The Latest from Cafe Hayek

(Don Boudreaux)

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Steve Davies describes what he believes is, today, not a collapse of democracy but realignment.

In this short radio interview, my intrepid Mercatus Center colleague Veronique de Rugy discusses Elizabeth Warren’s scheme for Social Security.

Jeff Jacoby wonders why there is no more clamor over the gargantuan and growing indebtedness of the U.S. government. A slice:

For the first time since World War II, the government’s debt ($22.02 trillion) is bigger than America’s entire economy ($21.06 trillion).

Tim Worstall offers some adult advice to St. Greta of Stockholm. A slice:

Economic growth is not a problem in beating climate change, it’s the cause of doing so.

Mark Perry summarizes some of the many failed predictions of environmental calamity.

Arthur Diamond sings the praises of market-tested innovation.

David Bier argues that legal immigration will resolve America’s real border problems.

Richard Epstein laments California’s assault on the gig economy.

(Don Boudreaux)

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… is from page 295 of Thomas Sowell’s 2009 book Intellectuals and Society:

By encouraging or even requiring students to take stands when they have neither the knowledge nor the intellectual training to seriously examine complex issues, teachers promote the expression of unsubstantiated opinions, the venting of uninformed emotions, and the habit of acting on those opinions and emotions while ignoring or dismissing opposing views, without having either the intellectual equipment or the personal experience to weigh one view against another in a serious way.

DBx: Indeed.

And nothing is more childish than supposing that youth supplies an especially rich source of knowledge and wisdom about social and economic matters – matters that are inherently complex and involve the making of countless trade-offs at the level of the individual.

(Don Boudreaux)

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This Wednesday, starting at 4:00pm EDT, I will do an hour-long webinar – hosted by Freedom Hub – titled “Labor Market Realities Aren’t Optional.”

Join in!

(Don Boudreaux)

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In my latest column for AIER, I further explore so-called “price gouging,” this when it occurs under very extreme and desperate circumstances. A slice:

Everyone understands that the looting of stores leads only to an arbitrary distribution of who gets available supplies and who goes without. There’s simply no reason to suppose that successful looters are more worthy or needy than are unsuccessful looters or people whose morality won’t permit them to loot.

Everyone understands also that the distribution of available supplies through looting does nothing to inspire suppliers to bring more supplies into the region.

Yet very few people see the similarity, visible to economists, of queueing to looting. As with looters, there’s simply no good reason to suppose that successful queuers are more worthy or needy than are unsuccessful queuers or people whose time or circumstances won’t permit them to queue.

And if available supplies are so limited that some people must do without and die, no conceivable distribution of these supplies will prevent people from dying.

The gallon of water sold to Jones at a “gougingly” high price saves Jones’s life, but it also results in Smith dying of thirst. If the price of that gallon of water had instead been held down to what politicians consider to be “normal,” it’s possible that Smith — able to afford that lower price and fortunate enough to be near the front of the queue — will get the water and survive. But in this case the unfortunate person to die of thirst will be Jones.

Deaths in these bitter circumstances can be avoided only if additional supplies are brought in. And what most economists understand that most non-economists don’t is that “gougingly” high prices are the market’s means of attracting to devastated regions these vital supplies. If government prevents these prices from rising, the market process is thwarted — which in cases such as this one means that people will perish.

(Don Boudreaux)

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For anyone who has studied the work and influence of the late Aaron Director – especially as that work and influence helped to successfully bulldoze off of antitrust economics and policy the heavy, thick layers of truly awful ‘economics’ that had encrusted it for much of the 20th century – encountering Matt Stoller’s post on Director is surreal.

I encountered this post through David Henderson at EconLog.

David is too kind to Stoller. Stoller is correct that what by the mid-1970s had come to be known as the “New Learning” about antitrust was very much a product of Aaron Director’s influence. But Stoller – unable to understand that bit of economics, and also apparently in the grip of the juvenile notion that “big” business means “monopoly” business – resorts to telling a childish and economically ignorant tale.

I’ve not now the time to offer a more comprehensive criticism of Stoller’s error- and myth-ridden ‘analysis.” David does a good job.

But I will here make two points.

First, the market-process understanding of competition that was championed by Director – and that was polished and explained by the many scholars whom he influenced – has a long and honored pedigree. I believe, for example, much of it can be traced to Adam Smith. Some of the other notable scholars who had this market-process understanding include (in no particular order):

– Joseph Schumpeter

– Ludwig von Mises

– F.A. Hayek

– Israel Kirzner

– Mario Rizzo

– Ronald Coase

– Harold Demsetz

– Armen Alchian

– Kenneth Elzinga

– Yale Brozen

– Thomas Sowell

– Donald Dewey

– Fred McChesney

– Thomas Hazlett

– George Bittlingmayer

– Dom Armentano

– Vernon Smith

– Jim Liebeler

– Bob Higgs

Perhaps Stoller thinks that all of these scholars were and are in the pockets of oligarchs.

Also, Stoller’s portrayal of H.L. Mencken is comically wrong. Here’s a comment that I left on David’s post at EconLog:

Not only is Stoller’s understanding of Aaron Director’s economics utterly misbegotten, his reading of H.L. Mencken can be described only as – well, I have no words to convey just how mistaken that reading is.

Mencken argued for individual liberty – for keeping each individual as free as possible from what Thomas Sowell calls “the rampaging presumptions of their betters.” It’s nothing short of astonishing that Stoller accuses Mencken of believing that some people are fit to rule others.

From where might such a deeply erroneous interpretation come? One possibility is that Stoller never actually read more than a few out-of-context snippets of Mencken’s writings and judges Mencken either exclusively from those snippets or from some extant popular caricature of Mencken – a caricature itself the bastard child of such out-of-context snippets.

Another possibility is that something is going on along these lines: Mencken warned of the many dangers of majoritarian democracy and, hence, is believed by people such as Stoller to support, therefore, some sort of rule by aristocracy. One of the sad realities of popular understanding is that to oppose majoritarian democracy is necessarily to endorse rule by some over others.

In reality, of course, Mencken feared unlimited majoritarian democracy for the same reasons that unlimited majoritarian democracy was feared by the likes of James Madison and America’s other founders – namely, not because unlimited majoritarian democracy prevents rule by an aristocracy but, rather, because it poses a threat to the freedom of each individual to rule himself and herself.

To describe the ‘analysis’ offered by Stoller as juvenile and shallow is to treat it too kindly.

(Don Boudreaux)

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My intrepid Mercatus Center colleague Veronique de Rugy offers some options on how to deal with that great geyser of cronyism, the U.S. Export-Import Bank, if it’s politically impossible to slay the damn thing. A slice:

As the narrative goes, without Ex-Im many foreign companies would buy Airbus rather than Boeing; hence the need for support. This is a weird argument at many levels. First, as a believer that the government’s job is never, ever, ever to prop up private companies, I would say, “And so what?” But in this town, where people believe it is totally normal for Uncle Sam to work overtime so that a company will make extra private profit, that argument doesn’t go very far.

I have others. Doesn’t it bother anyone how little faith in Boeing those who are claiming that without Ex-Im airlines wouldn’t buy Boeing planes have? Effectively what these guys are saying is “This is a bad product that people wouldn’t want without with Ex-Im.” If this is true, why should the federal government ask us to stand behind Boeing?

James Peron warns of the danger to liberty posed by some who pose as friends of liberty. A slice:

The GOP is no party of free enterprise. They are led by a corrupt advocate of cronyism, worse than any stereotype the Bernie Sanders of the world could invent. The GOP may vote for protectionism, for big government, and for the regulatory state — provided it redistributes wealth to their favored groups — but in the minds of many voters, especially young people with limited experience, they think Republicans are the standard bearers of liberty.

More fracking? Or more war?

Jeffrey Tucker is among the fans of Downton Abbey.

Jonah Goldberg – writing about the current hysteria over vaping – notes that those who self-righteously boast of being “reality-based” ignore reality.

George Will ponders what Hong Kong’s resistance means for Taiwan.

Wendy Kaminer is unimpressed with an attempt to make a case against free speech.

Chris Preble remembers Earl Ravenal.