Some Links

by Don Boudreaux on February 25, 2015

in Civil Asset Forfeiture, Competition, Immigration, Seen and Unseen

My former students Sam Wilson and Alex Nowrasteh examine the political assimilation of immigrants and their descendants.  Here’s their introductory paragraph (footnote excluded):

Many skeptics of immigration reform claim that immigrants and their descendants will not politically assimilate and will consistently vote for bigger government for generations. Political survey data suggest that this fear is unwarranted, as the political differences between immigrants and native-born Americans are small and, in most cases, so small that they are statistically insignificant. In the cases where the differences are significant, the descendants of immigrants rapidly assimilate into America’s political culture by adopting mainstream ideologies, political party identifications, and policy positions held by longer-settled Americans. The policy and political views of immigrants and their descendants are mostly indistinguishable from Americans whose families have been here for at least four generations. As a result of these small differences in opinion and the subsequent rapid assimilation of immigrants, they and their descendants are unlikely to alter America’s aggregate political attitudes.

Speaking of immigrants, Shikha Dalmia explains that Pres. Obama is neither a friend of Latino immigrants nor a principled champion of civil liberties.

In my latest column in the Pittsburgh Tribune-Review, I remember the late Henry Manne.  (By the way, this coming April will be the 50th anniversary of the publication of Henry’s brilliant and influential article “Mergers and the Market for Corporate Control.”)

Bob Higgs asks if China’s ruling elites are more pro-market than are America’s ruling elites.

Dick Carpenter and Larry Salzman, in this new publication from the Institute for Justice, explain how the I.R.S. helps to fuel in the U.S. the uncivilized banana-republic terror that is civil asset forfeiture.

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… is from page 305 of Daniel Boorstin’s splendid 1973 book, The Americans: The Democratic Experience:

The old tricks of the miracle maker, the witch, and the magician became commonplace.  Foods were preserved out of season, water poured from bottomless indoor containers, men flew up into space and landed out of the sky, past events were conjured up again, the living images and resounding voices of the dead were made audible, and the present moment was packaged for future use.

When man could accomplish miracles he began to lose his sense of the miraculous.

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Comparing Riches Over Time

by Don Boudreaux on February 24, 2015

in Growth, Standard of Living

According to this analysis, George Washington was the richest – in inflation-adjusted money terms – of all the U.S. presidents.  Bill Clinton, by comparison (worth now about $60 million) is only ninth on this list.

But how meaningful are such comparisons?  Was George Washington really, in any meaningful or sensible use of the term, richer than Bill Clinton – or even richer than any randomly chosen middle-class American today?  I believe that the answer is no.

To see why I believe that George Washington’s personal wealth was in fact among the lowest of all American presidents (when the comparison is done across the full span of the 226 years of the U.S. presidency), ask yourself if you’d prefer to have a net worth of $525 million (of 2015 dollars) in the United States of the 1790s or a net worth of a mere $1 million (of 2015 dollars) in the United States of 2015.  I know that, for me at least, answering this question is quite easy: I’ll definitely and without the slightest hesitation take the $1M today.  Indeed, my answer would be the same even if the sum in play for 2015 were a mere $100,000 – and, likely, even if it were only a paltry $0.

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Quotation of the Day…

by Don Boudreaux on February 24, 2015

in Economics

… is from page 57 of William H. Hutt’s 1936 essay “On the Decline of Authority of Economists,” as reprinted as Chapter 4 of Daniel B. Klein, ed., What Do Economists Contribute? (1999) (original emphases):

Moreover, the swamping of economic treatises with mathematics has not only tended to drive away the layman, but has diverted attention from fundamentals to points of analytical interest, and incidentally thereby led to some actual corruption or unjustifiable weakening of basic tenets.  It cannot be argued, of course, that the mathematical method, building on valid and complete hypotheses, can lead to anything but correct results.  Neither can it be contended that this method has not proved, indirectly, of immense value in the development and refinement of the logical framework of the science.  But its intricacies appear to have caused some of those practicing it to lose their continuous intimacy with certain broad unquestionable elements of reality which ought always to dominate in applied theory.  Whilst not actually inducing generalizations from special cases, some economists seem to have given undue stress to curiosa in a manner that has tended to distort their judgment and weaken the authority of economists generally.  And they appear frequently to have shown a lack of judgment or an unregarded hastiness in framing generalizations from unrealistic premises.

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Here’s a letter to a new correspondent from my hometown of New Orleans:

Mr. Marion Ellis

Dear Mr. Ellis:

You say that your “instincts” tell you that “minimum wage increases don’t kill jobs for poor workers.”  And you are “staggered” that my “instincts” tell me differently.  You “simply can’t imagine” that raising the minimum hourly wage by $2.85 (from $7.25 to $10.10) “will trigger businesses to hire less workers.”  You say that you also are “convinced” by the “abundant research” that “finds the minimum wage causes no loss of jobs.”

My “instincts” (as you call them) are largely the product of my training in economics.  So it’s really my understanding of economics that tells me that minimum-wage legislation harms the very workers that it is ostensibly supposed to help.

But let me test your instincts with a question posed by the economist Mark Perry:* Do you believe that imposing a tax on employers for every low-skilled worker that they hire would not reduce the number of low-skilled workers hired?  Do you believe that requiring employers to pay a tax of $2.85 per hour for every low-skilled worker on their payrolls would not prompt employers over time to employ fewer such workers?  Do you suppose that firms are so inattentive to their bottom lines or so unable to figure out how to operate profitably with fewer worker that such a tax - which would be about $5,700 annually for each and every low-skilled worker employed full-time - would not reduce low-skilled workers’ employment options?

If you answer “yes” to these questions, then your instincts do indeed differ greatly and irreconcilably from my own.

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

P.S. And no: no one pays me to express my opposition to minimum-wage legislation.  I don’t suspect for a moment that someone is paying you to express to me your support for such legislation, so why would you suspect that someone is paying me to express my opposition to the same?

http://www.aei.org/publication/15-per-hour-minimumliving-wage-7-25-per-hour-100-tax-employers/

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This coming Wednesday, at noon at the Cato Institute’s Washington headquarters, a special live edition of EconTalk will be held featuring Cato’s George Selgin, my colleague Larry White, and (of course) Russ.  The title: “Renewing the Search for a Monetary Constitution: Reforming Government’s Role in the Monetary System.”  Note that this event will also be live-streamed.

Cato’s Doug Bandow warns against the hubris, folly, and unintended consequences of U.S. military adventurism.  A slice:

The two parties usually attempt to one-up each other when it comes to reckless overseas intervention. Yet Uncle Sam has demonstrated that he possesses the reverse Midas Touch. Whatever he touches turns to mayhem.

Warren Meyer offers a solid candidate for “worst argument for regulation ever.

Many people believe that the main purpose of occupational-licensing legislation is to protect consumers from incompetent physicians, electricians, interior designers, shampooers, and other professional service providers.  This paper (co-authored by my former GMU Econ colleague Mark Klee) identifies another – I think much more likely – purpose of occupational-licensing legislation.  (HT Jason Clemens of the Fraser Institute)

Citing my GMU colleague David Bernstein’s superb 2011 book, Rehabilitating Lochner, George Leef defends Rand Paul’s defense of the 1905 Lochner decision – which case, by the way, was argued before the U.S. Supreme Court exactly 110 years ago today.

My Mercatus Center colleague Brent Skorup identifies five myths about so-called “net neutrality.

Prompted by this post from yesterday, Tim Worstall sent me this 2005 “Stumbling and Mumbling” post entitled “Minimum Wage Effects.

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… is from page 264 of Nathan Rosenberg’s and L.E. Birdzell, Jr.’s excellent 1986 book, How the West Grew Rich:

The long growth in scientific and technical knowledge could not have been transformed into continuing economic growth had Western society not enjoyed a social consensus that favored the everyday use of the products of innovation.  Also, the West allowed innovators a degree of freedom from political and religious interference that was unusual among major societies, if not unique.  The practical power to innovate was widely diffused – a diffusion made possible by another Western economic institution: the freedom to form new enterprises and change old ones, in whatever sizes and shapes seem best adapted to the task at hand.  And it was through its markets, which many economists regard as its most basic economic institution, that the West conferred great rewards on those who innovated successfully and penalized those who did not.

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Minimum Accuracy, Maximum Illogic

by Don Boudreaux on February 22, 2015

in Seen and Unseen, Work

Here’s a letter to The Guardian; (I thank Rush Olson for the pointer to the Guardian report):

Aghast that many businesses have the gall to lobby against legislation that arbitrarily raises their costs, you assert that “a large body of economic research has discredited” the claim that raising the minimum wage destroys jobs for some low-skilled workers (“How a powerful rightwing lobby is plotting to stop minimum wage hikes,” Feb. 20).

First, your report presents a wholly misleading account of the current state of research.  As economists Jonathan Meer (of Texas A&M) and Jeremy West (of M.I.T.) wrote just last month in a revised version of a well-respected paper, “[t]he voluminous literature on minimum wages offers little consensus on the extent to which a wage floor impacts employment.”*  Profs. Meer and West, justly critical of the shortness of the time spans examined by ‘pro’-minimum-wage studies, then present powerful evidence that minimum wages do in fact over several years slow job growth for low-skilled workers.

Second, your claims on behalf of the minimum wage are specious on their face.  If you really believe that “employment expands with wages,” you should also believe, say, that newspaper advertising expands with rates.  The fact that you likely understand that newspaper advertising would fall if government were to force all newspapers to arbitrarily hike the advertising rates they charge makes mysterious your failure to understand that employment falls when government forces workers to arbitrarily hike the wage rates they charge.

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

* “Effects of the Minimum Wage on Employment Dynamics” (January 2015)

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Quotation of the Day…

by Don Boudreaux on February 22, 2015

in Complexity & Emergence, Economics, Seen and Unseen

… is from Kenneth Arrow‘s 1968 International Encyclopedia of the Social Sciences essay, “Economic Equilibrium“:

Whatever the source of the concept, the notion that through the workings of an entire system effects may be very different from, and even opposed to, intentions is surely the most important intellectual contribution that economic thought has made to the general understanding of social processes.

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In this video from 2012, my former  GMU colleague – and now Macaulay Professor of Economics at Clemson University – Tom Hazlett discusses so-called ‘net neutrality’ with Reason.tv’s Nick Gillespie.

In today’s Wall Street Journal Juan Williams argues that U.S. Supreme Court Justice Clarence Thomas is “America’s most influential thinker on race.”  Here are two slices:

Justice Thomas, meanwhile, is reshaping the law and government policy on race by virtue of the power of his opinions from the bench. Thurgood Marshall, the first African-American on the Supreme Court, stood up as a voice insisting on rights for black people. Justice Thomas, the second black man on the court, takes a different tack. He stands up for individual rights as a sure blanket of legal protection for everyone, including minorities.

….

The principal point Justice Thomas has made in a variety of cases is that black people deserve to be treated as independent, competent, self-sufficient citizens. He rejects the idea that 21st-century government and the courts should continue to view blacks as victims of a history of slavery and racism.

Writing in the Washington Post, Wendy Kaminer reports on the lunacy into which “Progressive” academics often sink.  You can’t make this stuff up.  (HT Todd Zywicki)  A slice:

How did we get here? How did a verbal defense of free speech become tantamount to a hate crime and offensive words become the equivalent of physical assaults?

You can credit — or blame — progressives for this enthusiastic embrace of censorship. It reflects, in part, the influence of three popular movements dating back decades: the feminist anti-porn crusades, the pop-psychology recovery movement and the emergence of multiculturalism on college campuses.

Using 2012 tax-return data, the Tax Foundation’s Alan Cole documents sources of personal income in the United States.

In the latest issue of the Cato Journal, my old Auburn University professor Randy Holcombe discusses “political capitalism” – a fascist-spawned

economic and political system in which the economic and political elite cooperate for their mutual benefit.  The economic elite influence the government’s economic policy’s to use regulation, government spending, and the design of the tax system to maintain their elite status in the economy.  The political elite are then supported by the economic elite which helps the political elite maintain their status; an exchange relationship that benefits both the political and economic elite.

Has inequality in the U.S. risen since 2007?

Sheldon Richman documents some of the hubris, failures, and dangers of Uncle Sam’s interventionist foreign policies.  Here’s Sheldon’s closing:

If those populations and the American people are to get any relief, U.S. foreign policy will need deep rethinking from outside elite circles. That won’t be easy. As over two centuries show, American hegemony—”exceptionalism”—is in the nation’s political DNA. Even the opening of foreign markets to American producers was always seen as a government program backed by a navy with global reach.

It’s well past time for us to think about what horrifies our rulers: nonintervention.

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