Todd Zywicki, my colleague over at GMU Law, explains in this splendid essay how the rule of law is undermined – and state (“crony”) capitalism promoted – by the auto bailout.

Bob Higgs blasts the drug war and its effects on levels of violence in Mexico.

Boston Globe columnist Jeff Jacoby defends freedom of association.  Here are Jeff’s concluding paragraphs:

Free and competitive markets aren’t thought of as promoting tolerance and reducing bigotry, yet they do so far more effectively than ever-more-detailed civil rights regulations. Writing in the 1730s, Voltaire famously described the London Stock Exchange as a place “where the representatives of all nations meet for the benefit of mankind. There the Jew, the Mohammedan, and the Christian transact together, as though they all professed the same religion, and give the name of infidel to none but bankrupts.” Gary Becker earned the 1992 Nobel Prize in economics in part for demonstrating that discrimination is economically detrimental — free markets penalize an employer who discriminates for reasons unrelated to ability and productivity.

Freedom of association is indispensable to making a free society work. No culture is without unfairness. But where men and women are unfettered in their freedom to form or avoid relationships with others — socially and economically — tolerance and cooperation increase, and ugly prejudice recedes.

Steve Landsburg points out that Paul Krugman misses the point regarding introducing more market forces into the provision of medical care.

Mark Perry hopes that Wal-Mart eventually breaks through regulatory barriers to open banks in the United States.  I hope so, too.

Finally, here’s a wonderful rarity: someone of the Left who seems genuinely to believe that poor people are capable of thinking soundly for themselves.  (HT Tom Hazlett)

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DG Lesvic April 10, 2011 at 5:53 pm

So, Gary Becker won the Nobel Prize for telling us that “free markets penalize an employer who discriminates for reasons unrelated to ability and productivity.”

Ludwgi von Mises told us the same thing a long time ago, but without earning any prizes for it.

“No system of the social division of labor can do without a method that makes individuals responsible for their contributions to the joint…effort. If this responsibility is not brought about by…inequality of wealth and income…it must be enforced by…direct compulsion…by the police…it is true that the employer has the right to fire the employee. But…it is to his own disadvantage if he discharges a better man in order to hire a less efficient one. The market does not directly prevent anybody from arbitrarily inflicting harm on…fellow citizens; it only puts a penalty upon such conduct.”

Gary Becker is another of the counterfeit genuiuses so dear to the academic profession while a real one, Mises, is ignored and scorned.

Daniel Kuehn April 10, 2011 at 7:10 pm

How can Mises be both ignored and scorned? If he’s scorned, doesn’t that mean he’s not ignored? You seem to have self-pitied yourself into a corner.

Chris April 10, 2011 at 8:05 pm

A couple possibilities..

1. He is ignored unless he must be addressed.

2. Some ignore him, some scorn him. DG assumes individuals, you assume a collective.

lamp3 April 11, 2011 at 11:32 am

This comment is full of win.

DG Lesvic April 10, 2011 at 8:51 pm

Daniel,

Is that the best you can do?

kyle8 April 11, 2011 at 2:27 pm

How man A-Holes can dance on the head of a pin?

Daniel Kuehn April 11, 2011 at 4:06 pm

Wow – people are really putting thought into a little jab at DG!!

Chris – I find #1 to be unconvincing. Again – the fact that he is addressed or that there is some review of whether he merits addressing implies he is not ignored. #2 is correct and I thought about it but did not consider it a viable reason not to post a jab at DG.

Don Boudreaux April 10, 2011 at 8:12 pm

Becker wrote an entire book devoted to this question, and wrote about the matter in ways that drew out the implications of the proposition far more extensively than Mises did.

Read Becker’s book, DG, then get back to us with specific objections to Becker’s theses beyond the trivial point that Mises (like other good economists before Becker) noted the point that you quote

DG Lesvic April 10, 2011 at 8:32 pm

from my review of Mark Skousen’s A Tale of Two Schools.

Friedman’s disparagement of Mises was as though the kayoed Schmeling had belittled Louis. Max, have you seen the film; Milton, have you read Human Action? I hate to tell you this, but you were slaughtered.

And yet, the consensus among “economists” is overwhelmingly in favor of Friedman. So, why have so many, including Skousen, who had once been “hooked on Austrian economics,” bought into his story?

Perhaps because it is what they want to hear, and, he wants to sell books. But that’s alright, for without concessions to the more popular taste, his book might not have been published, and we would all have been the poorer.

But what is the appeal of anti-economics to economists? We must understand that, as professionals, they are businessmen first and economists second, and that the Chicago School is good for business and the Austrian is not.

In the Austrian School, economics is a narrow field, with but a few great thinkers at the top, and all the rest mere schoolmasters and pedagogues. But, in the Chicago School, everyone is a researcher, discovering new data and “truths,” and eligible for the Nobel Prize.

It is said that Mises is hard to understand. Though some parts may have to be read twice, beyond that, he is the easiest to understand, for he makes the most sense, and it is nonsense that is hardest to make sense of.

And when the students can understand the teachers, they may even teach them.

They don’t have to worry about that in the Chicago School, where only the teachers and their favorites get grants for empirical research, and not even their peers can penetrate the mathematical and “technical” gibberish surrounding it.

But, within the closed shop itself, the opportunities are endless. Economics has become “a new imperial science invading like an army the new frontiers of politics, law, crime, religion, sociology, history, and Wall Street.” P 86
The “streams” was one example. For another, Gary Becker, of the Chicago School, “applies the incentive principle to show that increasing the cost of crime through stiffer jail sentences, quicker trials, and higher conviction rates effectively reduces the number of criminals who rob, steal, or rape, that ‘criminals, like everyone else, respond to incentives.’” P 87
Isn’t that amazing! And it was for such “pathbreaking work in nontraditional areas” that Becker won the Nobel Prize. Mises never won it, but Becker did, in Chicago’s wonderful new world of much ado about nothing, distraction from the real problems of economics, counting in place of thinking, and missing the forest for the streams.

Elsewhere, I had written:

Beware academic empire building and boondoggling, the “new methods and frontiers,” the looser definitions and thinking, the dilution, digression, and refuges from real challenges, the opiates of the economists, the fads and fancies that “divert the mind from the study of the real problems.” Mises

Beware the pretexts for getting rid of a critic, the left-handed monkey-wrenches you’re supposed to go chasing after, the worthless books you’re supposed to read.

Beware the old Internet Runaround: “Just follow the links, the Yellow Brick Road of the Internet, and you will see the light.” That is a fool’s mission, for a light not worth casting is hardly worth chasing after. It is not your obligation to follow someone else’s links, but his to make you want to do so. And when, without so much as a glimmer of his promised light, he tells you where to go, tell him, and let him fume at your obstinacy, but not get rid of you so easily.

DG Lesvic April 10, 2011 at 8:39 pm

And, by the way, Becker “wrote an entire book devoted to this question,” and I’m supposed to run right out and get it.

I don’t think so. You just told me all I need to know about it.

DG Lesvic April 10, 2011 at 8:47 pm

If you have any books that have tackled the greatest questions of economics, redistribution, competition and monopoly, the meaning of economics, and have gone beyond Mises in these matters, tell me about it. I’m interested.

kyle8 April 11, 2011 at 2:31 pm

Wow, you really have a hard on agains the Chicago guys don’t you? Take a chill pill dude. Good work has been done by the Chicago boys and by Monetarists. You don’t have to agree with all of it, but it would be pretty foolish to disagree with all of it.

vikingvista April 12, 2011 at 6:22 pm

Friedman did much good. The jury is out on whether that good outways his misleading and false but consensus-building commentary on central banking, inflation, and the business cycle.

vikingvista April 12, 2011 at 6:23 pm

Outweighs. Thanks auto spell.

Krishnan April 10, 2011 at 9:33 pm

According to your theory, everyone who has won a Nobel is a counterfeit genius – since everyone’s work is somehow dependent on and built upon the work of others (and so many) …

So, using your theory, Mises is also a counterfeit – since obviously he did not live by himself – and had people around him – from whom he may have copied. And whosoever Mises copied from, copied from someone else … ad infinitum.

I am glad you cleared that up.

No, no need to thank me. No need to ask me to go read this or that – your analysis was perfect – there is nothing original about anyone, any piece of work.

DG Lesvic April 10, 2011 at 10:36 pm

Krishnan,

I don’t know that we can ever say with certainty who originated an idea. But we can say what the most important issues are, and who has gone the furthest with them. The issue of redistribution has been singled out by more people, including Don Boudreaux, as the most important. So let’s start with that. Then, competition and monopoly. Cycle Theory. The definition of economics.

What have McCloskey and Becker had to say about them?

Who has gone the furthest with them?

Then those lists of the 15 greatest economists, including that one that omitted Mises, might mean something.

DG Lesvic April 11, 2011 at 1:16 am

And since the 15 greatest economists depends on the 15 greatest issues, and the greatest economist on the greatest issue, and we’ve already agreed that it’s redistribution, what have Becker and McCloskey contributed to that discussion?

Prediction.

Not much.

DG Lesvic April 11, 2011 at 1:41 am

Which book do you think has contributed the most to that discussion? That’s the one I’ll run out and buy.

Anonymous April 10, 2011 at 6:50 pm

“Finally, here’s a wonderful rarity: someone of the Left who seems genuinely to believe that poor people are capable of thinking soundly for themselves. ”

why do feel the need to be so nasty?

Don Boudreaux April 10, 2011 at 8:14 pm

Why do you feel the need to be anonymous?

W.E. Heasley April 10, 2011 at 9:46 pm

Point, counter point!

Maybe we could play “What’s My Line”, offer a prize, and guess anonymous’s real name. I’m guessing: Suomynona.

Anotherphil April 10, 2011 at 11:50 pm

Don:

Not everyone can express an opinion with impunity, even if secure in their present employment, the future must be considered-and it is now a common practice for employers to “google” prospective employees names.

Anotherphil, writing pseudonymously because I value my paycheck, and I believe in rational self-interest and without tenure, to do otherwise would be irrational.

vikingvista April 11, 2011 at 2:15 am

If it is ideas that truly matter, anonymous posting should be preferred, and the poster’s identity recognized as irrelevant.

DG Lesvic April 11, 2011 at 2:47 am

After so much jumping up and down on Don, I think we ought to pause a bit and give him a pat on the back. Not many of his peers would put up with what he does. We don’t see McCloskey or Becker subjecting themselves to this kind of give and take, nor the others like Horwitz who pretend to do so but in reality either browbeat or banish critics. Who among their peers take what Russ and Don do with such good grace?

Let’s have three big ones for our friends and the greatest men in economics today?

Daniel Kuehn April 11, 2011 at 6:10 am

dg -
Becker has a blog – I’m not sure how rowdy it is, though. I used to follow it but the posts can be long.

Richard Stands April 11, 2011 at 1:38 am

“Finally, here’s a wonderful rarity: someone of the Left who seems genuinely to believe that poor people are capable of thinking soundly for themselves. ”

why do feel the need to be so nasty?

I’m not sure I see why this statement is “nasty”. The author of the linked article lambastes another progressive author for asserting that choices in cellular service plans “will confuse low-income consumers”. Compassion via condescension and compulsion seems far more worthy of the term “nasty” than deference to diversity of decisions.

I guess we can simply hold different definitions of “nasty” – if you permit me to retain my poor choice, considering I’m obviously one of the alliterate masses.

Methinks1776 April 11, 2011 at 7:41 am

Richard,

Since most of what the left professes is pretty odious stuff, the truth to them is “nasty”. They’re still quite stuck in a fantasy world where they are feudal Lords protectively wrapping their illiterate peasants in a quilt of condescension.

Krishnan April 10, 2011 at 7:29 pm

David Honig JUST realized the condescending attitude of the Ruling Class towards the poor? Wow. I guess he left the plantation and am sure will be called for it.

HOW DARE YOU CRITICIZE WHAT WE WANT TO DO? WE ONLY WANT TO DO WHAT IS GOOD FOR THEM – THEY DO NOT KNOW WHAT IS GOOD FOR THEM – WE DO – WE WERE EDUCATED AT THIS_THAT_OTHER AND KNOW BETTER.

Mark Anthem April 11, 2011 at 2:27 am

So the Ruling Class is a level higher than the golden rule? He who has earned the gold will be stopped from hoarding the gold and have it confiscated by the Christians, Feds, Caliphate, Communists, or some other imperial force and put in a blind trust for the benefit of the poor and needy? I can’t figure out much of anything about our own Bureau of Land Management and all “their land” and what they do with the revenue they collect for us taxpayers & tribal groups? Democracy is definitely the God that failed in EPIC fashion.

jorod April 10, 2011 at 7:52 pm

Perhaps they didn’t mean to bail out GM..only the labor unions.

vikingvista April 10, 2011 at 9:05 pm

Vouchers would continue to artificially prop up health care prices, but that effect would be reduced compared to current Medicare if people are given the choice, without penalty, to save the voucher for future health care spending. Prices would drop even more if people were allowed to use those funds for non health care spending, but the current lot of Republican progressives would never allow liberty to go that far.

And in defense of their statist oppression, they continue to parade the disproven falsehood that preventive medicine saves money. Even if that nonsense were true, it would not justify their paternalistic violence against their countrymen.

W.E. Heasley April 10, 2011 at 9:40 pm

Unhealthy Reasoning – Steve Landsburg

Crazy old Uncle Paul Krugman, expert at large in all areas large and small, and always, always, always correct, is at it again. You see vouchers will never work for Medicare. Why? Because crazy old Uncle Paul says so. And so there!

You have to love Landsburg’s six word summation of Krugman’s position: “Well, this is just plain illiterate.” Go Steve go!

You see over-utilization, shopping coverage, the freedom to choose coverage best suited for the individual, reducing the third party payer effect etc. are items that can never ever effect price according to Krugman. In Landsburg’s words:

‘Paul Krugman on the Ryan budget proposal:

And then there’s the much-ballyhooed proposal to abolish Medicare and replace it with vouchers that can be used to buy private health insurance….

…The House plan assumes that we can cut health-care spending as a percentage of G.D.P. despite an aging population and rising health care costs.

The only way that can happen is if those vouchers are worth much less than the cost of health insurance.

Well, this is just plain illiterate. In fact, the only way that can happen is if the voucher system affects people’s health care choices. Which is, you know, the whole point.’

Bet crazy old Uncle Paul would enter cold meltdown if Ryan proposed Milton Friedman’s educational voucher plan.

Which begs the question of why Landsburg didn’t ask: does Nobel offer a prize for the illiterate as I have a nominee?!?

Kent Gatewood April 11, 2011 at 12:50 am

On legalizing drugs, 1. minors will still not be allowed to possess? 2. age of majority for drugs? 16, 18, 21 3. product liability– harsh like tobacco or easy like alcohol? 4. if one misuses the product and a death results (drunk driving) what penalty? Life in prison? 5. Is the Mexican drug war another of their civil wars for control of the country and drugs are just a cover? 6. Will people be allowed to run meth labs in residential neighborhoods?

vikingvista April 11, 2011 at 2:30 am

1 & 2. It really doesn’t seem to matter much, does it?

3 & 4. As with everything else, the circumstances of each case should be considered individually. Intoxication is not an issue new to the law.

5. It doesn’t appear so.

6. Do meth lab owners currently follow zoning laws?

Kent Gatewood April 11, 2011 at 10:03 am

Legalized drugs will not happen if minors aren’t protected.

Mexico is neither a friend nor an ally of America. They must then be enforcing their own drug laws. But of course under international law their territory can’t be used to attack American.

vikingvista April 11, 2011 at 5:41 pm

“Legalized drugs will not happen if minors aren’t protected.”

And maybe legalized drugs won’t happen if unicorns aren’t given voting rights. It simply isn’t a rational appeal. You must compare the current state of affairs with what it would be under decriminalization. You can’t compare decriminalization to the (monumentally failed) intent of existing laws.

“They must then be enforcing their own drug laws.”

They are. But the capability and ferociousness of the most violent drug traffickers is proportional to the demand for their goods and the ferociousness by which their less violent competitors are suppressed. The combination of the large US demand for drugs, and the ferociousness of the US war on drugs, creates drug traffickers more powerful than the Mexican government can deal with.

Mark Anthem April 11, 2011 at 2:03 am

Re: Higgs. So in the worldwide drug war we’ve been flying armed drones in Mexico? We should believe the countries of Africa have voluntarily formed the African Union? That all these world nations have requested our military presence? Tragically this government lost it’s soul when Truman was tricked into the mass murders of Nagasaki & Hiroshima and set the bar of human indifference to an all time high. Nassim Taleb is right, the sooner we remove our sanction to building fragile mega-imperial alliances and disband into robust local citystates the sooner this mystical collectivist nightmare can be put behind us.

barberatf ganston April 11, 2011 at 2:20 am

Can you please show links for explaining how math and hess are related? I know some but need more information.
NutraSlim HCA

Mao_Dung April 11, 2011 at 1:28 pm

Bob Higgs needs to stop his thuggish, war of exploitation on the environment.

He says that environmentalists are the new commies that we have to fear and declare war on. He is the dangerous one.

http://www.youtube.com/watch?v=zL8JO1RQfPU

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