Jeffrey Tucker tells the bizarre tale of the calamitous lockdown of the global economy that began in March 2020. A slice:

What’s truly surprising is just how recent the theory behind lockdown and forced distancing actually is. So far as anyone can tell, the intellectual machinery that made this mess was invented 14 years ago, and not by epidemiologists but by computer-simulation modelers. It was adopted not by experienced doctors – they warned ferociously against it – but by politicians.

(Yesterday I read carefully the 2006 paper that Jeff mentions and that is co-authored by the late Dr. D.A. Henderson. It’s a calamitous shame that this paper’s recommend approach was ignored.)

Also writing wisely about this calamitous lockdown is Robert Higgs. A slice:

They and their ideological supporters will claim, of course, that what they have done has saved us all. Don’t believe this implausible, fear-fed claim. There was a better way, a way that would have respected and employed the people’s freedoms and knowledge, but that way would not have satisfied the rulers’ lust for power. Indeed, it would have revealed that the less power they exercise, the better off is the general public.

My intrepid Mercatus Center colleague Veronique de Rugy never tires of pointing out in print and in personal conversation the following: even government agencies that should, in principle, be of some use to humankind never avoid in practice pursuing tasks that make these agencies destructive. For evidence that Vero is correct, see this piece by Eric Boehm.

Mark Perry skillfully uses the work of Richard McKenzie to debunk the protectionist ignorance of Robert Lighthizer.

The great Thomas Sowell has a new book due out on his 90th birthday – this coming June 30th. It’s a birthday present to us all.

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In my June 30th, 2009, column for the Pittsburgh Tribune-Review I lament the socialization of medical care. You can read my lament beneath the fold.

Read the full post →

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… is from page 7 of Bas Van Der Vossen’s and Jason Brennan’s excellent 2018 book, In Defense of Openness:

Knowing what actually has a history of making a difference helps one appreciate what’s morally appropriate to demand of others. And flawed moral principles often look attractive because they match flawed empirical views.

DBx: A person commits neither a crime nor a sin by remaining ignorant of history or of economics. But that person becomes a danger to others when he or she – remaining ignorant of history and economics – calls for the use of force to obstruct peaceful commerce among adults. All sincerely made assertions that economic growth of the domestic economy will be promoted by protectionism reveal ignorance of history and of economics. This fact is so for calls for piecemeal protectionism no less than for protectionism as part of so-called “industrial policy.”

In nearly all cases, the pleader for protectionism thinks himself or herself to possess adequate knowledge of history and economics. But investigation of the substance of such pleas always uncovers a great deal of ignorance of key realities. This ignorance is often masked by the use of economic jargon – the meaning of which the protectionist pleader clearly doesn’t understand – and by out-of-context or misunderstood quotations from scholars such as Adam Smith and F.A. Hayek. Making matters worse, the protectionist unfailingly serves up the case for protectionism on a platter of logical fallacies.

…..

As I often tell my students, if Adam Smith were resurrected today from his grave in Edinburgh and given a few hours to survey the current state of the debate pitting free trade against protectionism, he’d be surprised by almost nothing. All of the common arguments used today by protectionists were used in Smith’s day. These arguments are today no more advanced in substance than they were in the mid-18th century (although today’s arguments might be presented in murkier jargon or even in mathematical symbols). As in Smith’s day, protectionists see only what they want to see – which is at most only half of the picture. And the half of the picture that they do see, they see through distorted analytical lenses.

Protectionists think themselves to be genuinely clever and cutting-edge. They are neither. They are peddlers of economic magic crystals, no more intellectually respectable than are late-night “info”-mmercial hawkers of face creams that wipe away decades of wrinkles and of free pamphlets that guarantee easy and risk-free riches by flipping houses. Alas, though, because there will always be a large audience of people willing to be gulled by promises of miracles, there will always be an audience for the nonsense that is protectionism.

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… is from page 5 of the May 9th, 2020, draft of the forthcoming monograph from Deirdre McCloskey and Alberto Mingardi, The Illiberal and Anti-Entrepreneurial State of Mariana Mazzucato:

She [Mazzucato] has parachuted herself into the center of the debate about the role of state planning as against private profit-making for innovation and allocation. It is not because she is innovative herself (though that is what her brave rhetoric suggests), but because she is, market-style, giving people what most of them want: magical thinking, mythical certitude, free lunches all around, wise and loving parents guiding the people in a coerced routine from on high. Modern “statism.” Her theory is the illiberal one that has dominated economics since John Maynard Keynes eight decades ago spoke out loud and bold.

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Here’s a follow-up letter to “proud Trump man” Nolan McKinney:

Mr. McKinney:

I recently challenged Sen. Josh Hawley “to explain why jobs lost as a result of Americans choosing to save labor by using technological innovations are different than are jobs lost as a result of Americans choosing to save labor by trading with non-Americans.”

You’re “stunned” that I “miss the obvious answer” to my challenge. In your view, the obvious answer is that “the innovators of labor saving products mentioned” in my  letter “are all Americans.” And these Americans, you go on to say, “spent more because their inventions made them millions.”

It’s true that the innovators mentioned in my letter are all Americans. But I’m stunned at what you find to be relevant about this fact.

Contrary to your claim, the gains that we Americans enjoyed because of labor-saving innovations from the likes of Cyrus McCormick, Thomas Edison, Bill Gates, and Steve Jobs did not arise from the resulting increase in the spending power of these men. These men’s contributions to economic growth are their innovations, not the additional incomes they were able to spend as a result of their successes.

Americans would have benefitted from these innovations no less had each of these successful men been misers and spent not a cent more than they would have spent had they been unsuccessful. (Actually, Americans would have benefitted even more had these successful men been misers. I leave it to you to figure out why.)

Note also this important fact: the benefits that McCormick, Edison, Gates, and Jobs bestow on humanity are not limited to Americans. Among the beneficiaries are people across the globe. And non-Americans benefit for the very same reasons that Americans do – reasons that include the enormous saving of labor that such innovations make possible.

If your claim were correct, then you must also believe that no one outside of the U.S. ever benefitted from the innovations of these (or any other) Americans. And you must further believe that no Americans ever benefitted from, say, the printing press. Gutenberg, after all, wasn’t an American and he never spent money in America. Ditto for the wheel, the lever, the pulley, the bucket, the axe, and the domestication of horses, oxen, and dogs. The now-unknown inventors of these amazing labor-saving techniques weren’t American and they spent no money here.

Likewise, you must believe that the only benefits Americans enjoyed from the likes of the invention of the steam engine, the flush toilet, and the electric battery came from whatever American exports their non-American inventors might have bought rather than from the great saving in labor made possible by their creativity.

My challenge to Sen. Hawley remains unmet.

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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… is from page 10 of Roger Koppl’s 2018 book, Expert Failure:

We should not think of the division of labor as driven somehow by a grand purpose. It embodies no unitary hierarchy of values. The division of labor has no purpose and serves no particular hierarchy of ends. It is, rather, the emergent and unplanned result of a variety of persons pursuing a variety of potentially inconsistent goals. We can get along, so many of us so well, precisely because we do not have to agree on values. Believers buy Bibles from atheists and the system bumps along tolerably well, all things considered.

DBx: This passage contains a great deal of important truth – truth typically unknown to, or cast aside by, so many people on the “Progressive” left, the nationalist conservative right, and, frankly, even by many perched in the ‘pragmatic’ center.

The economy as such has no purpose. A well-functioning economy enhances the prospects of each of its participants of fulfilling as many as possible of his or her individual purposes, whatever these might be. Implicit in this achievement of a well-functioning economy is the prohibition on any participant of fulfilling his or her purposes by violating the rules that enhance the prospects of as many as possible others fulfilling their purposes.

One key rule that enhances as many as possible individuals fulfilling as many as possible of their goals is what economists call “consumer sovereignty.” This term is short-hand for the economic rule that producers have no right to consumer patronage. If you earn income, you have a right to spend, save, and invest that income as you choose. Your having previously bought your groceries from Safeway does not give to Safeway a right to compel you to continue to buy your groceries from Safeway. Nor does it give to Safeway a right to obstruct – or to hire thugs to obstruct – your efforts to shop at Whole Foods or at Wegman’s.

When the rule of consumer sovereignty is obeyed, each of us must earn our incomes by meeting the demands that our fellow human beings express as consumers. As producers, each of us competes for consumer demand. (Of course, this competition typically is most effective when many individuals consciously cooperate with each other in productive efforts, most commonly by forming and working in firms.) Only success in such competition reveals which of the relatively few of the uncountably large number of possible ways to ‘produce’ are actually productive – which of the ways actually create value for our fellow human beings rather than being a waste of human time, effort, and other resources.

Yet when government erects tariffs for the purpose of protecting existing jobs, particular individuals are excused from the rule of consumer sovereignty. These protected workers, as well as the owners of the protected firm, are excused from having to abide by an important rule of a market economy. These ‘protected’ individuals are given a right – a right to consumer patronage – that unprotected individuals do not have.

In large and dynamic economies, such as that of the United States, excusing relatively few individuals from the rule of consumer sovereignty does not bring the entire economy crashing down. The economically harmful consequences of such rule-breaking are masked by the larger churn and productive process of the economy. But as more and more people get to break this rule, the economic damage deepens and spreads.

Economically ignorant protectionists, from the likes of Bernie Sanders on the left to Donald Trump on the right, do not understand that, if the government attempted to excuse everyone from the rule of consumer sovereignty the economy would collapse. All producers would be guaranteed jobs and markets. Although there would also be an attempt to guarantee wages, this latter attempt would literally be impossible to carry out successfully. Producers, no longer having to compete for consumer patronage, would not only lose incentives to produce goods and services that satisfy consumers, they would also lose any ability to know what goods and services consumers most want. Prices in such an economy would become meaningless because no one would be allowed to change his or her spending.

Protectionism looks good to those who refuse to look at anyone other than the immediate receiver of income. To such a person a tariff appears to increase national well-being in the same way that to such a person armed robbery appears to increase national well-being: in both cases, some identifiable individuals’ incomes rise. End of story (or so protectionists insist). (Of course, protectionists deny the similarity of tariffs with armed robbery. Protectionists believe that because the people who are robbed by the tariff don’t actually see the weapons at the disposal of customs officers, these weapons – and the threats these weapons exist to enforce – are not real.)

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My intrepid Mercatus Center colleague Veronique de Rugy joins with Mercatus’s Executive Director Dan Rothschild to make the case for keeping government limited and markets free and open. A slice:

Lilla’s claims about globalization are likewise mistaken. Yes, the international order is imperfect, but on balance, economic liberty, global trade, and the internationalization of ideas have by far done more to stop global misery and poverty than has any other system. Yes, China has not joined that international order and adopted liberal values and democracy as many predicted a decade ago, and, yes, it maintains a gulag archipelago reminiscent of the worst abuses of Soviet totalitarianism. But the international economic order is far from being a threat to national self-determination (a deeply flawed and utterly illiberal concept) and blaming it for our problems merely deflects blame from our own internal political pathologies.

Also from Veronique is this lament of sprawling government.

Recently, I was again a guest of the always-insightful Dan Proft.

Don’t miss Russ Roberts’s page featuring materials on so-called “price-gouging.

Art Carden explains why we don’t need One Big Plan to end the lockdown.

Alberto Mingardi is always worth reading.

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… is one of the very few that I consciously reprise; first quoted here in late 2014, this wise observation is, at the moment, simply too relevant not to repeat; it’s from page 16 of Nobel-laureate economist Angus Deaton’s 2013 book, The Great Escape:

The need to do something tends to trump the need to understand what needs to be done.

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My intrepid Mercatus Center colleague Veronique de Rugy turned 50 this past Sunday. Unfortunately, the covid-19 crisis caused the cancelation of her big birthday-celebration bash. No matter. Vero here celebrates the market’s ability to enable her many friends and loved ones to congratulate her on her birthday. (Happy Birthday, Vero!)

Wall Street Journal columnist Holman Jenkins has been remarkably insightful throughout the coronavirus pandemic. Here’s a slice from his latest column:

That politicians took steps out of panic is understandable. That these steps were unjustified by the science that existed then much less now doesn’t mean their motives were bad. We can accept, especially in a panic, that the media will eschew complexity in favor of a story of an enemy who must be vanquished.

Our country and our Constitution are finished, however, if the most sweeping, authoritarian and undemocratic restrictions on individual liberty ever contemplated are not subjected to legal challenge and accountability.

Russ Roberts – sporting a covid beard – interviewed Nobel-laureate economist Paul Romer.

GMU Econ alum Ray Niles argues that what we need are millions of individual experiments.

Already I miss blogging from Arnold Kling.

GMU Econ alum Alex Nowrasteh makes the case against banning H-1B workers.

Among the greatest economists not only of the past 100 years, but of all time is Harold Demsetz (1930-2019). Whenever he and his late UCLA colleague Armen Alchian were alone in the faculty lounge, that lounge then contained in it far more economic knowledge, insight, and critical thinking than it would contain in 9 out of every 10 times of it being filled with any randomly chosen 5 or 6 Nobel-laureate economists. I’m glad that David Henderson’s new biographical essay of Demsetz is now up at The Concise Encyclopedia of Economics.

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Here’s a letter to the persistent “proud Trump man,” Nolan McKinney:

Mr. McKinney:

Dismissing my open letter to Sen. Josh Hawley as “globalist bull__t” you defend the senator. Your defense boils down to this: that which separates Sen. Hawley and other protectionists from me and other free traders is simply preferences. Protectionists, such as the senator, prefer to have Americans “not so addicted to imports” while we “globalists have no problem with this addiction.”

Well now.

First, I don’t share your low opinion of our fellow Americans. Unlike you, I believe that they generally choose their commercial relationships wisely rather than, as you imply, recklessly.

Second, there is in play here more than a difference in preferences. Also in play is ignorance of reality. The point of my letter to Hawley is to expose as mythical the protectionist belief that international trade is unique at destroying jobs. Any and all economic changes, including but hardly limited to changes in the pattern of international trade, destroy some jobs as they create others. This factual reality is lost on Hawley and those who cheer his twitter ejaculations.

Third, I don’t mind Hawley and his fans having preferences that differ from my own. What I do mind – intensely – are their attempts to compel the rest of us to live as if we share those preferences. If the likes of Josh Hawley, Oren Cass, Donald Trump, Peter Navarro, and Sherrod Brown prefer not to trade with the Chinese, that’s fine. I don’t object. They are free to not do so. But they have no business coercing the rest of us to avoid such trading opportunities. They should mind their own business.

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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