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Writing in the Wall Street Journal, Burton Malkiel exposes the economic ignorance that lay at the heart of Biden’s proposal to dramatically increase taxes on stock buybacks. Two slices:

Stock buybacks don’t take money away from pro-growth investments. Most buyback funds are reinvested in the stock market and in private equity, where they can be put to more productive use. A policy such as the one Mr. Biden is proposing distorts economic decisions that could harm the savings that many people rely on for retirement.


Perhaps the most pervasive critique by progressives is that the practice enhances the wealth of the top 1% of the population, who own most of the stock. While direct ownership of shares isn’t common among low-income people, indirect ownership through retirement plans exists across the income distribution. Most common stock is held by the mutual (and exchange-traded) fund industry and by a variety of public and private pension plans. Entities such as the California Public Employees’ Retirement System as well as state-run pension plans own enormous amounts of common stocks. These institutions usually reinvest the proceeds from buybacks, and they rely on returns from the stock market to preserve the viability of their programs.

Increasing the tax on corporate buybacks is bad policy. Any revenue raised would come at the expense of making the capital allocation process less productive and introduce inefficiency into the capital markets. A policy that distorts corporate decision making and interferes with the movement of investment capital would harm the economy and weaken the country’s retirement system.

Exposing Biden’s – and many other Democrats,’ as well as Republicans’ – ignorance about trade is the New York Times‘s Peter Coy. Two slices (link added):

To me, something is out of whack in Washington when there’s bipartisan agreement that the federal government should buy products that are made in the United States even if they’re more expensive, even if they aren’t as good and even if the imported versions pose no national security concerns.

If the American-made products were cheaper, better or both, there would be no need to force agencies to buy them. They’d be the natural choice. So either the requirement is harmful to the customers in the federal government and, by extension, taxpayers, or it’s superfluous.

As for national security, there are other laws that stop Americans from buying, say, gallium arsenide integrated circuits for military purposes from potential adversaries such as China. That’s not what Biden is talking about here, though. You have to have a vivid imagination to see a national security threat from imported lumber, glass, drywall or optical fibers. (The electronics in fiber optic cables are a potential concern.)


These are not new arguments. Clearly, though, judging from the standing ovation Biden got this week, a lot of people in Washington aren’t persuaded by them. I asked Douglas Irwin, a Dartmouth College economist who wrote a book titled “Free Trade Under Fire,” whether he’s hopeful for free trade. “Not really,” he said. “The old center has lost ground.” It will probably take evidence of substantial harm from protectionism to get people to change their minds about it, he said.

John Hasnas explains “the diversity dodge.” A slice:

We might call this the “diversity dodge.” Those making the value decisions for colleges and universities believe that the right thing to do is to give preference to minorities until they occupy a share of the student and faculty slots proportional to their percentage of the population. The Civil Rights Act prohibits doing this directly. But colleges and universities can do it indirectly by saying that they are pursuing the educational benefits of a diverse student body. (Note that they cannot use this rationale to increase the number of minority faculty they hire, because obtaining whatever benefits flow from having an ethnically diverse faculty is not an interest that can override the restrictions of Title VII.)

Marcus Witcher reviews Timothy Sandefur’s Freedom’s Furies: How Isabel Paterson, Rose Wilder Lane, and Ayn Rand Found Liberty in an Age of Darkness. Two slices:

With Freedom’s Furies, Timothy Sandefur shows how Isabel Paterson, Rose Wilder Lane, and Ayn Rand defended individualism and free markets while America was in the grips of Depression and war. Although these three furies have long been identified as the founders of modern American libertarianism, Sandefur treads new ground by exploring their relationships with each other and by tracing the evolution of their thought. All three women offered their own unique defenses of individual liberty, and their disagreements anticipated the differences among libertarians and classical liberals today.


In the midst of that darkness, Sandefur writes, Paterson, Lane, and Rand argued “that the spirit of self-reliance was the keystone of American mores—the essential element that allowed for political liberalism, economic growth, the flourishing of geniuses such as Edison and the Wright brothers, and the peaceful pursuit of happiness by millions of unknown citizens.” Individual liberty and self-reliance are still the keystones, and the furies’ successors will surely continue to promote liberty in the face of the darkness today.

My former GMU Econ colleague Bill Shughart explains what shouldn’t – but, unfortunately, what nevertheless does – need explaining: “Noncompete contract clauses are agreed-upon voluntarily.” A slice:

One of the purposes of noncompete clauses is to prevent employees who gain sensitive firm-specific knowledge in their current jobs from divulging it to a rival in return for promotions, pay raises, or other benefits. Specialized knowledge comes in many forms, not just a business’s intellectual property, which may not be protected formally by patents or copyrights but instead by “trade secrets.” Information about unique production techniques, lists of current customers, methods of determining prices, marketing and advertising strategies, inventory policies, and many other aspects of one company’s business operations is valuable to competitors.

Because noncompete clauses limit employees’ job market options, they would be willing to accept such conditions only if the wages or salaries the employer pays exceed the amounts offered without restriction. The pay premium since Adam Smith has been called a compensating wage differential, which the employer is willing to offer if it is less than the added value the employee brings to the job. Noncompete clauses necessarily benefit both parties to an employment contract; they would not survive in a competitive marketplace otherwise.

Speaking of compensating differentials in wages, Tim Worstall identifies another.

A medical consensus today sometimes goes up in smoke tomorrow.

TANSTAFPFC (There Ain’t No Such Thing As Free Protection From Covid.)

Wood House tweets: (HT Jay Bhattacharya)

My friend’s elderly mom is being isolated for 10 days, no visitors allowed, at a rehab center in the Chicago suburbs, after testing positive for covid. cc: @AmyJacobson @DanProft

Friend: “It’s demoralizing, it’s dehumanizing, and a complete fiasco.”