Tweet [1]
Phil Gramm and Amity Shlaes, writing in the Wall Street Journal, bust myths about ‘gilded ages.’ [2] Two slices:
Between 1870 and 1900 [3], America’s inflation-adjusted gross national product expanded by an unprecedented 233%. Though the population nearly doubled, real per capita GNP surged by 90%. Real wages of nonfarm employees grew by 53%, and life’s staples, such as food, clothing and shelter, became more plentiful and much cheaper. Food prices plummeted by 174% and the cost of textiles, fuel and home furnishings fell by 70%, 65% and 70%, respectively. The illiteracy rate fell by 46% and life expectancy rose 12.5%. Infant mortality declined by 17%.
As American capitalism blossomed, some got rich. In 1892 there were 4,050 millionaires, with less than 20% having inherited their wealth. The rest created it and in the process reduced poverty, expanded general societal prosperity, and made it possible for millions of immigrants looking for opportunity and freedom to find both. That mattered little to progressives, who were so obsessed by the 4,050 millionaires that they turned a blind eye to the 66 million Americans whose economic well-being improved faster than any people who had ever lived on earth.
Had the Gilded Age suffered from monopolistic exploitation, as critics claim, output would have fallen and prices would have risen in the monopolized industries. In a 1985 study, economist Thomas DiLorenzo tested [4] that hypothesis for steel, petroleum, railroads and other industries accused of being monopolistic during the debate on the Sherman Antitrust Act of 1890. He found that output in those industries actually increased by an average of 175% from 1880-90—seven times the growth rate of real GNP. On average, prices in the ostensibly monopolized industries fell three times as fast as the consumer price index.
This myth of the Gilded Age in turn produced Progressive Era regulations that proved to be an impediment to competition, as regulation became an “instrument of cartelization,” producing higher prices, poorer services and less innovation. By the 1970s the negative effect of these regulations was so obvious that Sen. Ted Kennedy and President Jimmy Carter led the deregulation of airlines, trucking, railroads, energy and communications. The benefits of overturning Progressive Era regulations included more competition, greater efficiency, more innovation and stronger growth, setting the foundations of contemporary American competitiveness and prosperity.
…..
Today’s progressive rant that income inequality is an existential threat is unpersuasive and untrue. If we counted all transfer payments such as food stamps and refundable tax credits as income to their recipients and taxes paid as income lost to taxpayers—something the U.S. Census Bureau doesn’t do—we’d find that income inequality [5] is lower today than it was in 1947.
At its root, progressivism is based on a myth and fueled by envy—the same caustic force that has destroyed prosperity and endangered freedom from the time of the ancient Greeks.
(DBx: Yes. Yet unfortunately today it’s not only progressives who peddle economic myths and who stoke envy; today’s progressives are joined in this dangerous game by “national conservatives.”)
Also busting a myth about economic stagnation is James Pethokoukis, who explains that ordinary Americans’ standard of living is today much higher than it was 50 years ago [6]. (DBx: Because I’m a time traveler from 50 years ago – the trip took 50 years – I can confirm that Mr. Pethokoukis’s analysis rings true.)
The New Industrial Policy is the latest fad in justifying runaway deficit spending and clumsy government intervention. I predict that, like Modern Monetary Theory, it will end up doing considerable economic damage. I have to mark down any economist who jumps aboard this train.
(Adam) Smith v. (Wesley) Jones [8]. A slice:
If that was all people knew about the Jones Act, some would likely support it for the same rationale [9] given in 1920, which was to guarantee a merchant marine “for the national defense and the development of the domestic and foreign commerce of the United States,” and “a naval and military auxiliary in time of war or national emergency.” As Senator Wesley Jones (R-WA) expressed it [10] at the time, “The man…who could discourage the upbuilding of our merchant marine is fighting the battle of alien interests.”
But while the aspirations listed sound reasonable (as even completely unreasonable government policies are often made to sound), the Jones Act has actually produced a massive failure. It has provided none of those aspired-to benefits. It has done the opposite. But it has imposed very high costs, direct and indirect, that trace to the fact that it makes shipments between American ports several times more expensive than shipping not subject to those restrictions. That is, the results contradict the aspirations to the point of putting it on the side of the interests Jones said he opposed.
David Henderson advocates a move away from – rather than toward – socialized medicine [11].
Jay Bhattacharya tweets [13]:
A pandemic is a bad time to remake the world into the utopia of your imagination. The pathogen and the response will kill more as a result. And your god will fail so obviously that the whole world cannot miss it.