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Writing in today’s Wall Street Journal, my GMU Econ colleague Dan Klein explains an illogical move by supporters of censorship to increase the government’s power to superintend people’s expressions. A slice:

In Murthy, however, the government defends its actions in terms of combatting misinformation and disinformation. The administration and other practitioners and proponents of censorship thereby pretend that they are merely protecting the public from cut-and-dried falsehoods. In doing so, they misrepresent their actions and attempt to evade responsibility for arrogating to themselves the decision of what is safe and sound for people to see and hear.

George Will applauds the effort to encourage K-12 school choice in Arizona – and also criticizes efforts to suppress it. A slice:

The pandemic was an ill wind that filled the sails of the choice movement nationally. Children consigned to “remote learning” opened their laptops at home, and parents heard indoctrination served up as learning. And they recoiled against teachers unions that lobbied to keep schools closed, even though children were an age cohort essentially unthreatened by the coronavirus. Even before pandemic, an illegal teachers strike had Arizona parents (in [Rep. Ben] Toma’s words) “fleeing the stupidity.” As the Goldwater Institute’s Timothy Sandefur has said, “The mystique of the public school teacher” is fading.

Ninety-nine years ago, the Supreme Court, declaring unconstitutional an Oregon law requiring children to attend public schools, affirmed parents’ right to “direct” their children’s education. Teachers unions, among Democrats’ largest donors, work tenaciously to attenuate this right with regulations and litigations about even schools’ minute operational choices.

My intrepid Mercatus Center colleague, Veronique de Rugy, isn’t falling for Marco Rubio’s economically ignorant argument for “industrial policy done right.” A slice:

First, even if his version of industrial policy — which he claims will be different from the Biden version — were to produce a manufacturing boom, it wouldn’t produce a boom in manufacturing employment precisely because modern manufacturing relies heavily on automation. Let me repeat this again: Industrial policy will not turn us back into a nation of factory workers, especially one that employs the workers that the senator is concerned about.

Then what’s the plan? Does he want to force factories to retool with 1950s technology so that the resulting lower worker productivity will require many more man-hours in manufacturing work? And does he realize that, if such an outcome were to occur, the lower productivity of manufacturing workers would dramatically drive down manufacturing wages? What would that do to his plan for well-paying jobs in manufacturing?

The Editorial Board of the Wall Street Journal reports on yet another instance of how industrial policy in reality is very different from industrial policy on paper. A slice:

It’s a shame to see Intel, a legendary U.S. company, being captured by government like this. All told, Intel could pocket some $50 billion in federal subsidies. Yet Mr. Gelsinger wants more. American chip manufacturing “doesn’t get fixed in one three- to five-year program,” the CEO said last month. “I do think we’ll need at least a CHIPS 2 to finish that job.”

Maybe two or three more chips funding bills will be needed if Intel foundries keep bleeding red ink. On Tuesday Intel disclosed that it doesn’t expect its foundry business to break even until “midway” between now and the end of 2030. One problem is demand for Intel’s server and PC chips is slackening as more tech investment flows into AI.

David Barker decries climate alarmists’ bad ‘science.’ Three slices:

I debunked research by the Federal Reserve and top academic economists on the economics of climate change. An author of a paper I debunked then said that three professors from Stanford and Berkeley had done a much better analysis of temperature and growth in an article they published in Nature. I took up the challenge and scrutinized their article. My critique appears in the latest issue of Econ Journal Watch.

The Nature article is in the top 0.1% of academic economics publications by citations, and it has received glowing press coverage. I downloaded their data and found that, as with the other articles I debunked, the results don’t hold up under scrutiny.

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Rather than uncovering a consistent relationship between growth and temperature around the world, their results are driven by relatively few countries. Dropping Greenland and a group of contiguous northern and central African countries, for example, eliminates the practical and statistical significance of their results.

The authors claim that there is no tendency for their results to diminish over time, because they find that the results for 1961-89 and 1990-2010 are similar. But changing the cutoff year to 1990 instead of 1989 changes this conclusion, because the data from 1991-2010 show no statistically significant relationship between growth and temperature. Because some countries are missing data from early years, a cutoff of 1990 would do a better job of matching the number of observations between the two periods. There is also evidence that if a result is present at all, it is completely reversed the following year.

I also produce simulated data with random numbers representing temperature and growth that are correlated by region, but with no relationship between temperature and growth. I find that the authors’ method is likely to indicate a statistically significant relationship even though the data are constructed to have no such relationship.

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The law of supply and demand applies to tomatoes and also to ideas. Demand for research that bolsters arguments for bad policy leads to supply of research. Truth provides some constraints but doesn’t always prevail.

Fortunately, such publications as Econ Journal Watch give a platform to researchers who challenge reigning propaganda. More academics and independent researchers are uncovering bias, fraud and plagiarism, bringing a bit of discipline to a field greatly in need of it.

Kevin Corcoran riffs wisely on the joke about economists and the $20 bill laying on the sidewalk.

Arnold Kling usefully asks: “When are the laws of probability useful?”

Scott LIncicome is almost certain that California’s newly hiked minimum wage for workers in fast-food restaurants will end badly. A slice:

We first reviewed the minimum wage debate and relevant academic literature three years ago, and the issue gets a nice refresher in my Cato colleague Ryan Bourne’s excellent book The War on Prices, which comes out next month and is a one-stop shop for all things price related (inflation, rent/price controls, etc.). The minimum wage issue gets two book chapters, with the first from University of California-San Diego economist Jeffrey Clemens on the myriad workplace trade-offs—not just aggregate jobs—associated with state and local wage laws. As Clemens notes, “studies of large minimum wage increases [me: like the one in California] regularly find evidence that those increases result in substantial job losses, especially for the least-skilled, least-experienced, and least-productive workers.” But there are many other labor market “channels” through which wage controls might act. In particular, studies show that employers often adjust in response to new minimum wage laws via—

• Reductions in the amount or quality of fringe benefits, such as employer-provided health insurance and employee discounts;
• Reductions in amenities like schedule flexibility, vacation/sick days, training opportunities, safety provisions, or workplace aesthetics—all in ways that reduce employers’ costs but also make work a little less pleasant for employees;
• Increases in performance requirements (higher production targets, shorter break times, etc.) to get more output from each employee hour worked;
• Efforts to avoid minimum wage laws, either lawfully (e.g., by keeping employee count below a threshold that triggers the mandate) or unlawfully (e.g., by systematic underpayment);
• Changes in hiring patterns, replacing lower-performing workers with higher-performing ones—often doing this via imprecise proxies for worker quality like age or credentials; and/or
• Reductions in work hours, especially for new or inexperienced workers.

Clemens concludes that any proper evaluation of minimum wage laws must account for these often-invisible trade-offs too, not simply look at whether mandated pay hikes reduce the total number of jobs in an affected jurisdiction. (This might make obvious sense to you and me, but discussions of the minimum wage far too frequently paint the issue as a simple choice between fewer jobs and higher earnings.)

James Allan reflects on the authoritarianism of covidians. A slice:

At any rate, during the lockdowns judges in Canada (and let’s be blunt, around the democratic world) were as panicked as all the other elites. Retired UK Supreme Court Justice Jonathan Sumption may have noted early on that the authoritarian response to COVID amounted to the biggest inroads on our civil liberties in two hundred years. Yet he was a very solitary voice. Nearly all the judges were as frightened and panicked as most everyone else. There was next to no chance litigants were going to roll back governmental regulations through the courts. I said so in print at the start of the crisis and I believe events have proved that true. My take was that we would have to wait till everyone calmed down and the panic subsided and then you would see the judges discover a bit of a willingness to overturn some of these rules and regulations. But as far as the COVID years were concerned the entire edifice of human rights law, and all its accoutrements, was totally useless. Worse than useless in fact.

Jay Bhattacharya tweets:

The old blue check system on Twitter did not mark expertise. It marked usefulness to power and compliance with narrative.

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… is from page 16 of the 1947 “Crofts Classics” edition of John Stuart Mill’s 1859 On Liberty:

If all mankind minus one were of one opinion, and only one person were of the contrary opinion, mankind would be no more justified in silencing that one person, than he, if he had the power, would be justified in silencing mankind. Were an opinion a personal possession of no value except to the owner; if to be obstructed in the enjoyment of it were simply a private injury, it would make some difference whether the injury was inflicted only on a few persons or on many. But the peculiar evil of silencing the expression of an opinion is, that it is robbing the human race; posterity as well as the existing generation; those who dissent from the opinion, still more than those who hold it. If the opinion is right, they are deprived of the opportunity of exchanging error for truth: if wrong, they lose, what is almost as great a benefit, the clearer perception and livelier impression of truth, produced by its collision with error.

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John Tierney decries “the WHO’s power grab.” Two slices:

The response to Covid was the greatest mistake in the history of the public-health profession, but the officials responsible for it are determined to do even worse. With the support of the Biden administration, the World Health Organization (WHO) is seeking unprecedented powers to impose its policies on the United States and the rest of the world during the next pandemic.

It was bad enough that America and other countries voluntarily followed WHO bureaucrats’ disastrous pandemic advice instead of heeding the scientists who had presciently warned, long before 2020, that lockdowns, school closures, and mandates for masks and vaccines would be futile, destructive, and unethical. It was bad enough that U.S. officials and the corporate media parroted the WHO’s false claims and ludicrous praise of China’s response. But now the WHO wants new authority to make its bureaucrats’ whims mandatory—and to censor those who disagree with their version of “the science.”

The WHO hopes to begin this power grab in May at its annual assembly in Geneva, where members will vote on proposed changes in international health regulations and a new treaty governing pandemics. Pamela Hamamoto, the State Department official representing the U.S. in negotiations, has already declared that America is committed to signing a pandemic treaty that will “build a stronger global health architecture,” which is precisely what we don’t need.

If we learned anything from the pandemic, it was the folly of entrusting narrow-minded public-health officials with wide-ranging powers. The countries that fared best, like Sweden, were the ones that ignored the advice of the WHO, and the U.S. states that fared best, like Florida, were the ones that defied the White House Coronavirus Task Force and the Centers for Disease Control. This wasn’t a new lesson. Previous research had shown that giving national leaders new powers to respond to a natural disaster typically leads to more fatalities and economic damage.

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Until the WHO acknowledges its pandemic blunders and holds China accountable, the U.S. should suspend any further financial contributions to the agency. It certainly shouldn’t enter into any agreement that gives the organization new powers and more money whenever its director declares a “potential public health emergency of international concern.” That would create the sort of perverse incentive that the economist Friedrich Hayek recognized decades before Covid. “‘Emergencies’ have always been the pretext,” Hayek wrote in 1979, “on which the safeguards of individual liberty have been eroded—and once they are suspended it is not difficult for anyone who has assumed emergency powers to see to it that the emergency will persist.” If the U.S. and other countries endorse the WHO’s power grab at the meeting in May, there will be many more emergencies in our future.

Colin Grabow ably defends – against Helen Andrews’s arguments – his assessment of the current condition of U.S. manufacturing. A slice:

Andrews counters that the rise in manufacturing output is largely a statistical quirk. Citing the work of economist Susan Houseman, Andrews argues that these gains were largely due to impressive increases in a single subsector — computers — and more reflected qualitative improvements in the products than production efficiency gains. Once computers are stripped out of the data, a bleaker manufacturing picture emerges.

“We weren’t making more stuff with fewer people,” Andrews writes. “[W]e were making less stuff.”

The assertion is false. As Houseman herself stated in a 2016 interview, manufacturing output was about 8 percent higher than in 1997 even with the computer industry excluded. Meanwhile, manufacturing employment declined over the same period by nearly 30 percent (approximately 17 million versus 12 million). That’s certainly making more stuff — modestly more, to be sure — with significantly fewer workers.

More importantly, while Houseman’s observations about the computer sector’s outsized contributions to output are interesting, they hardly invalidate US manufacturing’s performance in recent decades — especially when compared to other countries (which would face similar data issues). Computers are not a trivial or unimportant part of the US manufacturing sector. Just as their inclusion arguably paints a somewhat skewed picture, so would their exclusion.

Indeed, what’s the limiting principle to such logic? Would eliminating sectors that, due to changing societal or technological trends (trends that have nothing to do with trade), exert a disproportionate drag on manufacturing performance provide a more accurate portrayal of the sector’s health today?

For example, from 1997 to 2018 smoking rates among US adults nearly halved. Not surprisingly, US tobacco product manufacturing also experienced a sharp (nearly 73 percent) decline in real value-added. Similarly, decreases in paper and paperboard consumption in recent decades (When’s the last time you read a physical newspaper?) correlate with a 36 percent decline in the sector’s real value-added.

Should these and other manufacturing industries that have declined or disappeared through no possible fault of trade (the trend of dematerialization, for example) be excluded from the sector to produce a more accurate sense of domestic manufacturing’s resilience — one that would cast it in an even better light? Once one begins making such data adjustments, there’s no logical end.

David Henderson makes the long case for free trade.

GMU Econ alum Nikolai Wenzel warns of “the fatal conceit of national commercial policy.”

Steve Stewart-Williams – with help from a new paper by Amit Bhattacharjee and Jason Dana – explores why human beings are generally so awful at understanding basic economic realities. (HT Steve Hardy) Two slices:

Bhattacharjee and Dana make a persuasive case that laypeople’s views on economic questions routinely part company with those of the experts, and thus that folk economics – unlike folk physics, biology, and psychology – is systematically misguided.

Of course, in principle, the laypeople could be right and the experts wrong. But if I had to bet money on it, I know which way I’d go. Aside from anything else, it makes good sense that our untutored intuitions about economics would tend to fall short of the mark. Whereas humans have dealt with the physical, biological, and psychological worlds for as long as we’ve existed on this planet, not so the modern economic world. Thus, biological evolution hasn’t equipped us for it, and culture hasn’t either – not unless we’ve studied economics.

With that as backdrop, here are some excerpts from Bhattacharjee and Dana’s paper. Note that the excerpts only just scratch the surface of the paper’s contents. Other topics covered include the benefits of immigration, the problems with buying local, the fairness of CEO pay, the effects of markets on the environment, and criticisms of the degrowth movement. If you like the excerpts and want to read the whole paper, you can request a copy from the authors here.

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Protectionism

Among economic experts, the consensus that free trade (international or otherwise) is mutually beneficial and positive-sum is overwhelming and nearly universal. The benefits of economic specialization and division of labor increase greatly with population size, and extending these practices to a global scale allows everyone to benefit from the wealth and efficiency gains that arise when production reflects the comparative advantages of countries, regions, organizations, and individuals around the world. However, public perceptions of international trade are strikingly different: lay people tend to believe that importing cheaper foreign goods solely benefits the nations that export them while weakening domestic industry, overlooking the possibility that domestic consumers can also benefit from paying lower prices.

Scott Atlas talks with Alex Epstein about the moral case for fossil fuels.

The Editorial Board of the Wall Street Journal understandably fears the rising ranks of the U.S. government’s Army of the Environment. A slice:

The political model is FDR’s Civilian Conservation Corps, which paid Americans to work when nearly one in four were jobless. The U.S. now has a labor shortage, but the Biden Administration wants to mobilize more than 20,000 initially for the Climate Corps—and some 50,000 by 2031. Ms. Ocasio-Cortez and Massachusetts Sen. Ed Markey want the Climate Corps to employ 1.5 million over five years.

Aaron Brown unpacks “the bad science behind Jonathan Haidt’s call to regulate social media.”

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… is from pages 231-232 of George Will’s 2021 book, American Happiness and Discontents: The Unruly Torrent, 2008-2020 – a collection of many of his columns over these years; (the column from which the quotation below is drawn was originally published in the Washington Post on September 18th, 2015):

The saint who is [Pope] Francis’s namesake supposedly lived in sweet harmony with nature. For most of mankind, however, nature has been, and remains, scarcity, disease and natural – note the adjective – disasters. Our flourishing requires affordable, abundant energy for the production of everything from food to pharmaceuticals. Poverty has probably decreased more in the past two centuries than in the preceding three millennia because of industrialization powered by fossil fuels. Only economic growth has ever produced broad amelioration of poverty, and since growth began in the late 18th century, it has depended on such fuels.

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In this wonderful new video, John Stossel and Scott Lincicome bust six myths – peddled by the likes of Trump and Biden – about globalization.

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… is from my late, great colleague Walter Williams’s October 1979 essay in Reader’s Digest titled “The Shameless Roots of Minority Unemployment” (original emphasis; I can find no on-line version of this essay):

All the egalitarian rhetoric will not change the simple fact that some workers are less experienced, less productive – and therefore worth less (in wages) than others. This is especially true of the new worker. Forced by law to pay a wage that may be more than the new worker is worth, the druggist hires one stockboy instead of two; the garage owner hires two workers, not four – and hires the highest-skilled ones he can find.

DBx: But hey, (some of) the advocates of minimum wages mean well.

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GMU Econ alum Dominic Pino talks with Ed Gresser about the realities of the making of trade policy.

GMU Econ alum Benjamin Powell reports that Trump’s ignorant bleatings about trade can, alas, be good politics. A slice:

Supporters of Trump’s trade policies may be willing to bear the burden of higher prices and lower incomes if U.S. manufacturing jobs are protected. However, his trade policies apparently did not deliver on that either. Another new NBER study, by economists David Autor, Anne Beck, David Dorn, and Gordon Hanson, found that Trump’s tariffs did not increase employment in the regions of the newly protected industries. They also found that China’s retaliatory tariffs decreased agricultural employment in the United States.

Their study also pointed to why Trump continues to try to sway midwestern voters with his anti-trade rhetoric. Voters in districts with firms targeted for protection by his tariffs became “less likely to identify as Democrats, more likely to vote to reelect Donald Trump in 2020, and more likely to elect Republicans to Congress” despite the lack of economic benefits in the targeted industries and districts.

The political appeal of Trump’s rhetoric can be partially explained by voters’ difficulty in disentangling the effects of many individual economic policies. The bulk of President Trump’s domestic economic policies on taxation, regulation, drilling, and a host of other important issues were pro-growth and led to an economy that raised living standards for the middle class before the pandemic despite the drag caused by the trade war. Without a solid understanding of economics, voters hearing Trump’s rhetoric could easily confuse correlation and causation.

On April Fools’ Day, Alex Tabarrok ingeniously caricatures the vacuousness wrongheadedness of so much economic commentary that is regularly dispensed and widely believed to be wise and informed.

Marc Joffe has an excellent – and honest – idea for replacing Baltimore’s Francis Scott Key bridge.

Mark Pulliam reminds us of “the eternal folly of central planning.”

Jason Sorens isn’t buying the line that the U.S. government’s incontinent spending and officious intermeddling makes the U.S. economy more dynamic.

The Wall Street Journal‘s Editorial Board is unimpressed with the economic ignorance on display in Albany. Two slices:

You have to marvel at the enlightened economic thinking of New York politicians. Gov. Kathy Hochul and her Legislature are hashing out a deal as part of the state budget that would impose universal rent control while creating tax breaks for housing developers. Increase disincentives for investment, and then layer on subsidies. Genius.

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Extending rent control to market-rate apartments will compound the 2019 law’s damage and discourage new housing. Are Democrats in Albany trying to precipitate a local banking crisis by spurring massive write-downs on apartment buildings? Their plan could make New York housing uninvestable.

Boston Globe columnist Jeff Jacoby explains that “the border needs fixing, but not because migrants are dangerous.” Two slices:

Researchers have confirmed again and again that immigrants to the United States — authorized and unauthorized alike — are significantly less likely than native-born citizens to commit serious crimes or be in prison. For example, a peer-reviewed 2020 study published by the National Academy of Sciences found that “undocumented immigrants have substantially lower crime rates than native-born citizens and legal immigrants across a range of felony offenses.” Last month, Cato Institute scholar Alex Nowrasteh, who has been studying the connection between immigration and crime for years, released a new paper based on data from Texas, the only state that records the immigration status of people arrested and convicted of various crimes. His calculations established that the homicide conviction rate in Texas is 2.4 per 100,000 among undocumented immigrants — lower than the rate of 2.8 per 100,000 for native‐born citizens.

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It is likewise unconscionable to pretend that the violent crimes committed by an atypical sliver of those immigrants prove that immigrants are making the country less safe. Immigrants tend to be unusually law-abiding. True, there are appalling outliers. But public policy should be based on the rule, not the exceptions. Agitators like Trump and other nativists on the right harp on the exceptions because it advances their long-standing anti-immigrant agenda. Yet one could just as readily point to spectacular acts of goodness performed by unlawful migrants as a reason to throw the gates open.

On the day of the Boston Marathon terror attack, to mention just one notable local example, Carlos Arredondo instinctively ran toward the explosion, laboring without letup to rescue victims from the debris. In a famous photo, he can be seen helping to rush Jeff Bauman to an ambulance. To prevent Bauman, whose legs were shredded, from bleeding to death, Arredondo had the presence of mind to grip a protruding femoral artery and use his fingers to pinch it shut. Bauman might well have died had Arredondo not reached him in time. Arredondo was a Costa Rican native who entered the United States illegally when he was 19 years old.

For those of you who might be in or near Boston on Thursday, here’s a tweet from Jay Bhattacharya:

I’m giving a speech at @MIT this Thursday, April 4th on free speech. I will defend the idea that free speech is essential to scientific inquiry & advance and to keeping the public healthy. Admission is free.

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… is from page 59 of the 5th edition (2020) of Douglas Irwin’s excellent book Free Trade Under Fire (footnote deleted):

Protection had insulated less productive firms from foreign competition and allowed them to drag down overall productivity within an industry, whereas open trade weeded out inefficient firms and allow more efficient firms to expand. Thus, trade brings about certain firm-level adjustments that increase average industry productivity in both export-oriented and import-competing industries.

DBx: Remember this reality whenever you encounter claims that higher tariffs are an obvious means of enhancing America’s national security.

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This piece by Robert Zoellick – to appear in the April 2nd, 2024, print edition of the Wall Street Journal – is superb. It conveys an enormous amount of relevant facts and insightful analyses in relatively few words, with the help, I add, of the Cato Institute’s Colin Grabow (to whose important work Zoellick justifiably links). I wish that I could reproduce here Zoellick’s entire piece. Unable to do so, I share three choice slices:

America’s elderly presidential candidates want to return the country to a fantasy mid-20th-century past. Their mantra is to restore manufacturing. But neither understands modern manufacturing or how America can forge a dynamic and secure future.

The Cato Institute has reported that—contrary to conventional belief—U.S. manufacturing accounts for a larger share of global output than Japan, Germany, South Korea and India combined. America’s productivity is far ahead, too. In 2019, the value added by the average American manufacturing worker was $141,000, exceeding second-place South Korea by more than $44,000 a worker and China by more than $120,000.

Global markets reflect this strength. Between 2002 and 2021, U.S. manufacturing exports more than doubled, with sales second only to China, which dominated low-end production. Foreigners understand American industry better than Joe Biden or Donald Trump does; they invested $2.1 trillion in U.S. manufacturing, including $121 billion in 2021, before Mr. Biden’s subsidies.

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The U.S. economy’s evolution from agriculture to manufacturing and now to services reflects changes in what Americans buy. Today, that means spending on healthcare, entertainment, sophisticated equipment and education.

The Biden-Trump economy of nostalgia won’t lead to higher wages. Research by the Bureau of Labor Statistics and the Federal Reserve Bank of St. Louis shows that manufacturing workers earn less than the average private-sector worker. Manufacturing workers in higher-tech sectors, with greater productivity, fare better. These jobs benefit from trade, but Messrs. Biden and Trump fail to understand how a modern trade agenda can serve America’s interests and promote our values.

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Yet in the face of change, America’s two protectionist presidents retreated. Their formula has been to tax trade through higher tariffs, restrict the use of foreign inputs for American businesses, and bust the budget with hundreds of billions of dollars in subsidies. By directing patronage to favored causes and protecting others from competition, they are adding costs, limiting the country’s adaptability, and eroding U.S. financial resilience.