As Mike Munger says on his Facebook page, the New York Times likely made a mistake: that newspaper published a genuinely superb analysis of the rise in real college tuition rates – an analysis, written by Paul Campos, that denies the truth of mantras currently spouted by “Progressives.”  A slice:

What cannot be defended, however, is the claim that tuition has risen because public funding for higher education has been cut. Despite its ubiquity, this claim flies directly in the face of the facts.

Bob Higgs explains that immigration ‘policy’ is unjust.  A slice:

[T]he government may not justly carry out what is now called immigration policy. This policy violates migrants’ and would-be migrants’ natural right to move about peacefully so long as they do not trespass on anyone’s private property or trench on anyone’s other natural rights, and it violates the rights of residents to harbor, aid, do business, and associate freely with migrants and would-be migrants. If migrants wish to enter this country to visit or do business with me or to pursue any other peaceful purpose, no one may justly interfere with their doing so; and because none of us has a just right to interfere, neither may the government interfere, because no one may delegate to the government the defense of a right he does not possess and, to repeat, the government as such has no just rights of its own.

In my latest column at the Pittsburgh Tribune-Review, I address some historical ‘facts’ that ain’t so.  A slice:

[Stanley] Lebergott sensibly argues that, had slavery not existed, Southern ports such as that at Charleston, S.C., would have gotten a great deal more shipping business. But because slavery artificially kept most Southerners – unfree and free – poor, it kept the South from being a strong market for European manufactured goods.

These historical realities should be kept in mind by anyone attracted to the argument that capitalism was fathered by slavery.

James Pethokoukis deals with the myth that Wal-Mart is subsidized by the U.S. welfare state.  (I think there are even stronger arguments against this canard about subsidies. :) )

Freeman Dyson sensibly is not worried about climate change: “He [Dyson] acknowledges that human activity has an effect on climate but claims it is much less than is claimed. He stresses the non-climate benefits of carbon are overwhelmingly favourable.”

William McGurn writes insightfully about the controversy now raging in Indiana.  (gated)  Here’s his conclusion:

For these people, usually characterized as social conservatives, the question is more fundamental: Will they retain sufficient freedom to live their lives and run their institutions in accord with their faith?

The irony of Indiana suggests that it may be the libertarians who have the strongest arguments for defending them.

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Quotation of the Day…

by Don Boudreaux on April 8, 2015

in Government Intervention

… is from page 256 of the original edition of Robert Higgs’s indispensable 1987 book, Crisis and Leviathan:

The mixed economy that has prevailed in the United States since World War II, a uniquely American form of participatory fascism, has lent itself to a substantial expansion of the scope of government authority over economic decision-making.  Given capitalist color by the form of private property rights, the system has denied the substance of any such rights whenever governmental authorities have found it expedient to do so.

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Variable Supply of a Fixed Quantity

by Don Boudreaux on April 7, 2015

in Economics

This post has generated a bit of push-back, some of it by people whose opinions I deeply respect.  The push-back, to summarize, is that, ignoring the relatively insignificant amounts of land created by claiming land from the sea and other bodies of water, the supply of land is indeed fixed.

I agree that the physical amount of land is close to being fixed (and can be thought of as practically being absolutely fixed).  But supply is an economic concept, and so the supply of land – the economic amounts of land made available for various human purposes – is not fixed.

….

When introducing the concept of supply to my principles-of-microeconomics students, I talk for a bit about Rembrandt paintings.  Ignoring any previously unknown paintings by that late, great Dutch master that might be found in someone’s attic or in a long lost chest, and ignoring also the prospect that some Rembrandt paintings might be destroyed, the mathematical number of original Rembrandt paintings is indeed fixed.  Rembrandt hasn’t painted anything since, at the latest, 1669.

Read the full post →

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At this month’s Cato Unbound, my colleagues Alex Tabarrok and Tyler Cowen argue that the asymmetric information is disappearing.  A slice:

Technological developments are giving everyone who wants it access to the very best information when it comes to product quality, worker performance, matches to friends and partners, and the nature of financial transactions, among many other areas.

These developments will have implications for how markets work, how much consumers benefit, and also economic policy and the law. As we will see, there may be some problematic sides to these new arrangements, specifically when it comes to privacy. Still, a large amount of economic regulation seems directed at a set of problems which, in large part, no longer exist.

Steve Chapman sensibly finds merit in Obama’s recent nuclear deal with Iran.

Market prices are telling people not to waste so much of a precious resource – human time – on recycling plastics.  (gated)

Towson University economist Howie Baetjer explains that the ridesharing market does not need government regulation.

Richard Rahn has a mind-bending idea: the rule of law should apply to everyone, including government officials.

Here’s a description of Charles Murray’s forthcoming book, By the People: Rebuilding Liberty Without Permission.

GMU Econ doctoral candidate Abby Hall explains that the “gender wage gap” is a “myth that just won’t die.

John Graham isn’t impressed with Obamacare’s actual results so far.

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Quotation of the Day…

by Don Boudreaux on April 7, 2015

in Prices, Reality Is Not Optional, Work

… is from page 113 of the 11th (2006) edition of one of greatest economics textbooks of all time: Paul Heyne’s, Peter Boettke’s, and David Prychitko’s The Economic Way of Thinking:

No one blames the thermometer for low temperatures or seriously proposes to warm up the house on a cold day by holding a candle under the furnace thermostat.  That’s because they have a more-or-less correct understanding of how those things work.  People do, however, often blame high prices for the scarcity of certain goods and act as if scarcity can be eliminated by enforcing price controls.

Market-determined prices – those that are neither set nor constrained by government diktat – reflect underlying economic realities.  Prices are the results of those realities.  Prices – even those that are set or constrained by government diktat – also have consequences; prices affect and direct economic decision-making.  So while prices that are set or constrained by government diktat affect and direct economic decision-making no less than do market-determined prices, only the latter does so in ways that are consistent with underlying economic realities.  The reason is that only market-determined prices tell the truth about underlying economic realities; minimum-wage rates and other prices that are set or constrained by government diktat lie about underlying market realities.  Such government-determined prices thus cause people to act on misinformation – on economic lies.  And people who are misinformed and misled will not make decisions that improve underlying economic realities; quite the opposite.

….

Whenever I encounter anyone who supports, or even expresses some sympathy for, minimum wages and other government-dictated price controls, that person immediately strikes me as being someone who can be persuaded that holding a candle flame beneath a thermostat will warm the house because such a ham-fisted action does indeed cause the thermostat to register a higher temperature reading.  Or a different analogy: such a person is the sort who supposes that killing the messenger wipes from reality the bad news that the messenger communicates.  At the very least, such a person – regardless of whether or not he or she is formally credentialed as an economist – does not adequately understand what prices are, how they are set, and what roles they play.

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Here’s a letter to a correspondent:

Mr. Chap Oxley

Dear Mr. Oxley

Thanks for your e-mail.  I don’t share your worry that “land’s natural fixed supply” means that population growth poses a “grave hazard.”

While I agree that efforts to create land out of water-covered areas won’t yield much extra land, I disagree that land is fixed in supply.  It is not fixed, at least not economically.

Most obviously, skyscrapers and other multi-storied buildings increase land’s economic capacity.  On the mere two acres of land occupied by the Empire State Building, the number of people who work simultaneously is upwards of 3,400 – roughly 100 times the number of people who could work on only the surface of those two acres of Manhattan.

Land’s economic capacity expands also in other, less obvious ways.  The same acre of land that in 1950 annually yielded 25 bushels of wheat has, economically, become two acres of land by today annually yielding 50 bushels.  So the creation and improvements of tractors and other farm machines increase the supply of land.  Likewise with the creation and improvements of fertilizers, pesticides, and genetically modified seeds and livestock.

Yet another innovation that effectively increases the supply of land is refrigeration: by preserving food longer, refrigeration turns any given physical yield from land into an increased economic yield - which is economically identical to increasing the physical amount of land.  Ditto for transportation improvements that get food to consumers faster (and, hence, fresher) and with less damage and loss.

One more example: modern computers.  By keeping the demand for paper lower than otherwise, computers increase the supply of land relative to the demand for pulp-yielding trees.  And by enabling people to meet by teleconferencing, the amount of land devoted to supplying surface transportation effectively grows relative to the demand for land used for surface transportation.  (Of course, the supply of land is also increased by affordable air travel.)

The economic supply of land, like that of any other resources you can name, is not a physical phenomenon.  As long as people are free and inspired to innovate – and as long as input and output prices are free to adjust to changes in supply and demand – the economic supplies of even the most ‘fixed’ and ‘nonrenewable’ resources will expand.

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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In this new video, my great colleague Walter Williams explains the source and the important role of profits (and of losses).

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Among business-owners’ responses to a mandated higher minimum wage are greater efforts to economize on the use of low-skilled labor.  (HT Jan Jorgensen)  A slice:

[Seattle restauranteur Quynh-Vy] Pham says they are considering scaling down employment, possibly ending sit-down service and transitioning to a “fast-casual” concept to cut down on labor costs.

This report also features the fatuous comments of Seattle’s mayor Ed Murray – comments that are quite annoying to read.  While actual, experienced, skin-in-the-game business owners deal with the very real cost consequences of a mandated artificial hike in wage rates – and while many actual, skin-in-the-game employees who are willing to work at wages below the mandated minimum are denied by ‘their’ government the right to so work and, thus, will find themselves unemployed – prancing and preaching politicians make economically ignorant and irrelevant pronouncements as their cruel handiwork causes hardship to innocent victims.

No doubt some highly credentialed economists will defend these officious politicians, offering up rococo theoretical explanations of why the minimum-wage legislation in fact will yield great benefits to the workers who standard and well-grounded economic theory predicts will be harmed.  Sigh.

….

The minimum-wage debate in economics is rather like the reverse of the debate that took place centuries ago among astronomers.  In astronomy, the standard, mistaken geocentric theory of the solar system was defended with ever-greater cleverness and desperation by thinkers eager to explain how the apparently inexplicable movements of the planets in fact are consistent with Ptolemaic theory.

In economics, in contrast, the standard textbook theory works remarkably well, without any desperate tweaking, to explain observed patterns of activity following increases in the minimum wage.  The clever and desperate tweaking of theory is done instead by those economists whose faith in the politics-centric view of the economy refuses to be shaken by reason or observed empirical reality.  These faith-guided economists just know that minimum-wage legislation helps the poorest of poor workers, and to ‘prove’ the validity of their faith they concoct and deploy all manner of contorted theoretical explanations to explain why the market for low-skilled workers is, among all markets in creation, the one in which the standard law of demand is suspended whenever the great hand of Government-the-Creator is waved and a prayer is muttered by the congregation about how this waving hand will by Will (backed by Force) enrich poor workers.

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… is from page 309 of Albert Venn Dicey’s 1905 volume, Lectures on the Relation Between Law & Public Opinion in England During the Nineteenth Century; I read it as a warning against the romantic notion that ‘good’ and (seemingly) ‘apolitical’ government poses little or no danger to individual liberty:

English administrative mechanism was reformed and strengthened [during the last half of the 19th century].  The machinery was thus provided for the practical extension of the activity of the State; but, in accordance with the profound Spanish proverb, “the more there is of the more the less there is of the less,” the greater the intervention of the Government the less becomes the freedom of each individual citizen.

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George Selgin’s new blog – a joint project of Cato’s Center for Monetary and Financial Alternatives and the Center for Financial Privacy and Human Rights – is now up and running.  It’s called Alt-M.  Alt-M, I predict confidently and with joy, will neither warm the hearts nor soothe the souls of central bankers and other monetary cranks.

Mike Munger weighs in on the current hullabaloo in Indiana.

Ann Althouse helps to reveal the revolutionary importance of a device that 21st-century Americans regard as mundane.  (HT John Kunze)

Bill Sundstrom reviews Francis Spufford’s Red Plenty.  (HT Peter Minowitz)

George Smith has edited a new reader on individualism.  (HT Walter Grinder)

My colleague Tyler Cowen explores, in the New York Times, inequality and mobility.

David Boaz, whose latest book is The Libertarian Mind, will be the guest on today’s Bob Zadek Show.

My colleague Alex Tabarrok celebrates market-driven innovation and rightly concludes that “we have much to gain from increased wealth in the developing world.”

Speaking of innovation, it’s the subject of the latest Stossel.

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