… gives everyone with whom he interacts the sensation of living in Bill Murray’s Groundhog Day.

For example, the protectionist asserts that every increase in the home country’s trade deficit (or, more broadly, current-account deficit) is an increase in the indebtedness of the people of the home country to foreigners (or a net transfer of capital ownership from citizens of the home country to foreigners). The economist then explains that this protectionist assertion is factually false. Moments later, the protectionist repeats his false assertion as if the economist’s explanation had never been offered.

Or the protectionist will make some factual claim – such as, for instance, that America’s industrial capacity has been hollowed out by globalization. The economist then offers data that – being as clear as data can be – show the protectionist’s factual claim to be mistaken. Moments later, the protectionist repeats his mistaken factual claim as if the economist had never presented the disproving data.

These are only two of many examples of the protectionist’s immunity to learning – which immunity, I realize as I write these words, should be wholly unsurprising because only those who are immune to learning remain sincere protectionists.

Add a Comment    Share Share    Print    Email

This is an actual headline at the New York Times’s website today:

The Green New Deal Is What Realistic Environmental Policy Looks Like

DBx: Here’s one hypothesis: Trump has convinced the Russians to fund a scheme by which large numbers people on the political left are paid gargantuan sums of money to behave so idiotically and with such ferocious stupidity that Trump’s own behavior, in comparison, appears less frightening – indeed, even sane.

Add a Comment    Share Share    Print    Email

Here’s an excellent interview done by Yale’s The Politic of Deirdre McCloskey. A slice from Deirdre:

Yes, the so-called New Liberalism was slow socialism, as was an American Progressivism recommending the sterilization of defectives to improve the Aryan race and a minimum wage to drive non-Aryan immigrants out of the labor force, not to speak of carrying a big stick and joining a war to end all wars.  The slow socialism took longer to implement than the fast versions in Bolshevism and Nazism. It was pushed along by the taking of powers by governments in the 20th-century wars, hot and cold.  Calling it “modern liberalism” has always been an abuse of language.  And it was an abuse of people to implement it.

It still is.

My intrepid Mercatus Center colleague Veronique de Rugy prescribes market-oriented innovations for purchasing health care.

George Will rightly laments Americans’ increasingly weak grasp of reality. A slice:

The GND [Green New Deal] has no practical importance but much significance. First, it underscores the rise of the politics of gestures that are as flamboyant as they are empty: President Trump has his wall, the left has its GND. Second, it reprises the progressive desire to militarize everything but the military, to conscript everyone into vast collective undertakings that supposedly justify vast excisions from personal liberty and the setting side of pesky constitutional impediments. See President Franklin D. Roosevelt’s call in his first inaugural address for power “as great as the power that would be given to me if we were in fact invaded by a foreign foe.”

For those who need yet more evidence that industrial policies – state-engineered attempts to develop particular industries – are costly follies, here’s that evidence.

Tim Carney explains that the Green New Deal would spark a cronyist corporate feeding frenzy.

Chris Edwards reminds us that he was correct several years ago to warn against nationalizing security screening at U.S. airports.

I believe that Jonah Goldberg is correct to note that, at least now in the United States, the median-voter model is not a good predictor.

Jeffrey Tucker explores the connection between liberty and meaning.

Add a Comment    Share Share    Print    Email

Quotation of the Day…

by Don Boudreaux on February 14, 2019

in Myths and Fallacies, Trade

… is this Facebook post, yesterday, by Bob Higgs; the background here is the refrain chanted incessantly by historically ignorant protectionists that high U.S. tariffs in the 19th century helped to fuel that era’s impressively vigorous U.S. economic growth:

Protectionists are the sort of people who, having discovered that John D. Rockefeller had a trusted employee in his office who surreptitiously stole $100 a week from Standard Oil’s coffers for forty years, would argue that these thefts explain why John D. Rockefeller got fabulously rich during the same period.

Add a Comment    Share Share    Print    Email

Bonus Quotation of the Day…

by Don Boudreaux on February 13, 2019

in Growth, Myths and Fallacies, Trade

… is from page 325 of Columbia University economics professor Arvind Panagariya’s forthcoming book, Free Trade and Prosperity:

A common argument made by critics is that if we take a snapshot of a rapidly growing economy such as Taiwan in the 1960s or China in the 1980s, we would observe continuing high levels of protection. This raises the question of why protection rather than liberalization might not be the source of the rapid growth. The answer to this misleading critique has two parts. First, in both cases, liberalization preceded or accompanied growth acceleration. If the countries still looked highly protected, it is because they began too far away from the free trade position and too close to autarky. Second, if protection was indeed the source of rapid growth in these cases, its reduction during the following years should have led to a decline in the growth rate. But the opposite was observed when Taiwan in the 1970s and China in the 1990s and 2000s opened their economies further.

Add a Comment    Share Share    Print    Email

Here’s a letter to First Things:

Editor:

Daniel McCarthy’s “A New Conservative Agenda” (March 2019) is shot through with much economic ignorance and frightening naiveté. Consider this passage: “What follows is that we ought to minimize the loss of employment due to every factor not technologically inevitable, such as ill-conceived trade deals.”

Mr. McCarthy correctly notes that job churn isn’t caused only by international trade. (Indeed, in the United States international trade is responsible for only a tiny fraction of job churn.) Mr. McCarthy correctly realizes, too, that, if the protection of particular existing jobs justifies trade restraints, then the protection of particular existing jobs justifies also restraints on “every factor not technologically inevitable.”

Has Mr. McCarthy seriously pondered the full consequences of his proposal? Overlooking the impossibility of separating “factors” that are “technologically inevitable” from those that aren’t, Mr. McCarthy would have the state “minimize the loss of employment due to” any change in consumer preferences and opportunities. And therefore….

If, say, we Americans become less fond of drinking and gambling, Mr. McCarthy’s state nevertheless – to protect the jobs of brewers, vintners, distillers, liquor-store clerks, and poker dealers – would prevent us from reducing our purchases of alcoholic beverages and trips to Vegas. If another ‘great awakening’ sweeps through the country, Mr. McCarthy’s apparatchiks – to prevent the loss of jobs at restaurants that serve Sunday brunch – would guarantee that there’s no increase in Sunday church attendance. If an automotive engineer designs a new automobile that dramatically lowers the likelihood of traffic accidents, Mr. McCarthy’s state would keep this vehicle off the market to ensure against job losses for EMS workers and emergency-room physicians.

A government powerful enough to attempt, in the name of protecting American culture, to “minimize the loss of employment due to every factor not technologically inevitable” would not cause America’s economy merely to stagnate; it would cast us all into deep poverty. Even worse, such an omnipotent state – as it tramples on that not-insignificant part of American culture grounded in individual liberty – would herd us all forthwith and without mercy down the road to serfdom.

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

Add a Comment    Share Share    Print    Email

My Mercatus Center colleagues Veronique de Rugy and Jack Salmon reveal some of the costs of a marginal income-tax rate of 70 percent.

Charles Lane explains reality to AOC, Ed Markey, and other proponents of the “Green New Deal.

William Anderson joins in the fun of exposing the complete lunacy – and the grave dangers – of the “Green New Deal.”

Even Cass Sunstein – a man of the political left – warns of the dangers of socialism.

Scott Douglas Gerber sings some praises for Clarence Thomas.

Steve Davies describes the anatomy of moral panics.

Mike Rappaport argues that “it is the combination of economic ignorance and a strong desire to reduce income inequality that is deadly—to the poor and to society.

The first episode of MRU’s “Women in Economics” series features the late Nobel laureate Elinor Ostrom.

George Selgin’s debate with Bob Murphy over fractional-reserve banking continues.

Add a Comment    Share Share    Print    Email

Quotation of the Day…

by Don Boudreaux on February 13, 2019

in History, Myths and Fallacies

… is from page 469 of Deirdre McCloskey’s wonderful 2006 book, The Bourgeois Virtues:

When I initiated a course in business history at the business school at the University of Chicago in 1979, I started it with Mesopotamia, having the kids read business letters from 2000 BC collected at the Oriental Institute, because I wanted them to know that they were embarking on an ancient and honorable profession, not, as the clerisy believe, a dirty modern aberration.

Add a Comment    Share Share    Print    Email

… is from page 9 of Frank Knight’s 1956 collection, On the History and Method of Economics; specifically, it’s from Knight’s 1951 Encyclopaedia Britannica essay titled “Economics”:

Although the book [Adam Smith’s An Inquiry Into the Nature and Causes of the Wealth of Nations] is the most influential brief ever formulated for unimpeded trade, neither hampered nor coddled by governments, its greatest importance lies not in that circumstance but in the general picture, at once simple and comprehensive, which it gives of the economic life of a nation. The apparent chaos of competition, the welter of buying and selling, are resolved or transmuted into an orderly system of economic co-operation by means of which, under individual freedom in contrast with central direction, the community’s wants are supplied and its wealth increased.

Add a Comment    Share Share    Print    Email

Trump’s Trade Cluelessness

by Don Boudreaux on February 12, 2019

in Balance of Payments, Myths and Fallacies, Trade

Here’s a letter to Fortune:

Editor:

Two short passages in your report today on Trump’s trade negotiations with the Chinese reveal volumes about Trump’s ignorance of the facts and of the nature of trade.

First is this accurate description of a presidential misconception: “Trump routinely points to the large U.S. trade deficit, the difference between imports and exports, as a symbol of a declining manufacturing base and the loss of American might.”

He’s mistaken. In reality, American industrial capacity is now at an all-time high. Today it’s 15 percent higher than it was when China joined the World Trade WTO in 2001, and 66 percent higher than when NAFTA was launched in 1994. Unsurprisingly, therefore real U.S. manufacturing output is today near the all-time high that it hit in 2007, just before the Great Recession, and it continues to rise. American manufacturers today produce 11 percent more output than they produced when China joined the WTO and 45 percent more than when NAFTA took effect.

Second is this correct report on Trump’s goals: “He aims to reduce the goods-and-services gap with China, which totaled $566 billion in 2017, by both browbeating and enticing U.S. companies to import less and export more.”

A slight rewording changes none of the meaning but exposes the crackpot essence of Trump’s goal: “He aims to reduce the goods-and-services gap with China, which totaled $566 billion in 2017, by arranging for Americans to send more goods and services to the Chinese and to receive in exchange fewer goods and services.”

How we Americans will be enriched by our president artfully bargaining to reduce the prices that we receive for what we sell to the Chinese remains a palace mystery.

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

Add a Comment    Share Share    Print    Email