Bonus Quotation of the Day…

by Don Boudreaux on October 23, 2017

in Doux Commerce, Trade, War

… is from page 141 of my Mercatus Center colleague Dan Griswold’s important 2009 book, Mad About Trade (footnote deleted):

Trade has been seen as a friend of peace for centuries.  In the 19th century, British statesman Richard Cobden pursued free trade as a way not only to bring more affordable bread to English workers but also to promote peace with Britain’s neighbors.  He negotiated the Cobden-Chevalier free trade agreement with France in 1860 that helped to cement an enduring alliance between two countries that had been bitter enemies for centuries.  In the 20th century, President Franklin Roosevelt’s secretary of state, Cordell Hull, championed lower trade barriers as a way to promote peaceful commerce and reduce international tensions.  Hull had witnessed first-hand the economic nationalism and retribution after World War I.  He believed that “unhampered trade dovetail[s] with peace; high tariffs, trade barriers and unfair economic competition with war.”

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Stereotyping

by Don Boudreaux on October 23, 2017

in Myths and Fallacies

Among the gravest offenses today in modern America is to talk or to write as if certain stereotypes contain even the smallest sliver of truth.  I share with many conservatives and libertarians a disdain for the remorseless lack of humor with which the typical academic, the typical college student, and the typical “Progressive” today processes even the most innocent of jokes and comments.  Even more do I share the disgust that civilized people have for the Torquemadaian treatment dished out by the Politically Correct to any and all who are perceived as not sufficiently attentive to the tenets of Political Correctness.

But my purpose here is to bemoan neither Political Correctness nor the extremes to which it is today taken.  Instead, my purpose is to bemoan an inconsistency in Politically Correct “Progressives.”

It’s true, of course, that one problem with stereotypes is that they mask significant differences among the individuals in whatever group is stereotyped.  To stereotype is to treat a group as if it is the relevant unit of analysis.  To stereotype is to judge an individual not according to his or her own merits and demerits but, instead, according to the group to which he or she is believed to belong.  To stereotype is to ignore the individual; to stereotype is often to show either a careless disregard for persons as individuals.  And sometimes, let us be honest, the stereotyping is not innocent: it is sometimes malevolent.

Yet the same “Progressives” who are on 24/7/365 intrepid patrol against certain varieties of stereotyping – varieties such as racial, ethnic, or sexual-preference stereotyping – are themselves proud practitioners of many other varieties of stereotyping.  For example, “Progressives” are especially prone to think of “workers” (or, at least, “blue-collar workers”) as a unified group – as one big blob in which each individual is identical to the rest, in which each worker’s interest is the same as any other worker’s interest.  Likewise with “big business” or “capitalists” (or “capital”): all the same in the minds of “Progressives.”  What’s good for big business A is also good for big businesses B through Z.  What’s bad for big business Z is also bad for big business A through Y.

Ditto for several other groups such as “the rich,” “the poor,” “consumers,” and “students.”

“Progressives” should be ashamed of themselves and deeply embarrassed by their regular displays of antediluvian notions.

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Mark Koyama reviews Peter Leeson’s WTF: An Economic History of the Weird.

George Will reviews some of the different perspectives on the effects of cuts in tax rates.

Speaking of the economics of tax-rate cuts, here’s Greg Mankiw.  And John Cochrane.  See also Steve Landsburg.

Also on taxes is my Mercatus Center colleague Veronique de Rugy.

Matthew Lau correctly argues that people grow more prosperous by making goods and services less scarce, not more scarce.

Mark Perry draws an important lesson from changes over time in the composition of the Fortune 500.

Jeff Jacoby rightly argues against forcing government workers to support labor unions of government workers.

My Mercatus Center colleague Dan Griswold exposes some of the flaws in Robert Lighthizer’s narrative about NAFTA.  A slice:

President Trump and his trade advisors routinely blame job losses in manufacturing on trade deals such as NAFTA and the outsourcing they supposedly encourage, but objective studies show otherwise. The biggest reason for the decline in manufacturing employment in the United States since 2000 has been dramatic productivity gains fueled by automation. U.S. companies are not shipping jobs wholesale to Mexico. They are investing heavily in their U.S. factories so they can produce more valuable products more efficiently with fewer — but also better educated and better paid — U.S. workers.

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Quotation of the Day…

by Don Boudreaux on October 23, 2017

in Adam Smith, Trade

… is from pages 32-33 of the 2015 Fourth Edition of Douglas Irwin’s important book, Free Trade Under Fire:

[Adam] Smith envisioned a system that would give people the incentive to better themselves through economic activities where they would create wealth by serving others through market exchange rather than through political activities, where they might seek to redistribute existing wealth through brute force or legal restraints on competition.  Under such a system, the political motivation of self-interest could be channeled toward socially beneficial activities that would serve the general interest rather than toward socially unproductive activities that might advance the interests of a select few but would come at the expense of society as a whole.

Free trade is an important component of this system of economic liberty.

DBx: You live on a block on Elm St. which has two other households: the Joneses and the Jacksons.  Suppose your neighbor Jones puts a knife to your throat and threatens to kill you unless you either buy your tomatoes from him or, if you insist on buying tomatoes from a grower across town, pay him a fine for each across-town tomato that you buy.  You immediately understand that Jones is violating your rights; you immediately understand that Jones is a thug, pure and simple.  No amount of philosophy, economics, political science, or theology will change your assessment.

Now let Jones secure Jackson’s approval for his actions.  Jackson expresses his approval not only of Jones obstructing your freedom to buy across-town tomatoes, Jackson also approves of Jones taking some of your money directly to help Jones pay for the employment, arming, and dressing up in fancy costumes of a street gang who will do the actual dirty work of caging or killing you if you refuse to abide by the tomato-buying terms that Jones imposes on you.

When you object to the injustice of Jones’s actions, he reminds you that you had a vote in this matter.  But being outvoted 2 to 1, this majority outcome, by some mystical process, transforms Jones’s pure and simple thuggery into perfectly acceptable – even noble – “trade policy” the violation of which would make you the anti-social criminal.

Further, Jones, to his delight, discovers that Jackson has been hard at work on a treatise that details the many dangers of allowing you to buy your tomatoes without obstruction from across town.  Jackson’s treatise even has empirical data on the number of tomatoes and labor hours that would no longer be grown and and worked on your Elm St. block if you are left free to buy your tomatoes unobstructed.  Combined with criticisms of ‘simple-minded’ defenses of free trade and with explanations that tomatoes grown across town are sold at unfairly low prices, Jackson’s treatise rids Jones of the few qualms that Jones’s threats of violence against you caused him to suffer from time to time

Thus is “trade policy.”

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McCloskey on Comparative Advantage

by Don Boudreaux on October 22, 2017

in Economics, Trade

Here’s Deirdre McCloskey on comparative advantage.  A slice:

People who think they understand comparative advantage, and also think that economists are anyway a passel of pretentious fools, say silly things about Ricardo and his principle of comparative advantage.  For example, Sir James Goldsmith did: “According to Ricardo,” he wrote with brisk assurance, “each nation should specialize in those activities in which it excels” (The Trap, quoted in Paul Krugman, “Ricardo’s Difficult Idea”).  No, Sir James.  Each nation—or each member of the household or each member of a sports team–should specialize in those activities in which it gives up the least of activity X in doing activity Y.  Afterwards the household or nation should embark on trade.  By the principle of cooperation and then trade, each will have more cloth and wine than if it had manufactured both for itself behind tariff walls.

DBx: Another assertion that protectionists often make about comparative advantage is that it rests on the assumption that capital is not mobile across national boundaries.  Such an assumption – which was indeed made by David Ricardo in that part of his book in which he explained comparative advantage – merely makes explaining the logic of comparative advantage easier by assuming away one factor that can cause the particular international pattern of comparative advantage to change.  As Deirdre explains in her essay, comparative advantage exists in all instances in which individuals specialize and trade.  When it comes to teaching principles of economics, I have a comparative advantage over my next-door neighbor no less than over an orthopedic surgeon in Olso.  And this comparative advantage makes it worthwhile for my neighbor to pay me to teach his daughter economics no less than it makes it worthwhile for the orthopedic surgeon in Oslo to pay me to teach her son economics.  The fact that capital is much more mobile between my house and that of my neighbor next door than it is between my house and that of the orthopedic surgeon in Oslo does nothing to eliminate comparative advantage as an economic fact that makes it profitable for my neighbor and me each to specialize in what we each do best and to trade with each other.

Asserting that comparative advantage “breaks down” or “doesn’t work” when capital is mobile across international boundaries is a sure sign of failure to grasp the meaning and logic of comparative advantage. People who make this argument present the superficial appearance of being highly informed.  But in reality, the very fact that they make this argument is sufficient proof that they don’t understand comparative advantage.

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Here’s Phil Magness’s thorough review, in Modern Age, of Nancy MacLean’s fabricated tale of Jim Buchanan and public choice.  Some slices (but do read all of Phil’s fine review):

For such a strong and inflammatory insinuation, MacLean’s evidence is shockingly flimsy. Although she made use of Buchanan’s personal papers shortly after his death in 2013, she uncovered no specific documentation that he ever stated a position on Brown [v. Board of Education] and nothing to suggest he harbored animosity toward black people. What follows instead is a three-hundred-page exercise in poisoning the well against both Buchanan personally and the broader public choice tradition, achieved by means of reckless innuendos that lead the reader to conclusions MacLean stops short of making herself.

….

But MacLean’s tale suffers from a severe evidentiary problem that even prompted Steven Teles and Henry Farrell, two left-leaning scholars, to observe that her cited sources fall far short of her depictions, including on the matter of segregation. A closer look at her footnotes bears this out, as many of the strong claims noted above are cited only to a generalized secondary literature that makes no mention of Buchanan. Others refer to letters that do not sustain the specific interpretation she supplies, and an unsettling number carry no citations at all.

Such flimsy and misused evidence might ordinarily spell the death of any historical thesis, absent the confirmation biases that have led many scholars of MacLean’s own political persuasion to accept her word uncritically. But overreading or misreading existing documents is only half the problem with Democracy in Chains. The other half derives from a body of evidence that MacLean either neglected to consider or simply omitted from her account. Far from taking its cues from the Byrd machine, Buchanan’s TJC [Thomas Jefferson Center] was actually an active sponsor of scholarly work that sought to unite antiracist principles with the emerging field of public choice theory.

….

But there we find another of MacLean’s mistakes. She is writing for the politics of the current moment—a moment of frenzied partisanship in which bias-affirming red meat is especially welcome to left-wing activists, who look forward to the approaching election cycle. The core of Buchanan’s intellectual contribution is thus entirely lost on MacLean, as he had little invested in such frivolous concerns. He was writing, as he so often reminded his students and colleagues, for the ages.

DBx: No conclusion about Nancy MacLean’s performance in Democracy in Chains is warranted other than that she is either a complete fraud or, as I believe, someone who, although employed at a prestigious university to teach history, should instead be enrolled in classes at a community college to learn remedial reading and elementary logic.

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Quotation of the Day…

by Don Boudreaux on October 22, 2017

in Politics, Virginia Political Economy

… is from pages 460-461 of my late colleague Jim Buchanan‘s 1986 Nobel Prize lecture, “The Constitution of Economic Policy,” as it is reprinted in volume 1 of The Collected Works of James M. Buchanan: The Logical Foundations of Constitutional Liberty (original emphasis):

Individuals choose, and as they do so, identifiable economic interest is one of the “goods” that they value positively, whether behavior takes place in markets or in politics.  But markets are institutions of exchange; persons enter markets to exchange one thing for another.  They do not enter markets to further some supra-exchange or supra-individualistic result.  Markets are not motivationally functional; there is no conscious sense on the part of individual choosers that some preferred aggregate outcome, some overall “allocation” or “distribution” will emerge from the process.

The extension of this exchange conceptualization to politics counters the classical prejudice that persons participate in politics through some common search for the good, the true, and the beautiful, with these ideals being defined independently of the values of the participants as these might or might not be expressed by behavior.

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Bonus Quotation of the Day…

by Don Boudreaux on October 21, 2017

in Virginia Political Economy

… is from page 372 of my late Nobel-laureate colleague Jim Buchanan’s 1989 paper “The Ethics of Constitutional Order” as this paper is reprinted in volume 1 of The Collected Works of James M. Buchanan: The Logical Foundations of Constitutional Liberty (1999):

Much of what we have observed in modern politics is best described as action taken without understanding or even consideration of the rules that define the constitutional order.  I have referred to this politics as “constitutional anarchy,” by which I mean a politics that is almost exclusively dominated by and derivative from the strategic choices made by competing interests in disregard of the effects on political structure.

DBx: Economists are fond of calling upon the state to protect its citizens from the negative ‘externalities’ imposed by some people upon others.  And yet one gargantuan externality of using the state is the breakdown of rules that prevent us from using the state to prey upon each other.  When members of today’s political majority vote to seize for themselves resources from members of today’s political minority, members of the political majority not only prey upon members of the political minority, they – if their predation can be constitutionally justified only with legerdemain – prey also upon the entire polity (including their future selves).  They do so by undermining constitutional rules meant to minimize predation by the state.

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… is from page 89 of Knut Wicksell‘s 1896 essay “A New Principle of Just Taxation,” as it is so translated and appears in Classics in the Theory of Public Finance (Richard A. Musgrave & Alan T. Peacock, eds., 1958):

It would seem to be a blatant injustice if someone should be forced to contribute toward the costs of some activity which does not further his interests or may even be diametrically opposed to them.

DBx: In case it matters, Wicksell was – in addition to being one of history’s finest economic thinkers – a man of the political left.

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Nancy MacLean’s Third-Grader Defense

by Don Boudreaux on October 20, 2017

in Books, Myths and Fallacies

In today’s “Best of the Web” at the Wall Street Journal, James Freeman features one of Phil Magness’s most-recent revelations of the shoddy ‘research’ that characterizes Nancy MacLean’s fabulist tale Democracy in Chains.  Freeman reports that he e-mailed MacLean to give her the opportunity to defend herself against Phil’s charge.  MacLean replied to the first of Mr. Freeman’s e-mails:

Ms. MacLean said via email that Mr. Magness is “wrong about the facts of Virginia history” but has not responded to a follow-up question asking specifically which of the publications carried Buchanan’s work

Of course, MacLean’s reply to Mr. Freeman is no defense whatsoever.  It’s the equivalent of a third-grader saying “Nuhh unhhhh!” in response to a classmate’s truthful charge that she cheated while playing some game during recess on the schoolyard.

Anyone receiving an inquiry from a publication as prominent and as widely circulated as the Wall Street Journal would leap at the opportunity to share specific evidence of his or her accuser’s errors – anyone, that is, who actually has such evidence.  The fact that MacLean responds only with the equivalent of ‘Nuhh unhhhh!’ – the fact that she responds only with an unsubstantiated charge against Phil – is itself evidence as powerful as such evidence gets in such cases that she, in fact, has no credible evidence to point to in order to support her charge that Phil’s recounting of a slice of Virginia history is “wrong.”  If MacLean has such evidence, she’d be delighted to share that evidence in the prominent pages of the WSJ.

So I ask: how can MacLean get by without offering a single substantive defense of herself?  Her defense of her completely misleading quotation of Tyler Cowen – namely, that she quoted him in light of the “totality” of his work – would be a poor defense even if Tyler had elsewhere expressed sentiments of the sort that she falsely portrays him as expressing in her misquotation of him.  (See here, here, and here.)  But nothing in Tyler’s vast corpus of work supports MacLean’s quotation or her interpretation of the “totality” of Tyler’s work.

Has MacLean offered any substantive defense against even one of the dozens and dozens of specific charges of inaccuracy leveled against Democracy in Chains?  If so, I’ve not seen it.  Her defenses consist chiefly in accusing those who question the accuracy of her work of being participants in some shady conspiracy against her.  This ‘defense,’ of course, is itself based on zero evidence.  (And speaking as one of MacLean’s critics, I attest and solemnly swear on all that I hold dear that I am part of no conspiracy, organized or un.  I criticize MacLean’s work simply because I cannot abide the absurd portrayal of Jim Buchanan and of public choice that is presented in her fabulist tale.)

I challenge MacLean to offer a defense against even just one of the charges against her book.  (Note: defenses rooted in ad hominem accusations are not substantive.)  I challenge MacLean to offer evidence that even one of the many charges against her work is flawed or inapposite.  Surely a chaired professor of history at one of the world’s most prestigious research universities can offer substantive evidence in defense of at least one of the many charges against her book.

……

MacLean refuses to engage with her critics, again asserting that our motives are impure.  But ask yourself: if you were MacLean, subject as you are to a fusillade of specific charges of inaccuracies and falsehoods, wouldn’t you leap at the opportunity to defend yourself with evidence or logical argumentation if you could?  The only sensible conclusion to draw from MacLean’s continuing refusal to offer any substantive defense of her work is that she has no such defense to offer.  So she hides behind ad hominem fallacies and unsupported accusations.  She hides.  She doesn’t defend herself because, well, she has no substantive defense to offer.  What other reason can there be?

Here, by the way, is yet more on MacLean’s fallacies from Phil Magness.

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