… is from page 285 of Matt Ridley’s marvelous new (2020) book, How Innovation Works: And Why It Flourishes in Freedom (link added):

Britain, too, was slow to provide public support for science compared with France and Germany, but as [Terence] Kealey observes: ‘the continent supposed markets failed in science, the UK supposed they did not, and the industrial revolution was British, not French or German.’

DBx: Yes.

Only one error is more commonplace than to underestimate the creativity and abilities of people acting voluntarily – that is, acting in ways that each individual chooses, uncoerced by other human beings. That more-commonplace error is to vastly overestimate the creativity and abilities of people possessing the power to coerce fellow human beings.

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Hong Kong Safe Harbor Act

by Don Boudreaux on July 4, 2020

in Philosophy of Freedom

On this 4th of July, I can think of no more appropriate means by which Americans can commemorate the immortal words of the Declaration of Independence by supporting the Hong Kong Safe Harbor Act.

Here’s David Bier:

The Hong Kong Safe Harbor Act would directly support protesters by telling them that they can risk their lives in Hong Kong knowing that they have a backup plan in case they are targeted. The Chinese party is already clearly concerned about this type of offer, denouncing the United Kingdom’s similar proposal to allow up to 3 million Hong Kongers to enter and work in the UK and claim UK citizenship.

This proposal would also benefit the United States by providing it with talented new Americans committed to freedom and democracy (a commitment too few U.S.-born Americans share). The program would support U.S. diplomatic efforts to defend democracy and freedom in Hong Kong, and it would embolden freedom fighters the world over.

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Quotation of the Day…

by Don Boudreaux on July 4, 2020

in Philosophy of Freedom

… is from page 23 of George Will’s 2019 book, The Conservative Sensibility:

America was born with an epistemological assertion: The important political truths are not merely knowable, they are known. They are self-evident in that they are obvious to any mind not clouded by ignorance or superstition. It is, the Declaration says, self-evidently true that “all men are created equal” not only in their access to the important political truths, but also in being endowed with certain unalienable rights, including the rights to life, liberty, and the pursuit of happiness.

…..

(Pictured here is Charles Édouard Armand-Dumaresq’s 1873 painting of the signing of the Declaration of Independence.)

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July 3, 2020

Peter Navarro
White House
Washington, DC

Mr. Navarro:

Today on MSNBC you asserted (without evidence) that Beijing “spawned” the novel coronavirus in a laboratory in order to intentionally infect Americans. Hmmm….

You famously believe that China grew rich at the expense of other countries, especially the United States, by deviously expanding its exports and simultaneously restricting its imports. Putting aside here the head-scratcher of how a country grows rich by continuing to ship lots of goods and services to foreigners while resisting the receipt of goods and services in exchange from foreigners, I’ve this question: Given your economic theory, why would the Chinese government intentionally seek to kill its country’s customers?

If the secret sauce of China’s economic success is its “export-led growth,” that country needs people abroad to buy its exports. Killing Americans would thus – again, on your own theory – do serious damage to the Chinese economy.

Have leaders in Beijing lost interest in increasing their country’s wealth? Or have they suddenly gone stupid? What, do tell, is your explanation for why the Chinese – who are so utterly dependent upon American consumers – would aim to rid themselves of this lucrative customer base? Are they mad? Masochistic? What?

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

…..

The irony is that Navarro’s tale told today would be logical only if his long-held notion of the source of Chinese economic success were spectacularly wrong.

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Bonus Quotation of the Day…

by Don Boudreaux on July 3, 2020

in Myths and Fallacies, Trade

… is from page 66 of the 1969 Arlington House edition of Ludwig von Mises’s 1944 Yale University Press book, Omnipotent Government: The Rise of the Total State and Total War (available free-of-charge on-line here):

In the past various doctrines and considerations induced governments to embark upon a policy of protectionism. Economics has exposed all these arguments as fallacious. Nobody tolerably familiar with economic theory dares today to defend these long since unmasked errors. They still play an important role in popular discussion; they are the preferred theme of demagogic fulminations….

DBx: It’s true. Anyone who understands economics would be as embarrassed to publicly endorse protectionism as he or she would be to publicly endorse flat-earthism or the healing properties of crystals. Sadly, the world is well-populated with people who don’t understand economics.

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Eric Boehm highlights three things to know about the new NAFTA (the “USMCA”), which took effect on Wednesday. A slice:

Although Trump’s supporters sometimes claim that the president is actually pursuing a radical free-trade agenda and only using protectionist tactics to achieve it, the USMCA is strong evidence that Trump would prefer to see more barriers to trade.

For example, the administration pushed for the inclusion of stricter rules that make it more difficult for cars and car parts to cross national borders duty-free. Under the USMCA, 75 percent of the component parts of vehicles would have to be produced in North America to avoid tariffs, and 40 percent would have to be built by workers earning at least $16 an hour—effectively putting a minimum wage on Mexican manufacturing plants with lower wages.

Alberto Mingardi is justifiably harsh in his assessment of Marianna Mazzucato’s recent New York Times op-ed. A slice:

I don’t know if you have seen The Invention of Lying. In the movie Ricky Gervais lives in a world where nobody ever lied; he is the first who come up with the idea and builds his success on it. It seems to me that Mazzucato may star in a similar movie, The Invention of Government [which is the title of her latest book]. Her narrative that we socialize risk but never properly compensate governments fits very well a world where taxation does not exist. Sadly, that is not the world we live in.

John O. McGinnis discusses the differences that separate Justice Clarence Thomas from Chief Justice John Roberts over the interpretation of stare decisis.

George Will applauds Espinoza v. Montana Department of Revenue.

Here’s wisdom from Wall Street Journal columnist Daniel Henninger. A slice:

It is a misstatement to call what is going on now an American revolution. The Declaration’s revolution was about creating a new nation. Today’s claimants see the future as de novo, a blank slate, an exercise in elimination. It is closer to what the ever-ironic 1960s radical anarchist Abbie Hoffman called “revolution for the hell of it.”

Larry Sand endorses greater reliance upon the wisdom of markets.

Matthew Lesh adds his clear voice to those calling out the absurdity of the assertion that modern capitalism is the child of slavery. A slice:

Nor did the slave trade fund the industrial revolution. Leading economic historian Deirdre McCloskey explains that the slave trade, and the goods produced by slaves, were a tiny portion of foreign trade in Britain. Additionally, slaves were not passive: From Jamaica to St Dominique they rebelled against their masters. Quashing these rebellions was not cheap. More broadly, McCloskey argues that the industrial revolution was spurred by domestic innovations and not trade or minuscule imperialist returns.

Michael Sellenberger writes honestly and sensibly about environmental policy.

My GMU Econ colleague Dan Klein continues to write informatively – in a way that cannot be waved off – about covid.

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… is from page 73 of the May 9th, 2020, draft of the important forthcoming monograph from Deirdre McCloskey and Alberto Mingardi, The Illiberal and Anti-Entrepreneurial State of Mariana Mazzucato:

“There is nothing in the DNA of the public sector,” Mazzucato declares, “that makes it less innovative than the private sector.” Oh, yes there is. One thing is clear: only people innovate. It is they who think, research, tinker, ponder, imagine, create, produce. Not the bureau, the office, the factory, the corporation, the market, the private sector, the public sector. The State and the market are simply settings, contexts, structures, in which actual people operate – for innovation or against it, wise improvements or waste, bettering or pillage.

So the question is which setting is best for people to innovate, sometimes succeeding, sometimes failing – a market of free people or a State coercing them to directionality? Are people more likely to be creative and innovate if they themselves, or their willing investors, pay the costs and earn the benefits of betterments, or alternatively if taxpayers foot the bill for remote bureaucrats to decide?

DBx: Deirdre and Alberto here unearth more evidence that much opposition to free markets springs from the mistaken belief that the economy is an engineering project.

Proponents of industrial policy and related kinds of economic interventions by the state – people such as Marianna Mazzucato (from the left) and Oren Cass (from the right) – conceive of economic activity as being much like painting by numbers. The only significant question, under this conception, is this: “Who will choose the image that is to be painted?” Once the image is chosen, it’s a purely mechanical process to actually produce the final product.

Proponents of industrial policy who, like Mazzucato and Cass, aren’t utterly without some sound economic instincts will admit that market forces can come in handy to emit the necessary incentives for workers to apply the paint according to the numbers chosen by government officials. But the ultimate objective of all this work is the production of images the forms and color palettes of which have been carefully chosen and prescribed by wise and apolitical government officials. (The conclusion that these government officials are wise and apolitical is justified by the presumption that they will heed the advice of scholars such as Marianna Mazzucato and Oren Cass.)

Completely absent in the work of people such as Mazzucato and Cass is an appreciation of the logic of market processes – processes driven by market prices, and by entrepreneurs’ profits and losses, generated when individuals spend their own money as consumers and invest their own money (and time) as investors. People such as Mazzucato and Cass simply cannot conceive that any economy that is not consciously guided to result in a pre-chosen image will result in anything but an ugly, chaotic mash-up of globs of paint.

People such as Mazzucato and Cass do not understand markets. And they especially don’t understand the knowledge-gathering and dispensing function of markets. Failure to understand markets is failure to understand the processes that generate market ‘outcomes’ and that these ‘outcomes’ are far better than any that could possibly be consciously chosen.

Pardon now my sudden change to a different analogy: It’s as if someone today catalogs all the parts of a pig and concludes that there’s nothing special about the countless individual forces of natural selection that result in the pig. A skilled engineer can, at least as well as blind natural selection, gather from nature all of the parts that make a pig and assemble them accordingly. In no time we’ll hear joyous oinking! Such is the belief of top-down thinkers such as Mazzucato and Cass.

And this skilled engineer can then design animals that are better than those ‘designed’ by blind, stupid, aimless natural selection. We can now have pigs that fly! Horses that talk! Cows that give chocolate milk! Dogs that don’t defecate! Cats that do our laundry! Humans with x-ray vision! Even rainbow-colored unicorns! It’s simply a matter of knowing how to consciously assemble atoms found in nature into these wonders. Indeed, the fact that natural selection hasn’t yet produced wonders such as these proves that natural selection is random and unreliable and must be replaced by conscious design and control.

It’s engineering, is all it is. We don’t rely upon natural selection to assemble our wristwatches. Why should we rely upon competitive free-market forces to assemble our economy?
…..

Changing the analogy yet again: Industrial-policy advocates think of the economy as a ship that needs a captain to conduct the economy to an appropriate destination. The captain directs the ship there by consulting a reliable compass.

This great helmsman might choose the destination himself or be of a democratic bent and, thus, consult the passengers on where they might like the ship to go. No matter. For the ship to arrive at a worthwhile destination, that destination must be consciously chosen and steered there by a trusty compass-consulting skipper. The passengers on this ship – even if captained by the democrat – inevitably discover that they are not so much passengers as they are conscripted crew under the command of the compass-clutching captain. They must do as the captain commands if the ship is to sail in the pre-selected direction.

…..

The fact that humanity over the past 200 or so years has experienced an unprecedented rise in material prosperity largely as a result of market forces that the likes of Mazzucato and Cass believe cannot possibly deliver any such outcomes is denied. The focus of the denial à la Mazzucato is that modern prosperity is really the result of state action. (“Oh, look, the state prescribed this and proscribed that! Our modern prosperity is, therefore, the consequence of this prescription and that proscription! Q.E.D.”) That there is a tight and positive correlation between the wealth of ordinary people and the freedom of their economies from state direction is legerdemained away.

The focus of this denial à la Cass is that things really aren’t so great after all. In fact, things stink. Working American males, Cass tells us, cannot today support their families in the way that they could support their families decades ago. Ergo, the American economy is stranded on the shoals. Mr. Cass & crew have the compass needed to direct the ship back out to sea, through waters calm and with breezes favorable, toward the Promised Land.

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I’m honored to have been a guest recently, along with John Tamny, on Bill Walton’s show. In this program we discussed a variety of issues, including American Compass’s misguided “Coin-Flip Capitalism” project.

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Bonus Quotation of the Day…

by Don Boudreaux on July 2, 2020

in Current Affairs

… is from page 227 of the late Nathan Glazer’s 2000 paper “Disaggregating Culture,” which is chapter 16 in Culture Matters, Lawrence E. Harrison and Samuel P. Huntington, eds. (2000):

It is of benefit, every group thinks, to be seen as victim, not as superior.

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The title of this post is from an e-mail that my GMU colleague Todd Zywicki sent after he watched this video by Marc Sidwell. (I thank Todd for his kind permission to quote him. I thank also my colleague Dan Klein for alerting me – and Todd – to this video, the length of which is just over five minutes.)

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