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Quotation of the Day

Posted: 28 Mar 2020 04:10 AM PDT
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(Don Boudreaux)




Tweet
is this March 21st, 2020, tweet from Thomas Sowell:

It is so easy to be wrong and to persist in being wrong when the costs of
being wrong are paid by others.

DBx: Indisputably true, both as a matter of logic and as a proposition that
consistently succeeds at explaining a great deal of human history.

Note that Sowell’s point is general. Those who are convinced that today’s
government-engineered lock-down of much economic activity is appropriate
can nod their heads approvingly at the thought that those who are convinced
of the opposite fail to account adequately for the costs that would be paid
by others were this lock-down less draconian. Ditto the other way ’round:
those opposed to this lock-down nod their heads approvingly at what they
take to be Sowell’s explanation of why government officials seem now to be
so glibly and irresponsibly imposing massive economic costs on hundreds of
millions of strangers.

But whatever your position on the lock-down whether you think it to be
worth its gargantuan costs or not worth these costs you cannot fail to
recognize the deep dangers that lurk within any system that allows a
handful of people to act in ways that impose massive costs on others.

My own sense is that the benefits of this lock-down are not worth their
costs. (And, by the way, I do not reckon as costs only or even chiefly
financial flows, such as lost profits, and the monetary values of foregone
goods and services. Among the many kinds of costs of this lock-down are
worse-than-otherwise health in the future, and the innumerable problems
inevitably to be created by governments with yet more discretionary
powers.) Yet even if I am mistaken and perhaps I am (I say sincerely) we
should all be deeply suspicious of discretionary power exercised by
government officials power the costs of the exercise of which are borne
almost wholly by third parties.

The grade-school fiction one embraced also by many PhD-sporting
intellectuals is that majority-rule democracy is sufficient to ensure that
all decisions made by government officials in democratic nations are
without any such negative externalities, that is, without any undue
ill-consequences imposed on third-parties. We the people make these
decisions ourselves through our elected representatives and the assistants
that they hire to help them. Problem avoided!

Anyone who believes this above account of democracy is too naive for words.
He or she is wholly ignorant of even the most basic principles of
public-choice economics an ignorance, note, that itself imposes negative
consequences on third-parties by encouraging the naive to impose the costs
of political superstitions and of the resulting dangerous policy-making
regimes on their fellow citizens. Such people should read Buchanan,
Tullock, Downs, Olson, Schumpeter, Arrow, Stigler, Wagner, Niskanen, Higgs,
Holcombe, Yandle, Brennan & Lomasky, Caplan, Lee, Simmons, Munger, and
Achen & Bartels, among others. Oh, and do read also Sowell’s own great
magnum opus.




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What About Economists Expertise?

Posted: 27 Mar 2020 11:41 AM PDT
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(Don Boudreaux)




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Here’s a letter to the Washington Post:

Editor

These days we are lectured incessantly about the importance of deferring to
experts. And those persons amongst us – including members of Congress,
state governors, and even the President of the United States – who don’t
fully follow experts’ prescriptions are solemnly denounced as fools who
irresponsibly endanger the public.

Without opining on the merits of epidemiologists’ expert assessments
regarding COVID-19, I’m compelled to ask why there is no deference to the
expert assessments of us economists. Why, for example, is economists’
long-standing consensus in support of free trade – indeed, strong support
for unilateral free trade – ignored? We hear no demands from the likes of
politicians such as Sen. Chuck Schumer or pundits such as Dana Milbank that
economists’ expert recommendations on trade policy be followed in full, no
questions asked.

Likewise, it’s very difficult to find an economist who supports rent
control. Yet this expert consensus against rent control is routinely
ignored by the likes of New York City Mayor Bill de Blasio and presidential
aspirant Bernie Sanders. Why? Where’s their respect for experts?

I emphatically reject the Progressive belief that society is an engineering
project that can be scientifically guided by a government of the best and
brightest toward some optimal condition. But I also believe that true
experts can play a valuable role by informing the public and government
officials of the likely consequences of different policies. And so given
today’s clamor for deference to the expertise of epidemiologists, where’s
the deference of pundits and politicians to the expertise of us economists
on those policy matters on which we can fairly be said to have reached a
consensus?

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




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Some Links

Posted: 27 Mar 2020 07:22 AM PDT
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(Don Boudreaux)




Tweet
My intrepid Mercatus Center colleague Veronique de Rugy applauds the
creativity and compassion on display in the private sector. A slice:

After what can only be described as a multilevel government failure that
resulted in the United States having practically no coronavirus tests
available for weeks after the onset of the pandemic, the private sector
ramped up its production so much that were now testing 65,000 people every
day. This number is bound to grow. The tests are a crucial component of
making it through this crisis, and theyll become even more accurate and
deliver results faster as innovators do what they do best when theyre
unhindered by silly or contradictory government regulations.

Vincent Geloso teaches us what Herbert Hoover inadvertently teaches us
about reaction to COVID-19. A slice:

This bias in favor of draconian measures that avoid the stigma of the
“do-nothing-Hoover” etiquette stems from the fact that these actions are
observable. Even if they impose considerable costs to society at large or
hurt the poorest most, they will be privileged over less easily observed
but more efficient measures.

Wall Street Journal columnist Kimberly Strassel rightly laments the
self-serving cronyism the big government contagion of government relief
efforts. A slice:

Government mostly “Cares” for government. Bills that hand out money are
written by appropriators. And appropriators never miss an opportunity to
expand departments, agencies, bureaus and commissions. A rough calculation
suggests the single biggest recipient of taxpayer dollars in this
legislation—far in excess of $600 billion—is government itself. This
legislation may prove the biggest one-day expansion of government power
ever.

And heres Bruce Yandle on the massive relief bill from Washington.

David Henderson warns against being gullible about claims of scientific
consensus. (A note: Im neither an epidemiologist nor a physician. I remain
open to a wide range of claims about plausible scenarios both of just how
contagious is the coronavirus and of its lethality. But I am an economist
who has spent his adult lifetime now one thats been quite long observing
governments. As Vincent Geloso argues in the piece linked above, we must
all expect that most government officials will opt for worst-case scenarios
and trumpet these as though these scenarios are the only ones that are
legitimate. Further, we should all although, alas, we wont all recognize
the grave danger of the viral expansion of government power.)

I was recently interviewed by Dan Proft.

Hans Eicholz reviews the great Stephen Daviess The Wealth Explosion.




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Quotation of the Day

Posted: 27 Mar 2020 06:03 AM PDT
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(Don Boudreaux)




Tweet
is from pages 262-263 of George Will’s excellent 2019 book, The
Conservative Sensibility:

[Welfare] states presuppose economic dynamism sufficient to generate
investments, job creation, corporate profits, and individuals’ incomes from
which come tax revenues needed to fund entitlements. But welfare states
produce in citizens an entitlement mentality and a low pain threshold. That
mentality inflames appetites for more entitlements, broadly construed to
include all government benefits and protections that contribute to welfare
understood as material well-being, enhanced security, and enlarged leisure.
The low pain threshold causes a recoil from the rigors, insecurities, and
dislocations inherent in the creative destruction of dynamic capitalism.
The recoil takes the form of protectionism, regulations, and other
government-imposed inefficiencies that impede the economic growth that the
welfare state requires.

DBx: Yes.

Redistribution’ requires the existence of something to be redistributed.
And because cash, as such, can’t be used as food, clothing, shelter, or for
any other human purposes beyond kindling for fires or flooring for the
cages of pet hamsters, meaningful redistribution’ requires the existence of
real goods and services.

The existence of real goods and services, in turn, requires production. And
production to be worthy of its name must be of real goods and services
that are useful to human beings. Producing’ chocolate-covered pine cones
is, in economic reality, to produce nothing; it is instead to waste human
labor and chocolate.

To ensure that toiling human minds and hands actually produce, rather than
waste, requires that the toiling hands and minds have knowledge not only of
what people want, but of what people want most how people rank their
consumption possibilities. To toil to produce goods and services ranked low
at the cost of not producing goods and services ranked more highly is waste
almost as bad as toiling to produce goods and services not wanted at all.

In short, toiling, in order not to be wasteful, must be guided by knowledge
of what people wish most to consume. To the extent that toiling is not so
guided, it is wasteful.

The best means that humanity has stumbled upon for both informing people
what to produce and giving people appropriate incentive to produce what
should’ be produced is the competitive market system and the money prices
that it generates. (And, yes, the market no less than language was indeed
stumbled upon and crafted largely by evolution; it was not designed and
consciously implemented.) Ironically, perhaps the biggest flaw in this
system is the fact that it works so marvelously well. The material fruits
that it generates are so magnificent in form and volume that they appear to
those of us blessed to live in market-oriented societies as being
automatic, a feature of reality like oxygen or rain. Seeming so, the
material fruits of markets are far too seldom explored to discover their
actual origins.

The resulting ignorance of the operation and benefits of markets is rather
like a virus that is potentially lethal to the very markets which do too
little to dispel this ignorance.




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