Quotation of the Day…

by Don Boudreaux on July 25, 2016

in Competition, Inequality

… is from page 13 of the 2015 English edition (translated from Chinese by Matthew Dale) of Weiying Zhang’s excellent 2010 book, The Logic of the Market:

Under the planned economy, we did not pursue happiness by making others happy.  Instead, we pursued happiness by making others unhappy.  Our energies were spent fighting for power and gain.  We were competing, even competing for life and death, but we were not creating value.

Every expansion of the state incites more people to compete – and to compete more intensely – to possess the power over others that that expansion brings.  From each individual’s perspective, it’s better to be in the group that exercises power rather than in the groups against whom the power is exercised.  Unlike competition in markets, competition for power wastes material resources and human time and energy (rent-seeking wastes); such competition is never win-win but, rather, win-lose.  But also unlike competition in markets, competition for power results in the worst form of inequality – indeed, the only form of inequality that warrants legitimate concern – namely, inequality of power.  Those with state power, regardless of how they acquire it, can command those without state power.  Those with state power use force to override the choices of those without state power.  Those with state power do the choosing; those without state power do the obeying.

Unlike market-enabled differences in monetary incomes and wealth, this species of inequality – inequality of power – is inhumane and destructive, and it results from humans’ most primitive impulses.

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Milton Friedman on Trade and Consumer Sovereignty

by Don Boudreaux on July 24, 2016

in Trade, Video

I linked earlier today to this 1978 video of Milton Friedman speaking on trade.  But it’s such a good speech that I here offer it stand-alone – as an important inoculant against not only the unalloyed mercantilist moronics spewed by the bloviating buffoon named Donald Trump, but offered also (if in somewhat more subdued hues) by Czarina Clinton and the “Progressives” regressives who specialize in economic ignorance.

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Bonus Quotation of the Day…

by Don Boudreaux on July 24, 2016

in Energy, Hubris and humility

… is from page 487 of the great Armen Alchian‘s 1975 essay “An Introduction to Confusion,” as reprinted in The Collected Works of Armen A. Alchian (2006), Volume 1 (“Choice and Cost Under Uncertainty”; Daniel K. Benjamin, ed.); this essay is Alchian’s insightful response to the Final Report of the Energy Policy Project of the Ford Foundation (original emphasis):

Political controls on our use of energy – whether for outdoor lighting, household heating, or swimming pool heating – means simply that an elite group is undertaking to limit the options of other people.  Has the lesson of Nixon’s administration been ignored?  The Report recommends a higher gasoline tax and mandatory gasoline mileage standards to conserve gasoline – even beyond the amount available at costs that match the price people are willing to pay to get the gasoline (the value they place on it).  Such overconservation, making the costs of energy use appear higher than they really are, is a kind of masochism.

Or, worse, it’s a kind of sadism, with elites in government sneeringly restricting the choices that each of hundreds of millions of individuals makes in light of that individual’s unique circumstances and preferences and constraints.  Such restrictions – not only, of course, on energy use, but also on countless other dimensions of choice – are the result of nothing other than the arrogant presumptions held by those with power that they – the powerful – are entitled to lord it over individuals who are less powerful.

Statism is sadism.

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It is a fact as scientifically valid as any in the social sciences: anyone so hungry for power that he or she will say or do almost anything to get power is not fit to have power.  Here’s Jeff Jacoby.  A slice:

To be clear, I don’t hate Hillary Clinton. I don’t hate Donald Trump. But I do find them both to be indecent and unworthy, graspers of low character whose rise to political eminence is a terrible reflection on the Republican and Democratic parties. Neither deserves a vote for president. They certainly won’t get mine.

Nick Gillespie thinks that neither Clinton nor Trump knows the facts.  (Me thinks Nick is correct.)

James Pethokoukis reminds us that Ronald Reagan was far more cosmopolitan and (classically) liberal – including, of course, on both trade and immigration – than are the GOP’s currently ascendant pooh-bahs.

Speaking of James Pethokoukis, I thank him for pointing out this excellent essay on trade by the great trade economist Douglas Irwin.

People under 30 are scarily ignorant of recent history.

Mark Perry is right to dust off this video from 1978 in which Milton Friedman offers important lessons about trade.

Sandy Ikeda explains that tolerance, criticism, and humility are core principles of freedom.

Someone who is intolerant, cocksure, and uncritical of statist nostrums (including its potted version of history) is Elizabeth Warren.  My former student Ninos Malek has more.

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Quotation of the Day…

by Don Boudreaux on July 24, 2016

in Myths and Fallacies

… is from pages 179-180 of H.L. Mencken’s essay “On Government,” as it is reprinted in the 1996 Johns Hopkins University Press collection of some of Mencken’s essays, Prejudices: A Selection:

These gross extortions and tyrannies, of course, are all practised on the theory that they are not only unavoidable, but also laudable – that the government oppresses its victims in order to confer upon them the great boons mentioned by Godwin.  But that theory, I believe, begins to be quite as dishonest as the chiropractor’s pretense that he pummels his patient’s spine in order to cure his cancer: the actual object, obviously, is simply to cure his solvency.  What keeps such notions in full credit, and safeguards them against destructive analysis, is chiefly that survival into our enlightened age of a concept hatched in the black days of absolutism – the concept, to wit, that government is something that is superior to and quite distinct from all other human institutions – that it is, in its essence, not a mere organization of ordinary men, like the Ku Klux Klan, the United States Steel Corporation or Columbia University, but a transcendental organism composed of aloof and impersonal powers, devoid wholly of self-interest and not to be measured by merely human standards.  One hears it spoken of, not uncommonly, as one hears the law of gravitation and the grace of God spoken of – as if its acts had no human motive in them and stood clearly above human fallibility.  This concept, I need not argue, is full of error.

There is no better antidote against the delusion-inducing fever of state-worship than reading Mencken.

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… is from page 133 of UCLA economist William Allen’s 1989 collection of the transcripts of his marvelous radio addresses, The Midnight Economist; specifically, it’s from Allen’s October 1987 radio address entitled “Antitrust: Mythology and Methodology” (original emphasis):

The antitrust crusaders of the 1880s professed to be protecting consumers from deprivation and gouging.  But the actual record does not support the demagogic ridicule of alleged monopolies.  Output of the notorious industries – including coal, lead, petroleum, steel, sugar, and zinc – was increasing much more rapidly than the economy generally, and their prices were falling more rapidly than the overall price index.

(Prof. Allen’s account accords with the detailed information contained in Tom DiLorenzo’s important 1985 article, “The Origins of Antitrust.”*  [See also this 1992 article by Gary Libecap and this 1993 article that I wrote with Tom D.])

Bottom line: Antitrust legislation was meant to stymie, not to promote, competition.  It was an early, populist-era exercise in cronyism.


* On page 81 of Tom’s article a typo resulted in a misspelling of the quoted Senator’s name.  It’s not Senator “Edwards”; it’s Senator George F. Edmonds (R-VT) – who is one of the major authors of the Sherman Antitrust Act.

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Reason‘s Peter Suderman is sensibly frightened by the prospect of a Pres. Trump.  A slice:

Donald Trump’s speech accepting the Republican nomination was easily the most overt display of authoritarian fear-mongering I can remember seeing in American politics. The entire speech was dark and dystopian, painting America as a dismal, dangerous place beset by violent outsiders. In response to the nation’s problems, Trump had only one solution: Donald Trump, the strongman who would take America back, by force if necessary.

George Will is sensibly disgusted by Mike Pence’s lack of principles.

Not surprisingly, Tim Kaine is also an unprincipled political opportunist.

Nearly ten years ago Sheldon Richman warned of the dangers of economic nationalism.  A slice (link added):

It is only when the ideology of nationalism — often a cover for special labor and industrial interests — is permitted to muddy clear economic thinking that common sense is tossed to the wind and obvious truths are traded for rank fallacies. As Bastiat taught, Robinson Crusoe would never shove a useful plank that has washed ashore back out to sea because the free good robs him of work. He doesn’t have enough time to make all the things he wants, so the freed-up time represented by the plank is a windfall. Yet at the national level, people fall for that one all the time. For some folks, nothing could be worse than dumping.

Speaking of trade, Marty Mazorra demonstrates that protectionism is nutty.

My Mercatus Center colleagues Eli Dourado and Michael Kotrous call on Uncle Sam to stop obstructing innovations in commercial air travel.

Ilya Somin, a GMU colleague of mine from over in the law school, asks if it’s ever ethically appropriate to overthrow a democratically elected government.

Writing in the Wall Street Journal, Charles Koch correctly explains that political responses to people’s pessimism about the future will make the future one about which pessimism is justified.  A slice:

The state often claims to keep its citizens safe, when it is actually inhibiting increased individual well-being. See, for example, the FDA’s astronomically expensive and time-consuming drug-approval process, which University of Chicago professor Sam Peltzman argues has caused “more sickness and death than it prevented.” These kinds of harmful barriers to life-enhancing advances exist at every level of government.

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Quotation of the Day…

by Don Boudreaux on July 23, 2016

in Adam Smith, Growth, Man of System

… is from page 79 of Thomas Leonard’s excellent 2016 book, Illiberal Reformers (link added):

For as long as people have recorded their views on economic life, there have been two constants of political economy.  The first constant has been to distinguish two opposed methods of economic coordination: market exchange and administrative command.  The second constant has been to scorn markets and to esteem administration.

Hostility to trade is as venerable as trade itself.  During the roughly two millennia that separate the students of Socrates from Adam Smith’s Wealth of Nations (1776), the market was scorned as a disreputable demimonde of moneychangers, pawnbrokers, Shylocks, usurers, factors, gougers, hagglers, hawkers, hucksters, jobbers, middlemen, mongers, peddlers, shopkeepers, and scrambling little profiteers. The low regard for the market was conveyed by the epithets given to its participants.

The scholars who maligned markets admired administration.  Administration was favored by Greek philosophers grooming tyrants, theologians vindicating the Church, political arithmeticians calculating for lord protectors, the man of system whispering in the ear of princes and parliaments, and even trading companies, once they snatched the sovereign powers of the governments that gave them their monopolies.

Isn’t it, therefore, strange that those politicians, pundits, professors, and preachers who today wish to turn more power over to state administrators (and, hence, to reduce the range of market activities) call themselves – and are called by others – “Progressives”?  These champions of administration – these ‘men of system’ – are not progressive; they are regressive.  They are atavistic.  They peddle millennia-old superstitions; they work with outdated concepts; they possess an antediluvian faith in strong ‘leaders’; they have never learned the modern lesson of spontaneous order; they are haunted by archaic fears of people who are free to pursue their own ends, in their own manner, without supervision by overlords.

The modern world in which dignity for the first time began to be spread to ordinary people arose only a couple or three centuries ago.  The modern economy in which material and cultural riches for the first time began not only to increase steadily but also to be shared by ordinary people arose only a couple or three centuries ago.  True progress occurred not through a doubling-down on diktats from lords and ‘leaders’ and weapons-wielding commandants but from freeing ordinary individuals to choose and act as each chooses to act within an institutional framework of private property and contract law, and in a cultural setting in which shopkeepers, bankers, and factory owners are accorded at least as much respect as are generals, mandarins, and priests.  In other words, true progress occurred only when and only where the policies and procedures demanded by “Progressives” were rejected in favor of free minds and free markets.

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Bonus Quotation of the Day…

by Don Boudreaux on July 22, 2016

in Growth, Hubris and humility, Innovation

… is from page 67 of Joel Mokyr’s forthcoming (October 2016) volume from Princeton University Press, A Culture of Growth: The Origins of the Modern Economy (footnote deleted; link added):

Max Planck famously noted (with some exaggeration) that a new scientific insight never triumphs by convincing its opponents, but only because these opponents eventually die off.  Within technology there was and still is considerable resistance to inventors coming from vested interests, known (somewhat unfairly) as Luddism.  Deirdre McCloskey (2016a, p. 94) points out that such words as “innovation” and “novelty” in the past often had negative connotations.  An emotional attachment to traditional ways of doing things made novelty look suspect.

It is more than passing strange that the opponents of new patterns of trade and of new methods of production, financing, and distribution – it is remarkably odd that those who are expressly afraid of, pessimistic about, and (hence) hostile to an economic future made open-ended by entrepreneurial creativity and market competition – include not only people who self-identify as “conservative” but also many people who self-identify as “Progressive.”  The only “progress” such “Progressives” really want is the progressively more expansive and harsh use of force to prevent individuals from acting in ways that “Progressives” do not understand and fear.

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F&#$ Fifteen!

by Don Boudreaux on July 22, 2016

in Reality Is Not Optional, Seen and Unseen, Video, Work

Trigger warning: This video has adult language (and great content).

One of the many wrong-headed arguments made by proponents of minimum wages is that employers can simply raise the prices of their outputs in order to cover the higher labor costs they must bear due to legislated minimum wages.  People who offer this argument never pause to ask: when the prices of outputs made with disproportionately large numbers of low-skilled workers rise relative to the prices other outputs, what happens to the quantities of those outputs bought by consumers?  The answer, of course, is that the quantities of those outputs bought by consumers fall – a reality that reduces employers’ demand for minimum-wage workers.

Despite lots of wishful thinking (often buoyed by naïve empirical analyses), there is no escaping economic reality even when the economic reality that people wish to escape bears upon low-skilled workers.

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