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
My earliest clear memory the length of which is greater than that of a jpeg shared on Facebook is the assassination of JFK. I’d 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 can’t today say why – I couldn’t 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 grandmother’s 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. I’ve been a fan ever since. (I also remember wondering, whenever I looked at the album cover, if there was something wrong with Ringo’s neck – a tumor, perhaps? – that my young eyes didn’t 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 they’re from early childhood. In my memory, I saw the cover of Life before watching the Beatles on Ed Sullivan, but that can’t have been the case because that issue of Life didn’t appear until August 1964.)
Anyway, today is Paul McCartney’s 80th birthday. Happy Birthday, Sir. You’ve 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.
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.
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. Warren’s destructive proposal – is the polar opposite.
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.”
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.
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.
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.
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.”
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.
… 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.
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
… 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.
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.
Biden’s administration did nothing to bring about the deficit’s 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 Biden’s 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.
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.
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, it’s fair to point out that repealing the tariffs won’t solve inflation. It’s likely that only higher interest rates or a debilitating recession will do that. But there’s no doubt that tariffs are contributing to higher prices throughout the economy.
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.
… 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.
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 Association’s 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 Kruse’s 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.
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.
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.
… 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.
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.
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.
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.
Here’s 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 doesn’t 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.
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.”
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.
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.
Although I’ve devoted many essays here to exploding myths about historical private currencies, there’s one I’ve yet to directly challenge. That’s 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 today’s digital context) peer-to-peer exchange media: nobody denies that other sorts of private money, such as commercial bank deposits and traveler’s 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 doesn’t 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. Let’s 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.
…..
I’ve 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 I’m 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, they’ve 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 I’m 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.
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.
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.
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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.
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.”
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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?
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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.
My earliest clear memory the length of which is greater than that of a jpeg shared on Facebook is the assassination of JFK. I’d 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 can’t today say why – I couldn’t 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.
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.
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.
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.
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.
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.
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.
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.