Some Links from Cato@Liberty

by Don Boudreaux on September 21, 2011

in Balance of Payments, Crony Capitalism, Myths and Fallacies, Other People's Money, Scientism, Seen and Unseen, Trade, Video

Cato@Liberty has such a large number of especially important posts recently that I devote all of today’s “Some Links” post to them.  In no particular order…

Dan Ikenson again clearly and cleanly exposes the Economic Policy Institute “as an unrivaled purveyor of economic nonsense.”  For the umpteenth+1 time: EPI’s claim that U.S. trade deficits increase American unemployment – and especially EPI’s claim that it can measure the number of jobs allegedly so “destroyed” – is a comically sad attempt at hocus-pocus wizardry that would embarrass the most thread-bare street-corner magician.

… In this video – as my dear friend Tom Palmer notes – “Russian philosopher Leonid Nikonov explains the differences between socialism, cronyism, and free market capitalism.”

Chris Edwards reveals that Warren Buffett’s grasp of tax facts is palsied.  (Mark Perry chimes in, too, over at Carpe Diem.)

David Boaz uncovers more evidence of the civilizing properties of commerce.

… Finally, Sallie James is rightly upset at the shameless attempts by crony capitalists to double-dip into other people’s money.

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{ 42 comments }

kyle8 September 21, 2011 at 4:20 pm

How would one go about “proving” that trade causes a net loss in jobs? Every bit of economic data I have ever seen shows a clear link between higher volumes of trade and higher levels of growth and employment.

Invisible Backhand September 21, 2011 at 5:40 pm

Losing jobs, net or not, is detrimental by itself. People aren’t fungible. A 50 year old can’t go back to being a 20 year old.

Ken September 21, 2011 at 6:06 pm

IB,

“Losing jobs, net or not, is detrimental by itself.”

The loss of all those farming jobs due to the plow “is detrimental by itself”?

The loss of all those scribe jobs due to the printing press “is detrimental by itself”?

The loss of all those other farming jobs due to the tractor “is detrimental by itself”?

The loss of all those buggy whip jobs due to the car “is detrimental by itself”?

The loss of all those wheel chair jobs due to the polio vaccine “is detrimental by itself”?

The loss of all those clerical jobs due to the rise of computers “is detrimental by itself”?

Isn’t it more likely you don’t know what you’re talking about? Having a job is NOT what people aspire towards. People aspire to have enough materially to live a comfortable personal life, however they define what a comfortable personal life is. This is born out by the fact that over the past few decades Americans work less hours.

Regards,
Ken

Invisible Backhand September 21, 2011 at 7:56 pm

RegardsKen, you have a documented history of making stuff up:

http://i.imgur.com/Ds1CJ.png

Methinks1776 September 21, 2011 at 8:46 pm

Yeah, Ken!

You’re just making that stuff up about some fictional printing presses and tractors! Everybody knows that stuff doesn’t exist. And everybody knows that man seeks to toil from the moment he wakes up to the moment he falls, exhausted, into bed at night. Just look at whatever’s in Irritable Bowel’s link.

Don’t lie, man! Don’t lie!

Ken September 21, 2011 at 10:02 pm

IB,

I see, so I say something that is true and you call it a lie. I know that’s how you roll.

I also note that you failed to capture my response to you on that comments thread. You failed to demonstrate anything resembling a fact and call facts you don’t like, no matter how verifiable, lies.

Regards,
Ken

Invisible Backhand September 22, 2011 at 11:31 am

I notice you made no effort to produce this $190/mo insurance.

Ken September 22, 2011 at 12:09 pm

IB,

That’s it? That’s your big defense? You didn’t ask where I got the insurance quote and since I didn’t explicitly say, you just assume I’m lying? Ha! You really are just a stain on humanity aren’t you?

I went to http://www.ehealthinsurance.com, clicked on a family plan and put in a made up family of four. They gave me back dozens of options, one of which was a low as $190/month.

Regards,
Ken

Invisible Backhand September 22, 2011 at 12:47 pm

I went to http://www.ehealthinsurance.com, clicked on a family plan and put in a made up family of four. They gave me back dozens of options, one of which was a low as $190/month.

Let’s see, mom and dad born 1980, son born 2000, daughter born 2001, all non smokers, show all plans, sort by price, cheapest is $414.93. Second lowest is $757.68

Again, you shouldn’t tell such easily checked whoppers.

Ken September 22, 2011 at 1:42 pm

IB,

Of course, you’re probably just too stupid to note that the policies aren’t sorted by price. I ran it again again the website I gave with a 37 year old father, a 30 year old mother, an 8 year old son and a 4 year old daughter and lo and behold I got the same results back I got the other day. The lowest insurance policy is $187/month from UniteHealthOne called the Copy Select Value – 10000.

Again, you demonstrate yourself to be a stain on humanity.

Regards,
Ken

kyle8 September 21, 2011 at 6:24 pm

People might not be fungible but a person can certainly change their careers. I retired at age 50 from industry and went into teaching. I love it.

If the economy is growing and everyone is better off then it is a lot easier to do that than when the economy is in the tank. And there is a wealth of data to prove that protectionism will slow growth.

Sometimes you make a intelligent comment and sometimes you say really really silly things. This is one of those times.

Invisible Backhand September 21, 2011 at 8:55 pm

I retired at age 50 from industry
Sounds fake. Retire on disability I could believe. Retired military I could believe.

went into teaching
Then you must have heard about teachers that can’t find jobs.

Every bit of economic data I have ever seen shows a clear link between higher volumes of trade and higher levels of growth and employment.

Then you’ve never seen the term ‘jobless recovery’: “However, in the early 1990s recession, early 2000s recession, and late-2000s recession the employment recoveries have lagged increases in GDP.”

http://en.wikipedia.org/wiki/Jobless_recovery#Recent_employment_trends_in_the_USA

kyle8 September 21, 2011 at 9:12 pm

You just really get off to trolling don’t you? No real substance, just a troll.

Invisible Backhand September 21, 2011 at 10:19 pm

How would one go about “proving” that trade causes a net loss in jobs? Every bit of economic data I have ever seen shows a clear link between higher volumes of trade and higher levels of growth and employment.

By the way, here’s a chart of trade, growth and unemployment that doesn’t show that.

http://i.imgur.com/yh04P.jpg

Now that you’ve seen it, you can’t say ‘every bit’. But you will pretend it away I’m sure

JS September 21, 2011 at 8:21 pm

Yes, it’s detrimental to the 50 year old who can’t adjust his skills to serve the consumers in the same capacity that he had before, but the consumers, of which you are one, care little for his problem.

A person’s compensation is ultimately linked to how he serves his fellow man. And if we set goals to preserve the circumstances of those who no longer serve their fellow human beings at the expense of those who do, society will become poorer.

JS September 21, 2011 at 8:26 pm

Invisible backhand will spend his money with a ruthless disregard for those whom his dollars don’t reward, but will then pander for government to subsidize those he disregarded with his own money. He calculates that the subsidy will most likley be born by others and he will still get the egotistical recognition he seeks from his peers for the display of compassion and social concern for the plight of others.

Man is not interested in virtue, per se, but only in the appearance therefof.

Methinks1776 September 21, 2011 at 8:41 pm

Brilliant.

JS September 21, 2011 at 8:50 pm

The plight of this supposed 50 year old is also a myth. We are led to believe that society has cast him off, as he is no longer employable, etc. What is often and instead the case, he is no longer employable at the same rate. That’s a big difference.

The typical scenario is that the guy’s pay was too high to begin with. Because he was in a union, he was one of the lucky to be overpaid at the expense of the rest of the labor force, who were, by default, underpaid. Consumers had no choice but to overpay for union made products for generations until globalization allowed them some relief. The poor people who buy their neccessities at Walmart, for example, need to pay attention to every penny that their households consume. They care little for the plight of the 50 year old who loses his $40/hr union factory job, benefits included. a

Any political effort made to keep people employed at rates that impoverish the consumers is a tradegy. And since the overwhelming majority of consumers have very modest means, any laws that protect or shield labor from competition amount to consumption taxes on the poorest sectors of the economy, which is hardly compassionate.

Economic Freedom September 22, 2011 at 2:06 pm

That’s right, Invincibly Backward. It was detrimental for the U.S. to lose all those candle-making jobs to the electric lightbulb industry.

And what about all those typewriter manufacturing and repair jobs that were lost to the personal computer? WE MUST FIND SOME WAY OF GETTING THEM BACK! The U.S. is wealthy only to the extent that it employs lots of typewriter manufacturers and repairmen.

And lest you forget: what about all those additional undertaker jobs that were lost to the discovery and widespread use of antibiotics?

Your response: “Yes, we must find some way of killing more people at a younger age in order to create or save more undertaker jobs. That much is economically clear.”

JS September 21, 2011 at 9:13 pm

Kyle8,

It’s proven logically. If consumers are denied the freedom to buy at the most efficient prices, they won’t save enough for capital to be invested in new things. Jobs are never lost. They are only changed, unless people refuse to work. The consumers direct the economy as savings are reinvested intro making things that they want.

If people, as consumers, are free to reward the most efficient producers, less people will be required to make those products. Those displaced will shift into the new industries that emerge due to the consumer savings being plowed back into the economy. This is how wealth is created–from the displacement and replacement of jobs into new and more abundant goods and services. But first jobs have to be ‘lost’.

Using reverse logic, if comsumers were forced to pay the highest prices, so as to insure people in factories, or wherever, don’t ever lose their jobs, there not only wouldn’t be any savings to put toward new prodcuts, but there most likley would be a reduction in existing consumption that would lead to mass layoffs without the prospect of those people finding work in new industries.

Wealth is measured by the division of labor in a society. Just how complex it is measures the wealth of society. It can not be taken for granted. Holding economic positions such as advocated by Invisible backhnd will cause a reversal in the division of labor, which cause a reduction in the available goods and services in the society. If protecting a job is good, then, theoretically, there can be no division of labor, and no new wealth created by its process.

But I’m sure he has a link that explains how protecting jobs expands the division of labor.

kyle8 September 21, 2011 at 4:25 pm

I am going to order The Morality of Capitalism. It would be good to reacquaint myself with those arguments. I am challenged by my students and fellow teachers all the time about how pure capitalism can be an immoral or dog eat dog system.

My usual reply is how would you know since we have never seen anything resembling a free market in our lifetimes. But that is a rather glib and unsatisfactory answer.

Economiser September 21, 2011 at 6:03 pm

What is more moral than voluntaryism?

vikingvista September 23, 2011 at 2:41 am

“What is more moral than voluntaryism?”

Nothing. For most people, it is ostensibly the very meaning of morality and civility. And yet how severely immoral most of those same people become through their government proxies.

Craig S September 21, 2011 at 4:43 pm

kyle8:

I ask why we do not trust people to treat each otehr fairly in free trade, but some how think when given the power of government to use force over others we expect fair and just treatment. It literally makes no sense that people can’t be trusted in the market, but can in the government.

Henri Hein September 21, 2011 at 6:33 pm

You are lucky to count Tom Palmer as your friend. He is one of my favorite contemporary thinkers (no offense).

Mike September 21, 2011 at 9:55 pm

Hey Don, have you caught ABC’s new special “College Dorms ‘Made in America’: Students use their dorm rooms to help create jobs.”? If not, you might find it amusing: http://abcnews.go.com/WNT/video/college-dorms-made-america-14559893

Daniel Kuehn September 21, 2011 at 10:40 pm

There are a couple people at EPI and a couple issues that they do really well. But their trade and immigration people can be really nutty. At a Georgetown University event on high skilled immigration their Vice President (a lawyer, not an economist – and this might explain things) told me to my face that I wanted to “immiserate the nation”.

Why? Because I suggested that high skill immigrants benefited the U.S. economy.

Granted, he didn’t call me a statist. But I was still pretty put off by it.

Methinks1776 September 21, 2011 at 11:02 pm

Pathetic.

I totally see his pointless. Why, I need Prozac to deal with the thought of having hordes of excellent programmers to choose from. Oh, woe.

kyle8 September 21, 2011 at 11:48 pm

Yes that is pretty weird thinking. I can see the opposite argument, that we might be importing too many low skill people for our needs (not that I agree). But high skill workers?

How could such an injection of human capital not increase our well being?

Daniel Kuehn September 21, 2011 at 11:58 pm

Low skill workers have useful things to provide in a market. So do high skill workers. What’s the difference? Do you see any evidence that jobs for low skilled workers aren’t out there? Do you see any evidence that people with low skills can’t contribute productively.

If I raised a criticism about low-skill immigration it would be a much less direct criticism, and it would go like this:

George Borjas and others have demonstrated that low skill immigration can have concentrated negative effects on the employment and earnings of native competitors, particularly low skilled black males. In the U.S. we do a bad job investing in these low skill natives. Being faced with lots of additional labor market competition doesn’t help them succeed. So – given the added pressure from immigration on low educated black males, and other low skill populations – we oughta do a better job at investing in these low-skill native workers.

I would make an argument like that – but notice that’s not an argument against low skilled immigration.

JS September 22, 2011 at 8:40 am

“We oughta do a better job at investing in these low-skill native workers” suggests that government action is better than non action, which isn’t true. Once you make that statement, you can’t argue against government investing in anything.

The real reason why too much low skill labor might be a problem is because of already existing labor legislation (min wage, etc.), the overwhelming regulartory burden on industry that retards the allocation of resources, and the welfare related laws that amount to disincentives to work.

Government programs to train people are a complete waste of money, but they get politicans re-elected.

Daniel Kuehn September 22, 2011 at 9:23 am

re: “Government programs to train people are a complete waste of money, but they get politicans re-elected.”

I wasn’t talking about government training programs. However, if you want to consider them, I don’t think they really help much with re-election. Government isn’t good at providing specific training but it feels the need to “do something” which is why we have a lot of these job training programs that don’t do all that much. What they need to do is just provide support/vouchers/subsidies for things like community colleges and OJT/apprenticeships and let firms and colleges “do sometihng” – since they’re the ones that know how to do it.

Methinks1776 September 22, 2011 at 12:04 pm

Daniel,

You had me until “What they need to do is…”. You just can’t resist central planning. Simplistic, top down solutions for complex problems carry a strange attraction for you. Are you really blind to how your subsidies are gamed?

There are already educational subsidies. Any reason to believe they work and is there any reason to think they work better than allowing school choice at a much earlier level of schooling?

Also, I don’t understand why people from third world nations who don’t have the benefit of support/vouchers/subsidies for things like community colleges and OJT/apprenticeships and who are also hampered by a lack of language, family support and familiarity with the U.S. are suddenly so much better prepared for the U.S. labour market then similarly skilled U.S. labour.

If taxpayers have to pour massive amounts of money into our low skilled labour to make it competitive with low skilled labour from countries with a higher rate of illiteracy, then I suggest it’s just cheaper to hire the imported low-skilled labour.

I don’t need subsidies to train employees. The training I provide is an investment in my firm. If these investments need to be subsidized, then I’m hiring the wrong people or I’m hiring them too dearly. Your idea of government subsidy for job training for unskilled labour is nothing more than forcing taxpayers to subsidize private industry and a lot of fraud to boot.

Just get rid of the minimum wage and the ridiculous employment laws that artificially inflate the cost of labour and deflate wages.

Daniel Kuehn September 22, 2011 at 12:54 pm

re: “You just can’t resist central planning.”

Never been a proponent of central planning.

re: “Simplistic, top down solutions for complex problems carry a strange attraction for you.”

Did you read my post? I’m saying that’s exactly what we SHOULDN’T do.

re: “Are you really blind to how your subsidies are gamed?”

Yes I am. I have never claimed that the reasonable solution is a costless solution.

re: “Any reason to believe they work and is there any reason to think they work better than allowing school choice at a much earlier level of schooling?”

I’m confused. Are you suggesting we have to choose between school choice and public subsidization of education?

re: “Also, I don’t understand why people from third world nations who don’t have the benefit of support/vouchers/subsidies for things like community colleges and OJT/apprenticeships and who are also hampered by a lack of language, family support and familiarity with the U.S. are suddenly so much better prepared for the U.S. labour market then similarly skilled U.S. labour.”

I don’t understand why either. Is that even true? They are competitive in labor markets that don’t require much formal skills. I don’t know why you’re talking about “much better prepared”.

Economic Freedom September 22, 2011 at 2:22 pm

@ Daniel Kuehn:

re: “Are you really blind to how your subsidies are gamed?”

Yes I am. I have never claimed that the reasonable solution is a costless solution.

One of your stupidest responses, Daniel. How about this instead: ALL solutions have costs, reasonable or not. The question is: why do you go out of your way to choose a solution that has a higher cost — vouchers/subsidies — than one that has a lower cost — unhampered choice in the markets for labor and education?

I think there’s a simple Public Choice answer: in an unhampered, free-entry market, there’s no need for a think-tank, university, or government agency to hire someone like Daniel Kuehn to “advise” them on “reasonable policy.” Self-interest explains quite well why you’re attracted to interventionism, regardless of whether you call it “top-down planning.”

Let’s face it. Under conditions of economic freedom, you’d be unemployable because your ideas would be irrelevant.

Methinks1776 September 22, 2011 at 5:21 pm

Danny,

I don’t understand why either. Is that even true?

According to what you posted, it is. I’m referring to this:

George Borjas and others have demonstrated that low skill immigration can have concentrated negative effects on the employment and earnings of native competitors, particularly low skilled black males. In the U.S. we do a bad job investing in these low skill natives. Being faced with lots of additional labor market competition doesn’t help them succeed.

Which strikes me as weird on several levels. Competition usually lights a fire under people’s feet and forces them to do better. It may be time to consider that a cushy welfare system to fall back on may be a reason competition isn’t doing its job for this segment.

I have never claimed that the reasonable solution is a costless solution.

Forcing taxpayers to pay for employee training costs is a form of central planning. You don’t like to think of it that way, preferring to narrowly define “central planning” as “what the Russians did” (which I don’t think you understand well) so that you can feel more at ease with your desire to impose top-down control, but when you force people to pay for things they wouldn’t pay for on their own, you are definitely engaged in central planning.

JS September 22, 2011 at 8:50 am

A good argument is that under the current laws we should deport people.

Your main point, however, that immigration is good for an economy, is supported by hermeneutics.

JS September 22, 2011 at 8:55 am

I enjoyed that from a couple of months ago and hadn’t forgotten it.

Daniel Kuehn September 22, 2011 at 9:24 am

What good argument is there for deporting people?

JS September 22, 2011 at 3:03 pm

Don’t you recognize sarcasm when you see it?

Don’t you know that an overly regulated economy can’t support population growth? If we can’t do that, then what good will immigration do? Your suggestion didn’t address the problem. It amounted to regulating the regulations.

JS September 22, 2011 at 3:14 pm

The above response was to Daniel. I am for open borders. But deportation is the best policy based on the prevailing laws affecting our economy and trade policies. Maybe a one child policy should also be studied.

JS September 22, 2011 at 3:11 pm

The statists will refuse to free the economy. They won’t deport, but they will abort new people. They will erect trade and immigration barriers. The trade barriers are to force consumers to buy union made products and the immigration barriers are to reduce the supply of labor to protect unions. The policies have nothing to do with low skilled black labor.

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