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Quotation of the Day…

… is from page 189 of Thomas Sowell’s 1993 collection, Is Reality Optional?:

The kind of people we need in Washington won’t go to Washington.

DBx: Indeed. And precisely the kind of people that we absolutely do not need to go to Washington are the very ones who are most eager to take up residence in the Potomac swamp and wrap their arrogant or venal hands around the levers of arbitrary power.

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Some Links

Mike Munger explains “government failure in one lesson.” A slice:

Perhaps the easiest way to explain government failure in one lesson is to remember that there is no such thing as “the state.” Instead, essential decisions about resource use will be made by political actors. This suggests what I have called “The Munger Test.” If someone says, “I believe that government should make decisions about what information is true in an emergency, and what should be censored!”, then you should make a simple suggestion: Take out the word “government,” and replace it with “Trump” (or “Biden,” I’m not making a partisan point).

Richard Epstein warns of greater politicization of U.S. military academies. A slice:

A lame-duck President Trump appointed Heidi Stirrup to a three-year term on the Board of Visitors to the U.S. Air Force Academy in December 2020. Joe Biden became president the following month, and his administration launched a frontal assault on the independent status of the board, along with its counterparts at the Army’s and Navy’s academies.

First, without any statutory authorization, Defense Secretary Lloyd Austin usurped the boards’ system of internal governance by suspending all board activities while he conducted a “zero-based review” of their operation—a review that could have gone on without that suspension. Next, Mr. Austin assumed the authority to delegate the business of the boards to subcommittees, none of whose members had to be member of the boards.

Then in September 2021, he terminated all remaining Trump appointees on one day’s notice. No other administration, including Mr. Trump’s, has ever purged rival members of the boards, who by statute are required to exercise their independent judgment and offer balanced perspectives on the academies’ activities not only to the president but to Congress, the service academies and the public at large. Press secretary Jen Psaki clumsily justified this crude sacking by complaining that they didn’t back Mr. Biden’s victory on Jan. 6, 2021, or share his “values.”

Here’s Arnold Kling on Javier Milei.

Also writing about Javier Milei is Andrew Stuttaford. A slice:

Milei has been president for only six months, but Argentina has announced its first quarterly fiscal surplus since 2008. Meanwhile, monthly inflation is falling, down to 4.2 percent in May (below expectations of around 5 percent) against 8.8 percent in April. Milei’s legislative agenda also took a step forward last night with a tied senate (the vice president cast the deciding vote) advancing a version of his legislative program amid sometimes violent protests outside the congress.

There is a long, long way to go. Life for many Argentines remains desperately hard. Nevertheless, Milei seems to enjoy around a 50 percent approval rating. “There is no alternative” (TINA) as Mrs. Thatcher used to say.

My treasured GMU colleague Dan Klein is someone whose intellect and integrity I very much respect, so I post here this recent essay of his, that he co-authored with Zachary Yost, with which I find much to disagree.

The essay by Reason‘s Peter Suderman – in response to the Klein-Yost piece – is one that I find myself in more agreement with. A slice:

It’s not just that Trump isn’t a libertarian or a limited government ideologue. It’s that he’s a classic strongman, with a clear predisposition is toward an authoritarian form of politics in which he understands himself to be above the law and immune to checks on power.

Like so many populist demagogues, he has encouraged ugly xenophobic passions and violent mob actions while running on slogans about locking up his political opponents. He has repeatedly expressed disdain for free speech and the free press, and as president threatened (and perhaps actively pursued) unconstitutional legal changes and retaliatory action against those who criticized him. Trump has demonstrated little concern for individual rights, except his own.

More ominously, Trump has engaged in self-serving fantasies of stolen elections. Over the years he has refused to concede legitimate election results on multiple occasions, even, hilariously, when he won. With assistance from his henchmen and cronies, Trump took steps to subvert the results of a presidential vote. Trump may not bear legal responsibility for the Capitol riot on January 6th, but he bears some moral responsibility. The foundation of democratic governance is the peaceful transfer of political power. As president, Trump facilitated political violence intended to strike at that foundation.

Joe Biden is a big government liberal whose second term would further expand the size and scope of government. But in contrast with a bullying populist demagogue like Trump, a libertarian who values the American constitutional order might still reasonably view Biden as the lesser evil.

Personally, that’s not my view. I believe that Trump and Biden are both awful. I won’t be voting for either.

Juliette Sellgren talks with GMU Econ alum Anne Bradley about the political economy of terrorism.

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Quotation of the Day…

… is from page 286 of historian William Manchester’s gripping 1992 book, A World Lit Only by Fire:

[T]he most barefaced lies die hard when influence and prejudice have a vested interest in them.

DBx: “Trade deficits cause unemployment and impoverish us!” – “We must subsidize our exports as long as other governments subsidize other-countries’ exports!” – “Government should limit the amount of money spent on political campaigns!” – “Government schooling will be improved only if schools are given more taxpayer money!” — These fallacies and countless others live on not only because of economic ignorance, but because this ignorance is fed upon, and fed by, venal interest groups who benefit from the continued widespread belief in these fallacies.

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Don’t Be Beguiled By Talk of “the Common Good”

Here’s a letter to National Review Institute President Lindsay Craig:

Ms. Craig:

I’m pleased to read your report that Capital Record’s David Bahnsen defended the free market against Oren Cass’s mistaken notions (Email, June 13). Not the least-mistaken of Mr. Cass’s notions is the one you single out – namely, his assertion that “policy makers have to have some conception of the common good.”

No they don’t. As I’m sure you and Mr. Bahnsen agree, one of the merits of the liberal market order is that it allows each of us to pursue our individual ends absent any need to agree on, or to aim for, anything called the “common good.” The only appropriate legally enforced boundaries on individuals’ pursuits of their ends is that they do so in ways that are consistent with everyone else’s equal ability to pursue their ends – which means that no one gets to defraud or coerce anyone.

This merit of the liberal market order is great. Because of the diversity of individuals’ particular interests, ends, and understandings of ‘the good,’ to impose any specific “common good” goal of the sort that Mr. Cass favors necessarily requires coercing the majority of people to abandon their own ends in order to assist in the pursuit of the particular ends enforced by those who currently hold political power.

Imposing a “common good” sounds splendid only to negligent or foolishly romantic minds. Serious, sober thinkers agree with the late political philosopher Anthony de Jasay who explained that “any political decision that, by invoking the common good, overrides the will and wishes of some to satisfy others, is the execution of a value judgment about individual wills and wishes.”* And there is no reason whatsoever to suppose that the particular value judgments of those persons who excel at grabbing political power are superior to the value judgments of the individuals who Mr. Cass wishes to compel to behave as he believes they should behave.

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

* Anthony de Jasay, Against Politics (London: Routledge, 1997), p. 70.

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Bonus Quotation of the Day…

is from page 158 of the 5th edition (2020) of Douglas Irwin’s superb book Free Trade Under Fire:

The perception that imports have destroyed good, high-wage jobs in manufacturing is largely mistaken. It is closer to the truth to say that imports have destroyed bad, low-wage jobs in manufacturing. This is because wages in industries that compete against imports are well below average, whereas wages in industries in exporting industries are well above average.

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Some Links

Testifying yesterday before Congress, the Cato Institute’s Scott Lincicome continues to bust myths about the state of American manufacturing. Two slices:

Second, we must also consider the actual return on these investments. When the government showers preferred companies with trillions of taxpayer dollars and numerous restrictions on foreign trade competition, the policies will inevitably produce something in the real economy. The question is what, exactly, all that government support is getting us. If, for example, the policies generate hundreds of billions of dollars in private manufacturing investment that eventually translates into dozens of vibrant, innovative, and globally competitive American factories and a sterling U.S. economy, then the federal government’s gamble will have paid off. On the other hand, declarations of policy victory today will look foolish in retrospect if government coddling results in a few such successes but as many or more failures—not just a few empty fields or moribund facilities but entire companies and industries that depend on continuous federal protection or support—and myriad unintended or unseen costs in the broader U.S. economy.

Today it is too early to definitively say what new U.S. industrial policy will produce. However, there are already signs that the subsidies and protectionism supposedly fueling a U.S. manufacturing “boom” are encountering problems both domestically and internationally—problems that could undermine the industrial policies’ objectives at great budgetary and economic cost, and ones that the United States has encountered many times before in previous industrial policy experiments.

…..

Today’s uncoordinated and predictable subsidy race raises several concerns. First, it could offset or even undermine the very domestic investments that the U.S. industrial policy is trying to encourage. Semiconductor subsidies, for example, were largely justified on the grounds that the United States’ share of global chipmaking has declined substantially in recent decades. However, as the Wall Street Journal recently reported, the Boston Consulting Group estimates that the semiconductor “building boom” here will—optimistically assuming everything announced actually gets built—boost the U.S. share of global chip production from 12 percent in 2020 to just to 14 percent in 2032, largely because other governments are also “stepping up” their own spending on these industries.

Vance Ginn is right that protectionists are wrong.

The Editorial Board of the Wall Street Journal reports on the increasing craziness of “the EV tariff wars.” A slice:

All of this is a classic illustration of how one policy blunder begets another, which begets another, and then another. EV mandates force consumers to buy cars that costly European climate policies force manufacturers to make in China. Then Europe imposes tariffs on those EV imports, raising prices for the EVs it forces companies to make and consumers to buy. This is the definition of economic masochism.

The solution to this non-conundrum is so obvious maybe someone in Brussels will spot it eventually. If Europe doesn’t want its auto makers and their suppliers to go out of business, the EU can allow these companies to make, and consumers to buy, whatever cars they want. If Europe is worried about unfair competition from China, it can stop requiring Europeans to buy EVs whose production Beijing subsidizes.

George Will is decidedly unimpressed with Alvin Bragg’s criminal case against Donald Trump. A slice:

Bragg campaigned in 2021 promising to continue trying to hold Trump “accountable,” noting that in the New York attorney general’s office he had sued Trump “more than a hundred times.” In 2023, seven years after a particular Trump misbehavior, but just in time to influence this year’s election, Bragg indicted Trump for “34” felonies. One dead misdemeanor (falsifying business records; the statute of limitations has long since expired) was resuscitated and carved into 34 slices. These were inflated into felonies by claiming they were done to facilitate a crime. (Bragg often has a progressive’s penchant for reducing felonies to misdemeanorsc— e.g., some first-degree robberies are now charged as petty larcenies.) Bragg says:

Trump used bookkeeping dishonesty in 2017 (about paying hush money, which is not illegal) to influence the 2016 presidential election. (A puzzling understanding of causation.) He was a candidate in the 2016 election he is accused of somehow illegitimately trying to influence. This violated a federal campaign finance law. (Enforcement of which Congress assigned to the Federal Election Commission, not to local district attorneys.)

Richard Ebeling looks back at the 1974 meeting at South Royalton, Vermont, of Austrian economists (and Milton Friedman). A slice:

Those lectures at the South Royalton conference half a century ago this year, have resulted in a vibrant and productive rebirth of the Austrian School of Economics. It has seen the refinement and refashioning of the original ideas for which the Austrian Economists were internationally renowned in the late nineteenth and twentieth centuries, and which have now been taken into numerous new directions of theoretical and public policy significance.

Here’s more wisdom and insight from Arnold Kling.

My intrepid Mercatus Center colleague, Veronique de Rugy, is not letting the Biden administration get away with shifting the blame for Americans’ current economic woes onto others. Two slices:

Constrain supply, and prices will rise. But that hasn’t stopped Biden from blaming energy companies—the same companies that reduced prices to record lows in relatively freer markets during the Trump administration. He’s now threatening them with tax hikes, which would be passed on and increase consumers’ costs even more.

…..

It’s nothing new to see politicians blaming others for the error of their ways. Long gone are the days of President Harry S. Truman’s “The buck stops here” philosophy. Our current president would be more successful if he reversed course, ending the spending orgy that’s undermining the American family and restoring a sense of fiscal responsibility to the nation’s budget.

Mandatory national military service is a bad idea.”

Congrats to CEI president Kent Lassman!

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Quotation of the Day…

… is from page 147 of Tulane University philosopher Eric Mack’s excellent 2018 book, Libertarianism (original emphasis):

That function and virtue [of the market order] is to enable people with their own distinct and separate system of ends to engage in mutually beneficial cooperative interaction. The prospect of market reciprocity explains why people with deeply different ultimate values need not be enemies but, instead, can live at peace with one another to their mutual advantage. That prospect shows that people do not have to be remolded into devotees of some common “higher” end in order to live well with one another. It shows how a deeply pluralistic and tolerant social order is feasible.

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Here’s a letter to Barron’s.

Editor:

After surveying the history of American trade policy, Kenneth Pringle expresses criticism of America’s post-war turn to freer trade by asking rhetorically “how’s that working out?” (“Forget Free Trade. Biden’s Use of Tariffs Follows a Long History in the U.S.” June 12). Clearly he thinks the obvious answer is ‘Not so well’ given that he follows this question by writing that “China has been subsidizing key industries, according to Biden, ‘and then dumping the excess products onto the market at unfairly low prices.’ That’s what the new tariffs are meant to counter.”

I have my own rhetorical question: How, exactly, does Beijing enrich China and impoverish America by forcibly directing Chinese labor and resources to produce large amounts of outputs for sale to Americans at bargain prices? Common sense and sound economics say that this policy of Beijing makes the Chinese poorer and Americans richer, for this policy results in a net transfer of valuable resources from China to America.

To the extent that we Americans have reason to worry that China poses a military threat, we should stop complaining about Beijing’s policy of “dumping” goods in America and proceed to actively encourage Beijing to double-, triple-, or quadruple-down on such “dumping.” The more such dumping occurs and the longer it lasts, the richer we become at China’s expense.

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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The Super Market

In my latest column for AIER I use the supermarket to celebrate the super market. A slice:

Like the typical American, I go to the supermarket a lot. But probably unlike the typical American, every time I go to the supermarket I silently rejoice at my good fortune to be able to frequent this beautiful testimony to the immense productivity of the market economy. Literally, in the past 40-plus years, I’ve never gone into a supermarket without at least once consciously marveling at the economic processes that reliably, yet without ostentation, keep that emporium of affordable material wonders constantly stocked.

Indispensable to the seemingly commonplace modern supermarket is the system of market prices. How do prices work to stock supermarkets? The analogy that I’m about to offer isn’t perfect, but it’s nevertheless instructive.

Think of a supermarket as an anthill. And think of yourself — a customer of that supermarket — as a queen ant. Everyday countless worker ants scurry around the surface of the earth in search of food and other goods to bring to you for your sustenance and convenience.

How do the workers know what to bring? Market prices! Each of the hundreds of millions of individuals who exerted some effort to make possible the bounty that now resides in your favorite supermarket had to be accurately informed about what to do to make his or her contribution, and sufficiently motivated to do it. Just as actual ants follow pheromones to lead them to sources of food to bring back to the colony, entrepreneurs and workers follow market prices to direct their efforts that result in food and other goods being brought to supermarkets. Like each individual ant, no entrepreneur or worker does what he or she does as a self-sacrifice to the group. The ant is programmed by nature to follow pheromones in a way that causes that little creature’s efforts to be coordinated with those of his fellow ants to support a thriving colony that no ant designed and is of such complexity that no ant could possibly comprehend it.

We humans aren’t programmed by nature to do what we do in our roles as producers. But we are programmed by nature to be able, rather reliably, to distinguish courses of action that promote our individual interests from courses of action that don’t.

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Some Links

GMU Econ alum Dave Hebert explains that so-called “trade deficits” are “accounting masquerading as economics.” Two slices:

Trade deficits are one of, if not the, most misunderstood concepts in all of economics. The Build America Buy America Act, which this month celebrates its second anniversary of taking effect, seeks to reduce trade deficits by restricting the use of imported goods for certain infrastructure projects. Last month, President Biden suggested reducing our trade deficit with China by “tripling the tariff rates for both steel and aluminum imports from China.” Former President Donald Trump has stated that he also seeks to reduce trade through aggressive tariffs, floating a “10 percent tariff on all imports, and a more than 60 percent tariff on Chinese imports” to create a “ring around the country.” The former President and his advisors have even gone so far as to suggest devaluing the US dollar as a means of reducing trade deficits. The misunderstanding of the effects of trade deficits on economies pervades Washington, DC. It is time to correct this misunderstanding.

A trade deficit is merely an accounting identity, not an economic identity.

Despite this truth, policymakers of all stripes fundamentally treat trade deficits as if they were a source of economic harm to the nation.

…..

Policy makers and the would-be-intelligentsia of both the American Right and the American Left who carp on about the trade deficit and use it as a means of speaking authoritatively on the state of the US economy reveal one thing: a stunning lack of understanding about which they speak. Trade deficits are merely an accounting number, nothing more and equally, nothing less.

Claude Barfield corrects Robert Lighthizer’s distortion of the historical record on U.S. government trade policy.

The Editorial Board of the Wall Street Journal reports on yet another instance that reveals just how authoritarian the green religion can make people. A slice:

The United Nations has lousy ideas about nearly everything these days, but sometimes even Turtle Bay outdoes itself. Secretary-General Antonio Guterres did that last week when he said countries should ban advertising for fossil fuels.

“Many in the fossil fuel industry have shamelessly greenwashed—even as they have sought to delay climate action,” Mr. Guterres said. “I urge every country to ban advertising from fossil-fuel companies. And I urge news media and tech companies to stop taking fossil-fuel advertising.”

“Greenwashing” is the word climate alarmists use to attack anyone who disagrees with them. Mr. Guterres lacks the power to enforce an advertising restriction, and thank goodness. But he is using his bully pulpit to call for what amounts to global censorship of anyone speaking on behalf of the industry that supplies most of the world’s energy. He wants to censor anyone who doesn’t sign up to the U.N. climate agenda.

Phil Gramm and Terrence Keeley have edited a new book on the folly of ESG “investing.”

Let’s hope they succeed: “‘Anti-Woke’ shareholders are going after corporate boards.”

Jeffrey Miron reports possible good news about reining in the banana-republic practice of civil asset forfeiture.

Christopher Snowdon asks: “Why was George Orwell as socialist?” A slice:

Orwell could clearly see the dangers of socialism, but since he believed that capitalism was doomed and socialism was the only game in town, he had to believe that these dangers could be avoided and that his own brand of libertarian collectivism could prevail. And so he reached for the same comforting explanation for Big Brother’s tyranny as he had for the Bolsheviks’ – that they were bad actors from the outset and had never really believed in socialism.

Axel Kaiser describes Joseph Stiglitz as the “patron saint of Latin America’s radical left.” A slice:

Stiglitz’s involvement in the 2021 Chilean presidential election followed the same pattern of ideological alignment with radical left-wing populism. Shortly before the second round of the election, Stiglitz, along with other left-wing economists such as Mariana Mazzucato and Thomas Piketty, signed an open letter expressing support for socialist candidate Gabriel Boric in the following terms: “We see in the program of candidate Gabriel Boric that openness to the future, that way of creating a new economy that delivers these ambitious goals. Its objectives are viable and help to sustain democratic values. It is a modern strategy to mobilize a dynamic and sustainable productive agenda capable of achieving growth, equity, and development.”

Central Michigan University economist Jason Taylor’s letter in today’s Wall Street Journal is superb:

While I have a great deal of respect for Prof. Blinder, the flaw in his distributionist logic is staring him in the face. He complains that government social spending targeting the nation’s low-income households, elderly, disabled, sick, unemployed and youth is a lower proportion of GDP in the U.S. than it is in France and Germany.

But U.S. GDP per capita far exceeds those of France and Germany, so that the amount of U.S. social spending per person surpasses that of both these traditionally redistribution-focused nations—over $19,000 in the U.S. versus than $15,000 in Germany and France. (If the GDPs are compared under purchasing power parity, social spending per capita is closer in the three countries but the U.S. still comes out ahead.)

Distributionists (whether re- or pre-) focus so intently on making sure that everyone’s slice of pie is identical that they neglect the most important factor in the human condition: How much pie is everyone actually getting? History shows that policies that focus too heavily on equity result in there being far less to go around over time, and the most vulnerable suffer from this greater scarcity. As Milton Friedman liked to say, “There’s nothing that does so much harm as good intentions.”

Phil Magness understandably tolerates no excuses for any of Karl Marx’s many idiotic scribblings.

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