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Some Non-Covid Links

Tweet [1]

Phil Magness tweets the following – and points out that such facts are nearly impossible to square with the cartoonish fallacies spread by the likes of Nancy MacLean about classical-liberal economists [2].

In 1958, the AEA [American Economic Association] was considering a future conference site in New Orleans. The hotel was still segregated. Milton Friedman proposed sending a message to the hotel: the conference would be conditional on ending discrimination before the proposed date.

Richard Ebeling looks back on the founding of the Mont Pelerin Society [3]. A slice:

If one take Mises’s dictum seriously, it means that an individual may read, watch, consume, and act upon any desire he has or belief he holds, without molestation by either a fellow citizen or by the government, as long as his conduct is peaceful and honest. He may enter into any association and exchange, based upon mutually agreed-upon terms with any and all others, as long as they are not based on fraud or force. And he may keep all that he has peacefully and honestly earned and spend it any way he considers beneficial to himself, without being taxed or regulated to fund activities or redistributions to others for which he does not give his voluntary consent. It is the philosophy on the basis of which Leonard E. Read once entitled one of his books, Anything That’s Peaceful [4] (1964).

Jason Hayes, writing in the Wall Street Journal, explains how ‘green-energy’ policies will make Michigan a darker, hotter place this summer [5]. A slice:

Decades of mandates and subsidies mean Michigan has a quickly growing supply of solar panels and more than 1,500 wind turbines. Yet combined, they still can’t produce as much electricity as the Palisades plant alone. There is no economically viable path to ramp up wind or solar production to replace the lost power, much less meet the state’s rising energy demands.

For that matter, there’s no obvious recognition from the governor’s office that wind and solar are wholly dependent on the weather. They must have ample back-up from nuclear, coal and gas-fired plants for the significant amount of time on cloudy, windless days, when turbines and solar panels produce nothing. Yet it’s the reliable energy sources that are being targeted for closure today.

A different, more sane approach is needed, because rolling blackouts are looming.

GMU Econ alum Nathan Goodman, writing at EconLog, ponders the limits of Tiebout competition [6].

My GMU Econ colleague Bryan Caplan shares his observations about the ‘biography’ of the typical modern American economist [7]. A slice:

Although I teach econ at heterodox George Mason University [8], I went to standard elite colleges: UC Berkeley for undergrad, Princeton for grad school. I talked to a lot of classmates at both schools, and have met many hundreds of other professional economists. I therefore confidently insist that the typical economist’s origin story actually goes like so:

  1. You grow up in a well-off, center-left or left-wing home.
  2. As a teen-ager, you became a vocal left-wing intellectual, confident that your side has all the answers.
  3. Following the path of least resistance, you go to college. Despite left-wing misgivings, you take Econ 1 and discover some troubling downsides of standard left-wing policies. You hear about scarcity and opportunity costs. You learn about the equity-efficiency trade-off. You find out that incentives matter. You see why price controls lead to shortages and surpluses.
  4. While you absorb the reality of these downsides reluctantly, you eagerly embrace every textbook story about market failure. Monopoly, externalities, public goods, asymmetric information, behavioral econ: All “scientifically” confirm your left-wing priors. Still, the net effect of economics is to tone down your youthful leftist enthusiasm – to realize that “the world is more complex” than you thought. Left moves to center-left, center-left moves to moderate.
  5. Since you’re near the top of your classes and you fit in, you go to grad school to get a Ph.D. You toil with a pile of math and stats for most of the rest of your twenties.
  6. Voila, you become a professional economist – and start helping other youths of similar background to follow in your center-left “the world is more complex than I thought” footsteps.

In my view, a truly high-quality undergraduate economics program would [9] turn even a far-left freshman into an avid Friedmanite [9] – and push everyone else to more extreme libertarian stances. Regardless of whether I’m right, however, nothing of the kind goes on in most actually-existing undergraduate economics programs.

The chief function of actually-existing undergraduate econ, rather, is taking know-it-all leftist teen-agers and showing them some trade-offs. Kind of like that scene with the eyedrops in A Clockwork Orange [10]. This intellectual experience has near-zero influence on students’ core values, which remain conventionally left-wing. In their hearts, most professional economists continue to place equity over efficiency, distribution over production, and social cohesion over economic growth, just as they did in their teens. Still, economic education convinces them that (a) there is a trade-off, and (b) this trade-off is occasionally severe enough to justify deliberate sacrifices of equity, distribution, and social cohesion.

This might not seem like much, but in a world ruled by Social Desirability Bias [11], what’s amazing is not that most economists continue to affirm feel-good platitudes. What’s amazing is that most economists occasionally play the iconoclast.

(DBx: I’m an exception to this pattern. I grew up in a decidedly working-class household with no conscious political ideology save for a natural distrust and dislike of the labor unions that regularly tried – and regularly failed – to unionize the shipyard at which my father, grandfather, mother, and uncles worked. But my parents had an acute allergy – which they spread to each of their four children – to envy, to covetousness, to ingratitude, and to the making of excuses.)

Steven Greenhut is correct: There is no political solution to the baby-formula shortage [12].

My GMU Econ colleague Larry White asks: “Should the Fed Devalue Our Currency to Implement Negative Interest Rates?” [13]