Arnold Kling writes with his usual insight and wisdom about economics and the efforts of economists to better understand reality. (HT my intrepid Mercatus Center colleague Veronique de Rugy) Two slices:
Patterns of specialization and trade are constantly being reshaped. There is no fixed relationship between inputs and outputs.
Capital, labor, and output are highly heterogeneous. In my view, the attempt to describe an aggregate production function is futile.
…..
Today, pretty much everyone who writes on economic policy starts from the assumption that markets are misguided and government regulation is better. Sometimes, economists point out specific problems with non-economists’ regulatory proposals. But more fundamental, Austrian-inflected critiques go unappreciated.
(DBx: The work of the late Ludwig Lachmann on the heterogeneity of capital remains under-appreciated. See, for example, Lachmann’s insightful May 1947 Economica paper, “Complementarity and Substitution in the Theory of Capital.” See also Lachmann’s 1956 book, Capital and Its Structure.)
Consider one example: the subsidies to electric vehicles. Ignore the ironic fact that because of the domestic-content constraints the senators put on for those producers to qualify, few EVs would qualify for the subsidies. Even if all EVs did qualify, what are the odds that EVs are the way to go? Have the senators been outside lately where they would see electric bicycles whizzing by, bicycles that can be powered with a fraction of the coal or natural gas used to produce electricity for electric cars and trucks? Yet those bicycles will not get the subsidies. Nor should they. No one should get the subsidies.
And what about the hated N-word: nuclear? Nuclear power produces zero carbon emissions and is incredibly safe as well as being relatively expensive. But improved lower-cost technologies that are starting to appear in some states, combined with a tax on carbon production, might just make nuclear power the least-cost way of producing electricity in at least some parts of the country where non-nuclear electric power is relatively expensive.
We just don’t know. Neither do the Senate Democrats. The great virtue of a free market is that it can cause tens of thousands of people to pursue promising technologies and promising ways to reduce carbon at their own expense. The market leads to discovery. Politicians, by contrast, think they know “the” answer, and they’re always wrong.
Kevin Rudd, writing in the Wall Street Journal, is correct: Xi Jinping’s reach exceeds his grasp. A slice:
China’s market-based reform program stalled in 2015 and has generally been in reverse since 2017, with the notable exception of the financial sector. The party has reasserted control over a previously rampant private sector, eroding business confidence and private fixed capital investment. This intervention has taken many forms. Communist Party committees have taken management roles at private firms. The party has forced companies into mixed equity arrangements with state-owned enterprises. A “rectification” campaign has reaffirmed that the courts exist to serve the party, including in commercial cases.
Fauci’s egomania is disturbing.
Ramesh Thakur reports on the mugging of New Zealand by covid reality.
Alas, covid derangement still is on the loose in some places, including Philadelphia. A slice:
Pre-kindergarten pupils aged 3 to 5 will have to mask up all year, according to a letter to parents Friday from the School District of Philadelphia, Fox News reported.
In response to a silly CBS News report that childhood obesity is being fueled by climate change (!), Jay Bhattacharya tweets:
Public health bureaucrats closed playgrounds, limited kid’s sports, and made a virtue of extended screen time. They closed schools and PE classes. In some places this went on for years. Maybe this headline writer lives in Florida or Sweden and missed the lockdowns?
