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… is from pages 135-136 of the 5th edition (2020) of Douglas Irwin’s superb book Free Trade Under Fire (footnote deleted; link added):

[A]ccording to one calculation, the Trump administration’s decision to impose 25 percent tariffs on imported steel in 2018 means that U.S. consumers and businesses are paying more than $900,000 a year for every job saved or created by the tariffs. The cost is more than thirteen times the typical salary of a steelworker.

DBx: Just a reminder: Protectionists continue to insist that tariffs enrich the country by, in effect, forcing domestic consumers to pay workers in protected industries more than the value of these workers’ outputs.

Protectionists’ would be more credible if they tried their trick at home by, say, paying each of their babysitters $150 per hour, each of the workers who mow their lawns $200 per hour, and each attorney they hire $5,000 per hour. Protectionists’ credibility would be further raised if they were also to quadruple – or, better, quintuple – the amounts they pay at supermarkets. For example, if today’s supermarket bill comes to $200, a protectionist – if protectionist ‘theory’ is correct – can enrich himself or herself by instead forking over to the supermarket a full $1,000.

I challenge protectionists to do as I describe here and then to keep track of their net worths.

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James B. Meigs isn’t favorably impressed with Scientific American‘s recent unscientific moves. Two slices:

American journalism has never been very good at covering science. In fact, the mainstream press is generally a cheap date when it comes to stories about alternative medicine, UFO sightings, pop psychology, or various forms of junk science. For many years, that was one factor that made Scientific American’s rigorous reporting so vital. The New York Times, National Geographic, Smithsonian, and a few other mainstream publications also produced top-notch science coverage. Peer-reviewed academic journals aimed at specialists met a higher standard still. But over the past decade or so, the quality of science journalism—even at the top publications—has declined in a new and alarming way. Today’s journalistic failings don’t owe simply to lazy reporting or a weakness for sensationalism but to a sweeping and increasingly pervasive worldview.

It is hard to put a single name on this sprawling ideology. It has its roots both in radical 1960s critiques of capitalism and in the late-twentieth-century postmodern movement that sought to “problematize” notions of objective truth. Critical race theory, which sees structural racism as the grand organizing principle of our society, is one branch. Queer studies, which seeks to “deconstruct” traditional norms of family, sex, and gender, is another. Critics of this worldview sometimes call it “identity politics”; supporters prefer the term “intersectionality.” In managerial settings, the doctrine lives under the label of diversity, equity, and inclusion, or DEI: a set of policies that sound anodyne—but in practice, are anything but.

This dogma sees Western values, and the United States in particular, as uniquely pernicious forces in world history. And, as exemplified by the anticapitalist tirades of climate activist Greta Thunberg, the movement features a deep eco-pessimism buoyed only by the distant hope of a collectivist green utopia.

The DEI worldview took over our institutions slowly, then all at once. Many on the left, especially journalists, saw Donald Trump’s election in 2016 as an existential threat that necessitated dropping the guardrails of balance and objectivity. Then, in early 2020, Covid lockdowns put American society under unbearable pressure. Finally, in May 2020, George Floyd’s death under the knee of a Minneapolis police officer provided the spark. Protesters exploded onto the streets. Every institution, from coffeehouses to Fortune 500 companies, felt compelled to demonstrate its commitment to the new “antiracist” ethos. In an already polarized environment, most media outlets lunged further left. Centrists—including New York Times opinion editor James Bennet and science writer Donald G. McNeil, Jr.—were forced out, while radical progressive voices were elevated.

…..

The Covid pandemic was a crisis not just for public health but for the public’s trust in our leading institutions. From Anthony Fauci on down, key public-health officials issued unsupported policy prescriptions, fudged facts, and suppressed awkward questions about the origin of the virus. A skeptical, vigorous science press could have done a lot to keep these officials honest—and the public informed. Instead, even elite science publications mostly ran cover for the establishment consensus. For example, when Stanford’s Jay Bhattacharya and two other public-health experts proposed an alternative to lockdowns in their Great Barrington Declaration, media outlets joined in Fauci’s effort to discredit and silence them.

Adam Summers reports on the reality of minimum-wage diktats playing out in Seattle.

Art Carden celebrates the bourgeois deal.

Writing in the Wall Street Journal, Bjorn Lomborg warns against the radical green agenda. A slice:

Many developing nations never shared the Western elite’s obsession with reducing emissions. Life for most people on earth is still a battle against poverty, hunger and disease. Corruption, lack of jobs and poor education hamper their futures. Tackling global temperatures a century out has never ranked high among the priorities of developing countries’ voters—and without their cooperation, the project is doomed.

“No, unions aren’t having a resurgence – and that’s good for workers,” so explains my intrepid Mercatus Center colleague, Veronique de Rugy. Two slices:

All the same, talk of a union renaissance might be much ado about nothing. Union membership as a share of wage and salary workers has declined steadily from 28.3 percent in 1967 to an all-time low of 10 percent in 2023. Although the absolute number of union workers has recently risen, it hasn’t kept up with the growth of the total number of American workers.

National Review‘s Dominic Pino has been following unions comprehensively. He never forgets to report both their wins and their losses. For instance, workers at a unionized Nissan facility in Somerset, New Jersey, are in the process of decertifying from the UAW. The same happened at various non-Starbucks coffee shops.

…..

By contrast, private unions have every right to exist, but this doesn’t mean they’re a good thing on net for workers. A September 2023 National Bureau of Economic Research paper looked at what a unionized workforce does to incentives and investment. While unionized plants pay higher wages and benefits than do nonunionized ones, they also “experience higher rates of closure, reduced investment, and slower employment growth.” In other words, your unionized job might pay more, as long as it doesn’t go away—and good luck finding another like it. The result holds also for partially unionized plants.

Introducing more competition to the private sector union business model could help. For that, my colleague Liya Palagashvili suggests ending the exclusive-representation clause that “provides government-granted monopoly status to a union supported by 51 percent of an employer’s workers, giving it the sole authority to negotiate. This means that if some workers want a different union—for example a newer one that might raise the bar in terms of what it can offer—they are out of luck.” Today, these workers aren’t allowed to engage in any negotiations with their employers, and they still have to pay the original union’s fees.

Adrian Wooldridge warns that “progressives forget their free-trade heritage at their own peril.”

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… is from page 8 of Cormac Ó Gráda’s 2015 paper “Neither Feast Nor Famine: England Before the Industrial Revolution,” which is chapter 1 of Institutions, Innovation, and Industrialization: Essays in Economic History and Development (Avner Greif, Lynne Kiesling, and John V.C. Nye, Eds., 2015):

Famines are nearly always linked to economic backwardness. Their virtual elimination globally (in peacetime) is one of the achievements of modern economic growth.

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… is from page 8 of Dartmouth economist Bruce Sacerdote’s excellent 2017 paper “Fifty Years of Growth in American Consumption, Income, and Wages“ (link added):

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My intrepid Mercatus Center colleague, Veronique de Rugy, talks with GMU Econ alum Adam Michel about government-debt reduction.

George Will offers an argument in support of “principled nonvoting.” Two slices:

This is not a normal time. Granted, scores of millions of Americans normally — and reasonably — think their political options should be much better: The memory of man runneth not to a time when voters exclaimed, “What a divine presidential choice we have this year!” Still, 2024 is so abnormal, consider, without necessarily embracing, an argument in defense of principled nonvoting. Plainly put, the argument is: Elections register opinions. Abstaining from voting can express a public-spirited and potentially consequential opinion.

Regarding the supposed duty to vote, the right and ability to ignore politics is an attribute of a good society. (Totalitarian societies forbid notparticipating in the enveloping politics.) As for the supposed duty to become satisfactorily informed:

Polls showed that in 1964, two years after the Cuban missile crisis, only 38 percent of Americans knew that the Soviet Union was not a NATO member. In 2006, only 42 percent could name the government’s three branches. The average American works harder at being informed when choosing a refrigerator than when picking a president.

…..

It might be a constructive signal to both parties if, for the first time in a century, more than half the electorate would not vote. (Only 48.9 percent voted in 1924.) Voters’ eloquent abstention would say that they will return to the political marketplace when offered something better than a choice between two Edsels.

Joshua Windham calls for an end to the egregious “open-fields” doctrine.

Kimberlee Josephson is right that Mises was right and Elizabeth Warren is wrong. A slice:

Time will test the best of what Apple has to offer. And so far, the benefits derived from Apple products have extended far beyond the smartphone sector. It is perhaps worth noting that Warren Buffett believed the iPhone to be “enormously underpriced” and he said he’d give up his private airplane before he would the iPhone. “What it [iPhone] does for you, it’s incredible” and, if to add to Buffett’s sentiments, what Apple’s success has done for other sectors is also incredible.

In addition to empowering small businesses who have leveraged Apple products for transactions in a variety of ways, Apple has also supported the creation of adjacent innovations which can have spillover use effects in the marketplace. For instance, in 2021, Apple’s Advanced Manufacturing fund awarded $45 million to Corning Incorporated to further research and development for creating the toughest smartphone glass ever made, Ceramic Shield. The various forms of protection and connection that Apple has established for its hardware, its software, and its content is truly impressive and should be a point of pride for the United States.

Economic advancement occurs when companies increase their capacity for market linkages thanks to business growth. When production and sales increase, a larger and more diversified market occurs igniting new demands for market offerings and new opportunities for job seekers and entrepreneurs. Indeed, businesses depend on vast networks of suppliers, distributors, and ancillary service providers. Businesses never operate in silos and firms survive and thrive when value is derived through market interactions. As it turns out, Apple’s walled garden has produced rather strong vines.

“Trump promised to ‘drain the swamp.’ He did the opposite.”

Jacob Sullum rightly decries Ron DeSantis’s unprincipled cultural warriorism.

George Leef asks: “Why must social workers believe in leftist shibboleths?” A slice:

A veteran professor of social work has just written an article that dares to criticize her field’s obsession with “social justice.” Naomi Farber is an associate professor in the University of South Carolina College of Social Work, and her piece “The Dystopian World of Social Work Education” gives us an insider’s view of the way leftist theories are shoving aside practical instruction.

Farber writes, “The calls to ‘decenter whiteness’ and ‘decolonize curricula’ are ubiquitous among schools of social work, including those at the most prestigious and hence most influential universities.” She continues, “The changes that have occurred already threaten the value of a once-respectable profession as successive cohorts of social workers enter the field prepared to act more as social justice warriors than trustworthy providers of important services to vulnerable people.”

John O. McGinnis makes the case for overturning Chevron.

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… is from page 221 of the Definitive Edition (Ronald Hamowy, ed., 2011) of F.A. Hayek’s 1960 book, The Constitution of Liberty:

The conception of freedom under the law … rests on the contention that when we obey laws, in the sense of general abstract rules laid down irrespective of their application to us, we are not subject to another man’s will and are therefore free. It is because the lawgiver does not know the particular cases to which his rules will apply, and it is because the judge who applies them has no choice in drawing the conclusions that follow from the existing body of rules and the particular facts of the case, that it can be said that laws and not men rule.

DBx: Hayek was born on this date – May 8th – in 1899. Happy 125th birthday, sir.

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Here’s a follow-up note to a recent correspondent:

Mr. B__:

Thanks for your follow-up to my recent note critical of Dani Rodrik’s take on trade.

You write that I “don’t appreciate that workers validly feel more nervousness and anger when the jobs they lose are to foreign goods than when they lose jobs to their fellow Americans who do things like introduce new technology or choose to shop online than at malls.”

If workers feel this way, it’s likely because the general public is constantly fed the fib that international trade is a categorically distinct, especially large, and uniquely disruptive source of economic change and job destruction. Yet it isn’t. In a country as large and as dynamic as the U.S., job losses directly connected to trade are a very small portion of the job losses that routinely occur.

One role of the economist is to reveal such realities rather than to pretend that such misapprehensions are valid.

But there’s a deeper point: Jobs lost to imports are lost because of decisions made by fellow citizens no less than are the jobs that are lost when fellow citizens, say, choose to increase their online shopping and decrease their shopping in brick-and-mortar stores. It’s commonplace to say that “jobs are destroyed by imports,” that “international trade destroyed this or that industry,” and that “foreigners are stealing our jobs.” But this language is highly misleading.

Imports, as such, don’t destroy any particular jobs in America; those particular jobs are destroyed by fellow Americans choosing to buy imports. International trade destroys no American industries; industrial decline blamed on trade is caused by fellow Americans choosing to buy more imports. Foreigners never “steal” jobs – not only because a job isn’t a piece of property, but also because all such job losses occur only because fellow Americans choose to change their spending patterns.

If you’re okay with economic change and the loss of particular jobs caused by the decisions made by fellow Americans, then you should be okay with economic change and the loss of particular jobs that arise when Americans buy more imports. Such job losses are caused by fellow Americans.

Sincerely,
Donald J. Boudreaux
Professor of Economics
and
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030

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… is this recent tweet by trade scholar Dan Ikenson:

It’s not so much that we “need foreign savings,” but that foreigners need, desire, demand US investments. Even when US policymakers play roulette with fiscal policy or when the world is in a seemingly chaotic state and US policymakers are exacerbating the problem, investors want dollar denominated investments in US assets. May change at some point. But for now there is a strong argument to make that foreign investment in US (not mindless consumerism) drives the trade deficit.

DBx: Yep.

An unfortunately common practice, even among economists, is to talk or write about the U.S. trade deficit as if it’s necessarily a consequence of inadequate savings by Americans and would, therefore, shrink or disappear altogether if only Americans saved more.

For example, if the U.S. trade deficit this month is $70 billion, this fact does indeed mean that foreigners this month are investing in America $70 billion more than Americans this month are investing abroad. From this reality people conclude that “if only” we Americans as a whole saved more we either would have invested at least $70 billion more this month in foreign ventures and assets or we Americans, rather than foreigners, would have undertaken in the U.S. that $70 billion of investment in America that is instead being undertaken by foreigners.

But this conclusion is mistaken. Investment opportunities aren’t dispensed by nature for all to see, with the fastest or most-frugal individuals on the globe seizing them, leaving no further opportunities for others. Until and unless every human need and whim is fully satisfied, creative individuals will have opportunities to make productive and profitable investments. Investment opportunities are ultimately the creations of human ingenuity. When a Norwegian or Bulgarian uses U.S. dollars to build a business in the U.S., that activity causes the U.S. trade deficit to be higher than it would be had that Norwegian or Bulgarian instead used his or her dollars to purchase American exports. But it isn’t the case that had we Americans saved more we would have built that business. Absent the foreign investment in America, that particular business would not have been built at all, and perhaps no similar business would have been built.

Ditto with portfolio investments: foreigners might see – correctly or incorrectly – prospects for profit that we Americans miss.

In short, the amount of investment done in a country during some period, or over long expanses of time, is not a nature-given fact independent of the particular individuals who are making the investments. And, importantly, because the amount of investment opportunities is practically unlimited, there is simply nothing inherently harmful about U.S. trade deficits to Americans. As Ikenson points out above, quite the opposite is the case.

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The Editorial Board of the Wall Street Journal warns: “Freddie Mac and its Biden regulator want to guarantee second mortgages. What could possibly go wrong?” A slice:

As usual, the likely losers would be taxpayers. One risk is that home prices fall, causing some homeowners with second mortgages to default. An equity buffer helps reduce defaults, which is one reason foreclosure rates remain near record lows. A reduction in equity would make defaults and foreclosures more likely.

Former Democratic Rep. Brad Miller testified in a 2015 hearing on the 2008 financial crisis that “the subprime mortgage model was to lend to people who already owned their own homes—70% were refinances and had a lot of equity in their home—and the mortgages were designed to catch them in a cycle of borrowing and borrowing again.”

He blamed banks for being greedy, but they were merely responding to incentives created by the government and Fannie and Freddie. If Fan and Fred buy and guarantee second mortgages, this will also create new risks in the financial system.

Richard McKenzie details the unfortunate yet unsurprising reality of California’s new minimum wage for workers at fast-food restaurants. A slice:

The political supporters, who surely know the findings of the minimum-wage studies, might object vociferously: “Most past statistical studies on minimum-wage hikes have found meager percentage reductions in employment in covered worker groups (generally, lower than 3 percent of covered workers) and hours worked.” They would be right, for the literature they’ve reviewed. Yet they overlook how employers are not fools, unable to recognize and use other ways of legally responding to government mandates, with the intent of offsetting partially, if not totally, the labor-cost increases from money wage-rate hikes.

Employers know very well that the mandated money-wage increase is hardly the only way workers are compensated, and may not even be the most important form of compensation (on the margin) for some, or even a few, covered workers (especially those with children who need flexible schedules).

Employers also face competitive market pressures to control their labor costs and advance their profits in financial markets. Employers who don’t respond to minimum-wage mandates by cutting their labor costs (perhaps because they want to be “nice” to their workers) can be left behind with relatively higher production costs, and with higher prices and lower sales than those who do make the cuts. The extant competition can force all competitors to respond even when they would prefer not to do so.

Scott Sumner has some rather remarkable news for the many people who believe that zoning protects residential and other non-industrial areas from being uglified by industrial facilities.

Arnold Kling shares his thoughts on the memorial service for his dissertation supervisor, Robert Solow.

I’m eager to read Kristian Niemietz’s new work, Imperial Measurement: A cost-benefit analysis of Western colonialism.

J.D. Tuccille argues against banning people from recording the police.

Writing in the Wall Street Journal, J. Howard Beales and GMU Law’s Timothy Muris analyze “Lina Kahn’s failed FTC experiment.” Two slices:

President Biden has embraced modern progressivism and ditched his liberal economic-policy inheritance. Nowhere is this more striking than in competition policy—the past 40 years of which, Mr. Biden says, have been a failed experiment. His complaint is the consumer-welfare standard, the nearly half-century bipartisan consensus that competition policy should be judged by whether consumers benefit from a given arrangement.

Today’s Democrats aren’t the first to argue that the Federal Trade Commission, now led by Lina Khan, needs drastic change. New leadership after the 1968 and 1980 elections argued the same. In a recent analysis for the Competitive Enterprise Institute, we compared Ms. Khan’s tenure with her predecessors’ from those two eras. The contrast is revealing.

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The FTC has persisted in relentless norm-busting, beginning with Mr. Biden’s designating Ms. Khan as chair immediately after she was confirmed as a commissioner—without telling the Senate he intended to do so. It continued by limiting information available to minority commissioners, companies under investigation and Congress. Further, according to a designated agency ethics official, Ms. Khan became the first agency employee to ignore the advice that she recuse herself from participating in a specific party matter owing to “appearance or other federal ethics grounds.” Before joining the commission Ms. Khan had opined that Meta, one of the parties to a challenged merger, should be denied such acquisitions. She chose to participate anyway, and members of the commission sought to conceal her disregard for ethical guidance.

Norms are essential, particularly when people with strong but different opinions must work together. When they are undermined, so too are social and professional cohesion. Such is the case at Ms. Khan’s FTC. While the commission is certainly active, promulgating rules and filing lawsuits, the painstaking organization and planning necessary to make its efforts permanent are nowhere to be found. As legendary basketball coach John Wooden said, “Never mistake activity for achievement.”