aliens in “Avatar.” Director James Cameron says: “The mining company boss will be the villain again in several sequels.
One reviewer calls a scene in the recent “Star Wars” movie “a beautiful critique of unregulated capitalism.”
“Unregulated capitalism” is such a stupid cliche. Markets are regulated by customers, who have choices; we routinely abandon suppliers who don’t serve us well.
The great Steve Davies laments the return of internal passports.
David Henderson unveils yet more sloppiness in the statistical work of Gabriel Zucman.
Michael Huemer celebrates political gridlock and the political contestation that causes it. (HT David Levey)






Nothing Left of Left Smithianism
My GMU Econ colleague Dan Klein powerfully challenges, in this recent talk, attempts made by Samuel Fleischacker, Dennis Rasmussen, and some other scholars on the political left to claim Adam Smith as a member of their ranks.






Pittsburgh Tribune-Review: “Don’t complain about bargain prices”
In my column for the February 23rd, 2007, edition of the Pittsburgh Tribune-Review I continued my discussion of the fallacies that surround the value of foreign currencies. You can read this column beneath the fold.






Quotation of the Day…
… is from page 329 of William Leggett’s December 3rd, 1836, Plaindealer essay, “Thanksgiving Day,” as this essay is reprinted and titled in Democratick Editorials, Lawrence H. White, ed. (Indianapolis: Liberty Fund, 1984) (original emphasis):
No one can pay the most cursory attention to the state of religion in the United States, without being satisfied that its true interests have been greatly promoted by divorcing it from all connexion with political affairs…. In this city alone [New York] the number of churches is one hundred and fifty, and their aggregate capacity is nearly equal to the accommodation of the whole number of inhabitants. It is impossible to conjecture, from any data within our reach, the amount of the sum annually paid by the American people, of their own free will, for the support of the ministry, and the various expenses of their religious institutions: but it will readily be admitted that it must be enormous. These, then, are the auspicious results of perfect free trade in religion – of leaving it to manage its own concerns, in its own way, without government protection, regulation, or interference, of any kind or degree whatever.
DBx: While I am not religious, I celebrate America’s complete separation of church and state no less than I would were I deeply devoted to a faith that is despised by a majority of Americans. Not only is the resulting individual freedom good in and of itself, the resulting absence of political disputes over religious doctrine, practice, funding, membership, organizational structure, organizational leadership, architecture, and on and on and on is a blessing.
If government played a role in religion akin to the role that governments in the U.S. today play, say, in K-12 schooling, we’d have “church boards” the members of which are elected by votes cast by people of all religious faiths and of no faith. Taxpayers who do not subscribe to the faith(s) supported by taxpayer funding would nevertheless be compelled to support notions that they do not believe, or that they perhaps actively oppose.
To list other dysfunctions is easy, but here unnecessary: can anyone today doubt the truth of Leggett’s observation that religion’s divorce in America “from all connexion with political affairs” results in religious institutions and beliefs that are about as diverse, robust, thriving, competitive, and effective as is humanly possible in today’s United States? (If I understand David Hume’s argument correctly, he – Hume – supported state involvement in religion precisely because he understood that such involvement would reduce the effectiveness of religion. Being no friend of religious belief, Hume wished to see such belief weaken and wither, and he correctly understood that having the state involved in religion is an ideal means toward his end.)
I’m quite sure that what’s true for the relationship between church and state is true for the relationship not only between school and state, but also on a broader scale – namely, between economy and state. The recent fervor on the political left and right for industrial policy would, to the extent to which such policy is pursued, artificially favor some particular productive (and, hence, some particular consumption) activities while artificially disfavoring others. The economy would weaken and shrink.
The healthy and peaceful rivalry in markets, in which each individual spends his or her own money and time as that person chooses – spends his or her own money and time as investor, producer, and consumer – would be replaced by decisions made politically. Individuals whose comparative advantage lies in winning political elections would direct the use of resources. Yet who this side of sanity seriously supposes that the likes of Marco Rubio or Elizabeth Warren have both the miraculous ability to divine the economic future and the spine to resist the pleas of special interest groups for state power to be used in their favor? The answer to this rhetorical question does not change by noting that the likes of Rubio or Warren would choose for their advisors arrogant ‘men of system’ such as Oren Cass or some successful business tycoon or some Ivy-League economists who’ve written in the pages of top-ranked academic journals lovely equations that are advertised as describing how industrial policy can ‘succeed.’
Those who support the strict separation of church and state should, to be consistent, support also the separation of economy and state – or, at the very least, support a policy of unilateral free trade that rejects the use of all tariffs, subsidies, and other interventions aimed at redirecting the flow of productive energy and resources away from well-lit paths that emerge in free markets and into dark tunnels constructed by those made unusually ignorant by their unusual arrogance.






December 6, 2019
Repetitive, I Know…
Here’s a letter to a “concerned patriot”:
Mr. Neil Garza
Mr. Garza:
You “have no problem” with American jobs being lost “when foreigners can produce with higher efficiency than us.” But you “strenuously object” if American jobs are lost “when imports’ lower prices exist because [foreign] producers receive subsidies.”
On the first point you’re correct. On the second point, though, you’re mistaken: we Americans shouldn’t care in the least why we’re able to buy more imports at attractive prices. Whatever the reason, we gain.
If more (say) imported lumber is sold here because foreign lumber producers have achieved greater efficiencies, some workers in the U.S. lumber industry will have to find different jobs, and some capital and land that until now were used to produce lumber in America will find other uses. The exact same scenario plays out if more imported lumber is sold here because foreign producers receive subsidies from their governments.
In both cases the price of lumber here falls and we Americans get to consume more lumber than we consumed before the increase in lumber imports. Further, in both cases we get to consume more also of other goods and services – specifically, more of the additional non-lumber goods and services that are produced by the American workers, capital, and land that no longer are used to produce lumber.
You might, like me, pity the foreigners whose governments tax them in order to make us Americans richer than we would otherwise be. But you’re mistaken to conclude that foreign-government subsidies of our imports impoverish us while they enrich foreigners. The result of such subsidies is quite the opposite.
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…
… is from pages 47-48 of Jagdish Bhagwati’s 2002 book, Free Trade Today:
But the perennial and persistent public-policy fights for free trade, in the end, were with protectionists who cared little about the size of the pie and more about their own slice of it….
The proponents of free trade therefore started from, or at least could always claim, the higher moral ground. But today’s challengers of free trade often fight our general interest with theirs; and the most vociferous among them even claim the higher moral ground. And since our case is more taxing to the mind and theirs is plainer to the view, the public-policy debate has put the proponents of free trade into a battle that is harder than ever to wage.
DBx: You show me a protectionist and I’ll show you one, or a combination, of three things: (1) someone who feels no shame at the prospect of being enriched at the larger expense of others, including at the larger expense of his fellow citizens (that is, someone with the ethics of a thief); (2) someone who either cannot or will not see free trade’s, or protectionism’s, consequences in full; or (3) a pedant lacking the judgment or intellectual maturity to distinguish theoretical curiosa from real-world plausibilities.
…..
The great Richard Cobden and John Bright made plain the economic case for free trade, yet they made even plainer the moral case for free trade.






Pittsburgh Tribune-Review: “Reaping a strong dollar’s benefits”
In my February 14th, 2007, column for the Pittsburgh Tribune-Review, I celebrated a strong dollar. You can read my column beneath the fold.






Some Links
Kevin Williamson brilliantly explains that we Americans are emphatically not winning the trade war. A slice:
Like a great deal of what comes out of this White House, the new tariffs and the rationale undergirding them exhibit a very fine blend of dishonesty and stupidity.
Also from Kevin Williamson is this appropriate, critical response to Oren Cass.
Phil Magness looks at Alexander Hamilton, an earlier Tariff Man who created a mess.
Finally, legislators could use this time to come up with a list of spending cuts that will allow them to abide by the spending caps they agreed to back in 2011. Back in July of this year, Congress and the president announced a plan to raise discretionary spending caps for fiscal years 2020 and 2021. But that move would increase spending by $320 billion over two years. With the deficit soon to be permanently above $1 trillion, Congress should find the courage to abide by the budget caps rather than, yet again, kick our debt bomb down the road.
George Leef intelligently reviews David Kirp’s The College Dropout Scandal.
Chris Edwards and Ryan Bourne explore wealth inequality.
David Henderson warns of the growing hostility to large monetary fortunes.






Quotation of the Day…
… is from page 328 of George Will’s excellent 2019 book, The Conservative Sensibility:
Half a century on, the nation’s mood is tinged with sadness stemming from the well-founded fear that America’s new, post-Great Society government is subverting America’s old character. This government’s agenda is a menu of temptations intended to change the nation’s social norms by making Americans comfortable with dependency.
DBx: So true.
My intrepid Mercatus Center colleague Veronique de Rugy says often that she fears that America is becoming ever-more like her native France. Vero’s fear is justified.
Progressives have for a long time now competed vigorously with each other to see who can identify the greatest number of groups the members of which are helpless victims of this and that ‘system’ or troupe of historical actors, including (but hardly limited to) capitalism, the patriarchy, late-15th-century European explorers and early-17th-century slavers. And – worse – lots people have proudly proclaimed their membership in these groups of ‘victims.’
Many conservatives have recently upped their game at playing at this socially destructive form of competition. From politicians such as Donald Trump, Marco Rubio, and Tom Cotton to pundits such as Oren Cass, Tucker Carlson, and Daniel McCarthy, we hear that we uniquely resilient and splendidly capable Americans are the helpless victims of low-wage workers in China and Mexico, of hard-working immigrants from El Salvador and Guatemala, and of choice-expanding entrepreneurs such as Jeff Bezos and Mark Zuckerberg.
This phenomenon of a person seeming to find dignity in discovering that he or she is a helpless victim requiring rescue by political superheroes – and requiring also continuing dependency on his or her rescuers – seems, at first, to be bizarre. But the bizarreness fades, if the contemptibility of it does not, upon realizing that the political superheroes promise material rewards to these ‘victims.’
The fact that these ‘victims’ in fact typically wind up being truly victimized by the very process that is ostensibly aimed at rescuing them from their imagined ‘victimhood’ only adds to the situation sad irony.






December 5, 2019
Reflections on the Fall in the Labor-Force-Participation Rate
Indeed, the very length and timing of the 70-year-long decline in men’s labor-force participation strongly suggests that much of this decline reflects a rise in prosperity rather than in problems.
In the decades immediately after WWII ordinary Americans famously became wealthier. The U.S. economy boomed, despite the fact that Americans back then did relatively little trading with non-Americans. Yet men’s labor-force participation rates nevertheless fell steadily as the economy motored merrily along. In January 1950 men participated in the labor force at a rate of 86.2; 10 years later this figure was 83.6. And 10 years after that – in January 1970 – this rate had fallen further, to 79.9.
The most plausible explanation for this post-war decline in men’s labor-force participation is that Americans’ greater wealth both allowed more American males to attend college (and, increasingly, even graduate school) rather than start full-time work at 18, as well as allowed more American males to retire early.
In addition, America’s increasing wealth renders government more willing and able to enact programs that allow working-age adults to remain out of the labor force temporarily or (as with some disability payments through Social Security) permanently. Whatever you think of such programs, their reflection of America’s increasing wealth should not be missed.






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