Cafe HayekCafe Hayek - where orders emerge - Article Feed

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Bonus Quotation of the Day

Posted: 17 Oct 2019 12:24 PM PDT
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(Don Boudreaux)




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is from page 55 of Armen Alchian’s and William Allen’s Universal Economics
(2018; Jerry Jordan, ed.); this volume is an updated version of Alchian’s
and Allen’s magnificent earlier textbook, University Economics:

It is often argued that intermediaries like wholesalers, retailers, sales
agents, and advertisers exploit the ignorance of customers. That is true in
the same way a teacher exploits the ignorance of students, doctors exploit
the ignorance of patients, and authors the ignorance of readers.
Intermediaries exist (survive) because they reduce the costs of exchange.




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Lies, Damn Lies, and

Posted: 17 Oct 2019 08:38 AM PDT
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(Don Boudreaux)




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Heres a letter to a sympathetic patron of Cafe Hayek:

Mr. Fulton:

Thanks for your e-mail.

I did indeed read in today’s Wall Street Journal about the decline in U.S.
manufacturing output, and I agree that this decline likely has much to do
with Trump’s war on Americans who trade with foreigners.

But I’ll refrain from blogging on it. There’s a larger monster that lurks,
one that I don’t wish to feed. Indeed, I want to do my part to slay this
beast. This larger monster is the too-frequent misuse of economic
statistics to stir up opposition to free trade.

Ultimately it matters not one whit how many things conventionally
classified as “manufacturing output” are produced in the U.S. What
ultimately matters is how many goods and services we Americans are able to
acquire for our consumption, with much of this acquisition coming through
peaceful commerce with foreigners.

If we produce nothing but outputs classified as services as, by the way,
the great majority have done for decades and in exchange for our services
acquire through trade whatever manufactured goods we chose, there’s no
problem whatsoever. Yet this situation would be trumpeted loudly as
evidence that the American economy is in decline and, as such, suffers a
“problem” that must be “solved” with tariffs and other government
interventions.

But any such conclusion is ridiculous. As far as economic policy goes,
statistics on manufacturing output are no more relevant than are statistics
on yellow-things output, on curvy-edged-things output, or on the output of
people who are left-handed, have green eyes, and were born east of the
Mississippi.

Earlier this week I was with Deirdre McCloskey and asked her why public
resistance to the case for free trade seems today to be no weaker than it
was when Adam Smith wrote An Inquiry Into the Nature and Causes of the
Wealth of Nations. Deirdre immediately and wisely pointed to the misuse of
economic statistics.

I don’t deny that much value is to be had from the careful gathering and
study of some economic statistics. But I believe also that a great bulk of
them especially those that bear on international trade unleash far more
smoke, confusion, and devilment than light, insight, and sound policy.

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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Mises vs. Marx

Posted: 17 Oct 2019 06:22 AM PDT
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(Don Boudreaux)




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The supremely talented, and learned, filmmaker John Papola does it again,
this time with a rap video pitting Ludwig von Mises against Karl Marx.
Enjoy! And learn.



..

I love the cameos by some good friends.




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Pittsburgh Tribune-Review: "Costs & benefits"

Posted: 17 Oct 2019 06:00 AM PDT
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(Don Boudreaux)




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In this July 28th, 2005, column for the Pittsburgh Tribune-Review I warn
against hotheaded, poorly thought-out responses to terrorist attacks. You
can read my warning beneath the fold.

(more)




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Some Links

Posted: 17 Oct 2019 03:59 AM PDT
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(Don Boudreaux)




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Richard Ebeling identifies the poisonous root of the NBAs recent kowtowing
to the authoritarians in Beijing. In this slice, Richard makes the solid
point that two wrongs dont make a right:

In the hysteria of an American political election season, the worst thing
that could happen would be if politicians and pundits now propose to
legislate or regulate the response by the NBA or the Houston Rockets to the
Chinese government. With all the chatter about the Chinese attempting to
abridge the freedom of speech of Americans through the weapon of financial
intimidation if they want to do business in China, it then would be the
U.S. government dictating what those sports teams and their NBA
representatives could say and agree to in trying to salvage their growing
business in China.

More broadly on the same topic is George Will. Heres his conclusion:

Unfortunately, however, [Beto] O’Rourke, [Elizabeth] Warren and [NBA
Commissioner Adam] Silver demonstrate the tendency of too many progressives
to cut constitutional corners, to despise and bully adversaries, and to
practice theatrical but selective indignation about attacks on fundamental
American principles, some of which they themselves traduce. Just what we
did not need in our dispiriting civic life — additional evidence that there
really is no such thing as rock bottom.

On October 23rd, Steve Landsburg will speak (along with, among others, GMU
Econ alum Paola Suarez) at Kennesaw State University.

Ben Zycher exposes problems with renewable energy. A slice:

In the larger context, the opposition to conventional energy that is the
core of the GND is fundamentally anti-human, because one major implication
of the opposition to fossil fuels is an aversion to increases in the value
of human capital and other parameters that have the effect of increasing
the demand for conventional energy. Moreover, the authoritarian
implications of the GND are serious, however unnoticed.

In this letter in the Wall Street Journal, Tom Grennes again exposes the
absurdity of the Jones Act.

James Pethokoukis observes, accurately, that this time is an especially
strange one for the West to tremble in fear of the Chinese economy.

Also from James Pethokoukis is this podcast with the eloquent and learned
Scott Lincicome, who today has few peers in defending free trade.




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Quotation of the Day

Posted: 17 Oct 2019 01:45 AM PDT
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(Don Boudreaux)




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is from page 136 of GMU Econ alum Edward Stringham’s important 2015 Oxford
University Press book, Private Governance:

The most personal form of private governance is individual self-governance
or internal moral constraints. Ignored by strict neoclassical economists,
the importance of individual self-governance or internal moral constraints
has been discussed by writers from Adam Smith to Immanuel Kant and Leo
Tolstoy. Internal moral constraints are rules that people choose to follow
even if other people do not impose them; these constraints are chosen from
within. Manners, politeness, honesty, and trustworthiness are common
examples of internal constraints that people commonly adopt independent of
external rules.




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Some Links

Posted: 16 Oct 2019 01:21 PM PDT
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(Don Boudreaux)




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My intrepid Mercatus Center colleague Veronique de Rugy isnt favorably
impressed by Trumps new kinda-sorta-maybe trade deal with China.

Megan McArdle isnt favorably impressed with Elizabeth Warrens knowledge of
health-care economics.

Vincent Geloso isnt super-impressed with the economics that was
most-recently awarded a Nobel Prize. A slice:

First, the narrowing of the focus provides results that are not that
surprising: more capital makes small firms more productive; better food
increases schooling performance; access to vaccines improve health; better
teachers mean better test scores for students. These are highly
unsurprising results even if the measure of the effects is incredibly
accurate. Some of their findings were, at first sight, more surprising. For
example, Banerjee and Duflo (along with Rachel Glennerster) found that a
program to deal with nurse absenteeism in Indian public hospitals that had
positive effects initially was ultimately undermined by local politicians
and bureaucrats. However, for scholars familiar with the insights from
public choice theory and the economics of bureaucracy, the results are
unsurprising. They illustrate a point they have been making for a long time
regarding the need to consider public sector players to be just as
self-interested as everybody else.

And heres David Henderson on this years economics Nobel laureates. Heres
Davids conclusion:

Many other economists are asking that question, and coming up with big
answers. Michael A. Clemens, an economist at the Center for Global
Development, has written that removing or substantially reducing barriers
to immigration would create tens of trillions of dollars of additional
income for people from poor countries, while also benefiting the rich
countries to which they move. How about a Nobel Prize to Mr. Clemens for
working on a big question?

Heres the video of Deirdre McCloskeys interview yesterday (by James
Pethokoukis) at AEI.

Gary Galles celebrates comparative advantage.




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