Quotation of the Day…

by Don Boudreaux on July 31, 2022

in Inflation

… is from Milton Friedman’s February 1963 speech “Inflation: Causes and Consequences“:

Inflation is always and everywhere a monetary phenomenon.

DBx: Although this gem of an observation by Friedman is quite famous, I’ve never before featured it as a Quotation of the Day. Now seems an appropriate time to rectify that oversight.

Milton Friedman was born in Brooklyn on this date – July 31st – in 1912.

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Geoff Brennan, R.I.P.

by Don Boudreaux on July 30, 2022

in Virginia Political Economy

This morning brings sad news of the death of the Australian economist and political scientist Geoffrey Brennan. A frequent co-author with the late Nobel-laureate economist James Buchanan, Geoff’s contributions are enormous. For me, his 1993 book co-authored with Loren Lomasky, Democracy & Decision: The Pure Theory of Electoral Preference, is not only his best work, it’s also among the books that most influenced my way of thinking. (And I know that it prominently influenced also Bryan Caplan, who in 2007, with The Myth of the Rational Voter, brilliantly expanded on the theme.)

Geoff also did the great service of co-editing this 2008 collection of some of the papers and lectures of the late Paul Heyne, as well as the Collected Works of James M. Buchanan.

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This short video on the folly of government-imposed price ceilings is excellent. (It’s based on a recent essay by David Henderson.)

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Wall Street Journal columnist Jason Riley reviews three new books that challenge the mainstream, “Progressive” view of race. A slice:

In “The State of Black America,” a new collection of essays edited by William B. Allen, an emeritus professor of political philosophy at Michigan State University, Mr. Allen writes that it is not only wrong but counterproductive for the media to give the last word on social inequality to black elites who traffic in racial resentment and identity politics. “The civil rights movement may inadvertently have spawned the most serious obstacle to the progress of American blacks in our time,” he writes in his own essay. “Black leaders have turned to group identity rather than individual identity and American principles of assimilation. The result has been cultural stagnation for some black communities.”

Elsewhere in the volume, Brown University economics professor Glenn Loury challenges the left’s notion that racism mainly explains this cultural underdevelopment. “The ‘structural racism’ argument seldom goes into cause and effect,” he writes. “We are all just supposed to know that it’s the fault of something called ‘structural racism,’ abetted by an environment of ‘white supremacy’ that purportedly characterizes our society. Any racial disparity, then, can be totally explained by the imputation of ‘structural racism.’”

George Will is correct: “What is still referred to, reflexively and anachronistically, as higher education is supposedly run by and for persons who are products of, and devoted to, learning. Today, this supposition is false.” Another slice:

The Chronicle of Higher Education, the reading of which is in equal measures fascinating and depressing, recently published Joseph M. Keegin’s bracing essay “The Hysterical Style in the American Humanities: On the ideological posturing and moral nitpicking of the very online.” Keegin, a philosophy student at Tulane University, argues that, confronted with “the slow slide of academe into oblivion,” scholars — especially in humanities departments, which are losing undergraduates, prestige, jobs and funding — “desperately grasp for relevance.” They seek it by becoming “professors of ‘academic Twitter.’”

The Editorial Board of the Wall Street Journal rightly worries that Xi and the other thugs who today rule China will increasingly play the nationalist card to divert attention from the economic destructiveness of their policies. A slice:

Slowing growth is global, but Mr. Xi has added Chinese characteristics. A chronic problem is his “dynamic zero-Covid” policy, which Beijing shows no signs of easing. This imposes sudden lockdowns and stringent testing requirements anywhere Covid-19 is detected. The lockdowns are a severe strain for ordinary Chinese, and a danger to global supply chains passing through China. Foreign companies are rethinking investments, while local firms suffer.

Ryan Bourne, Brad Subramaniam, and Rachel Chiu describe the FTC’s attempt to block Meta’s (Facebook’s) merger with Within Unlimited as “bizarre.” Here’s their conclusion:

Yet these are the blinkers at the agency right now. The new trustbusters in DC describe Meta as a “behemoth” and an “empire” that must be restrained. They are convinced that they were in error to green‐​light Facebook’s acquisitions of WhatsApp and Instagram, a hindsight bias that ignores the possibility that Facebook’s ownership helped improve those products, and which suggests entry barriers in the social media sector are relatively low anyway. The Meta‐​Within move looks like an overcorrection to try to block even small purchases that might aid Meta as a company. Yet banning these sorts of acquisitions not only deters integration in the burgeoning VR ecosystem that might benefit consumers, but risks reducing incentives for startups to produce innovative new products in future.

Reason‘s Robby Soave reports on the political bias of Facebook’s third-party “fact-checkers” (so called). Two slices:

Meta’s third-party fact-checkers have flagged as “false information” posts on Instagram and Facebook accusing the Biden administration of changing the definition of a recession in order to deny that the U.S. economy has entered one. This is yet another reminder that the project of purportedly independent fact-checking on social media is a highly partisan one, in which legitimately debatable opinions are passed off as objective truth.


This is hardly the first time that the social media fact-checking industry has failed to add clarity to a contentious issue. Last year, PolitiFact rated as false the claim that COVID-19 is 99 percent survivable for most age groups.

“Experts say a person cannot determine their own chances at surviving COVID-19 by looking at national statistics, because the data doesn’t take into account the person’s own risks and COVID-19 deaths are believed to be undercounted,” wrote PolitiFact.

Regardless of what “experts say,” it is certainly the case that individual persons can estimate their likelihood of surviving COVD-19 based on national statistics. The disease’s age discrimination is extreme: The overwhelming majority of young, healthy people are not at significant risk, especially when compared with elderly Americans. This was a curious fact-check, and it was hardly the first.

Writing about the challenge of defining “recession” is my GMU Econ colleague Vincent Geloso.

Brian Riedl reports that “Congress this week offered a masterclass in the incoherence of government.”

Nick Gillespie talks with the great John Cleese.

Juliette Sellgren talks with GMU Econ alum Jon Murphy about the Jones Act and Adam Smith.

Barry Brownstein warns of the dangers of using state power to settle questions of science. A slice:

The claim that a state-proclaimed consensus settles science has resulted in many losing their jobs. In 2021, Dr. Aaron Kheriaty was fired from the University of California, Irvine. Kheriaty was a professor at their School of Medicine and director of their Medical Ethics Program. He was fired for being unvaccinated and for believing natural immunity was superior to the COVID vaccine.

Dr. Kheriaty delivered his testimony against the California bill that would ban the expression of opposing opinions: “Advances in science and medicine typically occur when doctors and scientists challenge conventional thinking or settled opinion. Fixating any current medical consensus as ‘unassailable’ by physicians will stifle medical and scientific progress.”

Kheriaty explained how repressing alternative views creates a false consensus driven by politics and crony interests. Government cures drive out real cures.

Sai Medi tweets: (HT Jay Bhattacharya)

🧵 (1/19) Long Covid & Post Viral Syndromes

Scov2 is not that unique in this regard.

Our cardinal sin is a massive sampling bias in which we hyper focus on Scov2 and ignore 1) other viruses 2) important context around long term complications of any general illness.

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Quotation of the Day…

by Don Boudreaux on July 30, 2022

in Innovation

… is from page 129 of Deirdre McCloskey’s splendid 2022 volume, Beyond Positivism, Behaviorism, and Neoinstitutionalism in Economics:

Slave societies are slow to innovate if slavery is big there. Liberal societies innovate because no one is a slave, at any rate in theory and in eventual outcome.

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Inflated with Motivated Reasoning

by Don Boudreaux on July 29, 2022

in Inflation, Seen and Unseen

Here’s a letter to the Wall Street Journal:


A serious contradiction lurks in Jason Furman’s argument that “the Schumer-Manchin bill will ease inflation and climate change” (July 29).

On one hand, Mr. Furman insists that raising taxes will help reduce inflation in large part because “[d]emand reductions resulting from tax increases … are much larger and more immediate than any impact they have on future supply.” On the other hand, he asserts that it “isn’t at all clear” that raising corporate taxes will reduce business investment – which is another way of saying that it isn’t at all clear that demand reductions will result from corporate-tax increases.

Mr. Furman misses this contradiction by immediately shifting his focus to the allegedly similar effects on business investment of raising corporate taxes and of raising interest rates. Yet the contradiction nevertheless looms: If it isn’t at all clear that raising corporate taxes will reduce business investment, then it isn’t at all clear that raising corporate taxes will help ease inflationary pressures.

Donald J. Boudreaux
Professor of Economics
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 208 of former Caltech physics professor and provost – and former Energy Department undersecretary during the Obama administration – Steven Koonin’s superb 2021 book, Unsettled? What Climate Science Tells Us, What It Doesn’t, and Why It Matters (emphases original):

The could question is very different from the question of “What should we do?” Any discussion of how the world should respond to a changing climate is best informed by scientific certainties and uncertainties. But it’s ultimately a discussion of values – one that weighs development, environment, and intergenerational and geographical equities in light of imperfect projections of future climates.

DBx: This point is vitally important and, because it’s frequently overlooked, must frequently be repeated. There is no ‘objective,’ scientifically determinable ‘optimal’ collective response to climate change that exists independently of the subjective value judgments, preferences, and expectations of each of the nearly eight billion people alive today. Professor Jones, pundit Smith, or politician Snort can write, talk, and pontificate until their hair falls out about what ‘should’ be done, but even the best-intentioned and best-informed person can at best make only an educated guess about what ‘should’ be done. A practical implication of this reality is that the range of disagreement among reasonable people about what ‘should’ be done is very wide.

My position on this matter is that to ‘combat’ climate change very little should be done collectively, that is, by governments. While the climate is heating, and while human industrial activity is indeed contributing to this heating, we simply know too little about, among other variables, (1) what changes in human industrial activity will do and when to the climate, (2) what government-engineered changes in economic activity will do to the economy (and, hence, to human well-being), (3) how both the costs and the benefits of centralized, government-directed adjustments to climate change compare to the costs and the benefits of decentralized, market-directed adjustments to climate change – decentralized changes many of which centralized, government-directed changes will either make impossible or unattractive to pursue.

The above uncertainties reveal not only that the precise rates at which carbon taxes “should” be set are impossible to determine ‘scientifically,’ but also impossible to determine in practice is whether or not we should use carbon taxes at all as opposed to not intervening at all.

Contrary to the claims of too many people, including economists, there is no clean-cut case for taxing carbon emissions (or, I say for the record, for any other intervention to ‘address’ climate change).

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Texas Tech economist – and GMU Econ alum – Ben Powell says about the CHIPS Act that “the U.S. is serving up pork to semiconductor manufacturers.” Here’s his conclusion:

The $52 billion subsidy bill is just a pig dressed up in high-tech clothes. There is nothing special about the semiconductor industry that justifies subsidies. This is just wasteful pork-barrel politics as usual. Unfortunately, wasteful pork-barrel spending is the one thing that seems capable of getting bipartisan support in Washington these days.

George Will applauds the practical wisdom of last year’s U.S. Supreme Court ruling in Mahanoy Area School District v. B.L. A slice:

Unfortunately but actually, no reasonable person thinks that the kind of people running American education today know — or, in the unlikely event that they do know, that they care — what constitutional law says about speech protections. Furthermore, Joe Biden’s Education Department, like Barack Obama’s, is pressuring institutions of higher education — which hardly need pressure — to conduct ersatz courts in which people accused of sexual misbehavior are denied due process rights (e.g., the rights to counsel, to confront their accusers, and to not to be convicted by a mere “preponderance” of evidence rather than evidence beyond a reasonable doubt).

My Mercatus Center colleagues Andrew Mercado and Giorgio Castiglia detail some of the distortions introduced by government into the market for baby formula.

John Berlau and Josh Rutzick, writing in the Wall Street Journal, call for the repeal of the Sarbanes-Oxley Act. A slice:

The costs of Sarbanes-Oxley are responsible for much of this shift in the size of newly public companies. Academic studies and annual reports show that the law has caused auditing costs to double, triple or even quadruple for many companies. A 2009 study by the Securities and Exchange Commission found that smaller public companies have cost burdens more than seven times those of large ones.

The disproportionate burden on small and midsize companies has spurred bipartisan criticism of Sarbanes-Oxley. As the Obama administration council noted: “Regulations aimed at protecting the public from the misrepresentations of a small number of large companies have unintentionally placed significant burdens on the large number of smaller companies.”

One of Sarbanes-Oxley’s most onerous mandates stems from the two brief paragraphs that constitute Section 404, which requires that public companies have effective “internal controls.” The Public Company Accounting Oversight Board, a quasipublic rule-making agency created by Sarbanes-Oxley, has interpreted this section to mean full-blown audits of any company process that could enable “a reasonable possibility of a material misstatement in the financial statements.”

David Henderson explores the roots of blacks’ recent economic progress. Two slices:

My independent check of the data shows that Riley is right. Each year the US Census reports comprehensive survey data on incomes of various ethnic groups. Its latest report shows that between 2017 and 2019, median income for black households rose from $40,594 to $46,073, a rise of 13.5 percent over just two years. Adjusted for inflation, the increase was a respectable 8.8 percent. For Hispanic households, median income rose from $61,372 in 2917 to $68,703 in 2019, an 11.3 percent increase; inflation adjusted, the increase was 7.3 percent.

How does that compare with progress for white households over those same two years? Their median income rose from $65,273 in 2017 to $72,204, an increase of 10.6 percent. Adjusted for inflation, their median income rose by 6.1 percent.

Notice something interesting: black and Hispanic household incomes rose by a higher percentage than white household incomes.


A case can be made that what’s good for black people is good for the nation. And what’s good for both is economic growth.

We know, and have known since Adam Smith’s 1776 opus, The Wealth of Nations, how to get economic growth: deregulate or keep regulation limited, cut marginal tax rates or keep them low, have relatively free trade, and restrain government spending. Let’s not forget the roots of black and, indeed, all economic progress.

Fiona Harrigan: “55% of America’s Top Startups Were Founded by Immigrants. Why Won’t Congress Let in More?”

Michael Lucci reports that Gavin Newsom is out of touch with reality. Here’s his conclusion:

Newsom wants Americans to believe that he has it figured out in California, and that the new American model for freedom is a progressive one. Yet his state’s aggressive population pivot has coincided almost precisely with his tenure as governor, making Newsom the first California leader to preside over a shrinking state rather than a growing one.

No amount of political rhetoric can mask California’s reality under Governor Newsom. Low-income students are being left behind, the rule of law is eroding, and residents are leaving in record numbers. The many former Californians watching Newsom’s ads in Texas and in Florida can only marvel at the hubris of the man.

Thorsteinn Siglaugsson concludes:

Considering the aforementioned study which found serious complications from Covid-19 in children to be practically non-existent, this raises serious doubts about the continued push for child-vaccination.

TANSTAFPFC (There Ain’t No Such Thing As Free Protection From Covid.)

Jay Bhattacharya tweets:

During the pandemic, public health messaging stigmatized:
➡️kids as disease vectors
➡️the unmasked as unempathic & unpatriotic
➡️the unvaxxed as unclean
➡️the poor & working class who couldn’t comply with lockdowns as irresponsible
Only the compliant laptop class was spared.

Vinay Prasad talks with John P.A. Ioannidis. (HT Jay Bhattacharya) Two slices:

JPAI: The mechanism of action of SARS-CoV-2 vaccines suggested upfront that they would probably not be very effective to halt transmission. The rapid development of vaccines that were apparently very effective for decreasing the risk of serious disease was an amazing success and it could have been a wonderful opportunity to showcase the power of science and to build more trust in public health that had suffered over the years from attacks from the anti-vax movement.

Unfortunately, this opportunity was lost, to a large extent by trying to push an inflated narrative that COVID-19 vaccines are perfect, the ideal silver bullet to put an end to epidemic waves, and having no side effects at all.


VP: Early in the pandemic you were viciously attacked for expressing a policy viewpoint and intuition that is different from others. In a number of ways your core thesis was: in an effort—well intentioned—to control the coronavirus, we may inflict great damage on ourselves. That lesson appears to be borne out in a number of historical and recent events. How do you judge you original intuition?

JPAI: I wish I had been wrong on this point. Unfortunately, I am afraid I might have been correct.

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Quotation of the Day…

by Don Boudreaux on July 29, 2022

in Philosophy of Freedom

… is from page xi of the 1996 Johns Hopkins University Press edition of H.L. Mencken’s immensely enjoyable 1941 autobiographical volume, Heathen Days:

Indeed, I seem to have been born without any capacity for envy, and to the fact, no doubt, is due a large part of my habitual tranquility, not to say complacency.

DBx: Mencken was unusual among human beings, but in a good way. Most of us, alas, are emotionally equipped to experience envy. But while envy, perhaps, occasionally serves a useful purpose, it is, I am sure, overwhelmingly one of the most antisocial and uncivilized emotions that humans in modern society are prone to suffer.

The decent man or woman works diligently to overcome the natural proneness to envy. And to the extent that success in this noble endeavor is met, that person is indeed rewarded with a greater likelihood of tranquility.

Unfortunately, we live in an era in which envy is encouraged. The media, politicians, and intellectuals stir it up. Making matters worse, this stirring-up of envy is regarded as enlightened and “progressive,” while resistance to the attempts to stir up envy are treated as the product of a character both benighted and greedy. We are incessantly being told that those individuals who have more material wealth than we have do not deserve what they have. We’re counseled to support redistributive taxation.

Thomas Piketty, Paul Krugman, Bernie Sanders, Elizabeth Warren – these and many other “Progressives” are merchants of envy, which is to say that they are merchants of an exceedingly antisocial sentiment, one both childish and destructive.

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Orwell Nailed It

by Don Boudreaux on July 28, 2022

in Hubris and humility, Seen and Unseen

Here’s a letter to the Wall Street Journal:


Lance Morrow is correct: The immunity that politicians and media personalities – and also, let’s acknowledge, professors – too often enjoy from the ill on-the-ground consequences of their actions, words, and flights of theorizing encourages many of these people to behave far more irresponsibly and fanatically than ordinary Americans going about their daily affairs (“Public Life Is Crazy, but Americans Aren’t,” July 28). In turn, as George Orwell succinctly observed, “the intellectuals are more totalitarian in outlook than the common people.”

Donald J. Boudreaux
Professor of Economics
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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