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… is from page 16 of my late colleague Gordon Tullock’s 1987 essay “Public Choice,” the original of which appeared in The New Palgrave: A Dictionary of Economics, and is reprinted in Virginia Political Economy, which is Vol. 1 of The Selected Works of Gordon Tullock (Charles K. Rowley, ed., 2004):

We do not expect businessmen to devote a great deal of time and attention to maximizing the public interest.  We assume that, although they will of course make some sacrifices to help the poor and advance the public welfare, basically they are concerned with benefiting themselves.  Traditionally economists did not take the same attitude towards government officials, but Public Choice theory does.  To simplify the matter, the voter is thought of as a consumer and the politician as a businessman/entrepreneur.  The bureaucracy of General Motors is thought to be attempting to design and sell reasonably good cars because that is how promotions and pay rises are secured.  Similarly, we assume that the government bureaucracy will be attempting mainly to produce policies which in the view of their superiors are good because that is how their promotions and pay rises are secured.

DBx: One may legitimately quibble with the specifics of the behavioral assumptions made by economists and by public-choice scholars; indeed, one may reject these assumptions wholesale and altogether.  Regardless, what one may not do if one wishes to maintain his or her legitimacy as a scholar or as a serious thinker is simply to assume that individuals in the government sector are motivated differently than are individuals in the non-government sector.  Nor may one assume that individuals in the government sector are generally more intelligent than are individuals in the non-government sector, or that individuals in the government sector have access to more and better information than do individuals in the non-government sector and that individuals in the government sector are better able, and with less bias, to process information than are people in the non-government sector.

Note also that when an economist talks about the motivations of, for example, a business person, that economist should be understood to be talking about a typical person operating in his or her capacity as a business owner or manager.  The particulars of whatever motivational assumptions the economist makes about the business person are not meant necessarily to describe also those of a business owner or manager in that person’s capacity as father, wife, neighbor, friend, or fellow club member.

Finally, and for the record, to make assumptions about the motivations of individuals in any of their various roles in life is not thereby to express normative approval of those motivations.  Likewise, to challenge the descriptive accuracy or the analytical usefulness of some assumed behavioral motivations is not thereby to express normative disapproval of those motivations.

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Here’s the subject line of a blast e-mail that I just received and that was blasted out under Newt Gingrich’s name:

President Trump is working for you, Don.

Receiving this e-mail reminds me of one of the reasons why I so thoroughly detest politics: it insults my intelligence.  Even overlooking all of its many other faults, politics remains insufferable because it’s so completely imbecilic.  It traffics in assertions that are either hilariously false or utterly meaningless.  Politicians and their operatives then expect those of us on the receiving end of their moronic assertions not only to believe these assertions to be true, but also to marvel at the amazingness of the politicians who, we are assured, regularly perform the unbelievable feats described by the assertions.

Politics is unalloyed idiocy treated even by – indeed, especially by – the intelligentsia as if it is a solemn and serious undertaking.  But it’s not.  Politics is overwhelmingly the domain of megalomaniacal frauds, liars, and con artists.

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The cronyist Jones Act – which is a special privilege granted by government to American shipbuilders and owners – is the subject of this excellent essay by Tom Grennes in U.S. News & World Report.  A slice:

By prohibiting the use of foreign-flag ships on coastal routes, the nearly 100-year-old Jones Act is an impediment to disaster responders, and for that reason, can only add to the damage done. To transport merchandise from one domestic port to another by water, the act requires the use of a ship that is American-built, American-owned, American-crewed and flies the American flag. This American-flag fleet is small and shrinking, and some of the ships have long-term contracts that prevent them from quickly responding to a disaster.

See also this Wall Street Journal editorial that rightly criticizes Trump’s inexcusable refusal to suspend the Jones Act – a suspension that would greatly speed and make less costly the relief efforts for the victims in Puerto Rico of hurricane Maria.  A slice:

Puerto Ricans pay dearly for this protectionism, which reduces competition and raises costs. A 2012 Federal Reserve Bank of New York report said the Jones Act helps explain why household and commercial goods cost roughly double to ship from the East Coast to Puerto Rico than to the nearby Dominican Republic or Jamaica. Food and energy costs are far higher than on the mainland.

Presidents of both parties have suspended the Jones Act to alleviate fuel shortages and enlist the aid of cheaper, foreign-flagged ships during previous emergencies. George W. Bush did it after Hurricane Katrina, and Barack Obama did so after superstorm Sandy. The Trump Administration followed after Hurricanes Harvey and Irma ripped through Texas and Florida in August and September.

The aftermath of Hurricane Maria is an even more urgent emergency. The Category 4 storm shut down electricity, destroyed crops, and has residents scrambling to obtain food and potable water. Many of the island’s 3.4 million residents may not have power restored for weeks. At least 10 people have died, and rescue operations will be needed for months. Allowing Puerto Ricans to import cheaper petroleum, equipment and bulk supplies would help.

Tim Worstall e-mailed to me this incisive observation:

Not waiving the Jones Act allows American shipowners and crew to continue to price gouge Puerto Rico.

Despite two hurricanes.

Consistency isn’t one of those things which happens in special interest politics, is it?

Special-interest politics – that is to say, nearly all politics – is consistent only in being inconsistent, sometimes fatally so, with the public interest.

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… is the closing paragraph of Ron Bailey’s excellent 2013 article “Can a Carbon Tax Solve Man-Made Global Warming?” (links added):

In 1988, [Nobel laureate economist Ronald] Coase argued, “The fact that governmental intervention also has its costs makes it very likely that most ‘externalities’ should be allowed to continue if the value of production is to be maximized.”  Considering how well governments afflicted by political conflicts of interest, chronic corruption, and inherent incompetence can be expected to execute a carbon tax, global warming is likely just such an externality.

DBx: Just as it is unscientific to ignore ‘externalities’ and other imperfections that exist in market settings, it is unscientific to ignore ‘externalities’ and other imperfections that exist in political settings.  Put differently, just as the ability to describe, scientifically, on paper how splendidly markets function when all conditions are ideal is no reason to believe that in reality markets function in the ideal way described on paper, the ability to describe, scientifically, on paper how splendidly governments function when all conditions are ideal is no reason to believe that in reality governments function in the ideal way described on paper.  As Ron Bailey explains in the article from which the above quotation is taken, many sound reasons exists to believe that any real-world regime of carbon taxes will be designed and implemented in ways that inflict net damage on humanity.  At the very least, to dismiss as unscientific or ideological those who argue as Ron argues is to exhibit strong evidence of a disposition that is itself unscientific or excessively ideological.

(Pictured above is Ronald Coase.)

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Here’s a letter to the Wall Street Journal:

In “The $15 Minimum Wage Crowd Tries a Bait and Switch” (Sept. 26) David Neumark explains the challenges facing today’s minimum-wage researchers.  Yet the difficulty of quantifying the consequences of minimum wages is even more daunting than Prof. Neumark’s excellent essay reveals.

First, because minimum wages in the U.S. have been in place for more than a century (Massachusetts enacted the first American one in 1912) and have consistently risen over time, employers long ago learned to adjust to their existence.  Business decisions – especially the choice of how much labor to use relative to machines – are made with the expectation that minimum wages will rise.  Thus, because firms adjust the sizes of their work forces in anticipation of minimum-wage hikes, measuring changes in employment after any given minimum wage hike fails to account for the jobs that were never created because employers expected the minimum wage to rise.

Second, while fewer jobs for low-skilled workers is a chief and especially unfortunate result of minimum wages, it isn’t the only negative result.  Many other responses to minimum wages are possible instead of, or along with, reduced employment opportunities.  My colleague Dan Klein offers some examples: the extent and difficulty of work duties grow; flexibility in employee scheduling lessens; fringe benefits and on-the-job training decrease; lockers, free food, and other amenities for workers are cut; workplace safety, comfort, and amiability decline.  Because most of these other possible downsides of minimum wages are practically impossible to capture in empirical data, studies of minimum-wages’ effects almost certainly underestimate the harm inflicted on low-skilled workers by minimum wages.

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 282 of Bruce Benson’s indispensable 1990 volume, The Enterprise of Law: Justice Without the State (footnotes deleted):

Politically dictated rules are not designed to support the market process; in fact, government-made law is likely to do precisely the opposite.  As [Bruno] Leoni explained: “Even those economists who have brilliantly defended the free market against the interference of the authorities have usually neglected the parallel consideration that no free market is really compatible with a law-making process centralized by authorities.”  Indeed, it appears that the increasing centralization of law-making has been associated with increasing transfers of property rights from private individuals to government or perhaps, more accurately, to interest groups.  In other words, public production of law undermines the private property arrangements that support a free market system.

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Nearly 13 years ago the Washington Post published this short and, unfortunately, still-relevant letter of mine:

Robert J. Samuelson argued that the federal government should protect Boeing against a government-subsidized Airbus, even though he conceded that Boeing “has been grossly mismanaged” [op-ed, Dec. 8].

Protecting a “grossly mismanaged” firm from competition is an odd way to boost its competitive energies. Protection is more likely to drain than enhance these energies. More ominously, protection makes firms more dependent on government favors rather than consumer demand.

As William Bourke Cockran, the New York congressman who was a political mentor to Winston Churchill, remarked, “The necessary effect of free trade is, therefore, to encourage efficiency in production, while the necessary effect of protection is to encourage skill in corruption.”

DONALD J. BOUDREAUX
Burke

(I cannot find a link to the Samuelson op-ed.  Nor can I now find the physical document that I recall having and from which I took this splendid quotation.)  UPDATE: Thanks to Mark Cancellieri for finding a link to Samuelson’s column, and to Stephen Wilkes for reminding me that the Cockran quotation is from page 193 of a 1925 collection of essays and speeches by Cochran titled In the Name of Liberty.

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Deirdre McCloskey nicely summarizes her theory of what did, and what didn’t, cause modern prosperity.

I agree with Tyler Cowen that sporting events are not appropriate occasions “for escalating patriotic loyalty tests.”  A slice:

Anthem practices shouldn’t be viewed as sacrosanct, and no one would think the absence of an anthem unpatriotic if expectations were set differently. Professional sports don’t start their competitions with the Pledge of Allegiance, and that is hardly considered an act of treason. Nor do we play the anthem before movies, as is mandatory in India. Furthermore, “The Star-Spangled Banner” wasn’t sanctioned by Congress as our national anthem until 1931. Earlier in the history of baseball, the anthem was played during the seventh-inning stretch. It was only during World War II that the anthem was played regularly at the beginning of each game, rather than for special games alone, such as the World Series.

Ron Manners reminds us of the late, great Leonard Read.

I was pleased and honored two weeks ago to speak at Northwood University’s annual Freedom Week.  Here’s a video of my talk, which was on trade.  (Many thanks to Alex, Kristin, Eli, and all the others at Northwood for inviting me to participate and for making my visit so pleasant.)

Respect for authority can be (and, as history teaches, often is) extraordinarily uncivilized and brutal.

My colleague Walter Williams laments, in his words, that “[m]any colleges have become hotbeds of what might be labeled as enlightened racism.”

N.C. State economist Tom Grennes is no fan of the Jones Act.  See also Scott Shackford.

My Mercatus Center colleagues Matt Mitchell and Tad DeHaven wonder if Trump will, in his tax-reform efforts, really stand up to special-interest groups.

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Regular readers of Cafe Hayek know that I’m very keen on the distinction between law and legislation.  (It’s a distinction that I learned long ago from F.A. Hayek’s 1973 book, and that Hayek himself learned from Bruno Leoni.)  The distinction is straightforward, but one that is too-little known and appreciated: a law is one among that vast set of undesigned and evolved rules of interpersonal behavior that we follow because members of our community expect us to follow these rules.  A piece of legislation is a command issued by the state.

Recognition of this distinction between law and legislation, as well as of its descriptiveness of reality, does not thereby necessarily create a normative preference for law over legislation or vice-versa.  Any such preference depends upon the evaluation of the merits of one method of governing human interactions compared to the other method of governance.

Those of us who believe that individuals acting on their own initiative are usually quite creative at devising ways to peacefully and productively cooperate with each other tend to see value in evolved law, for law both emerges from these cooperative efforts and, also, helps to guide such efforts.  And this admiration for law becomes an even stronger ‘preference’ for law over legislation the more one distrusts the abilities of some human beings to productively disrupt and alter with conscious commands the law-guided interactions of other human beings.  In contrast, those people who have a dim view of most individuals’ capacities to act for themselves and toward other individuals in productive ways tend to admire legislation, for legislation at least opens up the possibility that the best and the brightest amongst us will be given the authority to ensure that the masses of us behave toward ourselves and toward each other productively rather than destructively.

Yet just as those who ‘prefer’ legislation must admit that legislation sometimes goes awry – I offer Jim Crow legislation as a classic example – those of us who ‘prefer’ law must admit that law sometimes goes awry.  (Hayek, it is worthwhile pointing out, while ‘preferring’ law, explicitly recognized that instances of law will not always be acceptable and, hence, he endorsed the use of legislation to replace law in those instances.)  It recently occurred to me that so-called “price gouging” in most communities is unlawful – or, at the very least, borders on being unlawful – even when it is not prohibited legislatively.

Although I personally believe opponents of “price gouging” to be mired in intellectual error about the cause and consequences of sudden and dramatic hikes in prices, the fact seems to be that in most communities the widespread expectation is that merchants will not raise prices substantially in the wake of natural disasters.  See, for example, this essay by Mike Munger.  In it, Mike documents people’s widespread approval of government intervention to prevent “price gouging” even though that intervention reduced the inflow into the community of much-needed supplies.

“Price gouging” seems to be against the law in most communities – again, even in those communities in which it is not prohibited by legislation.  If there were a community of economists and libertarians, “price gouging” there would be perfectly legal.  But in real communities – in real cities and towns – the current widespread expectation is that merchants will, as they say, “keep the lid” on prices.

I wish the law in these communities were different.  Given my understanding of economics and of my strong normative support for free markets, I wish that “price gouging” were widely accepted and, hence, that it were lawful.  Yet I must admit that “price gouging” is generally unlawful.  This law against “price gouging” is, I’m quite certain, a bad law; it harms most of those people who support and enforce it with their reactions to it.  But changing the law is even more difficult than changing legislation.  After all, legislation is under some individuals’ (and, occasionally, some individual’s) conscious control.  Law is never under any individuals’ (or individual’s) conscious control.  Law exists, spread out, in the hearts and minds of individuals.  To change the law requires the changing of hearts and minds.

….

In light of the above, is it unlawful in the United States to refuse to stand quietly when the national anthem is played?  (Note that laws are often enforced, not with physical restraints or compulsion, but with social disapproval.)