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… is from page 17 of the manuscript of Deirdre McCloskey‘s forthcoming volume, The Treasured Bourgeoisie; quoted with Deirdre’s kind permission:

The [political] right and left unhappiness [with the modern bourgeois economy] can be understood sympathetically as a present-mindedness.  It is like standing too close to a pointillist painting, such as Georges Seurat’s “A Sunday Afternoon on the Island of La Grande Jatte,” in its room in the Art Institute of Chicago.  At close range one sees the dots as dots only, and laments the disorder.  If one stands back, however, the disorder resolves into a satisfying scene.  Likewise, the history seen in longer perspective shows how very much better off people are now than two centuries ago.

Perspective.  It’s among the treasures of insights that wise people bring to their analyses and to our discussions.  McCloskey brings it here, in the manuscript from which this quotation is drawn.  Tyler Cowen brings it here.  Johan Norberg brings it here.  Matt Ridley brings it here.  Adam Smith brought it here (in particular, at the end of paragraph 32).  Julian Simon brought it here.  Perspective is evidence of maturity, of sound and sober judgment, and of a disposition to avoid indulging in the often emotionally satisfying weakness of hysteria.

…

Deirdre will discuss her forthcoming book at this Cato Institute event on June 20th.

Oh, and here’s a recent interview of Deirdre.

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… is from page 116 of Thomas Cahill’s splendid 1998 volume, The Gifts of the Jews; Cahill here is discussing the lessons of the Egyptian Pharaoh’s hubris as portrayed in the book of Exodus:

The comedy of the narrative lies in ironic juxtaposition: Pharaoh, supposedly all-powerful, understands nothing.  It would not be too much to say that this narrative asserts that power (because it is a feckless attempt to usurp God’s dominion) makes you stupid, blinding you to your true situation – and absolute power makes you absolutely stupid.

Cahill’s (or Exodus’s author’s) point is quite Hayekian: centralization of power and decision-making authority causes the countless bits of local knowledge and information about important details – details necessary for peaceful, successful, and productive social arrangements and interactions – to be overlooked; ignored.  It cause knowledge and information about those details to be wasted or, worse, often never discovered by anyone in the first place.  The consequence of this reliance (whether this reliance be forced on, or is demanded by, the general population) is stupid public policies.  And this stupidity is utterly unavoidable as long as the centralization of decision-making authority continues.  This stupidity can be avoided neither by the good intentions of the power-holders nor by changing the process by which those holders of centralized power are chosen.

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The spark for the idea of the new series here at the Cafe – “Mid-Twentieth-Century America” – was a recent conversation over coffee with my former student Laura Sacher, a mother of four young children.  We were discussing dental care for kids, and I mentioned my recollections from 1960s-era t.v. commercials of child actors shown bragging, after visits to the dentist, of having only one or no cavities.  It was normal, apparently back then, to have the dentist discover several cavities in each patient on each visit.

Here’s a commercial, for Crest toothpaste, from the 1950s.  Note the assumption that tooth decay is a rather typical scourge.

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Today I start a new series here at the Cafe.  It’s a series featuring television commercials from the 1950s, ’60s, and ’70s – those decades in which America’s middle-class allegedly reached the peak of their economic affluence before beginning the long stagnation that, now having lasted at least three decades, continues today.  (Regular Cafe patrons know that Russ and I do not believe that the evidence supports this thesis of middle-class economic stagnation – a thesis that Mark Perry and I challenged earlier this year in the pages of the Wall Street Journal.)  Comparing consumer products from back then, presented in their best light by the best mad-men marketers of the era, to consumer products today will, I trust, be revealing.

I thank my superb former GMU student Laura Sacher for suggesting this series.

I’ll compose all of these blog posts on my Apple MacBook Pro laptop computer, which – when I use on it the word-processing program Word – has dozens of different fonts, each of which I can access in a matter of seconds and implement even after typing in some different font.  But I learned to type, in 1974, on this machine….

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Here’s a letter to an e-mail correspondent:

23 May 2013

Mr. Denis D___

Dear Mr. D___:

Thanks for your e-mail explaining your “black hole theory of the minimum wage.”

A critical part of your theory, as I understand it (with help from the link you sent to a video of Sen. Elizabeth Warren talking about wages and worker productivity), is that the minimum wage hasn’t risen by as much as has overall worker productivity.  Supply and demand, therefore, presumably aren’t working for low-skilled workers.

Ms. Warren and you are correct that worker pay in the long run is determined by worker productivity.  The productivity that’s relevant, however, is marginal productivity – namely, the value that ‘the last’ worker added to a class of production projects adds to the market value of the outputs of those projects.  But not all workers and not all production projects are alike.  The level of aggregation at which Ms. Warren and you conduct this conversation is meaningless for the point you wish to make.  You confuse trends in overall worker productivity with that of the marginal productivity of low-skilled workers.

If, all other things unchanged, consumer demand for neurosurgeons rises relative to that for general practitioners, the wages of neurosurgeons will rise relative to that of GPs.  The reason is that the marginal productivity of neurosurgeons will rise relative to that of GPs.  The same result will occur if, all other things unchanged, the number of GPs increases relative to that of neurosurgeons.  If the average productivity of physicians as a group rises over time, nothing in economic theory says that the productivity or the wages of all physicians must rise by equal amounts – by amounts equal to the rise in average physician productivity and average physician wages.  Indeed, nothing says that the wages of some kinds of physicians cannot fall even when average physician productivity is rising.

What’s true for physicians is true for workers generally.  There’s absolutely no reason for Ms. Warren and you to conclude that the standard economic theory of wage determination is faulty, or fails to apply to low-skilled workers, simply because the wages of one kind of workers – the low-skilled – have not risen by as much as these wages would have risen had they been determined by the rise in average worker productivity.  What matters is marginal productivity of the particular kinds of workers in question.

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

Several other flaws infect Mr. D___’s and Ms. Warren’s economic analysis, but the letter above is quite long enough.

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… is from Sheldon Richman’s blog post yesterday at Explore Freedom:

Opponents of government regulation argue that artificially raising the costs of manufacturing in poor countries would harm intended beneficiaries by destroying jobs.  If so, workers would face worse options, including life on the streets and prostitution.

Unfortunately, the debate is unnecessarily narrow. What needs discussing – and radical changing – is the country’s political-economic system, which benefits elites while keeping the mass of people down.  The economists are correct that under the status quo, imposing safety standards would raise costs, cause unemployment, and aggravate poverty.  But we can’t leave the matter there.  We must go on to examine how the political-economic system constricts people’s employment opportunities, including self-employment, and otherwise stifles their efforts to improve their lives.  Thus, a debate over whether garment factories should be subject to safety regulations, while the status quo goes largely undisturbed, misses the point.

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While driving yesterday I listened for a while to ESPN radio.  Among the topics that the show’s hosts explored was greed – in particular, the “greed” of professional sports franchises such as the Washington Redskins and the New York Yankees to produce and sell to fans ever-more logo-ladened paraphernalia.  Some of the radio hosts were more sensible than others, but every one of them assumed without question that “greed” is the appropriate term to use to describe the motivation of owners of pro sports teams to earn more money by supplying more of the likes of baseball caps, jerseys, and jackets emblazoned with team colors and images of team mascots.

All of the hosts agreed that there’s something a bit sleazy and disreputable about the aggressive production and supply of such paraphernalia.  In short, it was an all-too-typical shallow discussion of commerce.

For my purposes here I assume (I believe realistically) that professional sports-team owners’ actions to sell more of their teams’ paraphernalia are indeed motivated solely by their desire to earn more money for themselves.  But I ask: why are such actions described as “greedy”?

Fans purchase that paraphernalia voluntarily – indeed, they do so, apparently, with great gusto.  According to the ESPN-radio hosts, fans can’t get enough of the stuff.  Whatever is produced and made available for sale is scarfed up quickly by buyers.  But not once did the radio hosts describe the fans who buy sports paraphernalia as “greedy.”  Not once did the radio hosts give any hint that they understood that the production of such paraphernalia occurs because sports fans have a high demand for such paraphernalia; such production and retailing would not occur in the absence of such consumer demand.

So why are the economic choices and actions of that group of people who are entrepreneurially alert to the potential existence of these demands – and who, in response, risk their resources to do nothing more than give consumers the opportunity to satisfy these demands – singled out for ridicule and condemnation by being called “greedy”?  Why are not the economic choices and actions of consumers – without which resources would not be diverted from other uses and employed instead to make more sports-team paraphernalia – ridiculed and condemned as lamentable manifestations of greed?

Of course, I don’t regard either group of economic actors here – neither the team owners nor the fans – as being appropriately described as “greedy.”  The fans are buying with their own money utterly harmless, and for them fun, items; the team owners are using their own resources to satisfy their fans’ peaceable and legitimate demands for these items.  Would team owners be more meritorious if, in spite of their suspecting that many fans value such paraphernalia – value such paraphernalia so highly that it’s worthwhile to use considerable amounts of resources to produce such paraphernalia – these owners refused to produce and sell such paraphernalia?  “People really want lots of baseball caps and jerseys with my team’s emblems on them,” says the team-owning mogul, “so I’ll be damned if I’ll supply these things!”

Maybe his favorite preacher or New York Times pundit or ESPN-radio host convinced him that selling such items is, if not downright evil, at least a bit unscrupulous.  So he refrains.  Is he a better person for refraining?  Is the world a better place as a result of his refraining?  If the answer to both questions is no, why, then, describe business-people’s efforts to satisfy as fully as possible consumer demands as manifestations of greed?

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… is from page three of the original edition of Henry Hazlitt’s classic – and still very relevant – 1946 volume, Economics in One Lesson; indeed, the lines below form the book’s opening passage:

Economics is haunted by more fallacies than any other study known to man.  This is no accident.  The inherent difficulties of the subject would be great enough in any case, but they are multiplied a thousandfold by a factor that is insignificant in, say, physics, mathematics or medicine – the special pleading of selfish interests.

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Sen. Rand Paul properly suggests that if members of the U.S. Congress really want to grill financial predators, they bring a large mirror to Capitol Hill and grill themselves.

(HT Kerry Dugas)