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Quotation of the Day…

… is from pages 108-109 of Thomas Sowell’s 2023 book, Social Justice Fallacies (original emphasis):

Arguing as if some people’s high incomes were deducted from some fixed or predestined total income – leaving less for others – may be clever. But cleverness is not wisdom, and artful insinuations are no substitute for factual evidence, if your goal is knowing the facts. But, if your goals are political or ideological, there is no question that one of the most politically successful messages of the twentieth century was that the rich have gotten rich by taking from the poor.

DBx: Before the advent of capitalism, the rich generally did get rich at the expense of others. One of the many excellent features of capitalism is that it reversed this ages-old reality: Under capitalism, the rich get rich only by enriching others – and the more someone under capitalism enriches others, the richer that someone becomes.

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Great Moments in Antitrust

In late 1944 and early 1945, before Congress approved the Bretton Woods agreement (which it finally did in July of 1945), the U.S. Treasury department – under the leadership of Treasury secretary Henry Morganthau – launched a public-relations effort to drum up support for the agreement. I turn the narrative over to Randall Bennett Woods (from page 230 of his A Changing of the Guard: Anglo-American Relations, 1941-1946 [1990]):

Winthrop Aldrich of Chase Manhattan and a bitter enemy of Henry Morgenthau … launched a full-scale public attack on the Bretton Woods proposals. Both the [International Monetary] fund and [World] bank were unnecessary, he insisted. London and Washington should work out a joint agreement to “shun totalitarian tactics in international trade and to adopt economic liberalism,” and then the United States would provide England with a grant-in-aid large enough to establish stability between the dollar and the pound. At this point Anglo-America could turn its attention to stabilizing other currencies.

The Treasury Department’s response to the Aldrich Plan was simple. On the day his report appeared, Morgenthau phoned the attorney general and pressed him to get busy on an antitrust suit pending against Chase Manhattan.

Ain’t government glorious? And isn’t antitrust useful?

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Some Links

GMU Econ alum Jon Murphy explains that “the Jones Act seems to have weakened national defense and shipbuilding capabilities, rather than protect them”.

Jon Decker expresses well, in the Wall Street Journal, his bemusement at Bernie Sanders’s effort to legislate reduced work time. A slice:

So why is Mr. Sanders pushing to legislate a 32-hour workweek? Amusingly, the senator argues his legislation is necessary because “the financial gains from the major advancements in artificial intelligence, automation, and new technology must benefit the working class, not just corporate CEOs and wealthy stockholders on Wall Street.” The irony is these very gains in artificial intelligence are making the 32-hour workweek possible for so many employees—without legislation.

Speaking of Bernie Sanders, Boston Globe columnist Jeff Jacoby isn’t impressed.

This truth identified by Arnold Kling is important:

Thus, we arrive at my explanation for naive realism, or as I prefer to describe it—the belief that social problems have simple solutions. People who espouse such a belief appear to care deeply about a social problem. Instead, if I recognize the complexity of the problem, then I appear not to care as much about it.

When people equate simplistic thinking with caring more about the problem, simplistic thinking is socially rewarded. And because you are not personally making life choices based on your beliefs about social problems, a simplistic view that is wrong does not cost you anything.

GMU Econ alum Dominic Pino casts his clear gaze on coffee-shop labor unions.

Correlation is not enough.”

Nicolás Cachanosky points out “a credibility dilemma in Milei’s economic plan.”

Samuel Gregg reports that “China’s economic facade is cracking”. A slice:

Dismal demographics isn’t the only challenge with which China must grapple. The country is reaping the whirlwind of conscious decisions on Beijing’s part over the past 15 years to embrace more state-centric economic policies.

Take, for instance, China’s much touted Belt-and-Road Initiative (BRI). Since 2013, Beijing has sought to systematically promote and invest in infrastructure projects around the world, particularly in countries China considers geopolitically significant.

From its beginning, however, BRI has been characterized by runaway costs: so much so that, as early as 2015, state-run Chinese banks started reducing their exposure to BRI while Chinese commercial banks began trying to avoid it altogether. There is also evidence that BRI has long been marred by corruption on the part of those Chinese officials responsible for directing it.

After spending an unduly long time washing my hands under my reliably inadequate legislated low-flow bathroom faucet, I found Wall Street Journal columnist Andy Kessler’s lament on the loss of reliability to be of special interest. A slice:

Lockdowns. Six-foot social distancing. Closed schools. In retrospect, all unnecessary. “Follow the science” doesn’t work when the “science” is unreliable. Same for politicians. Rep. Adam Schiff (D., Calif.) talked up Trump-Russia election collusion again and again, then refused to release transcripts of Obama administration officials testifying under oath that they’d seen no evidence of it. It turns out this unreliability is a promotable offense—Mr. Schiff is leading in the race to be California’s next senator.

Elon Musk helps Kulvinder Kaur.

Kevin Bass tweets: (HT Jay Bhattacharya)

Covidianism is not science. It is an identity cult.

Disavowing it is not a disagreement. It is a betrayal.

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Quotation of the Day…

… is from page 306 of the 1997 collection of some of my late, great teacher Leland Yeager’s finest essays, The Fluttering Veil (George Selgin, ed.); specifically, it’s from Leland’s 1971 AEI pamphlet, “Monetary Policy: Before and After the Freeze” (original emphasis):

Theories of bureaucracy and politics give ample reason for skepticism about the ability of government to perform any function well.

DBx: Pictured here (left to right) are Warren Nutter (partially obscured), Gordon Tullock, and Leland Yeager. This image is from a photo taken in Rouss Hall of University of Virginia economists in November 1962. Among others in the larger photo are Jim Buchanan and Ronald Coase. It was a remarkable faculty, later to be dismembered by leftist ideologues at the Ford Foundation and in UVA’s upper administration.

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Bonus Quotation of the Day…

… is from page 5 of the 1976 second edition of my late, great teacher Leland Yeager’s magisterial International Monetary Relations: Theory, History, and Policy:

In short, trade permits greater efficiency both in using resources to produce goods and in using goods to “produce” satisfactions.

DBx: Indeed so. And, thus, protectionism taxes the pursuit of greater efficiency and the pursuit of greater satisfactions.

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Some Links

Scott Lincicome reports on “some welcome trade facts from White House economists.” A slice:

Fact 2: Foreign direct investment (FDI) is good; the United States is the world’s FDI leader; and there’s been no “giant sucking sound” of capital leaving the country.

James Harrigan reports on the economic damage done to the people of Minneapolis by arrogant government officials who attempt to dictate terms of employee compensation.

GMU Econ alum Dominic Pino shares Andrew Biggs’s correction of Bernie Sanders’s seriously mistaken claims about the economic condition of Americans in or near retirement age.

Ramesh Ponnuru uncovers yet another absurd claim made by the historically ill-informed occasional ‘journalist’ Nikole Hannah-Jones.

David Henderson describes what would be a positive policy move regarding American auto workers. A slice:

That way is to end, at the federal and state levels, all EV mandates, all EV subsidies, and all  subsidies to EV charging stations. Then people could go on buying cars with internal combustion engines (ICE cars) and hybrid vehicles. I predict that the vast majority would do so. Prices would be lower than they are now. Why? Because the mandates cause the car manufacturers to artificially raise the price of ICE vehicles so that fewer of them will be demanded. This is much like the effect of CAFE regulations: even in the 1980s, auto manufactures raised the prices of large gas guzzlers and lowered the prices of small fuel-saving cars to avoid paying the federal government’s CAFE fines. I’ve written about that numerous times and actually my first piece on CAFE, which I wrote after ending my time as the senior economist for energy with Reagan’s Council of Economic Advisers, was in 1985. In it, I predicted the demise of station wagons.

Also from David Henderson is high praise for Bryan Caplan’s forthcoming Build, Baby, Build.

George Selgin busts the myth that banks are not financial intermediaries.

Bob Graboyes shares further thoughts about Israel’s war against Hamas.

I hope that Susan Shelley is correct in predicting a victory for the plaintiffs in Murthy v. Missouri. (HT Jay Bhattacharya)

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Quotation of the Day…

… is from pages 78-79 of the late Ronald Max Hartwell’s 1975 paper “Capitalism and the Historians,” as this paper appears in Essays on Hayek (Fritz Machlup, ed., 1976):

The opponents of capitalism are generally not moved by liberal arguments about freedom and choice, the existence of which they reject as illusory or irrelevant. The opponents of capitalism depend on a mutually reinforcing battery of facts, theories, and values that cannot be disturbed by country evidence, and are not susceptible to rational argument. It is a prime mistake of the liberal, therefore, to imagine that he can win the debate about “capitalism versus socialism” by the normal academic game of proving or disproving according to rules and logic.

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The Arrogance of Antitrust

Here’s a letter to Barron’s:

Editor:

In your report on the D.O.J.’s antitrust suit against Apple, you note that “Attorney General Merrick Garland said Apple controls more than 70% of the premium U.S. smartphone market” (“Apple’s DOJ Lawsuit Is a Blow, But It Has This Silver Lining,” March 22). Such is the language commonly used to create the impression that today’s most successful companies possess monopoly power that can be wrested from them only by government. Yet this impression is mistaken. As Thomas Sowell wrote in 2011:

If, at a given time, three-quarters of the consumers prefer to buy the Acme brand of widget to any other brand, then Acme Inc. will be said to “control” three-quarters of the market, even though consumers control 100 percent of the market, since they can switch to another brand of widgets tomorrow if someone else comes up with a better widget, or stop buying widgets altogether if a new product come along that makes widgets obsolete.*

The creative destruction described by Sowell is inherent in the modern market economy. As long as government erects no barriers blocking entry into an industry, consumers are better protected, not by headline-hungry bureaucrats, but by competition from creative entrepreneurs risking their own money on efforts to show that the existing industry structure or practices can be improved. Merrick Garland, keep in mind, is risking none of his own money on the proposition that consumer welfare will be enhanced by forcibly rearranging the market served by Apple.

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

* Thomas Sowell, Intellectuals and Society (New York: Basic Books, 2011), p. 65.

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Some Links

George Will explains why the reality of income inequality in America is unwelcome on both the political left and right. Two slices:

In more than 50 years, government transfer payments (Medicaid, food stamps, etc.) to the average household in the bottom quintile of earners, have risen (in inflation-adjusted dollars) from $9,700 to $45,000 annually. Why, then, does the government, which is substantially staffed by progressives, use — actually, abuse — statistics to suggest the futility of progressive anti-poverty policies? Because this provides a permanent rationale for government growth: perpetual undiminished poverty.

In their 2022 book “The Myth of American Inequality: How Government Biases Policy Debate,” Phil Gramm, Robert Ekelund and John Early demonstrate gross defects in the Census Bureau’s measurement of inequality. By not counting about 88 percent of government transfer payments that enlarge the buying power of lower-income households, and not counting taxes that lower the wealth of higher-income households, government statistics purport to prove that the average income in the top quintile of earners is 16.7 times that of the average in the bottom quintile. Counting transfers and taxes, however, the actual ratio is 4 to 1.

…..

Economist Pierre Lemieux, writing in the Cato Institute’s journal Regulation, says that in 2017, 44 percent of all households had real (inflation-adjusted) incomes that 50 years earlier were earned only by those in the top 20 percent. “Recall,” he says, “that real wages increased by 74 percent over the past 50 years and the real median household income nearly doubled.”

Amid increased attention to income inequality, the populist right — “national conservatives” — and the progressive left favor “industrial policy” that regressively funnels money upward to corporations. The populist right advocates protectionism (tariffs to shield corporations from competition), and the populist left advocates hundreds of billions of dollars of subsidies (for semiconductors, electric vehicles, solar panels, etc.).

Effrosyni Adamopoulou, Jeremy Greenwood, and Nezih Guner detail “the household equipment revolution.” (HT GMU Econ alum Anne Bradley) Two slices:

Imagine one day that you wake up and discover all of your household appliances have disappeared!i What would you do? How would you prepare meals, wash the dishes, clean the floor, and do the laundry?

Nowadays, in most countries a standard home is typically equipped with an oven, a microwave, a dishwasher, a vacuum cleaner, a washing machine, etc. People take for granted the existence of these household appliances and do not realize the enormous amount of time that household equipment saves in daily life.

Back in 1900, without household appliances, the average US household spent 58 hours per week on meal preparation, laundry, and cleaning.

…..

The household equipment revolution changed the way of life for households around the world during the 20th century—see Figure 12. With the reduction in the needs for household labor, driven by the introduction of new home appliances and the rationalization of the home, there was a notable increase in female labor-force participation worldwide—see Figure 13.xxi The household equipment revolution is significant even when judged alongside the new technologies in industry brought about by the Second Industrial Revolution at the turn of the last century. The decline in household labor also reduced the benefits of the traditional division of labor, with a breadwinner husband and housekeeper wife, lessening the incentives to get married—see Figure 14.xxii The household equipment revolution was an engine of liberation.

[DBx: See also here (although the video is no longer accessible).]

Juliette Sellgren talks with Giandomenica Becchio about feminist economics.

My GMU Econ and Mercatus Center colleague Pete Boettke talks with TFAS president Roger Ream.

The Editorial Board of the Wall Street Journal warns that California’s environmental nuttiness will be suffered by all Americans. A slice:

In any case, the biggest losers of this “partnership” [of Stellantis] with California will be Americans across the country who will have fewer gas-powered options. California is imposing its EV mandate nationwide by using regulation to take auto makers hostage. Mr. Newsom may not be running for President in November, but he already acts as if he governs the country.

How the Government Almost Killed the Apple … and how the free market is saving it.

Kevin Williamson is understandably no fan of schools of journalism. A slice:

Students in law school spend time studying the work of James Madison, who never sat a day in law school in his life (his alma mater, Princeton, to this day somehow gets by without a law school) but who spent a great deal of time studying Latin, history, and literature, and somehow managed to produce the Constitution without the blessing of his local bar association. For most of the history of newspapers, journalists were some combination of entrepreneur, printer, reporter, essayist, and agitator, and there was no such thing as a journalistic credential—the work either passed the test of the reading public or it didn’t. Subjecting future reporters to the careful attention of the dean of journalism, the dean of students, the career counselor, etc., was supposed to elevate the standards of the profession.

Credentialism did not elevate journalism—it neutered it.

Steven Greenhut is correct: “The lesson of covid-19: Don’t give government more power.” A slice:

The experts and politicians touted the “science” even though that was really just a way of telling us to shut up and follow orders while they muddled their way through it. We’ve since learned that masks and plastic sneeze bars, lockdowns, school shutdowns, and the panoply of makeshift protections were, likely, of marginal value. Critics who questioned official death statistics were tarred as conspiratorialists. But even a 2023 Washington Post report found that officials seemed to be counting people who died “with” COVID rather than “from” it.

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Quotation of the Day…

is from page xii of the 1971 Augustus M. Kelley edition of F.A. Hayek’s 1937 book, Monetary Nationalism and International Stability:

But while the politician – and the economist when he is advising on concrete measures – must take the state of opinion for granted in deciding what changes can be contemplated here and now, these limitations are not necessary when we are asking what is best for the human race in general. I am profoundly convinced that it is academic discussion of this sort which in the long run forms public opinion and which in consequence decides what will be practical politics some time hence. I regard it therefore not only as the privilege but as the duty of the academic economist to take all alternatives into consideration, however remote their realisation may appear at the moment.

DBx: Yes.
…..
Hayek died on this date – March 23rd – in 1992.

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