Quotation of the Day…

by Don Boudreaux on May 12, 2013

in Competition, Complexity & Emergence, Hayek, Hubris and humility

… is from page 171 of Don Lavoie’s 1985 book, Rivalry and Central Planning:

The basic problem is whether the manager will have at his disposal the requisite knowledge when he does not face competitive rivals who are trying to outbid him for resources.  He may sincerely want to produce at minimum cost but he may simply not know what the minimum cost is if he is not involved in a rivalrous, competitive discovery process….

To assume that the knowledge of the relative costs of alternative projects is available is, as Hayek says, to miss the whole point.

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Statistical Constructs Are Not People

by Don Boudreaux on May 12, 2013

in Immigration

Here’s a letter to National Review Online:

Yuval Levin makes some worthwhile points in his essay “Reforming Immigration Reform” (May 6).  But he makes some blunders, too - for example, his argument that “A huge amount of American social policy is directed to reducing the number of people in our country who have low levels of skills and education, and it would be bizarre to use our immigration policy to increase that number significantly.”

Presumably, the chief purpose of this huge amount of American social policy is to improve the lot of the poor.  While a policy of allowing in more low-skilled immigrants might well pull down statistical measures of well-being in America (for example, the average level of schooling), it will certainly and immediately improve the well-being of millions of actual, flesh-and-blood people – who find better lives in America – and also improve the lives of actual, flesh-and-blood Americans over time by strengthening the economy with both a deeper division of labor and the dynamism that is fueled by immigration.

The potential downward trend of country-specific statistical artifacts is no reason to block a policy that, especially, allows some of the world’s poorest people to enjoy at least that level of prosperity that even the poorest Americans take for granted.

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 learned of Levin’s essay from this very good column by George Will.

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Jumping the Queue Is Bad When the Object of the Queuers’ Desire is Genuinely Scarce – Not Necessarily When the Queue Is Itself Artificially Constructed

by Don Boudreaux on May 11, 2013

in Immigration, Myths and Fallacies

In light of the heightened discussion of immigration, I reprise this post from seven years ago:

Queuing Up for a Bad Analogy

by DON BOUDREAUX on MAY 19, 2006

in IMMIGRATION

People who jump the queue – who “cut in line” – are annoying because they directly harm others. Their selfishness reduces other peoples’ range of opportunities. At best, they play zero-sum games: what queue-jumpers gain in reduced waiting time and increased chances of securing the scarce object is lost by those who patiently wait their turn. Clearly, queue jumping is undesirable.

This waiting-in-line, and queue-jumping, analogy is used in the current immigration debate to condemn ‘illegal’ immigration.  Immigrants here without Uncle Sam’s permission are said to have jumped the queue, not waited their turn for opportunities to enter legally.  But I believe that this analogy is misplaced and, hence, misleading.

Many of the Latin American immigrants who are in the United States without Uncle Sam’s stamp of approval likely have little or no chance of getting in legally. Therefore, for these people – for those whose chances of entering the U.S. legally are practically zero – there is no line for them to wait in.  To tell them to wait their turn implies that they, in fact, will have a turn.  But no chance at any real turn to enter the USA exists for many foreigners.  So it’s incorrect to portray such foreigners who then enter ‘illegally’ as selfish scoundrels who jump the queue merely to speed up their arrival in the U.S.

Now ask: does coming to the United States without Uncle Sam’s stamp of approval hurt those who are waiting in line to get this approval as a condition of entering the land of the free and the home of the brave? I don’t see how. The number of legal immigration slots isn’t reduced by the number of ‘illegal’ immigrants entering the USA.

Indeed, to the extent that those who enter the USA ‘illegally’ would be eligible for legal-immigration status, their entering ‘illegally’ actually helps aspiring immigrants who are waiting in the queue. Those who enter the USA ‘illegally’ obviously aren’t waiting in the queue to get here ‘legally’; therefore, immigrants who enter ‘illegally,’ rather than join the queue, shorten the queue.  Those waiting in the queue are made better off.

So the ‘jumping-the-queue’ analogy misleads because our disgust at queue jumpers springs from our correct sense that queue jumpers hurt those who wait their turns in the queue. But ‘illegal’ immigrants don’t hurt those waiting in the queue for Uncle Sam’s approval to enter.

There are other problems with the queue-jumping analogy that, perhaps, I’ll discuss in later posts.

And this one:

Queuing Up for a Bad Analogy II

by DON BOUDREAUX on MAY 19, 2006

in IMMIGRATION

Robert Cote, commenting on the first installment in this series of blog-posts, says:

“I suggest you test your theory at Disneyland.  Ignore the parking regs, jump the lines, sneak past the security checks, don’t pay at the gate and when you get inside avail yourself of the attractions and services. If as you predict the theme park becomes a better place for your actions and indeed those waiting in line applaud your actions and eventually approve of your brave actions as being in their best interests I shall withdraw my clam.”

This response is appropriate and sensible; it gets us to the heart of the matter.  The heart of the matter is not queue-jumping; it is, rather, the belief that the object sought by those waiting in the queue – and by those jumping the queue – is scarce.

The Disneyland analogy works better the more the following is true:

- the U.S. is crowded

– the number of jobs and amount of capital per worker are more or less fixed in quantity

- people, once here, frequently free-ride on goods and services provided by government

Disneyland, after all, is a small space, and privately created, maintained, and owned. Frequently it is on the verge of being over-crowded, so that each new entrant into that amusement park reduces other people’s ability to enjoy the park.  Disney has a strong incentive to keep the park from becoming too crowded; it achieves this goal largely by charging high prices.  (I’ll note that Disney doesn’t deny large swaths of people any real chance of entering its park. An aspiring customer doesn’t have to be related to an existing customer, for example.)

Also, Disney has an incentive to keep the length of its queues as short as possible.  I’ve been to DisneyWorld three times, most recently in April 2005; never have I had a significant wait to enter the park.  (I did wait in several queues for a variety of rides and attractions within the park.  But for these queues, the standard queue-jumping analysis that I explained in my previous post fits perfectly.)

Moreover, Disney’s customers are not producers.  Disneyland is a consumption experience. People pay to get in to consume scarce experiences and things. The rides are there for customers to consume; likewise for the food, drinks, and mouse ears and other trinkets.

But immigrants who come to the United States are not just consumers; most are also producers. (Incidentally, even if they were exclusively consumers, if they – like Disney’s customers – paid for all that they consume, there would be no problem.  Problems arise when immigrants – and citizens – free-ride on goods and services supplied by others.)

It’s here that I believe the analogy with Disneyland breaks down irreparably.  Not only are immigrants not coming to America to crowd us Americans out of ‘our’ spaces and jobs, most come to produce.  I support more open immigration because I am quite confident that

- the U.S. is not crowded

- the number of jobs and amount of capital per worker are emphatically not fixed in quantity

- while people, once here, free-ride on goods and services provided by government, the first step in solving this problem is to enable more foreigners to work in America legally; that way, immigrants’
contributions to the economy in general, and to the provision of public goods, will be even greater than it already is;

AND

- people, being the ultimate resource, help deepen and widen the division of labor — which is the chief source of human prosperity.

Jeff Jacoby, of the Boston Globe, is especially eloquent on this matter.

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Quotation of the Day…

by Don Boudreaux on May 11, 2013

in Complexity & Emergence, Politics

… is from page 328 of Randy Simmons’s 2011 Revised Edition of his and the late William Mitchell’s superb 1994 book on public choice, Beyond Politics:

When I argue for markets I am rejecting one-size-fits-all solutions to perceived problems.  I am rejecting centralized, expert rule because experts never have the information, knowledge, ability, or incentives to know what ought to be done.  Rejecting experts means accepting the amazingly complex systems of human interaction.

Letting the market handle it reaffirms the title of this book and my argument that much of what modern societies rely upon politics to accomplish are simply “beyond politics.”  Not that government will completely fail in its objectives, but it will accomplish far less and at far more cost than if markets were allowed to work.  Educating children, reducing traffic congestion, protecting water sources and supplies, reducing pollution to appropriate levels, rebuilding after natural disasters will all be dealt with more efficiently and fairly by markets than by collective choice.

By the way, do not suppose that Randy is simply asserting.  In his book – which I highly recommend – he marshals both theory and evidence to support those claims.

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Jason Richwine’s Dismissal from Heritage

by Don Boudreaux on May 11, 2013

in Complexity & Emergence, Immigration

I don’t know all of the facts behind Jason Richwine’s resignation (or, perhaps, “resignation”) from the Heritage Foundation, so I’ll content myself simply to expressing agreement with Bryan Caplan’s take:

In a just world, no researcher would be fired for truthfully stating that some kinds of immigrants have low IQs.

In a just world, however, researchers would be fired for arguing that people with below-average IQs should be denied their basic human right to accept a job offer from any willing employer.

Despite their correlation, the two views are worlds apart.  And despite popular opinion, it is the second opinion, not the first, that civilized society should shun.

I would add only – as a matter of emphasis – to Bryan’s take that a researcher who argues that immigration policy would be improved by screening out low-I.Q. immigrants is a researcher who doesn’t understand the principle of comparative advantage.  (Bryan himself emphasizes this general point in one of the links that he supplies above.)

If you’ll pardon my vanity in this post that is already filled with too many “I”s, I made a closely related point last year in this essay for the Liberty Law blog – an essay in which I argue that the economic case for allowing in more low-skilled immigrants is as strong as is the case for allowing in more high-skilled immigrants.  My conclusion there:

Denizens of market economies prosper more the greater the mobility of capital to find its most remunerative (that is, most productive) uses.  Ditto for resources.  Ditto for consumer goods.  And ditto for labor.

While we Americans should, by all means, make it much easier for the likes of foreign-born engineers, physicians, architects, and web-designers to immigrate to America, the same holds with equal force for immigrants whose skills are much fewer and far less sexy.

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Public Choice Outreach Seminar, 2013

by Don Boudreaux on May 11, 2013

in Economics

I paste here in full Alex Tabarrok’s announcement from over at Marginal Revolution.  Alumni of past seminars include some of today’s finest scholars in political economy – Tim Groseclose, Russ Sobel, and Paul Zak, to name only a few.

Students are invited to apply to the Public Choice Outreach Conference. The Conference is an intensive lecture series on public choice and constitutional economics that has “graduated” some of the leading lights in economics and political science over the past thirty years. The conference will be held at George Mason University from Friday August 16 to Sunday August 18.

Graduate students and advanced undergraduates majoring in economics, history, international studies, law, philosophy, political science, psychology, public administration, religious studies, and sociology have attended past conferences. Applicants unfamiliar with Public Choice and students from outside of George Mason University are especially encouraged. A small stipend is available and meals and rooms will be provided by the conference (for non-locals). Space, however, is very limited.

Applications are due June 21. You can find more information here. Contact Lisa Hill-Corley if you have further questions about applications.

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Milton Friedman, Immigration, and the ‘War on Drugs’

by Don Boudreaux on May 10, 2013

in Immigration

Tina from Montgomery e-mails me with the following question.  (The wording is my own, but it is a faithful rendition of Tina’s question.)

You (Boudreaux) are a fan of Milton Friedman, but even he questioned the workability of more-open immigration when the U.S. has a welfare state.  Isn’t it a bit too convenient for you, in this lone instance, to disagree with Friedman – to conclude that, in this one case, he was mistaken?

I’ve written on this Friedman-and-immigration issue before.  (See also here.)  But let me here try an angle that I don’t recall making publicly until now.

First – and just for the record – this matter is not the only one on which I disagree with Friedman.  For example, I do not think much of his methodological pronouncements; I believe that Friedman was wrong in Chapter VI of Capitalism and Freedom to classify elementary education as a public good; I am not a monetarist (market or otherwise) [although Friedman's case against central-bank discretion is profound, and, I believe, correct]; and I do not agree with Friedman that J.M. Keynes was a great economist.  I could list other areas of disagreement (although the areas of agreement are far, far more expansive).

Second – and now to the main point – as far as I know Friedman never qualified his passionate, powerful, and principled case for drug legalization by claiming that legalization, while desirable in principle, is unworkable (or undesirable, or impractical, or unrealistic, or whatever) in a world with a U.S. welfare state.  But it seems to me that if Friedman genuinely believed that the existence, and likely permanence, of a welfare state in America is a strong-enough reason to empower government to do what that government otherwise ought not do – in the case of immigration, forcibly prevent people from migrating to the United States – then he should also have qualified his argument for drug legalization with the same condition; namely, in the case of drugs, forcibly prevent people from getting high by whatever peaceful means they choose.

The fact that Friedman (again, as far as I know) never qualified his case for drug legalization with the condition that the welfare state first be rolled back suggests to me that Friedman’s case for restricting immigration (at least as that case has now come down to us in lore) is at odds with his case for drug legalization.  At the least, this difference between Friedman-the-’realist’ on immigration and Friedman-the-principled-proponent-of-freedom on drugs exposes an inconsistency in his policy assessments.  And so why not resolve the inconsistency in favor of more freedom rather than in favor of more government-imposed restraint?

Almost every argument that can be marshaled to make a case for why the welfare state practically means that ‘we’ ‘must’ restrict immigration can, with few alterations, be marshaled to make a case for why the welfare state practically means that ‘we’ ‘must’ restrict people’s access to mind-altering and body-damaging narcotics.  Yet, again, I’ve never read of Friedman making the latter argument – and I somehow doubt that he would have accepted it if it were offered to him as justification for continuing the ‘war on drugs.’

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Some Links

by Don Boudreaux on May 10, 2013

in Economics, Health, Immigration, Monetary Policy, Reality Is Not Optional, Regulation, Seen and Unseen

I encourage you to try to be one of the fortunate 24 people who participate in this May 15th webinar on Bastiat’s Economic Harmonies – a webinar sponsored by the Future of Freedom Foundation and conducted by the great Sheldon Richman.

Bryan Caplan goes to the heart of what’s wrong with Robert Rector’s and Jason Richwine’s Heritage Foundation study on the consequences of immigration.  (To uncover other errors in this study, click on the links that Bryan supplies.)

Kurt Schuler, over at Free Banking, weighs in on the brouhaha stirred up recently by Niall Ferguson’s remark about J.M. Keynes’s homosexuality.

Also over at Free Banking, Brad Jansen explains another important justification for competition in currency: privacy.

Caroline Baum explains what seems to be the case: Pres. Obama doesn’t want any American to retire rich.

Jeffrey Tucker recounts one of the myriad ways that government officiousness makes our lives worse.  (HT Kenneth MacDonald) Here’s Jeff’s closing line:

If some product annoys you in surprising ways, there’s a good chance that it is not the invisible hand at work, but rather the regulatory grip that is squeezing the life out of civilization itself.

The Los Angeles Times reports that “Part-Time Workers to Lose Pay Under Affordable Care Act.”  Wow.  What a surprise.  I’m shocked.  Shocked, I tell you.  Just shocked.  It’s simply astonishing that employers don’t just pay these higher mandated costs out of their ubiquitous pots’o'gold.

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Quotation of the Day…

by Don Boudreaux on May 10, 2013

in Civil Society, Growth

… is from pages 173-174 of Joel Mokyr’s 1990 book, The Lever of Riches: Technological Creativity and Economic Progress:

Through the ages, the various activities that conveyed prestige have included, beside the creation of wealth (economic activity), the military, the arts, worship, sports, administration, learning, and teaching.  Different societies have ranked these various activities differently.  It seems plausible that the higher labor, production, and the accumulation of wealth are in this ranking, the more susceptible a society is to technological progress.

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Monty Python Policy-Making

by Don Boudreaux on May 9, 2013

in Crony Capitalism, Other People's Money, Trade

Here’s a letter to the Wall Street Journal:

Let’s re-write the opening of your report with words that make the facts clearer: “Chinese solar-panel manufacturers European consumers of Chinese solar-panels will face import tariffs additional taxes of up to 67.9% on the price of solar panels at European Union borders under a plan scheme from the 27-nation bloc’s executive body, according to a copy of the plan scheme viewed by The Wall Street Journal (“EU Plans Tariffs Taxes of Up to 67.9% on Europeans Who Buy Chinese Solar Panels,” May 9).

“The tariffs taxes, which will come into effect by June 6, will range from 37.3% to 67.9%, according to the document, drafted by the European Commission. Some of the largest Chinese manufacturers Even the poorest Europeans, depending on which Chinese manufacturers they patronize, will face duties on the higher end of that range.

“The proposal is likely to spark one of the largest battles over unfair trade crony capitalism ever waged under the decades-old system of international trade rules. European manufacturers say Chinese firms are selling their products well below fair-market prices European consumers are buying Chinese products at prices well below the monopolistically high ones that European manufactures would like to fetch for their panels.  To justify their proposal to force European consumers to pay unnecessarily high prices for solar panels, European politicians – who thrive by doling out corporate welfare – prey upon the gullibility of the typical European voter by making the baseless assertion that if Europeans aren’t forced to pay higher prices for solar panels the Chinese will dominate the world market for solar panels.”

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
If ‘our’ government subsidizes green energy, that act (we are assured) is noble and wise and far-sighted.  If ‘their’ government subsidizes green energy, that act (we are warned) is unlawful and devious and dangerous.  (And we’re supposed to trust politicians to spend other people’s money – and, simultaneously, to prevent people from spending their own money – all in an effort to stimulate a ‘green’ economy.  It’s like a Monty Python skit.)
…..
(With sincere apologies to Monty Python – and to Mark Perry.)
….

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