Russell Roberts's Blog, page 57

Bonus Quotation of the Day…

(Don Boudreaux)

Tweet

… is from pages 313 of Mario Rizzo’s and Glen Whitman’s important 2020 book, Escaping Paternalism: Rationality, Behavioral Economics, and Public Policy:

Furthermore, legislators and regulators still face strong externalities despite their choices more often [than voters’ choices] being decisive. They face relatively low costs for making poor regulatory decisions that affect other people, whereas private citizens face relatively high costs for making poor personal decisions that mainly affect themselves. As a result, private decision-makers have stronger incentives than public decision-makers to acquire information and work to overcome their behavioral biases.

DBx: Why is this reality – which seems to me to be both undeniable and very important – largely ignored by all but classical liberals and libertarians in discussions and debates over government interventions?

Some Links

(Don Boudreaux)

Tweet

My intrepid Mercatus Center colleague, Veronique de Rugy, rightly criticizes familiar debates and discussions about the debt ceiling.

Also from Vero is this just criticism of the GOP’s plans to keep government spending under some semblance of restraint. A slice:

All that said, while limiting discretionary spending is a good start, fiscal sustainability requires that Congress also cut the mandatory side of the budget. Indeed, Social Security, Medicare and Medicaid — not defense or education — are still the chief drivers of our future debt, just as they have been in the past. Along with the interest the Treasury must pay on the debt, these three programs will be responsible for 86% of federal spending between 2008 and 2032, says [Brian] Riedl. In other words, no level of discretionary spending cuts will ever be enough to control the upcoming debt explosion.

David Henderson exposes the fallacies that infect a recent statement made by Virginia governor Glenn Youngkin.

Art Carden applauds the accountability enforced by the market.

Reason‘s Peter Suderman reports good news: “The courts are rejecting Biden’s antitrust crusade.”

Fraser Myers accurately accuses St. Greta of Stockholm of being an enemy of the working class.

Brendan O’Neill debunks the nonsensical assertions that Californians are now being punished for sinning against Mother Nature. Here’s his opening paragraph:

There’s always been an irony in the haughtiness of America’s coastal elites. These people look down on Middle Americans and their cranky beliefs – they ‘cling’ to religion, as Obama infamously said – and yet they themselves hold far wackier views. They think there’s a hundred genders. That racism is the original sin of the United States that will never be washed away. That whites must engage in the self-mortification of checking their privilege. And that climate change is Mother Nature’s punishment of mankind for his hubristic industrial antics. That last one is positively pre-modern. It makes the other religions in the US look perfectly sane.

Robby Soave explains how the CDC become “the speech police.” A slice:

Indeed, the U.S. public’s understanding of COVID-19—its virality, how to prevent its spread, and even where it comes from—was largely controlled by Fauci and bureaucrats like him, to a greater degree than most people realize. The federal government shaped the rules of online discussion in unprecedented and unnerving ways.

This has become much more obvious over the past few months, following Elon Musk’s acquisition of Twitter. Musk granted several independent journalists access to internal messages between the government and the platform’s moderators, which demonstrate concerted efforts by various federal agencies—including the FBI, the Centers for Disease Control and Prevention (CDC), and even the White House—to convince Twitter to restrict speech. These disclosures, which have become known as the Twitter Files, are eye-opening.

But Twitter was hardly the only object of federal pressure. According to a trove of confidential documents obtained by Reason, health advisers at the CDC had significant input on pandemic-era social media policies at Facebook as well. They were consulted frequently, at times daily. They were actively involved in the affairs of content moderators, providing constant and ever-evolving guidance. They requested frequent updates about which topics were trending on the platforms, and they recommended what kinds of content should be deemed false or misleading. “Here are two issues we are seeing a great deal of misinfo on that we wanted to flag for you all,” reads one note from a CDC official. Another email with sample Facebook posts attached begins: “BOLO for a small but growing area of misinfo.”

Here’s more from Robby Soave on the same disturbing matter.

One of the most authoritarian covidians will soon leave office.

Matthew Crawford talks with Freddie Sayers about “the perpetual state of emergency.”

Jay Bhattacharya tweets:

If the evidence on the efficacy of masking to stop covid spread were strong, no mandate would be necessary. The evidence would be persuasive on its own. The reason why the @CDCgov wants the power to mandate is _because_ the evidence is weak.

Quotation of the Day…

(Don Boudreaux)

Tweet

… is from P.J. O’Rourke’s 2007 book, On the Wealth of Nations, as quoted on page 79 of Eamonn Butler’s 2021 volume, An Introduction to Trade & Globalisation:

To give Adam Smith’s case against mercantilism in extreme concision: imports are Christmas morning; exports are January’s MasterCard bill.

DBx: Very nicely said.

The essential point here is not that imports are paid for with borrowed funds; sometimes they are, sometimes they aren’t. The essential point is that imports are the goal – the ultimate purpose – of trade, and exports are the means of achieving this goal.

In short, imports are a benefit; exports are the cost of obtaining that benefit. Incurring this cost in order to reap a higher benefit means that incurring this cost is worthwhile, but it does not mean that this cost is the benefit.

“I, Pencil’s” Point

(Don Boudreaux)

Tweet

Here’s a letter to a new correspondent:

Mr. K__:

You upbraid me for rejecting the claim that, in writing “I, Pencil,” Leonard Read “put God at the center of the explanation” of how the worldwide division of labor and trade results in the production of pencils.

I stand by my insistence that the message Read meant to convey is that the market economy and its pattern of prices incite and inform individuals each to act in ways that give rise to a complex pattern of production not only that no one (not even God) designed, but also one with details so numerous that no human mind can begin to comprehend them in full. And by conveying this message using as an example a simple pencil, Read also drove home the reality that the achievements – the human achievements – enabled by the market are far more remarkable than most people realize.

But even if, contrary to fact, Read wrote “I, Pencil” to describe the capitalist handiwork of God, the practical importance of this counterfactual ‘fact’ would be almost nil. The reason is that almost no one who supports the market order interprets “I, Pencil” in that manner. All of the many references to “I, Pencil” of which I’m aware (and I’ve been in this business a very long time) understand that essay to present pencils as one of the myriad marvelous products of the market order – a product that, although simple in comparison to automobiles, skyscrapers, and electric lighting, could not possibly be produced by the sort of conscious central economic planning that socialists endorse.

Look at the famous use made of “I, Pencil” by Milton Friedman. Consider the Competitive Enterprise Institute’s beautiful 2012 video on “I, Pencil.” Find any of the countless textbooks and essays in which “I, Pencil” is mentioned or alluded to. You’ll discover in all of these the use of “I, Pencil” as a celebration of the ability, not of God, but of humans interacting in the market to incite and inform each other to act in ways that bring about productive results the details of which no human mind could begin to comprehend.

“I, Pencil” was first published more than 64 years ago. In that time, with the curious exception of persons far more hostile to the market order than was Read, it has almost never been interpreted as a description of the handiwork of God. As such, “I, Pencil’s” firmly established legacy, and its continuing role, is as a description of the vast complexity and silent yet soaring productivity of the free market.

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

Good-Faith Reading vs. Adversarial Reading

(Don Boudreaux)

Tweet

In response to recent Cafe Hayek posts – here and here – on the appallingly mistaken reading of Leonard Read’s great 1958 essay, “I, Pencil,” Washington University economist Ian Fillmore sent to me the following excellent e-mail. I share it here, in full, with Ian’s kind permission.

Hi Don,

I’ve been thinking about this. I think there are (at least) two different kinds of “reading.”

The first, which I’ll call good faith reading makes a sincere attempt to understand what the author is trying to say. In good faith reading, the goal is to understand the author and the ideas he is trying to express. This will require some charity, since no one’s ideas are perfect nor does anyone express himself perfectly. Good faith reading assumes that the writer is doing his best to explain his thinking and avoids ascribing motives or views that the author does not explicitly endorse. When ambiguities, tensions or contradictions arise in the author’s writings, we try to reconcile them in a way that most faithfully hews to the author’s views more broadly.

The second, which I’ll call adversarial reading, asks “How can I use the words on the page to support the argument I already want to make?” The focus is not on understanding the writer and what he is trying to say. In adversarial reading, the adversary may be the author himself, or it may be some third party. Either way, the focus is on finding ammunition for an argument you are already determined to make. From this perspective, ambiguities, tensions, or contradictions present openings to exploit rather than opportunities to engage deeper with the author’s ideas. In adversarial reading, the reader often finds it useful to adopt an attitude of deliberate obtuseness, lest the actual message of the author interfere with the entire exercise.

When someone who has engaged in a thorough good faith reading of author A encounters someone who has engaged in an adversarial reading of author A, it can be quite disorienting. What’s more, to a debate audience the adversarial reader can often sound better informed about A’s views than the good faith reader (hence why so many people choose adversarial reading). But in the end, adversarial reading is just a shallow word game and is the antithesis of genuine scholarship. It mistakes cleverness for knowledge and wit for wisdom.

Ian Fillmore

DBx: Beautifully and wisely said.

Academic fora now are flooded with adversarial readers – people such as Nancy MacLean, Sandy Darity, and the ‘scholars’ who read “I, Pencil” as an account of the work of a deity.

A related point occurs to me. Adversarial readers frequently accuse persons with whom they disagree of doing “dog whistles” – messages supposedly meant to communicate the sinister ideas of the whistlers only with others in the whistlers’ ideological group. “Dog whistles” on their face, or taken literally, are innocent.

But this habit of accusing others of “dog whistling” is subject to a well-known and correct criticism used to debunk of conspiracy theories. Conspiracy theorists interpret the absence of evidence of the conspiracy as proof of the conspiracy’s reality. Of course, this move is epistemological nonsense. Likewise, those persons hurling accusations of “dog whistling” use the absence of any incriminating words as evidence that the ‘whistler’ is guilty of conveying a sinister message.

Pittsburgh Tribune-Review: “Sham heroics”

(Don Boudreaux)

Tweet

In my column for the August 30th, 2013, edition of the Pittsburgh Tribune-Review I decried the sham heroics performed ritually by politicians. You can read my column in full – with an added link and a corrected typo – beneath the fold.

(more…)

Some Links

(Don Boudreaux)

Tweet

Subscribers to Bari Weiss’s Free Press can register to attend this forum with Jay Bhattacharya. It begins today at 8:00pm EST.

This letter in today’s Wall Street Journal is wise:

Ms. Finley accurately sums up the Covid discussions we’ve had at our own table since 2019. We have no consensus at this point on who should get a Covid shot, when or why, because it doesn’t prevent infection, as President Biden had said. It lessens the effects of the symptoms, but shot reactions for certain people can be as terrible as the virus itself. We learned about Covid from our own experiences, so officials on TV “informing” us with contrary information has lost all credibility.

Patricia Morrison
Mukilteo, Wash.

Justin Hart supplies evidence that, at least for 2021, the number of covid deaths in the U.S. is inflated.

Guy Gin reports on the damage and tyranny unleashed in Japan by Covid Derangement Syndrome – damage and tyranny the effects of which will not soon disappear. Here’s his conclusion:

And during Covid, Japanese politicians haven’t just stretched the meaning of “least infringement”; they’ve bent the meaning of “emergency” completely out of shape too.

Jennifer Sey tweets: (HT Jay Bhattacharya)

I’m gathering photos & videos of kids in zoom school & during closures & lockdowns.

The photos might show up in a documentary film so don’t send if you’re not ok with that possibility. Please send to GenCovid@seyeverything.com.

Caroline Breashears correctly observes that “the majority of politicians have one-track minds. They identify problems, pass legislation, and send the consequences down the line.” A slice:

The “Unleashing American Innovators Act of 2022,” for instance, amends existing legislation to enable the Undersecretary of Commerce for Intellectual Property and Director of the US Patent and Trademark Office to encourage innovation and new patents among particular groups. It ends the preferred list with “any geographic group of innovators that the Director may determine to be underrepresented in patent filings.” The Director may spend your tax dollars based less on the quality of invention than on who innovates and where.

“No, recycling will not save the environment.”

Writing in the Wall Street Journal, Jeb Hensarling warns of the dangers posed by the U.S. government’s fiscal recklessness. A slice:

In any deficit-reduction deal, Democrats are likely to demand tax increases. Republicans should say no unless dramatic entitlement reforms are offered in exchange. There are too many examples of laws whose promised tax increases are realized and promised spending reductions aren’t. In 2001, the budget was balanced between less spending and more growth, not less spending and higher taxes. Further, at 20% of GDP for fiscal 2022, tax revenue is already near a multidecade high.

David Boaz argues that the American west needs water markets.

Wall Street Journal columnist Holman Jenkins rightly decries the increasing lawlessness of antitrust during Biden’s reign. A slice:

Elsewhere Ms. [FTC Chairwoman Lina] Khan has cited a “special obligation to bring hard cases,” confusing herself with criminal prosecutors who sometimes must go after obviously guilty people (Al Capone) with imperfect evidence. Antitrust seldom lacks for evidence—companies hand over reams of documents and data. But too often the evidence is distorted to create a crime, a classic being the FTC’s 2003 insistence that, for antitrust purposes, “superpremium” ice cream doesn’t compete with ice cream.

By now the degradation of antitrust into Washington’s least purposeful and public-spirited activity is a long-running story, resting on exactly such “market definition” games, which are the modern trustbuster’s main stock in trade. The Trump case was built on laughably pretending cable TV doesn’t compete with streaming. Ms. Khan’s case is built on the fantasy that a single game franchise, “Call of Duty,” would enable Microsoft to monopolize the industry.

It’s useful to put in plainer words what previous analysts and reporters have said: The FTC is lying to have a case.

Quotation of the Day…

(Don Boudreaux)

Tweet

… is from page 411 of Marian Tupy’s and Gale Pooley’s brilliant 2022 book, Superabundance:

[H]umans are a unique kind of animal, one that has developed a cooperative culture that allows for the accumulation and sharing of knowledge. That knowledge, in turn, helps to make our society gentler and more prosperous. Population growth and freedom are crucial parts of that positive feedback loop. It is free people, not machines or deities, who generate new ideas, and it is free people who test those new ideas against other people’s ideas in the marketplace. The process of knowledge and value creation is at the heart of humanity’s moral and material progress.

Don’t Ban Noncompete Clauses

(Don Boudreaux)

Tweet

Here’s a letter to the Wall Street Journal:

Editor:

Although its author doesn’t realize it, your report “FTC Plan to Ban Noncompete Clauses Shifts Companies’ Focus,” Jan. 17) offers evidence of why a ban on noncompete clauses would do more harm than good. The evidence is that the worker featured in the report, Daniel Bachhuber, refused a job that required he sign a noncompete clause. He had and took other employment options.

If Mr. Bachhuber’s experience is any indication (and why wouldn’t it be?) U.S. labor markets are competitive. And in competitive labor markets, workers will agree to contractual terms that restrict their options only if employers provide adequate compensation for such agreement. This compensation can take the form of higher pay, more fringe benefits, greater job security, or enhanced training. But whatever form this additional compensation takes, workers who agree to restrictions such as noncompete clauses obviously value this compensation more highly than they value having no contractual restraints on their future employment options. Banning noncompete clauses would thus make these workers worse off, as they’ll be denied the valuable opportunity to ‘sell’ to employers restrictions on their future employment options.

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

On the Comparative Advantage At Improving Comparative Advantages

(Don Boudreaux)

Tweet

In my latest column for AIER, I counsel against trusting government with the power to use protectionist measures to engineer better comparative advantages in the home country. A slice:

Which of the following situations do you find most plausible?

Situation A: To inspire a favorite student of mine to excel in class, I promise him not only that I will grade his exams and papers more leniently than I grade the work of other students, but that I will assign to him only high grades regardless of his performance. This student, grateful for the special privilege he is given, puts his nose to the academic grindstone in a way that he would otherwise not. He studies hard and diligently. Protected from failing by his special privilege, by semester’s end the academic industriousness that my ‘protection’ has inspired in this student has turned him into my star pupil. He no longer needs special protection from me to excel in the classroom.

Situation B: To inspire a favorite student of mine to excel in class, I promise him not only that I will grade his exams and papers more leniently than I grade the work of other students, but that I will assign to him only high grades regardless of his performance. This student, grateful for the special privilege he is given, slacks off in class. His studying becomes cursory, and his writing uninspired and sloppy. His overall performance in class is dismal. Protected by his special privilege from failing, by semester’s end this student’s only hope of ‘passing’ the class is that I stick to my promise to continue to assign to him grades much higher than those that he’s actually earned.

My confident guess is that, like me, the situation that you find most plausible is B. Indeed, situation A, while imaginable, is practically ridiculous. (If situation A were realistic, schools long ago would have quit assessing student performance by administering exams. Schools would instead have simply promised high grades to students unconditionally.)

Tariff protection is akin to situation B, despite being frequently sold as akin to situation A. Tariffs are no more likely to elicit from entrepreneurs, businesses, and workers the diligent effort required to develop the skills to excel economically than is the guarantee of lenient grading to elicit from students the effort to excel academically.

The example of schooling helps to reveal a second flaw in the argument that tariff protection is needed for the home country to develop better comparative advantages: Every student is striving to improve his or her comparative advantage.

When I was a college freshman, I worked at a supermarket bagging groceries. Such a low-value skill was then my comparative advantage. But I didn’t wish to spend the rest of my career bagging groceries. So I stayed in college, studied hard, and quite consciously changed my comparative advantage to one that’s superior to that of a grocery-bagger. To bring about this improvement in my comparative advantage, I didn’t require government-supplied protection. The government didn’t artificially prevent trained economists from teaching, lecturing, and researching in order to make it easier for me to become an economist and earn my living in that profession. (Had government done so, I’m certain that I would have become a poorer economist than I actually managed to become.) During college I continued to work at a steady succession of low-value-added jobs as I simultaneously pursued a better comparative advantage.

Reality teems with individuals and firms striving to improve their comparative advantages. These individuals and firms do so not despite the absence of government protection for them in their preferred occupations and market niches, but because of the absence of such protection. Each day, workers strive to improve their skills. Each day, businesses aim to increase their efficiency at supplying particular goods or services. Each day, improvements in comparative advantages occur. Powerful evidence in support of this claim is the fact that Americans’ real incomes have steadily risen over the decades and continue to do so.

Yet almost none of this improvement in comparative advantages is done behind walls of protection or other special privileges erected by government. Steady improvement in comparative advantage is overwhelmingly the result of individual initiative guided by market prices and wages. There is, therefore, no plausible case to be made that for us Americans to improve our comparative advantages we need government to protect any of us from foreign competition.