Russ Roberts’s latest EconTalk podcast is with Tim Harford.

My intrepid Mercatus Center colleague Veronique de Rugy reflects on some things about Thanksgiving dinner for which we Americans ought not be thankful.  A slice:

Take the ridiculous protective scheme built around a politically powerful cartel of domestic sugar processing companies. Between protective tariffs that reduce cheap foreign supplies, loan guarantees and bailouts, American consumers pay about double the global average price for sugar. Obviously, consumers are hurt, but so are all the producers of goods that require the use of sugar, such as bakers and candy-makers.

And here’s Richard Ebeling on the first American Thanksgiving.

George Will recollects some unintentionally hilarious American moments from 2017.

David Henderson is thankful.

Northwestern University law professor John McGinnis distinguishes the multiculturalism of liberty from the multiculturalism of coercion.

Warren Meyer ponders worker mobility.

In this short video, Johan Norberg busts some myths about cross-country differences in students’ performance on tests.

Sam Staley reviews The Florida Project.

Cole Webb Harter celebrates Black Friday.

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Quotation of the Day…

by Don Boudreaux on November 24, 2017

in Myths and Fallacies, Seen and Unseen, Trade

… is from page 16 of Doug Irwin’s new (2017) volume, Clashing Over Commerce:

For most of US history, however, there has not been a single, unified “capital” or “labor” interest regarding trade policy, because there are many different types of capital and labor that are affected by trade in different ways.  Capital owners and workers employed in industries that compete against imports (iron and steel, textiles and apparel) typically have a much different view of trade policy than the capital owners and workers employed in industries that export (agriculture, machinery, or aerospace).

DBx: This reality, which should be obvious, is often missed.  Despite the deeply held dogma of many people, “capital” (or “business” or “corporations”) is not one large and unified, or homogeneous, interest group.  Nor does the interest of “capital” necessarily conflict with the interests of “labor.”

More directly to Doug’s point, to recognize the reality highlighted in this quotation is to immunize oneself against the error, committed by the typical protectionist, of defending trade restrictions on the grounds that such restrictions “save jobs” and “protect domestic producers.”  Trade restrictions save only some particular domestic jobs and businesses while they destroy others.  The typical protectionist, therefore, has no business patting himself on his back for his alleged ‘enlightened’ concern for domestic workers and business owners.  At best, the typical protectionist has more concern for certain workers in the domestic economy (namely, those whose jobs are more visibly affected by international trade) and less concern for other workers in the domestic economy (namely, those whose jobs are either less affected by international trade or less visibly affected by such trade).

It is beyond my comprehension why anyone deserves applause for championing worker Jones over worker Smith for no reason other than that worker Jones happens today to be employed by a firm that is more subject to international competition than is the firm at which worker Smith today is employed.  My incomprehension springs both from the fact that I see no reason to regard the interests of worker Jones to be superior to those of worker Smith, and from the reality that using the state to artificially protect worker Jones from competition is thereby to use the state to artificially impose undue hardships on Smith, both as a worker and as a consumer.  The protectionist gets away with defending such an ethically dubious distinction only by ignoring worker Smith.

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Quotation of the Day…

by Don Boudreaux on November 23, 2017

in History, Property Rights

… is from John Stossel’s latest column, “Thankful for Property Rights on Thanksgiving Day“:

Had the Pilgrims continued communal farming, this Thursday might be known as “Starvation Day” instead of Thanksgiving.

Fortunately, the Pilgrims were led not by Bernie Sanders fans or other commons-loving socialists, but by [William] Bradford, who wrote that he “began to think how they might raise as much corn as they could… that they might not still thus languish in misery… After much debate [I] assigned each family a parcel of land… This had very good success, because it made every hand industrious.”

There’s nothing like private ownership to make “every hand industrious.”

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Douglas Irwin’s “Clashing Over Commerce”

by Don Boudreaux on November 22, 2017

in Books, History, Trade

An early Christmas gift arrived today: my long-awaited copy of Doug Irwin’s new book, Clashing Over Commerce: A History of US Trade Policy.  My Mercatus Center colleague Dan Griswold read the page proofs of this massive study and has nothing but high praise for it – which, knowing Doug’s other work, is not at all surprising.

This book jumps immediately to the top of my reading list.  I’m thrilled to dive into it!

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Some Links

by Don Boudreaux on November 22, 2017

in Environment, Hubris and humility, Myths and Fallacies, Regulation, Taxes, Trade, Video

Corey Iacono challenges Dani Rodrik’s criticisms of free-market economics.

My Mercatus Center colleague Veronique de Rugy is puzzled by some of Senator Susan Collins’s (R-Maine) tax demands.

Nick Gillespie, Ian Keyser, and Jim Epstein justifiably celebrate the end of so-called “net neutrality.

And here’s Jeff Tucker on “net neutrality.

Here’s Alberto Mingardi on Gertrude Himmelfarb on intellectuals on capitalism.

“Local action improves the environment, not more officials” – explains Matt Ridley.

Deirdre McCloskey and Timur Kuran are among the scholars who, in this video, discuss populism.

Inu Manak is thankful for Nafta.

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Quotation of the Day…

by Don Boudreaux on November 22, 2017

in Economics

… is from page 109 of the 2016 Mercatus Center re-issue of my late colleague Don Lavoie’s excellent 1985 volume National Economic Planning: What Is Left?:

What is properly involved in economics is the building of a conceptual framework for historical interpretation capable of making certain kinds of outcomes understandable in terms of the purposes that led to them.

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An Open Letter to Kevin Kearns

by Don Boudreaux on November 21, 2017

in Myths and Fallacies, Trade

Mr. Kevin L. Kearns
U.S. Business & Industry Council

Mr. Kearns:

Your recently updated essay, “Trump Must Confront Massive Institutional Free-Trade Bias in Order to Balance Trade, Create Jobs” (Huffington Post, Nov. 12), is a very poor performance.  First, you repeat several myths as if they are established truths.  It is not true, for example, that the middle class has been “decimated” by trade – unless by “decimated” you mean “made richer.”  Compare Census Bureau data on inflation-adjusted household incomes today with those on household incomes in the mid-1970s, just before America began running large trade deficits.  You’ll discover that the percentage of American households earning annual incomes in each of the lower and middle ranges is today lower than in the mid-1970s, while the percentage earning incomes in each of the upper-income ranges ($100,000 and above) is higher.  The data are clear: more and more American households are earning high incomes.

A more fundamental problem with your essay is your premise that Americans are enriched the more government succeeds at creating artificial scarcity.  Merely stating your premise reveals its absurdity.  But if your premise is correct, then your proposals are far too modest.  Rather than confine itself to obstructing our access to imports – which are only 1/7th of U.S. GDP – government should create artificial scarcity more generally.  By your logic, Americans would be made even richer if government employed vandals to annually destroy, say, 25 percent of the value of every American’s residence and possessions.  Think of all the jobs that would thereby be created!  More carpenters, plumbers, and electricians would be employed every year to rebuild the 25 percent of the housing stock intentionally destroyed by government vandals.  Likewise, more farmers, truck drivers, and sales clerks would be employed to help consumers replace the 25 percent of their food, clothing, and furniture demolished by those same vandals.

You’ll insist that destruction of valuable goods by vandals differs from import restrictions.  But you’ll be mistaken.  You’ll be unable to identify a single essential economic difference between consumers having their access to valuable goods artificially restricted by vandals and consumers having their access to valuable goods artificially restricted by customs agents.  (The fact that the latter are simply more familiar to us than the former doesn’t count as an economically essential difference.)

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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Baffling Hostility to Free Trade

by Don Boudreaux on November 21, 2017

in Trade

Here’s a letter to a someone who disapproves of the pro-free-trade position that I took in my recent debate, at Hillsdale College, against Ian Fletcher:

Mr. Harrison Cline

Mr. Cline:

Thanks for your e-mail.  You say that you support Pres. Trump’s protectionist policies because of your “lifelong allegiance to free markets and limited Government.”  Your confidence in free markets leads you to conclude that the U.S. government “should protect us from the interventionist policies of [other] governments … which give them unfair advantages over us.”  With respect, I find your conclusion to be baffling.

If you understand that interventions by American politicians and bureaucrats into our economy weaken our economy, why do you suppose that interventions by foreign politicians and bureaucrats into their economies strengthen their economies?  Are foreign officials smarter and more ethical than American officials?  Are the constitutions of foreign governments superior to that of the U.S. government?

Further, if you understand that American politicians and bureaucrats have too little knowledge and too few sound incentives to be trusted to regulate the likes of securities and labor markets, pharmaceutical development, environmental emissions, and workplace safety in the public interest, why do you suppose that these same politicians and bureaucrats have adequate knowledge and appropriate incentives to regulate international trade in the public interest?

And if you don’t like politicians taxing your income as you earn it, why are you happy to have these same politicians taxing your income as you spend it?

I understand why people such as Bernie Sanders and others on the political left are hostile to free trade: they trust politicians and bureaucrats and distrust private markets.  Opposition to free trade, therefore, is a natural part of their larger agenda.  But I do not begin to understand why so many free-market advocates, such as yourself, are today hostile to free trade.  Such hostility is utterly inconsistent with your larger understanding of markets and with your commitment to economic freedom.

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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Quotation of the Day…

by Don Boudreaux on November 21, 2017

in Man of System, Myths and Fallacies

… is from page 393 of the late Paul Heyne‘s 1982 speech “What Is the Responsibility of Business Under Democratic Capitalism?” as this speech is reprinted in the 2008 collection of Heyne’s writings, “Are Economists Basically Immoral?” and Other Essays on Economics, Ethics, and Religion (Geoffrey Brennan and A.M.C. Waterman, eds.):

The primary problem that modern, industrialized economic systems must solve is the problem posed by the scarcity of information.  We are inclined to overlook these difficulties and to take their resolution for granted, because we take for granted the remarkable mechanism of social coordination through which we gather and disseminate the knowledge that is essential to the system’s functioning.  In overlooking the knowledge or information problem, we focus undue attention on a different scarcity, the scarcity of goodwill.  We erroneously suppose that goodwill can resolve problems that can in fact be resolved only through the accumulation of additional information.  Moreover, many of our proposals for increasing the amount of goodwill in the economy fail completely to attain their objectives, but do manage to subvert the crucial information system.

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Some Links

by Don Boudreaux on November 21, 2017

in Growth, Legal Issues, Seen and Unseen, Taxes, Truth-seeking & ideology, Video

Bryan Caplan’s important idea of the ideological Turing test is featured in this excellent new video from Learn Liberty.

Richard McKenzie clarifies much confusion about the corporate income tax.  A slice:

The corporate tax is, effectively, a means of taxing people hidden “behind trees,” which is one of its chief attractions to politicians interested in garnering additional tax revenues for the government. They don’t have to admit that the corporate tax is a disguised tax hit on median and low-wage workers and low-income consumers and not on just the rich Trumps, Bill Gates, and Warren Buffets of the world. The exact size of the various hits felt by all income classes are literally unknown and unknowable (although many econometricians feign that their statistical equations reveal truth).

Jim Bovard identifies stupid (and sometimes also scary) ideas for combatting stupid (and sometimes also scary) ideas.

Kevin Erdmann draws an interesting connection between a foundational economic understanding of trade and the (in)famous 1942 United States Supreme Court case Wickard v. Filburn.  A slice:

So, if you think it’s too extreme to suggest that opposing international trade is the equivalent of opposing tractor manufacturing in order to protect the oxen industry, I am afraid the federal government has already galloped past you.  They say it’s the equivalent of making it illegal to grow your own food during a depression.  Except, the federal government makes this reductio ad absurdum in approval of the intuition.  And the Supreme Court concurs.

Brittany Hunter reviews some of the socialist ideas that formed the foundation of Naziism.

My colleague Pete Boettke and GMU Econ alum Rosolino Candela are inspired by Deirdre McCloskey’s Bourgeois trilogy.  (And here’s a link to the entire Winter 2017 issue of the Journal of Private Enterprise – an issue devoted to McCloskey’s trilogy.)

Your next government.

Bob Higgs notices that neoclassical welfare economics is far better at supplying dubious justifications for government intervention than at actually improving our understanding of reality.  A slice:

This is the trouble with neoclassical welfare economics, amigos: it’s not a decent theory, but it’s a dandy rationale for government to coerce people right and left ostensibly in order to supply valuable public goods, many of which are mere boondoggles for government contractors and magnets for corruption of the legislators and bureaucrats who impose the projects on an often-unwilling public.

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