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Quotation of the Day

Posted: 25 Jan 2020 03:04 AM PST
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(Don Boudreaux)




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is from page 172 of my late Nobel-laureate colleague Jim Buchanan’s 1987
paper “Man and the State,” as this paper is reprinted in James M. Buchanan,
Federalism, Liberty, and Law (2001), which is volume 18 of the Collected
Works of James M. Buchanan:

Failure or success has too often been measured in terms of the standard
economists’ criterion of efficiency, the ability to get goods and services
produced and distributed, to add to the wealth of nations. Markets may fail
against the efficiency standard, even in some relative sense. But even in
failure markets allow persons to retain exit options without which liberty
cannot be secured.

DBx: The important point that Buchanan makes here has several implications,
two of which are:

To the extent that human beings value liberty as an end in itself that
is, apart from whatever instrumental value liberty has for increasing our
material prosperity or even our happiness the decline in liberty should be
entered on the cost side of any cost-benefit analysis of government
intervention. To leave it off to fail to account the loss of liberty as a
cost’ is unscientific if and to the extent that any individual values
liberty. The fact that this cost is especially difficult to render in
monetary terms doesn’t justify excluding it from cost-benefit calculations.

When government intervenes to correct real or merely alleged market
failures, it typically as Buchanan notes blocks off exit options. The
Pigouvian tax must be paid. The toilets must use no more than X amount of
water per flush. Plastic straws may no longer be offered for sale. Yet to
block off exit options is to block off options that might have been used by
entrepreneurs to devise better solutions’ to the market failures than those
imposed by government. The loss of the prospect of these better solutions’
is also a cost of government intervention, one admittedly difficult to see
and practically impossible to quantify. Yet who can deny that it’s real?
(This cost of intervention would be nonexistent only if the state really
were godlike.)




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Bonus Quotation of the Day

Posted: 24 Jan 2020 01:00 PM PST
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(Don Boudreaux)




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is from page 75 of the original edition of Lee Francis Lybarger’s 1914
book, The Tariff (original emphases):

If you would understand the Motives and Philosophy of Protection, you must
realize that it is simply a conflict between the Producer and Consumer. In
other words, it is an effort on the part of the producer to secure by law a
higher price from the consumer than he is able to obtain in the open
market. The Producer is against an open market and in favor of a closed
market. Therefore the Tariff causes an increase of price wholly in the
interest of the Producer and at the expense of the Consumer. What it gives
to one it must take from the other.

DBx: Yes.

Pedants will pounce! They’ll declare that some of the costs of tariffs are
typically borne by foreign suppliers in the form of lost profits on
foregone export sales. This declaration is true. But it’s also irrelevant.

Because the very purpose of a protective tariff is to artificially divert
sales from imports to domestically produced goods and services sold in
competition with imports, a protective tariff has its intended effect of so
increasing these domestic sales only to the extent that the prices
confronted by domestic consumers rise. If and insofar as foreign suppliers
absorb pay the cost of the tariff, price hikes in the domestic market are
lower than they would otherwise be and domestic producers who compete
against those foreign suppliers aren’t helped.

In the extreme case, in which foreign suppliers absorb the entire cost of
the tariff, the prices of imports don’t rise at all. As a result, no sales
are diverted from imports to domestic sellers. But, obviously, such an
outcome is not the one sought by industry lobbyists who plead for the
protection of tariffs. Such lobbyists and their principals, as well as the
politicians who heed their pleas want to harm domestic consumers by making
them pay higher prices. That is the goal.

Every protective tariffs is by its very nature an attack by agents of
particular domestic producers against domestic consumers. It is an attack
no less real, no less venal, and no less unjustified economically and
ethically than would be a seller’s threat to shoot out the brains of
customers who refuse to pay higher prices for that seller’s offerings.

And apologists for protectionists are apologists for predators. Period.




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Some Links

Posted: 24 Jan 2020 08:52 AM PST
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(Don Boudreaux)




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My intrepid Mercatus Center colleague Veronique de Rugy gives credit where
credit is due in this case to the Trump administration for its wise
roll-back of an Obama-era labor policy

John O. McGinnis exposes the appalling ideology and bias of the New York
Times.

Have you ever heard of the genuine hero Wilson Greatbatch?

Stuart Anderson gets the language right about travel bans.

Kevin Williamson has fun revealing the Everestian economic ignorance now on
the loose in Sacramento.

Heres a deep and important insight from Bryan Caplan about economists
careless use of market-failure arguments (and economists inexcusable
disregard of public choice).

My GMU Econ and Mercatus Center colleague Pete Boettke writes about the
four pillars of economic wisdom. A slice:

Economics brings truth and the light to the darkness, and pierces through
the fog to make sense of all human endeavors, whether in pursuit of the
highest ideals or the basis of crass motives. If you are being taught
economics by Gordon Tullock, or for that matter Pete Leeson (The Invisible
Hook and more recently WTF), be prepared to be shocked out of your
comfortable complacency and instead learn about the logic and underlying
governing dynamics of the world around you.




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