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Quotation of the Day

Posted: 24 Jun 2022 01:15 AM PDT
[link removed]

(Don Boudreaux)




Tweet
is the closing paragraph, on page 17, of Edwin Cannan’s excellent November
13th, 1931, Sidney Ball Lecture – a lecture titled “Balance of Trade
Delusions“:

But even so we manage to carry on, and whether on or off the gold standard
we certainly shall not benefit by reviving the three-hundred-year-old and
long-ago exploded superstition that the balance of trade must be watched
over and kept right by Parliament a superstition which can only be ranked
with the once equally widespread belief that witchcraft must be smelt out
and witches burnt at the stake.




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Biden Gives New Meaning to "Bully Pulpit"

Posted: 23 Jun 2022 11:38 AM PDT
[link removed]

(Don Boudreaux)




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

Editor:

You report that “Mr. Biden ordered U.S. refiners last week to come up with
short-term solutions to increase capacity – or else” (“A Gas Tax Holiday
From Reality,” June 23). The president’s actions are as brutish and stupid
as are those of a schoolyard bully who, having scared away his playmates,
warns them to come back and play – or else. Neither Mr. Biden nor the bully
should be surprised to discover that their bullying won’t work.

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: 23 Jun 2022 09:15 AM PDT
[link removed]

(Don Boudreaux)




Tweet
is from pages 148-149 of the 2021 35th anniversary edition of Steven
Rhoads’s excellent 1985 book, The Economist’s View of the World: And the
Quest for Well-Being (footnote deleted; links added):

Just as landlords adjust when forced to keep rents low, employers adjust
when required to pay low-skilled workers more than a market wage. If they
have previously offered workers inexpensive insurance or partial daycare
coverage, they can discontinue these nonage benefits. Perhaps more
important, they can discontinue on-the-job training. Jacob Vigdor, one of
the University of Washington economists who conducted the Seattle study,
worries that, by harming employment opportunities for junior workers, we
may be removing the bottom rung of the ladder to future, better-paid jobs.




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Some Links

Posted: 23 Jun 2022 03:35 AM PDT
[link removed]

(Don Boudreaux)




Tweet
Writing in todays Wall Street Journal, David Henderson and Casey Mulligan
accurately describe Biden as practically engineering a recession. A slice:

GDP and productivity levels were exaggerated during the pandemic as many
goods were unavailable or low in quality in ways the GDP data didn’t
capture. Even though public-school teachers stayed home, for instance,
national accountants assumed that they were as productive as ever merely
because they continued to be paid. As they get back to traditional
teaching, this won’t be officially recognized as economic progress for the
same reason the pandemic regress was never acknowledged.

In normal years, workers’ productivity rises by about 1%. That alone is a
strong economic tailwind causing GDP growth, making recession by the
reduced GDP definition less likely than otherwise. Unfortunately, Mr.
Biden’s economic policies will likely cause productivity growth to fall. A
2020 analysis by one of us (Mr. Mulligan) and three co-authors concluded
that Mr. Biden’s economic agenda would cause full-time equivalent
employment per capita to be 3.1% lower than otherwise and real GDP per
capita to be 8.5% lower than otherwise. If that effect were spread over
five years, the reductions relative to the baseline growth would be 0.6%
and 1.7% a year, respectively. That by itself makes a recession likely in
one of those five years.

This Facebook post by Chris Freiman is insightful:

I fail to see a principled moral distinction between vouchers that can be
used for private religious school and other forms of public spending. Even
something like publicly supplied water can be used for religious
purposes—someone might use it for a baptism. Granted it’s easier to
regulate the use of vouchers than water, but the ease of regulation isn’t
morally relevant. Even if the state *could* easily prevent people from
using publicly supplied water for a baptism, it would be wrong to do so.
Citizens should be free to use their state-supplied resources to pursue
their own good in their own way, whether their good is religious or not.

Also insightful is this follow-up Facebook post by Freiman:

It’s strange to see so many folks on the left reject public support for
private religious education when it comes to school choice but support
student loan forgiveness for all, including those who attended BYU,
Liberty, Oral Roberts…

Richard Gunderman praises the insights of the late Elinor Ostrom, co-winner
(along with Oliver Williamson) of the 2009 Nobel Prize in economics. A
slice:

A key theme of Lin Ostrom’s work was polycentricity. A monocentric system
is one in which all the problems faced by a community or organization are
addressed in a top-down fashion by a single authority, such as the federal
government. Such a unit determines the one best solution and then imposes
it on everyone else. By contrast, a polycentric approach gets people and
groups working together to devise a means of solving problems, embodying
the view that those best qualified to do so are usually those who live with
them day to day. A central government may have the power to impose a
solution and even punish those who do not abide by its dictates, but such
approaches are often poorly tailored to local conditions and deprive people
of the opportunity to work it out for themselves, thereby stunting their
development as citizens.

We need more refinery capacity but policy uncertainty makes companies less
inclined to invest in new refineries or update old ones so argues Scott
Lincicome. Two slices:

The lack of new U.S. refinery investment isn’t exactly breaking news:
According to the EIA, for example, the last major refinery to be built in
the United States was in 1977, while there hasn’t been a significant
refinery expansion in several years. But, still, the recent decline in
national refining capacity remains quite stark when you compare it to
pre-pandemic trends dating back decades.

..

The study’s author finds that this heightened climate policy uncertainty is
associated with lower CO2 emissions and suggests future research on how it
affects firm-level investment in climate-sensitive industries like energy.
But it would seem obvious (to me, at least) that uncertainty plays a role
in refinery investment over the longer term too: If it takes 15-20 years to
recoup a refinery investment and there’s a big-but-unclear risk that
climate regulation will make said investment unprofitable in only a decade
or sooner (see, e.g., California), then you’re probably not making that
investment.

Gary Galles decries the deep confusion surrounding international trade and
trade policy. A slice:

Few Presidents have wrapped their protectionism in the American flag to the
extent Donald Trump did. But all recent Presidents have continued a long
line of protectionist policies, and Joe Biden is clearly on that list.

Such policies are based at least in part on the idea that “good” American
producers should be given special treatment over “bad” foreign producers
for the good of our country. But that leaves an important group out of the
political equation–American consumers. And our joint interests as consumers
is what we have most in common. Consequently, as Leonard Read put it,
“Consumer interest is the premise from which all economic reasoning should
proceed,” and since “my interest is progressively served by an increase of
goods and services obtainable in willing exchange for my offerings As a
consumer, I choose freedom.”

John Stossel applauds the Babylon Bee.

My intrepid Mercatus Center colleague Veronique de Rugy explains that the
biggest problem with the fiscal incontinence that occurred in response to
covid hysteria is not that much of it was as much of it indeed was spent
wastefully and fraudulently. A slice:

Then, you have the money dispensed to corporations. In one way or another,
that spending made up a huge share of the COVID-19 relief. Indeed, whether
through the airline bailouts or the Payroll Protection Program,
shareholders collected trillions of dollars in government handouts they
didnt need. Most of the PPP funding, for example, went to companies whose
workers were never at risk of losing their jobs since they were well-suited
to work from home.

Telegraph columnist Allister Heath writes that [b]asket-case Britain is the
definitive proof lockdown was an epic mistake. A slice:

The lockdowners even claimed that Covid had allowed a breakthrough in
economic engineering: officials had worked out how to put free market
economies into hibernation, to pause activity at will. It was the economics
of Sleeping Beauty: the private sector would rebound as soon as Dishy Rishi
chose to kiss it back to life again. Hayekians who believed capitalism was
a complex, fragile spontaneous order that couldn’t be disrupted with
impunity had finally been proved wrong. Even if the economy did find it
difficult to continue exactly where it left off, we could simply unleash
more QE or Joe-Biden style public spending to fix everything.

It was dangerous, delusional nonsense. Everything that could go wrong went
wrong, starting with surging inflation and myriad other unintended
consequences. The insane amounts of cash pumped into the economy by zero
rates, money printing, furlough, test and trace and subsidised loans chased
too few goods, services, homes, shares and cryptocurrencies, pushing prices
drastically higher and annihilating central bankers’ credibility.

Alex Gutentag tweets (HT Jay Bhattacharya):

Many parts of the US kept schools closed long after they reopened in
Europe. We were one of the only countries to mask toddlers and are the only
country vaccinating infants. This isn’t something to be proud of. Our
treatment of children is uniquely irrational and unscientific.




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Quotation of the Day

Posted: 23 Jun 2022 01:30 AM PDT
[link removed]

(Don Boudreaux)




Tweet
is from page 229 of Robert Higgs’s September 1986 Freeman essay, “To Deal
With A Crisis: Government Program or Free Market?” as this essay is
reprinted and slightly revised in the excellent 2004 collection of some of
Bob’s essays, Against Leviathan:

An emergency governmental program is said to have the important attribute
of speeding the process of adjustment. Undeniably, coercive programs often
work more quickly, but is this aspect of their operation really an
advantage?

Coercive programs “save time” only because they compel wastefully hasty
adjustments. They do not save valuable resources. Rather, they redistribute
the costs of adjustment in comparison with the distribution of the costs
when responses are determined by voluntary arrangements in free markets.




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