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… is from page 76 of Liberty Fund’s 2017 expanded English-language edition, expertly edited by David Hart, of Frédéric Bastiat’s indispensable work Economic Sophisms and “What Is Seen and What Is Not Seen”; specifically, it’s from Bastiat’s essay “A Conflict of Principles” (“Conflit de principes”) (original emphasis):

To command consumers by law, to force them to buy only in the national market, is to infringe on their freedom and to forbid them an activity, trade, that is in no way intrinsically immoral; in a word, it is to do them an injustice.

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… is from pages 458-459 of Book IV, chapter ii, of the 1981 Liberty Fund edition of Adam Smith’s 1776 masterwork, An Inquiry Into the Nature and Causes of the Wealth of Nations (emphasis added):

The natural advantages which one country has over another in producing particular commodities are sometimes so great that it is acknowledged by all the world to be in vain to struggle with them.  By means of glasses, hotbeds, and hot walls, very good grapes can be raised in Scotland, and very good wine too can be made of them at about thirty times the expence for which at least equally good can be brought from foreign countries.  Would it be a reasonable law to prohibit the importation of all foreign wines merely to encourage the making of claret and burgundy in Scotland?  But if there would be a manifest absurdity in turning towards any employment thirty times more of the capital and industry of the country than would be necessary to purchase from foreign countries an equal quantity of the commodities wanted, there must be an absurdity, though not altogether so glaring, yet exactly of the same kind, in turning towards any such employment a thirtieth, or even a three-hundredth part more of either.  Whether the advantages which one country has over another be natural or acquired is in this respect of no consequence.  As long as the one country has those advantages, and the other wants them, it will always be more advantageous for the latter rather to buy of the former than to make.  It is an acquired advantage only, which one artificer has over his neighbour, who exercises another trade; and yet they both find it more advantageous to buy of one another than to make what does not belong to their particular trades.

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Here’s a letter to the Wall Street Journal:

Michael Saltsman reports that San Francisco City Supervisor Jane Kim worries that automation, by eliminating large numbers of particular jobs in coming decades, will lead to chronic unemployment.  And so Ms. Kim wants to tax employers each time they replace workers with robots or algorithms (“San Francisco’s Problem Isn’t Robots; It’s the $15 Wage Floor,” Nov. 25).

Never mind that labor-saving innovations have been destroying particular jobs since the invention of the lever and the wheel without yet causing chronic unemployment.  Quite the opposite, in fact: the number of paid jobs is today at an all-time high (as are global living standards).  The number of people with paid jobs is now 3.3 billion, a figure more than three times larger than the total population of the world at the dawn of the industrial revolution – a revolution that greatly accelerated the invention and use of labor-saving technologies.

Instead, note the irony of Ms. Kim’s proposal: her tax taxes job creation.  First, taxing employers for replacing workers with technology will dissuade employers from creating jobs to begin with.  Entrepreneurs who know that they’ll be penalized whenever they use technology to improve the efficiency of their operations are less likely to launch firms to begin with or, if their firms are already launched, to expand.  Second, with such a tax, when firms do launch or expand they’ll do so using more technology (and less labor) than they would use absent such a tax.  This tax will create, among firms that launch or expand, an artificial bias in favor of capital-intensive operations – a result opposite the one that Ms. Kim presumably intends.

If Ms. Kim really wants to tax activities that destroy jobs, she should tax the counterproductive schemes that she and her fellow city officials embrace – schemes such as minimum-wage legislation and this hare-brained tax.

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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Here’s this year’s crop of outstanding, newly minted – or very soon to be newly minted – GMU Econ PhDs who are on the academic job market.

Bob Higgs revisits the idea of the consent of the governed.  A slice:

When the North American revolutionaries set out to justify their secession from the British Empire, they declared, among other things: “Governments are instituted among Men, deriving their just Powers from the Consent of the Governed.” This sounds good, especially if one doesn’t think about it very hard or very long, but the harder and longer one thinks about it, the more problematic it becomes.

One question after another comes to mind. Must every person consent? If not, how many must, and what options do those who do not consent have? What form must the consent take—verbal, written, explicit, implicit? If implicit, how is it to be registered? Given that the composition of society is constantly changing, owing to births, deaths, and international migration, how often must the rulers confirm that they retain the consent of the governed? And so on and on. Political legitimacy, it would appear, presents a multitude of difficulties when we move from the realm of theoretical abstraction to that of practical realization.

Did Republicans obstruct the implementation of Obamacare with sabotage?

Jordan Candler explains why he was thankful last Thursday.

GMU Econ alum Ninos Malek explores intentions.

Richard Rahn busts some myths about tax rates and government-budget deficits.

Speaking about myths about taxes, Chris Edwards investigates the U.S. Senate’s tax-reform proposal.

Richard Epstein says let them bake cake!

Here’s the latest podcast from Reason.

My Mercatus Center colleague Dan Griswold is unimpressed by Trump’s effort to redefine ‘reciprocal trade.’

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… is from pages 306-307 of the late University of Washington economist Paul Heyne‘s 1995 article in Agenda titled “Teaching Introductory Economics,” as this article is reprinted in the 2008 collection of Heyne’s writings, “Are Economists Basically Immoral?” and Other Essays on Economics, Ethics, and Religion (Geoffrey Brennan and A.M.C. Waterman, eds.) (original emphasis):

But the genuinely useful light that economics sheds does not fall on the economizing process; it illuminates the process of exchange.  Just about everyone knows how to economize, and does so effectively.  What people do not know and what economics can explain for them is how millions of economizing people, each one pursuing his or her own interest, manage to cooperate effectively despite the fact that they are all substantially ignorant of what others want or can do.  The fundamental problem of economics is not so much scarcity as a multitude of interdependent projects that somehow have to be coordinated.

DBx: Yes.  Deirdre McCloskey frequently points out that even grass economizes.  As necessary as economizing is to survival and to growth, it’s not the sole or even the chief activity of human beings engaged in “economic” activities.  What are central are exchange and innovation.  Efforts to create and to use new opportunities for exchange can be modeled as economizing activities.  Ditto for efforts to innovate.  But viewing these efforts through an ‘economizing’ lens blinds us to the creativity of these efforts.  Using only the economizing lens leads us to mistake creativity for mechanical adjustments, and to see the details of exchange as pre-programmed while, in fact, they had to be figured out and made possible by the parties involved.

Markets themselves – exchange opportunities – the many different and nuanced ways that we contract with each other – the division of labor that exchange makes possible, and the enormous prosperity that these processes generate are taken for granted.  Every denizen of the modern world is the fortunate beneficiary of a stupendously complex and productive emergent order of market exchange – an order that works so remarkably smoothly and well that we notice not its successes, which occur every moment of every day, but its hiccups. And we panic at each hiccup, rushing to prescribe ill-thought-out remedies that typically prolong the hiccups or that even worsen them.

If you are reading my words now, you are – every day of your life – the beneficiary of the creativity and efforts of billions of people, each of whom has somehow managed to have his or her activities coordinated with those of billions of other individuals in a process that results in the food that you eat, the clothes on your body, the furniture in your home and workplace, the marvelous motorized transportation that you use daily without ever bothering to marvel at it, and the indoor plumbing and solid roofs and hard floors and electrical power that ensures that your home and workplace is clean and comfortable.  This globe-spanning, incredibly complex market process is designed by no one and operated by no one.  It, as a whole, is undirected by conscious effort.  It is not a thing to be engineered; it is not a thing that could possibly be successfully engineered.

Economists’ core duty is to study and to explain the logic of this emergent order of exchange and innovation – and to help the general public better appreciate its reality and marvelousness.

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… is from page 55 of the 2012 revised edition of Steven Landsburg’s 1993 book, The Armchair Economist (original emphasis):

I want to create another version of the game, in which students produce consumption goods for one another.  In one class, students bake brownies; in another they do each other’s laundry.  Halfway through the semester, I would lower trade barriers and allow students from one class to exchange services with those of the other.

This “international” version of the game would convey two valuable lessons.  One is that trade expands opportunities.  The second, and more important, is that trade is beneficial not because you get to export but because you get to import.  The export business is the downside of international trade.  You don’t enjoy doing the other class’s laundry but you do enjoy eating their brownies.

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Here’s a letter to a new correspondent:

Mr. Will Chaiprasit

Mr. Chaiprasit:

Thanks for your e-mail.

You ask if I “deny there is export led growth.”  No, I do not deny it.  But I do insist that care must be exercised when interpreting the meaning of this frequently heard claim.

Economic growth requires increases in production, and significant increases in production require increases in specialization.  Increases in specialization, in turn, require increases in trade.  If, for example, you specialize in producing ball-bearings, you’ll prosper only if you have lots of people to trade with – not only buyers willing to purchase your ball-bearings, but also many sellers willing to supply you with goods and services the consumption of which improves your standard of living.  If you produce and sell more and more ball-bearings but never spend your earnings on consumption goods, then you make other people wealthier (namely, those who buy your ball-bearings) but make yourself poorer (you work and work but take nothing for yourself in return, other than money that you render personally useless by refusing to spend it).

The people of a country can indeed grow more prosperous by specializing in producing goods and services and then exporting some or all of those goods and services to foreigners.  But this increased production and selling makes these producers more prosperous only if these producers eventually spend their earnings, as consumers, on goods and services that they import from foreigners.  A people who export more for the sake of importing more grow wealthier; a people who export more only for the sake of exporting more grow poorer.

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 remarks delivered by James Madison in the United States House of Representatives on April 9, 1789; these remarks are quoted on page 70 of Douglas A. Irwin’s hot-off-the-press (2017) Clashing Over Commerce:

I own myself the friend to a very free system of commerce, and hold it as a truth, that commercial shackles are generally unjust, oppressive and impolitic – it is also a truth, that if industry and labour are left to take their own course, they will generally be directed to those objects which are the most productive, and this in a more certain and direct manner than the wisdom of the most enlightened legislature could point out. Nor do I think that the national interest is more promoted by such restrictions, than that the interest of individuals would be promoted by legislative interference directing the particular application of its industry.

DBx: Madison was not a complete unilateral free trader. Like all politicians, he in practice compromised on the question. And in principle Madison, as Irwin points out, held there to be three exceptions to the case for free trade – exceptions that, Madison believed, justified tariffs:

(1) tariffs to raise revenues for the national government;

(2) tariffs to protect American shipping;

(3) tariffs to promote the government’s ability to supply national defense.

What is notable about these exceptions is how limited they are.  The first and the third exceptions are fully consistent with the economic understanding that trade restrictions are economically costly.  (Keep in mind that revenue tariffs better serve their purpose of raising revenue the less they discourage imports.) And about the third exception Madison had, as Irwin notes, doubts about its practical relevance. Irwin quotes Madison from the same April 9th speech in Congress: “[t]here is good reason to believe that, when it becomes necessary, we may obtain supplies from abroad as readily as any other nation whatsoever.”

Only the second exception – which likely has some national-defense element in it – is one that is inconsistent with the foundational case for free trade. Yet, being focused on only one particular industry, this exception is very narrow.

(The full text of Madison’s April 9th, 1789, Congressional speech can be found here by scrolling down.)

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… is from a note sent today on Facebook Messenger by Art Carden (and shared here with Art’s kind permission); in it, Art comments upon the bizarre ethics of many modern “Progressives”:

Somehow, there is blood on your hands if you refuse to fork over to a health care bureaucracy, but gulags…well, you have to break some eggs to make an omelet, though.