Russell Roberts's Blog, page 49

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(Don Boudreaux)

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The Wall Street Journal‘s Editorial Board exposes the deceptiveness of Biden’s pose as a president who’s fiscally responsible. Two slices:

President Biden boasted during his State of the Union address about cutting the deficit by a record $1.7 trillion. His putative conversion into a born-again deficit cutter is belied by this week’s Congressional Budget Office federal budget report for January, which shows the deficit has doubled in the first four months of this fiscal year.

CBO reports that the budget deficit from October through January swelled to $522 billion from $259 billion in the same period last year after adjusting for a timing shift in payments. Receipts are tracking $43 billion lower than last year, mostly owing to reduced individual income taxes, while spending is running $220 billion higher.

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The budget deficit more than tripled to $3.14 trillion in fiscal 2020 owing to numerous Covid bills. It fell slightly to $2.7 trillion in 2021 because individual and corporate income tax revenue surged—not because of spending discipline. As pandemic welfare payments expired, the deficit last year clocked in at $1.4 trillion.

During his State of the Union, Mr. Biden blamed deficits on his predecessor. But the deficits during the first three years of the Trump Presidency totalled $2.5 trillion—less than in the first year of Mr. Biden’s. The deficit is on a path to increase again this year owing to the infrastructure bill, Inflation Reduction Act (IRA) and end-of-year omnibus blowout.

My intrepid Mercatus Center colleague, Veronique de Rugy, is grateful to Biden: “That’s right. In one speech, his State of the Union address, he has done more than I have in years of writing to highlight how the MAGA and the progressive agendas are identical: subsidies for favored manufacturing, industrial policies, protectionism, anti-big-tech policies, and more.“

Samuel Gregg reimagines fusionism.

Clark Packard and Alfredo Carrillo Obregon report that the data on 2022 U.S.-China trade show “no signs of widespread decoupling.”

Scott Sumner is correct: Economic nationalism is a negative-sum game. A slice:

Most politicians don’t understand the economics of subsidies. It’s not a question of subsidies helping one country and hurting another; all countries suffer.

Here’s what politicians don’t understand. It is not possible for governments to subsidize “industry” as a whole. All they can do is boost one industry at the expense of another. If the US subsidizes industries A, B and C, then we implicitly penalize industries D, E, and F. Two hundred years ago, Ricardo developed the concept of comparative advantage, which explains why helping one set of industries effectively hurts the remaining industries. Back in the 1990s, Paul Krugman pointed out that for many people, included even high-level policymakers, “Ricardo’s Difficult Idea” is hard to grasp. Policymakers view the world in partial equilibrium terms when they need to look at things from a general equilibrium perspective.

Every time we put a tariff on steel or aluminum imports, we give a cost advantage to Asian and European firms that use steel and aluminum, such as carmakers. Every time we subsidize US chipmaking, we give a boost to Asian and European firms that do not make chips.

Unfortunately, it’s not a zero sum game—industrial policies are negative sum. In another article, the Economist points out that these subsidies reallocate global production in a highly inefficient fashion….

Here’s part 23 of George Selgin’s important series on the New Deal and recovery.

Is Californian Housing Policy a Form of Central Planning?

J.D. Tuccille reports on ten colleges woke-cult locales you should definitely have your children avoid.

Vanessa tweets: (HT Jay Bhattacharya)

Sorry, I am not living my life constantly worried about the next pandemic. Living in survival mode is not a healthy coping mechanism and we should not be subjecting our kids to this constant fear mongering.

Quotation of the Day…

(Don Boudreaux)

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… is from page 123 of the late Columbia University economist Donald Dewey’s 1984 paper “Antitrust According to Robert Bork: Some Reservations,” as this paper is reprinted in the excellent 1990 collection of some of Dewey’s papers on antitrust – a collection titled The Antitrust Experiment in America:

Surely the clear, unambiguous implication of conventional price theory is that only entry and exit conditions matter – and that of the two, entry conditions matter most. Unless it can be shown that cartels create entry barriers that would not otherwise exist, they are entitled to the same presumption of welfare creation as any other type of private contract.

DBx: Yes. And, of course, cartels or other horizontal price-fixing agreements as such do not create artificial barriers to entry (or exit) into their industries. Thus, any private cartel agreement that survives likely promotes consumer welfare in some fashion – say, by enabling the efficient survival of high-fixed-cost firms during economic slumps. (See, for example, the important work of George Bittlingmayer.) To use antitrust to prevent private cartel agreements, therefore, is to use antitrust to prevent contractual agreements that likely promote consumer welfare.

The best antitrust policy is simply for government not to obstruct entry into any industry or profession – a policy that implies also no obstruction of exit from any industry or profession, as any obstruction of exit is necessarily also an artificial discouragement of entry.

Don Dewey’s “reservations” about Bork’s splendid 1978 book had mostly to do with Dewey’s correct observation that Bork did not carry his significant skepticism of antitrust policy far enough.

The Great Ken Elzinga Speaks at GMU Econ

(Don Boudreaux)

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Perhaps history’s greatest teacher of principles of microeconomics (“Econ 101”) is the University of Virginia’s Kenneth Elzinga. Still going strong at the age of 81, Ken, in addition, is one of the world’s leading and best economic experts on antitrust – meaning that he understands that antitrust is far too often used to stymie, rather than to promote, competition.

Ken is also the co-author, along with the late Bill Breit, of the series of economic murder mysteries published under the nom de plume Marshall Jevons.

The fates, treating me much more generously than I deserve, forged between Ken and me a friendship in the mid-1980s. I’m grateful beyond words that this friendship continues to thrive. Ken is – like Bruce Yandle, and the late Hugh Macaulay, Manuel Ayau, Julian Simon, Andrea Rich, Leland Yeager, and Walter Williams – one of the most remarkable people I have ever known and befriended.

Ken spoke today (pictured here) in Fairfax at the GMU – Mercatus Center weekly seminar run by my colleague Pete Boettke. The seminar room was standing-room-only, filled mostly with GMU Econ students who not only will retain for their lifetimes much of the wisdom they encountered today, but also will share this wisdom with the students they will teach in the years and decades to come.

Ken’s lecture was an insightful contemplation of the connection of capitalism with democracy. Unsurprisingly, Ken argued, very convincingly, that the market – in which even the lowliest person possesses the right to say “no” – out-performs government schemes to improve the lot of ordinary people.

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(Don Boudreaux)

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George Will decries the destructiveness of public-employee unions. Three slices:

Two public schools in Manhattan illustrate the high stakes of a political choice that the nation, and many states and municipalities, must reconsider. In 2019, Success Academy Harlem 2 charter school ranked 37th among New York state’s 2,413 public elementary schools, one of which, PS 30, had only about a third as many pupils as Harlem 2, spent twice as much per pupil and ranked 1,694th. PS 30 and Harlem 2 operate in the same building.

The contract for PS 30’s unionized teachers is 167 pages long, mostly detailing job protections, and what teachers can and cannot be required to do. The contract for Harlem 2’s nonunion teachers is one page long. Those teachers can be fired at will, and are paid 5 to 10 percent more than PS 30 teachers on the other side of the building.

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Particularly at the state and local levels (e.g., school board elections), public employees wield union power to elect their employers, who reciprocate with contracts containing labyrinthine job protections. A 2011 book reported that over an 18-year period, just about two of Illinois’ 95,000 teachers were dismissed annually for unsatisfactory work. Because California’s 300,000 teachers are unionized, [Philip] Howard says, two or three a year are terminated for performing poorly. Consider this from a pro-union blog: “We don’t need to swap out all the bad and mediocre teachers for better teachers, any more than we should swap out our struggling students for more advanced students.”

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Public employee unions dictate rules for government with a beyond-satire granularity: Why was paint flaking off the top of the walls in New York City schools? Howard: “The union contract only allowed custodians to paint up to ten feet; any higher and the school would have to pay extra to hire a member of the painters’ union to complete the work.”

My intrepid Mercatus Center colleague, Veronique de Rugy, warns that fiscal reality isn’t optional. A slice:

Meanwhile, interest payments on the national debt are another fast-growing mandatory-spending component of the federal budget. Altogether, mandatory spending on entitlements and interest payments accounts for over 70 percent of the budget and is projected to consume more than 80 percent by 2040. Legislators barely have a say over such payments, even though these increasingly dominate the budget.

GMU Econ alum Romina Boccia busts some myths peddled by Biden.

Wall Street Journal columnist James Freeman criticizes Biden’s fiscal irresponsibility. A slice:

There may be some downsides to having an 80-year-old running the country. But among the benefits ought to be wisdom, an understanding of history and a focus on the legacy that will be left for future generations. Right now America’s children need President Joe Biden’s leadership in addressing the country’s massive and rapidly rising debt burden. Yet on Tuesday night the president clarified that he has no intention of providing it. Mr. Biden is so committed to rejecting Republicans’ efforts to restrain spending that in his State of the Union address he spent time attacking reforms they’re not even proposing.

It would be one thing if Mr. Biden were attempting to make an economic case that the government can finance massive annual deficits forever without consequence—or that the numbers published by his Treasury and the Congressional Budget Office are wrong. But he’s simply ignoring the problem and rejecting even the idea of discussing spending reforms as he seeks congressional approval for more borrowing.

Pierre Lemieux reminds us of protectionism’s utter illogicalness. A slice:

The benefit of trade, whether domestic or foreign trade, is that buyers can get their products (and services) from the least costly source. I leave it as an exercise for my reader (especially if he is an economics student) to persuade himself that imports are more important than exports. Interestingly, this belief should be more prevalent among protectionist conservatives, who should not want “our national resources” to be used to produce goods and services for foreigners instead of for “us.” But protectionists are not known for their logic; you may want to have a look at my Regulation article “Logic, Economics, and Protectionist Nationalism.”

Art Carden explains how public-choice makes him less cynical.

John O. McGinnis explores the connection between liberalism and democracy.

Jennifer Sey is understandably angry at the damage done to children and young adults by covid cultists. A slice:

Colleges are some of the last places requiring vaccination — even boosters, in some instances, like at Fordham University. These young adults are least at risk from covid, most at risk from vaccine-induced myocarditis and are some of the last Americans required to be boosted. It makes no sense.

Anthony LaMesa tweets: (HT Jay Bhattacharya)

Politicians kept schools closed, not COVID.

Winston Marshall talks with Jay Bhattacharya about lockdowns and the suppression of open debate.

Quotation of the Day…

(Don Boudreaux)

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… is from page 85 of Robert Higgs’s Winter 1997/1998 Independent Review essay, “Puritanism, Paternalism, and Power,” as this essay is reprinted in the 2004 collection of some of Bob’s essays, Against Leviathan:

Paternalists are more ambitious than Puritans. Whereas the latter are content to steer people away from sinful behavior, the former go further, seeking also to promote the worldly health, safety, and welfare of their wards, coercively if need be.

A Tendentiously Alleged Connection Between Trump and the Kochs

(Don Boudreaux)

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Here’s a letter to the Wall Street Journal:

Editor:

William Galston’s portrayal of the Koch network as having, until very recently, been clandestinely allied with Trumpian populists is tendentious (“The Koch Network Dumps Trump,” Feb. 8). It’s true that some policies pursued during Trump’s presidency are ones long supported by the Kochs. But none of these policies are uniquely Kochian. Every one of them – including tax cutting and reducing regulations – have long been supported also by mainstream Republicans. To suggest that Trump embraced these policies only because of insidious influence exercised by the Kochs is absurd.

Mr. Galston thinks that he seals his case when he quotes remarks delivered by Charles Koch to a gathering of key network supporters in July 2018. Mr. Koch did indeed then say that “We’ve made more progress in the past five years than I’ve made in the previous 50.” But I was in that audience and can attest that, contrary to Mr. Galston’s implication, those remarks were not about Trumpian policies – as should be obvious given that for three-and-a-half of the five years prior to July 2018 the White House was occupied by Obama. Mr. Koch was instead referring to the successes of his organization, Stand Together, at empowering  individuals to realize their potential. The majority of those efforts are focused on improving K-12 and post-secondary education, and on supporting community groups that help people who are struggling.

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 54 of economists Phil Gramm’s, Robert Ekelund’s, and John Early’s excellent 2022 book, The Myth of American Inequality: How Government Biases Policy Debate (footnote deleted):

The top 10 percent of households in the United States earn about 33.5 percent of all income, but they pay 45.1 percent of income-related taxes, including Social Security and Medicare taxes. In other words, their share of all income-related taxes is 1.35 times larger than their share of income. That is the most progressive income tax share of any OECD nation. In Germany, the top 10 percent earn 29.2 percent of the income and pay 31.2 percent of income-related taxes, 1.07 times their share of income. The French top 10 percent earn 25.5 percent of the income and pay 28.0 percent of the income taxes, 1.10 times their share of income.

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(Don Boudreaux)

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Eric Boehm of Reason reports on the Biden administration’s stubborn opposition to a Congressional effort to end the requirement that foreigners who fly to visit the United States be vaccinated against covid. A slice:

And whatever logic may have dictated the placement of extra burdens on foreign travelers at the beginning of the pandemic—when countries were trying and failing to slow the spread of the virus—certainly no longer applies. Once COVID became a global disease, any restriction on international travel made no more sense than imposing the same rules on people crossing from Virginia into Washington, D.C., every day.

Reason‘s Robby Soave writes about the Cochrane Library’s recent review of the effectiveness of masks. A slice:

The wearing of masks to prevent the spread of COVID-19 and other respiratory illnesses had almost no effect at the societal level, according to a rigorous new review of the available research.

“Interestingly, 12 trials in the review, ten in the community and two among healthcare workers, found that wearing masks in the community probably makes little or no difference to influenza-like or COVID-19-like illness transmission,” writes Tom Jefferson, a British epidemiologist and co-author of the Cochrane Library’s new report on masking trials. “Equally, the review found that masks had no effect on laboratory-confirmed influenza or SARS-CoV-2 outcomes. Five other trials showed no difference between one type of mask over another.”

That finding is significant, given how comprehensive Cochrane’s review was. The randomized control trials had hundreds of thousands of participants, and made useful comparisons: people who received masks—and, according to self-reporting, actually wore them—versus people who did not. Other studies that have tried to uncover the efficacy of mask requirements have tended to compare one municipality with another, without taking into account relevant differences between the groups. This was true of an infamous study of masking in Arizona schools conducted at the county level; the findings were cited by the Centers for Disease Control and Prevention (CDC) as reason to keep mask mandates in place.

Also writing about the recent study that finds masking to be largely ineffective at reducing the spread of covid is Reason‘s Jacob Sullum. Two slices:

After questioning the value of general mask wearing early in the COVID-19 pandemic, the Centers for Disease Control and Prevention decided the practice was so demonstrably effective that it should be legally mandated even for 2-year-olds. A new review of the evidence suggests the CDC had it right the first time.

That review, published by the Cochrane Library, an authoritative collection of scientific databases, analyzed 18 randomized controlled trials that aimed to measure the impact of surgical masks or N95 respirators on the transmission of respiratory viruses. It found that wearing a mask in public places “probably makes little or no difference” in the number of infections.

These findings go to the heart of the case for mask mandates, a policy that generated much resentment and acrimony during the pandemic. They also show that the CDC, which has repeatedly exaggerated the evidence in favor of masks, cannot be trusted as a source of public-health information.

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But one thing is clear: Instead of following the science on masks, the CDC distorted it to support a predetermined conclusion.

Jenny Holland is rightly appalled by Leonard Downie’s Orwellian call for the news media to attempt to regain public trust by abandoning objectivity. A slice:

According to the Washington Post, journalists should contort a story so it affirms every pre-conceived notion your reader has. Telling your readers how something really is, even if it risks disabusing the reader of those notions, is no longer necessary.

Wall Street Journal columnist Jason Riley is correct: Black students need better schools, not lower standards. A slice:

Some of the best public schools in the country are charter schools full of low-income black students who regularly outperform wealthier white peers on standardized tests. Yet these charter schools, which purposely locate in poor minority neighborhoods, have been criticized by civil-rights organizations for their racial imbalance. School choice has polled off the charts among black parents for decades, but opponents continue the fight to deny these families better education options.

Similarly, gifted and talented programs have come under attack for their elitism. There have been calls to eliminate them outright or at least broaden the definition of “gifted” to get a more desirable racial mix. Because the programs often enroll more whites and Asians than blacks and Hispanics, they’ve been accused of driving school segregation, but a new study published in Harvard’s Education Next magazine concludes that there is little merit to that claim.

“I find essentially no impact from gifted and talented programs on a Black or Hispanic student’s likelihood of having white or Asian students as classmates,” writes Owen Thompson, a professor of economics at Williams College. Nor does starting or ending a gifted and talented program affect a school’s racial composition, as critics allege. “I do not find any consistent evidence that gifted and talented programs have a causal effect on schools’ race-specific enrollments.” Nevertheless, efforts to oust or water down enrichment programs continue. Racial parity has been deemed more important than maintaining high standards.

You don’t help underperforming groups by pandering to them or by holding them to lower standards. And you don’t help black children by insisting that they must be seated next to white children in order to learn. It’s not only insulting and condescending but contradicted by decades of evidence. Low-income black students need quality schools, not white classmates, and the focus on racial balance at any cost will only ensure that another generation of black youth receives an inferior education.

I’m honored to have been a recent guest of Ed Kless and Ron Baker.

Philip Klein identifies a truly grotesque bipartisan moment during Biden’s State of the Union address. A slice:

There were plenty of things to dislike in President Biden’s State of the Union speech, but the most grotesque moment actually was one of the most bipartisan: when both Republicans and Democrats stood with Biden to applaud the idea of not touching Social Security and Medicare, which both desperately need to be pared if there is any hope of the United States escaping a fiscal crisis.

An e-mail correspondent, David, generously sent to me this text of a speech given in 2003 in California by the late Michael Crichton on environmentalism as religion. (I heard Chrichton give this same speech, also circa 2003, in NYC.) I’m delighted to be able to share here the text of this speech.

Quotation of the Day…

(Don Boudreaux)

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… is from page 121 of Julian Simon’s posthumously published 1999 volume, Hoodwinking the Nation:

I believe that the demands of the everyday necessity to make a living constrain the flights of fantasy and the excitement of prophesies made and believed. And as society becomes richer, fewer people and groups are prevented by this necessity from indulging themselves in these emotional orgies.

DBx: Truly prophetic.

We humans immersed in today’s spectacularly productive global, commercial economy take for granted a level of material prosperity that could not have been dreamed of by the most powerful potentate just a few hundred years ago. This prosperity is overwhelmingly good, but it’s not without serious downsides. As Simon notes, this prosperity enables more and more individuals to consume the luxury good of emotional orgies.

Enormous quantities of time and emotional energy – and resources – are spent fretting about and “addressing” environmental risks the true magnitudes of which simply don’t justify such expense. What’s really being produced and consumed by too many ‘environmentalists’ is the emotional thrill of fighting an Evil Villain and, in the process, fancying oneself superior to the masses who haven’t yet seen the full danger posed by the Evil Villain.

The fact that the Evil Villain is cartoonish is a feature and not a bug for these ‘environmentalists,’ for only by portraying the danger as coming in the form of an Evil Villain are they free to disregard real-world complexities, uncertainties, and the inescapability of trade-offs.

Very much the same mindset – made possible by our enormous prosperity – explains the fevers for DEI “initiatives,” ESG “investing,” and wokism generally. Only fantastically wealthy societies can afford to indulge this nonsense and hope to get away with it.

And only fantastically wealthy societies can and would attempt to shut themselves down in order to slow or stop the spread of a respiratory virus.

…..

Julian Simon, pictured here, died suddenly on this date 25 years ago. Only four days shy of his 66th birthday, he was struck down at far too young an age. The world needs his wisdom now more than ever.

Some Questions for a Covid Commission

(Don Boudreaux)

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Jay Bhattacharya, Leslie Bienen, Ram Duriseti, Tracy Beth Høeg, Martin Kulldorff, Marty Makary, MD, Margery Smelkinson, and Steven Templeton – “The Norfolk Group” – have some questions for a covid commission. Here’s their Introduction:

America’s response to the COVID-19 pandemic failed on many levels of government and in many aspects. Certainly, deaths are unavoidable during a pandemic. However, too many U.S. policy makers concentrated efforts on ineffective or actively harmful and divisive measures such as school closures that generated enormous societal damage without significantly lowering COVID-19 mortality, while failing to protect high-risk Americans. As a result, Americans were hard hit both by the disease and by collateral damage generated by misguided pandemic strategies and decisions that ignored years of pandemic preparation guidance crafted by numerous public health agencies, nationally and internationally.

Many crucial mistakes were made early on, in January, February, and early March 2020, and not corrected later. Mistakes made during this early critical window at the beginning of the pandemic affected our ability to collect data about COVID-19 and protect those most at risk and laid the groundwork for loss of public trust and confusion. These oversights led to unnecessary morbidity and mortality, particularly in nursing homes, and a lack of much-needed medical supplies, reagents for testing, and required medications. Delays in initiating research on key questions such as effectiveness of therapeutics, modes of transmission, length of infective periods, and other questions, meant that policy decisions were based on assumptions rather than on solid data. To this day, many of these questions have not been adequately addressed through robust trials.

At hospitals, morbidity and mortality (M&Ms) conferences are used to examine errors or omissions in order to improve medical care. Aviation agencies conduct detailed investigations after airplane accidents and incidents. Pandemics are recurring events throughout history, and there will be future pandemics. It is thus critically important that we thoroughly examine federal pandemic responses and decisions so that we can identify and learn from mistakes. Individual states should take on the responsibility of conducting similar processes to analyze their own responses to the pandemic. Other countries have conducted such inquiries (Norway, Sweden, The Netherlands, the United Kingdom, and Denmark) and made results available to the public and to decision makers. The United States is notably absent from this list. These inquiries pose important questions to key decision makers during the pandemic, including (i) politicians, (ii) leaders of the Centers of Disease Control and Prevention (CDC), the Food and Drug Administration (FDA), the National Institutes of Health (NIH) and the National Institute of Allergy and Infectious Disease (NIAID), (iii) state health departments, (iv) university presidents, medical school deans, hospital executives, medical journal editors, and leading public health scientists, as well as (iv) news media and technology/media companies.

This document is not a report from such an inquiry. Rather, we present a blueprint containing key public health questions for a COVID-19 commission. In separate chapters we summarize key background information and propose specific questions about failures to protect older high-risk Americans, about school closures, collateral lockdown harms, lack of robust public health data collected and/or made available, misleading risk communication, downplaying infection-acquired immunity, masks, testing, vaccine efficacy and safety, therapeutics, and epidemiological modeling.

We chose not to discuss economic issues, although we recognize that negative effects on the economy have long-term negative effects on public health. We have also chosen not to engage in issues regarding media handling of the pandemic, nor questions of how, when and why the SARS-CoV-2 virus originated. Public health responses to a pandemic are devised and implemented independently of viral origin.

This document was prepared and written solely by its eight authors. No other person discussed its content, or saw a draft or the final version before publication. Seven of us started the work at an in-person meeting in Norfolk, Connecticut, organized by the Brownstone Institute in May of 2022. We wrote and edited the bulk of this document during the subsequent six months. In honor of the place where we met, we call ourselves the Norfolk Group.

The eight of us hold a wide range of political views and are not united by any particular political viewpoints. All the authors have voiced criticisms of how the pandemic was handled by government agencies and individuals appointed by and serving in both Republican and Democratic administrations. This is a public-health document, and we write it as scientists with different specific areas of expertise, but sharing the same views regarding the basic principles of public health. Our work on this document was not on behalf of any institution, public or private. Further, the statements written in these articles by the Norfolk Group represent their personal interpretations and do not necessarily represent those of their employers. Last, as data are collected and new studies emerge, some of these documents and statements may become out of date or less accurate. These documents are based on current information as of January 2023 and may not have been updated past that date.