Russell Roberts's Blog, page 53

Some Links

(Don Boudreaux)

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My GMU Econ colleague Peter Boettke remembers Yuri Maltsev, who passed away last week.

Also remembering Yuri is Jeffrey Tucker.

It was ninety years ago today that Hitler was sworn in as Chancellor of Germany – a loathsome event that Samuel Gregg reflects upon as he applauds the courageous Wilhelm Röpke. A slice:

When the Nazis acceded to power in 1933, the effect was not mass consternation on the part of those with misgivings. Even the most important German Jewish representative group, the Central Association of German Citizens of Jewish Faith, maintained that, despite the Nazis’ ferocious anti-Semitism, “nobody would dare to touch [their] constitutional rights.”

In his February 8 lecture, Röpke demonstrated that he had no such illusions. Entitled “Epochenwende” (End of an Era), Röpke’s lecture spelled out precisely why Hitler’s entry into the Chancellery represented something entirely different from a normal change of government. National Socialism’s triumph constituted, Röpke stated, a defeat for reason and freedom. The Nazi movement, he told his audience, with its naked appeal to “moods and emotions” and constant invocation of “myth,” “blood,” and the “primordial soul” left no room for such things.

Not only, Röpke insisted, were “stupidity and stupor” being “inculcated in a way that beggars description”; “every immoral and brutal act,” he observed, “is justified by the sanctity of the political end” for the Nazis. The threats to destroy entire groups—“Jews in Germany” and “hereditary enemies of all kinds”—were not, Röpke argued, mere rhetoric designed to whip up populist resentment that would be quietly shelved once the Nazis took power. It was integral, Röpke knew, to the entire National Socialist project.

Juliette Sellgren talks with Kaytlin Bailey about the oldest profession.

David Henderson writes: “From the start, many of us who were skeptical of, or even opponents of, government lockdowns pointed out that advocates of lockdowns often ignored tradeoffs.”

TANSTAFPFC (There Ain’t No Such Thing As Free Protection From Covid.)

“Misinformation and hate speech have been rife in the past three years, but from defenders of the covid consensus, not dissenters.”

Amy Lansky and her husband, who “felt like COVID-vaccine refugees,” went in search of freedom from covid hysteria and tyranny. (HT Arnold Kling) Two slices:

Once we left the Bay Area and especially California, a change in energy and spirit was immediately palpable and visible. Thank God for the innate spirit of freedom cherished by so many American citizens, who refuse to let their lives be controlled by fear. I have a vivid memory of being at a gas station/mini-mart in Nevada on the first day of our trip. No one was wearing a mask. And when we checked into our first stop at a little motel in Winnemucca, NV, I was amazed that the clerk was not wearing a mask either. At the gas station, however, I saw people get out of a car with California plates. With their masks fully in place, they seemed to be looking around in abject fear, as if they had entered a plague zone. It was the first hint that what I had considered normal and “protective” over the past 1.5 years may actually have been based on misguided and excessive fear.

…..

The fact that fear breeds more fear also explains the toxicity of places like the Bay Area that have embraced the closed attitude with relish. As soon as we got back home (a wealthy area that has one of the highest rates of vaccination and lowest incidences of COVID in the country), I slowly became not only depressed but also more worried about getting COVID myself. It took a week or two, but the creeping fear and anxiety sank back in again. It is no wonder that people who haven’t left this area since March 2020 simply can’t believe what the rest of the country is like. I have more than one friend who has not left self-imposed complete lockdown in almost two years. When we tell our friends here about our voyage across America, most of them simply ignore us. I now believe that most of the people living in the Bay Area are in a psychotic delusional state of fear. They truly believe that the emperor is wearing regal robes. In contrast, most of the country can see that he is naked or at least has hardly anything on.

Reason‘s J.D. Tuccille decries the loss of freedom due to covid hysteria. Two slices:

“The pandemic has resulted in an unprecedented withdrawal of civil liberties among developed democracies and authoritarian regimes alike,” cautioned The Economist‘s Democracy Index 2021. This “compounded many pre-pandemic trends such as an increasingly technocratic approach to managing society in Western democracies, and a tendency in many non-consolidated democracies or authoritarian regimes to resort to coercion.”

“As COVID-19 spread during the year, governments across the democratic spectrum repeatedly resorted to excessive surveillance, discriminatory restrictions on freedoms like movement and assembly, and arbitrary or violent enforcement of such restrictions by police and nonstate actors,” Freedom House observed in 2021.

…..

“The pandemic of COVID-19 coronavirus threatens a world-wide wave of sickness, but it’s the healthiest thing to happen to government power in a very long time,” I warned in March 2020. “As it leaves government with a rosy glow, however, our freedom will end up more haggard than ever.” Weeks later, I added that the “virus would threaten to turn the Land of the Free into a command society where what we do is directed and paid for by the state.”

It’s obvious now that the real plague of the past few years was less COVID-19 than governments’ exploitation of public health fears to further expand their already excessive power. Freedom, which was already ailing, shows no signs of improving health.

Here’s an excellent letter in today’s Wall Street Journal:

My mother was 7 years old when the German army rolled through her home in Yugoslavia. Every day thereafter her family lived in fear that either a roving band of German soldiers, Nazi sympathizers, loyalists or partisans would round up the family and execute them. They simply confronted this fear and got on with life, albeit always looking for a way to survive the day.

Before Covid, recent generations of Americans had never known a collective fear of war, mass poverty or disease. Our current peace and prosperity is a gift from the previous generations who knew these fears and confronted them. Sadly, large parts of our society succumbed to fear in the spring of 2020.

Werner Beyer
Collierville, Tenn.

Michael Senger tweets: (HT Jay Bhattacharya)

Focused protection was *always* the moral and ethical framework for managing COVID. That health and security officials ever pretended otherwise was the fundamental psychic break from which the entire catastrophe proceeded—everything else was downstream.

Simon Fraser economist Douglas Allen offers a final assessment of covid hysteria and tyranny. A slice:

The benefits of lockdowns were originally expressed in terms of mitigating the rush to hospitals and preventing the health system from being overrun. Later many thought that the virus might actually be eliminated by lockdowns (so-called “zero-COVID”). Initial benefit estimates were based on simple models that predicted the number of hospitalizations and deaths without lockdowns. Initial estimates of the costs of the lockdowns were based only on lost GDP from reduced labor-force participation. This led to grossly inaccurate cost/benefit estimates.

Quotation of the Day…

(Don Boudreaux)

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… is from page 60 of F.A. Hayek’s July 1946 speech at Stanford University titled “The Prospects of Freedom,” as this speech appears – for the first time in print – as chapter 3 of Essays on Liberalism and the Economy, which is volume 18 of The Collected Works of F.A. Hayek (Paul Lewis, ed., 2022) (emphasis added):

[W]e shall not prevent the gradual advance of totalitarian control if we do not succeed in defeating the philosophy which produces it.

Broken Compass

(Don Boudreaux)

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Here’s a letter to a long-time correspondent:

Mr. W__:

Thanks for sharing with me American Compass’s Policy Brief endorsing a global tariff. Alas, I don’t share your enthusiasm for that document. It’s deeply flawed both factually and economically.

Forget that, contrary to the Brief’s assertion, an increase in the U.S. trade deficit does not necessarily increase Americans’ indebtedness. (When you pay $1,000 for a car repair, you are not thereby thrust $1,000 further into debt if your mechanic – rather than buying $1,000 of what you sell – either pockets the cash indefinitely or spends it on an out-of-town trip.) Overlook the Brief’s mistake of equating a fall in U.S. manufacturing employment with a fall in U.S. manufacturing output. (The former has been falling for more than 40 years while the latter has been rising. Real U.S. manufacturing output is today only 5.7 percent lower than the all-time high which it hit just before the Great Recession and 179 percent higher than it was when the St. Louis Fed began gathering data on manufacturing output in January 1972.)

Instead focus on this passage from the Brief’s final paragraph:

Even very large tariffs have barely detectable short-term effects on consumer prices, and every dollar of tariffs can go toward reducing other taxes or costs that families face. In practice, much of the tariff ’s cost will be borne by foreign producers who must cut price to compete in our market, which economists found to be the case when President Trump imposed tariffs on China.

This passage alone reveals that the author of the Brief is ignorant of the most basic of economic realities. The reason is plain: Tariffs protect domestic producers only if and to the extent that tariffs raise the prices that domestic consumers must pay. The very point of a protective tariff is to raise the prices that consumers must pay for imports, for only by artificially raising the prices of imports will consumers be incited to instead purchase domestically produced substitute goods. Any tariff whose “cost will be borne by foreign producers” and thus cause that tariff to have “barely detectable” effects on consumer prices is a tariff that doesn’t do what the author of the Brief wants it to do – namely, protect domestic producers from foreign competition.

The fact that American Compass peddles its scheme for a “global tariff” by claiming that such a tariff will divert consumer demand to domestically produced substitutes for imports without raising the prices that consumers pay for imports is proof as solid as proof gets that all of American Compass’s trade-policy proposals should be ignored.

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

Choosing to Be Part of the Global Market Economy

(Don Boudreaux)

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In my latest column for AIER I offer some evidence that people who are explicitly confronted with the ability to make an active, conscious choice to join the global market economy or remain ‘protected’ from this economy’s risks, overwhelmingly choose to join the global market economy. A slice (link added):

More than a few people have challenged my claim of voluntary participation in the global economy. But I stand by this claim.

Later in the paper I argue:

No one is forced to participate [in the market economy]. Each of us has the option of withdrawing from commercial society, as a tiny handful of people have actually done. A great deal of rural land is available for purchase. Each of us is free to buy this land on which we can scratch out a living, either literally alone or with whatever small band of individuals we persuade to accompany us.

Of course, the resulting material standard of living of economically isolated individuals would be desperately low compared to the standard of living available even to the poorest of those who participate in the modern commercial economy. Indeed, the colossal difference between the maximum standard of living achievable by those who divorce themselves from modernity and the minimum standard of living available to those who remain integrated into modernity is what makes my claim that it is possible to abandon commercial society seem so far-fetched.

Again, I stand by this claim. Yet I understand why many people continue to doubt its realism: we Americans and Europeans today almost never observe anyone actually opting out of commercial society. How realistic is this option if no one takes it?

But in reading Michael Shellenberger’s 2020 book, Apocalypse Never, I ran across some real-world evidence of the validity of my claim. In discussing his work as a young man in the 1990s in Brazil, Shellenberger writes:

I can count on a single hand the number of young people who told me they wanted to remain on their family’s farm and work their parents’ land. The large majority of young people wanted to go to the city, get an education, and get a job. They wanted a better life than what low-yield peasant farming could provide.

When confronted more explicitly and consciously than we Americans are with the choice of avoiding, or embracing, the particular kinds of risks that are inseparable from participation in a global market economy, most people choose to embrace these risks. People who have actually experienced the ‘security’ that comes from insulation from market forces understand that the price they pay for this ‘security’ is far too high. That price includes the inability to enjoy goods and services that we in America today regard as indispensable – goods and services such as indoor plumbing, plentiful food, shelter that’s sturdy and spacious, antibiotics, and motorized transportation. This price includes also the greater insecurity to life and limb that curses all who have no access to these goods and services.

People who have actually had the ready opportunity to ‘protect’ themselves from the global market economy understand that the fruits of that economy are far more abundant and sweet than is the pathetic ‘security’ that comes from being sheltered from global market forces. Overwhelmingly, and not merely by default, these people choose to be part of the global market economy. The fact that Americans and Europeans make this choice as a matter of course without really thinking about it does not mean that we don’t really have such a choice. We do. We just choose to continue to position ourselves to reap the fruits of the global market economy. And therefore, each of us must be willing to pay the relatively small price of participating in this economy.

Bonus Quotation of the Day…

(Don Boudreaux)

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… is from George Will in his September 2021 conversation with Nick Gillespie, as the transcript of this conversation appears in the January 2022 issue of Reason:

What’s wrong with the 1619 Project is that it is factually preposterous. The essence of the story is that Americans fought the American Revolution because Lord Dunmore said that slaves fighting on the British side would be emancipated. Well, he said that in November 1775 – after Lexington and Concord, after the Boston Tea Party, after the Boston Massacre, after the Stamp Act. The war was up and running, and this is after George Washington had been put in charge of the troops.

So it is factually illiterate to say this. And that is why, to use your term, it’s not a good-faith kind of argument. It’s tendentious, meretricious, and propagandistic.

DBx: Legitimate litmus tests for revealing oneself to be without-question incompetent to pronounce on a particular issue are rare. But the set of such tests isn’t empty. For example, if Sam announces that protective tariffs increase real wages for most ordinary workers in the domestic economy, Sam reveals himself to be incompetent to pronounce on the economics of international trade. If Sarah proclaims that the rises in prices for goods such as propane and plywood following a devastating storm are caused by greed, she thereby reveals herself to be incompetent to pronounce on the workings of markets. A third example: If Steve waxes eloquently about the economic and environmental benefits of locovorism, you can be certain that Steve is incompetent to pronounce on anything economic and environmental. He is – like Sam and Sarah – a ‘thinker’ as shallow as they come.

No less revealing of his or her incompetence – here, the incompetence to pronounce on the history of the American revolution – is anyone who insists, or who defends those who insist, that the American revolution, sparked by Lord Dunmore’s announced emancipation of certain slaves, was a struggle to protect the institution of slavery in the thirteen colonies from imminent British abolition.

…..

Pictured above is Lord Dunmore. Under his governorship of the Bahamas from 1787 to 1796, slavery continued.

Some Links

(Don Boudreaux)

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My GMU Econ colleague – and great scholar of free banking – Larry White recently debated Frederic Mishkin on this resolution: “Replacing the Federal Reserve with free market institutions would significantly improve the economy’s money, banking, and financial systems.”

GMU Econ alum Dominic Pino, writing at National Review, decries the Securities and Exchange Commission’s mission creep gallop. A slice:

Two of the [Chairman Gary] Gensler SEC’s most important critics are within the SEC. The first is commissioner Hester Peirce, the only Republican currently on the commission. Appointed by Donald Trump and serving since 2018, Peirce has used her post to argue against Gensler’s approach and to dissent from her Democratic colleagues’ decisions. Though the chairman sets the agenda and directs the commission’s resources, individual commissioners retain significant latitude to speak their minds.

In a lengthy statement from March 2022 titled “We Are Not the Securities and Environment Commission — at Least Not Yet,” Peirce argued that the climate-disclosure proposal “turns the disclosure regime on its head.” The purpose of disclosure requirements, Peirce said, is to provide investors with information about how a company is run. It would be a perversion of the SEC’s purpose to require disclosures that regulators want rather than disclosures that investors need.

The proposal would give stakeholder capitalism the force of federal regulation over part of the economy. “It forces investors to view companies through the eyes of a vocal set of stakeholders, for whom a company’s climate reputation is of equal or greater importance than a company’s financial performance,” Peirce said. Stakeholder capitalism is a theory of corporate decision-making by which businesses seek to satisfy various groups of people inside and outside the company, rather than focusing on financial performance. Corporations should be free to adopt or reject it without government’s putting its thumb on the scale in favor of particular groups (in this case, environmentalists).

The Wall Street Journal‘s Editorial Board reports the happy news that school choice is gaining momentum. A slice:

All of these reforms share a common principle, which is that state money for education follows the child and not the school system. The hope is that this empowers parents, rather than unions and education bureaucracies that have dominated school governance and prevented the learning improvement and higher standards that U.S. students desperately need.

Art Carden identifies four ways to get what you want. A slice:

Consider tariffs again. If we know anything in economics, we know taxing trade routes is “bad.” It impoverishes most people to serve special interests. The “bargaining” between interest groups that can deliver votes, and politicians who can deliver policy, consumes income and wealth, on net. Politicians are “trading” what’s in consumers’ wallets without giving them an offsetting benefit.\

Why are gasoline prices so much higher in California than in the rest of the country?

Billy Binion talks with Jennifer Sey.

Last month, Russ Roberts had Arnold Kling as a guest on EconTalk.

The Pholosopher tweeted this image: (HT Jay Bhattacharya)

Quotation of the Day…

(Don Boudreaux)

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… is from page 38 of Michael Shellenberger’s excellent 2020 book, Apocalypse Never: Why Environmental Alarmism Hurts Us All (original emphasis):

Insensitivity to Brazil’s need for economic development led environmental groups, including Greenpeace, to advocate policies that contributed to the fragmentation of the rainforest and the unnecessary expansion of cattle ranching and farming. Environmental policies should have resulted in “intensification,” growing more food on less land. Instead, they resulted in extensification and a political and grassroots backlash by farmers that resulted in rising deforestation.

Trust the ‘Experts’?

(Don Boudreaux)

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I’m honored to appear, in this documentary produced by the Pacific Legal Foundation, with (among others) Martin Gurri, Roger Koppl, and Amity Shlaes.

Some Links

(Don Boudreaux)

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Writing at his Facebook page, Phil Magness identifies a fundamental misrepresentation of American history made in the new documentary based on the fallacy-filled 1619 Project. A slice:

Welp, the 1619 Project Hulu series is already a dumpster fire.

They filmed the part about the American Revolution on the grounds of the colonial governor’s mansion in Williamsburg. Nikole Hannah-Jones interviews Woody Holton, where they jointly make the case that Lord Dunmore’s proclamation of November 1775 was an “Emancipation Proclamation” of the slaves that roused the colonists to rebellion.

Throughout the scene, they give the impression that Dunmore issued his order from Williamsburg, with Holton even pointing at the building as he speaks. But this is an egregious factual error. In reality, the rebellion had already been underway in Virginia for almost 6 months. Dunmore fled Williamsburg on June 8, 1775 and had already lost control of the colony. He was sheltering in exile aboard the British navy ship William off the coast of Norfolk, and issued his order from there as a desperate attempt to regain power.

Inspired by the James Webb Space Telescope, George Will writes eloquently about the changing universe – and about science. Here’s his conclusion:

Earth is biophilic only somewhat (volcanoes, earthquakes, viruses, etc.), and only briefly, as measured by the cosmos’s clock. But what distinguishes us from trees and trout and every known (so far) thing in the universe is what Webb exists solely to satisfy. The Webb Space Telescope speaks well of us precisely because it has, and needs, no justification beyond the purity of its service to curiosity.

Wall Street Journal columnist Kimberly Strassel warns us to indeed be worried that the government might well deny us access to gas stoves. Two slices:

The reason gas stoves are in the news is simple: There is a coordinated, calculated—and well-funded—strategy to kill them off. It’s the joint enterprise of extremely powerful climate groups, working with Biden administration officials who have publicly stated their aim to eliminate all “combustion appliances” in homes. Only after the GOP called them out did anyone pretend otherwise.

…..

The stated goal of all these group is killing gas to “save” the planet. Yet they also know Americans won’t give up their stoves in the name of climate. So several years ago this cabal hit on the idea of contradicting decades of science and ginning up hokey studies claiming gas stoves present a “health risk.” The twin goals: scare Americans and give government a pretext to ban gas cooking.

This is how you end up with climate outfits masquerading as health experts. One frequently cited study from the Rocky Mountain Institute—claiming to find a link between gas stoves and childhood asthma—was co-authored by two RMI staffers, neither of whom has a science degree. Another favorite study by New York University’s Institute for Policy Integrity claims gas stoves cause “dangerous levels of indoor air pollution.” It was written by two lawyers, and it cites … the RMI study. Ah, science.

Philip Klein decries Kevin McCarthy’s unseriousness about addressing the problem posed by excessive U.S. government indebtedness. Here’s his conclusion:

Entitlement reform is not about “crushing our own people” — as Don [Trump] Jr. put it — it’s about addressing the moral disgrace of government programs that will crush younger Americans for decades to come.

“Constitutions Matter for Tax Rates.”

John G. Murphy explains – and offers real-world examples of – how “extending the reach of Buy America rules to new products and sectors can easily backfire and make infrastructure development goals harder to achieve.”

I’m always pleased to join Amy Jacobson and Dan Proft, this time mostly for a discussion about the myth of middle-class stagnation.

Anthony LaMesa tweets: (HT Jay Bhattacharya)

I think it was really weird for society to force so-called essential workers to keep serving the laptop class in person, but not allow them to eat a meal at a restaurant or drink a beer at a bar after work.

Ian Vásquez reports a reality as sad and scary as it is unsurprising: “The Pandemic Was a Catastrophe for Global Freedom.” A slice:

In the year 2020, 94 percent of the world’s population saw a fall in its freedom compared to the year before. The annual Human Freedom Index, released today by the Cato Institute and the Fraser Institute, documents how the Covid‐​19 pandemic was a catastrophe for human freedom.

(DBx: Of course, because public policy is made by people and not by pathogens, blame for the catastrophe that Ian reports rests squarely on those persons who stirred up covid hysteria and called for the unprecedented draconian measures that were sold as appropriate means of fighting covid.)

Quotation of the Day…

(Don Boudreaux)

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… is from page 3 of Robert Hessen’s Introduction to the 1981 collection Does Big Business Rule America? (R. Hessen, ed.); this collection is of critical commentaries on Charles E. Lindblom’s atrociously bad 1977 book, Politics and Markets:

[Charles] Lindblom believes that the suppression of individual liberty and economic freedom is unobjectionable if the political processes in a country are democratic. Although he prefers a democratic system to a dictatorship, he does not notice that the difference is bogus if all decisions are to be made in the political arena. If private spheres of action and opportunity are to be outlawed, it scarcely matters whether the dictator is one man – Mao Tse-tung, for example – or a majority of the voters. The results are identical: individuals are not free to pursue their own interests, to engage in peaceful cooperation and exchange with each other, or to reap the benefits of their own ingenuity and industriousness.