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Art Carden reviews my GMU Econ colleague Bryan Caplan’s new graphic non-fiction book, Build, Baby, Build. A slice:

We don’t have as much housing as would be necessary to keep housing costs low because it’s illegal. Governments manufacture scarcity by wrapping building permissions in red tape. It’s absurd, for example, that so much space is zoned for single family detached housing. Many lots where apartment complexes and towers would fit are, unfortunately, limited to single family detached housing: 75 percent of residential land in LA, 77 percent on Portland, 79 percent in Chicago, 81 percent in Seattle, 84 percent in Charlotte, 94 percent in San Jose, and 38 percent in San Francisco. He states his point clearly on page 64, and I paraphrase: the status quo closes off some options, which wastes land, which makes all the options more expensive.

My Mercatus Center colleague Ben Klutsey explains that “America’s ‘non-crusaders’ personify the case for classical liberalism.” A slice:

Political liberalism ensures our freedom to participate in self-governance. Economic liberalism promotes the freedom to innovate, produce and exchange goods and services for our mutual benefit. Epistemic liberalism encourages freedom of thought and expression, as well as respectful exchange of conflicting ideas. And cultural liberalism encourages us to respect the choices of others so long as they don’t violate anyone else’s rights.

The Editorial Board of the Wall Street Journal reports that reality isn’t optional even in California and even when it comes to minimum wages.

As usual, Democrats don’t want to eat their own lousy cooking. Gov. Newsom this spring also signed legislation to carve out fast-food restaurants on government property from California’s new $20-an-hour fast-food minimum wage, which kicked in last month. Democrats don’t want the mandate interfering with government concession licenses.

California’s wage minimums are another illustration of how progressive mandates boomerang. Average weekly earnings for leisure and hospitality employees in California have declined by 2.6% over the last year owing to a steep drop in hours worked. By contrast, those average weekly earnings rose 3% nationwide, 3.2% in Florida and 5.2% in Texas.

Tom Savidge warns about the explosion in so-called “entitlements.”

GMU Econ’s Alex Tabarrok explains that the FDA is blocking your access to effective sunscreen. A slice:

Americans visiting beaches in France, Spain or Italy often do something that’s illegal back home: They purchase and use European sunscreens for better protection against sunburn and skin cancer. Many dermatologists argue that American sunscreens are far behind the scientific frontier, and they worry that the Food and Drug Administration’s decadeslong delay in approving new sunscreens for purchase in the U.S. is contributing to rising rates of skin cancer.

David Friedman asks if climate catastrophe passes the giggle test. Here’s his conclusion:

The claim that we have good reason to expect climate change on a scale that will produce not merely problems for some but catastrophe for many is one that no reasonable person should take seriously.

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Quotation of the Day…

… is from pages 95-96 of the 1948 printing of the second edition (1935) of Lionel Robbins’s classic 1932 tract, An Essay on the Nature & Significance of Economic Science (original emphasis; footnote deleted):

Every first-year student since the days of Adam Smith has learnt to describe equilibrium in the distribution of particular grades of labour in terms of a tendency, not to the maximisation of money gains, but to the maximisation of net advantages in the various alternatives open.

DBx: I offer this quotation from an influential book written nearly a century ago by one of the 20th-century’s most prominent economists as evidence that economists do not assume that each person acting in the market seeks maximum monetary gains to the exclusion of the satisfaction of all possible non-monetary benefits. And yet pundits who wish to discredit economics continue to insist that economics is narrowly focused on the maximization of monetary gains and, thus, cannot be trusted as a guide to public policy in a world in which individuals, in their roles as producers, have multiple goals not all of which involve increased monetary income.

These critics of economics either are ignorant of economics or they choose to distort it. (I suspect that the former is more likely, in most cases.) Slaying an especially pathetic straw man, these critics of economics take pride in their intellectual victory and then proceed to recommend government policies – for example, protective tariffs – that they mistakenly suppose are immune to the criticisms offered by competent economists. These critics never stop to consider that if their straw man were real, then economics would predict that individuals would spend only enough money to keep themselves in peak condition as producers.

Ironically, if this straw man were real, economists would be leaders of the cult that insists that genuine consumption is not and ought not be among anyone’s activities. And Adam Smith would never have said what he said about consumption.

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Some Links

Jon Miltimore praises the great Jimmy Lai – and the Hong Kong now being murdered by the thugs in Beijing.

Arnold Kling insightfully asks if an artificial-intelligence personal computer is an oxymoron.

Fiona Harrigan is correct: “Trump’s mass deportation plan is anti-American.” A slice:

Mass deportations would prompt American “business owners to cut back or start fewer new businesses, in some cases shifting their investments to less labor-intensive technologies and industries, while scaling back production to reflect the loss of consumers for their goods,” warned George Mason University economist Michael Clemens. “Prior episodes of mass deportations and exclusions” in U.S. history, Clemens continued, have reduced both employment and earnings for American workers “in the short run and long run.”

David Friedman reflects on what it’s like to be brought up by libertarian parents – in his case, brought up by Milton and Rose Friedman.

Alabama’s Attorney General, Steve Marshall, writing in the Wall Street Journal, explains that California’s “effort at setting national energy policy is misguided and unconstitutional.” A slice:

Interstate emissions and national energy policy are inherently federal issues that must be resolved under federal law by federal courts. Congress decides how to regulate national energy production and interstate emissions and has done so through laws setting standards for pipelines, power plants and other things that use oil and gas. Congress has never passed a law disrupting the balance of state and federal power in this area; nor has it empowered states to impose their own half-baked climate schemes on their neighbors.

GMU Econ alum Ninos Malek warns of the dangers of antitrust. A slice:

Antitrust legislation ostensibly exists to maintain a competitive market economy; however, it is often wielded as a governmental tool to punish success. Not surprisingly, antitrust laws are supported by less successful businesses against their more formidable rivals. In addition, the words control and power are often misused when referring to business activity. Companies like Google, Apple, Amazon, Meta, and Microsoft are often portrayed as monopolies that exercise control and power. However, this obscures the true essence of what competition really is. Trying to “kill off” one’s competitors is the goal of dominating a market. Attempting to prevent other companies from successfully negotiating deals with rival firms is not anti-competitive. In fact, these are clear examples of real competition. Power and control imply force; in the case of Google and other “tech monopolies,” they cannot force individuals to use their services. Unfortunately, this point is often ignored by standard economics textbooks and economists who label themselves as “free market”-oriented.

Libertarians booed Donald Trump because he isn’t libertarian.”

Eric Boehm isn’t swallowing Vivek Ramaswamy’s insistence that the nationalism peddled today by the likes of Donald Trump and Robert Lighthizer is nothing more than “national pride and identity.” (Also disagreeing with Ramaswamy is David Henderson – see the comments.)

Wall Street Journal columnist Allysia Finley wants to know what Fauci’s senior adviser, David Morens, was hiding. Two slices:

The Covid pandemic wasn’t government’s finest hour, not least because of a persistent lack of transparency. Emails released last week by the U.S. House reveal how Anthony Fauci’s former top adviser worked to keep the public in the dark and thwart investigations into Covid’s origins.

…..

Dr. Morens noted in another email to Dr. [Gerald] Keusch: “I learned the tricks last year from an old friend, Marg Moore, who heads our FOIA office and also hates FOIAs.” FOIA productions are burdensome, but government officials are required by law to preserve their emails and to conduct government business on government accounts.

Dr. Morens didn’t, and his emails suggest Dr. Fauci might also have used private addresses in this manner. Dr. Morens wrote to Mr. [Peter] Daszak on April 21, 2021: “PS, i forgot to say there is no worry about FOIAs. I can either send stuff to Tony on his private gmail, or hand it to him at work or at his house. He is too smart to let colleagues send him stuff that could cause trouble.”

The next day, Dr. Morens wrote to Dr. Keusch: “If i had to bet, i would guess that beneath Tony’s macho I-am-not-worried reaction he really is concerned. And whatever the case he should be very concerned about what happened to Peter, to our research portfolio in an extremely important area, and to scientific independence.”

Daniel Hadas tweets: (HT Jay Bhattacharya)

Lockdown was a war on society, or a war of society on itself, because it attacked every bond that holds groups of people together, that makes them more than bio-mass sharing the same spaces.

Accordingly, it began by attacking the family, the earliest and tightest bond of all.

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Quotation of the Day…

… is from page lix of the late John Chamberlain‘s Forward as it appears in the 2021 70th anniversary edition of William F. Buckley, Jr.’s, 1951 book, God and Man at Yale.

[T]here is no compulsion on the decent human being to be “with history” when history is driving headlong toward an abyss. The compulsion to be “with history” denies the moral freedom of man.

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Some Links

David Friedman remembers his father. A slice:

Economists are supposed to think about the effect of incentives. The existence of the Federal Reserve, established to serve as a lender of last resort, meant that private banks believed it was no longer necessary for them to take expensive precautions against a run on the banks bringing down the banking system. When the run came the Fed did nothing about it and the system crashed. [Paul] Krugman’s implication that if there was no Fed to prevent it the Great Depression would still have happened is like claiming that if Lucy had not promised Charlie Brown that she would hold the football for him he still would have tried to kick it and gone head over heels.

GMU Scalia Law professor Todd Zywicki ponders the U.S. Supreme Court’s ruling in favor of the Consumer Financial Protection Bureau. A slice:

All the opinions in CFSA v. CFPB, including Alito’s dissent, miss this fundamental point. The primary problem with the CFPB’s structure is not that it represents Congress ceding its authority over the purse to an unaccountable agency (now, even more surreal, an executive agency that draws its funding from an independent agency, i.e., the Federal Reserve, with no formal appropriation from Congress). The problem is that Congress in 2010 ceded the authority of future Congresses over the CFPB’s budget.

John Phelan helps to bust the ridiculous myth of the so-called “pink tax.”

The secret ballot meant victory for Mercedes-Benz workers.” A slice:

The secret ballot is a game-changer. Last week it protected thousands of Alabama auto workers from being forced into union representation against their wishes.

Workers at two Mercedes-Benz factories voted in an election ending May 17 against joining the United Auto Workers, one of the nation’s largest unions. Nearly 4,700 of about 5,100 eligible employees cast ballots, rejecting the union by a margin of 56% to 44%. The outcome surprised many observers because in early April, about 70% of the factory workers petitioned the National Labor Relations Board for an election. That made it seem like unionization was all but guaranteed.

But it wasn’t, for a simple reason. The UAW obtained the 70% by asking workers to sign cards indicating their support for unionization—the same cards used for a process called “card check.” The card-check method for union organizing is infamous for encouraging the intimidation and harassment of workers hesitant to join a union by other workers who are pro-union. When your co-workers can see your stance on unionization, you have an incentive to go along with the loudest voices, which typically belong to activists. Union organizers have even been known to visit workers’ homes to urge them to unionize. The use of cards also allows unions to present workers with a one-sided story, which undercuts workers’ ability to make informed decisions.

Judge Glock argues that “‘Neopopulism’ is overhyped.” (And read also GMU Econ alum Dominic Pino.)

Pierre Lemieux is having none of the widespread nonsense that Chinese ‘leaders’ and their mandarin underlings, wielding economic-planning schemes, are a mighty force for bringing widespread prosperity to the Chinese people.

Wall Street Journal columnist Daniel Henninger argues that “the president is using the U.S. Treasury like a 1920s party boss’s safe.” A slice:

But has election politics ever seen spending on such a massive scale for the sole purpose of producing votes? Let’s depart from the cuddlier labels for this phenomenon and call it what it is: Biden’s bribes. Mr. Biden is using the U.S. Treasury the way a 1920s party boss would use the safe behind his desk.

Most polls have indicated for months that the 81-year-old president’s support among younger voters is soft. Worse, their turnout is relatively poor in most elections.

Voilà, the Biden student-loan debt-forgiveness plan. Questions of moral hazard aside, one may argue that with more than 40 million Americans owing about $1.7 trillion in federal and private student loans, some measure of forgiveness could be defended by a Democratic president.

But the Biden proposal tripped the what-the-heck-is-going-on alarm. It totaled $430 billion in write-offs for about 30 million borrowers. No surprise, the Supreme Court ruled that Mr. Biden overstepped his presidential spending authority. Chief Justice John Roberts wrote that the administration’s description of the plan as a “modification” was true “only in the same sense that the French Revolution ‘modified’ the status of the French nobility.”

D.G. Hart reflects on Jerry Seinfeld’s reflections on work and love.

Inspired by Mother’s Day, GMU Econ alum Liya Palagashvili offered some sound advice.

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Quotation of the Day…

… is from page 321 of the 1936 English-language edition (translated from German by Alfred Stonier and Frederic Benham) of Gottfried Haberler’s magnificent 1933 work, The Theory of International Trade: With Its Application to Commercial Policy:

The decisive argument against pure export bounties, stated by Adam Smith and in a still better form by Ricardo, is the same as that against tariffs. Export bounties divert trade away from the lines indicated by comparative costs. Such bounties are a gift to the foreigner. Either they induce the economy to produce goods which could be obtained at less expense from abroad in exchange for others, or they induce subsidized industries to expand their production beyond the point at which (owing to diminishing returns) it ceases, from the rational standpoint of comparative costs, to be profitable.

DBx: Indeed so. Yet this reality is lost on the many politicians and pundits who assert that Beijing, by subsidizing Chinese producers who export to the United States, is harming Americans as it enriches China. In reality, such Chinese subsidies put America first and, simultaneously, make the Chinese people poorer than they would otherwise be, and the Chinese economy less productive.

And it’s insane that these complaining politicians and pundits in the U.S. demand that, to counter China’s self-damaging efforts, we Americans should inflict similar, or perhaps even worse, damage on ourselves.

Encountering the yammering or writing about trade by any randomly selected politician or pundit is akin to encountering yammering or writing by people who treat it as axiomatic that up is down, left is right, hot is cold, less is more, small is big, and 10-3=15. In the bizarro alternative universe of the protectionist, Jones, by wasting ever more of his resources and energy, enriches himself both absolutely and relatively to Smith, and at the exclusive expense of Smith – and Smith’s only hope of reversing this fate is to mimic (or, better, outdo) Jones at wasting ever more of his resources.

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Averages Can Mislead

Here’s a letter to the Wall Street Journal:

Editor:

Donald Luskin argues compellingly that the recent influx of immigrants is buoying the U.S. economy (“Open Borders Produced the Biden Economic Boom,” May 24). But his case is even stronger than he supposes. He’s not quite correct to write that “it is likely the case that the new foreign-born adults are diluting the productivity of the U.S. economy by arriving with few skills and with language and education deficits.”

The addition to the labor force of a worker whose skills are below average ‘dilutes’ the economy’s productivity only in the same way that the arrival of an infant child into a family ‘dilutes’ the height of the family members. What is ‘diluted’ is only the family’s average height; the infant’s arrival causes no individual’s height to fall. Mom and dad don’t shrink and big sister continues to grow. The family’s total height increases.

And so it is with the arrival of lower-skilled workers. They do pull down average worker productivity, but this statistical reality does not imply that the productivity of existing workers or of the U.S. economy falls. Indeed, by complementing existing workers, more low-skilled workers can raise the productivity of their higher-skilled counterparts, and of the economy at large, even as the measured average worker productivity declines.

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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Some Links

GMU Econ alum Dominic Pino: “We’re now seeing the results of Biden’s self-consciously big-government economic agenda. Turns out people don’t like it very much.”

George Leef reviews Carol Swain’s The Adversity of Diversity. Two slices:

Swain’s book opens with a foreword by the famed Harvard Law professor Alan Dershowitz, who was a civil-rights activist back in the 1960s. He agrees with Swain that America has departed disastrously from the integrationist goals of the old civil-rights movement. Today, it employs force to disrupt our institutions and violate the rights of disfavored groups, while accomplishing little if any good for struggling blacks. It’s good to see a traditional white liberal voicing support for a black conservative who believes that America made a tragic mistake when it turned away from the goal of equal rights for all.

…..

Swain emphasizes the depth to which the DEI agenda has taken root in American higher education. At the University of Texas, for example, there were 171 positions for “diversity” administrators at the time of Swain’s writing, costing over $13 million per year. In her view, that expense is worse than useless, since the diversity message is anti-educational—disinformation intended to sow the seeds of social discord by making whites feel guilty and blacks angry at their supposed oppression.

Kevin Corcoran exposes some of Tucker Carlson’s jejune ignorance.

The state of New York spends a lot per pupil on education.

Bjorn Lomborg decries green ‘activists” inhumanity.

Here’s David Bier on the Immigration Act of 1924. A slice:

No law has so radically altered the demographics, economy, politics, and liberty of the United States and the world. It has massively reduced American population growth from immigrants and their descendants by hundreds of millions, diminishing economic growth and limiting the power and influence of this country. Post‐​1924 Americans are not free to associate, contract, and trade with people born around the world as they were before.

Writing in the Wall Street Journal, Donald Luskin makes the case that the surge in immigration over the past few years is a major source of America’s current economic growth. Three slices:

Consider the 3.2 million increase in the foreign-born adult population in the U.S. in the 21 months since July 2022. We start at that date because it gives us a clean slate, free from the effects of the pandemic lockdown and reopening. And this period captures the full effect of the Biden administration’s loose border policies.

Over that period, foreign-born employment has increased 1.8 million—meaning that roughly 56% of the 3.2 million new foreign-born adult population became employed. Setting aside the political matter of how much of this employment is legal, the stereotype that immigrants don’t or can’t work appears to be false.

These numbers come from the Bureau of Labor Statistics in its monthly jobs report. They are collected in the Current Population Survey—the so-called household survey—which is used to calculate the national unemployment rate. It’s an old-fashioned door-to-door census of 60,000 households in which respondents are asked, among many questions, whether they are native-born or foreign-born. They aren’t asked if they are in the country illegally, and no doubt some are. But illegal aliens may be harder to find and less likely to answer a knock on the door, so the BLS probably undercounts them.

Even undercounted, the foreign-born represent 80% of the 4.1 million U.S. adult population increase since July 2022, and they account for 71% of the 2.5 million new jobs. All else equal, without the new foreign-born workers, total job growth in the economy would have been about 86,000 less every month—only 724,000 over the period, not 2.52 million.

…..

Yes, new immigrants put incremental demands on roads, hospitals, schools and other resources. But so do new native-born citizens. For either population, the question is what they produce as well as what they consume. The evidence shows that the foreign born are more likely to be producers than the native-born. In total, the foreign-born employment-to-population ratio is 63.4%. For the native-born, it is only 59.6%. By hook or by crook, legal or illegal, new immigrants are working.

……

Such a policy is unsustainable in any case. Under capitalism, economic growth depends on trust—on the ability of economic participants to rely on others’ adherence to a set of defined and stable rules. The ad hoc lawlessness of the Biden border policy undermines that, and unless it can be stabilized it will be corrosive to long-term growth prospects. On the other hand, a border crackdown such as Donald Trump has proposed could end up leading to slower growth. Whoever is president in 2025 will need to take great care in balancing these urgent interests.

Randy Holcombe, dismayed by the intensification of tyranny in the country of Georgia, understands political ‘leaders” motivations. Two slices:

The voices of freedom in the Republic of Georgia (the former Soviet republic, not the home of the Bulldogs) will be substantially less audible thanks to a new law passed by Parliament. Organizations receiving more than 20% of their funding from foreign sources must be designated as “agents of foreign influence.”

Nonprofits in Georgia that have advocated for freedom and free markets receive a substantial share of their funding through grants from foreign foundations. That is likely to come to an end.

…..

This law will mute the voices of freedom in Georgia and turn the country, which for two decades moved away from Russian influence toward the West, back toward heavy-handed Russian-style governance.

Why would Georgia’s political leadership turn their backs on the institutional reforms that have shown such success for two decades? The main goal of those who have political power is to maintain and increase their power. The well-being of the masses is, at best, a secondary consideration. We can hope for the sake of the Georgian people that this is not the first step that will turn Georgia into another Venezuela.

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Quotation of the Day…

… is from page 5 of Robert Ekelund’s and Robert Tollison’s fascinating 1981 book, Mercantilism As a Rent-Seeking Society:

The balance-of-trade objective was nothing more than the by-product of the interplay of numerous self-interested parties who were seeking rents from monopolization in these early nation-states.

DBx: Yes. And so the balance-of-trade (or, more generally, the balance-of-payments) concept remains today good for nothing more than generating excuses for each government to burden the bulk of its citizens with trade restrictions and subsidies designed in fact to enrich a small handful of politically influential producer groups.

…..

Bob Ekelund (1940-2023) was my dissertation advisor at Auburn University. Bob Tollison (1942-2016) was my former colleague at George Mason University. I miss them both.

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