Over at National Review today, I correct recent claims from American Compass’ Wells King and Dan Vaughn that 1980s U.S. automotive protectionism—in the form of Japanese “voluntary export restraints”—was a tremendous success, boosting both Japanese investment in the United States and domestic “Big 3” car manufacturers at minimal cost to American consumers or the economy more broadly. As I explain, “a fuller accounting… reveals the VERs not to be some inspiring success but instead a cautionary tale of American industrial policy’s high costs and failed objectives.” Owing to word limits and format (as a letter in the “dead‐tree” magazine), however, several aspects of my original critique—hyperlinks, charts, snarky asides, etc.—were left on the cutting room floor. This blog post will therefore serve as a supplement to the letter, which you can read in full over at NR.
Let’s start with the litany of rigorous economic studies showing that the consumer costs of the VERs were far greater than the $5 billion total King and Vaughn provided, due in large part to the fact that (contra their figures) the quotas increased the prices of not just Japanese cars, but also American and European ones too, and they lasted for another decade after President Reagan wisely disavowed them in early 1985…..
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King and Vaughn are probably on firmest ground when claiming that the VERs accelerated investments by Japanese automakers in the United States in the mid‐1980s (though, as noted, at a very high cost). But they again err by crediting the protectionism for all such investment through 1991. As I note at NR, for example, foreign automakers had begun investing before the VERs and kept investing thereafter: “The VERs followed Volkswagen’s late-’70s investment in Pennsylvania and Honda’s in Ohio (announced in 1980), and about a dozen other automobile factories—Japanese, German, and Korean—have arrived since 1992.” In fact, foreign direct investment in motor vehicle and equipment manufacturing grew faster post‐1990 than before it….
Kevin Corcoran corrects Yoram Hazony’s uninformed criticism of the case for free trade. A slice:
Hazony has badly misunderstood the arguments he is attempting to engage. Those who support free trade and the tradition of classical liberalism don’t believe the least expensive options are somehow the most freedom enhancing. It is the absence or presence of force, not the magnitude of expense, which is relevant to freedom. Nor is buying from the cheapest source or selling to the highest bidder some terminal value, from which deviating constitutes a market distortion. If someone makes their buying or selling decisions out of a sense of loyalty rather than in search of the most favorable price, no economist in the classical liberal tradition will accuse them of irrationally distorting the market.
The classical liberal tradition presents no obstacles to engaging in the kind of economic decision making Hazony advocates. The problem for Hazony, I think, is that while classical liberal economics allows he and his fellow thinkers to operate according to the values he holds, it doesn’t require everyone to do as he wishes.
Arnold Kling offers his thoughts on the use of mathematical models in economics.
“The China Challenge: What’s a Real Liberal To Do?”
Richard Sander explains that “even liberals [that is, progressives] should be skeptical of racial preferences in higher education.” (HT George Leef)
Regarding Jeb Bush’s “How to End the Epidemic of Failure in America’s Schools” (op-ed, Oct. 24): The problem isn’t an epidemic but a monopoly in America’s public schools, thanks to teachers unions and school administrators. Their failure is driven by lack of competition and poor capital allocation with no required rate of return on taxpayer capital.
The simple solution is school choice. Let parents decide where to send their children to school. Given vouchers, parents will allocate capital to schools that provide the best education for their children.
Terence E. Burns
Fairfax Station, Va.
My intrepid Mercatus Center colleague Veronique de Rugy decries Fed officials’ hubris.
David Henderson reports that “[t]he Laffer Curve in California is alive and well.”
One simple step for @Twitter to regain its status as a platform committed to free speech: when the US government tells you to censor people or tweets or ideas that violate no law, tell the government to go find some other way to violate the first amendment. Don’t cooperate.
James Allan is no fan of today’s so-called “experts.” A slice:
Speaking of failures by the expert class, let’s now turn our attention to the public health clerisy in this country [Australia]. It was to these medicos that our woeful political caste abdicated virtually all decision-making during the pandemic. Last week a self-styled ‘Independent Covid Review’ led by Peter Shergold reported back on how we did in Australia. It found that no schools should have been shut; some of the lockdowns and border closures were avoidable; key groups were excluded from financial support; and generally was not overly complimentary. But let me be abundantly blunt here. This report is as tepid as they come. The data is now clear there should have been no lockdowns, no mandates, no police thuggery, no outspending Trudeau, the list goes on. So say so.
Here’s the problem. All these reports done by the great and the good all start with the premise that in the face of radical uncertainty (no one knew how bad the virus was going to be) the government had to take steps and err on the side of doing something big to keep people safe. It’s from that premise that even this report makes its criticisms. But in my view that core premise is simply wrong-headed. In the face of radical uncertainty there is no plausible ground for thinking the default position should be some regulatory equivalent of the precautionary principle – ie opt for what looks like the zero-risk position – requiring big-state actions. In fact, the best-supported approach in the face of radical uncertainty is to continue on with what the till-then accumulated data indicated was the best road and wait for new data. (Data, not models, to be clear.) That, readers, is basically what three of the world’s top epidemiologists recommended in the Great Barrington Declaration. And it is exactly what we in Australia (and most of the non-Swedish world) did not do. The costs are now proving to be astronomical, even in terms of cumulative excess deaths where we are worse than Sweden. So this report points in broadly the right direction but, really, it is pathetically weak in its criticisms. We lived through thuggery, the worst inroads on our civil liberties in 300 years, massive impositions on the young and poor to benefit the old and rich, and virtually no MPs (Libs included) said a word. Our expert class was wholly useless as were our politicians. (My kingdom for a DeSantis.) Their first principles were catastrophically wrong. And we here in the pages of the Speccie Australia were saying it from day one, not in an enervated report long after the fact that is far, far too tepid.
Jennifer Sey wonders “[w]hen will Fauci admit the ‘open schools’ parents were right?” Two slices:
Yet now, two and half years into the pandemic, Fauci insists we should have known all along he understood there would be harmful impacts from extended school closures. So why didn’t he stress this oh-so-obvious fact? Why didn’t he clearly state that, “yes, sad to say, there will be learning loss, as well as mental health impacts”?
The obvious answer is that keeping public schools closed was his priority and he led the messaging to ensure it would happen. That message was then adopted by key political and media figures. Fauci knowingly chose to let children suffer — low-income kids especially. And he encouraged the shouting down of dissident parents who were barred from school board meetings, deemed unemployable bigots, or simply cowed into silence.
The fact is that, despite his cultivated veneer of scientific objectivity, Fauci has always been intensely political; which is to say, always able speak out of both sides of his mouth on an issue. So, for instance, in an interview with NPR’s Judy Woodruff in July 2020, Fauci said, “we should try and get the children back to school as best as we possibly can.”
But Dr. Fauci had been the face and voice of America’s Covid policy since March 2020. If he thought schools should have been opened, they would have been. But he didn’t. Instead, both behind the scenes and in front of the cameras, he did everything he could do to ensure schools stayed closed.
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Rather than citing data to support the age stratification of risk and the fact that people from the ages of 0-19 have an infection fatality rate from Covid-19 of .0003 percent pre-vaccine, Fauci chose to incite panic and further irrational policymaking. He consistently and repeatedly positioned public schools as dangerous and children as deadly vectors of disease, at high risk themselves of death and other adverse consequences such as MIS-C. And states like California followed suit, keeping public schools closed for close to eighteen months.
At every turn, Fauci stoked rather than allayed fears.
