Russell Roberts's Blog, page 9

Quotation of the Day…

(Don Boudreaux)

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… is from page 119 of the 1962 Gateway edition of University of Georgia economist David McCord Wright’s unfortunately forgotten 1951 book, Capitalism (emphasis original; footnote deleted; link added):

The mistake often made here – as in so many social controversies – lies in the idea that, if we abolish the particular type of inequality with which we happen to be familiar, we thereby abolish all inequality. But as [John] Hicks and [Albert] Hart point out, what do we accomplish by diminishing inequality of income if at the same time we increase inequality of power. And it must be remembered that power advantages no less than money advantages may be transmitted (however unofficially) from one generation to another….

In short we do not have a choice between a world of equality and one of inequality. We have only a choice between different kinds of inequality.

On the Relevance of Economics

(Don Boudreaux)

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Here’s a letter to a frequent but unsympathetic correspondent:

Mr. S__:

Thanks for your e-mail triggered by the post in which I argue that job satisfaction and other non-monetary aspects of employment are scarce and, hence, must be economized upon.

Identifying yourself as “supportive of common good capitalism,” you write: “The emotional connections which many workers have to jobs they held for years, like the spiritual connections ordinary people have to their local communities and culture, are not things which can be valued economically. These things are above and outside of the narrow calculations that economists busy themselves with…. Protecting workers and communities from the wreckage caused by globalization is not about economics, it’s about human values which economics is blind to.”

With respect, I couldn’t disagree more.

The post of mine to which you object simply points out that if something is scarce, economics has something to say about it. If something is scarce, that something is not available without the sacrifice of something else of value. It follows that the value of what’s sacrificed might well be greater than is the value of what’s gained through the sacrifice. The sacrifice, thus, might not be worthwhile.

By your own admission the non-monetary aspects of employment are scarce, otherwise they would not be, as you assert, under threat from globalization. Being scarce, therefore, means that if government protects particular workers from suffering losses of non-monetary aspects of particular jobs, something else of value is sacrificed. Someone must pay. This reality, although perhaps unwelcome, is one that economics reveals – and reveals to be inescapable. The jobs that you and other “common good capitalists” wish the government to protect will be paid for by forcibly extracting resources from these workers’ fellow citizens.

It will not do simply to assume that the value of the non-monetary aspects of jobs that are protected from import competition is necessarily always greater than is the cost of achieving this protection. Any such assumption must be supported with argument and evidence. But as I read the works of Oren Cass and other “common good capitalists” who make the argument that you here endorse, I find no such arguments or evidence. Instead, I find only the marvelously convenient dismissal of the relevance of economics to the case.

Economics is dismissed as inapposite, it appears, because if it were to be taken seriously the case for protecting particular jobs because of these jobs’ non-monetary benefits could no longer be offered, as it is typically offered by protectionists, as a religious dogma. Instead, such a case would have to be made with logic and evidence. Because protectionists have neither of these things on their side, they resort to asserting the irrelevance of logic and evidence by asserting the inapplicability of economics.

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

Social Security and Medicare Are Going Broke

(Don Boudreaux)

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Some Links

(Don Boudreaux)

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David Henderson highlights several instances of Wall Street Journal columnist James Mackintosh’s deep misunderstanding of the case for free markets. A slice:

Here’s Mackintosh’s other big error that is as egregious as the one Pierre highlights: “Sure, free markets work—but only when a bunch of vital assumptions hold.” That’s false. Free markets work if a bunch of assumptions hold. They also work well even when many of those assumptions don’t hold. We don’t, for example, need “perfect competition” to have healthy competition among firms.

Moreover, as Jon Murphy pointed out in the comments on Pierre’s [Lemieux’s] post, we should ask “work compared to what?” Did Mackintosh look at how well Amtrak is run, how government-built housing works, or how carefully the feds and the California state government handed out unemployment benefits in 2020, to name just three? And I was left wondering whether the economists whose classes he sat in on ever raised that issue. When he was at the University of Chicago, economist Harold Demsetz pointed out in a famous 1969 article that many economists use the “Nirvana approach.” They compare actual markets with ideal government programs run by all-knowing bureaucrats with benevolent motives rather than comparing actual markets with actual government.

Writing in the Wall Street Journal, University of Washington professor of atmosphere sciences Clifford Mass explains that last-week’s air pollution from Canadian wildfires did not come from climate change. Two slices:

An extreme environmental event struck New York last week. The city experienced some of the worst air quality in the world—and the worst to hit the city in at least a half-century—as dense wildfire smoke surged south from the province of Quebec. Headlines suggested that the primary culprit was climate change, but these claims are inconsistent with peer-reviewed science, the observational record and our growing understanding of the meteorology associated with wildfire events.

…..

It was the perfect storm for smoke in New York, with several independent elements occurring in exactly the right sequence. It’s difficult to find any plausible evidence for a significant climate-change connection to the recent New York smoke event. The preceding weather conditions over Quebec for the months prior to the wildfire event were near normal. There is no evidence that the strong high pressure over southern Canada that produced the warming was associated with climate change, as some media headlines claim. In fact, there is a deep literature in the peer-reviewed research that demonstrates no amplification of high- and low-pressure areas with a warming planet.

The long-term trend in Quebec has been for both precipitation and temperature to increase. Temperatures have warmed about 2 degrees Fahrenheit over the past half-century. Even assuming that this warming is entirely human-induced, it represents only a small proportion of the excessive heat during the event, in which Quebec temperatures climbed to 20 to 25 degrees above normal. The number of wildfires in Quebec is decreasing; there is no upward trend in area burned, which would be expected if global warming was dominant.

The recent intense New York smoke event is a good illustration of the underlying origins of many extreme environmental and weather events. The atmosphere is a chaotic system, dominated by random natural variability. Such variability is like a game of cards—rarely, by the luck of the draw, one is dealt a full house or a straight flush. Climate change’s effects on weather are relatively small compared to random variations inherent in a hugely complex system.

National Review‘s Andrew Stuttaford reports on the predictable, unfortunate results of policies enacted by Britain’s “common good” conservatives. Here’s his conclusion:

Stupid taxes have bad consequences.

Brad DeVos and Ryan Yonk remember the late Walter LeCroy (who I am privileged to have known and had as a friend).

Stephanie Slade encourages Ron DeSantis to look in the mirror.

Marc Joffe reports on some inevitable consequences of the progressive ‘governance’ of San Francisco.

Bob Graboyes decries the arrogance and destructiveness of eugenicists.

“‘The BBC has a reputation as a truth-teller – but in Covid it did what the Government wanted’” A slice:

There is growing evidence that during the pandemic the BBC morphed from a national broadcaster founded on impartiality into a state broadcaster that stifled voices challenging the authoritarian response to Covid.

The Telegraph has spoken to current and former BBC journalists who described a “climate of fear” existing in the corporation during the pandemic, with experienced reporters “openly mocked” if they questioned the wisdom of lockdowns, or called “dissenters”.

Some complained to senior managers about the BBC’s blinkered stance, but were ignored. Others communicated via secretive WhatsApp groups to share their frustrations, like members of a resistance movement.

While other news organisations made their own assessments of conflicting scientific evidence on coronavirus and the best ways to weigh them up, the BBC was alone among news gatherers in attending the Counter-Disinformation Policy Forum, which was chaired by ministers or civil servants.

The BBC has claimed it only attended the meetings as an “observer”, and has played down its significance, but it inevitably leaves the corporation open to accusations that it was taking dictation from the Government, rather than allowing its journalists to scrutinise all of the evidence independently and impartially.

“There was open censorship,” says one journalist. “There was no debate about who should and who should not be given airtime, that was very clear.

Quotation of the Day…

(Don Boudreaux)

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… is the epigraph that launches Chapter One of Albert Jay Nock’s 1943 autobiography, Memoirs of a Superfluous Man; the epigraph is a quotation from Amos Bronson Alcott:

To be ignorant of one’s ignorance is the malady of the ignorant.

DBx: The world, alas, teems with ignorant people – teems with people ignorant of their own ignorance. A disproportionately large number of such ignorant people boast advanced degrees.

Soiled by Socialism

(Don Boudreaux)

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In my latest column for AIER I announce a soon-to-be-launched new occasional series, here at Cafe Hayek, titled “Soiled by Socialism.” The idea for – and title of – this series comes from my friend Andy Morriss. Here’s a slice from my AIER column (link added):

There’s no question that the environment in which modern humans live is immeasurably cleaner, safer, and more pleasant than was the filthy and dangerous environment in which all of our pre-industrial ancestors lived.

But on this front not all the news is good. As innovative entrepreneurs in capitalist markets daily devise new goods and services to make our lives cleaner and safer, government officials are increasingly working to reverse this environmental improvement. Ironically, much of this government action is done in the name of improving the environment. This dismal reality was driven home to me recently by an e-mail from my friend Andy Morriss, a professor at Texas A&M.

Andy – who knows of the Café Hayek series “Cleaned by Capitalism” – was in London doing research at the British Library. He was prompted by the experience to send to me this e-mail:

I’m at the British Library this week doing research. They have what seem to be waterless urinals, with the predictable result that the men’s rooms reek of urine. So you should add ‘Soiled by Socialism’ to the series!

Unfortunately, there are enough instances of government soiling our environment to make Andy’s idea an excellent one. I’ll start that series soon. And waterless urinals are an ideal inaugural entry. I speak from personal experience because several years ago waterless urinals were installed in many men’s rooms on George Mason University’s Fairfax, Virginia, campus. Within a couple of months these men’s rooms were foul, with urine odor detectable even before entering the facility. So water was indeed ‘saved’ by avoiding flushing, but this ‘savings’ came at the high cost of rendering the men’s-room air and urinal surfaces unnecessarily repulsive and dirty.

By some miracle, George Mason eventually replaced the waterless urinals with proper water-flush ones. The improvement is noticeable and welcome.

Another example of “Soiled by Socialism” is government-mandated low-flow water faucets, showerheads, and toilets. At the very best, these low-flow devices simply fail to achieve their purpose of saving water, as people – to compensate for the lower flows – keep faucets and showers running longer, as well as flush toilets multiple times. But because water pressure, in addition to volume, contributes positively to cleansing one’s hands, body, and toilet-bowl interiors, we and our toilets do not get quite as clean with the low-flow devices as we would with higher-flow ones.

Some Links

(Don Boudreaux)

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David Henderson explains why he, quite reasonably, disagrees with Bob Poole on zoning.

Also disagreeing with Bob Poole on zoning is GMU law professor Ilya Somin. A slice:

It is true that single-family zoning can sometimes protect homeowners against externalities. For example, some affluent homeowners dislike the aesthetics of mixed-use housing, and others may prefer to live in an area with few or no working or lower-middle class residents. Others simply want to avoid changes to the “character” of their neighborhood.  But exclusionary zoning creates far larger negative externalities than it prevents, most notably by excluding millions of people from housing and job opportunities, thereby also greatly reducing economic growth and innovation. Moreover, even many current homeowners in areas with zoning restrictions stand to benefit from their abolition.

Also writing wisely about housing is Jason Sorens.

Deirdre McCloskey makes a strong case that Adam Smith was indeed a Christian. (DBx: Although contrary to what might be inferred from Paul Oslington, Smith’s use in An Inquiry Into the Nature and Causes of the Wealth of Nations of the term “invisible hand” is emphatically not a suggestion that the market process is manipulated by a divine power.) A slice from McCloskey:

Smith was no intellectual coward. He denounced mercantilism, and mercantilism was the easy and popular position. Still is. If you want to be a U.S. senator from Ohio, or even a president of the United States, you must be against imports and for exports. Trade deals, for example, are always expressed in mercantilist form: Give us access to your markets and we’ll give you access to ours, because what we want is a positive balance of payments. Smith could have gone along to get along. But he didn’t. Still less plausible is it to suppose that he would have lied when agreeing to the Thirty-Nine Articles, and would have achieved his academic chairs without scrutiny, and would have schemed to lead the young Duke into atheistic temptation.

John Cochrane comments about commenting on proposed U.S. government-issued regulations.

Wall Street Journal columnist Mary Anastasia O’Grady decries the simplistic conclusions that many environmentalists are drawing from last-week’s deluge of air pollution spewed by Canadian forest fires. A slice:

Evaluating the causes of this complex event calls for humility, curiosity and thoughtfulness. But politicians are in charge. Senate Majority Leader Chuck Schumer jumped in front of a camera on Wednesday to proclaim that “we cannot ignore that climate change continues to make these disasters worse.” President Biden called the Canada burn “another stark reminder of the impacts of climate change.” Canadian Prime Minister Justin Trudeau joined the chorus.

Their claims are bunk. A 2020 study, “Trends in Canadian Forest Fires, 1959–2019,” found that “there was a sharp increase in destruction caused by forest fires” in the first half of that 60-year period, “and a general decline in the second half.” The study, published by the Vancouver-based Fraser Institute, reported that “the all-time peak of fire activity in 1989 involved some 7.6 million hectares burned, while the most recent national data show only 1.8 million hectares burned in 2019.” Fire activity varied significantly across the country. Whereas Alberta had its second-highest fire loss in 2019 (1981 was its worst), in the prairie provinces “peak fire activity occurred several decades ago.” In the east, levels of forest fire activity were “steady.”

Robert Murphy, the author of the study, said his objective was “merely to document” what had happened with fire during that time. As to possible explanations, he mentioned “temperature and rainfall, but also local fire suppression policies, human-forest interactions, and agricultural practices.” He warned against trying to oversimplify the matter. “Any simple cause,” he observed, “would not have such disparate impacts across provinces and territories.”

Andrew Stuttaford reports that “the pandemic revealed that rather more of Leviathan lurks within the West’s democracies than we like to think.”

Quotation of the Day…

(Don Boudreaux)

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… is from page 25 of the 1948 printing of the second edition (1935) of Lionel Robbins’s classic 1932 tract, An Essay on the Nature & Significance of Economic Science:

It follows, further, that the belief, prevalent among certain critics of Economic Science, that the preoccupation of the economist is with a peculiarly low type of conduct, depends on a misapprehension. The economist is not concerned with ends as such. He is concerned with the way in which the attainment of ends is limited. The ends may be noble or they may be base. They may be “material” or “immaterial” – if ends can be so described. But if the attainment of one set of ends involves the sacrifice of others, then it has an economic aspect.

DBx: This point, to a well-trained economist, is almost trite. I say “almost” because the misapprehension that Robbins accurately described nearly a century ago remains in place and troublesome today. People who do not like the cold analytical water thrown on their social-engineering schemes by economics often assert that the goals that they, the social engineers, wish to further are nobler or ‘higher’ than are the goals with which economics is concerned. It is then said to follow that economists’ criticisms of such schemes are inapposite.

An example are those pundits who describe their support for trade restrictions as being aimed at protecting jobs the value of which allegedly is non-economic – the value of which is ‘higher’ than are the mere material ends with which economics is concerned. But as Robbins correctly explains, this attitude rests on a misapprehension of the nature and significance of economics.

It might be the case that a worker who holds a particular job derives from holding that job some amount of satisfaction –  some “utility” – beyond, or in addition to, the utility that he or she gets from the goods and services that he or she purchases with the monetary income earned at that job. Indeed, as society becomes wealthier, more and more jobs will have this feature. (As society becomes wealthier, people can better afford to sacrifice on-the-job monetary income for ‘non-monetary’ benefits of particular employments.) This reality, it will surprise critics of economics to learn, is absolutely unsurprising to economists. Nor are economists unaware of the reality that people who are gainfully employed experience, as a result of this employment, a sense of dignity. Yet these realities do nothing to render economics inapplicable to the case. Workers’ very real desires to consume non-pecuniary aspects of employment are no more outside of the purview of economics than are workers’ very real desires to consume bread, butter, beef, and beer. Non-pecuniary aspects of employment, including the dignity that being gainfully employed brings, are not free. These must be paid for – and, hence, economized on – no less than must goods available on Amazon, groceries available at Kroger, and gadgets available at Apple.

Rubio Is Wrong

(Don Boudreaux)

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Here’s a letter to the New York Post:

Editor:

Sen. Marco Rubio (R-FL) has only himself to blame if readers of his book excerpt come away skeptical of his arguments about immigration (“Marco Rubio’s new book explains how globalizing the US economy transformed immigration,” June 10). Rubio conveys the impression that, since the early 1990s, globalization has turned the American economy into a hellscape marked by deindustrialization and wage stagnation. Yet this dismal tale is utterly false.

The real value of American industrial output is today 71 percent higher than it was at the end of the early 1990s recession (March 1991). Unsurprisingly, therefore, compared to its level of 32 years ago America’s industrial capacity is today 69 percent larger. As for wages, economist Michael Strain documents that the average inflation-adjusted wage for America’s production and nonsupervisory workers was, just before the pandemic, at an all-time high and about 34 percent higher than it was in the early 1990s.

Strain shows also that, while households earning inflation-adjusted before-tax annual incomes between $35K and $100K have fallen as a percentage of all American households, the reason is not because the share of households earning less than $35K has increased; it’s because what has increased is the share of households earning more than $100K.*

Contrary to the impression conveyed by Rubio, globalization over the past three decades has been a boon, not a burden, to the great majority of ordinary Americans.

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), pages 42 and 73.

…..

See also Phil Gramm, Robert Ekelund, and John Early, The Myth of American Inequality (Lanham, MD: Rowman & Littlefield, 2022).

Reducing CO2 Concentrations In the Atmosphere Is Not An End In Itself

(Don Boudreaux)

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At least partly disagreeing with this EconLog post by Kevin Corcoran – a post that expresses wise skepticism of top-down ‘solutions’ to social problems – regular EconLog commenter Thomas Hutcheson wrote:

Well, we have been waiting quite a while for a bottom up solution to increasing CO2 concentration in the atmosphere.

In response to Mr. Hutcheson’s remark – a remark that unintentionally is evidence in support of Corcoran’s point – I offered the following comment:

Mr. Hutcheson: The correct criterion is not how much CO2 there is in the atmosphere – or by how much the concentration of CO2 in the atmosphere has been changed by top-down or by bottom-up responses. The correct criterion is how well human beings protect their lives and livelihoods given the fact that the production of much of what makes modern life possible involves as a by-product the emission of CO2.

If the best way to deal with CO2 emissions is to pay little or no attention to the emissions as such but, instead, to adjust to the consequences – say, by building higher sea walls, or by creating more reliable air-conditioning – then by hypothesis we should do the latter rather than the former.

Of course, no one can say in the abstract that the “if” that motivates the previous paragraph is in fact true. But no one can say in the abstract that it isn’t. Fact is, no one can say in the abstract what is the best way, or mix of ways, of dealing with CO2 emissions. But what we can say in the abstract – and say correctly – is that it is wrong to posit reductions of concentrations of CO2 in the atmosphere as an ultimate end. If the cost of reducing CO2 emissions by X amount is $Y, then humanity ‘should’ spend $Y to reduce CO2 emissions by X amount if and only if:

(1) the value to us of having CO2 reduced by X amount is worth at least the value to us of what we would otherwise have enjoyed had we not spent $Y to achieve this reduction of CO2 emissions,

and

(2) the improvement in our lives that would be achieved by a reduction of CO2 emissions by X amount cannot be achieved in some alternative way at a cost of less than $Y.

Because of the enormous complexity of the modern world, real-world knowledge of these details is impossible to get. The best we can do is to make educated guesses governed by realism about political processes. When I look at the economic history of the past few centuries, I see that unprecedented and enormous improvements in human health, safety, and comfort – and in living standards generally – have been generated, and continue to be generated, by CO2-emitting industrial activities. There is clearly a benefit side to the cost side of CO2 emissions.

This benefit side is all-but-ignored by mainstream pundits, professors, and politicians. These people simply take for granted that our standard of living will continue to be high with government-engineered reductions in CO2 emissions, or that the benefit to us of government-engineered CO2 reductions will by hypothesis be worth the cost. The fact that so many people who today are hysterical about CO2 emissions do as you do in your comment here – namely, talk and write of reductions in CO2 emissions as if achieving such reductions is an end in itself – gives me no confidence that the loudest voices screaming about climate change are thinking with sufficient clarity and seriousness about the matter.