… is from pages 428 of H.L. Mencken’s indispensable 1949 collection, A Mencken Chrestomathy; specifically, it’s the final paragraph of Mencken’s spectacularly good May 27, 1935, essay in the Baltimore Evening Sun entitled “The New Deal”:

Of such sort are the young wizards who now sweat to save the plain people from the degradations of capitalism, which is to say, from the degradations of working hard, saving their money, and paying their way.  This is what the New Deal and its Planned Economy come to in practice – a series of furious and irrational raids upon the taxpayer, planned casually by professional do-gooders lolling in smoking cars, and executed by professional politicians bent only upon building up an irresistible machine.  This is the Führer’s inspired substitute for constitutional government and common sense.

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Todd Zywicki on His New Book

by Don Boudreaux on November 19, 2014

in Books, Regulation, Seen and Unseen

On Thursday, December 4th, Todd Zywicki, a GMU colleague of mine from over in the law school, will be joined by GMU’s Pete Boettke, and Josh Wright, and the Washington Post‘s Steve Pearlstein, in a discussion of Todd’s new book, Consumer Credit and the American Economy.  The book’s message is not one that will be applauded by Elizabeth Warren.

This event is sponsored by the Mercatus Center.

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Here’s an interesting podcast with Sam Peltzman.  (Sam doesn’t get much wrong, but he does, at the very beginning, mistake Thomas Carlyle’s reason for labeling economics the “dismal science.”  My colleague David Levy just sent Sam the relevant info!)

Stewart Dompe and Adam C. Smith ask if we Americans were better off in 1987 than we are today.

My Mercatus Center colleague Adam Thierer ponders the implications of the growth of the Internet of wearable technology.

The Pope Center’s Jane Shaw offers two modest reasons to preserve the humanities.

Tim Carney offers an agenda for reducing corporate welfare and cronyism in the U.S.

Richard Rahn reflects on the stupidity of the ‘experts.

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Will the real Adam Smith please stand up?

by Russ Roberts on November 19, 2014

in Adam Smith, Books

In The Wealth of Nations, Smith assumed we’re self-interested. In The Theory of Moral Sentiments, he wrote about our deep interest in those around us. In this excerpt from my new book, How Adam Smith Can Change Your Life, I try to reconcile the different approaches in Smith’s two masterpieces.

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Quotation of the Day…

by Don Boudreaux on November 19, 2014

in Economics, Inequality, Myths and Fallacies

… is from a plenary talk that Deirdre McCloskey delivered this past September at the Mont Pelerin Society meetings in Hong Kong; Deirdre here refers critically to Thomas Piketty’s project:

Marx got it wrong.  Ricardo got it wrong.  Combining the two is not a good plan.

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Politicians Should Pipe Down

by Don Boudreaux on November 18, 2014

in Environment, Myths and Fallacies

Here’s a letter to WTOP Radio in Washington, DC:

During today’s 10:00am hour you reported that Maryland governor Martin O’Malley objects to building the Keystone XL pipeline because (as you summarized his objection) “the pipeline will create too few jobs to offset its environmental cost.”

I have no idea if this pipeline should or should not be built.  But I do know that Mr. O’Malley’s stated reason for opposing it makes no sense.  Labor (like each of the other resources) used to build the pipeline is a cost, not a benefit.  So whatever are the environmental costs of the pipeline, this project becomes more justified the fewer are the workers used to build and to operate it.  Mr. O’Malley seemingly thinks that one cost (namely, the pipeline’s environmental risk) becomes acceptable to bear, not if it is offset by lower costs on other fronts but, instead, only if another cost of the pipeline proves to be even greater than the environmental cost.

Mr. O’Malley’s objection, in short, is that the pipeline is not costly enough!

It’s distressing that people as economically illiterate as Mr. O’Malley have influence over public policy.

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

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Low Flow Sense

by Don Boudreaux on November 18, 2014

in Environment, Myths and Fallacies, Seen and Unseen

I loathe low-flow faucets and shower heads.

First, they likely do not cut down on the amount of water used per incident.  For example, I know that I rinse my hands for a longer duration under low-flow faucets than I do under regular-flow faucets.  The point is to rinse my hands, and that takes a minimum amount of water.  Reduce water flow per second and the result is a increase in the number of seconds the faucet is kept in operation.  Ditto for showering.

Second, the solution to over use of water is a free market in water.  Save under bizarrely extreme circumstances that almost never occur on earth in modern societies, if I’m paying the market price for water, it should be no one else’s business how much water I use and for what purposes I use it.

Third, some of the justifications for low-flow faucets are plainly idiotic – such as that (as I’ve seen and heard on several occasions) “water is our most precious resource.”  Nonsense.  Potable water in most places in the civilized world today is incredibly unprecious.  Buildings are almost all equipped with little machines called water fountains that routinely dispense the stuff for free.  Ever see a machine dispensing Chateau Latour or even Budweiser for free?  Water is in most places in modern society today quite abundant; it’s not quite to the point of being superabundant, but it’s awfully close in many situations.

Yesterday in my class on sustainability at GMU my students and I were discussing low-flow faucets.  We all agreed that if government-mandated low-flow faucets make sense, then government should also mandate that Dasani and other suppliers of bottled water equip each bottle with a low-flow nipple so that drinkers of such water “conserve” this “precious resource.”

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Quotation of the Day…

by Don Boudreaux on November 18, 2014

in Inequality

… is from page 574 of the 2000 Modern Library edition of Charlotte Bronte’s brilliant 1847 novel, Jane Eyre; here – in chapter 33 – Jane has just learned that she unexpectedly inherited, from her uncle John, a fortune of £20,000:

One does not jump, and spring, and shout hurrah! at hearing one has got a fortune; one begins to consider responsibilities, and to ponder business; on a base of steady satisfaction rise certain grave cares, and we contain ourselves, and brood over our bliss with a solemn brow.

In Capital in the Twenty-First Century, Thomas Piketty cites several 19th-century novels to help drive home his point about the idleness of the rich and of the dangers of economic inequalities.  While I share Piketty’s belief that literature contains a great deal of useful scientific information – or, put differently, literature offers treasures of information and insight that are useful for science – that information, like all information, must be used with care and good judgment.  Steve Horwitz and Sarah Skwire show that Piketty’s use of literature is neither careful nor done with good judgment.  The above quotation from Jane Eyre similarly offers evidence, from classic 19th-century literature, that conveys an impression about reality quite the opposite of the impression that Piketty attempts to convey.

Piketty does not, in his book, cite Jane Eyre.  Yet the passage quoted above is obviously relevant to Piketty’s point.  One may debate the economic- or policy- relevance of the sorts of responsibilities that Jane then brooded over.  But at least the passage reveals that even aristocratic wealth of the sort that was still common in mid-19th-century Britain carried with it some greater obligation to “ponder business”: even landed wealth – certainly during that era when the economy was undergoing such vast, foundational changes – did not automatically reproduce itself independently of human agency and cares.

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Public Choice and Ideas

by Don Boudreaux on November 17, 2014

in Politics, Reality Is Not Optional

I’m pleased and honored to have written the lead essay for the November / December Cato Policy Report.  It’s entitled “Why Government Fails and Why Ideas Matter.”  Here’s a slice from near the essay’s end:

In private markets, each person who ignores the preferences of buyers or sellers in order to indulge his or her personal ideological interests pays the cost of doing so. For instance, a racist restaurateur who refuses to serve African-Americans forgoes the profits he would earn from such customers. As a result, markets naturally temper ideological actions that are inconsistent with sellers’ efforts to earn profits or with buyers’ efforts to stretch their spending power as far a possible. Matters differ in politics, for two reasons. First, most political decisions are about how to spend other people’s money or resources; and second, no voter truly expects that his or her vote will determine the outcome of any election. Each of these realities means that the bulk of the consequences of every individual political decision falls on people other than the decisionmaker.

Consider a citizen in a voting booth. We’ve already seen one reason why he’ll cast an uninformed vote — namely, because he knows that his vote won’t determine the outcome of the election, the benefit to him of becoming adequately informed is very small. A second, related reason is that he stands to capture only an infinitesimally small share of benefits of casting an informed vote, and to suffer only an infinitesimally small share of the costs of casting an uninformed vote. Because becoming informed is costly, each voter remains rationally ignorant of the detailed facts and issues at play in any election.

Although this rational ignorance initially appears to be an unambiguous cause for despair about the prospects of any good ever coming from politics, it isn’t necessarily so. Precisely because each voter, as such, has no material interest that will be affected by how he, as an individual voter, casts his ballot, he has free rein to vote ideologically — to vote his conscience, if you will. For example, a steelworker in Pittsburgh who supports free trade can safely vote against the candidate who promises higher tariffs on steel imports. Because this steelworker has no hope of determining the election’s outcome, it costs him nothing to express in the voting booth his ideological preference for free trade, even though his material interest would be better served by the protectionist candidate. The upshot is that democratic outcomes are not destined to be determined strictly by special-interest-group politics and other collective-decisionmaking imperfections. Ultimately, voters’ ideas about the proper role of government matter a great deal.

If the public believes that a large and discretionary government will generally intervene productively, then the result will be a large, discretionary government that intervenes. And special-interest groups will then get “cleared” by uninformed and pro-government voters to then determine the actual details of government’s activities. Basic Public Choice economics predicts that these details will be ugly.

….

Far too much modern economics and other social science is unscientific because it ignores the realities highlighted by public choice.  Such ‘science’ – ‘science’ such as whiteboard demonstrations of how, under just the right circumstances, minimum-wage legislation can improve the lot of low-skilled workers, or of how bureaucrats empowered to negate or to modify the contractual terms voluntarily agreed to by private borrowers and private lenders might possibly do genuine good – is in fact more akin to snake-charming than it is akin to genuine, objective science.

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The Wisdom and Wit of Warren Nutter

by Don Boudreaux on November 17, 2014

in Hubris and humility, Politics

Here’s a letter to the Wall Street Journal:

It’s very good that you (with help from my colleagues Bryan Caplan and David Levy) draw readers’ attention to the late University of Virginia economist and Defense Department official Warren Nutter (“Notable & Quotable,” Nov. 17).  Nutter was a fountain of profound insight and wisdom before his early death in 1979; sadly, today he is largely forgotten.

My favorite example of Nutter’s acumen - and of his wit - is his observation that “in the academic world, you think now and decide never; and in the government, it’s just exactly the other way around.”*

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

* Quoted on page 51 of William R. Allen, “Economics, Economists, and Economic Policy: Modern American Experiences,” History of Political Economy (Spring 1977), Vol. 9, pp. 48-88; reprinted here at Econ Journal Watch.

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