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… is from page 128 of the 2013 Palgrave reprint of the 1932 4th edition of A.C. Pigou‘s famous (among economists) magnum opus, The Economics of Welfare (original emphasis):

He [Adam Smith] would not have quarrelled with the dictum of a later economist [Vilfredo Pareto, in Manuale di economia politica] that “the activities of man are expended along two routes, the first being directed to the production or transformation of economic goods, the second to the appropriation of goods produced by others.”  Activities devoted to appropriation obviously do not promote production, and production would be promoted if they were diverted into the channels of industry.  We must, therefore, understand him to assume the existence of laws designed, and, in the main, competent, to prevent acts of mere appropriation, such as those perpetrated by highwaymen and card-sharpers.

DBx: Pigou here, and Pareto whom he quotes, recognized the reality of rent-seeking.  This reality only later began, with important work by my late colleague Gordon Tullock, to be studied analytically by economists.

Pigou failed to add – but should have added – politicians to his list of highwaymen, card-sharpers, and others who engage in acts of “mere appropriation.”  If Jones as a private citizen puts a gun to my head and threatens to shoot me if, whenever I buy a foreign-made good, I don’t pay to him the sum of money he demands, he is clearly engaged in an act of mere appropriation.  It’s an act that diverts valuable resources from production to appropriation (and to efforts to guard against appropriation).  Yet nothing of substance is changed if Jones does the very same thing but only now as an official of the state.

(Pictured above is Pigou.)

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Here, in no particular order, are some of my further thoughts on what I believe many people get wrong or miss about the peaceful protests of many NFL players during the playing of the national anthem, and of Trump’s ignorant response.

– Contrary to the implication of many pundits, the fact that most of the protesting NFL players are millionaires is utterly irrelevant.  Everyone from the poorest pauper to the richest billionaire is a human being who has a right to express his or her thoughts in whatever peaceful ways he or she chooses.

– To defend the right of people to peacefully express their opinions is not thereby to express or to imply agreement with the protestors on the substantive issues at stake.

– Earning a living – even a magnificently high-paying living by playing a game – is not, contrary to Trump’s assertion, a “privilege.”  Instead, it’s the result, in a market economy, of a voluntary contract between an employer and the employee.  We do not earn our livings by the good graces, and through the generous permission, of the state.  To put the matter mildly, government is no more responsible for the existence of such employmment opportunities than are countless, mostly unseen actions of millions of other individuals.  In the case of NFL players, for example, the owners and executives of the National Football League are far more directly responsible for these players’ opportunities to earn handsome salaries and great fame than is Uncle Sam, and yet, correctly, no one believes that NFL players should pay homage to the NFL logo or to any theme song that the NFL might declare to be its anthem.  (My dear friend Kerry Dugas reminds me that the NFL benefits from much government cronyism.  I agree, but that fact is even more reason not to insist on paying homage to symbols of the state.)

– I agree that Donald Trump has as much of a right as do others to peacefully express his opinions.  But this fact does not render invalid or hypocritical any criticisms of the substance of Trump’s expressed opinions.  Specifically here, it is both correct and appropriate to criticize Trump for asserting (as he did in his now-infamous tweet) that individuals who earn millions of dollars in private employment “should not be allowed to disrespect our Great American Flag (or Country) and should stand for the National Anthem.”  Put differently, it is perfectly correct and appropriate to criticize Trump for suggesting that a condition for holding a high-paying private-sector job in America is that those who hold such jobs show what is widely held to be minimum proper deference to symbols of the state.

– Whatever the merits or demerits of Trump’s or of anyone else’s opposition to NFL players’ protests, if anyone is genuinely bothered by actions that ‘disrespect’ America, that someone should have in his or her sight a far larger and more significant target, namely, members of Congress and other government officials who regularly disrespect the Constitution by ignoring and violating it.  Where’s the criticism of members of Congress who mock the Constitution by pretending to find in that document the authority to do what that document does not authorize them to do, such as (to pick only a few examples) subsidizing farmers, using tax dollars to fund a government-run pension scheme, preventing workers from agreeing to work at hourly wages below a government-set minimum, and restricting the amount of resources that private individuals may contribute to political campaigns?  In this light it’s fair to ask: Do professional athletes who refuse to stand for the playing of the national anthem undermine and ‘disrespect’ America’s core values anywhere nearly as much as these values are undermined and disrespected by the countless government officials, elected and appointed, who daily act in disregard for the Constitution that each of them took a solemn oath to uphold?

UPDATE: One other point: I’d have no objection at all, as a matter of principle, to either the NFL as a league, or to any individual NFL franchise, insisting that a condition of employment is that the player stand for the playing of the national anthem.  While such a condition of employment in the NFL would make me less likely to watch NFL games – because I detest state-worship – I also recognize that it’s none of my business what conditions of employment the NFL voluntarily agrees to with its workers.  (By the way, I myself never pledge allegiance to any flag or sing any national anthem, although when such statist ceremonies are conducted in my presence I stand for them in order not to embarrass whoever is my host who brought me to whatever event might begin with such ceremonies.)

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… is from page 12 of Deirdre McCloskey’s essay “Max Weber Was Wrong,” which appears in the November 2017 issue of Reason:

Now Weber was a very learned and intelligent scholar.  After all, he gave us the true definition of government, namely, a monopoly of the legitimate use of physical force within a given territory.  It is a definition as full and accurate as it is sadistically useful for torturing our mild social democratic friends in Sweden or Massachusetts, who like to believe that the government is a festival of kindly collectivism, sort of like a loving family.

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Here’s a letter to the Washington Examiner:

You report that Donald Trump tweeted: “If a player wants the privilege of making millions of dollars in the NFL, or other leagues, he or she should not be allowed to disrespect our Great American Flag (or Country) and should stand for the National Anthem” (“Trump: Players with ‘privilege’ to make millions in NFL should not be allowed to ‘disrespect’ the USA,” Sept. 24).

This past January 20th Trump took an oath to “preserve, protect and defend the Constitution of the United States.”  Apparently he didn’t read the document that he solemnly swore to uphold.  Nowhere in the Constitution, or in any of the vast accretion of Anglo-American common law upon which that document rests, is there the faintest hint that an individual’s freedom to earn a living requires that individual to pay homage to – or even to refrain from showing disrespect toward – flags and other symbols of the state.  Indeed, the spirit of both the American Declaration and the Constitution is that individuals are and ought to be free from any pressure applied by government to express or to not express themselves in whatever peaceful ways they choose and for whatever reasons they have.

The irony of a sitting president of the United States’s ignorant – and, we might say, un-American – outburst against NFL players’ peaceful refusal to show ‘respect’ for the national anthem is that this very outburst only further justifies peaceful protests, such as those by the players, against the words and actions of the likes of Trump and other such officials who, it seems, would have us behave as forelock-tugging supplicants before the state and all of its officialdom.

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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Deirdre McCloskey celebrated her 75th birthday on September 11th.  My colleague Pete Boettke marked the occasion.  A slice:

Many years ago she [McCloskey] published a wonderful collection How to Be Human Though an Economist which I highly recommend, and which I reviewed very favorably in the now defunct Humane Studies Review for the Institute for Humane Studies.  The important point to always remember is that liberalism is liberal, it is a vision of a system that exhibits neither discrimination nor dominion, it promises to break all bonds of oppression, it unleashes the creative powers of a free civilization, it is a doctrine of freedom of thought, freedom of association, freedom of contract, and peaceful relationships among all.

And here’s Pete on F.A. Hayek’s epistemic liberalism.

George Will finds insight in my colleague Tyler Cowen’s The Complacent Class.

John Tamny riffs on the work of the great Bastiat.

Gary Galles reminds us of the depth and brilliance of Lord Acton.

Andrew Heaton and Reason TV have read Hillary Clinton’s What Happened so that we don’t have to.

Here’s the conclusion to Bob Higgs’s latest inspiring and insightful essay at The Beacon:

Thank God for the entrepreneurs, both those who immigrate from distant lands and those who work among us every day to keep the wheels of commerce rolling. Today’s world is utterly reliant on entrepreneurs. Their willingness to bear risks and their skill in appraising how they might best serve consumers make life possible, not to mention comfortable and often delightful, for the earth’s huge human population. They are at work everywhere—in the USA, in Mexico, and in the enormous movement of goods and services between these two great economies.

It is nothing short of tragic, as well as utterly foolish, that the Trump administration is devoting itself to impeding and distorting such commercial entrepreneurship between the USA, Mexico, and other countries. Let us hope that even in Washington, D.C., some of the economic dullards and political opportunists will rouse themselves and decide to desist from their current, destructive policies.

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Yesterday I spent the morning with The Fund for American Studies president, and my long-time friend, Roger Ream and his wife, Mary Kay.  Over coffee we touched briefly on so-called “price gouging.”  Roger had an insight that I’d never before encountered.  Roger asked: “What about the many merchants who lose consumer demand as a result of natural disasters?  Where’s the criticism of the consumers who greedily and suddenly ‘force’ those merchants to lower their prices, perhaps in some cases all the way to zero?  Where’s the outrage?”

Roger’s point is excellent.  While natural disasters cause the demand for many goods and services to rise (and, simultaneously, also cause the supplies of these goods and services to fall), every geographic area struck by a hurricane or other natural disaster also has within it markets for some goods and services in which demand collapses because of the natural disaster.  Consider, for example, a movie theater that suffers no physical damage because of the disaster.  With residents of the stricken area dealing with the natural disaster, many fewer residents go to this theater than would go in the absence of the natural disaster.  Perhaps so few people go to the theater that the theater owner simply shuts down for several days, earning during those days $0 revenue per seat even though a mere week earlier that owner expected to earn $11 per seat on the sale of many seats.  Where’s the outrage at the greediness of movie goers who now refuse to pay $11 per seat to watch movies a this theater?

Or perhaps the theater keeps operating, but for several days following the natural disaster discovers – because the demand for watching movies has fallen significantly – that its profit-maximizing price-per-seat is $2 rather than $11.  Is each consumer who pays $2 (rather than $11) to watch movies at this theater doing whatever the mirror-image of ‘price gouging’ might be called?  Should government legislate that any consumer will be fined or even jailed if he or she is caught, in the wake of a natural disaster, paying prices substantially lower than were the prices that consumers paid before the natural disaster struck?

The point is germane: if in the wake of natural disasters government penalizes merchants for exchanging goods and services at unusually high prices voluntarily paid by consumers, that same government should also penalize consumers for exchanging goods and services at unusually low prices voluntarily accepted by merchants.  And in both cases the self-important government officials can go on television and radio and denounce the “greed” that, in their economically uninformed opinions, “cause” these prices to differ greatly from these prices’ pre-natural-disaster levels.

Admittedly, in reality the incidence of prices made unusually low by natural disasters is much less than of prices made unusually high.  Natural disasters are spectacularly good at destroying supplies and disrupting supply lines.  But it is not difficult to think of plausible examples of goods and services the demands for which fall so far, and the supplies of which are relatively unaffected, because of natural disasters that the disaster-induced market-clearing prices of these goods and services fall far below their ‘regular’ levels.

One real-world example that just occurs to me is tour-guides on Key West.  I heard several days ago on the radio a Key West tour guide interviewed.  This tour guide expressed worry that, because of the damage caused by hurricane Irma, he’ll not be back to full-time work for several months.  Should consumers be fined for greedily not now purchasing this tour-guide’s services in quantities and at prices that they would have agreed to had not Irma struck south Florida?

Here’s another plausible example from Roger, one that he sent to me by e-mail:

Prior to a storm, there are no doubt vendors of perishable goods who cut prices to reduce their inventories and minimize subsequent losses.

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… is from pages 372-373 of David Boaz’s excellent 2015 book, The Libertarian Mind:

My ideal community would probably not be your utopia.  The attempt to create heaven on earth is more likely to produce hell, because we have different ideas of what heaven would be like.  As our society becomes more diverse, the possibility of our agreeing on one plan for the whole nation becomes even more remote.  And in any case we can’t possibly anticipate the changes that progress will bring.  Utopian plans always involve a static and rigid vision of the ideal community, a vision that can’t accommodate a dynamic world.  We can no more image what civilization will be like a century from now than the people of 1900 could have imagined today’s civilization.  What we need is not utopia but a free society in which people can design their own communities.

DBx: Yes.

One of the many mistaken beliefs about libertarianism and classical liberalism is that their opposition to central and large-scale planning by government implies an opposition to all planning.  In fact, libertarian and classical-liberal opposition to central and large-scale planning is, on its flip side, support for more and better planning – that is, planning by individuals, households, and firms and other voluntarily formed organizations.  Under a regime of private property and contract rights, and the free markets that this regime gives rise to, an unplanned ecosystem of planning emerges spontaneously.  The sizes of different sorts of plans – everything from lemonade stands to automobile manufacturers and giant retailers – are tested and discovered by markets, with, over time, only those particular planning arrangements whose benefits exceed their costs surviving, but surviving only as long as their benefits continue to justify their costs.

Economic planning by government substitutes one large, rigid, and poorly tested plan (or a small handful of such plans) for a vastly larger number of smaller, flexible, and constantly tested plans.  In doing so, economic planning by government substitutes centralized stupidity for decentralized intelligence (even if the centralized stupidity comes camouflaged as brilliance).

Put differently, true champions of diversity reject planning by government and celebrate the dynamism and manifold varieties of plans, actions, and outcomes generated by free markets.

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Solid, vast, and clear evidence of racism is dismissed as mistaken and unreliable if the persons charged, using this evidence, with being racists are “Progressive.”  Non-existent evidence of racism is elevated into incontrovertible truth if the persons charged, using this non-existent evidence, with being racists are classical-liberal advocates of a society grounded in private property and free markets.

Jonathan Haidt could write a long volume devoted exclusively to a study of the shabby treatment of Thomas Leonard’s great book, Illiberal Reformers, and the silly applause offered for the carelessly researched, utterly shoddy, and absurd concoction of factual and logical fallacies that is Nancy MacLean’s Democracy in Chains.

(See also this related Cafe Hayek post.)

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… is from page 279 of my late Nobel laureate colleague Jim Buchanan‘s 1987 paper “Market Failure and Political Failure,” as this article is reprinted in James M. Buchanan, Federalism, Liberty, and Law (2001), which is volume 18 of the Collected Works of James M. Buchanan:

The theoretical welfare economists of mid-century … assumed, implicitly, that the political alternative to the unimpeded operation of the market itself operated ideally.  That is to say, it was simply presumed that “failures” in market arrangements could be ideally corrected by politically directed adjustments in the rules guiding market participants.

The prospect that any feasible political corrective for market failure might also fail when compared against the ideal standard of efficiency was not examined.

DBx: Unfortunately, the typical economist today continues simply to assume that government will perform ideally, or perform at least better than the market arrangements that government replaces or modifies with its interventions.  One of the ways that ECON 101, as still taught today, does indeed mislead students is that, with rare exception, public-choice considerations are ignored.  I cannot now find a link to the paper (or papers) that Jim Gwartney recently wrote on the matter, but Gwartney and co-authors examined all of the leading principles-of-economics textbooks and discovered that precious few of them incorporate public-choice into their analyses.  (Gwartney’s own great textbook is the most notable of the few exceptions.)

It is not science to point to real (or, often, imagined) market failures and then show with this model or that how a god-like agent from above can ‘solve’ the problem.