Although Arnold Kling dislikes the term “naive realism,” he believes the concept to be useful. A slice:
Naive realism on the part of public officials is a serious drawback. If the officials are sure that their views are correct, then they may undertake bold interventions without regard to the risks, unintended consequences, or coercion that is embedded in their policies.
[Jeffrey] Friedman points out that although I may acknowledge that I do not know how to solve a problem, my naive realism may take the form of being convinced that someone has a solution. This will bias me toward supporting interventionist public officials, creating a selection bias in favor of officials who themselves are guilty of naive realism.
The proposed regulation to ban noncompetes takes this one step further. Rather than reviewing and judging the specific and individual conduct of companies under Section 5, the FTC has proposed simply to issue a nationwide ban of a type of employment contract that three unelected commissioners have decided they don’t like.
The minds of progressive activists must be running wild with ideas of what they could do if this approach is allowed to stand. Don’t like the pay gap between executives and nonexecutives? The FTC could simply declare it unfair and regulate it. Think that businesses above a certain size shouldn’t be allowed to get any bigger through mergers? The FTC could simply declare those businesses can’t make acquisitions.
Sound far-fetched? Like the banning of noncompetes, both of these policies have been put forward by Sens. Bernie Sanders and Elizabeth Warren.
This fight is about much more than the fate of noncompete agreements. That’s why the Chamber of Commerce will fight in court to hold the FTC accountable to the rule of law.
Democrats also want the Federal Trade Commission to issue “new regulation defining excessive rent increases” as an unfair trade practice. This would be an enormous usurpation of power since the FTC can only regulate interstate commerce and activities that affect it. Most landlords aren’t engaged in interstate commerce, and housing is regulated by states and localities.
Democrats also want the White House to dictate local housing policy by conditioning Department of Housing and Urban Development (HUD) grants on localities “mitigating cost burden and adopting anti-rent gouging measures.” So if cities want federal funds to build more housing for their homeless, they’d have to cap rents.
If there’s any consensus in economics it’s that rent control achieves the opposite of its intended goal. It leads to housing shortages by discouraging new development and maintenance of existing properties. Rents rise faster in properties not subject to controls. Even 60% of California voters rejected a ballot measure in 2020 to expand rent control. We can hope the White House pushes back against this economic destruction, but the last two years aren’t cause for optimism.
Eric Boehm warns that “tariffs targeting carbon emissions would be a costly blow to free trade.” Two slices:
The Trump administration had to do the whole “national security” song and dance because it provided access to a convenient loophole to impose tariffs without the consent of Congress—thanks to Section 232 of the Trade Expansion Act of 1962, which delegates presidential authority over tariffs for issues relating to national security.
At the time, some observers pointed out that Trump’s tactic of declaring economic issues to be national security issues vastly expanded the powers granted to the president under Section 232. Some even suggested that it opened the door for a future president to declare climate change a national security issue and assume massive new powers over trade.
Sure enough, that’s what it looks like the Biden administration is now set to do.
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Regardless of whether the tariffs are implemented for domestic political reasons or in pursuit of an amorphous plan to address climate change, the economic costs are indisputable. The Peterson Institute for International Economics, a trade-focused think tank, estimated that every job saved by Trump’s tariffs on steel cost consumers roughly $900,000 in higher costs created by the tariffs.
It’s fair to expect a similar result from any new tariffs aimed at cutting carbon emissions—because the laws of economics don’t care about the intentions of policy makers.
“Americans are the ones who are going to pay those taxes. If you’re a consumer or a business, you’re going to end up paying those costs—without any input from Congress,” says Bryan Riley, director of the Free Trade Initiative at the National Taxpayers Union, a free market think tank.
Sally Satel recently hosted this panel on the perils of politicized science.
You might have heard a radio advertisement warning that if you’ve had Covid, you could get it again and experience even worse symptoms. The message, sponsored by the Health and Human Services Department, claims that updated bivalent vaccines will improve your protection.
This is deceptive advertising. But the public-health establishment’s praise for the bivalent shots shouldn’t come as a surprise. Federal agencies took the unprecedented step of ordering vaccine makers to produce them and recommending them without data supporting their safety or efficacy.
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The vaccine makers designed their studies to get the results they wanted. Public-health authorities didn’t raise an eyebrow, but why would they? They have a vested interest in promoting the bivalents.
The Food and Drug Administration ordered the vaccine makers in June to update the boosters against BA.4 and BA.5 and rushed in late August to authorize the bivalents before clinical data were available. The Centers for Disease Control and Prevention recommended the bivalents for all adults without any evidence that they were effective or needed.
Vaccine makers could have performed small randomized trials last summer and early fall that tested the bivalents against the original boosters and a placebo group. Results could have been available by the end of September. But the public-health authorities didn’t want to wait—and now we know why.
The CDC published a study in November that estimated the bivalents were only 22% to 43% effective against infection during the BA.5 wave—their peak efficacy. As antibodies waned and new variants took over later in the fall, their protection against infection probably dropped to zero.
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Covid vaccines mitigated severe illness while most Americans gained immunity through natural infection, which substantially boosts protection. There’s a growing consensus that we need better vaccines and treatments to protect those still at risk. But we also need honest public-health leaders.
