Industrial-policy enthusiasts take note: The Wall Street Journal‘s Editorial Board reports further evidence that politicians – in this case, Trump – “are lousy at picking business winners and losers.” Here’s the conclusion:
Translation: Workers will be collateral damage in the transition to EVs as they lose their jobs making gas-powered cars. President Biden flogs the jobs created at EV factories, but he never mentions the losers elsewhere owing to government mandates and subsidies that distort investment. Lordstown is a poster child of the new Washington consensus in favor of government industrial policy, and it won’t be the last casualty of the hubris.
Parallel thinking on the alleged benefits of employment regulation and government industrial planning, particularly to boost manufacturing, is being pursued by various putative conservatives in the United States, including Florida Senator Marco Rubio, American Compass founder Oren Cass, and the Heritage Foundation, a once robustly free-market think tank. For example, the Heritage Foundation’s recently published “Mandate for Leadership” includes a chapter on the Department of Labor that says “federal labour and employment agencies have an important role to play by protecting workers, setting boundaries for the healthy functioning of labour markets, and ultimately encouraging wages and conditions for jobs that can support a family.”
The “important role” the Heritage publication envisions includes, among other things, banning private sector employers from including a bachelor’s degree requirement in job descriptions and government action aimed at pushing for worker representation on corporate boards. Oren Cass cited the Heritage publication as “proof the New Right really cares about worker power.” But whatever your view of individual companies’ hiring policies or governance structures, this proposed government takeover of corporate decision-making is not something any serious conservative or free-marketer can abide. Ask a real free-market economist and he will say the U.S. Department of Labor, far from having an “important role,” should be abolished.
My intrepid Mercatus Center colleague, Veronique de Rugy, decries the Biden administration’s effort to cap credit-card late fees, concluding correctly that such a cap will hurt most the poor. A slice:
Late fees are already capped at a maximum $30 for a first late payment and $41 for any subsequent violations. Although the current rules impose what are essentially price controls, a large enough difference in degree becomes a difference in kind. The much stricter $8 cap can be expected to have much more pronounced negative consequences, especially for low-income consumers. Economic history is replete with examples of price controls leading to shortages. In this case, putting a ceiling on the price card issuers can charge for late payments will inflict most of its damage on low-income consumers who can least afford to lose credit.
The Biden administration, wanting a cheap political win, is counting on consumers being overjoyed with the sugary treat of lower late fees. But we see again that wanting something does not mean that it’s good for you. Preventing or severely limiting the ability of financial institutions to assess appropriate late fees will hurt consumers who can least afford it.
Faria next devotes two chapters to refuting false claims that we often hear from the statists about the supposed need for government activism in medical care. For one thing, leftist politicians and their media allies like to claim that government must intervene to bring down the high cost of medical care so that it will be “affordable.” Faria counters that it’s government meddling that has made healthcare so unaffordable, and observes that we have enormous administrative costs in the system that are wholly attributable to government interference in the market.
The American Economics Association has awarded the prestigious John Bates Clark medal to University of California, Berkeley economist Gabriel Zucman. At the link you’ll find what the AEA decision makers thought made him deserving.
What’s missing? The shoddy work he did to make the data fit his story that in 2018 the tax rate on the “super-rich” fell below the tax rate on the bottom 50 percent. That contradicted one of his own findings in a previous academic article.
Economic historian Phil Magness, who was one of a number of people who caught the problem at the time, explained the details in a February 25, 2020 article titled “Harvard Finally Stands Up to Academic Duplicity“….
Alexander Nazaryan reports that “Earlier this year, Germany’s health minister, Karl Lauterbach, admitted that school closures had been a “big mistake.” There has been no such acknowledgment in the United States.” (HT Jay Bhattacharya)