To everyone – left, right, and center – who believes that the market economy can and will be made to operate better if more power to superintended and intervene in the economy is given to government officials, spend the less than two minutes it takes to watch this performance by the current Chairman of the U.S. president’s Council of Economic Advisors. Then tell me, or tell even just yourself, why you have the faith that you do in government. (HT Dan Klein)
Max Gulker explains that “the DOJ’s Apple antitrust suit doesn’t add up.” A slice:
Some or all of the alleged conduct might be judged anticompetitive if the DOJ could show Apple’s intent was trapping users in its ecosystem rather than creating the ecosystem its customers want. Apple’s longtime successful branding as a “walled garden” suggests the opposite. It is difficult to envision remedies for decreasing Apple’s control over app distribution and use within the iPhone ecosystem that would not undermine the security, usability, and aesthetics many consumers prefer, which is fundamental to Apple’s competitive strategy. The DOJ’s theory rests on a “broad pattern” of exclusionary conduct because none of the specific acts clearly impose switching costs without making the iPhone ecosystem consumers have already chosen even more desirable.
In a recent post, Matt Yglesias flatters the left by saying that it stands for equality vs. hierarchy and that its supporters are more intelligent than conservatives.
My 2010 book, the widely-unread Unchecked and Unbalanced argues against Yglesias. It says that the leftist approach to government creates inequality that far exceeds the inequality produced by the market. And it says that the power wielded by government officials far exceeds their intelligence. I suggest ways to break up the concentration of political power.
…..
While power has become more concentrated, knowledge has become more dispersed. In the economy, people are increasingly specialized. Science, medicine, and engineering have split into smaller sub-disciplines
In general, policy makers have too little knowledge relative to the high concentration of power. Consider the bills passed in Congress that run to hundreds of pages, which is more than they can read. And often the bills merely delegate power to unelected officials in government agencies.
My GMU Econ colleague Pete Boettke talks economics.
University of Florida president Ben Sasse reports that, at the University of Florida, the adults are in charge. Two slices:
At the University of Florida, we tell parents and future employers: We’re not perfect, but the adults are still in charge. Our response to threats to build encampments is driven by three basic truths.
First, universities must distinguish between speech and action. Speech is central to education. We’re in the business of discovering knowledge and then passing it, both newly learned and time-tested, to the next generation. To do that, we need to foster an environment of free thought in which ideas can be picked apart and put back together, again and again. The heckler gets no veto. The best arguments deserve the best counterarguments.
To cherish the First Amendment rights of speech and assembly, we draw a hard line at unlawful action. Speech isn’t violence. Silence isn’t violence. Violence is violence. Just as we have an obligation to protect speech, we have an obligation to keep our students safe. Throwing fists, storming buildings, vandalizing property, spitting on cops and hijacking a university aren’t speech.
…..
Young men and women with little grasp of geography or history—even recent events like the Palestinians’ rejection of President Clinton’s offer of a two-state solution—wade into geopolitics with bumper-sticker slogans they don’t understand. For a lonely subset of the anxious generation, these protest camps can become a place to find a rare taste of community. This is their stage to role-play revolution. Posting about your “allergen-free” tent on the quad is a lot easier than doing real work to uplift the downtrodden.
Universities have an obligation to combat this ignorance with rigorous teaching. Life-changing education explores alternatives, teaches the messiness of history, and questions every truth claim. Knowledge depends on healthy self-doubt and a humble willingness to question self-certainties. This is a complicated world because fallen humans are complicated. Universities must prepare their students for the reality beyond campus, where 330 million of their fellow citizens will disagree over important and divisive subjects.
Eric Boehm is correct: Americans really are unhappy with today’s inflation.
Here’s David Henderson on the late Bob Hessen on the industrial revolution.
Vinay Prasad isn’t favorably impressed with Time‘s list of 100 of the most-influential people in health care. (HT Jay Bhattacharya)
… is from page 117 of the 1947 “Crofts Classics” edition of John Stuart Mill’s 1859 On Liberty:
The mischief begins when, instead of calling forth the activity and powers of individuals and bodies, it [the government] substitutes its own activity for theirs; when, instead of informing, advising, and, upon occasion, denouncing, it makes them work in fetters, or bids them stand aside and does their work instead of them.
… is from page 115 of Benn Steil’s and Manuel Hinds’s great 2009 book, Money, Markets & Sovereignty:
Development requires helping the poor find their way from farm to factory, and from factory to office, classroom, and laboratory. This requires massive investment, which in turn requires sophisticated financial intermediation. It is for this reason that the trade and financial dimensions of globalization are complementary.
DBx: Yes. And here we have yet another economic reality that is ignored by American Compass-types who decry the size of the finance sector. Such people are not merely ignorant of economics, they are naive physicalists. In their eyes, production consists chiefly in transforming matter into different combinations and shapes. Moreover, nearly all acts of transforming matter into different combinations and shapes are, in the minds of theses physicalists, ipso facto productive.
The economic ignorance that gives rise to this physicalist myth reflects primitive thinking.
My GMU Econ colleague Bryan Caplan makes the case for housing deregulation. A slice:
Second, building off the work of Peter Ganong and Daniel Shoag, Build, Baby, Build shows that housing regulation also reduces the upward mobility of the poor. Decades ago, when housing prices were much lower — and more nationally uniform — poor Americans had a clear path to a better life: move to a higher‐wage part of the country. Steinbeck’s Grapes of Wrath notwithstanding, this strategy worked well. Now, however, poor Americans who try this route typically find that the extra housing cost in high‐wage regions eats up more than 100 percent of the wage gain. Lifting yourself up by your own bootstraps is still possible, but used to be quite a bit easier.
We’ve been chronicling how Biden regulators are dusting off old laws to seize more power over the private economy. Now comes the Food and Drug Administration, which on Monday redefined blood cancer, genetic and other innovative lab tests as—get this—medical devices like pacemakers.
FDA’s 528-page rule snatches authority over tests that are developed, manufactured and performed by labs. Doctors prescribe such tests to identify prenatal genetic abnormalities, predict hereditary disease risks, select therapies, diagnose infectious diseases, and more. They increasingly use algorithms and artificial intelligence.
The agency claims it has long held the authority to regulate tests under the 1976 Medical Device Amendments, which augmented its purview over diagnostic devices such as blood-glucose monitors and test materials. But lab tests aren’t devices. They are analytical processes and patient services.
No matter. The FDA will now require some 12,000 labs to submit tests for agency review.
GMU Econ alum Jon Murphy explains that market concentration does not signal monopoly. A slice:
The Federal Trade Commission (FTC) recently launched an antitrust investigation into Amazon, alleging the firm had used monopoly power to suppress competition. Through the Amazon Marketplace, Amazon supposedly limits competition to promote certain sellers and brands at the expense of others. Prima facie, this complaint may make sense, but the economic understanding of a firm discussed above gives us reason to question the FTC’s argument. We must ask the question “as compared to what?” Absent Amazon Marketplace, would these sellers and their listed products exist? Amazon Marketplace reduces the cost, in both money and time, of online buyer-seller transactions. These independent sellers get access to Amazon’s platform, Amazon’s customers, Amazon’s payment handling system, and as such are able to quickly and efficiently coordinate with potential buyers. All of these transaction costs, when not subsidized by a large firm, can represent a significant hurdle to would-be sellers. By reducing transaction costs, Amazon increases the number of sellers (and buyers) in the market; they make it easier for sellers to enter the market, find buyers, and complete transactions. Thus, we see the FTC’s complaint gets things exactly backward: Amazon isn’t reducing competition. Amazon is increasing competition! Breaking up Amazon’s supposed monopoly would likely result in less competition, even if it makes the market appear to be less concentrated.
GMU Econ alum Paul Mueller chews on Florida’s ban on producing lab-grown meat.
Megan McArdle writes insightfully about campus protestors and Democratic politics. A slice:
Generations of progressive strategists have nonetheless been dazzled by visions of the enormous coalition they could build if young voters would just turn out to vote as readily as retirees do. But there’s a reason these visions keep failing to materialize. When you ask young voters what they care about most, bread-and-butter issues such as inflation, health care and jobs top the list, while progressive priorities such as climate change, student loan forgiveness and Israel-Palestine are at the bottom. Moreover, this is especially true of young voters who don’t vote regularly: “at all ages, less-engaged people are less ideological and more moderate than consistent voters,” political analyst Matt Yglesias writes.
Randy Holcombe is understandably unhappy with the TSA.
Juliette Sellgren talks with Alice Temnick about Adam Smith as educator.
… is from page 251 of Deirdre McCloskey’s 2024 paper “Market Prices are Not Inherently Corrupting,” which is chapter 19 in The War on Prices: How Popular Misconceptions About Inflation, Prices, and Value Create Bad Policy (Ryan A. Bourne, ed., 2024):
Most often, and especially when dealing with strangers, money prices take an item out of the political or ethical realm in a way that paradoxically purifies it. Allocating goods by social class or race or violence or political pressures or party membership is disgraceful. A price for most goods is merely a price. No shame attached.
An example of just how bonkers – and bipartisanly so – are many allegedly serious discussions by political types of trade is found in this short report on a recent hearing on Capitol Hill. In this hearing, Sen. John Thune (R-SD) complained about America’s trade deficit in agricultural goods. And U.S. Trade Representative Katherine Tai (also at this hearing) apparently treated this complaint as if it is economically meaningful.
But of course an “ag trade deficit” is no more economically meaningful than is a “yellow-things trade deficit” or a “things-bigger-than-a-breadbasket trade surplus.” There is absolutely no reason to expect that a country will export – during any year or over time – the same amount of agricultural products that it imports. Indeed, because of the principle of comparative advantage, each country will import things that it doesn’t produce at home and export different things. In short, countries are supposed to have so-called ‘trade deficits’ in some things and so-called ‘trade surpluses’ in other things.
Because “agricultural goods” is a portmanteau category – a category that includes many different agricultural goods (strawberries, wheat, pineapples, pork bellies, etc.) some of which we Americans produce at a comparative advantage and others of which we produce at a comparative disadvantage – America almost certainly runs ‘surpluses’ in some of these goods and ‘deficits’ in others. For example, America might be a net exporter of wheat, maple syrup, and rawhides, and a net importer of grapes, artichokes, and alfalfa. It’s therefore possible that in a calendar year American exports of “ag goods” would equal American imports of “ag goods.” But, again, there simply no reason to expect any such ‘equality’ and, thus, mentioning and treating the “ag trade deficit” as if it is an economically meaningful concept only shows how primitive trade-policy discussions (and trade-policy making) remain in 2024.
(HT to Ricky Wylde for sending the piece linked to above.)
… is from page 102 of the 5th edition (2020) of Douglas Irwin’s superb book Free Trade Under Fire (footnote deleted; link added):
When the Trump administration decided in 2018 to impose a 25 percent tariff on all imported steel, the same employment tradeoffs emerged…. The steel industry employs about 147,000 workers, while there are roughly 2.3 million workers in steel-using industries. The tariffs cost Ford Motor Company a billion dollars in added costs of production because the tariffs made American steel the most expensive in the world. The higher steel costs also hurt Caterpillar and John Deere, as well as machinery producers. One study suggested that, as a result of the steel tariff, the number of jobs in the iron and steel industry and the fabricated metal products industry would increase by 44,000, but there would be 17,000 fewer jobs in motor vehicles and parts and 209,000 fewer jobs in construction.
George Will reminds us of the terrible reality of nuclear weapons. A slice:
Future historians, if there are any, will be dumbfounded. Today, uncountable dollars and unquantifiable hysteria are devoted to the distant threat of climate change milder than some changes Earth has experienced. A recent peer-reviewed study of scientific estimates concludes that the average annual cost of what the excitable U.N. secretary general calls “global boiling” might reach 2 percent of global gross domestic product by 2100. Meanwhile, negligible public anxiety accompanies the intensifying danger of global incineration from nuclear war.
Richard Reinsch warns of the coming of stakeholder statism.
Congratulations to Ed Glaeser.
Gary Galles is realistic about voting.
Brad Thompson suggests that the Ivy League be defunded.
Like the Clean Power Plan, the EPA’s newly finalized replacement rule requires adoption of technology that doesn’t exist. More remarkably, the agency simultaneously published the rules governing mercury, water emissions and solid-waste storage, all of which it had clumsily promised would drive plants to close and thereby reduce greenhouse-gas emissions.
EPA officials apparently grasp that the opinion in West Virginia prohibits the practice that admirers call “law whispering” or “teaching old laws new tricks”—particularly on major questions like contriving changes in our energy mix. Gone are paeans to inventive ways of coercing plants to retire. With a newfound modesty, the administrative record published for these non-greenhouse-gas emissions rules disputes claims of causing “a significant number of retirements” and attributes any generation shifting to Inflation Reduction Act subsidies.
The kicker is that no technology exists today to enable railroads to comply with California’s diktat, rendering the whole exercise fanciful at best.
The Wall Street Journal‘s editorial board explained last November that while Wabtec Corp. has introduced a pioneering advance in rail technology with the launch of the world’s first battery-powered locomotive, the dream of a freight train fully powered by batteries remains elusive. The challenges of substituting diesel with batteries—primarily due to batteries’ substantial weight and volume—make it an impractical solution for long-haul trains. Additionally, the risk of battery overheating and potential explosions, which can emit harmful gases, is a significant safety concern. As the editorial noted, “Even if the technology for zero-emission locomotives eventually arrives, railroads will have to test them over many years to guarantee their safety.”
… is from page 343 of A. James Meigs’s Fall 1988 Cato Journal paper, “Dollars and Deficits: Substituting False for Real Problems,” as this paper appears as chapter 14 of Dollars, Deficits, & Trade (James A. Dorn and William A. Niskanen, eds., 1989) (footnote deleted):
The total capital stock available to U.S. workers and businesses, for any given U.S. saving rate, surely must grow more rapidly with an inflow of capital from abroad than it would without that inflow, even though some imported capital may be consumed instead of being invested in productive facilities. The greater growth of capital stock, therefore, must be reflected in greater growth of total U.S. product (and consumption) than we otherwise would have. So the “burden of debt service” can be paid out of the greater product. How would this be different from the burden of domestic debts? Why does it matter who holds the debt (or equity)?
Foreign owners of businesses in the United States receive the marginal product of their capital, but American workers and various state, local, and federal tax authorities get the rest of the product of the enterprises in which the capital is employed. The total product is certainly greater than it would be without the capital. Moreover, Japanese and European plant managers are now bringing improved management techniques to our country, just as American managers took improved management techniques to other developing countries in the past.
DBx: Worrying about a U.S. trade deficit is akin to worrying about your neighbors saving some of their income in order to invest in your business.
