The AEA’s stance presented an opportunity for Friedman to act on a theory that his doctoral student, Gary Becker, proposed the same year in a dissertation written at the University of Chicago. Segregated businesses ultimately harmed themselves by denying their services to excluded racial groups, thereby losing them as customers. As Friedman later observed, economic decision-making could be used as a powerful weapon against discriminatory practices. In this case, if the Roosevelt Hotel would not allow black guests to stay on its premises, the economists would take their conference and its paying customers elsewhere.
Friedman would elaborate on this principle in his now-classic 1962 book, Capitalism and Freedom. As he wrote in that text, “It is often taken for granted that the person who discriminates against others because of their race, religion, color, or whatever, incurs no costs by doing so but simply imposes costs on others.” This view, Friedman continued, rested on an economic fallacy. “The man who objects to buying from or working alongside a Negro, for example, thereby limits his range of choice. He will generally have to pay a higher price for what he buys or receive a lower return for his work. Or, put the other way, those of us who regard color of skin or religion as irrelevant can buy some things more cheaply as a result.”
When Friedman advocated making the AEA’s hotel contract contingent upon their desegregating their facility, he aimed to drive home this point. If the Roosevelt Hotel [in New Orleans] would not integrate in time for the conference, it would not receive any business at all from the organization.
Throughout his career, Zitelmann insists, Hitler was an anti-capitalist and he became more so during wartime, when he increasingly came to admire Stalin’s command economy as a far superior system than that of the West. The book is a tour de force of critical exegesis, ranging across the vast corpus of the dictator’s speeches, orders, correspondence, “table talk,” and other documents to grasp what he meant by National Socialism. What emerges is an ideology of remarkable consistency, more coherent and sophisticated than most historians have hitherto been willing to concede.
Like most industries that involve building things, the solar industry in America needs two conditions to grow: reliable supply chains to provide access to goods produced anywhere in the world and greater private investment. Tariffs make the former more complicated and expensive while introducing uncertainty that scares away the latter.
It’s undoubtedly true that international trade, like all forms of market competition, disrupts some American companies and workers that, through government protection, formerly had the U.S. market to themselves. However, the economic case for free trade remains rock solid. American consumers (who are also American workers, by the way) gain from new access to goods and services at lower prices and in greater varieties. These gains come not only from foreign-made items but also from similar domestic ones that are now forced to compete with imports on price and quality. Studies show that trade’s “consumer surplus” is far more significant than a few cents on the proverbial cheap T-shirt. Recently, for example, several economists have found that falling prices caused by Chinese imports into the United States during the 2000s generated hundreds of thousands of dollars in consumer benefits for each American job potentially displaced by the China Shock—the equivalent of giving every American “$260 in extra spending per year for the rest of their lives.” Similar gains occur outside the United States: European consumers, for example, save €60 billion per year (about $64 billion) from lower tariffs resulting from the European Union’s entry into the WTO. Studies also uniformly find that these benefits—again contrary to the conventional wisdom—tend to disproportionately aid the poor and the middle class, who have tighter budgets and concentrate their spending on tradable sectors like food, clothing, footwear, and consumer electronics.
Phil Magness reports that the straw man is not yet leaving Shanghai. (HT Tim Townsend)
The Small Business Administration (SBA) was in charge of the $814 billion Paycheck Protection Program, and a report last month from its inspector general is a bracing read. PPP provided forgivable loans to keep workers paid and businesses whole while the economy went into a government-ordered cryogenic freeze. To get the money into businesses quickly, local banks were authorized to approve PPP claims.
Yet the SBA “did not provide lenders sufficient specific guidance to effectively identify, track, address, and resolve potentially fraudulent PPP loans,” the IG says. The official fraud hotline has taken more than 54,000 complaints. Scams were “rapidly evolving” and included “false attestations on loan documents, inflation of payroll, falsified tax documentation, identity theft, and misuse of proceeds.”