Tim Cook and Charles Koch, writing in today’s Washington Post, make a strong case for more humane immigration policy.  A slice:

No society can truly flourish when a significant portion of its people feel threatened or unable to fulfill their potential. Nor can it prosper by excluding those who want to make positive contributions. This isn’t just a noble principle; it’s a basic fact, borne out through our national history.

Dreamers are doing their part. They have shown great faith in the United States by coming forward, subjecting themselves to background checks, and submitting personal and biometric data.

Now, the rest of us need to do our part. Congress should act quickly, ideally before year’s end, to ensure that these decent people can work and stay and dream in the United States.

Here’s the Fraser Institute’s newly released Economic Freedom of North America 2017.  (Dean Stansel, the primary author, tells me that GMU Econ alum Meg Tuszynski supplied invaluable help on this project.)

George Will reflects eloquently on the failed candidacy of the truly scary Roy Moore.

Kyle Swan busts some myths about so-called ‘net neutrality.

Ryan Ferguson explains that a job is not a thing.

Mark Perry updates Bastiat’s classic “The Candlemakers’ Petition.

The sad paradox of free markets.

Bruce Yandle asks if the U.S. economy is surging or sleepwalking.

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Quotation of the Day…

by Don Boudreaux on December 14, 2017

in Competition, Hayek, Reality Is Not Optional

… is from page 313 of F.A. Hayek’s 1968 brilliant lecture “Competition As a Discovery Procedure,” as reprinted in The Market and Other Orders (Bruce Caldwell, ed., 2014) – a collection of some of Hayek’s most influential essays:

Of course, it is one of the chief reasons for the dislike of competition that it not only shows how things can be done more effectively, but also confronts those who depend for their incomes on the market with the alternative of imitating the more successful or losing some or all of their income.  Competition produces in this way a kind of impersonal compulsion which makes it necessary for numerous individuals to adjust their way of life in a manner that no deliberate instructions or command could bring about.

DBx: The choices open on this front to you, a denizen of modernity, are three.  First, you can choose to remove yourself from the market by adopting a self-sufficient lifestyle.  Second, you can choose to enjoy the prosperity made possible only by the market by playing by market rules – a central one of which is that, in your role as a producer, the value of that which you produce is determined by the voluntary choices of consumers.  Third, you can hope to enjoy the prosperity made possible only by the market by seeking for yourself an exemption from the market rules that everyone else must obey if you are to prosper.

If you choose the first course, the dictates of nature will be brutal and inescapable.  You’ll be, from the perspective of a denizen of 21st-century modernity, unimaginably poor and miserable.  (But, hey, at least you won’t have to worry about the likes of Chinese currency manipulation or Vietnamese ‘dumping’ of shrimp.)

If you choose the second course, you will enjoy enormous material riches even if you are far from being the richest person in modernity, and even when your particular fortunes on the market wane.  You will, to use Hayek’s language, accept the “impersonal compulsion” of the market in place of, on the one hand, the impersonal yet far more harsh compulsion of nature, and, on the other hand, the personalized compulsion of a state that decides who is and who isn’t exempt from the rules of the market.

If you choose the third course, you will enjoy enormous material riches as long as only you and, perhaps, only a relatively small number of others succeed in breaking the rules of the market order.  If you succeed in having the state use its power of compulsion to exempt you – for example, with a protective tariff – from the forces of market competition while, at the same time, most other people continue to be subject to the “impersonal compulsion” of the market, some of your riches will be the result of your cheating others out of what is rightfully theirs.  You will enjoy both the riches of a still largely well-functioning market and the stolen booty that you’ve successfully convinced the state to seize for you from those who continue to play by the rules of the market.  But the more the state treats others as it treats you – that is, the more the state exempts others, as it exempts you, from the “impersonal compulsion” of the market – the more the state uses its own powers of compulsion to drain the market of its productive powers.  At some point, the substitution of state compulsion for the “impersonal compulsion” of the market results in everyone, including you, being made poorer than they and you would be if the state refused to use its powers to bestow upon anyone an exemption from the rules of the market.

In short, there is no escaping “compulsion.”  You must subject yourself to the brutal compulsion of nature, to the “impersonal compulsion” of the market, or to the politicized compulsion of the state.  Unless you are both untroubled by being unprincipled and quite sure that the politicized compulsion of the state will be used only against others for your benefit (rather than against you for others’ benefit), then prudence ought to lead you to support a regime in which the only “compulsion” is the “impersonal compulsion” of the market.

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Do you rejoice for the Chinese?  Timothy Taylor does – and rightly so.  (HT Steve Hardy)  A slice:

But the bottom line is that more than a billion people in China have risen out of a combination of grinding poverty, poor health and low levels of education to what the World Bank classifies as “upper middle income.” A Chinese person who was a young adult back in 1980 has observed the entire process in his or her own lifetime – and hasn’t yet reached retirement age.

Speaking of China, Beijing is cutting some tariffs.

The Volokh Conspiracy has moved to Reason.

When, exactly, were the good ol’ days? – Johan Norberg explores.

I just learned from Frayda Levy of a new series of informational spots that will run on radio: “Why Minutes.”  Here’s the first one – one that, by the way, the richest man in America 100 years ago couldn’t listen to because in 1917 commercial radio broadcasts had yet to start in America.  (For more, see here.)

GMU Econ alum Mitch Mitchell unveils the economic wisdom in Charlotte’s Web.

Gary Galles celebrates George Mason the man.

Bob Higgs reflects deeply on politics.

Also from Bob Higgs is this objection to the maternal state.

My intrepid Mercatus Center colleague Veronique de Rugy corrects a headline-grabbing misperception about tax reform.

Writing in U.S. News & World Report, my Mercatus Center colleague Dan Griswold warns of the harm that will come to both Mexicans and to Americans if Trump pulls the United States out of Nafta.  A slice:

Recent data from the U.S. Bureau of Economic Analysis confirms [Douglas] Irwin’s conclusion about NAFTA. From 2011 to 2016, the outflow of direct manufacturing investment from the United States to Mexico averaged a modest $3.1 billion. That is a trickle compared to an average $217 billion that has been invested each year in manufacturing plants and equipment in the United States during that same time frame. The decline in U.S. manufacturing jobs in the past two decades has not been because of NAFTA, but primarily because of rising productivity spurred by automaton and the move of U.S. industry up the value chain.

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Escaping Modernity

by Don Boudreaux on December 13, 2017

in Standard of Living, Trade

Will Smith (not the actor, but a regular reader of Cafe Hayek and of materials from the Foundation for Economic Education) wrote to me last evening to request that I post, at Cafe Hayek, in full this August 2002 column of mine from The Freeman.  In this column I explain that those who truly believe that the downsides of globalization and trade outweigh the benefits can escape these downsides without dragging the rest of us along with them to what, for most of us, would be an earthly hell.  My vanity obliges me to comply with Mr. Smith’s request.  The column is below the fold.

Read the full post →

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Quotation of the Day…

by Don Boudreaux on December 13, 2017

in Philosophy of Freedom

… is from page 100 of an excerpt from the great Richard Overton‘s 1646 An Arrow Against All Tyrants and Tyranny, shot from the Prison of Newgate into the Prerogative Bowels of the Arbitrary House of Lords and All Other Usurpers and Tyrants Whatsoever, as this excerpt appears in the superb 2015 reader, Individualism, edited by George H. Smith and Marilyn Moore; Overton’s remark here is aimed at Parliament:

For the edge of your own arguments against the king in this kind may be turned upon yourselves; for if for the safety of the people he might in equity be opposed by you in his tyrannies, oppressions, and cruelties, even so may you, by the same rule of right reason, be opposed by the people in general in the like case of destruction and ruin by you upon them.

DBx: I won’t live to see it, but one day people will look back with as much befuddlement upon the notion that democratically elected assemblies are uniquely capable and deserving of ruling with diktats as we today look back with befuddlement upon the notion that kings and queens are uniquely capable and deserving of ruling with diktats.  Put differently, we pride ourselves today, rightly so, on having rejected the notion of vox rex vox dei; but we today embrace a piece of mysticism no less absurd, namely, vox maioris ad suffragii vox dei.

Put in yet another way, there is no such thing as the will of the people – and, therefore, there is no political arrangement capable of discovering this unicorn.  None.

None of these protests implies that majority rule isn’t better on many margins than is monarchy or dictatorship; majority rule is indeed better than is monarchy or dictatorship for making collective decisions.  But recognition of majority-rule’s superiority to monarchy or dictatorship must not continue to mislead us – as, unfortunately, it does continue to mislead so many of us – to the mistaken conclusion that any and all decisions made according to majority rule are superior to decisions made by other means (such as, for example, individually in a regime of private property rights).

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Bonus Quotation of the Day…

by Don Boudreaux on December 12, 2017

in Economics, Myths and Fallacies, Trade

… is from Merton Miller‘s, Walter Fackler’s, and Tom Davis’s Preface (no page numbers) to the 1963 collection of some of Fritz Machlup’s essays, Essays in Economic Semantics:

By forcing ambiguities, sloppy reasoning, and implicit theorizing out into the open, Professor Machlup has alerted his own students and the profession at large to the tyranny of words.  He has been a life-long foe of Mephistopheles, who advised the student in Goethe’s Faust to use words to conceal ignorance, to substitute words for what he did not understand….

DBx: Among the most fortunate events in my life – a life filled with a super-abundance of fortunate events – is that I had, and seized, the opportunity at NYU in 1981 to take a graduate course in international trade from Fritz Machlup.  Machlup’s careful thought and use of language – along with that of another remarkable teacher of mine, Leland Yeager – has made me forever attentive to the countless ways that error sneaks into economic analysis simply because of the careless use of language.  And in no area of economics is the careless use of language more common and more dangerous than in international trade.

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Writing in The Hill, my Mercatus Center colleague Dan Griswold calls for more open immigration.

On the same theme – immigration – is James Pethokoukis.

In the Wall Street Journal, Gregory Clark reviews Edward Wolff’s A Century of Wealth in America.  A slice:

Even more surprising, inherited wealth is much more important in the lives of those who have relatively little wealth than it is in the lives of the super rich. For the top 1% of wealth holders from 1989 to 2013, inherited wealth accounted for only 17% of their assets. (The 1%, in this analysis, is an overwhelmingly self-made group.) By contrast, for those with assets of just $25,000-$50,000, inherited wealth accounted for 52% of their worth.

As a bizarre consequence of this pattern, African-Americans, who have low levels of net worth on average, are the social group for which inherited wealth represents the largest share of their net worth. Another odd implication is that inheritances tend to make overall wealth-holding more equal. Were inherited wealth to be completely abolished, the wealth of the poor would decline more than that of the rich. Inherited wealth is the great equalizer. Who knew?

The Hoover Institution just put on-line this splendid 1976 essay by Milton Friedman.

Bob Murphy is rightly critical of Pope Francis’s deep ignorance of economics.

Richard Rahn warns of the destructiveness of the state’s greedy hand.

Chris Edwards exposes the falsity of the Washington Post‘s tax narrative.

Here are Deirdre McCloskey’s brief and fond remarks on the occasion of Steven Cheung’s 80th birthday.  A slice:

Steve taught me—by doing it in front of my eyes—that thinking like an economist is not the same as possessing this or that technique of math or econometrics. I have nothing against math or econometrics (well, maybe a little against the more silly uses of them). But I do think an economist should be one, as Steve is an economist right down to his fingertips. To see what I mean, look at the bottom of p. 6 of the English translation of Thomas Piety’s Capital in the Twenty-First Century, and note that Piketty, trained in France and MIT, does not understand supply response to increasing scarcity.

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Here’s a letter to the New York Times:

What’s the point of today’s report “A Nasty, Nafta-Related Surprise: Mexico’s Soaring Obesity”?  It seems to be that freer trade, because it expands the number of options open to ordinary people, is suspect if some of those people choose in ways that NGO officials, western journalists, and other intellectuals judge to be inappropriate.  And a corollary of this point is that government should perhaps obstruct trade in order to reduce the number of options open to ordinary people.

Such thinking reflects both arrogance and error.  It reflects arrogance because it presumes that freer trade should be judged by its success at prompting ordinary people to choose in ways that are applauded by intellectuals.  Such thinking reflects error because it misses the fact that economic growth generally, and not just that which is caused by freer trade, increases people’s options and, hence, increases the incidence of people choosing in ways that disturb intellectuals.  Therefore, if freer trade is disparaged because it allows some people to choose ‘unwisely,’ then economic growth more generally must be disparaged.

Are you prepared to criticize increasing prosperity – and perhaps to implicitly endorse policies that prevent increasing prosperity – because some people use their greater access to a wide variety of goods and services to make choices that offend the sensibilities of intellectuals?

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

I thank my son, Thomas, for alerting me to this report in the Gray Lady.

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Quotation of the Day…

by Don Boudreaux on December 12, 2017

in Crony Capitalism, Seen and Unseen, The Future, Trade

… is from page 30 of Tomas Larsson’s 2001 book, The Race to the Top:

As Disraeli noted, “Protectionism is not a principle but an expedient.”

DBx: There are those who, out of sheer economic ignorance, believe that in principle artificially intensified scarcity makes people richer.  In contrast, there are those who, having no use for principles, focus only on the immediate and the seen; in doing so these ‘practical’ folk undermine both the future and the unseen in order to make that which is visible today as pretty as possible according to their lights.

And crony capitalists are ever happy to turn the ignorance of the first group, and the hubris of the second, into support for government restrictions that enrich these ‘capitalists’ at the greater expense of the general public.

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A Series of Questions for Protectionists

by Don Boudreaux on December 11, 2017

in Trade

Bob has for years chosen to buy beer from Augie.  One day, Bob chooses to give up drinking alcoholic beverages.  As a result, Bob stops buying beer from Augie.  Augie’s reduced sales cause him to lay some workers off.  Many of these workers have worked for decades in Augie’s brewery and have skills that are not easily transferred to other employers.

Should Bob be prevented from giving up drinking alcoholic beverages?  Or, at least, should Bob be punitively taxed for giving up drinking alcoholic beverages?  If so, why?

….

Bob has for years chosen to buy beer from Augie.  One day, Bob invents a machine for making beer in his garage.  This machine allows Bob to brew higher-quality beer at half the cost he incurs to buy beer from Augie.  As a result, Bob stops buying beer from Augie.  Augie’s reduced sales cause him to lay some workers off.  Many of these workers have worked for decades in Augie’s brewery and have skills that are not easily transferred to other employers.

Should Bob be prevented from brewing his own beer?  Or, at least, should Bob be punitively taxed for brewing his own beer?  If so, why?

….

Bob has for years chosen to buy beer from Augie.  One day, Bob’s next-door neighbor Betty invents a machine for making beer in her garage.  This machine allows Betty to brew higher-quality beer at sell that beer profitably to Bob at half the price that Bob pays to buy beer from Augie.  As a result, Bob stops buying beer from Augie.  Augie’s reduced sales cause him to lay some workers off.  Many of these workers have worked for decades in Augie’s brewery and have skills that are not easily transferred to other employers.

Should Bob be prevented from buying Betty’s beer?  Or, at least, should Bob be punitively taxed for buying Betty’s beer?  If so, why?

….

Bob has for years chosen to buy beer from Augie.  One day, Bob’s next-door neighbor Betty invents a machine for making beer in her garage.  This machine allows Betty to brew beer of the same quality as Augie’s beer.  But Betty’s cost of brewing this beer is actually higher than Augie’s cost.  But Betty is very fond of Bob and so agrees, even though doing so will impose a cost on her, to sell to Bob her beer at a price that is half the price that Bob pays to buy beer from Augie.  As a result, Bob stops buying beer from Augie.  Augie’s reduced sales cause him to lay some workers off.  Many of these workers have worked for decades in Augie’s brewery and have skills that are not easily transferred to other employers.

Should Bob be prevented from buying Betty’s beer?  Or, at least, should Bob be punitively taxed for buying Betty’s beer?  If so, why?

….

Bob has for years chosen to buy beer from Augie.  One day, Bert, a Belgian, invents, using his own private funds, a new machine for transporting beer across the Atlantic – a machine that dramatically cuts the costs of transporting beer over such a long distance.  This machine allows Bert to profitably sell good-quality beer to Bob at half the price that Bob pays to buy beer from Augie.  As a result, Bob stops buying beer from Augie.  Augie’s reduced sales cause him to lay some workers off.  Many of these workers have worked for decades in Augie’s brewery and have skills that are not easily transferred to other employers.

Should Bob be prevented from buying Bert’s beer?  Or, at least, should Bob be punitively taxed for buying Bert’s beer?  If so, why?

….

Bob has for years chosen to buy beer from Augie.  One day, Bert, a Belgian, invents, using Belgian-government money, a new machine for transporting beer across the Atlantic – a machine that dramatically cuts the costs of transporting beer over such a long distance.  This machine allows Bert to profitably sell good-quality beer to Bob at half the price that Bob pays to buy beer from Augie.  As a result, Bob stops buying beer from Augie.  Augie’s reduced sales cause him to lay some workers off.  Many of these workers have worked for decades in Augie’s brewery and have skills that are not easily transferred to other employers.

Should Bob be prevented from buying Bert’s beer?  Or, at least, should Bob be punitively taxed for buying Bert’s beer?  If so, why?

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