Russell Roberts's Blog, page 51

Bonus Quotation of the Day…

(Don Boudreaux)

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… is from page 34 of economists Phil Gramm’s, Robert Ekelund’s, and John Early’s superb 2022 book, The Myth of American Inequality: How Government Biases Policy Debate:

Texan George Mitchell, who invented fracking, combined several existing technologies to make oil and natural gas cheaper for the whole world while reducing carbon emissions as natural gas replaced coal in power generation. He received so small a share of the value he created that he deserves to be considered one of the great public benefactors of the twenty-first century.

DBx: Indeed so!

Pictured here is George P. Mitchell.

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(Don Boudreaux)

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In today’s Wall Street Journal, Barton Swaim profiles the great George Will. Two slices:

The rise of Donald Trump signaled something new. Mr. Trump himself had no interest in philosophical arguments for or against state intervention, but he won in 2016—or so a lot of Republican politicos told themselves—by promising to bring industrial production back to the American homeland. Suddenly high-level Republicans rediscovered the virtues of central planning. Sen. Marco Rubio, who in his 2015 presidential campaign announcement had bewailed “the weight of more taxes, more regulations and more government,” was soon able to proclaim the virtues of industrial policy. Several of his GOP colleagues in the Senate—Josh Hawley and J.D. Vance most vocally—are now doing the same. For the first time in many decades, Congressional Republicans don’t even claim to care about slowing the growth of mandatory social-welfare programs, which together comprise two thirds of the federal budget.

A vocal and not negligible number of conservative intellectuals, most of them marching under the banner of “national conservatism,” gleefully scorn the postwar right’s “libertarian” or “neoliberal” veneration of markets. National conservatism is a baggy term—for some it means traditional conservatism with a particular concern for the American nation-state; for others it signifies collectivist social policies combined with social conservatism.

George F. Will, columnist for the last half-century for the Washington Post, has traveled in the opposite direction. In “Statecraft as Soulcraft,” published 40 years ago, Mr. Will, now 81, made the case for government’s ability, and therefore duty, to encourage virtue in the citizenry. Readers of Mr. Will’s columns from the 1990s to the 2020s, however, are likelier to think of him as a proponent of the free market. His most recent book, “The Conservative Sensibility” (2019), makes a cogent case for the removal of government, to the extent possible, from social and economic life.

…..

Mr. Will’s belief in the old “liberal” ideals of free speech and the settling of disputes by compromise has a corollary: He’s suspicious of too much concord. “On policy,” he says, “I’m much more alarmed by the consensus than the discord.”

One form of consensus he finds particularly destructive. “I think the political class is far more united by class interest than it is divided by ideology. From Elizabeth Warren on the left to Ted Cruz on the right, they all subscribe to the permanent powerful incentive to run deficits—peacetime, full-employment, large deficits. Because the perception that they won’t be here when the crash comes.”

David Henderson skillfully exposes the fallacies in the case for wage and price controls. A slice:

Some macroeconomists seem to forget that although inflation is an overall measure of price increases, individual price increases matter. The main problem with price controls is that they prevent prices from rising when demand increases or supply falls. If the government doesn’t allow prices to rise in such circumstances, we get shortages and line-ups. That’s what happened in the gasoline market with Nixon’s price controls. It’s true that price controls will reduce the measure of inflation, but they actually hide inflation. Inflation is, after all, an increase in the cost of living. Most of us would rather buy steak at $10 a pound from the butcher who has steak than go to the butcher who doesn’t have steak but is charging $8 a pound. That $8 a pound does not signify a lower cost of living if we can’t get the steak.

Here’s the abstract of a new paper co-authored by my GMU Econ colleague Vincent Geloso:

Wage gaps between various groups within economies are common and policy solutions to attenuate them can have different distributional effects within groups. We propose a model to think about how, when labour is relatively immobile but capital isn’t, an economy with initial wage gaps between different groups can transition toward greater equality. We apply this framework to the French-English linguistic wage gap in Quebec (Canada) between 1970 and 2000 by looking at birth cohorts from 1910 to 1970. Our findings are consistent with our model: the closing of the wage gap was caused by a change, during the 1940s in compulsory schooling which shocked the initial equilibrium and led to cohort-specific dynamics.

George Will rightly describes “New York’s Rikers Island [as] a disgraceful emblem of a benighted era.” A slice:

And disregard irrelevant cant about “systemic racism.” Equity-mongers appalled by racial “disparities” should read Rafael A. Mangual in City Journal: Nationally, Black males are victims of gun homicides at a rate almost 10 times higher than White males. In New York City in 2021, 97 percent of shooting victims were Black or Hispanic.

Wall Street Journal columnist Holman Jenkins riffs intelligently on Al Gore and the climate-hysteria complex. Two slices:

In fact, Exxon’s results were identical to those of other scientists because it collaborated with them. Its findings weren’t hidden “behind closed doors,” as one report alleged. They were published in peer-reviewed journals. Rather blatantly, to get to its desired result, the “Harvard” study had to attribute to Exxon outside research that its scientists merely “reported.”

This retread builds on Rockefeller’s previous greatest hit, paying journalists in 2016 to flaunt Exxon’s decades-old scientific efforts. Exxon was accused of “emphasizing the uncertainty” when uncertainty was the crucial scientific output. No matter what Exxon said, not sellable to policy makers at the time was spending unknown trillions to reduce future temperatures maybe by 4.5 degrees Celsius, maybe by 1.5 degrees. Yet this was the best guidance science could provide for four decades.

Rockefeller prefers to stress the $30 million Exxon once spent on climate-skeptical think tanks. This money, not the scientific uncertainty or humanity’s desire for cheap energy, explains the failure to enact meaningful CO2 reductions. It’s all Exxon’s fault.

OK, studies like this one sponsored by Rockefeller and served up by provocateurs at the Harvard history department and Germany’s Potsdam Institute exist to exploit media shallowness. They wouldn’t exist otherwise.

…..

Mr. Gore will continue his angry prophet act. Politics will continue to fuel a sacred pork scramble. The climate press will balance on its noses whatever memes are tossed its way. And humanity will adapt to the climate it gets, which the best current guess says will probably be another 1 to 2 degrees Celsius warmer over the next century.

My GMU Econ colleagues Bryan Caplan and Robin Hanson interview Fossil Future author Alex Epstein.

Richard Fulmer is understandably unimpressed with Karl Marx’s economics.

Megan McArdle warns against the state removing parents from their minor children’s decisions to transition. Here’s her conclusion:

These are hard questions that often force difficult trade-offs, and I’m sure that parents will not always get the answer right. But I’m also sure they’ll give it their best shot. And until we have better evidence, that’s the best anyone can do.

Pamela Paul – using some words and phrases from Stanford University’s recent list of verboten words and phrases – decries the woke stifling of speech on campuses. Two slices:

Yet when in life is it more appropriate for people to take risks than in college — to test out ideas and encounter other points of view? College students should be encouraged to use their voices and colleges encouraged to let them be heard. It’s nearly impossible to do this while mastering speech codes, especially when the master lists employ a kind of tribal knowledge known only to their gurucreators. A normal person of any age may have trouble submitting, let alone remembering that “African American” is not just discouraged but verboten, that he or she can’t refer to a professor’s “walk-in” hours or call for a brown bag lunch, powwow or stand-up meeting with peers.

“You can’t say that” should not be the common refrain.

…..
It is reasonable to wonder whether any conceivable harm to a few on hearing the occasional upsetting term outweighs the harm to everyone in suppressing speech. Or whether overcoming the relatively minor discomforts of an unintentional, insensitive or inept comment might help students develop the resilience necessary to surmount life’s considerably greater challenges — challenges that will are not likely to be mediated by college administrators after they graduate.

Rather than muzzle students, we should allow them to hear and be heard. Opportunities to engage and respond. It’s worth remembering how children once responded to schoolyard epithets: “Sticks and stones may break my bones, but names will never harm me.” Narrow restrictions on putatively harmful speech leave young people distracted from and ill-prepared for the actual violence they’ll encounter in the real world.

Emma Camp writes about the recent empirical documentation of one of the steep costs of covid-hysteria-induced school closures.

Jay Bhattacharya tweets:

It’s time for a new generation of leadership in public health. This time with a better appreciation of the scientific method and less prone to panic and authoritarian excess. This generation failed its key test and cannot be trusted with the public’s health.

Quotation of the Day…

(Don Boudreaux)

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… is from page 122 of Thomas Sowell’s 1999 book, Barbarians Inside the Gates:

While we often complain about particular government policies or particular court decisions, often the more fundamental problem is that politicians and judges tried to deal with things for which they lacked either the depth of knowledge required or the means (or will) to monitor their mistakes and correct them.

The Typical Immigration Restrictionist Is No Better At Economics Than Is the Typical Protectionist

(Don Boudreaux)

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Here’s a letter to the New York Post.

Editor:

Steven Camarota’s February 3rd op-ed, “No, more immigration won’t stem inflation,” is deeply confused.

In reality, more immigration would indeed stem inflation. A notable reason for this reality is supplied – ironically if unwittingly – by none other than Mr. Camarota when he documents Americans’ sharply declining participation in the labor force.

The lower is the share of working-age Americans actually working, the lower is output. And the lower is output, the lower is the volume of goods and services on which newly created dollars can be spent. The result is price hikes higher than would otherwise occur. With more money chasing fewer goods, inflation is higher than it would be if output were higher.

Precisely because more immigrants would increase output, more immigrants would in fact put downward pressure on the inflation rate.

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 51 of the 1958 edition of E.A.G. Robinson’s 1931 book, The Structure of Competitive Industry:

The shareholders of a company perform two separate functions. They provide the capital and they run the risks, the risks either of losing their money or achieving wealth.

DBx: Real-world Bond villains and other proponents of replacing shareholder capitalism with so-called “stakeholder” capitalism are proponents of continuing to have the risks of business failures be borne by those persons who supply businesses with capital, while simultaneously compeling the suppliers of capital to share any profits that their capital makes possible with non-suppliers of capital.

Proponents of “stakeholder” capitalism, in short, are proponents of externalizing the upside ‘risks’ of private businesses while keeping the downside risks internalized on the suppliers of capital. In more pedestrian terms, proponents of “stakeholder” capitalism are proponents of free-riding loading.

More from Phil Magness on the Error-Stuffed 1619 Project

(Don Boudreaux)

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(Don Boudreaux)

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Paul Schwennesen lends his strong voice to those who are justly critical of the Hulu series on the 1619 Project. A slice:

Though it’s not likely to go very far, I’d like to toss another potato into the fire and point out that slavery was well-established in North America at least one hundred years before the alleged “beginning” of the American slavery story. Complete with the myriad complexities, contradictions and paradoxes of real life, the Spanish Americas (including much of what is today the United States) were awash in slavery. Slavery between Indians. Enslavement of Indians by Spaniards. Enslavement of Spaniards by Indians. And yes, tragically, enslavement of blacks, ladinos, Moors, and every distinction between. It was messy, it was endemic, and it was very real—but it was certainly not confined exclusively to Blacks, nor to early Americans in Virginia. Perhaps this deeper, more complex history might be called the 1519 Project.

The 1619 Project’s film trailer claims that the “very first enslaved Africans were brought here over four hundred years ago.” This is not only inaccurate (it was well over five hundred years at least), but it promotes the very sort of historical amnesia it professes to redress by entirely ignoring the much-earlier history of slavery in America.

“Since then,” it goes on, “no part of America’s story has been untouched by the legacy of slavery.” This is true in the narrowest sense, but it studiously misses the larger point: no part of the history of the entire world has been untouched by the legacy of slavery. The 1619 Project makes only glancing reference to sixteenth-century American slavery, and instead seeks to make a special case of colonial English slavery, with a specific political aim to impugn “capitalism” and the “hypocrisy” of revolutionary founding ideals. By carefully ignoring the larger context of slavery in the Americas, it engages in weaponized, cherry-picked history that supports its own motivated ends, amongst which are special race-based preferences and “$13 trillion in reparations.”

Phil Magness and others have already done yeoman’s work in documenting the numerous historical inaccuracies and outright fabrications of the The 1619 Project (and, charitably, what the project gets right), so I won’t rehash except to say that, as a historical product the Project is, shall we say, questionable. But setting that aside, the biggest tragedy of all is that The 1619 Project’s tunnel-vision ignores so much rich history: remarkable people, troubling facts, and brutal truths that cut across all manner of ethnic and geographical boundaries.

“An Apostate Indicts Our Educational System.”

GMU law professor Donald Kochan writes about courts in the U.S. taking a harder look at lawsuits alleging that oil producers mislead the public about climate change. A slice:

These so-called deception claims sometimes allege that the companies downplayed the impacts of climate change despite that there is no affirmative duty to share everything you know, especially when consumers in the market have access to the same information.

Other times the greenwashing claims allege that the companies should not have been allowed to advertise about efforts they are making toward developing cleaner energy because these efforts were not as robust as the plaintiffs would have liked. Indeed, in several cases, the plaintiffs have essentially stated that these companies should not have been allowed to speak about their environmental successes because the only clean fossil fuel is no fossil fuel.

These consumer deception lawsuits are direct attacks on rights to speak and the corollary rights to not be compelled to speak. But there should be no climate change exception to free speech.

Colin Grabow explains that there are many good options for reforming the cronyist and harmful Jones Act. A slice:

In a recent blog post my colleague Scott Lincicome and I critiqued a Niskanen Center essay that called for addressing the Jones Act’s many shortcomings through heavy‐​handed industrial policy rather than repealing the century‐​old law. While the proposals offered were misguided, there is nothing objectionable about advocating for the law’s update and modernization rather than outright repeal. Indeed, the approach offers a more politically feasible path forward. Although scrapping the Jones Act and meeting U.S. national security needs through more targeted and purposeful measures represents the ideal policy outcome, it’s a near‐​term political long shot.

1990s welfare reforms in the U.S. appear to have been successful. A slice:

We find that single‐​parent‐​family poverty, after accounting for taxes and nonmedical in‐​kind transfers, declined by 62 percent between 1995 and 2016 using the CID [Comprehensive Income Dataset]. In contrast, it fell by only 45 percent using survey data alone. Moreover, while survey‐​reported deep poverty among single‐​parent families increased over this time period, linked survey and administrative data reveal that this misleading result is due to declining survey quality. Linked CID data show that deep poverty decreased between 1995 and 2016.

Who’d a-thunk it?!: “COVID Stimulus Spending Played ‘Sizable Role’ in Inflation.”

Timandra Harkness decries the covid-hysteria-inspired ramping-up of Orwellian efforts by government to police and suppress disinformation and misinformation. Two slices:

“Government cracks down on spread of false coronavirus information online,” announced a UK Government press release on March 30, 2020. “Specialist units” are tackling dangerous misinformation, disinformation, criminal fraudsters, and “false and misleading narratives”, we were told.

But, as Big Brother Watch revealed on Sunday, the activities of these units went far beyond refuting claims such as “gargling warm water cures Covid”. The Counter Disinformation Unit, first used in 2019 to monitor potential interference in elections, was intended to combat deliberately misleading online content. In March 2020, however, its scope was extended to include misinformation and to work even more closely with social media platforms. This may not be an official censorship regime — departments have a hotline to these platforms to ask that material is removed — but it is a very easy way for the Government to reduce the spread of posts it disapproves of.

…..

The UK is not the only country to invoke the spectre of disinformation to seek to control public conversations. Greece passed a law against spreading false information in 2021, with a penalty of five years in prison, while Malaysia used emergency powers to pass a “fake news” law imposing jail terms for anyone spreading “wholly or partly false” information about either the pandemic or the state of emergency itself. Elsewhere, Turkey passed a law in October last year which threatens those who spread misleading news with prison, and social media platforms with fines for failure to remove content or disclose a user’s identity. Arrests have already been made.

U.S. Travel tweets: (HT Jay Bhattacharya)

There’s no reason to wait until the public health emergency expires in May to eliminate the vax requirement for intl travelers. We thank the sponsors of H.R. 185 for their efforts to remove this outdated policy and normalize inbound travel operations.

Quotation of the Day…

(Don Boudreaux)

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… is from page 4 of Linda R. Cohen’s and Roger G. Noll’s 1991 paper “New Technology and National Economic Policy,” which is Chapter 1 of The Technology Pork Barrel (L. Cohen & R. Noll, eds., 1991):

In the private sector the problems of relating uncertain current research to uncertain future market conditions are demanding and risky enough, but they are even harder for public officials, who usually have less access to information about markets than their counterparts in the private firms. Moreover, the public decisionmaker must consider political forces that would be of little or no concern to a private organization.

DBx: This problem of deficient information continues to be ignored by advocates of industrial policy. Industrial-policy advocates simply assume the knowledge problem away or, what is the same thing, assume that it will somehow be solved. Just how officials charged with conducting industrial policy will acquire the detailed knowledge necessary for their schemes to succeed is never explained.

Note that it will not do for industrial-policy proponents to say “Oh, government officials will acquire, process, and act on the same knowledge that is used by private entrepreneurs, investors, and managers.” Precisely because industrial policy is designed to bring about a pattern of resource allocation that differs from the pattern that would arise on free markets, industrial-policy officials cannot be guided by the same source of knowledge as that which guides private decision-makers.

Private decision-makers are guided largely by relative prices set on markets – prices for outputs relative to each other, and prices for inputs relative both to each other and to outputs. Because industrial policy rejects the usefulness of these prices – because at the very core of support for industrial policy is the belief that the information conveyed by market prices is defective – industrial policy overrides market prices. And by overriding market prices, industrial policy destroys the single greatest source of information that private-sector decision-makers rely upon.

Bonus Quotation of the Day…

(Don Boudreaux)

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… is from pages 26-27 of Thomas Sowell’s 1978 paper “Three Black Histories,” which is the lead essay in Essays and Data on American Ethnic Groups (Thomas Sowell & Lynn D. Collins, eds., 1978) (footnotes deleted):

Many of the costs created by slavery as a system were borne by southern society as a whole, rather than by the 5 percent of white southerners who actually owned slaves. These costs included not only government apparatus directly involved in the control of slaves (patrols to check passes, recapture escapees, etc.) but also restrictions increasingly imposed on the white population, including the censoring of the mails to intercept abolitionist literature and the destruction of academic freedom at souther colleges and universities in order to stamp out antislavery ideas and individuals.

DBx: Were proponents of reparations (to descendants of American slaves) serious about their (misguided) effort to achieve cosmic justice, they would endorse not only excluding descendants of the 95 percent of southern whites who didn’t own slaves from having to contribute taxes toward the reparations fund, but also including these whites in the group who receive reparations payments.

Being myself descended from non-slave-owning white southerners, I should be compensated for the damage to my life’s prospects that – according to the logic of champions of reparations – I suffer as a lingering consequence of the economic deprivations the institution of slavery inflicted on my ancestors.

Of course, in reality I am ethically entitled to no such reparations payment – just as no one today is ethically entitled, because of misfortunes visited upon their ancestors, to any such reparations payment.

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(Don Boudreaux)

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George Will, although more comfortable than I am with some U.S.-government-dispersed subsidies to producers of semiconductors, nevertheless rightly worries that these subsidies will become malignantly cancerous. Three slices:

It would be easier to be sanguine about the government’s coming disbursal of $52 billion in subsidies for semiconductor manufacturing and research if Commerce Secretary Gina Raimondo did not celebrate it so lavishly. Her language suggests that what should be a narrow national security measure might become a broad, perennial temptation for government.

…..

Speaking in her office in the Commerce Department building, which is named for a previous secretary (an engineer: Herbert Hoover), Raimondo is emphatic: The reason for subsidizing the “on-shoring” of chips manufacturing is “100 percent national security.” Manufacturers should “produce what the market decides, but do it in America.”

In a November speech, however, Raimondo said these “transformational” subsidies will enable “reimagining our national innovation ecosystem well beyond Silicon Valley.” And she anticipated “new collaborations among businesses, universities, labor, and local communities” concerning “advanced computing, biotechnologies and biomanufacturing, and clean energy technologies.” Hence, “we are working across the government” to “invest in core critical and emerging fields of technology,” for “revitalizing” manufacturing.

So, far from being “100 percent national security,” the rationale for the $52 billion (and more; read on) is government-driven transformation of, potentially, American society.

…..

Government always needs but rarely has epistemic humility, an understanding not just of what it does not know, but what it cannot know. Such as what unplanned-by-government human creativity will cause to emerge, over the horizon. And how government planning of the future, by allocating resources, can diminish it.

Phil Magness finds further evidence that the 1619 Project‘s use of Lord Dunmore’s proclamation rests on a foundation more flimsy than one constructed of loosely arranged dandelion petals.

George Leef remembers Yuri Maltsev.

GMU Econ alum Dominic Pino rightly criticizes the FTC for “using a tool it shouldn’t even have in its toolbox.”

Phil Gramm and Michael Solon, writing in the Wall Street Journal, decry the U.S. government’s fiscal incontinence. A slice:

The Biden administration and the Democratic Congressional leadership admonish Republicans to do the “responsible” thing by raising the debt ceiling to continue the post-pandemic spending surge. President Biden has called Republican efforts to use the debt ceiling to rein in spending “fiscally demented.” In holding the “debt limit hostage,” Treasury Secretary Janet Yellen says Republicans could do “irreparable harm to the U.S. economy.” But at what point does not raising the debt ceiling become less irresponsible than continuing current policy and allowing the country to go broke?

Despite outcries from Democrats and the media, using the debt ceiling to try to rein in spending is hardly a new idea. Since 1985 when Sen. Biden joined a bipartisan effort to adopt Gramm-Rudman-Hollings as a rider to the debt ceiling, the debt ceiling has been raised 50 times, and riders have been adopted as part of raising the debt ceiling 48% of the time. Many of those riders, such as the 1993 Clinton tax hike, the Balanced Budget Act of 1997 and the Pelosi PAYGO Act, were offered by Democrats.

The logic of using the debt ceiling to respond to the growth in the national debt is inherently appealing to most Americans. What better time to call the family together, sit down around the kitchen table, get out the butcher knife and cut up the credit cards.

My Mercatus Center colleague Alden Abbott summarizes the top takeaways from last-week’s 2nd annual Mercatus Antitrust Forum. (Video of the Forum is available here.)

In this video, Marian Tupy busts the myth of overpopulation.

My intrepid Mercatus Center colleague, Veronique de Rugy, isn’t impressed with politicians’ principles.

“The Morality of Adam Smith: An Interview with Daniel Klein.”

Dr. Malcolm Kendrick was sparked by news of the resignation of New Zealand strongwoman Jacinda Ardern to again ponder covid. Two slices:

With the resignation of Jacinda Ardern, my thoughts were dragged back to Covid once more. Jacinda, as Prime Minster of New Zealand was the ultimate lockdown enforcer. She was feted round the world for her iron will, but I was not a fan, to put it mildly. Whenever I heard her speak, it brought to mind one of my most favourite quotes:

Of all tyrannies, a tyranny sincerely exercised for the good of its victims may be the most oppressive. It would be better to live under robber barons than under omnipotent moral busybodies. The robber baron’s cruelty may sometimes sleep, his cupidity may at some point be satiated; but those who torment us for our own good will torment us without end for they do so with the approval of their own conscience.’ C.S. Lewis

At one point she actually said the following:

“We will continue to be your single source of truth” “Unless you hear it from us, it is not the truth.’

If I ruled the world, anyone who said, that, or anything remotely like that, would be taken as far as possible from any position of power, never to be allowed anywhere near it again. Ever.

…..

In the face of such evidence, the argument for lockdown seems to be transforming into a somewhat pathetic whinge. ‘We didn’t know. It’s all very well people saying we shouldn’t have locked down now. We didn’t hear you saying it at the time. We were just following The Science, don’t blame us. Better safe than sorry. Don’t blame us …I think you’re being very nasty to us.’

This, of course, is nonsense. There were plenty of scientists arguing against lockdown at the time. However, they were all ruthlessly censored, attacked, and silenced. Experts such as Prof. John Ioannidis, Prof. Karol Sikora, Prof. Sunetra Gupta, Prof. Carl Heneghan. These last two UK professors argued very strenuously against lockdowns. They were ignored, then vilified.

Thomas Massie tweets: (HT Jay Bhattacharya)

Why does Biden want to delay ending the COVID emergency for another 100 days? Because he wants to use emergency authorities to shove more money out of the door. It’s been 1000+ days to slow the spread. End the COVID emergency NOW.