Russell Roberts's Blog, page 85

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(Don Boudreaux)

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Vinay Prasad explains that “covid vaccines shouldn’t be ‘routine’ for kids.” A slice:

Mandates are concerning for two reasons. First, it is not clear they are ethical. The standard rule in medicine is simple: We do not intrude upon individual autonomy unless that intervention provides sufficient benefit to third parties. This means there must be a large benefit to others— enough so the loss of autonomy is acceptable. Given that the Covid-19 vaccine does not halt virus transmission, the prerequisite is not met.

Reason‘s Robby Soave reports that “adding the covid-19 vaccine to the childhood immunization schedule is a mistake.”

Anya Kamenetz tweets: (HT Jay Bhattacharya)

The counterfactual that “learning loss apologists” fail to engage is that we could’ve had shorter school closures AND lower death rates. How do I know? Every other OECD country managed it.

Jeffrey Tucker spoke recently at Hillsdale College on “the economic disaster of the pandemic response.” A slice:

Even if the lockdowns had saved lives over the long term—and the literature on this overwhelmingly suggests they did not—it would be proper to ask the question: at what cost? What are the tradeoffs?

Because economic considerations were shelved for the emergency, policymakers failed to consider tradeoffs. Thus did the White House on March 16, 2020, send out the most dreaded imaginable directive from an economic point of view: “bars, restaurants, food courts, gyms, and other indoor and outdoor venues where groups of people congregate should be closed.” And the results were legion.

For one thing, the lockdowns kicked off an epic bout of government spending. COVID-response spending amounted to at least $6 trillion above normal operations, running the national debt up to 121 percent of GDP. For comparison, our national debt in 1981 amounted to 35 percent of GDP—and Ronald Reagan correctly declared that a crisis.

Aaron Kheriaty reports on a lawsuit over government collusion, in Kheriaty’s words, “with social media to censor content on social media platforms — including Twitter, Google, LinkedIn, Facebook and Instagram — that questions, challenges, or contradicts the government’s covid policies.”

“Every year, government bureaucrats and doomsayers in the media issue deathly serious advice for avoiding Halloween dangers that are trivial, or even nonexistent. And 2022 is no exception.” – so reports Lenore Skenazy.

Here’s the abstract of a new paper by my newest GMU Econ colleague Michael Clemens and his co-author Ethan Lewis: (HT David Henderson)

The U.S. limits work visas for low-skill jobs outside of agriculture, with a binding quota that firms access via a randomized lottery. We evaluate the marginal impact of the quota on firms entering the 2021 H-2B visa lottery using a novel survey and pre-analysis plan. Firms exogenously authorized to employ more immigrants significantly increase production (elasticity +0.16) with no decrease or an increase in U.S. employment (elasticity +0.10, statistically imprecise) across several pre-registered subsamples. The results imply very low substitutability of native for foreign labor in the policy-relevant occupations. Forensic analysis suggests similarly low substitutability of black-market labor.

Chris Edwards isn’t impressed with the Federal Reserve.

Dave Barker decries the fake science – including some from the Fed – that fuels climate hysteria. A slice:

Mainstream economics shows that warming will have minor economic effects compared to the economic growth we expect over the next century. That is a problem for the climate lobby, which unfortunately includes the Fed. Since economic growth will swamp the economic effects of global warming, the Fed set out, it seems, to prove that warming will reduce growth. The fact that Florida, on average 26 degrees warmer than Michigan, has grown faster didn’t faze them.

The Fed isn’t the only institution to fall into chicanery. The study was published in a peer-reviewed academic economics journal, given wide media coverage, and cited in a congressional report to justify the Green New Deal. Bogus research makes big splashes. But when it is debunked, there isn’t a ripple.

The best economic model, validated by a Nobel Prize for William Nordhaus, shows that if nothing is done to reduce emissions, warming will reduce world GDP by about three percent by the year 2100. If global GDP continues to grow at the rate it has been growing, then the world in 2100 will be five times richer than it is today. A three-percent reduction in GDP would make us 4.8 times richer instead of 5.0 times. Not exactly catastrophic! Mainstream economics doesn’t deny climate change and accepts that some policies to mitigate it might pass a cost-benefit test. But it does not predict a climate apocalypse, even if we do nothing.

Ryan Bourne warns fans of free markets: Don’t expect much satisfaction from new British PM Rishi Sunak.

Quotation of the Day…

(Don Boudreaux)

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… is from page 327 of Randy Simmons’s 2011 Revised Edition of his and the late William Mitchell’s 1994 volume, Beyond Politics, which is an excellent primer on public-choice scholarship and research:

One of the more impressive accomplishments of the Western world was developing, recognizing, and defending contracts. This was impressive because contractual relationships replaced those relationships conditioned by status. Contracts allow for dynamism and change while status maintains stagnant and traditional societies.

DBx: Yes. Freedom of contract – which of course includes the power to say ‘no’ – breaks the bonds of status. In a society with freedom of contract, each individual has vastly more scope to craft his or her life as he or she sees fit, unencumbered by status and hierarchy, and is much better able to challenge tradition.

Yet progressives as well as populists are forever proposing policies to reward or punish people according to status. Affirmative action for blacks! Protective tariffs for steel workers! Confiscatory taxation of rich people! Subsidies for farmers! Punish firms that hire undocumented immigrants!

It all violates freedom of contract. And it’s all so primitive.

Bonus Quotation of the Day…

(Don Boudreaux)

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… is from the lyrics of one of my favorite songs, Credence Clearwater Revival’s 1970 “Who’ll Stop the Rain” (written by CCR’s lead singer, John Fogerty):

Five year plans and new deals
Wrapped in golden chains
And I wonder, still I wonder
Who’ll stop the rain?

Note the Irony

(Don Boudreaux)

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Here’s a letter to the Wall Street Journal:

Editor:

Gerard Baker packs much insight into his column “Populism Is Behind the British Conservative Party’s Downfall” (Oct. 25). Unfortunately, though, he ends by uncritically repeating the myth that working-class voters in America “have been left behind” – a myth thoroughly debunked by economist Michael Strain’s data-rich 2020 book, The American Dream Is Not Dead (But Populism Could Kill It). As summarized by Strain,

The common experience over the past several decades has been that jobs are readily available for those who want them, and for quality of life to improve. The populist argument that typical workers have been at a standstill for decades – victims of an elite that has “rigged the system” against them to help itself, or of immigrants – is incorrect.*

Unjust interventions that enrich concentrated interests at the greater expense of the general public of course exist. But the dynamism and relative freedom of America’s market economy – at least until the covid era – have managed nevertheless to steadily improve ordinary Americans’ economic fortunes. Denying this reality only further incites working-class Americans to support tariffs and other interventions that, quite unlike demonized open markets, will indeed leave these Americans behind.

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

* Michael R. Strain, The American Dream Is Not Dead (But Populism Could Kill It) (West Conshohocken, PA: Templeton Press, 2020). The quotation above is on page 105.

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(Don Boudreaux)

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Writing in the Wall Street Journal, Florida Surgeon General Dr. Joseph Ladapo explains that covid boosters aren’t for everyone. Two slices:

How safe are the Covid-19 vaccines? Under my leadership, the Florida Department of Health analyzed overall mortality and cardiac-related mortality risk associated with Covid-19 vaccination. We found an 84% increase in the relative incidence of cardiac-related death among men 18 to 39 within 28 days following mRNA vaccination.

The left has smeared these results as “anti-science,” as Holden Thorpe, the editor of Science, recently stated in an editorial. But time and again, the unorthodox science related to Covid-19 becomes the mainstream. Scientists have been attacked for questioning the efficacy of lockdowns, for urging schools to reopen, for challenging the effectiveness of mask mandates, and for opposing vaccine mandates and passports. The scientists asking these questions had the data on their side, but critics bowed to fear and political ideology.

It’s happening again. The increased risk of cardiovascular events following the Covid-19 vaccine isn’t news; it has been known for over a year. Research has identified cardiovascular risks in the general population, and especially among young males following Covid-19 mRNA vaccination….

…..

Backed by the data, I stand by my recommendation against Covid-19 mRNA vaccination for young men. At this point in the pandemic, it is unlikely that the benefits outweigh these risks. The public can be assured that I will continue to lead with data, and I will place their interests ahead of political pressure and fear-based ideologies.

Wall Street Journal columnist Allysia Finley is rightly critical of the CDC’s decision to push for covid vaccination of young children. A slice:

Why else did face masks become so controversial? Given the scant evidence supporting widespread use of nonmedical-grade masks, many conservatives perceived masking as another instance of liberals imposing scientifically baseless rituals on nonadherent Americans. The same is now true with vaccinating children.

Most conservatives don’t oppose vaccines per se. But never before has the CDC recommended, or the FDA authorized, a vaccine for children based on such thin evidence of benefits and lack of clarity on potential risks.

It’s generally accepted that kids are at much lower risk for severe Covid than adults. One study, released earlier this month, estimated that only 3 of every million kids who have been infected with Covid have died from it. Children also are much less likely to get severely sick with Covid than with some other bugs.

Also critical of government covid-vaccination policy is Dr. Joel Zinberg. Two slices:

The public-health bureaucracy is adopting yet another excessive vaccination policy. On Oct. 12 the Food and Drug Administration authorized bivalent Covid-19 boosters from Pfizer and Moderna for use in children as young as 5 and 6, respectively. The same day, the Centers for Disease Control and Prevention recommended the vaccines for children 5 to 11. Neither shot is likely to find many takers, but that won’t stop the Biden administration from wasting billions of dollars buying them.

Since Covid shots first became available, the federal government has purchased and distributed them instead of relying on the market to match supply with demand. The result has been colossal waste. Between December 2020 and mid-May 2022, the U.S. wasted 82.1 million doses. Some expired on pharmacy shelves before they could be used; others were discarded after remaining unclaimed in opened multidose vials.

…..

Americans’ demand for vaccines is lower than the government’s arbitrary target—and for good reason. It’s time for the government to release its monopoly on the purchase and distribution of vaccines and let the private market do what it does best: aligning supply with the American people’s demand for goods they will actually use.

The Wall Street Journal‘s Editorial Board reports on “the school lockdown catastrophe.” A slice:

The pandemic lockdowns were a policy blunder for the ages, and the economic, social and health consequences are still playing out. But the worst catastrophe was visited on America’s children, as Monday’s release of the latest National Assessment of Educational Progress shows.

An anonymous student at Wellesley College speaks out about that school’s mindless covid-vaccination requirements.

Investors are not fans of Xi Jinping’s deranged pursuit of zero covid.

Dan Klein and Mike Munger respond to Scott Yenor.

Arnold Kling makes the case for breaking the U.S. into smaller jurisdictions. A slice:

The ability to run chronic deficits creates a bias toward larger government. Even if we believe in Keynesian economics, we could devise a scheme in which the size of deficits is determined automatically rather than through discretion. A fiscal rule could force the government to run surpluses as the economy approaches full employment. There was once a time when progressive economists called for such a rule.

Here’s David Friedman on special pleading. (HT David Henderson)

Quotation of the Day…

(Don Boudreaux)

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… is from page 99 of Samuel Gregg’s excellent 2022 book, The Next American Economy: Nation, State, and Markets in an Uncertain World:

[I]ndustrial policy supposes that if markets apparently fail to produce certain products, or to foster certain economic sectors deemed important for regional or national well-being, the government must intervene to rectify the problem. But what if the failure is not one of the private sector at all? What if the problem is pre-existing high taxes on profits generated by start-ups? Or regulatory barriers to entry for entrepreneurs? Or weak protections for intellectual property rights? Or preexisting subsidies that incentivize businesses to invest in established industries rather than new enterprises? Or some combination of these factors? In short, what if the problem is primarily government failure? Even relatively free economies contain numerous distortions that flow from government interventions that create perverse incentives for labor and capital to flow in less-than-optimal directions. The solution to such problems is less government intervention, not an industrial policy.

DBx: Indeed.

Another government intervention that stymies adjustments to economic change – and, hence, that causes such change to appear to undiscerning eyes to be the result of a failure of markets – is land-use regulations. (Thus the photo above.) Especially harmful are restrictions on the building of housing that’s affordable by poor and middle-income people. Several of my colleagues at the Mercatus Center, including GMU Econ alum Emily Hamilton, are hard at work both to expose the damage done by land-use restrictions and also to offer proposals for easing these regulations.

Government Is Largely Guesswork

(Don Boudreaux)

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In my latest column for AIER – a column inspired by a recent, superb blog post from Arnold Kling – I argue that government and the market, when considered as alternative means of achieving some particular outcomes, differ from each other categorically. (By this claim I mean more than that government is coercive while markets are voluntary.) A slice:

The single most important difference separating market action from government action is this: Unlike decision-makers in government, decision-makers in markets have access to detailed and reasonably reliable information about the net effects that any of their decisions are likely to have on all affected parties. In addition, decision-makers in markets also are uniquely incited to take those actions, and only those actions, that produce the largest possible positive net effects on affected parties.

The fact that the information available in markets is imperfect is indisputable. Also indisputable is the fact that even well-informed market actors often err. But equally indisputable, if not as widely recognized, is the reality that markets have (as an essential feature of their operation) a built-in process for detecting and correcting error, and thus taking into account over time as much relevant knowledge as possible. No such process exists in government. Because of this categorical difference, any supposed substantive symmetry between market action and government action is imaginary.

The foundational (if not the only) advantage of relying upon markets rather than upon government to supply, say, shoes is that only in markets is there a reliable source of information about which varieties of shoes to produce and how to produce these varieties efficiently – that is, how to produce these varieties of shoes in ways that leave as many resources as possible available for the production of goods and services other than shoes.

The amounts of their incomes that consumers choose to spend on Crocs, Nike sneakers, and Gucci loafers registers the intensity of consumers’ demands for each of these kinds of shoes relative not only to consumers’ demands for other kinds of shoes but also relative to their demands for all other goods and services available for sale.

The prices of each of the different varieties of shoes convey at least two critical pieces of information. First, the prices of Crocs tell entrepreneurs just how much consumers are willing to pay for Crocs compared to how much consumers are willing to pay for sneakers and loafers, and compared also to how much consumers are willing to pay for hamburgers, honey, housing, books, bananas, baseballs, and every other good or service currently for sale on the market. Second, the prices of Crocs relative to the prices of the inputs that might be used to produce Crocs tell entrepreneurs both if consumers’ desire for Crocs is high enough to justify using resources to produce Crocs, and, if so, just how many pairs of Crocs to produce.

If, as is usual, there is some unexpected change in the market (for example, consumers suddenly lose their taste for Crocs), consumers today will not be served as well as possible. Ditto if entrepreneurs as a group commit some error (for example, fail to notice the high consumer demand for blue suede shoes). Too many resources today will be devoted to producing Crocs while too few resources are used to manufacture shoes of blue suede. As a result, the prices of Crocs will fall relative to the prices of other goods and services, while that of blue suede shoes will surely soon be noticed by profit-seeking entrepreneurs to be high enough to justify increased production of this particular style of footwear. Such price changes, and more accurate recognition of existing prices, render what might be described as today’s inefficiencies (or market ‘failures’) as, also, today’s profit opportunities. Guided by prices, entrepreneurs will profit by shifting resources out of the production of Crocs and into the production of other items, including blue suede shoes.

Entrepreneurs who are insufficiently alert to market realities as revealed in the prices of both inputs and outputs, or entrepreneurs who are too incompetent to act profitably on market information, suffer losses. These entrepreneurs thus wind up ‘controlling’ fewer resources, with greater amounts of resources coming to be ‘controlled’ by entrepreneurs who are more alert or more competent.

The self-interest of entrepreneurs combines in the market with the self-interest of consumers and input suppliers – and also with the ability of consumers and input suppliers each to say ‘no!’ to offers they judge to be unattractive – to cause opportunities for improving the allocation of resources to be revealed in market prices. Again, such information is never revealed perfectly. Nor is it ever acted on with only unalloyed expertise. But the very essence of the market process is to reveal such information and to incite everyone in the market to act on it.

No such process of information revelation is available for government action. Precisely because government intervention into markets is intended to disregard or to override market signals, government officials, if they are to improve the welfare of citizens, must have access to information that is superior to that which is available on markets. But government officials, in fact, not only have no superior source of information, they have no good source of information at all. The best they can do is guess.

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(Don Boudreaux)

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Wall Street Journal columnist Mary Anastasia O’Grady reports on how the political left in Brazil is assaulting free speech. (DBx: Democratic norms are assaulted not only by persons on the right.) Two slices:

Brazil’s runoff presidential election—scheduled for Oct. 30—between two-term former President Luiz Inácio “Lula” da Silva and incumbent Jair Bolsonaro looks close.

How close is reflected in recent moves by Brazil’s seven-member electoral tribunal, or TSE. Led by a notoriously anti-Bolsonaro judge, Alexandre de Moraes, the TSE has grabbed extraordinary powers and is using them to gag Lula critics.

Brazil’s Constitution forbids censorship, and the court’s brazen crackdown on free speech has alarmed the nation. But Judge de Moraes, who is also president of the Supreme Court, shows no sign of backing down. If Brazil’s democracy is at risk, it’s not, as the chattering classes allege, because of Mr. Bolsonaro.
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To demonstrate how far from Brazil’s free-speech norms the TSE behavior falls, Mr. Escosteguy quoted Judge de Moraes, writing from the Supreme Court bench in 2018: “The fundamental right to freedom of expression is not only aimed at protecting opinions that are supposedly true, admirable or conventional, but also those that are dubious, exaggerated, reprehensible, satirical, humorous, as well as those not shared by the majorities. It should be noted that even erroneous statements are under the protection of this constitutional guarantee.”

Now the electoral tribunal wants to dispense with these civil liberties. It makes one wonder what Brazil will look like if Lula wins.

My intrepid Mercatus Center colleague Veronique de Rugy draws a lesson about industrial policy from California’s crazy train. A slice:

Building a high-speed rail connecting Los Angeles and San Francisco was always going to be challenging due to California’s geography. And of course, most of you will not be surprised to learn that this large-scale government project is in fact failing, in large part because of the perverse incentives that pervade such a government project. From conception to planning to building, the incentives consistently encourage waste and error. Again, legislators aren’t funding this boondoggle with their own money. Nor will they be personally accountable for cost overruns, failure to deliver, or what are certain to be many technical problems.

The cost overruns here are almost comical for something that literally hasn’t been built yet. In 2008, the train’s cost was projected to be $33 billion. Fourteen years later the final plan is projected to cost $113 billion – a mere 242 percent more than the sum used to peddle the scheme to the general public.

In addition, decisions on construction are unduly – but not unsurprisingly – influenced by special interests rather than by good economic sense.

Juliette Sellgren talks with Rachel Ferguson about how markets liberate blacks.

Laura Williams decries government restrictions on the building of housing in California.

Stephanie Slade celebrates the 200th anniversary of the birth of Gregor Mendel.

Roger Pielke corrects some misinformation about the climate.

David Henderson explains why he applauds Biden’s decision to release some of the petroleum in the Strategic Petroleum Reserve. A slice:

The philosophical justification is that the government shouldn’t be in the business of supplying oil. One of the strongest arguments for futures markets is that they give private actors a strong incentive to store oil when they think the price will rise in the future and to sell oil when they think it will fall in the future. The government gums up the works by being an unpredictable participant in the market for oil. So it’s best not to have the government in that market at all. The way to get to that point is to sell the oil.

“Progressive policies destroy capitalism’s prosperity.”

Jeffrey Tucker is right: apologies for lockdowns are in order. A slice:

Then one day, the kids were locked out of the universities that they pay to attend. No parties. No study sessions. No going to other people’s rooms. No in-person instructions. Many thousands of students in this country have been fined and harassed for noncompliance. They’ve had masks forced on them even though their risk from the virus approaches zero, and the memory of this humiliation will last a full lifetime. Then came the vaccines, forced on college students who did not need them and are most vulnerable to adverse events.

Geoff Shullenberger tweets: (HT Jay Bhattacharya)

The other point is that a stated justification of these policies early on was that they would buy time to build health care capacity, but once the propaganda sunk in everyone forgot that and decided that futile efforts to delay viral spread indefinitely were good in themselves.

Here’s the abstract of a new paper by Jay Bhattacharya, Phil Magness, and Martin Kulldorff:

During the first year of the pandemic, East Asian countries have reported fewer infections, hospitalizations, and deaths from COVID-19 disease than most countries in Europe and the Americas. Our goal in this paper is to generate and evaluate hypothesis that may explain this striking fact. We consider five possible explanations: (1) population age structure (younger people tend to have less severe COVID-19 disease upon infection than older people); (2) the early adoption of lockdown strategies to control disease spread; (3) genetic differences between East Asian population and European and American populations that confer protection against COVID-19 disease; (4) seasonal and climactic contributors to COVID-19 spread; and (5) immunological differences between East Asian countries and the rest of the world. The evidence suggests that the first four hypotheses are unlikely to be important in explaining East Asian COVID-19 exceptionalism. Lockdowns, in particular, fail as an explanation because East Asian countries experienced similarly good infection outcomes despite vast differences in lockdown policies adopted by different countries to control the COVID-19 epidemic. The evidence to date is consistent with our fifth hypothesis – pre-existing immunity unique to East Asia – but there are still essential parts of this story left for scientists to check.

Quotation of the Day…

(Don Boudreaux)

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… is from page 353 of the late, great UCLA economists Armen A. Alchian’s and William R. Allen’s Universal Economics (2018; Jerry L. Jordan, ed.); this volume is an updated version of Alchian’s and Allen’s magnificent and pioneering earlier textbook, University Economics:

A key feature of private property rights is that the rights to several goods can be dispersed or integrated among several people in whatever ways they find mutually acceptable.

DBx: Indeed.

The number of possible combinations and permutations of such arrangements of property rights is inconceivably large. Only a relatively minuscule number of these combinations and permutations will work to anyone’s advantage. But with property rights owned privately and, hence, not centrally – and because ‘better’ uses of particular pieces of property raise the market values of those pieces while ‘worse’ uses of particular pieces of property lower the market values of those pieces – owners are incited to seek out and discover ever-better ways to use, slice, and dice their property rights. The result of this on-going competitive process are uses of property far superior at producing mass prosperity than would be any attempt to consciously arrange the overall pattern of property usage.

Quotation of the Day…

(Don Boudreaux)

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… is from page 26 of Edwin Cannan’s 1914 tract, Wealth: A Brief Explanation of the Causes of Economic Wealth:

Civilization started where communication, and consequently co-operation, were easiest, and so far as we can go back in history, the peoples which are now civilized have had a large supply of products, brought from distant places.

DBx: Indeed. And therefore it is fair to describe protectionists as enemies of civilization.

That protectionists are unaware that they are enemies of civilization is, of course, true. Also true is the fact that modern-day protectionist measures almost never completely cut off all international trade. But the logic of protectionism is uncivilized. Carried to its logical conclusion, protectionism pursued for economic purposes not only impoverishes the people of the countries that protectionists intend to enrich, it cuts these people off from other human beings. Protectionism thus deprives the people of the home country not merely of the material gains that come from free trade, but also of the learning and cultural mixing that international commerce engenders. Protectionism is uncivilized and barbaric.