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The Deficit of Economic Understanding Is, Unfortunately, De Maximus

Posted: 18 Jun 2022 11:30 AM PDT
[link removed]

(Don Boudreaux)




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Here’s a letter to the Wall Street Journal:

Editor:

Josh Zumbrun reports as newsworthy Jeff Ferry’s warning that America’s
trade deficit with China is undercounted because of the exclusion from
trade statistics of the value of de minimis imports (“The Tiny Loophole
That Understates the Trade Deficit With China,” June 17). These imports are
consumer goods brought by travelers into the U.S. in bundles worth less
than $800.

Yet rather than suggest that the protectionist Mr. Ferry is justified in
raising concerns over the fact that America’s trade deficit with China is
larger than is officially reported, Mr. Zumbrun should instead report this
fact: In our world of more than two countries, any talk of one country’s
trade deficit or surplus with any other individual country is utterly and
indisputably nonsensical. When the number of participants in a market is
larger than two, there’s simply no reason to expect any pair of
participants to sell to each other the same amounts as they buy from each
other.

Because you, the Wall Street Journal, buy more (namely, his labor) from
Josh Zumbrun than Mr. Zumbrun buys from you, you run what Mr. Ferry would
call a trade deficit with Mr. Zumbrum. Yet clearly this fact implies
nothing amiss. And so just as there’s no reason to worry that Mr. Zumbrun
doesn’t buy from you the same dollar amounts as you buy from him, there’s
no reason to worry that the Chinese don’t buy from us Americans the same
dollar amounts as we buy from them.

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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Let It Be Known that Today Is Paul McCartneys 80th Birthday

Posted: 18 Jun 2022 03:52 AM PDT
[link removed]

(Don Boudreaux)




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Perhaps this post is written for no one but me.

My earliest clear memory the length of which is greater than that of a jpeg
shared on Facebook is the assassination of JFK. Id turned five just two
months earlier. My next such memory, from just weeks later, is of the news
made by the Beatles arrival on the international music scene. My
grandmother and great aunt showed me a cover of Life magazine featuring a
color photo of these strange men with long hair. I cant today say why I
couldnt then say why but as a young child I got caught up in the hype, the
Beatlemania. This new music, and the band playing it, were revolutionary,
and very exciting.

I remember well sitting on my maternal grandmothers lap, at my grandparents
home at 1337 Elysian Fields Avenue in New Orleans, watching on television
black-and-white, of course the Beatles first appearance on the Ed Sullivan
Show in February 1964. (Sunday, February 9th, 1964, to be exact.) I
remember someone giving me, as a gift, the album Meet the Beatles! and me
wanting to hear it played over and over again. Ive been a fan ever since.
(I also remember wondering, whenever I looked at the album cover, if there
was something wrong with Ringos neck a tumor, perhaps? that my young eyes
didnt realize was simply a consequence of the way the photograph was posed
and shot.)



(Many memories are flawed, especially long-ago ones and more so if theyre
from early childhood. In my memory, I saw the cover of Life before watching
the Beatles on Ed Sullivan, but that cant have been the case because that
issue of Life didnt appear until August 1964.)

Anyway, today is Paul McCartneys 80th birthday. Happy Birthday, Sir. Youve
given the world much happiness. Pasted below the fold is what I wrote here
at Cafe Hayek 16 years ago, when McCartney turned the age that I will turn
in three months: 64.

(more)




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Quotation of the Day

Posted: 18 Jun 2022 01:15 AM PDT
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(Don Boudreaux)




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is the closing paragraph of Robert Higgs’s excellent September 2006 essay
When the Government Took Over U.S. Investment (footnote deleted):

In sum, most contemporaries greatly exaggerated the heroic achievements of
the wartime socialization of investment, as have subsequent historians and
economists. In large part, they simply failed to appreciate how much of the
“capital” took strictly military forms. Even the industrial investments,
however, proved largely ill-suited for making a valuable contribution to
postwar civilian production: they were too concentrated in the wrong
industries and in the wrong locations for postwar purposes. The wartime
socialization of investment served a definite purpose in helping the U.S.
military-industrial complex to triumph over the nation’s enemies in World
War II, but beyond that, its achievements had little, if anything, to
recommend them.




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Yet Another Genius Proposal from Sen. Warren

Posted: 17 Jun 2022 09:59 AM PDT
[link removed]

(Don Boudreaux)




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Here’s a letter to the Wall Street Journal:

Editor:

You report that “high U.S. fuel exports are contributing to $5-a-gallon
gas” (June 16). Despite Sen. Elizabeth Warren (D-MA) agreeing with you,
both you and she are mistaken to imply that freedom to export keeps prices
unnecessarily high in the home market.

The greater are energy producers’ abilities to export, the larger are their
markets for domestically produced energy and, thus, the greater are their
incentives to invest in domestic exploration, drilling, and refining. While
forcibly curtailing fuel exports, as Sen. Warren proposes, might decrease
the prices that we Americans pay for gasoline today, the resulting reduced
investment in domestic fuel production will ensure that we pay inordinately
higher prices in the future.

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

..

Among the many myths about markets is that they are myopic while government
takes an appropriate long-run perspective. The truth as evidenced by Sen.
Warrens destructive proposal is the polar opposite.




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Pittsburgh Tribune-Review: "The middle class, then & now"

Posted: 17 Jun 2022 08:25 AM PDT
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(Don Boudreaux)




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In my column for the December 25th, 2012, edition of the Pittsburgh
Tribune-Review I wrote again about the myth of the economic stagnation of
Americas middle class. You can read my column in full beneath the fold.

(more)




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Some Links

Posted: 17 Jun 2022 03:13 AM PDT
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(Don Boudreaux)




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David Simon decries Bidens destructive virtue-signaling and the policies
that result on the climate. A slice:

Plastics and many other materials are made from petroleum. High oil prices
raise costs of production and prices for everything from laptop computers
to Patagonia vests to, perhaps of greatest current importance, fertilizers.
High fertilizer prices, of course, raise food prices.

The consequences resulting from Biden’s restriction of U.S. natural gas
production may be even worse. The price of natural gas price has tripled,
from about $3 per million British thermal units in June 2021 to about $9 by
May 2022. This has raised not only utility bills but also prices of goods
manufactured by gas powered plants.

But higher prices may not be the worst of it. The longer-term climate
campaign against natural gas use has resulted in utilities having less
power-generating capacity. This, the Wall Street Journal recently reported,
has led electric-grid operators to warn “that power-generating capacity is
struggling to keep up with demand, a gap that could lead to rolling
blackouts during heat waves or other peak periods as soon as this year.”

Reasons Ron Bailey reports that, while the frequency of heat waves in the
U.S. has been increasing in the U.S. since the 1960s, mortality from heat
is falling. A slice:

On the other hand, a longer-term view from the most recent U.S. National
Climate Assessment report finds that while the frequency of heat waves has
been increasing since the 1960s, they were more common and fiercer during
the first third of the 20th century.

It is true that if analysis of data begins in the 1960s, then an increase
in heat waves can be shown. However, if the data analyses begins before the
1930s then there is no upwards trend, and a case can even be made for a
decline. It is a fertile field for cherry pickers, observes University of
Colorado climate policy researcher Roger Pielke Jr. over at his invaluable
Honest Broker Substack. Pielke does note that ongoing man-made climate
change will tend to make future heat waves more frequent and last longer.

The falling trends in U.S. heat mortality are associated with increased air
conditioning, less work outdoors, and better weather warning systems.

Writing in the Wall Street Journal, Todd Henderson explains how a proposed
change in the operation of futures markets is likely to be beneficial and
why this change is opposed by some players. Heres his conclusion:

If the FTX model proves more efficient, and is eventually cleared for use
in agricultural products, these farmers, with the help of intermediaries if
they want, are well-equipped to navigate any change to the incumbent
exchanges outmoded way of doing things. The incumbent exchanges (the
bootleggers) clearly benefit from maintaining the status quo, but their
self-interest won’t sell on Capitol Hill or the CFTC. Instead, they cloak
private gains in public terms, hoping the Agriculture Committee and farming
advocates (the Baptists) play along.

Ethan Yang and Dorothy Chan explore Chinese antitrust policy.

Connor Harris reviews some of the foul and costly consequences of rent
control. A slice:

In 2000, New York Times columnist Paul Krugman commented on a story about
apartment seekers in San Francisco who spent months making apartment
searches a full-time job, dressing up in suits and ties and bringing
resumes to open houses where landlords expected them to act enthusiastic.
As Krugman pointed out, “Landlords don’t want groveling—they would rather
have money. In uncontrolled markets the question of who gets an apartment
is settled quickly by the question of who is able and willing to pay the
most.” Sure enough, San Francisco was not an uncontrolled market, but
rather one where “a technology-fueled housing boom has collided with a
draconian rent-control law.” In rent-controlled markets, landlords can
repel most prospective tenants by making absurd demands—or by being
prejudiced—and still have plenty of prospects willing to pay the maximum
legal rent.

Economists almost all agree on the evils of rent control. It discourages
housing maintenance, spurs black markets, reduces supply and increases
prices on the open market, and removes the incentive for people who don’t
need to live near job centers, such as retirees, to move and make way for
active workers who need the economic opportunity more. My old professor
Edward Glaeser likes telling the story of a corporate executive, who, when
asked whether it was unfair that he paid so little for a rent-controlled
apartment in Manhattan, said that it was perfectly fair because he almost
never lived there. Without rent control, he might have decided that keeping
a desirable apartment empty wasn’t a good use of his money.

Scott Morefield points to more evidence against the efficacy of mask
mandates. A slice:

Remember that CDC study purporting to show that school masking was
effective? Did you wonder what the results would have been if someone had
conducted a higher quality study over a greater sample size and period of
time? Ambarish Chandra of University of Toronto and Dr. Tracy Hoeg of
University of California, Davis did exactly that with this Lancet study
titled, “Revisiting Pediatric COVID-19 Cases in Counties With and Without
School Mask Requirements—United States, July 1—October 20 2021.” Their
results: “… no significant relationship between mask mandates and case
rates.”

Johan Anderberg applauds Sweden for saving children from lockdowns. Two
slices:

What no one at the time knew was that, behind the scenes, a retired
epidemiologist had won his first battle. Seventy-year-old Johan Giesecke
had been Sweden’s state epidemiologist between 1995 and 2005, and had a
good relationship with Anders Tegnell, the man who now held the title.
Decades earlier, Giesecke had hired Tegnell because he appreciated what
appeared to be Tegnell’s complete indifference to what other people thought
of him. Now, Giesecke referred to Tegnell as “his son”.

Both men, at the start of the pandemic, advocated for keeping schools open.

They did this for a number of reasons. Firstly, no one knew if school
closures worked. On the one hand, there was some historic support for the
policy: experiences from school holidays during influenza outbreaks in
France, and the varying responses to the 1918 pandemic in the US, suggested
that the number of cases could “maybe” be reduced by 15% by closures, in an
optimistic scenario. But it also suggested that those gains would likely be
lost if the children weren’t completely isolated when staying home from
school.

..

The Swedes monitored the course of events unfurling on the rest of the
continent. The countries closing their schools and preschools were growing
more and more numerous. Tegnell couldn’t understand what they were doing.

His confidantes at the agency agreed with his assessment: the rest of the
world was rushing headlong into a dangerous experiment with unforeseen
consequences. The head of analysis at the agency explained that Spanish
school closures had pushed the virus from the cities to the coasts, as
wealthy families fled to their holiday homes. And school closures would
force many key workers, including doctors and nurses, to stay home from
their jobs.

“The world has gone mad,” Tegnell wrote to two colleagues.

Heres some good news out of Canada: (HT Jay Bhattacharya)

The House of Commons is suspending COVID-19 vaccine mandates for MPs, staff
and visitors next week.

Proof of vaccination will no longer required to attend sessions, meetings
starting June 20.




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Quotation of the Day

Posted: 17 Jun 2022 01:30 AM PDT
[link removed]

(Don Boudreaux)




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is from page 145 of the original 1960 Harvard University Press edition of
Frank Knight’s collection of lectures, delivered in 1958 at the University
of Virginia, titled Intelligence and Democratic Action:

The first commandment, with respect to any intelligent action is
self-evident: compare the alternatives, beginning with understanding  what
they are. But that is what people dislike doing. And the second and third
are, appraise the alternatives, and then act on the basis of the best
knowledge or judgment that is to be had. The basic axiom is that it is
better not to act unless it can be done intelligently; as people are and as
the world is, the odds are strong that bad results on balance, rather than
good, will follow from acting ignorantly, at random and acting on false
knowledge is of course worse; but unhappily it is more common.




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Refining the Argument

Posted: 16 Jun 2022 12:38 PM PDT
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(Don Boudreaux)




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Here’s a letter to the Wall Street Journal:

Editor:

You nicely detail many of the reasons why prices at the pump today are much
higher than they’d be in a market less burdened with the ethanol-lobby’s
cronyism and less frightened by politicians’ succumbing to climate-change
hysteria (“Is $6 a Gallon Gasoline Next?” June 16).

There’s at least one additional reason for high gasoline prices: the
government-engineered fragmentation of the market for refined petroleum. As
Andy Morriss and I explained ten years ago in your pages,
For most of the 20th century, the United States was a single market for
gasoline. Today we have a series of fragmentary, regional markets thanks to
dozens of regulatory requirements imposed by the federal Environmental
Protection Agency (EPA) and state regulators. That’s a problem because each
separate market is much more vulnerable than a national market to refinery
outages, pipeline problems and other disruptions.
The role of regulators in fuel formulation has become increasingly complex.
The American Petroleum Institute today counts 17 different kinds of
gasoline mandated across the country. This mandated fragmentation means
that if a pipeline break cuts supplies in Phoenix, fuel from Tucson cannot
be used to relieve the supply disruption because the two adjacent cities
must use different blends under EPA rules.
To shift fuel supplies between these neighboring cities requires the EPA to
waive all the obstructing regulatory requirements. Gaining permission takes
precious time and money. Not surprisingly, one result is increased price
volatility.
Another result: Since competition is a key source of falling gas prices,
restricting competition by fragmenting markets reduces the market’s ability
to lower prices.

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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Bonus Quotation of the Day

Posted: 16 Jun 2022 11:56 AM PDT
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(Don Boudreaux)




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is from pages 180-181 of the original edition of Robert Higgs’s great 1987
book, Crisis and Leviathan:

A market system rests on an indispensable foundation of private property
rights. These are the effectively enforced expectations of private citizens
that they can (1) personally own property, including their own bodies and
labor power, and exclude all others from deciding how the property shall be
used; (2) appropriate the income and enjoy any other benefits yielded by
the property; (3) transfer their rights freely to others by mutually
satisfactory contractual agreements.




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"A Textbook Case of Government Overreach"

Posted: 16 Jun 2022 11:20 AM PDT
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(Don Boudreaux)




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Continuing my efforts to archive at Cafe Hayek as many as possible of my
writings, I post below the fold this essay that I co-wrote in the Spring of
2010, for the James G. Martin Center for Academic Renewal, with my dear
friend Roger Meiners. Id forgotten about this essay until I stumbled upon
it earlier this week, quite by accident. (Roger is the author and co-author
of several successful textbooks.)

(more)




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Some Links

Posted: 16 Jun 2022 08:09 AM PDT
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(Don Boudreaux)




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George Will decries the muck emitted by the administrative state. Two
slices:

This tendency will be made worse by Biden’s “buy American” policy. His
liberal industrial policy will make the $1.2 trillion buy fewer
construction materials: The Peterson Institute for International Economics
estimates that buy American requirements probably cost taxpayers more than
$250,000 for every job supposedly saved, and the Heritage Foundation cites
a report that “deregulating procurement” would add 363,000 jobs.

..

But perhaps the U.S. government is unusually susceptible to being made so
[inefficient] because of what University of Michigan law professor Nicholas
Bagley calls “the procedure fetish.” (“Inflexible procedural rules are a
hallmark of the American state.”) The result is what [Philip] Howard calls
“rule stupor.” All this is made in America by a homegrown chimera: the
progressive aspiration to reduce government to the mechanical
implementation of an ever-thickening web of regulations that leaves no room
for untidy discretion and judgment. Nowadays, add “equity” and
“environmental justice” to the lengthening list of ends that an
infrastructure project must include.

My intrepid Mercatus Center colleague Veronique de Rugy busts the myth that
Pres. Biden is fiscally responsible. A slice:

Bidens administration did nothing to bring about the deficits decline.
Credit really goes to large increases in tax revenues as the economy
rebounded combined with the decision by Democratic Sens. Kyrsten Sinema and
Joe Manchin and their Republican colleagues to block Bidens expensive Build
Back Better proposal. BBB would have made permanent many of the emergency
programs created or expanded during the pandemic, and had it passed,
government spending and deficits would be heading even higher than they are
today.

That said, the still-too-close-to-$1 trillion deficit for FY 2022 is
inexcusably large. More worrisome is the cost that we taxpayers must
shoulder because of the pre- and post-COVID-19 deficits. According to that
same Treasury report, in May, the U.S. government paid $56 billion in
interest payments on its debt, up from $44 billion in April. As of now,
total interest payments for this year are $311 billion. With four months
still to go on this figure, we can assume a total interest cost for FY 2022
of at least $500 billion.

The Wall Street Journals Editorial Board makes clear that Bidens (and
Progressives) hostility to fossil fuels, in combination with the ethanol
lobby, is a major reason for high gasoline prices. A slice:

Mr. Biden seems stunned to learn that prices rise when supply doesn’t meet
demand. He’s aghast that gas prices are still rising above $5 a gallon even
as oil prices have stabilized at $120 a barrel. Ergo, he says, the problem
must be greedy oil companies making too much money.

At least he’s finally noticed the dearth of refining capacity to process
crude, which some of us have warned about for years. The U.S. has lost
about one million barrels a day of refining capacity in the pandemic. Some
new refineries have opened in Asia, but the International Energy Agency
recently reported that global capacity last year fell by 730,000 barrels a
day.

A major culprit is U.S. government policy. Some older refineries have
closed because companies couldn’t justify spending on upgrades as
government forces a shift from fossil fuels. They also have to account for
the Environmental Protection Agency’s tighter permitting requirements—the
agency recently challenged a permit for an Indiana refinery—and steeper
biofuel mandates.

My GMU Econ colleague Vincent Geloso reviews Patrick Newmans 2021 book,
Cronyism: Liberty versus Power in Early America, 1607-1849.

Reasons Eric Boehm explains that instead of helping Americans battle rising
prices, Biden escalates Big Oil blame game. A slice:

But there is one magic switch that Biden could flip tomorrow to save the
average American household about $800 annually: he could repeal the tariffs
imposed by former President Donald Trump on steel, aluminum, solar panels,
and many other goods imported from China.

Yes, its fair to point out that repealing the tariffs wont solve inflation.
Its likely that only higher interest rates or a debilitating recession will
do that. But theres no doubt that tariffs are contributing to higher prices
throughout the economy.

What triggers Arnold Klings moral ire? A slice:

One example is wealthy career politicians. If you spent your whole life in
“public service,” then how do you end up living like an investment banker?

Andy Craig argues that gun rights are gay rights.

Joel Zinberg: The CDC and New York City put an end to two Covid
mandates—for international travel and for toddler-masking—that stopped
making sense a long time ago. Another slice:

It has long been clear that Covid-19 poses little risk to children under
five. The four-and-under age group makes up 6 percent of the U.S.
population, but from March 2022 to the present it has accounted for less
than 0.05 percent of Covid deaths. Total daily Covid deaths in New York
City, for all ages, have been 11 or fewer since March 9. Deaths in the
four-and-under age group in New York State and New York City have been
minuscule throughout the pandemic.

Moreover, there is little evidence that masking students works, especially
for children aged two to four, whose compliance with proper and continuous
mask-wearing is doubtful. And masks likely interfere with children’s social
and educational development.




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Quotation of the Day

Posted: 16 Jun 2022 01:30 AM PDT
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(Don Boudreaux)




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is from page 138 of my colleague Peter Boettke’s 2019 speech, delivered at
a regional meeting of the Mont Pelerin Society, “The Role of the Economist
in a Free Society,” as the text of this speech appears in Pete’s 2021
collection, The Struggle for a Better World:

Truth seeking in science is foundational to the enterprise, but the
assertion of truth claims in politics is the path toward tyranny, and must
be guarded against constantly.

DBx: Yes indeed. And anyone who calls for the silencing of those with
different assessments of reality commits an offense against science and
liberal civilization.




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Some Links

Posted: 15 Jun 2022 10:40 AM PDT
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(Don Boudreaux)




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Phil Magness exposes the hypocrisy and dishonesty of Princeton University
historian Kevin Kruse. Heres Phils conclusion:

Such examples suggest a recurring problem in the history profession, which
traditionally relies on close textual readings and citation-heavy
discussions of other historians as it scrutinizes and interprets the past.
The American Historical Associations statement on professional conduct
warns that writers plagiarize, for example, when they fail to use quotation
marks around borrowed material and to cite the source, use an inadequate
paraphrase that makes only superficial changes to a text, or neglect to
cite the source of a paraphrase. Even with proper footnoting, the
organization notes by example, plagiarism may still be present. Repeated
passages with only cosmetic alterations indicate a lack of synthesis and
original thought and represent a theft of [the borrowed] text.

In Kruses case, the passages from Bayor and Sugrue may portend more serious
problems in the academy. In an age of declining academic rigor, certain
works seem to get a pass—provided that they promote particular ideological
narratives that enjoy a following among elite academics and journalists.

Wall Street Journal columnist Jason Riley calls for more immigration into
the United States. A slice:

This post-pandemic labor shortage has been driven by reckless government
spending and misguided monetary policies that flooded the market with
money. Covid relief measures—eviction bans, student-loan payment pauses,
supplemental unemployment benefits—gave too many able-bodied workers an
incentive to stay home rather than rejoin the labor force. The food-stamp
work requirement was suspended in 2020, and the monthly benefit is now
double what it was in 2019. The upshot is that there are more people on
food stamps today than there were pre-Covid, even while the unemployment
rate is close to a 50-year low and there are nearly twice as many job
openings as people looking for work.

Richard Ebeling commemorates the 100th anniversary of the publication of
Ludwig von Misess Die Gemeinwirtschaft (or when translated and published
years later in English, Socialism: An Economic and Sociological Analysis).

Heres part 2 of Randy Holcombes The Research Interests of Academic
Economists.

My GMU Econ colleague Bryan Caplan argues that cancelling student-loan debt
is unforgivable.

David Beckworth talks with George Selgin.

Why Bidens Claim of Cutting the Deficit Is False, in a Single Chart.

David Bell decries the emergence of neo-fascism in public health. A slice:

We have all seen prominent health professionals publicly vilify and
denigrate colleagues who sought to restate principles on which we were all
trained: absence of coercion, informed consent, and non-discrimination.
Rather than put people first, a professional colleague informed me in a
discussion on evidence and ethics that the role of public health physicians
was to implement instructions from the government. Collective obedience.

This has been justified by ‘the greater good’- an undefined term as no
government pushing this narrative has, in two years, released clear
cost-benefit data demonstrating that the ‘good’ is greater than the harm.
However, the actual tally, though important, is not the point. The ‘greater
good’ has become a reason for the public health professions to annul the
concept of the primacy of individual rights.

The thugs holding power in China continue their covidocratic tyranny in
pursuit of the impossible goal of zero covid.




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Quotation of the Day

Posted: 15 Jun 2022 01:30 AM PDT
[link removed]

(Don Boudreaux)




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… is from page 6 of the June 2022 typescript of Deirdre McCloskey’s paper,
forthcoming in the Erasmus Journal, “Most Policy is Impossible”:

Industrial policy has propped up failing industries from Japan to France,
such as small-scale retailing, instead of choosing winners who actually
win. Regulation of dismissal has led to high unemployment, once in Germany
and Denmark, and especially still in South Africa. In the 1960s the
public-housing high-rises in the West inspired by Le Corbusier condemned
the poor in Rome and Paris and Chicago to holding pens. In the 1970s, the
full-scale socialism of the East ruined the environment. In the 2000s, the
‘millennial collectivists,’ whether Red, Green, or Communitarian, opposed a
globalization that helps the poor but threatens trade union officials,
crony capitalists, and the careers of people in Western non-governmental
organizations.

Thus policy.

DBx: Pictured above are French farmers during one of their countless
protests this one in 2015 to insist that government protect them from
competition.

..

Even if, contrary to fact, government could obtain enough of the detailed
knowledge necessary for it to improve the economy by supplementing and
overriding market forces, this ugly reality remains inescapable: A
government given the power to so supplement and override market forces will
in fact use that power to appease special-interest groups.

Many of these special-interest groups will be driven by narrow, material
rent-seeking motives (see, for example the economically informed but greedy
French farmers pictured above); many other of these special-interest groups
will be driven by sincerely held but nonetheless destructive ideological
convictions (see, for example, the economically uninformed but well-meaning
conservatives and Progressives who today plead for industrial policy). All
of these special-interest groups will ensure that any government power to
supplement and override market forces will be used in ways that promote the
goals of the special-interest groups at the larger expense of the general
public.




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Economic Lessons from "This Old House"

Posted: 14 Jun 2022 06:01 PM PDT
[link removed]

(Don Boudreaux)




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I love the long-running PBS program This Old House, in large part for
reasons that I reveal in my latest column for AIER. A slice:

While watching This Old House I’m struck throughout each episode by the
indispensability to modern life of all this specialized knowledge. I’m
certain that nearly everyone reading these words is, as I am, incapable of
wiring a house for electricity, of arranging new piping to build a bathroom
where none previously existed, or of turning an old kitchen into a living
room and an old garage into a modern kitchen. And yet each of us lives in a
house wired for electricity, and equipped with indoor plumbing and with a
modern kitchen and living room.

Each of us, every day, benefits from the highly specialized knowledge
obtained and used by the many strangers who built our homes and fitted them
with these conveniences. And each of us enjoys these conveniences despite
being personally incapable of producing them. Among the paramount marvels
of modernity is the fact that the efforts of countless specialized
producers are, every hour of every day – and today from around the globe –
called forth and then coordinated to form a steady stream of goods and
services that the richest potentates and poohbahs of the not-so-long-ago
past could not have dreamed of possessing.

Also made abundantly clear by each episode of This Old House is the fast
pace of innovation. Improvements abound in the likes of plumbing fixtures
and appliances. For example, a kitchen faucet that was luxurious ten years
ago is today outmoded, surpassed by ones sporting not just new designs but
clever features, such as enabling users to start and stop the water flow
without touching anything. There are also amazing showerheads, lightweight
but sturdy bathtubs made out of resin and limestone, smart doorbells, and
new alarm systems.

Yet perhaps even more impressive are incredible new building materials.
Examples include slender bricks for fireplaces and chimneys that create
the pleasing aesthetic of full bricks but without requiring the support of
a heavy foundation; rain gutters made with extruded aluminum; and a rich
assortment of advanced materials for decking.

Also attention-grabbing are many of the tools used by the carpenters and
other craftspeople. Very seldom, for example, does any carpenter in This
Old House wield an old-fashioned manual hammer. Pneumatic hammers are a
tool of choice, allowing carpenters to drive nails in a fraction of the
time required to do so manually. Construction time and costs are thus
driven lower than otherwise.

Adam Smith noted that the greater is the degree of specialization, the
greater is the impetus to create tools to assist workers. Tools enhance
each worker’s productivity; each worker works not only faster but also in
ways that result in fewer mistakes. This increased productivity, in turn –
by enabling tasks that once required many workers now to be performed by
fewer workers – releases workers to profitably specialize in trades that
would otherwise be too costly to practice. Expertise is increased, which
then further raises the quality and lowers the cost of the final product.]

It’s impossible to convey in words the amount of specialized knowledge, as
well as the amazingness of modern building materials and tools, that are
routinely, and entertainingly displayed in each and every episode of This
Old House. If you aren’t already a regular viewer of this program, I urge
you to give it a try. Like most viewers, you’ll get great ideas for how to
improve your own home. More importantly, though, you’ll witness the
indispensability of specialization, the value of skilled and serious
workmanship, and many of the fruits of market-driven innovation.




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Covid Poses No Significant Risks to Children

Posted: 14 Jun 2022 12:53 PM PDT
[link removed]

(Don Boudreaux)




Tweet
Here’s a letter to the Wall Street Journal:

Editor:

Unhappy that Jay Bhattacharya explained that covid’s risk to children is
minuscule, Jeremy Faust writes “CDC surveillance indicates that Covid-19
has caused substantially higher hospitalizations and deaths in children
than seasonal influenza usually does” (Letters, June 14). While true,
neither this fact nor any of the other points raised by Dr. Faust weakens
Dr. Bhattacharya’s argument that the risk posed by covid to children is far
lower than ordinary Americans likely infer from public-health authorities’
context-free warnings.

Heres some context. According to the CDC the total number of Americans
younger than 18 killed by covid since early 2020 is 1,086. If we start our
count with March 2020, that’s 40.2 covid deaths of children per month.
Compare this figure to the number of young Americans who die each month
from other causes. In 2020, the number of children younger than 15 who died
each month, on average, of congenital anomalies was 396 – a number nearly
ten times higher than covid’s monthly death toll for all children (that is,
for all persons younger than 18). Similarly, the number of children younger
than 15 who in 2020 died each month, on average, of unintentional injuries
was, at 326, eight times higher than covid’s monthly toll for children
younger than 18. Cancerous tumors killed each month at least another 92
children. And at least another 50 children, younger than 15, died each
month from either heart disease, flu, or cerebrovascular complications.*

When these figures are combined with the fact that children’s overall rate
of death is very low – approximately 0.045 percent of persons younger than
18 die each year** – Dr. Bhattacharya is both correct and wise to decry
public-health authorities’ insistence on stoking fears that children are at
high risk from covid.

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

* Calculated from this CDC page. (If the link doesnt open, see this
screenshot of the page.)

** Calculated from data available here, in which I divided by 29 (months)
the figure, 81,532, for “Death from All Causes” of persons 0-17 from
January 2020 through May 2022 to arrive at an annual number of deaths today
in America of persons 0-17 of 33,732. (81,532/29 = 2,811 x 12 = 33,732.)
According to the Census Bureau, the percentage of Americans under the age
of 18 is 22.3 – meaning the number of such persons in the U.S. today is
about 74,310,290. 33,732 is 0.045 percent of 74,310,290.




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Pittsburgh Tribune-Review: "Riding Social Security off a cliff"

Posted: 14 Jun 2022 03:10 AM PDT
[link removed]

(Don Boudreaux)




Tweet
In my column for the December 7th, 2012, edition of the Pittsburgh
Tribune-Review I wrote about the dangerous (il)logic the fiscal
recklessness of Social Security. You can read my column in full beneath
the fold.

(more)




///////////////////////////////////////////
Quotation of the Day

Posted: 14 Jun 2022 01:15 AM PDT
[link removed]

(Don Boudreaux)




Tweet
is from page 41 of Richard Epstein’s magisterial 2014 book, The Classical
Liberal Constitution:

If the common-law lawyers were right to worry about the dominant position
of a common carrier, modern scholars, both within and beyond the legal
profession, should not be indifferent to the still greater power that lies
in the hands of state regulators in the modern administrative state.

DBx: Yes. And, indeed, even if the common-law lawyers were not right to
worry about the dominant position of a common carrier not right, that is,
when that common carrier is privately owned and there are no
government-erected barriers to entry into that carrier’s market modern
scholars, and citizens too, should nevertheless still fear the immense
power that lies in the hands of state regulators in the modern
administrative state.




///////////////////////////////////////////
Bonus Quotation of the Day

Posted: 13 Jun 2022 07:21 AM PDT
[link removed]

(Don Boudreaux)




Tweet
is from pages 69-70 of the 1990 Transaction Publishers reprint of W.H.
Hutt’s superb 1936 volume, Economists and the Public:

The warping of judgment may be observed in forms which vary from the
deliberate propaganda of bodies like the Federation of British Industries
of the Trades Union Congress, to the self-deception of the individual who
convinces himself that what suits him must contribute to the general good.
We see it also in the enthusiasm of the debtor classes for inflationary
measures which they are emphatic will stimulate the prosperity of all; in
the universal concern of town-dwelling populations for the welfare of the
rural dwellers who, they aver, will suffer moral and physical corruption if
they are allowed to follow their inclinations and drift townwards; and in
the general persuasion of social classes or races with superior status that
the best interests of politically inferior classes and races are served by
the maintenance of the existing regime.

DBx: The late economist W.H. Hutt is now among those persons who Nancy
MacLean and her cadre of historically uninformed and if one didn’t know
better, also illiterate co-authors and supporters insist was a white
supremacist. Phil Magness and Art Carden masterfully expose the
baselessness of this assertion by MacLean, et al. To supply yet a bit more
evidence against the idiotic charges leveled by MacLean, et al., I offer
the above quotation from what is my favorite of all of Hutt’s many superb
books.




///////////////////////////////////////////
Some Links

Posted: 13 Jun 2022 03:23 AM PDT
[link removed]

(Don Boudreaux)




Tweet
Phil Magness and Art Carden expose the many errors several of which are
jaw-dropping committed by Sandy Darity, M’Balou Camara, and Nancy MacLean
in their unintentionally comical attempt to portray W.H. Hutt and my late
Nobel-laureate colleague Jim Buchanan as white supremacists. Here are two
slices from their conclusion:

The pattern of mishandled quotes, citation mistakes, superficial engagement
with the sources they do cite, and clear factual errors convinces us that
“Setting the Record Straight on the Libertarian South African Economist
W.H. Hutt and James M. Buchanan” hasn’t set the record straight on
anything. Their purported sequence of events establishing Hutt’s white
supremacy doesn’t match the actual timeline and falls apart once we correct
a citation mistake (see section IIa above). It’s hard to believe they are
serious in suggesting that Leon Dure’s italicization was rubbing off on
Hutt (discussed in section VII). Darity, Camara, and MacLean have not
persuaded us that Buchanan and Hutt were white supremacists concocting
“stealth plans” for America, South Africa, or anywhere. Does this make us
guilty of “dogma-driven denialism”? We will let the reader decide.

..

We don’t expect to change their minds. We expect the goalposts to move and
maybe to be accused again of “dogma-driven denialism” if not conspiratorial
obligations to nefarious “Dark Money” interests. That saddens us, but we
think the issues at stake are very important because they affect real,
flesh-and-blood human beings, and we think the Great Conversation that is
the academic project is too important to be contaminated by well-poisoning,
name-calling, and ad hominem. In any event, we’ve read student evaluations
for years. We know which comments we need to take seriously and which ones
to ignore. If the collection of inaccurate citations, selective
presentation of sources, and strained interpretations is what Darity,
Camara and MacLean believe to be an “irrefutable” argument, then we infer
that there is little to nothing to be gained from engaging with their
claims about on Hutt, Buchanan, Friedman any further. In this light, we
wish them well, and we consider the discussion closed.

George Selgin busts another myth about private currencies a myth recently
promoted by Paul Krugman. Three slices:

Although Ive devoted many essays here to exploding myths about historical
private currencies, theres one Ive yet to directly challenge. Thats the
belief that such currencies only thrive in the absence of official
alternatives. Otherwise, the argument goes, people would drop private
currencies like so many hot rocks. Since this opinion assumes that private
currencies are inevitably inferior to official ones, I hereby christen it
the ersatz theory of private currency. Note that currency means circulating
or (in todays digital context) peer-to-peer exchange media: nobody denies
that other sorts of private money, such as commercial bank deposits and
travelers checks, can coexist with official alternatives.

..

Paul Krugman explicitly appeals to the ersatz theory in observing, in a
recent New York Times column, that although private currencies did indeed
circulate and function as mediums of exchange during the United States free
banking era, this was so because there were no better alternatives:
greenbacks—dollar notes issued by the U.S. Treasury—didn’t yet exist.
Krugman goes on to say that, because greenbacks and government-insured bank
deposits do exist today, stablecoins play almost no role in ordinary
business transactions.

Like [Yves] Mersch and most others who subscribe to the ersatz theory of
private currency, either explicitly or implicitly, Krugman doesnt seem to
consider another possibility, to wit: that private currencies seldom
survive, not because the public prefers centrally-supplied, official
currencies, but because governments routinely slant currency playing fields
in official currencies favor, often by banning private alternatives
outright. Lets call this the coercive theory of official currencies. If the
ersatz theory is correct, the historical record should show that private
currencies died out on their own once official alternatives were available.
If, instead, the coercive theory is correct, governments would have had to
take further steps to seal private currencies fate.

..

Ive singled out the story of U.S. national currency because Krugman refers
to it. But it is only one historical instance of many that I might offer
contradicting the ersatz theory of private currency, while affirming the
coercive alternative. In fact, so far as Im aware, private paper
currencies, including notes issued by ordinary commercial banks without the
benefit of official guarantees, have never been driven to extinction by the
mere presence of official alternatives. Instead, theyve always been forced
out of existence, by prohibitive taxes, impossibly onerous regulations, or
(most often) outright prohibition. This was so in England and Wales. It was
so in France and in Italy. It was so in Sweden and Switzerland and Canada
and…but it would be tedious to list all the cases Im aware of. Instead, I
challenge my readers to inform me of an exception, that is, a case where
some official currency out-competed private rivals, fair and square.

Juliette Sellgren talks with my Mercatus Center colleague Thomas Hoenig
about inflation and the Fed.

Jon Sanders explains, contrary to Bidens assertion, that rising gasoline
prices are no blessing in disguise.

The Wall Street Journals Editorial Board praises Colorados Democratic
governor, Jared Polis, for bucking that mix of bootleggers and Baptists who
comprise the climate lobby. A slice:

Colorado is more progressive than its neighboring Western states. But
Democratic Gov. Jared Polis last week said no to becoming California by
vetoing a bill that would have required parking lots of new buildings to be
wired for electric-vehicle chargers.

Writing in the Wall Street Journal, Joel Zinberg and Gary Alexander explain
the Biden administrations perverse but predictable incentive to continue to
extend the official covid emergency. Two slices:

Covid is now endemic, yet the Biden administration keeps extending the
public-health emergency. Its goal is to preserve the expansion of the
welfare state through Medicaid, even though large and growing numbers of
enrollees are ineligible for the benefit.

Medicaid, the federal-state entitlement that provides health insurance to
nearly 1 in 4 Americans, ballooned during the pandemic. Enrollments had
declined in 2018 and 2019, but jumped by 15.9 million—about 25%—between
February 2020 and February 2022. According to the Centers for Medicare and
Medicaid Services, the increase was “due, in large part, to the continuous
enrollment condition” in Congress’s March 2020 Covid relief package, which
encouraged enrollments by temporarily increasing the federal government’s
share of total Medicaid costs by 6.2% while prohibiting states that
accepted Washington’s help from redetermining Medicaid eligibility and
removing ineligible people from the rolls until the emergency ended.

In other words, so long as the emergency persists, so too does the
expansion of the welfare state. More than two years later, the Biden
administration is intent on making permanent what were meant to be
emergency measures.

..

Extending the public-health emergency is a Trojan horse for further
government takeover of the healthcare system through a massive expansion of
Medicaid to cover those who aren’t even eligible. Washington should end the
emergency so states can ensure Medicaid is reserved for those who are
actually eligible.

Anthony LaMesa tweets: (HT Jay Bhattacharya)

Shutting down large parts of the global economy for nearly two years was a
major mistake.

Joakim Book shares some of the lessons found in Mattias Desmets new book,
The Psychology of Totalitarianism. Here are three slices from Joakims essay:

In his new book The Psychology of Totalitarianism, which comes out in an
English translation this month, Belgian psychologist Mattias Desmet calls
this phenomenon “mass formation.” He writes that he first began sketching
on a comprehensive account of totalitarianism in 2017: woke culture and the
intolerant anxiety that came with its rise to power was a symptom – as was
the surveillance state and the hysteria in recent decades surrounding
terrorism and climate change.

It’s not the topics themselves or the merits of their respective case that
interests Desmet, but the way populations process them, get wrapped up in
them, and psychologically attach themselves to their ideas.

Ultimately, it was the reactions to the coronavirus events in 2020 that was
Desmet’s ultimate catalyst. It shone a bright light on many things that,
beyond a doubt, had gone wrong with modern society. Here was mass
formation, on full display; totalitarian behavior, suddenly lived and
experienced by all of us.

In essence, mass formation is a sort of group-level hypnosis “that destroys
individuals’ ethical self-awareness and robs them of their ability to think
critically.” Labor camps and mass extermination, so unknown and so
unfathomable to our delicate present, don’t come out of nowhere but “are
merely the final, bewildering stage of a long process.”

The coronavirus crisis didn’t come out of the blue, either; we made it. (We
probably made the virus too, but that’s not the object of Desmet’s
investigation.) “Totalitarianism is not a historical coincidence,” he
writes, “In the final analysis, it is the logical consequence of
mechanistic thinking and the delusional belief in the omnipotence of human
rationality.”

..

Desmet’s take, following Hannah Arendt (a hero for political theorists,
particularly on the left), shows that opposition to coronavirus measures
isn’t merely the mad ramblings of a right-wing fringe. Opposing the public
measures taken in 2020 and 2021 crossed political lines, and the components
of his argument are, if anything, more traditionally associated with values
and worries on the left: loneliness, social isolation, atomized
individuals, unseen collateral damage, bullshit jobs and rejection of the
technocratic Enlightenment view of top-down rational control and scientific
improvement.

The stunning question looms: how do we make sense of all of this? We
overhauled society, on a whim and with very little to go on, for what
seemed – both at the time and in hindsight – a rather minor threat. How did
we all lose our minds at the same time? How could we all feel such
incredible buy-in in the months and years that followed?

..

The covid pandemonium was a reminder that even rich, sensible,
well-mannered, and well-educated societies can descend into the pits of
hell faster than you can cry “emergency.” Society always balances on the
edge of an unspeakably horrific abyss.

For those of us scratching our heads in disbelief at what happened in 2020
and 2021, Desmet’s book comes up short. It’s not as comprehensive and
conclusive as we might have liked, and it definitely won’t be the final
word on this strange episode. Still, it offers us a plausible story, nested
in the ways that the human mind can collectively go astray.




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