… is this recent tweet from GMU Law professor Todd Zywicki:
It is ironic that [Tim] Walz saying there’s no First Amendment protection for “misinformation” is itself misinformation.
Michael Strain explains that “protectionism is failing and wrongheaded” – and he’s got the supporting facts. Here’s the abstract:
The Trump–Pence and Biden–Harris administrations enthusiastically embraced protectionism. Each administration explicitly argued for a break from the bipartisan consensus of recent decades that has been generally supportive of free trade and of allowing markets to shape US industrial and employment composition. But the protectionism of the Trump and Biden administrations has not succeeded and likely will not succeed at meeting its goals: they have caused manufacturing employment to decline, not to increase; they have not reduced the overall trade deficit; they have not led to a substantial decoupling of the US and Chinese economies. More fundamentally, the goals that have not been met are wrongheaded: policymakers should not pay inordinate attention to manufacturing employment, and the trade deficit is a poor guide to economic policy. Finally, these wrongheaded goals often rest on fundamental economic misperceptions: free trade is not a policy to create jobs; it is a policy to increase productivity, wages, and consumption. The balance of the evidence suggests that free trade, including trade with China, has not reduced employment. Of course, trade has been disruptive. But populist policies adopted in response will hurt workers, not help them.
Tad DeHaven ponders ports, automation, and progress.
GMU Econ alum Dominic Pino is rightly dismayed by Biden’s and Harris’s pro-labor-union bias.
Jack Nicastro reports on the economic damage done by “Buy American” rules.
Phil Magness writes insightfully about the ridiculous popularity of Karl Marx. A slice:
The high level of Marx veneration in modern academic life makes for a strange juxtaposition with the track record of Marx’s ideas. The last century’s experiments in Marxist governance left a trail of economic ruination, starvation, and mass murder. When evaluated on a strictly intellectual level, Marx’s theories have not fared much better than their Soviet, Chinese, Cambodian, Cuban, or Venezuelan implementations. Marx constructed his central economic system on the labour theory of value – an obsolete doctrine that was conclusively debunked by the “marginal revolution” in economics in the 1870s. Capital was also riddled with internal circularities throughout, including its inability to reconcile the pricing of labour as an input of production with labour as a priced value onto itself. By the turn of the 20th century, Marx’s predictive claims about the immiserating forces of capitalism were confronted with the tangible reality of growing and widening levels of prosperity.
By every measure of its own merit, Marx’s economic system should have been relegated to the dustbin of intellectual history – and for a brief moment it was. Marx’s Capital struggled to find an audience in his own lifetime. He died in 1883 in relative obscurity and with little following outside of a small band of fanatical leftists led by his friend Friedrich Engels. Even among fellow socialists, Marx was a controversial figure. He spent the last decade of his life locked in endless internecine feuds with anarchists, non-revolutionary socialists, and even other competitor revolutionary factions. For decades after his death, he faced credible accusations of plagiarising his theories from other writers. The Manifesto has more than a few arguments that strongly resembled an 1843 pamphlet by French socialist writer Victor Considerant, and Marx’s doctrine of “surplus value” closely follows an earlier work by democratic socialist thinker Johann Karl Rodbertus.
Ms. Khan regularly vilifies business. While she has a right to free speech, her targets are also entitled to due process in formal government procedures. Express Scripts argues that the FTC report is defamatory, which may be a stretch. But businesses deserve the same protection against libelous statements made by government as they do private actors.
Ms. Khan is running rough-shod over due process as she tries to expand her authority. One result is she keeps losing in court. Another is that businesses are increasingly challenging the FTC’s power and structure. Ms. Khan may finally get punched back.
Alas, recycling China’s savings through a handout-palooza won’t fix this. Keynesians assume the Chinese save because they can’t rely on social benefits like America’s Social Security, which may even be true, but the high savings rate isn’t China’s problem. The low productivity of those savings is.
The political controls on the economy that created this situation aren’t going away under Mr. Xi and will thwart the Keynesians’ longed-for virtuous circle. Any new money funneled into consumption will land in a business ecosystem facing the same financial-political inhibitions on productive investment as before. A paradox: If China were capable of benefiting from a new spending stimulus, the economy wouldn’t need one.
Brad Thompson explores the connection between commerce and the birth of a free society.
James Hartley eviscerates the nonsense that goes by the name “limitarianism.” Three slices:
Limitarianism: The Case Against Extreme Wealth by Ingrid Robeyns is a very bad book. Writing a review of it thus presents a challenge. Who wants to read a review that is the equivalent of shooting fish in a barrel of dead fish? Yet, while reading Robeyns’ tendentious screed, I was faced with the absolute certainty that quite a few of my colleagues and students would love this book.
…..
As I said at the outset, writing an entire review just documenting how bad this book is would be an incredibly easy task. Pick a page at random, and you’ll find multiple examples of an argument neither cohesive nor persuasive. The question is: how is it possible that the book is this bad? The answer is found in the Introduction. On the third page, Robeyns notes, “For a long time, I felt that there was something wrong with an individual amassing so much money, but I couldn’t properly articulate why.” So, she “decided to deploy my training in philosophy and economics to answer the question: Can a person be too rich?” The arguments in this book did not lead Robeyns to her conclusion; she started with the conclusion. When you start your investigation already knowing the answer to the question, then you may not notice that the reasons you offer for your conclusion are not persuasive to someone who is skeptical about the conclusion. If it seems like the arguments are non sequiturs attacking straw men, that isn’t important to Robeyns. The conclusion is right even if the arguments fail. The result of this approach is a religious book written for the already converted.
…..
To pretend that you can have all the riches of the modern world and eliminate the ability for anyone to become wealthy is a sure sign of someone who has no understanding of how all this wealth was generated in the first place. Robeyns’ book, however, provides insight into why people advocating income limitation plans often seem so unaware of how economic growth occurs. If getting rid of rich people is akin to a religious mandate to rid the world of evil, then of course it is safe to impute bad motives to anyone arguing that there are possibly benefits to the world from allowing people to do things that will make them wealthy. Despite appearances, Robeyns book is not really an attempt to persuade anyone of her beliefs; instead, it is an insight into the minds of zealots.
… is from page 566 of the 1988 collection of Lord Acton’s writings (edited by the late J. Rufus Fears), Essays in Religion, Politics, and Morality; specifically, it’s a note drawn from Acton’s extensive papers at Cambridge University; (I can find no date for this passage):
Party does not mean that one set of men are especially able, always right, virtuous and able. But that the others are profoundly wrong.
DBx: It’s as if Acton foresaw from 19th-century Britain national politics in 21st-century America.
Coates’s overarching themes are familiar: the plundering of black wealth by the Western world, the hypocrisy at the heart of America’s founding ideals, and the permanence of white supremacy. If The Message departs from his earlier work in any way, it’s that his desire to smear America has been eclipsed by his desire to smear Israel—an exercise that takes up fully half the book. (More about that, which Coates has declared “his obsession,” in a bit.)
Blocking technological advancements is not only bad for the East Coast ‘Stone Age’ port workers, but it’s also bad for America’s competitive edge. Asian and Middle Eastern ports which do welcome technology will continue to grow faster in the long run compared to the U.S. ports. For those who sympathize with MAGA goals, banning technological advancements on U.S. ports is a great “American Last” strategy.
“Xi isn’t a follower of Hayek, but he should be.”
[C]ountries with a relatively young population and a need for domestic investment capital should expect net capital inflows, thus producing a trade deficit. That situation only becomes a problem if these capital inflows are not well-invested; for example, when Greece borrowed money after joining the eurozone, it was mainly spent on government salaries and not investments. Aging societies should invest part of their savings abroad to generate a net capital outflow and automatically achieve a trade surplus. Needless to say, an aging society with significant unemployment should still invest the bulk of its savings at home, but it can still potentially export capital. The trade surplus of such a country is caused by neither unfair behavior nor the country’s export competitiveness—instead, it is caused by the intertemporal decisions of its aging population.
GMU Econ alum Dominic Pino recalls how National Review stood up to a labor union.
… is from page 138 of the late Wesleyan University economic historian Stanley Lebergott’s brilliant – and fun – 1993 book, Pursuing Happiness: American Consumers in the Twentieth Century:
Throughout this century technical advance persistently cut the cost of each hour of “recreation.” It has, of course, been argued by [William] Baumol and others that technological advance in services is necessarily sluggish. After all, the Haydn Quintenquartette took 19 minutes playing time two centuries ago. It can be performed no faster today. Yet what about economics, not musicianship? In 1900 it was played to audiences of at most a few hundred. In 1990 radio and satellite beam it to millions. Similar changes for baseball games, opera, and tennis matches cut recreation costs this century, even ignoring records and videocassettes. Thus recreation experience increased more this century than the constant dollar figures report.
In this post of a few days ago I wrote that I would offer a follow-up post in response to Oren Cass’s claim that when a government doesn’t obstruct its citizens’ freedom to purchase imports one result is a negative externality – specifically, an alleged undervaluation of the nation’s industrial base. That follow-up response is now written; it will appear as my next AIER column, hopefully to be published sometime next week. (I will, of course, share a link to that column here.)
Here I will briefly remark on James Broughel’s inaccurately capacious notion of “externalities.” Broughel, you might recall, tweeted this after Cass tweeted out my criticism of him (that is, of Cass):
In Oren’s defense, Boudreaux does have a history of denying externalities exist
David Henderson then tweeted, in response to Broughel:
Actually, he doesn’t.
In reply to David, Broughel tweeted:
I provided evidence. You make assertions. He denies them in both the title and the text of the post I linked to.
What is the evidence provided by Broughel to support his accusation that I “have a history of denying externalities exist”? According to Broughel, it’s the post of mine that he shared on X. That Cafe Hayek post is titled “Other People’s Choices Made With Their Own Resources Do Not Create Externalities.”
I could end this post here and simply encourage readers to judge for themselves if, in that post of mine to which Broughel links, I’m guilty “of denying externalities exist.” But I’ll write more.
What I do deny in that post is that the particular phenomenon classified by Broughel as an externality is an externality. But it’s incorrect for Broughel to infer from what I wrote in that post to the conclusion that I am therefore in the habit of “denying externalities exist.”
If Broughel were to show the world a picture of Secretariat crossing the finish line in the 1973 Belmont Stakes and then identify Secretariat as a pigeon, no one would be guilty of denying the existence of pigeons if he or she pointed out that Secretariat wasn’t a pigeon. Yet such an error is the sort that Broughel commits in his response to David Henderson.
Broughel’s writings on negative externalities clearly reveal that he thinks these consist of any and all choices that have negative effects on third parties who are not directly compensated by the persons whose choices cause these negative effects. This understanding is what enables him to treat as a negative externality the “desire on the part of the public to engage in conspicuous consumption. It would be more economically efficient if we lived in a world where scientists and engineers were as highly valued as actors and athletes are in our own culture.”
Given what economists mean by “economically efficient,” this claim by Broughel is simply mistaken. (And by “economists” here I don’t mean only Austrian or Chicago economists.) Overlook Broughel’s economically ambiguous line of “a world where scientists and engineers were as highly valued as actors and athletes are in our own culture.” (What, exactly, does this mean? Is he talking about marginal valuation? Would Broughel cheer if some mysterious disease overnight killed off so many scientists and engineers that the few who remained alive would command salaries equal to those of George Clooney and Shohei Ohtani?)
Instead, recognize that people value – truly value – consumption, including watching movies and sporting events. Broughel simply assumes that the value of the enjoyment of engaging in these consumption activities is inferior to, or less than, the value of getting more scientific and engineering services and breakthroughs. He cannot know that. In fact – and here’s the foundational, scientific point – because individual income earners choose to spend on entertainment whatever portions of their incomes that they spend on entertainment, the foregone utility that these individuals give up by choosing not to spend their money in other ways is internalized on them. There. Is. No. Externality.
Broughel is free to express his normative assessment that the world would be a better place if fewer people liked Taylor Swift and more people liked Stephen Hawking. But in doing so he’s stepping outside of his role as an economist, and so it’s illegitimate of him to use a word with scientific meaning – “externality” – as a label for that which he normatively dislikes. Broughel is also free to make scientific predictions of the sort that if people had stronger preferences for going to science lectures and weaker preferences for going to professional wrestling matches, then production patterns would change in ways X, Y, and Z. But he is not free to describe the preferences expressed with the expressers’ own resources as “externalities” simply because these expressions of preferences reveal that the expressers have some positive demands for some consumption items (including leisure) that cause the set of opportunities open to other people to differ from what Broughel thinks that set should be.
Mr. Harold Daggett, President
International Longshoremen Association
Mr. Daggett:
I just encountered this report about a speech you gave last year:
“Who the hell is a foreign company like Maersk, to come on to American soil and build fully automated terminals,” ILA President Harold Daggett asked in a fiery speech at a 2023 convention. “This foreign company Maersk tries to shove fully automated terminals down our throats and for what reason? To eliminate good paying American jobs, ILA jobs.”
If you can spare a moment away from leading your striking workers in shoving down our throats the protectionism so craved by Donald Trump, I’ve a few questions for you:
– If Maersk were an American company trying to fully automate terminals, would its efforts then be acceptable? If not, why do you mention that Maersk is a foreign company?
– Is Maersk attempting to implement automation at gunpoint or otherwise through coercion? If not – that is, if Maersk is using only its own money and property, as well as money and property that Americans offer to it – in what way is Maersk ‘shoving’ automation “down our throats”?
– Because all automation eliminates some particular jobs – jobs that, until the automation was implemented, paid the workers who held them more than these workers could have earned in other jobs – are you opposed to all automation? And do you believe that the automation that humanity has accepted over the millennia – from the wheel, lever, and rope to the overhead crane, forklift, and automobile – was shoved down people’s throats and impoverished workers? Also, do you think that the workers who you represent would be better off if government were to outlaw the likes of wheels, levers, forklifts, and automobiles? If not, why do you presume that the particular kinds of automation that you now oppose will be bad for workers over time?
– Finally, who the hell are you to stand in the way of your fellow citizens’ ability to enjoy the fruits of human ingenuity?
Your answers to these question would be welcome.
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
For those (very many) people who write, talk, and pontificate about the modern economy in general, and trade in particular, as if these are phenomena simple enough for smart, informed, and apolitical officials in capital cities to manage – for these officials to pick ‘winners’ that actually should win and ‘losers’ that actually should lose – for these officials to impose tariffs here and dispense subsidies there in ways that will achieve economic outcomes that, by some metric, improve the overall economy – I recommend the new Cato Institute website, “Globalization, Unfolded.” (HT Scott Lincicome, who introduces the project here.)
George Will is understandably dismayed by both major-party candidates in the 2024 U.S. presidential contest. Two slices:
Harris is parsimonious with interviews, but who cares? They can only reveal today’s batch of her views, which tend to expire in batches. It would, however, be fun to find out if there is any question — e.g., are there enough submarines for the AUKUS partners? — she will not answer by saying, “I was raised a middle-class kid, okay?”
Former president Donald Trump still resembles the “Bleak House” character about whom Charles Dickens wrote: “When he has nothing else to do, he can always contemplate his own greatness. It is a considerable advantage to a man, to have so inexhaustible a subject.” But Trump’s ongoing choices of colorful companions raises a question: Has a ship’s hull ever become so encrusted with barnacles that the weight of them sank the vessel? The Trump campaign should wonder. He evidently enjoys the company of the dregs of America’s political culture — Holocaust deniers, 9/11 “truthers,” Tucker Carlson, who praises a “historian” who thinks Winston Churchill was beastly to Adolf Hitler.
…..
Her industrial policy will pick winners (and therefore, necessarily, losers), directing government subsidies to the most promising industries of the future. She has not said how her political career equipped her for such economic clairvoyance.
Eric Boehm reveals an inconsistency in J.D. Vance’s economics. A slice:
In response to a question about how to expand the housing supply, Vance argued that part of the solution must be lower energy costs—because those factor into the cost of housing.
“Think about it, if a truck driver is paying 40 percent more for diesel, then the lumberhe’s delivering to the job site to build the house is also going to become a lot moreexpensive,” Vance said. “If we open up American energy, you will get immediate pricing release relief for American citizens, not by the way, just in housing, but in a whole host of other economic goods too.”
That’s a good point—and Vance is right that affordable, abundant energy should be a top priority for any presidential administration.
But he should also consider the lumber that’s being carried on the truck in his hypothetical example.
If that lumber comes from Canada, it will be subject to 14.5 percent tariffs—tariffs that were hiked from 8 percent to that level earlier this year—that will increase the cost of that load a lot more than slightly higher fuel prices will. The National Association of Home Builders, an industry group, calls those tariffs “a tax on American builders, home buyers, and consumers” and says they directly affect housing affordability.
Building housing also requires steel and aluminum, and lots of other products manufactured from those two materials. Vance’s running mate, former President Donald Trump, slapped tariffs on much of America’s supply of steel and aluminum (and, in fairness, the Biden administration has kept those tariffs in place). Trump and Vance are campaigning on a plan to hike more tariffs, which would not only increase the cost of buying a house but also filling it with furniture, appliances, and other items.
Has the decline in manufacturing been the catastrophe portrayed by various politicians? Hardly. Inflation-adjusted gross domestic product per capita increased from around $15,000 in 1947 to about $66,000 in 2023. Real per capita disposable income rose by a similar rate. So it isn’t true that our prosperity depends on having most people work in the manufacturing sector—quite the opposite. Technology has dramatically raised labor productivity in manufacturing. Automakers here and abroad need far fewer employees now than they did in 2000 to make better cars than they used to. That’s a powerful force reducing employment in the auto sector—and the same is true in many other industries.
Per capita income couldn’t have risen so dramatically if most of the workers who left manufacturing landed up working in fast-food restaurants. Americans moved from manufacturing to other types of jobs in which their labor is needed and their level of productivity allows their employers to compete. Financial services, medicine, biotech and higher education are all examples of industries that have grown dramatically over time and powered our prosperity. The icing on the cake is that banking and software are huge U.S. exports.
Emma Camp exposes Tim Walz’s understanding of the First Amendment as poor. A slice:
The worst part about all this for Walz is that his sloppy, revealing answers on free speech derailed what had been one of his strongest moments in the debate. The subject only came up in the first place because Vance, in an attempt to sidestep a question about Trump’s election loss and the possibility of challenging future results, argued that big-tech censorship and government jawboning pose a bigger threat to democracy than Trump’s election denial.
Kerry, however, didn’t advocate such censorship. He explained, rather, why it is not an option under the Constitution.
“There’s a lot of discussion now about how you curb those entities in order to guarantee that you’re going to have some accountability on facts,” he said. “But look, if people only go to one source, and the source they go to is sick, and, you know, has an agenda and they’re putting out disinformation, our First Amendment stands as a major block to be able to just, you know, hammer it out of existence.”
Exactly right.
… is from my late Nobel-laureate colleague Jim Buchanan‘s Spring 2003 article in Policy, “Public Choice: Politics Without Romance” (link added):
Public choice, as an inclusive research programme, incorporates the presumption that persons do not readily become economic eunuchs as they shift from market to political participation. Those who respond predictably to ordinary incentives in the marketplace do not fail to respond at all when they act as citizens.
DBx: In 1919 on this date, October 3rd, Jim Buchanan was born in Tennessee.
Ryan Bourne is no fan of Joseph Stiglitz’s book The Road to Freedom. A slice:
But in declaring that perfect markets don’t exist, Stiglitz tilts at windmills. No real-world market is perfect. The logical leap is to assume that they are perfectible by governments, staffed by the same fallible humans who operate in the private sector. What we surely need in the messy real world is to weigh the costs and benefits of policies, on the margin, drawing on the experience of how government actually functions. Yet statistical claims appear, on average, just once every eight pages in this text — an extremely low figure for an economics book.
“In his focus on market failure,” as development economist William Easterly, a fellow former World Bank employee, has said of Stiglitz, “Joe often misses the bigger problem — the need to roll back the disastrous distortions of markets by government — such as government-induced hyperinflation, negative real interest rates, severe price controls, and punitive taxes on exports.”
Michael Lucchese warns of the dangers that would be unleashed if the Senate filibuster is killed.
Wall Street Journal columnist James Freeman asks if the striking dockworkers are price-gouging. A slice:
It’s almost as if “price gouging” is just an undefined term Ms. Harris will use arbitrarily to attack businesses and blame them for Washington-created inflation.
John McCormack, in this long piece at The Dispatch, asks what happened to Tucker Carlson.
The economy and rising cost of living are priorities for voters, and they consistently give Mr. Trump the advantage over Ms. Harris on both issues. Anyone else in Mr. Trump’s position would keep his campaign pitch short and simple: Are you better off? It would be the central message of every rally, every campaign stop, every interview.
Unfortunately for Republicans, Mr. Trump would rather spend his time insulting Ms. Harris’s intelligence when he isn’t spreading lies about stolen elections or rumors about migrants eating household pets. The upshot is that national surveys show the vice president with a slight lead, and polling in battleground states that are likely to decide the outcome has the candidates essentially tied.
While Mr. Trump perfects his woe-is-me shtick and remains distracted by peripheral issues that play mostly to the MAGA crowd, Ms. Harris has had time to redefine herself among the small group of swing voters who say they haven’t made up their minds. Even though Ms. Harris is Mr. Biden’s No. 2 and inextricably linked to the administration’s poor record, Mr. Trump has allowed her to run as the candidate better suited to move the country in a new direction.
Reason‘s Christian Britschgi is impressed with neither J.D. Vance nor Tim Walz.
Donald Trump is a thoroughly despicable man, a narcissist, and abject liar devoid of dignity and incapable of consistent behavior worthy of the presidency. Even now when a George Costanza-type “opposite” suppression of his instincts would advance his political interests, Trump has opted not to focus on Harris’ policy absurdities and reversals, instead criticizing Harris’ crowd size estimates, ethnic background, and other personal attributes more appropriate for a junior high school lunchroom setting.
…..
Kamala Harris is a supreme lightweight who has never thought about policy issues in a serious way, who does not know how to do so, and whose instincts are profoundly misguided. Anyone who can believe that price controls will improve economic outcomes can believe anything. But in terms of domestic policies, as president she would prove profoundly ineffective, as the likelihood of a GOP takeover of the Senate this year is very high, and the major questions doctrine as decided by the Supreme Court in West Virginia v EPA will impose real limits on regulatory policy as a circumvention of Congress. Moreover, Harris would be a poor bet for reelection in 2028 precisely because of the silliness of her thinking, the perverse results of her policy preferences, and the incoherence of her rhetoric. The comedy potential of a future debate between, say, Senator Tom Cotton and Harris is a harbinger of her reelection prospects.
