Human experience reveals the fallibility of [Paul] Ehrlich’s position. Even if there will, in time, be less tonnage of each of these resources, human ingenuity will provide substitutes to satisfy needs and the market will efficiently allocate the scarce resources. Every day, in places all over the world, people are seeking to create substitute products that will be cheaper and more useful than each of these metals. Others are discovering less expensive ways to bring these resources to market. These processes have been ongoing since the beginning of civilization, and they have been much more successful since the Industrial Revolution that began in the eighteenth century. The major impediment to ingenuity is government regulation which clamps artificial impediments on the human mind.
Here’s a letter to the Huffington Post:
Hillary Clinton insists that “[t]here’s something wrong when CEOs make 300 times more than the typical worker” (“Hillary Clinton Blasts Pay For CEOs, Hedge Fund Managers In Campaign Kickoff,” April 15).
Well now. As a speaker Ms. Clinton is paid, on average, $300,000 per talk; as a speaker I am paid, on average, $1,000 per talk. As a speaker, therefore, Ms. Clinton is paid 300 times more than I am paid! Is “something wrong”? Is the market for speakers rigged unfairly in favor of famous and politically connected speakers such as Ms. Clinton, and against obscure and ordinary speakers such as me? Is Ms. Clinton part of a nefarious network of greedy speaker-insiders who profit unjustly at the expense of myself and other more-typical speakers by manipulating the speaker market? Should government intervene into the speaker market to remedy this 300-to-1 ratio in speaker fees? Would the amounts that event organizers pay me to speak go up if government ensures that Ms. Clinton’s speaker fee is pushed down?
Although I reject everything that Ms. Clinton stands for (and proclaims in her speeches!), I’m quite sure that her high fee accurately reflects the value to her audiences of having her speak, just as my modest fee accurately reflects my value as a public speaker. So unless Ms. Clinton is prepared to conclude, solely because her speaker pay is 300 times that of typical speakers, that she profits unjustly at my and other typical speakers’ expense, she has no basis for asserting that a 300-to-1 difference in pay in other industries and lines of work is “wrong.”
Donald J. Boudreaux
Professor of Economics
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030
UPDATE: Jon Murphy’s comment here reminds me that I wanted to append to this letter this analysis from the Washington Post of Ms. Clinton’s claim.
Suppose that you are charged with selling a single food item to at least a hundred million people in a highly diverse society. You can pick whatever item you wish, but you can pick only one. If you fall short of getting at least 100,000,000 people to voluntarily choose your item over a rival item that will be offered by a competitor, you lose. (Your competitor is playing by the same rules that you are playing by.)
Being highly competitive, you hate losing. So you carefully go about selecting which item to choose.
What kind of item do you think you’ll finally select as the one food item to appeal (over your rival’s offering) to at least 100,000,000 people? Sashimi, perhaps? Nope. Far too exotic. Only a small fraction of people will choose sashimi over whatever food your rival offers. How about a luscious, authentically cajun, spicy plate of red beans’n'rice? No again, and for the same reason. Lamb chops? Too risky, what with all the vegans out there, as well as those people for whom lamb is itself much less preferred than beef or pork.
You go down a long list. Eventually, you settle upon something that is unquestionably bland and common and uninspiring – something like a plain hamburger, or perhaps a dish of mild meatloaf with mashed potatoes topped only with butter. Anything more exotic than such offerings will, while being much preferred by a few million of the people whose patronage you’re trying to win, will be rejected by a majority of the people. Your rival, of course, faces the same incentives.
No one above the age of seven who thinks about this matter for more than a few minutes would deny the truth of the above analysis. So why do so many adults – including media pundits and academic professors – suppose that the results of a national election in a large country, such as the United States, will produce outcomes that are fundamentally different? Why do so many seemingly intelligent people presume, or at least hope, that a genuinely interesting and intellectually substantive candidate can win at least the tens of millions of votes necessary to become the next resident of the public-housing project at 1600 Pennsylvania Ave.?
It’s intriguing that the people who most self-righteously criticize the likes of McDonald’s, Anheuser-Busch, pop rock, and builders of ‘cookie-cutter’ houses for being bland and failing to experiment with the Bold and the Edgy – those who condemn conformity, sneer at the crowds in Wal-Mart, and trumpet their devotion to diversity – are especially likely to be among those who glorify politics and to find in democratic elections the possibility of transcendence and of discovering and empowering the bold, the different, and the courageous trend-bucking leader.
No one should be surprised that candidates for the U.S. presidency transact mostly in platitudes and are forever performing deeds on the campaign trail that any self-respecting person with independent judgment and a genuine sense and appreciation of his or her uniqueness would never in a million years dream of doing. And the closer a candidate gets to the political promised land, the more intense becomes the pressure for him or her to be the political equivalent of a Bud Lite.
I applaud the fact that the U.S. Senate finally is seriously considering giving fast-track trade-negotiaing authority back to the U.S. president. While trade deals struck by governments are never ideal – because ideal is complete and unconditional free trade (unilateral if necessary) – such deals, in a world infected with politics, do tend to make trade freer than it would otherwise be. And that’s a very good thing.
As regular readers of this blog know, I’m allergic to almost all politicians – and my allergy is non-partisan. So on those occasions when I single out a politician for ridicule, I must not be interpreted as believing that he or she is uniquely scurrilous and contemptible. With that preface….
Hillary Clinton is much-criticized for many things – pretty much all properly so. I’m a bit surprised, though, by the relative rarity these days of critical mentions of her false claim, in 2008, that in 1996 on a trip as First Lady to Bosnia she had to dodge gunfire. When her lie was exposed, she excused herself by having her 2008 campaign folk explain that she “misspoke.”
So here’s a simple mental experiment. Suppose you’re on the board of a successful corporation and the President & CEO of that corporation is about to retire. You, as a board member, must help select the outgoing president’s replacement. A seemingly sane candidate comes in one day for an interview and he announces that he was once in the midst of sniper fire. That candidate then explains the hectic efforts that he and his companions took to avoid being mowed down, giving you the impression that his life was then in serious jeopardy before his fortunate escape from the attack. You’re impressed by the man’s adventure! You soon learn, however, that the candidate’s tale is a lie. There’s not a shred of relevant truth to it. You call the candidate and inform him that you have it on solid authority that no gunfire incident ever happened to him. There’s a short pause. He then replies, confidently, “Oh, yeah. I misspoke. Sorry about that!”
Do you need any further information about this candidate to immediately and unconditionally strike him off of the list of possible successors to the outgoing president? Can this candidate possibly have any superior qualities that offset your certain knowledge that he is either a bald-faced liar or bat-poop nuts? Surely not.
Let’s face it: no sane person misremembers being in the line of sniper fire when, in fact, that person never was in such a predicament. That’s not the sort of non-event that a sane person comes to believe he or she actually endured. How many of you, Cafe patrons, have ever recalled being in the line of sniper fire only to remember later that such a recollection is completely mistaken?
Now suppose that some of your colleagues on the board aren’t fazed by the discovery of this candidate’s phoniness or insanity. Indeed, a couple of your board colleagues say “Sure, that little tale is unfortunate, but we must overlook it because his genitalia make him ideal for the job!” Do you reassess your opinion of the candidate, or do you conclude that your colleagues either are up to something no good in their support of this candidate or are themselves also bat-poop bananas? Surely the latter.
If you don’t like this just-concluded mental experiment, try this one: your 25-year-old daughter brings home her new fiancé. The fiancé tells you that he was once in the midst of sniper fire and had to scurry to escape. You then discover that it’s a lie. How do you feel about your daughter’s future happiness?
Why is Hillary Clinton taken seriously by any serious person?
The word “fundamentalism” is appropriate, for five reasons:
Like many religions’ premises, the sustainability movement’s premises are more assumed than demonstrated. Second, weighing the costs of obedience to sustainability’s commandments is considered unworthy. Third, the sustainability crusade supplies acolytes with a worldview that infuses their lives with purpose and meaning. Fourth, the sustainability movement uses apocalyptic rhetoric to express its eschatology. Fifth, the church of sustainability seeks converts, encourages conformity to orthodoxy and regards rival interpretations of reality as heretical impediments to salvation.
This opportunity allows me to again remind readers of Pierre Desrochers’s and Hiroko Shimizu’s superb 2012 book, The Locovore’s Dilemma: In Praise of the 10,000-Mile Diet - a volume that exposes how one ring of the sustainability circus (the locavore ring) is nothing other than an ostentatious performance based upon a profound ignorance of both economics and of the empirical reality about which the locavores claim to care. (Note: Please don’t accuse me here of using, to discuss the “sustainability” movement, a different metaphor than the one used by George Will. I am indeed using a metaphor; George Will, in contrast, describes what this movement has actually become.)
Bob Murphy’s excellent new book, Choice: Cooperation, Enterprise, and Human Action - which I read in draft form – will be released on June 1st. Order your copy today!
Adam Ozimek concludes that “Unfortunately, there is little basis to claim that most public assistance programs benefit employers. This is unfortunate because such subsidies would incentivize firms to hire more low-income workers.” (HT Tyler Cowen)
… is from page 17 of the 1991 Liberty Fund edition of Bruno Leoni’s soaring 1961 volume, Freedom and the Law:
There is no such thing as “social opinion” in many cases, nor is there any convincing reason to dignify as “social opinion” the private opinions of groups and individuals who happen to be in a position to enact the law in those cases, often at the expense of other groups and individuals.
Perhaps the most destructive myth of modern times is the myth that proclaims that non-corrupt democratic elections with a wide franchise reveal or discover “the will of The People.” The completely illegitimate anthropomorphization of collectives is a dangerous error, one as easy to commit as it is hazardous to liberty and widespread prosperity. (By the way, Leoni’s defense, in this volume, of A.V. Dicey’s criticism of administrative law is intricate, deep, compelling, and important. It is a defense of Dicey that profits immensely from Leoni’s understanding of the fatal ease with which government officials are taken to be faithful representative of The People. On this question of the desirability of administrative law, Hayek, as Leoni explains, erred by failing to appreciate the depth of Dicey’s criticism of administrative law.)
Tomorrow is the release date for a book I edited for the Fraser Institute; it’s titled What America’s Decline in Economic Freedom Means for Entrepreneurship and Prosperity. The five chapters, all originally written for this volume, are by (in order of appearance in the book):
1. Liya Palagashvili, “Entrepreneurship, Institutions, and Economic Prosperity”
2. Russell Sobel, “Economic Freedom and Entrepreneurship”
3. Robert Lawson, “Economic Freedom in the United States and Other Countries”
4. Roger Meiners & Andrew Morriss, “Special Interests, Competition, and the Rule of Law”
5. Clyde Wayne Crews, “One Nation, Ungovernable? Confronting the Modern Regulatory State”
The Mercatus Center at George Mason University is helping to promote the book, its scholarship, and its message. My student Liya Palagashvili (who, by the way, will launch her career this Fall as an Assistant Professor of Economics at SUNY-Purchase) has an excellent article on the volume in U.S. News & World Report. A slice:
The book also addresses the role of entrepreneurship and small businesses in job creation and promoting economic growth and prosperity. People living in the United States and much of the developed world today experience significantly higher standards of living because entrepreneurs continuously introduce and improve market products – not only items such as personal computers and cell phones, but new medicines, better clothing and other technologies that improve ordinary people’s daily lives.
New technological improvements are sparked when entrepreneurs are able to reap the benefits of their innovations, and business entry is high when start-up costs are low. Efforts to foster business activity and these entrepreneurial processes should not focus on particular businesses, corporations or people. Instead, such efforts should strive to create an environment that allows for entrepreneurial activity of all kinds to thrive.
(I don’t yet have a link to the book; but when I get one I’ll pass it along here at the Cafe.)