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I continue to archive, here at Cafe Hayek, as many of my writings as I can – including those from my 15-year run as a twice-monthly columnist for the Pittsburgh Tribune-Review. Below the fold is my column from the March 11th, 2014, edition of that paper.

[continue reading…]

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Wall Street Journal columnist Gerard Baker writes wisely about reactions to the attempt on Donald Trump’s life. Two slices:

But while those of us who call ourselves believers accept the idea of divine intervention in human affairs—otherwise why pray?—there is a dangerous difference between belief that divine mercy can work in seemingly random ways and thinking that the Father of the universe stopped by a Pennsylvania field to bestow eternal blessings on the MAGA agenda.

If you doubt that, consider the six million Jews who died in the Holocaust and the countless others murdered by the Nazis, and ask if God intervened on numerous occasions to spare Adolf Hitler from the various bombs and bullets that could have prevented or mitigated that atrocity. Let’s leave God’s plans to himself for now.

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A third lesson will be more controversial to some: Avoid the idea that, even if they didn’t actually pull the trigger, Democrats are somehow to blame because of their rhetoric.

It’s true that the language about Mr. Trump and the Republicans is often absurdly overblown: the recent ululations about Project 2025 are a case in point. But it must be within the bounds of acceptable political discourse to claim that Mr. Trump represents a threat to democracy, not least because some of his behavior and rhetoric support the claim. So is it acceptable for Mr. Trump and Republicans to say that President Biden and the Democrats are destroying America without it being interpreted as a signal to anyone with a rifle to take out the Democratic candidate.

Jeff Jacoby (and Kareem Abdul-Jabbar) are correct:

I AM of the view, heretical in some quarters, that no one has a civic duty to vote and high turnout is not a measure of democratic health. The popular belief that everyone should be expected to take part in elections has always struck me as perverse. Many people don’t care about politics and policy; they shouldn’t be hectored to vote for the sake of voting. I agree with Kareem Abdul-Jabbar, the NBA superstar turned cultural critic. “Stop encouraging people who don’t want to vote to vote,” he has written. “When we pressure people to vote, we’re diluting the democratic process, by bringing out those who are easily manipulated.”

So I have consistently, if vainly, opposed election “reforms” designed to make voting as effortless and convenient as possible. Extended early voting, elections by mail, automatic voter registration, an Election Day holiday — in my view, they are all misguided.

Jason Sorens compares Idaho to California.

Richard Ebeling remembers the late Bob Formaini. A slice:

A particularly important contribution by Bob Formaini, in my opinion, is to be found in his book, The Myth of Scientific Public Policy (Transaction Publishers, 1990). He challenges the assumptions and presumptions of mainstream economics both then, and I would argue now, that the pursuit and development of statistical and related “empirical” quantitative methods by economists provide the “scientific” tools and precision to successfully manage and manipulate the economic processes at work in the marketplace for better results than from an unhampered free market system.

John Cochrane reviews Glenn Loury’s autobiography.

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… is from pages 93-94 of F.A. Hayek’s September 1945 paper in the American Economic Review, “The Use of Knowledge In Society,” as this paper is reprinted in the 2014 collection, The Market and Other Orders (Bruce Caldwell, ed.), of some of Hayek’s essays on spontaneous-ordering forces (original emphasis):

[T]he “data” from which the economic calculus starts are never for the whole society “given” to a single mind which could work out the implications and can never be so given.

The peculiar character of the problem of a rational economic order is determined precisely by the fact that the knowledge of the circumstances of which we must make use never exists in concentrated or integrated form but solely as the dispersed bits of incomplete and frequently contradictory knowledge which all the separate individuals possess. The economic problem of society is thus not merely a problem of how to allocate “given” resources – if “given” is taken to mean given to a single mind which deliberately solves the problem set by these “data.” It is rather a problem of how to secure the best use of resources known to any of the members of society, for ends whose relative importance only these individuals know. Or, to put it briefly, it is a problem of the utilization of knowledge which is not given to anyone in its totality.

DBx: This point is profound. It is also routinely ignored, including by proponents of industrial policy. How will government officials empowered to decrease the scarcity of some goods, services, and opportunities – and, hence, to increase the scarcity of some other goods, services, and opportunities – know that the value of that which they create exceeds the value of that which they destroy? What is the information- or knowledge-generating process or mechanism that provides to industrial-policy officials signals that are more reliable than are the prices and other market signals that the interventions of these officials distort or suppress altogether?

Ask such questions and expect no answers beyond ones that boil down to “Trust us. Our scheme is destined to produce results that are superior to those produced by markets. We know what to do. For proof, compare the excellence of what we promise to achieve to the reality, as described by us, that we promise to replace. This reality clearly isn’t ideal and must be corrected. Furthermore, our motives are pure, and our understanding of human nature and society is richer, deeper, and more expansive than is that of the naively materialistic and reductionists neoliberals and market fundamentalists. Trust us.”

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The Editorial Board of the Wall Street Journal writes wisely about the attempt on Trump’s life. A slice:

One great risk is that the shooting in Butler, Pa., will cause some on the right to seek violent revenge. This is where Mr. Trump and the Republicans have an obligation—and a political opportunity—at their convention in Milwaukee and through November.

If they weren’t already, Americans after Saturday will be looking for stable, reassuring leadership. The photo of Mr. Trump raising his fist as he was led off stage by the Secret Service with a bloody face was a show of personal fortitude that will echo through the campaign. No one doubts his willingness to fight, and his initial statement Saturday night was a notable and encouraging show of restraint and gratitude.

His opportunity now is to present himself as someone who can rise above the attack on his life and unite the country. He will make a mistake if he blames Democrats for the assassination attempt.

He will win over more Americans if he tells his followers that they need to fight peacefully and within the system. If the Trump campaign is smart, and thinking about the country as well as the election, it will make the theme of Milwaukee a call to political unity and the better angels of American nature.

Also writing wisely about the attempt to assassinate Trump is my Mercatus Center colleague David Masci. Here’s his conclusion:

I’m old enough to remember (as a young reporter on Capitol Hill) watching congressional leaders from different parties, such as Sens. Bob Dole and George Mitchell, square off in tough legislative battles and then call each other “friend,” and seemingly mean it. These friendships, even if they were partly for form’s sake, meant that continued conversations and future compromises were possible, even after difficult political fights.

No one expects President Biden and former President Trump to be sharing a few drinks and laughs anytime soon. (For starters, Trump doesn’t drink, and neither man seems in a jolly mood these days.) But hopefully Saturday’s tragedy won’t go to waste. Hopefully, the American people will demand at least a temporary halt to dangerous rhetoric. If Saturday’s events prompt both candidates to continue behaving at even the most basic level of civility, that will be a good start.

My former Mercatus Center colleague Walker Wright explains that secure private property rights promote greater peacefulness. Two slices:

A 2014 review of the literature determined that “one of the key discoveries of the past few decades” is that international trade, FDI, and market economies are “correlated with better protections for human rights.” Another 2015 review of the literature similarly concluded that economic globalization has played an important role in improving human rights. Global markets can also help foster a virtuous cycle: countries with a track record of human rights abuse are less likely to engage in liberal economic exchange and less likely to attract foreign capital.

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But a private-property-based market system does not just produce prosperity. It also produces peace. Ironically, despite the private ownership of a resource, the most valuable use of that resource is still determined by the public. Ultimately, as [Armen] Alchian noted, “private decisions are based on public, or social, evaluation.” Private property rights have the potential to incentivize individuals to be more attuned to the needs and desires of others; to serve their fellow man. Or, as Alchian put it, “Well-defined and well-protected property rights replace competition by violence with competition by peaceful means.”

For those many Americans who worry that the Chinese are brilliantly using state power to supercharge their economy into an unbeatable behemoth, you might want to read this report in the Wall Street Journal. Two slices:

For years, Liuzhou and scores of other Chinese cities together amassed trillions of dollars in off-the-books debt for economic development projects. The opaque financing was the yeast that helped China rise to the envy of the world.

Today, overgrown construction sites, sparsely used highways and abandoned tourist attractions make much of that debt-fueled growth look illusory and suggests China’s future is far from assured.

Liuzhou, a city in the southern region of Guangxi, raised billions of dollars to build the infrastructure for a new industrial district, where a state-owned financing group acquired land and opened hotels and an amusement park. Other tracts of acquired land sit vacant, and many area streets look practically deserted. Birds flit through the rows of abandoned buildings at an unfinished apartment complex.

“The government is broke,” said one local resident who watched the project falter from her shop across the street.

At the heart of the mess are the complex state-owned funding vehicles that borrowed money on behalf of local governments, in many cases pursuing development projects that generated few economic returns. The deterioration of China’s real-estate market in the past three years meant local governments could no longer rely on land sales to real-estate developers, a significant source of revenue.

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A taxi driver ferrying passengers earlier this year beneath the abandoned tracks of the failed light-rail project in Liuzhou expressed frustration about the pork-barrel spending.

With city buses underused, he asked, why did the city need to build a rail system?

On a Communist Party-run messaging board, a resident complained about the construction fences still bordering the abandoned light-rail project. The fences block the sidewalk, the resident wrote, forcing pedestrians to walk in the road.

Guangxi Liuzhou Rail Transit, the LGFV responsible for the project, responded candidly to the online post.

“Due to the tremendous financial pressure on our company recently, we’re not able to tear down this part of the fencing,” it said. “Thank you for your concern.”

Arnold Kling offers his list of “essential readings in economics.”

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… is this nugget of deep and timeless wisdom found on pages 362-363 of the 1999 Liberty Fund edition of Edmund Burke’s 1790 Reflections on the Revolution in France:

I do not deny that among an infinite number of acts of violence and folly, some good may have been done. They who destroy everything certainly will remove some grievance. They who make everything new, have a chance that they may establish something beneficial. To give them credit for what they have done in virtue of the authority they have usurped, or which can excuse them in the crimes by which that authority has been acquired, it must appear, that the same things could not have been accomplished without producing such a revolution.

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Here’s a letter to a new correspondent:

Mr. P__:

Thanks for forwarding the credulous review of the new book by George Monbiot and Peter Hutchison. If the review gives an accurate account of the book – and knowing something of George Monbiot, I’m confident that it does – I’ll not take you up on your suggestion that I “read this book to learn something finally.” Authors whose cases depend upon claims that are either outright lies or reflections of egregious ignorance deserve only to be distrusted and disregarded.

‘What lies or ignorance?’ you’ll ask. Overlooking minor flubs, such as the description of F.A. Hayek as being “a refugee from the Nazis” – Hayek, born of a Catholic family, moved to London in 1931 – here are two.

First, “neoliberalism” is most certainly not “a term popularized by the economist Friedrich Hayek.” Hayek championed liberalism, unprefixed. As reported by Bruce Caldwell and Hansjoerg Klausinger in their excellent 2022 biography of Hayek, the term “neo-liberalism” was suggested, as a better name for liberalism, in the 1930s by Louis Rougier to a gathering of liberals that included Hayek. This suggestion was rejected. As Caldwell and Klausinger note, “few used this term afterward, until it was revived by critics of liberalism later in the century.”*

Second and worse, it’s manifestly mistaken to write that Hayek in the Road to Serfdom argued that “social safety nets like the American New Deal and Britain’s emerging welfare state would diminish individual rights and inevitably lead to totalitarianism of the Nazi or Soviet kind.” In Chapter 9 of that book, Hayek explicitly acknowledged that the welfare state is compatible with the liberal society that he championed. He there distinguished between two kinds of security. One is “security against severe physical privation, the certainty of a given minimum of sustenance for all.” The second is security against losing one’s relative position in society. He then wrote that “there is no reason why in a society which has reached the general level of wealth ours has attained the first kind of security should not be guaranteed to all without endangering general freedom…. Nor is there any reason why the state should not assist the individuals in providing for those common hazards of life against which, because of their uncertainty, few individuals can make adequate provision.”**

The fact that Monbiot and Hutchison get such straightforward facts wrong drains their work of any claim to credibility.

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

* Bruce Caldwell and Hansjoerg Klausinger, Hayek: A Life, 1899-1950 (Chicago: University of Chicago Press, 2022), p. 461.

** F.A. Hayek, The Road to Serfdom (Chicago: University of Chicago Press, 2007 [1944]), pp. 147-148.

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In this Twitter thread, Phil Magness exposes the appalling dishonesty of some ‘researchers’ who persist in their tendentious efforts to falsely portray W.H. Hutt as a white supremacist.

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In a new paper for AIER, Samuel Gregg explains that “free trade generally enhances US national security, while economic nationalist or neo-mercantilist policies tend to undermine it.”

Writing in the New York Times, my GMU Econ colleague Bryan Caplan makes the case that “the best plan for housing is to plan less.” Three slices:

I would be the first to argue that if an economist claims to know of a cure-all policy — a reliable way to relieve a long list of social ills in one fell swoop — common sense tells you to stop listening.

So it is awkward for me to declare that I know of something close to a panacea policy: one big reform that would raise living standards, reduce wealth inequality, increase productivity, raise social mobility, help struggling men without college degrees, clean the planet and raise birth rates. It’s a sweeping reform that Democrats and Republicans, progressives and conservatives could all proudly support.

The panacea policy I have in mind is housing deregulation. Research confirms that there are large benefits in saying yes to tall buildings, yes to multifamily structures, yes to dense single-family development and yes to speedy permitting. The growing YIMBY (Yes In My Backyard) movement already has high-profile wins in Minnesota, Oregon, California and beyond, but even YIMBY devotees rarely appreciate the scope of the merits of loosening rules on housing.

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What would happen if homebuilders could once again freely build until housing prices were driven back down to cost? According to a conservative estimate, prices would ultimately fall about 50 percent on average nationally — with significant, wide-ranging implications. The most direct would be a sharp jump in the average American’s economic well-being. Since shelter is now roughly 20 percent of the average American’s budget, halving its price makes the cost of living 10 percent lower — and the standard of living 11 percent higher. This would be welcome news for those struggling to make rent or buy a first home. And while current homeowners would see their house values drop, those who sold to developers could still make a killing.

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Housing deregulation would be especially advantageous for one of America’s most downwardly mobile demographics: men without college degrees. Anne Case and Nobel Prize recipient Angus Deaton famously called attention to non-college males’ poorer job prospects and “deaths of despair.” But over 80 percent of construction workers have not graduated from college, and almost 90 percent are male. Construction is already a large sector, employing about 10 million workers at an average wage over $37 per hour, well above the average for full-time non-college males. Allowing even mild deregulation would therefore create millions of promising career paths — and well-paid ones at that — with full-throated deregulation adding millions more, all without requiring disaffected young men to learn to code.

Keith Richburg reports on the CCP authoritarianism now swallowing the once-great city of Hong Kong. Here’s his conclusion:

Hong Kong officials’ words belie their internal contradictions. They dismiss the expat exodus as wholly insignificant. But when outsiders say Hong Kong is becoming just another mainland city, they fire back indignantly — still keenly sensitive to any foreign criticism and eager to defend the city’s status as distinct from China.

They are finding out how difficult it is to tell both stories at once.

Brian Riedl warns of America’s worsening fiscal incontinence. A slice:

When President Joe Biden delivered his 2023 State of the Union address, Washington was drowning in a sea of red ink. The annual budget deficit was in the process of doubling from $1 trillion to $2 trillion in a single year due to some student-debt cancellation shenanigans. That year’s budget deficit would become the largest share of gross domestic product (GDP) in American history outside of wars and recessions. Economists at the Congressional Budget Office (CBO) and across the political spectrum warned that continuing to ignore the escalating Social Security and Medicare shortfalls while also opposing new broad-based taxes was unsustainable and could bring a painful debt crisis.

How did the nation’s highest elected officials respond to this economic challenge? Biden promised that “if anyone tries to cut Social Security [or] Medicare, I’ll stop them. I’ll veto it.” He also accused congressional Republicans of plotting to reform these programs—prompting outraged shouts from Republicans who resented the accusation of caring about the looming insolvency of the Social Security and Medicare trust funds. When the president triumphantly taunted that such boos reveal a new bipartisan consensus to do nothing about Social Security and Medicare shortfalls, both Republicans and Democrats leaped to their feet with thunderous cheers. For good measure, both parties endorsed Biden’s prohibition on any new taxes for 95 percent of families. Washington’s dangerous borrowing spree would continue with enthusiastic bipartisan support.

Sarah Montalbano details some of the contradictions of Biden’s climate policy. A slice:

The Bureau of Land Management on June 28 quietly shut down the last hope of the proposed Ambler Road project in northwest Alaska. Simultaneously, the bureau also recommended that no mining, oil or gas development be allowed across 28 million acres of Alaska’s federal land under the Alaska Native Claims Settlement Act.

The decisions limit economic opportunities for Alaskans, but East Coast denizens should care too. Denying the construction of the Ambler Road blocks access to a wealth of minerals needed for the Biden administration’s clean-energy agenda. The government’s right hand would be wise to consult what its left is doing.

The Ambler Road was a proposed 211-mile private-access road in Alaska’s Northwest Arctic Borough. The Ambler Mining District holds significant quantities of zinc, lead, silver, cobalt and copper—the last two of which are critical to electric vehicles, solar panels and battery storage.

Jonathan Adler shares news of a U.S. District Court ruling that the U.S. Congress may not exercise powers that are not among those enumerated in the Constitution as delegated to the U.S. Congress.

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… is from page 2 my former Mercatus Center colleague Dan Griswold’s April 2023 paper with Andreas Freytag, “Balance of Trade, Balance of Power: How the Trade Deficit Reflects U.S. Influence in the World“:

The [U.S. trade] deficit is not a symptom of weakness in manufacturing or the overall economy, or of unfair trade practices abroad, but a manifestation of underlying strength, enhancing U.S. “soft power” in the world during a time of rising tension with global rivals such as Russia and China.

DBx: This visual shows per-country inflows, in 2019, of foreign direct investment (FDI). Every dollar of FDI that flows into the U.S. makes the U.S. trade deficit larger than it would otherwise be. I wonder how many are the people who, with one breath, sincerely wish good luck to governors of U.S. states and mayors of U.S cities who travel abroad to encourage foreigners to invest in their locales, and then, in the next breath, bemoan U.S. trade deficits and demand that Washington do something to reduce these so-called ‘deficits.’