Ryan Bourne appropriately reacts to ‘anti-price-gouging madness’ – this time predictably uncorked by the coronavirus. Here’s his conclusion:

In the face of a potentially prolonged and worsening epidemic, muffling the price signals therefore risks disincentivizing much‐​needed supply expansions as the virus spreads. It’s bad enough that private sector firms are doing their best to keep sellers from legally serving the market. Government threats and laws would simply exacerbate the problem.

Here’s John Cochrane’s short but sensible reaction to Jason Furman’s call for more fiscal “stimulus” to help deal with the economic consequences of the coronavirus.

Alberto Mingardi rightly laments the virulence of the bureaucratic mind.

Joseph Epstein – understandably – isn’t impressed with any of the Democratic seekers of presidential power. A slice:

I eagerly awaited Ms. Warren’s announcement that she, too, would drop out of the race. Her contrived energy, those uplifted arms, the too-exuberant hugs, that never slackening self-righteousness—none of this paid off in votes. Many years ago I coined the term “virtucrat” for people who derive their grand sense of themselves from the virtuousness of their opinions, especially their political opinions. Had I known about her then, I would have added, in parentheses, “See Warren, Elizabeth.”

Jen Maffessanti sings the praises of consumer sovereignty.

Arnold Kling has an imaginary conversation with Eric Weinstein. Here’s a long but very insightful slice of what Arnold imagines he’d say in response to Weinstein’s case for protectionist policies:

You say that American workers, as citizens of this country, should have a right to access to job opportunities that give them a decent way of life. If we are willing to have their family members go off to fight wars in the name of protecting the rest of us from terrorists, then we certainly owe them protection from having their jobs taken away by outsourcing to Chinese factories.

My counter will be that international trade is isomorphic with other economic actions that you are more likely to approve. Outsourcing to a factory in China and taking away a factory worker’s job is not very different from developing Uber and taking away a taxi driver’s job or a rental-car agent’s job.

Our prosperity comes from breaking production down into steps. When you break the process down into steps, you get more efficiency. This goes back to Adam Smith’s pin factory. Breaking a process into steps can involve what most economists call capital, but the Austrian economists use the term “roundabout production,” which I like. When a farmer uses a tractor instead of a horse to pull a plow, this is roundabout production–manufacturing the tractor becomes a step in the farming process.

International trade is another form of roundabout production. As David Friedman put it, one way to manufacture an automobile is to grow wheat, put it on a ship to Japan, and have the ship turn around carrying an automobile.

The process of breaking production down into steps is mind-boggling in its complexity. There are so many conceivable ways to break down a production process into different steps. How are we to know which is best? The answer is that the price system co-ordinates the process. Prices inform entrepreneurs about the costs of alternative patterns of specialization.

The profit system directs the evolution of the process. As new ideas are tried, the most efficient ones prove sustainable, as indicated by profitability. Less efficient patterns of specialization and trade are weeded out by losses.

Thus, progress proceeds by creative destruction. Ways of life that are tied to a particular step in the production process are bound to be undermined if a new production process emerges that is more efficient. A society cannot enjoy the benefits of economic progress without incurring the cost of job destruction. The market treats work as a bug, not a feature, and it tries to get rid of it.

Back to the comparison of outsourcing to a factory in China or developing Uber. You might be tempted to say that when Uber changes the process of providing people with car rides, at least it doesn’t use Chinese labor in the process. But is that really the case? For Uber to work, somebody has to take the step of adding computer and communications capacity, and that probably uses components imported from China. Consumers need smart phones in order to hail rides, and those phones are partially manufactured in China. And even if there were no Chinese workers involved in the steps to create Uber rides, would that be any consolation to the taxi drivers and rental-car agents who lose their jobs?

If you want to suggest policies for making economic progress less painful for people whose jobs are displaced, that would be very constructive. But insinuating that economists are engaged in a conspiracy to hide the truth about international trade isn’t constructive–it’s just scapegoating.


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