GMU Econ alum Michael Thomas explains the great importance of tolerance. A slice:

I read the response by Doug Rasmussen to Daniel Klein and Daniel J. Mahoney with great enthusiasm for the skill they both convey in representing their positions. What I take from Klein and Mahoney is that liberty is important as an outcome for judging a good political order, but what Rasmussen adds is the observation that political and ethical institutions, while overlapping, are not built of the same thing. Instead, I argue that a principle like toleration should be understood as a way to both increase liberty and leave a space for the ethical.

Klein and Mahoney point out a role for the ethical when they claim that religious institutions have a major advantage of appreciating complexity. They write, “People who learn religious patterns of thought often have less hubris about outsmarting the complexities of life.” The pay-out here is that those that have a religious orientation are going to be skeptical of centralization of power, particularly the temporal power that reminds them of a Rome that would be such an effective supplier of martyrs. This allows for a dialectic, a mutual skepticism between religious groups sufficient to provide a check on each one’s hubris. A moderation of extremism is an important feature of the res publica.

Acknowledging a limit to expertise and the profound complexity of social organization is a starting point for understanding the Scottish Enlightenment. A concept of liberty becomes central in this tradition for political institutions, especially through its influence on the U.S. Founding. I was surprised to see that there is no mention of tolerance in either Rasmussen’s or Klein’s and Mahoney’s essay because it is toleration that creates the conditions for liberty. Tolerance is the institutional form and liberty is the result. In the tradition of Locke’s A Letter Concerning Toleration, I would expect that toleration and not liberty would be the supreme principle of a political order, which would more closely approximate the historical period captured by Smith and his contemporaries.

GMU Econ alum Dominic Pino reports that China’s Belt and Road Initiative has run into trouble.

The Editorial Board of then Wall Street Journal decries the cruelty of the cronyist, protectionist Jones Act. A slice:

Thousands of Americans in Puerto Rico are without power after Hurricane Fiona roared through last week. Idling off the island’s coast is a ship that reportedly carries 300,000 barrels of diesel fuel from Texas. Yet unloading that fuel is illegal without a Jones Act waiver, which the Biden Administration hasn’t granted.

The Jones Act, also known as the Merchant Marine Act of 1920, is protectionism at its worst. The law says waterborne cargo between U.S. points must be carried by ships that are primarily built, owned and crewed by Americans. This raises shipping prices, while shifting cargo to trucks, which are less efficient and worse for the environment. The law also explains why wintry Boston imports Russian liquefied natural gas.

Also decried by the Wall Street Journal‘s Editorial Board is what it correctly calls “the ‘food insecurity’ racket.” A slice:

Food insecurity is a gauzy measure that overstates how many Americans don’t consume enough calories. One irony is that ferocious grocery-store inflation may be driving Americans to eat more fast food, which is more affordable but often less healthy. How about making food more affordable by reducing the 11.4% annual pace of food inflation?

Richard Vedder laments the growing intolerance on college campuses. Two slices:

It is interesting but depressing to me that the more eminent a college or university is perceived to be, the more outrageous are efforts by administrators to stifle individual expression and enforce a numbing conformity of ideas reminiscent of universities in the old Soviet Union or Nazi Germany.

The most prestigious group of schools in America is no doubt the Ivy League, eight elitist and highly selective institutions in seven Northeastern states. In the last decade, Yale attacked and hounded from campus two scholars who dared to defend the right of students to wear Halloween costumes similar to what grade-schoolers don to Trick or Treat. Princeton revived ancient (and already adjudicated) charges of inappropriate sexual conduct against distinguished classicist Joshua Katz in order to punish him for more recent anti-woke criticisms of campus happenings.

…..

The campaign against [U. Penn law professor] Amy [Wax] began when she co-authored an op-ed in 2017 that defended bourgeois values and argued that civilizations are successful to the extent that they adopt them. Students and fellow faculty members expressed outrage at such provocative thoughts.

Arnold Kling reflects interestingly on reactions to the movie, Good Luck to You, Leo Grande. (DBx: Unlike Arnold, I have seen this movie and enjoyed it.)

Here’s the abstract of a newly published paper by Art Carden, Vincent Geloso, and Phil Magness:

In her 2017 book Democracy in Chains, historian Nancy MacLean identifies John C. Calhoun as the “lodestar” of public choice theory and argues that the conservative Southern Agrarian poets (Donald Davidson, Allen Tate, Robert Penn Warren, and others) were influential in the formation of 1986 Nobel Laureate James M. Buchanan’s worldview. We test this argument with reference to the scholars cited in Buchanan’s collected works and elsewhere. The evidence for any direct or even indirect influence of Calhoun and the Agrarians is very scant, and we conclude that Buchanan’s intellectual program was shaped far more by Knut Wicksell, Frank Knight, and the Italian public finance tradition than by Calhoun or early twentieth-century segregationists.

(DBx: Indeed. As I noted in this July 2017 blog post, if it is valid for MacLean to argue that Jim Buchanan’s worldview was determined by the vile views of fellow southerners John C. Calhoun and Donald Davidson, then it’s valid to argue that MacLean’s worldview was determined by the vile views of Joe McCarthy.)

The Pandemic Response Unleashed Two Kinds of Nationalism.”

Jay Bhattacharya tweets:

The California bill AB2098 aims to silence doctors who dissent against destructive public health directives. Its supporters like @NLFD_org slander doctors and dissidents and seek to jail those who disagree with them.

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Quotation of the Day…

by Don Boudreaux on September 28, 2022

in Complexity & Emergence, Prices

… is from page 165 of my colleague Peter Boettke’s November 2001 presidential address to the Society for the Development of Austrian Economics as this address (titled “Information and Knowledge: Austrian Economics In Search of Its Uniqueness“) is reprinted in Pete’s 2021 book, The Struggle for a Better World (footnote deleted):

Not only does the price system economize on the information economic decision makers must process, but the entire market system generates a level of social intelligence that no one mind or group of minds could approximate.

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In the April 1997 issue of the Southern Economic Journal I reviewed Richard Epstein’s brilliant 1995 book, Simple Rules for a Complex World. You can read my review in full beneath the fold.

Read the full post →

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Bonus Quotation of the Day…

by Don Boudreaux on September 27, 2022

in Complexity & Emergence, Hubris and humility

… is the concluding sentence (found on page 85) of my former teacher Israel Kirzner’s excellent Fall 1984 Cato Journal paper titled “Economic Planning and the Knowledge Problem,” as this paper is reprinted in Competition, Economic Planning, and the Knowledge Problem (Peter J. Boettke and Frédéric Sautet, eds., 2018), which is a volume in The Collected Works of Israel M. Kirzner:

Part of the tragedy of proposals for industrial policy and economic planning is that their well-meaning advocates are totally unaware of the knowledge problem – the problem arising out of unawareness of one’s ignorance.

DBx: Yes. If you show me an advocate of industrial policy, I’ll show you someone who is unaware of his or her own ignorance.

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Wall Street Journal columnist Gerard Baker is correct in writing this:

If I had to pick the most worrying characteristic of our current dystopia, I would choose the unsettling disconnect between the seriousness of the challenges we face and the public discourse that is supposed to be addressing them.

…..

We are used to politicians bending facts and logic to fit their aims, but the problem goes well beyond political rhetoric. Our larger discourse is dominated by cultural authorities who want us to believe things that the human mind rebels against—that there is no such thing as biological sex, that the way to fight past discrimination is with present discrimination, that not punishing crime is the way to prevent crime, that words can mean whatever they tell us they mean. These are the nostrums of the dominant progressives in our culture, but we shouldn’t kid ourselves that conservatives aren’t also susceptible to impossible ideas and implausible theories.

Arnold Kling wonders if the U.S. economy will soon come to a screeching halt.

My intrepid Mercatus Center colleague Veronique de Rugy reports that not all methods of deregulation are equal.

My GMU Econ colleague Bryan Caplan writes insightfully about student-loan repayment and ‘forgiveness.’ Here’s Bryan’s conclusion:

What is to be done? Let me start by unhelpfully pointing out that the student loan suspension was outrageous from the get-go. The federal government was handing out massive piles of free money to ensure that meeting your pre-Covid financial obligations was easy. Once the government does that, going on to declare that you don’t have to meet your pre-Covid financial obligations was a travesty from almost any point of view.

Yes yes, but what is to be done now?

First and foremost, this is a perfect time to end government-supported student loans forever. To say, “We thought we could avoid the slippery slope from subsidized loans to free college for all. We were utterly wrong, so we’re killing the program.” At minimum, this is a great time to drastically raise the interest rate to compensate taxpayers for much higher repayment risk going forward.

Second, we clearly need harsh enforcement, ideally backed by new draconian punishments. This won’t just directly encourage individuals to resume repayments. It will help us surmount the “safety in numbers” problem. Without some eye-bugging public examples of the consequences of default, innocent taxpayers will be left holding a bag with almost $2 trillion in student debt.

Unfair? Give me a break. Due to the suspension of all interest payments plus massive inflation, the real value of student debt has already fallen 13% since March. Borrowers have been getting an insanely great deal. It’s high time for this madness to stop.

Nick Gillespie talks with Corey DeAngelis about school reform.

Cato’s Chris Edwards explains why entrepreneurs are moving to Florida and Texas. A slice:

How can states attract interstate movers? IRS data suggest that tax burdens are one driver of migration. Of the 25 lowest‐​tax states, 20 enjoyed net in‐​migration from other states in 2020.

Top earners may be particularly responsive to interstate tax differences. Elon Musk apparently saved half a billion dollars when he moved from California, with its 13.3% top income tax rate, to Texas, with its zero rate. Numerous leaders in finance, such as Carl Icahn, have escaped from New York City and its 14.8% top income tax rate and settled in Florida, with its zero rate.

Jon Sanders isn’t impressed with Biden’s Orwellian-named Inflation Reduction Act.

Michael Shellenberger decries the detachment from reality about the climate of many on America’s political left.

Christina Maas reports on the dangerous ideas of the progressive authoritarian Jacinda Ardern – ideas, I fear, that increasing numbers of people on the left and the right find compelling.

Jeffrey Tucker reminds us that Trump supported covid lockdowns (at least until, fortunately, Scott Atlas showed up at the White House).

Jay Bhattacharya and Ramesh Thakur discuss, in this video, covid and covid authoritarianism, especially as these played out in Australia.

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Quotation of the Day…

by Don Boudreaux on September 27, 2022

in Education, Truth-seeking & ideology

… is from page 147 of the 2016 second edition of Thomas Sowell’s splendid volume Wealth, Poverty and Politics:

The pursuit of accurate knowledge and the pursuit of ideological satisfaction are inherently conflicting goals, whether in American universities today or in universities in other times and places.

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MAD

by Don Boudreaux on September 26, 2022

in Myths and Fallacies, Seen and Unseen, Trade

Here’s a letter to a Wall Street Journal reader who thinks me to be “dreaming” if I “think that America can compete if we don’t match Chinese industrial and trade policies step for step.”

Mr. M__:

Upset with my letter in today’s Wall Street Journal – a letter in which I oppose U.S. industrial policy – you accuse me of wishing “to disarm the US economically at a time when China is aggressively building up its economic arsenal.”

With respect, your argument is fallacious. If politicians and bureaucrats can allocate resources more productively than can markets, then economically we should use industrial policy even if no other government does so. But if politicians and bureaucrats can’t allocate resources more productively than can markets, then we should reject industrial policy even if every other government on the globe uses it.

Fortunately, we have good information about industrial policy from both economic theory and history. They make plain that politicians and bureaucrats are far worse than are markets at allocating resources productively. If you insist on using a military metaphor, therefore, industrial policy isn’t a weapon that threatens to destroy foreigners but, instead, a weapon that governments use to saturation-bomb their own economies.

Or as Jim Bovard put it when exposing the closely related fallacy of calling unilateral tariff reductions “unilateral disarmament”:

Rather than “unilaterally disarming” our trade barriers, the proper analogy is to unilaterally defuse old bombs that have been left scattered across our industrial landscape. If foreign nations refuse to sever the ball and chain on their economies, is the U.S. obliged in self-defense to continue hobbling the American economy?

A better name for “industrial policy” would be “industrial damage.” And so if the U.S. government were, as you desire, to mimic Beijing on this front, the two countries would engage in an economic version of MAD – Mutual Assured Destruction. The only difference is that, while in a nuclear war each country is ravaged by a foreign government, in a trade or ‘industrial-policy’ war each country is ravaged by its own government. I think it best to avoid such a policy.

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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LOL!

by Don Boudreaux on September 26, 2022

in Archived writings, Balance of Payments, Education, Seen and Unseen, Trade, Work

In my latest column for AIER I identify three especially ludicrous justifications for government intervention. A slice:

Free Government-Owned and Operated Schools Are the Best Means of Supplying K-12 Education!

A third utterly ludicrous justification for government intervention is found in defenses of the current system used throughout the United States for state and local governments to supply K-12 schooling. “Free primary and secondary education is a right! Therefore, government should own and operate primary and secondary schools that are paid for by tax dollars and that admit residents’ children free of charge! Only then will all children be guaranteed high-quality education!”

LOL!

If long ago an evil genius were motivated to impose on Americans an irrational, costly, inefficient, and unresponsive system of K-12 schooling, that fiend could not have served his purposes better than to design the system in place today. Guarantee to each government-owned and operated school an annual revenue that is divorced, except perhaps perversely (see below), from the quality of education that it delivers to students. Check! Require that all property owners, even ones without children and ones who send their children to private schools, pay for this schooling. Check! Require that all children be formally schooled, and assign each student to one particular government school. No shopping around allowed. Check!

Who in his right mind believes that school administrators who receive their revenues directly from state or local governments (rather than directly from parents of school children), and who have a largely captive pool of customers, are strongly motivated to ensure that the children enrolled in their schools receive the best possible education? No one. Add to this dystopian arrangement the ease with which schools that perform especially poorly are able to use their poor performance as justification for receiving increased funding, and we’re in la-la land. Yet, this arrangement is the one that prevails today throughout the republic.

If someone proposed using such a whackadoodle arrangement to supply citizens with groceries, that someone would be rightly ridiculed as deranged. Yet using this same arrangement to supply the vitally important service of education is regarded by many people not only as workable, but admirable or even sacred – to which attitude I can’t refrain from laughing out loud.

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Bonus Quotation of the Day…

by Don Boudreaux on September 26, 2022

in Complexity & Emergence, Prices

… is from page 13 of my late GMU Econ colleague Don Lavoie’s important Spring 1986 Comparative Economic Studies paper, “The Market as a Procedure for Discovery and Conveyance of Inarticulate Knowledge”:

The number of technologically feasible ways to produce any desired good in a modern economy is virtually infinite, but the subset of these which represent production methods that are also relatively economical is much smaller. Without the benefit of a price system, decision-makers who are faced with the bewildering variety of technologically possible methods of production would hit upon a set of economically feasible methods only by the most bizarre accident. The likely outcome of production that is carried on in the absence of price-guidance is that so little would be produced that society would revert to the simple methods of primitive societies.

Thus the aid provided by prices is a reduction in the overwhelmingly numerous possibilities of production methods to a handful that appear profitable ex ante. Of course, only some of these will, as prices continuously change, actually prove profitable ex post and thus survive through time as regularly employed habits of producers. But by reducing to a manageable size the mind-boggling variety of conceivable methods of production, the price system performs an indispensable service.

DBx: Precisely so.

This reality is missed by advocates of industrial policy. By proposing to allocate large quantities of resources by diktat and, hence, in opposition to the manner in which those resources would be allocated by the price system, industrial-policy advocates imagine that, by some miracle, industrial-policy mandarins will somehow know how to allocate those resources in ways that result in better economic outcomes than are achieved by the price system. Industrial-policy advocates never tell us just how industrial-policy mandarins will obtain all the necessary detailed information and knowledge they must obtain in order that these mandarins might have some reasonable prospect of improving the living standards of ordinary people over time.

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Quotation of the Day…

by Don Boudreaux on September 26, 2022

in Crony Capitalism, History, Trade

… is from page 104 of Edwin Cannan’s September 1894 Economic Journal paper, “Ricardo in Parliament,” as this paper is reprinted in the 1912 collection of some of Cannan’s essays, The Economic Outlook (E. Cannan, ed.):

On the notion that because commerce and manufacture were protected, agriculture should be protected also, he [David Ricardo] made short work. “The argument of the agriculturalist was,” he said, “that the legislature having enabled the shipowner and cotton manufacturer to injure the community, they should give him a privilege to do the same.”

DBx: Ricardo (1772-1823) was first elected to the House of Commons (from the Irish borough of Portlarington) in February 1819. He remained a member until his death on September 11th, 1823. In the essay of Cannan quoted above, Ricardo is revealed as being a principled liberal. As Cannan notes (on page 89), “Ricardo invariably acted with the most liberal section of the House.” During his time in Parliament, he voted to reduce the severity of criminal penalties, to eliminate state lotteries, to make speech freer, and to extend the franchise. He also pressed for freer trade, especially by speaking out against the Corn Laws.

Because Ricardo, who was among the wealthiest people in Britain, had most of his wealth in land, Ricardo’s opposition to the Corn Laws – which were legislatively imposed restrictive barriers to the importation into Britain of grain – was directly against his personal interest. The Corn Laws artificially increased the returns on land in Britain used to grow grain and, thus, artificially increased land values.

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