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… is from page 59 of my GMU Econ colleague Tyler Cowen’s superb 2002 book celebrating the creativeness of commercial culture and global trade, Creative Destruction: How Globalization Is Changing the World’s Cultures:

It is no accident that Classical civilization developed in the Mediterranean, where cultures used sea transport to trade with each other and learn from each other.

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In my latest column for AIER I describe two modest proposals to increase the supply of transplantable body organs. A slice:

The case for freeing the market in transplantable kidneys is strong, both economically and ethically. Thousands of lives would be saved every year and thousands more delivered from the misery and indignity of dialysis. The downside is almost nonexistent.

Nevertheless, most people steadfastly refuse even to consider supporting a policy of allowing any living individual to be paid a market price in exchange for one of his or her kidneys. Many of the arguments against a free market in kidneys spring exclusively from people’s aesthetic revulsion at the thought of commerce in kidneys. This revulsion is curious, given that it’s surely more revolting to allow people to die unnecessarily simply in order to protect other people’s aesthetic sensibilities.

While I would immediately lift the prohibition on kidney sales, there are several intermediate measures that would yield much benefit if a complete lifting of this prohibition is off the table. One of the most promising was proposed by the late George Mason University law professor Lloyd Cohen.

Cohen recommended that all of our body organs be considered to be parts of our estates in the same way that our homes and jewelry are parts of our estates. When someone dies, his or her heirs would own the deceased person’s body organs just as they own that person’s other properties. These heirs could then sell, give away, or ignore these organs.

The advantages of Cohen’s proposal over the current blanket prohibition on sales are clear. Each year, tens of thousands of healthy transplantable body organs are buried or cremated, needlessly destroyed despite their ability to extend and improve the lives of thousands of people. By treating all transplantable organs as property of each deceased person’s estate, this wholesale destruction of lifesaving body parts would be significantly reduced.

It’s easy to bury a loved one with his or her healthy kidneys or heart if agreeing to have those organs harvested for transplant brings nothing more than a sense of satisfaction from helping a stranger live longer or better. But if the sale of the loved one’s organs will bring thousands of additional dollars to the estate, I’ll bet my pension that the number of kidneys — as well as hearts, lungs, and other body organs — harvested for transplant from newly deceased persons will skyrocket. As a result, thousands of living people will enjoy longer, healthier, and more productive lives.

Of course, as with all properties destined to become part of a person’s estate, that person would, while still alive, have great leeway to determine the disposition of his organs. If someone objects religiously to his organs being harvested, that person must merely specify in his will that no such harvesting is to take place. That man’s family and the courts will be bound to honor this demand.

Or if someone specifies in her will that she wants only her daughter Ann or her nephew Bob to receive her kidney (or heart, or lungs, or liver, or …) for transplant, that provision, too, would be honored.

Cohen’s proposal avoids a major objection to a free market in kidney sales — namely, that too many living persons will impair their health by selling their kidneys to make a quick buck. Cohen’s proposal can be adopted without permitting living persons to sell their organs.

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Phil Magness is right:

1. Orban is an illiberal thug, and should be ostracized to the extent that peaceable means permit. His flirtations with the Maduro regime makes this an unambiguous reality, in addition to years of colluding with Putin, Xi, and other autocratic regimes.

2. I wish the Biden admin would apply a similar standard to Maduro, Lula and other leftist thugs to the extent that they too can be peaceably ostracized. He won’t though (beyond soft condemnation) because his and Harris’s left wing base supports them, whether overtly or quietly. That they cater to this crowd is unforgivable.

3. Trump’s active courting of Orban and similar types is unforgivable in its own right.

4. No matter who wins in November, liberal democracy will lose.

Here’s Mike Munger on Alfred Marshall’s scissors. A slice:

The most fundamental problem, though, is the naïve equating of price changes with costchanges. The logic seems to be that the only legitimate change in prices must come from and be proportional to, changes in cost.

There is no economic basis for such a rule. Cost and price may move together over longer periods of time, but in any period of a few months the price is mostly determined by consumers. This conclusion is not ideological, it’s not controversial, and it dates to one of the giants of economic theory:  Alfred Marshall.

In his landmark monograph, Principles of Economics (first published in 1890), Marshall defined, and limited, the role of costs in determining final price (Book V, Chapter 3, Section 7):

[I am] chiefly occupied with interpreting and limiting this doctrine that the value of a thing tends in the long run to correspond to its cost of production…

We might as reasonably dispute whether it is the upper or the under blade of a pair of scissors that cuts a piece of paper, as whether value is governed by utility or cost of production…[W]hen a thing already made has to be sold, the price which people will be willing to pay for it will be governed by their desire to have it, together with the amount they can afford to spend on it. Their desire to have it depends partly on the chance that, if they do not buy it, they will be able to get another thing like it at as low a price.

The “scissors” analogy is quite clear, since the classic “supply and demand” graph in introductory economics even looks like two scissors blades. If you know only “supply” (the schedule of amounts offered for sale at different prices) or only “demand” (the quantities purchased by consumers at different prices), you have no way of predicting the price at any point in time. Marshall’s insight is timeless: in the short run, consumers are generally buying from other consumers, not from producers.

Brian Miller and Joe Grogan explain that “the Biden-Harris administration is running a relentless campaign against American innovation.”

The Editorial Board of the Wall Street Journal reports on the Biden-Harris manufacturing boom that isn’t. A slice:

Yet there are already signs that this government-driven investment is a mistake. Auto makers are scaling back electric-vehicle production, which may lead to under-utilized factories. Some green startups are struggling to stay in business, such as Lordstown and Fisker.

The Institute for Supply Management’s purchasing managers index shows the manufacturing industry as a whole has been in almost continuous contraction since autumn 2022, right after Mr. Biden signed the IRA and Chips Act.

Meanwhile, investment in new industrial equipment has been notably weaker under Mr. Biden than Donald Trump. This suggests fewer manufacturers are refurbishing existing plants and investing in technology that will make them more globally competitive.

John Tatum understandably isn’t buying Biden’s and Harris’s “magical labor market claims.” A slice:

To give the Biden Administration’s credit for any success in increasing jobs requires proponents to blatantly misrepresent facts. Most notably, they claim to have added nearly 16 million jobs to the economy, more than any earlier president in one term. It’s true, but it takes credit for the return of about 9.4 million jobs for people who lost their jobs due to COVID-19 precautions and had not yet returned to work at the time Biden took office. Taking credit for the recovery of a large part of the COVID-related, record loss of 21.9 million jobs, far overstates Biden’s contribution and the effectiveness of his policy efforts. In fact, since the COVID recovery ended in June 2022, the Biden Administration witnessed the creation of 6.3 million new jobs, only about 40 percent of the Administration’s claim. In contrast, the previous administration oversaw growth of 6.7 million jobs before COVID hit.

Trump dodged Nick Gillespie’s sensible question about government debt.

And, as Jack Nicastro reports, Congress is no more responsible with the public purse than are Trump or Harris.

AEI’s James Pethokoukis is correct: “Illegal immigrants aren’t the same as home invaders.”

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… is from page 242 of Charles Calomiris’s and Stephen Haber’s important 2014 book, Fragile By Design (footnote deleted):

If the mortgage-underwriting standards in effect at Fannie and Freddie circa 2003 had remained in place, nothing on the magnitude of the subprime crisis would have occurred.

DBx: Yep. And as Calomiris and Haber show in this book, mortgage-underwriting standards were pushed lower by officials in the U.S. government.

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George Will rightly applauds the loss of the gleam once emitted to the eyes of too many people by “DEI” and “ESG.” Two slices:

Progressives’ alphabet soup ingredients are DEI hiring and ESG investing. Both often are illegal, and the latter is medieval.

“Diversity, equity and inclusion” became fashionable in corporate America, and enforced in academia. There, refusing to take DEI loyalty oaths provokes exclusion as punishment for deviations from this orthodoxy: Equity is group entitlements — inevitably, a racial spoils system. As Kamala Harris joyfully explains, “Equitable treatment means we all end up in the same place.”

…..

ESG’s defects begin with illegality. The 1940 Investment Advisers Act required advisers to have one overriding concern: their clients’ financial interests. This fiduciary principle was reaffirmed in the 1974 Employee Retirement Income Security Act, which stipulates that those entrusted with investors’ money have the duty to deploy it “solely in the interest of” and “for the exclusive purpose of providing benefits to” the investors.

ESG attempts to vitiate this duty, and disguise ESG’s illegality, by asserting that a corporation’s shareholders are just one set of “stakeholders.” And shareholders are inferior to stakeholders whose supposed superiority derives from having no financial stake in the corporation’s performance. Stakeholders include employees, suppliers, customers and (per the Oxford Reference Dictionary) “members of the wider community.” So, a stakeholder is anyone who claims to be affected, at whatever remove, by any corporate activity.

Investors are supposedly enabled by ESG to do good while doing well. Leave aside the Everest of unsurprising evidence that ESG investments do substantially less well than investments made for the purpose of maximizing returns for investors. Now, about doing good:

The greatest good, in terms of alleviating suffering, in all of humanity’s history has been done in recent decades by market-oriented, profit-seeking capitalists: by private wealth serving private interests. In 1975, half the human race lived in what the World Bank calls extreme poverty ($2.15 a day, adjusted for inflation). Today, fewer than 1 in 10 persons are so afflicted.

Former senator Phil Gramm and his colleagues in refuting ESG note: Between 1990 and 2020, the globalized market dynamism ignited in the previous decade by Ronald Reagan and Margaret Thatcher pulled up from abject poverty an average of 128,000 people every day.

Thanks to Robert Keys, a former GMU Econ student back in the late 1980s, for sending along this excellent clip of comedian Drew Dunn on our standard of living.

I’m honored to be a guest in the latest episode of Geoff Graham’s podcast, Yeoman.

Now that Trump has endorsed a government-imposed cap on credit-card fees, the Editorial Board of the Wall Street Journal wonders if the 2024 GOP candidate is Bernie Sanders. A slice:

Yet economics teaches there’s no free lunch. Millions of Americans use credit cards as convenient and ubiquitous payment networks, and they don’t owe interest because they pay off their balances at the end of each month. Debit cards are an alternative. People in a pinch also use credit cards to cover emergencies or financial shortfalls.

The interest rates on credit cards reflect operating costs, including nonpayment. A 10% cap would effectively cut off people with less-than-pristine credit scores. After Illinois capped many consumer interest rates at 36% “all-in APR,” a study in the journal Public Choice said “financial well-being declined” for residents who lost access to short-term, small-dollar loans.

Why do Messrs. Trump and Sanders think it’s helpful to limit credit access and send folks to the pawn broker or leg breaker instead? Card companies might respond by raising fees, which is what happened to free checking after Democrats regulated debit swipe charges in 2010.

In a new paper, Scott Lincicome, Marc Joffe, and Krit Chanwong expose the folly of subsidies. In their words, their

paper finds, among other things, that the growth of these corporate incentives is likely owed to their enduring political attractiveness and to new federal industrial policy initiatives. It also finds that state and local subsidies routinely create problems beyond their high budgetary (taxpayer) expense.

Bob Graboyes nicely explains just how young a country America really is.

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… is from page 102 of Gordon Wood’s excellent 2009 volume, Empire of Liberty: A History of the Early Republic, 1789-1815 (footnote deleted):

Since his entire fiscal program depended on the customs duties flowing from a large overseas commerce, [Secretary of the Treasury Alexander] Hamilton was reluctant to weaken that overseas commerce for the sake of developing domestic commerce.

DBx: Hamilton, although naive about the source of economic growth, understandably preferred subsidies to protective tariffs as a means of helping ‘infant industries.’ Tariffs that discourage enough imports to ‘stimulate’ domestic industry are unlikely to raise enough revenue to fund the expenses of a government that relies heavily on customs duties for revenue.

Do not, therefore, believe Oren Cass and the many other protectionists who insist – as Cass did in this October 2023 piece – that “in 1789, the first law in the first Congress – advocated by Alexander Hamilton, introduced by James Madison and signed by George Washington on the Fourth of July – established a tariff not unlike Trump’s.”

The tariff of 1789 was nothing like Trump’s. Trump’s tariffs were meant to protect domestic producers; in contrast, that first U.S. tariff was meant to raise revenue rather than to protect domestic producers. As Doug Irwin reports on page 131 of in his monumental 2017 history of U.S. trade policy, Clashing Over Commerce, “the Tariff of 1816 was the first ‘protectionist’ tariff of the United States in the sense that it was mainly designed to provide assistance to domestic manufacturers facing foreign competition.” By 1816, both George Washington and Alexander Hamilton were long dead.

It bears repeating: The tariff of 1789 was a revenue tariff and not a protective tariff. The fact that protectionists continue to confuse the two kinds of tariffs, and even to write – as Cass does – as if the revenue-raising function and protective function of tariffs are aligned, rather than in conflict, with each other, speaks only to the unseriousness of the thought that protectionists bring to the debate over trade policy.

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… is this comment today on my Facebook page by my emeritus Nobel-laureate colleague, Vernon Smith:

To interfere with those rights to choose with tariffs and subsides is to deny the right of all to the wealth creating benefits of a system disciplined by such choices.

DBx: Yes. Tariffs are not only economically destructive, they are also morally offensive. No producer or merchant has a right to your income merely because that producer or merchant is your fellow citizen – or because that producer or merchant has convinced some government officials to favor him or her with protection.

If a manager of a Taco Bell franchise hires a gang of thugs to obstruct the ability of consumers to enter the premises of Chick-fil-A, we would rightly regard that Taco Bell manager, and the thugs he hires, to be criminal. And we would not change our assessment even if we were presented with unambiguous proof that the thugs’ efforts result in Taco Bell employing more workers at higher wages.

Protective tariffs are in essence no different from the actions of this hypothetical Taco Bell manager and his thuggish hirelings.

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Back in March, Jeff Horwich reported this:

In a Minneapolis Fed staff report, Monetary Advisor Michael Waugh models how lower trade costs play out for richer and poorer households (Staff Report 653, “Heterogeneous Agent Trade”). Waugh finds starkly different effects, with poor households (defined by their level of consumer spending) gaining much more as freer trade lowers prices.

The reason is not that poorer households buy a larger proportion of imported goods. Rather, it is their higher marginal utility of consumption: Falling prices provide more value to households with tighter budgets, as evidenced by their sensitivity to prices. Low-income households react more strongly as trade drives down the prices of imports and competing domestic goods. These households increase their consumption more as their buying power increases, and they are quicker to substitute new products in pursuit of savings.

Waugh finds that all U.S. households benefit from a 10 percent reduction in U.S. trade costs. But the poorest fifth of households experience a welfare gain more than 4.5 times larger than the richest.

Jon Miltimore explains the Ford Motor Co.’s massive retreat from EVs. A slice:

One reason charging infrastructure has lagged is due to the federal government’s incompetence. Nearly three years ago, the U.S. Departments of Transportation and Energy announced a $5 billion spending effort to build fleets of charging stations to lead “an electric vehicle revolution.” As of the summer of 2024, just seven charging stations had been built.

“That is pathetic,” said US Sen. Jeff Merkley, a Democrat from Oregon. “We’re now three years into this … That is a vast administrative failure.”

The decision of automakers to bet big on EV adoption was in some ways rational, in that they were responding to powers in Washington that were pressuring them and incentivizing them to expand electrical vehicle production. But the costs of listening to industry experts and politicians in Washington instead of consumers — and profits — have been severe.

In August 2023, NPR reported that Ford CEO Jim Farley was charging ahead with its ambitious EV expansion even though the company was “losing money on each EV it sells” and consumer demand for EVs was plummeting. Farley’s reasoning was that Ford was attracting new customers, but it was a costly endeavor. Ford reported a loss of $4.7 billion on EV sales in 2023, roughly $40,525 per vehicle sold.

Nevertheless, Progressives continue to try to force EVs on Americans, as the House of Representatives at least temporarily blocks this officiousness. A slice:

The House on Friday voted, 215-191, to overturn the Environmental Protection Agency’s vehicle emissions rule, with eight Democrats joining Republicans. Kamala Harris says she doesn’t support an electric vehicle mandate, but that’s what the Biden EPA rule effectively is.

The EPA in March finalized greenhouse gas emissions requirements for auto makers through 2032. EPA’s models show that gas-powered cars will make up no more than 30% of sales by 2032. EVs made up a mere 7.6% of auto sales last year and less than 4% for General Motors and Ford. In eight years they will have to increase their EV sales by some 15-fold.

The emissions standards are especially punitive for U.S. manufacturers that mostly sell trucks and SUVs. Companies will effectively have to produce one to two electric trucks for every gas-powered one in 2027 and closer to four to one by 2032. Yet electric trucks cost much more to produce than sedans since they require much bigger batteries.

Ford lost $44,000 on each EV sold in the second quarter, which is more than some of its trucks retail for. Auto makers are scaling back EV investment amid slowing demand. Ford announced last month it is cancelling production of an electric SUV and delaying an electric pickup. The same week Stellantis delayed retooling a shuttered plant in Belvidere, Ill., for EV production. The Energy Department awarded Stellantis $335 million in subsidies to convert the plant to make EVs. President Biden boasted about the plant in his State of the Union address this year.

Andrew Stuttaford decries the degrowthers’ ‘war on kitchens.’ A slice:

One of the rules of understanding climate fundamentalism (and other forms of environmentalist fundamentalism) is that, as is the case for most fundamentalisms, the quest for purity never stops.

“Degrowth” is one example of this. Its central proposition is that humanity should turn away from economic growth, and, at least in the West, be prepared to reduce the size of our economies in (supposedly) the interests of the planet. What that would mean in practice can vary, but can we see in this tweet by Aashis Joshi a sign that one day the war against gas stoves might be overtaken by the war against kitchens?

Joshis tweets:

When it comes to preparing & consuming food, communal kitchens would eliminate the need to have refrigerators, stoves, ovens, & other kitchen appliances in each home. They would reduce the consumption of materials & energy, & also food waste, by a lot.

In a later tweet, he explains that changes such as these would “require a radical reorganization of our societies & a shift of values, especially from individualism to collectivism.”

Indeed. And the methods by which this “radical reorganization” and “shift of values” would be arranged is unlikely to be either peaceful or democratic. And the methods by which they would then be maintained would be repressive.

“Kamala Harris is not an ideas candidate,” so writes Christian Britschgi. A slice:

The vice president says she wants to make housing more affordable by building more units and capping rent increases on existing units. But rent control has a well-earned reputation for reducing new construction. One plank of Harris’ housing affordability agenda is working against the other.

That seems like less “building” and “balancing” and more like just building less.

And if “upstream” antitrust enforcement is supposed to lessen the need for redistribution, as Jen Harris claims in her Times column, why is Kamala Harris still proposing a raft of new subsidies and tax credits? Despite all that building and balancing, we still need more redistribution too, I guess.

Dennis Murphy praises economic competition.

“How Covid destroyed our lives, from newborns to pensioners.” Two slices, from Rosa Silverman’s report in the Telegraph:

Yet a growing body of evidence suggests we haven’t truly turned the page on what now sounds more like a chapter from dystopian fiction. Instead, the effects of the Covid lockdowns endure, and will continue to be observed and charted for many decades to come. “We’ll probably be studying the impact of this for as long as we live,” says Adam Hampshire, professor of cognitive and computational neuroscience at King’s College London (KCL).

A startling reminder of the long-term fallout of those unprecedented restrictions came just this week, as new figures revealed that the number of people on sickness benefits rose to 3.9m, an increase of almost 40 per cent since the pandemic first hit.

That came hard on the heels of news this month that lockdowns may have caused premature ageing to teenagers’ brains. Research from the University of Washington found the measures resulted in “unusually accelerated brain maturation” in adolescents, and that this was far more pronounced in girls than boys. While the average acceleration in the development of the male adolescent brain was 1.4 years, for females it was 4.2 years.

If girls were more dramatically affected, this could be due to their heavier reliance on social relationships, the researchers have suggested.

…..

But this possibly masks the harmful and irreversible impact of lockdown on so many of pensionable age. Last year, a study led by the University of Exeter and KCL found cognitive function and working memory in older people declined rapidly during the first year of the pandemic, whether or not they actually contracted Covid. The pattern continued into 2021-22, with researchers citing the heightened loneliness and depression suffered during the lockdowns by this cohort, as well as a decrease in exercise and – again – increased drinking.

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… is from page 83 of the 1947 “Crofts Classics” edition of John Stuart Mill’s 1859 On Liberty:

Nor is there anything which tends more to discredit and frustrate the better means of influencing conduct, than a resort to the worse.