Quotation of the Day…

by Don Boudreaux on April 23, 2015

in Hubris and humility, Seen and Unseen, War

… is from page 135 of Robert Higgs’s powerful 2005 collection, Resurgence of the Warfare State; specifically from Bob’s September 2002 essay, “Helplessly, We Await the Catastrophe Our Rulers Are Creating“:

We are told that the government’s new policies, with their perpetual wars “to keep the peace,” will bring us security, but they will not do so.  Instead, the American empire’s global violence will create a bottomless reservoir of vengeful terrorists.  By insisting on poking its imperial stick into every hornet’s nest on the planet, the U.S. government will ensure that Americans will continue to be stung.

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D.D. Sen asks me to reprise this Earth Day post from six years ago.  I’m pleased to oblige.

What Earth Day Means to Me



My son, Thomas (a sixth grader), has a homework assignment today: write an essay entitled “What Earth Day Means to Me.”  I will help him out with my own essay.

Earth Day, to me, means an opportunity to express thanks for all the ways that capitalism makes our lives and environment cleaner and healthier.

I’m thankful for the automobile, which has cleaned our streets and highways of animal feces, which is both foul and filthy itself, and that attracts flies that spread it into our homes and workplaces.

I’m thankful for the automobile also because it allows us to travel in a cleaner environment than we had when we traveled on horseback or in buggies.  Modern automobiles cool or heat the air immediately surrounding their passengers, making these passengers comfortable and, in summer, less sweaty and stinky.

I’m thankful for air-conditioning that keeps our interior environments not only comfortable but more healthy, as it allows us to better keep insects out of our homes, shops, factories, and offices — and also, in humid places, to dramatically reduce the growth of mold and mildew in our homes.

I’m thankful for indoor plumbing.  (The anti-polluting properties here are too obvious to spell out.  Ditto for disposable diapers — yet another product for which I’m most grateful.)

I’m thankful for the inexpensive soaps, shampoos, toothpastes, dental floss, toilet tissue, and plastic bandages and other first-aid items that make it possible for us to de-pollute our persons regularly.

I’m thankful for electronic appliances, such as those that (along with modern detergents – for which I’m also thankful) allow us to clean our used clothing and dirty dishes — clean these more deeply and more thoroughly than was possible in the past without spending multiples of the time on such tasks that we spend on these tasks today.  These appliances enable us to recycle our clothing and our dishes for many reuses.

I’m thankful for electricity for making these appliances possible – and for enabling us to light our home without dirty candles, and for enabling us to heat our homes without coal, wood, peat, or other filthy substances.

I’m thankful for plastics, which very effectively and at very low costs allow us to keep bacteria confined.  A plastic storage bag, for example, keeps food bacteria confined to the interior of the bag.

I’m thankful for refrigeration for retarding the growth of bacteria and, hence, keeping our foods cleaner and healthier.

I’m thankful for chemical fertilizers that increase the productivity of the earth’s soil, and thereby helps to prevent malnutrition — which, in turn, better enables each of our bodies to succeed at fighting off diseases that are more likely to sicken, or even kill, malnourished persons.

I’m thankful for factories (and the fuels that power them) that make possible things such as modern textiles — modern textiles that enable even poor people in market societies to own many changes of clean clothing.

I’m thankful for modern insecticides and cleansers that help to protect us from bugs and bacteria that would otherwise pollute our environments.

I am, in short, thankful for private-property markets that are the main driving force behind these (and many other) anti-pollutants — a force so powerful that we today enjoy the incredible luxury of being able to worry, should we so choose, about very distant and very speculative forms of environmental problems such as species loss and global warming.

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Alex Epstein – author of the wonderful 2014 book The Moral Case for Fossil Fuels – explains eloquently, in this video, the typically ignored benefits (and they are gargantuan) of fossil-fuel use.  (Yes, fossil-fuel use also has costs – as does nearly every other beneficial thing in the universe.  But the benefits of fossil-fuel use clearly, in my view, far outweigh their costs.  As David Henderson reminds us, good economic thinking involves cost-benefit analysis rather than merely a cost-only analysis or a benefit-only analysis.) I would add to Alex’s superb video only the Deirdre McCloskey-inspired insight that the great benefits of modernity come not exclusively or originally from fossil fuels but also from innovationism – market-tested creativity unleashed by respect for bourgeois pursuits and values and protected from plunder by good institutions.

For those of you who cannot play these videos as embedded here at Cafe Hayek, here’s the link to this one.

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Quotation of the Day…

by Don Boudreaux on April 22, 2015

in Politics

… is from page 100 of of Volume 2 (The Law,” “The State,” and Other Political Writings, 2012) of Liberty Fund’s The Collected Works of Frederic Bastiat; specifically, it’s a passage from Bastiat’s September 1848 essay “The State”:

For between the state, which is hugely generous with impossible promises, and the general public, which has conceived unattainable hopes, have come two classes of men, those with ambition and those with utopian dreams.  Their role is clearly laid out by the situation.  It is enough for these courtiers of popularity to shout into the people’s ears: “The authorities are misleading you; if we were in their place, we would shower you with benefits and relieve you of taxes.”

And the people believe this, and the people hope….

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Ludding the Way

by Don Boudreaux on April 21, 2015

in History, Innovation, Myths and Fallacies, Technology

Here’s a letter to the New York Times:

Warning that modern labor-saving technology is making humans expendable, Zeynep Tufekci writes that “[o]ptimists insist that we’ve been here before, during the Industrial Revolution, when machinery replaced manual labor, and all we need is a little more education and better skills.  But that is not a sufficient answer.  One historical example is no guarantee of future events, and we won’t be able to compete by trying to stay one step ahead in a losing battle” (“The Machines are Coming,” April 19).

Ms. Tufekci is mistaken to insist that the Industrial Revolution is the lone historical example of humans having had to adjust to labor-saving technology.  As the economic historian Deirdre McCloskey notes, while the introduction of such technological improvements greatly accelerated since the Industrial Revolution, these have occurred throughout all of human history.

Examples of labor-saving technology that were created before the Industrial Revolution include the wheel, the lever, the pulley, the bucket, the barrel, the knife, the domesticated ox and horse, the fishing net, and moveable type.  Examples of such technology created after that revolution are even more numerous; they include the harnessing of electricity, the internal-combustion engine, the assembly line, chemical fertilizers and pesticides, refrigeration, and, of course, today’s many IT marvels.  Yet history knows no example of the introduction of labor-saving technology that caused permanent and widespread increases in involuntary human idleness.  And at least since the dawn of the Industrial Revolution, all advances in such technology in market economies have been followed by improvements in the living standards of the masses - including (contrary to Ms. Tufekci’s suggestion) those advances introduced during the past few decades.

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

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An Orgy of Innovation

by Don Boudreaux on April 21, 2015

in Growth, Innovation, Standard of Living

Here’s my fifth and most recent “Everyday Economics” video.  It’s inspired by the work of Deirdre McCloskey, especially her pioneering 2010 book, Bourgeois Dignity.

UPDATE:  My colleague Dan Klein sent the following e-mail after watching this video:

The attitude change should be described more generally, as one towards approval of the pursuit of honest income, irrespective of how innovative that pursuit is. This broader formulation implies honoring innovations that reap honest income, but still the broader formulation is primary, it seems to me. I don’t think you or Deirdre disagree. But the video just speaks of honoring innovation and innovators.

As usual, I agree with Dan’s insight.

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George Selgin explains how the Fed helped to fuel the housing bubble that burst in 2008.  (Scott Sumner offers here his thoughts on George’s case.)

‘The Koch Brothers are up to no-good again!’ is how some people on the political left bizarrely interpret Charles and David Koch using their – the Kochs’ – money to lobby against government policies that would swell the Kochs’ companies’ bottom-lines.

John Tamny explains that the best way to ‘redistribute’ golfer Jordan Spieth’s wealth is to let him keep it (or, rather, to let him – not the state – spend and invest it as he, Spieth, sees fit).  Ludwig Lachmann would agree.

Pointing us to a fine Forbes essay by Wayne Crews, Alberto Mingardi ponders the EU’s antitrust investigation of Google.  (Antitrust’s history and practice in the U.S. reveals unmistakably that antitrust ‘policy’ has from the beginning been a cleverly camouflaged platform for rent-seekers to thwart competition.)

Also weighing in on the EU’s persecution of Google is Bill Shughart.

In this video, Bret Swanson explores Moore’s Law – and celebrates its consequences.

There’s never been a safer time to be a kid in America.  Truly.

John Graham explores the claim that Obamacare has reduced the percentage of Americans without health insurance.

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You can download a free copy of the new book that I edited for the Fraser Institute here.  (I thank again, not only Jason Clemens and his colleagues at Fraser, but also the six authors – Wayne Crews, Bob Lawson, Roger Meiners, Andy Morriss, Liya Palagashvili, and Russ Sobel – for their superb chapters.)

Here’s the video that Fraser produced to accompany the book.

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Quotation of the Day…

by Don Boudreaux on April 21, 2015

in Seen and Unseen, Work

… is the closing line of Milton Friedman’s excellent September 26, 1966, Newsweek essay, “Minimum-Wage Rates”:

The rise in the legal minimum-wage rate is a monument to the power of superficial thinking.

Indeed.  And the fact that even some highly credentialed professional economists are among those who think superficially about this matter does not diminish the superficiality of the case for minimum wages.

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In a speech in May 1932 presidential candidate Franklin D. Roosevelt famously said the following:

The country needs and, unless I mistake its temper, the country demands bold, persistent experimentation.  It is common sense to take a method and try it: If it fails, admit it frankly and try another. But above all, try something.

This sentiment is roundly applauded.  Perhaps surprisingly, I, too, applaud it – and loudly so.  What I don’t applaud is FDR’s assumption that government is the appropriate experimenter.  Bold, persistent experimentation is precisely what is constantly taking place in private-property, decentralized markets.  In such markets, millions of people are free to (and do) join in the experiments.  And each person – whether as entrepreneur, investor, worker, or consumer – does so with his or her own funds at stake.  No one experiments with funds seized from others, and no one has the privilege of forcibly preventing others from experimenting to compete for consumers’ dollars (or pounds, or pesos, or yen, or yuan, or whatever is the currency).

Even a government that does experiment boldly and persistently does so, when it intervenes into private economic affairs, by preventing or obstructing untold numbers of private experiments.  Such private experiments don’t get headlines; almost none of them are announced with fanfare; most take place completely under the radar of 99.99 percent of the population – including that of the population of people who will benefit from the successful experiments.

So if you really like bold, persistent experimentation – and you should – you ought to reject government intervention into economic affairs.  Here’s how I put the matter in March 2006:

“‘Let the market handle it! Let the market handle it!’ Don’t you tire of muttering this simplistic formula?” So ended an e-mail that I received from a reader.

It’s true that all of us sometimes are tempted to avoid thinking hard about complex issues and, instead, to fall back lazily upon simplistic mantras. We should guard against this weakness, in ourselves and in others.

At the same time, though, we shouldn’t confuse consistency with simplicity. The two are different. Just because I instruct my eight-year-old son to be always truthful does not mean that I’m a simpleton offering simplistic advice; it means, instead, that truthfulness is a virtue that should be pursued consistently — even if in a handful of instances my son might be made better off by telling a lie.

I admit that my proposed solution for many public-policy problems is to say “Let the market handle it.” But this response is neither naive nor lazy. It’s realistic. It reflects my understanding that almost any problem you name — rebuilding the Katrina-ravaged Gulf Coast, providing excellent education for children, reducing traffic congestion on highways — is most likely to be dealt with efficiently, fairly and effectively by the market rather than by government.

Saying “Let the market handle it” is to reject a one-size-fits-all, centralized rule of experts. It is to endorse an unfathomably complex arrangement for dealing with the issue at hand. Recommending the market over government intervention is to recognize that neither he who recommends the market nor anyone else possesses sufficient information and knowledge to determine, or even to foresee, what particular methods are best for dealing with the problem.

To recommend the market, in fact, is to recommend letting millions of creative people, each with different perspectives and different bits of knowledge and insights, each voluntarily contribute his own ideas and efforts toward dealing with the problem. It is to recommend not a single solution but, instead, a decentralized process that calls forth many competing experiments and, then, discovers the solutions that work best under the circumstances.

To recommend the market is to understand, or at least to cooperate with, the wisdom of James Buchanan’s important insight that “order is defined in the process of its emergence.”  It is to understand, at some level, Vernon Smith’s awareness that “ecological rationality” is greater than individual or “constructivist” rationality.

This process is flexible and it encourages creativity. It also denies to anyone the power to unilaterally impose his own vision on others.

In brief, to advise “Let the market handle it” is a shorthand way of saying, “I have no simplistic plan for dealing with this problem; indeed, I reject all simplistic plans. Only a competitive, decentralized institution interlaced with dependable feedback loops — the market — can be relied upon to discover and implement a sufficiently detailed way to handle the problem in question.”

None of this is to say that getting the government out of the way is sufficient to create peace and prosperity. Markets require a rule of law to ensure that, among other blessings, property rights are secure and exchangeable. At their best, governments can help to protect our rights. Markets also require a culture in which commerce flourishes.

Unfortunately, no recipe exists to create the legal institutions and commercial culture required by capitalism. If these prerequisites are absent, there can be no market to handle any problem. So saying “Let the market handle it” is not the same as saying “All will be just dandy if only the government gets out of the way.”

But when these prerequisite institutions are mostly in place, as they are in the United States and other developed countries, markets are amazingly creative and reliable. Calling on markets to deal with problems is then the wisest course.

Alas, though, foolishness frequently triumphs over wisdom. People too often suppose that large social problems can be solved only by deciding ahead of time which particular group of people and procedures hold the key to the solution.

While declaring “Let the government handle it” comes across as a solution, it’s no such thing. Instead, it is merely a sign of a simple and baseless faith — a simple and baseless faith that people invested with power will not abuse that power; that political appointees possess or will find better answers than will millions of people pursuing solutions in their own ways, and staking their own resources and reputations on their efforts; that only those ‘solutions’ that are spelled out in statutes and regulations and that have officials paid to implement them are true solutions.

So yes, show me a problem and I’ll likely respond “Let the market handle it.” I’ll respond this way because I know that not only is my own meager knowledge and effort never up to the task of solving big problems but that not even the Einsteins or Krugmans or Bushes amongst us can know the best solution to any social problem.

Solutions to complex social problems require as many creative minds as possible — and this is precisely what the market delivers.

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