Tweet

Art Carden describes “the tragedy of Paul Ehrlich.” A slice:

In the Malthus-Ehrlich view of the world, every new person is just a stomach and a pair of hands. Diminishing marginal returns means the hands can’t keep up, and disaster is inevitable. In [Julian] Simon’s view of the world, which I share with a great many economists and other commentators, each person is a stomach, a pair of hands, and a brain—a creative mind. That creative mind, according to Julian Simon, is the ultimate resource.

The New York Times called his predictions “premature.” The word they needed to use was “wrong.” His alarmist predictions informed fifty years of population and environmental policy, including China’s one-child policy and the demographic cliff we face as population growth slows and may eventually turn into decline. Ehrlich’s ideas had disastrous consequences, and the greatest tragedy of his passing is that he apparently died never having learned from a career of alarmism and sustained error. May his example and his memory serve as a warning to us all.

The Editorial Board of the Washington Post argues that the American economy is hurt, not helped, by the U.S. government’s increasing proclivity to mimic the interventionist policies of the communist government ensconced in Beijing. A slice:

The administration has already used taxpayer dollars to buy equity stakes in other critical mineral companies, such as Trilogy Metals, Lithium Americas, MP Materials, Vulcan Elements, Korea Zinc and USA Rare Earth. It’s also entered into an agreement to take a 10 percent stake in Intel, the chip manufacturer, and secured a “golden share” of U.S. Steel while negotiating the acquisition of that company by Japan’s Nippon.

There may be a case for limited government intervention to guarantee the supply of certain inputs into products crucial for national security. But a better way to ensure that happens is reducing trade barriers with allies rather than allowing bureaucrats to bet on which firms might be successful.

These deals are especially problematic when the companies have business connections with administration officials or close allies of the president. Syrah, for example, is closely tied with Elon Musk’s Tesla. But they also distort the economy by boosting projects that might not make sense economically. And taxpayers will be left holding the bag if the company fails.

China’s control of critical minerals is a serious issue, but having Uncle Sam as a minority shareholder in a foreign mining operation won’t solve it. Getting out of the way of innovators, and allowing private money to flow more freely between friendly nations, would do more.

Scott Lincicome tweets:

The Trump administration’s new biofuels bailout means higher US gas and food prices and worse environmental outcomes.

But at least farmers will get another $3-4B from the government.

Per Bylund reveals “the real lesson of the TSA walkout.”

Daniel Freeman explains what shouldn’t – but, alas, what nevertheless always does – need explaining: Rising prices are not caused by “greed” (but price ceilings, in addition to further reducing access to goods and services, are caused by greed – namely, the greed for political power).

Stephanie Slade writes that the loathsome “Nick Fuentes and his followers compete to see who can be most offensive.”

Whether you regard the current war on Iran as righteous or reckless, Coleman Hughes debunks the lazy notion that the U.S. government is a pawn of the Israeli lobby. Two slices:

The idea that the most powerful country the world has ever known is being puppeteered by a country the size of New Jersey — and by a group that collectively accounts for 0.2 percent of the world’s population — is an extraordinary claim. You would expect overwhelming evidence. In reality, there’s little to substantiate it.

Criticize America’s foreign and domestic policy as much as you want—there’s plenty to criticize. But don’t blame it on Israel or its supporters.

The centerpiece of this narrative is a historical claim: that Israel got the United States into the Iraq War. In reality, Israel’s prime minister came to the White House to caution President Bush against invading Iraq, warning that it would empower Iran, Israel’s real enemy. Bush listened politely, then ignored him and invaded anyway, because American presidents make their own choices, for good and for ill.

At the same time, the IDF chief of military intelligence said on TV in the fall of 2002 that Israel did not believe Saddam Hussein could obtain nuclear weapons, contradicting U.S. intelligence assessments. It’s hard to imagine a clearer discouragement. Again, the United States ignored this and proceeded for its own reasons.

…..

The United States maintains hundreds of military bases worldwide and spends vast sums sustaining its global presence. For example, the U.S. stations 30,000 American troops in South Korea and loses $3–4 billion every year because of its deployment there. But no one argues that an all-powerful South Korea lobby controls American foreign policy.

Glenn [Greenwald] tried to argue that the fact that we have troops deployed in South Korea makes the $4 billion a year we lose there a lesser commitment than the aid to Israel. But if the situation were reversed — if we had troops deployed in Tel Aviv and not Seoul — then he’d argue the opposite! Dave [Smith] and Glenn are always reasoning backward from their conclusion — they start from the premise that Israel controls us, and fill in the reasons afterward.

Tweet

… is from page 31 of the late Brian Doherty’s superb 2007 book, Radicals for Capitalism: A Freewheeling History of the Modern American Libertarian Movement:

Libertarianism arose in America from distinctly American roots. Yet in its soul it is a cosmopolitan philosophy, celebrating a world united in spirit, ideas, and trade, while reveling in the wide panorama of freely chosen local peculiarity that only relatively free polities can provide.

Tweet

… is from this Facebook post by my former NYU professor Mario Rizzo:

It is too much to say that wealthy people have a moral obligation to flee high tax states. However, they do other taxpayers a favor by putting pressure of rapacious government to curtail its taxes and programs.

DBx. Yes indeed.

(The image is from this January 2020 essay by the Cato Institute’s Chris Edwards.)

Tweet

Here’s a letter to the editor of National Review Online.

Editor:

Daniel Flynn’s reflections on Bill Buckley’s “feud” with Murray Rothbard are excellent (“Revisiting the Buckley–Rothbard Feud,” March 27). And while the balance of my sympathies are with Buckley and against Rothbard, on the question of the private provision of lighthouses, it was Buckley rather than Rothbard who suffered what Buckley called “the disadvantages of knowing nothing about lighthouses.” Rothbard was correct, and Buckley not, that private provision of lighthouses isn’t only possible, it was real.

In 1974, the great Nobel-laureate economist Ronald Coase published “The Lighthouse in Economics,” which tells of many lighthouses in Britain in the 18^th and 19^th centuries being privately built and operated. Fees were collected when ships docked at nearby ports. Although government wasn’t completely out of the picture – it set rates and helped to collect fees – private enterprise, contrary to Buckley’s supposition, did indeed play a significant role in providing lighthouse services.

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

Tweet

GMU Econ alum Erik Matson is having none of Katie Miller’s ignorant accusation that classical liberalism is woke progressivism.

Although the competition is stiff, Scott Lincicome identifies “the world’s dumbest tariff.” Two slices:

For American consumers, higher aluminum costs flow into the retail prices of food, beverages, foil, appliances, and more. For US manufacturers, the steep premium means higher costs and reduced competitiveness. Aluminum is a critical input for both advanced manufacturing – automotive, aerospace, defense, etc. – and less capital-intensive industries like food production. Today, American firms pay much more for the metal than do their overseas competitors.

Economists have found that Trump’s first-term aluminum tariffs hurt manufacturing on net. The harms today are surely greater, given the tariffs’ higher rates and broader scope – and dwindling domestic inventories that could cushion the blow. The complicated “derivatives” regime, which requires US companies to report imports’ precise metals content, has added more costs – a regulatory burden that even Trump officials acknowledge.

American supply chains are also more fragile. In one absurd example, Ford Motor Co. reported last month that a fire at its main US supplier would force it to pay $1 billion more to import aluminum in the meantime. (And that was before Iran.) Manufacturers without Ford’s resources and clout have been hit even harder, unable to get needed supplies and pausing expansion plans in response.

…..

Overall, aluminum protectionism has been a confounding own-goal. Tariffs haven’t just raised prices and harmed American manufacturers; they’ve actively pushed a top producer and close ally out of our market, with shrinking domestic sources unable to fill the gap. Given the metal’s role in the US defense industrial base, aluminum-related risks are likely higher today than they were before “national security” tariffs were ever enacted.

New investments, meanwhile, require years of sky-high prices before coming online and will take resources from better uses when they do. The US Chamber of Commerce estimates that replacing imports with domestic aluminum would require electricity generation equivalent to that of Nevada – finite power unavailable for semiconductors, data centers, and every other “strategic” industry Washington says we need. With clean, abundant, and secure supplies right across the border, choosing this path is nonsensical.

High-earning – that is, mostly highly productive – Americans continue to vote with their feet for lower-tax states. Two slices:

As Democrats across the country seek to raise income taxes, the IRS on Friday released new data on state income migration that is a reality check on their ambitions. Even after the pandemic, high-tax states continue to lose tens of billions of dollars in taxable income to low-tax states.

The latest IRS data includes the adjusted gross income (AGI) of tax filers who moved between and within states between 2022 and 2023. Not surprisingly, overall migration ebbed from record highs in 2020 and 2021 during the Covid lockdowns. A mortgage lock-in effect and rising interest rates also resulted in fewer people moving.

Yet states with the highest taxes continue to lose the most income to other states. California lost on net $11.9 billion, mostly to Texas, Nevada and Arizona. Other big losers include New York ($9.9 billion), Illinois ($6 billion), Massachusetts ($4 billion), New Jersey ($2.6 billion), Maryland ($1.8 billion) and Minnesota ($1.5 billion).

…..

People move for reasons besides taxes, but taxes influence the economic climate and opportunity. Government unions that rule high-tax states also work to undermine the quality of public education and other services, while ballooning welfare states squeeze spending on public safety.

When partisan gerrymanders and public-union machines entrench one-party Democratic governance, people who can’t affect political change at the ballot box vote with their feet. And they are taking their wallets and mutual funds with them.

Hank Adler reports on the flight from California of that state’s wealthy taxpayers. A slice:

California has long depended on a small number of ultrawealthy taxpayers to fund a large share of its government. According to the Legislative Analyst’s Office, the top 1% of taxpayers generate roughly 40% of the state’s personal income-tax revenue.

The flight of even a handful of California’s highest-earning taxpayers from the state has immediate and significant consequences for Sacramento’s finances. Although California doesn’t currently tax wealth directly, it heavily taxes the income generated by wealth—particularly capital gains. When billionaires change their state of residence, California largely forfeits the ability to tax those gains in the future. Former residents who are company founders won’t pay California income taxes when they sell shares in their companies after they leave the state.

Jack Nicastro explains that Elizabeth Warren “fails to consider how her tax would harm middle class Americans and slow economic growth.”

My intrepid Mercatus Center colleague, Veronique de Rugy, asks: “How will Congress fund a $300 billion war with Iran?” Here’s her conclusion:

In the end, the $300 billion question isn’t really about Iran. It’s about whether Congress will admit that nothing the federal government does is free, and that the bill always comes due. The only choice is who pays for it and when.

Eric Boehm is correct: “From long TSA lines to air traffic control issues to the chaotic war in Iran, it’s all the result of a government that won’t take its powers or responsibilities seriously.” A slice:

It doesn’t have to be this way—and a country with a more serious government would have fixed it long ago.

America’s entire air-traffic control system relies on technology that is woefully out of date (which probably makes it more difficult to recruit workers) compared to systems used in other countries. It remains that way because it is funded and managed by the federal government, rather than by the people who must rely on it to work: airlines, airports, and private pilots.

Those entities would have an incentive to make sure the air traffic control system is top-notch and fully staffed. As Reason Foundation cofounder Bob Poole noted in November, roughly 100 countries receive their air traffic control services from user-funded utilities. “If any of their governments were to have a shutdown like ours, air traffic control would continue to operate normally,” Poole wrote.

The federal government could fix this problem with air traffic control anytime it wants. This is not a partisan issue. It does, however, require some semblance of seriousness from our policymakers—so it is unlikely to happen, and another accident is inevitable.

Jeffrey Miron continues to share research evidence of the folly of minimum-wage legislation.

Robert Trivers is remembered by his student Robert Lynch. A slice:

The first [paperr], published while he was still a graduate student at Harvard, confronted one of the deepest problems in evolutionary theory: how can natural selection favor cooperation between non-relatives? In The Evolution of Reciprocal Altruism Trivers proposed that cooperation could evolve when the same individuals interacted repeatedly, making it advantageous to help those who were likely to help in return while avoiding cheaters who took benefits without reciprocating — i.e.“you scratch my back, I’ll scratch yours.” The paper offered an elegant solution to the problem of how natural selection can “police the system” and has had enormous implications for human psychology, including our sense of justice, with parallels in other mammals such as capuchins and dogs. The next year in 1972, Trivers published his most cited paper, Parental Investment and Sexual Selection. Here he offered a unified explanation for something that had puzzled biologists since Darwin. Writing perhaps the most famous sentence in all of evolutionary biology—“What governs the operation of sexual selection is the relative parental investment of the sexes in their offspring”—Trivers threw down the gauntlet and revealed a deceptively simple principle that reorganized the field. From that insight flowed one of the most powerful and falsifiable ideas in modern science: the sex that invests more in offspring will tend to be choosier about mates, while the sex that invests less will compete more intensely for access to them.

Tweet

… is from page 267 of Thomas Sowell’s 1999 book, Barbarians Inside the Gates:

Don’t you get sick and tired of being propagandized and warned almost everywhere you turn? Someone said: “They are the missionaries and we are the Hottentots.”

Tweet

A follow-up to a friend.

Tim:

Thanks for your reply to my earlier note. You write:

Not all jobs lost are the same. Not all jobs lost to free trade are the same. Not all factories that close are the same. Not all communities in which jobs are lost are the same. And not all free trade agreements are the same. You treat them as if they are and thus dismiss claims that an FTA could raise mortality rates. But jobs long protected in company towns are simply not the same as jobs in say Silicon Valley. It has nothing to do with manufacturing being special and you are perhaps too quick to assume that’s what people are claiming.

I’m not seeing something that you see. I understand that not all jobs (and job losses) are the same. What I don’t understand is what is unique about trade at causing the loss of those jobs that are especially traumatic to lose.

The ultimate cause of job losses in market economies is economic change. Sometimes that change is transmitted by international trade. Sometimes – and most times in a large country such as the U.S. – that change is transmitted by forces having little or nothing to do with trade. What reason is there to single out trade as a source of economic change, or of economic change that causes especially acute harm to workers who lose jobs? I know of none. The fact that trade sometimes has unusually traumatic and heart-rending effects doesn’t make the case. Not only does trade usually not have these effects, sometimes these effects are caused by non-trade sources of economic change, such as labor-saving technology.

It might well be that the economic change fueled by NAFTA caused job losses that led several people to make life choices that put them in early graves. But what of other historical cases? What of manufacturing workers in the 1920s who lost jobs because of electrification? What of manufacturing workers in 1945 who lost jobs because the war ended? What of manufacturing workers in the 1990s who lost jobs because of advances in computer technology? And what about the technology-driven mass destruction of agricultural jobs in the mid-twentieth century – job destruction that was just as large a share of the labor force as was that caused by the “China Shock”? Surely some of those workers committed suicide, turned to drink, or fell into life-draining despair.

It is simply misleading – because mistaken – to single out trade as a source of economic change that causes traumatic job losses.

The right course is to recognize that some unfortunate individual and localized problems are caused by economic change (and, by the way, as well as by efforts to obstruct economic change). And honesty demands that we acknowledge that among the countless sources of economic change is international trade. But to single out trade as if it’s a categorically different, or special, source of economic change makes no more sense than to single out labor-saving technologies invented in Texas, or changes in the preferences of Asian-American consumers, as a special source of economic change.

If voters insist on obstructing trade in order to avoid these traumatic downsides, that would be too bad, but so be it. Voters, however, should then be informed that their aim is too low: To be consistent they should aim to prevent all economic change, no matter its source. Again, it seems to me that to write of trade as if the economic change that it causes is uniquely troublesome is deeply misleading – and dangerous, because it suggests that such economic change should be controlled by political authorities.

Sincerely,
Don

Tweet

Here’s a letter to a respected friend – who, by the way, is no protectionist.

Tim:

Thanks for your feedback on my letter to the New York Times; it’s always good to hear from you.

You write that I’m “too glib” in questioning the claim that, as the NYT favorably summarized new research, “American workers in communities that were more exposed to competition from Mexican imports saw a significant shortening of their life spans after the trade deal went into effect in 1994.” You give as a hypothetical example a middle-age factory worker who, having lost his job to Mexican imports, commits suicide or becomes an alcoholic.

I’ll defend myself. I never questioned the finding that, in areas subject to increased foreign competition, mortality rates rose. Nor, of course, did I ever I make light of rising mortality. Instead, I questioned the accuracy of blaming this misfortune on trade.

The period studied by the researchers is 1994 through 2008. The St. Louis Fed has data starting in December 2000 on total monthly layoffs and discharges – that is, for 97 of the 180 months covered by the research. During those 97 months, an average of 1.9 million workers in America every month lost or were laid off from jobs they wanted to keep.

How much of this job destruction was caused by NAFTA? The Economic Policy Institute – an outfit hostile to NAFTA – estimates that over the course of NAFTA’s first 20 years, that trade agreement destroyed a total of 700,000 jobs. Even assuming that all of those 700,000 jobs were destroyed in the first 15 years of NAFTA, that’s an average monthly job loss of only 3,900 – or 0.2% of the average total monthly layoffs and discharges during this period. If we add to this number the maximum estimated average monthly job loss caused by the “China Shock” – 15,385 – we find that the average number of jobs destroyed monthly by these two much-criticized and most disparaged sources of increased imports is 19,285 – or 1.0% of total layoffs and discharges.

Most job destruction in the U.S. is caused, not by trade, but by labor-saving technology, changes in consumer preferences, and ordinary, healthy domestic competition. And yet, although this job destruction is massive and has long been on-going, we Americans don’t seem to be killing ourselves in great numbers because of it.

Why would the relatively tiny number of job losses due to trade uniquely increase mortality? I can think of no good reason. The researchers will say that there’s something special about manufacturing jobs, and that manufacturing jobs are disproportionately hit by trade. But the rate of layoffs and discharges in manufacturing was higher during manufacturing’s alleged ‘golden era’ – before America was much-exposed to global markets – than it was during the NAFTA years studied by the researchers.

Did those ‘golden era’ manufacturing-job losses increase mortality? If they did so, trade can’t be blamed, as post-war globalization was still in its infancy. But I’ve encountered no evidence that they did so. Either way, the earlier, higher rate of manufacturing-job loss means that the measured post-NAFTA increase in mortality rates identified by the researchers was likely fueled by factors other than trade – factors such as increased welfare payments that discourage people from moving to other towns to find employment, land-use restrictions that do the same, and more occupational-licensing requirements that close off some employment opportunities.

Because trade is not only not a unique, but not even a major, source of job losses – and because job losses are the proximate cause of the increased mortality identified in the research on NAFTA – and because the rate of manufacturing-job losses pre-NAFTA was higher than since NAFTA took effect – and because there is no evident negative effect on mortality of America’s enormous routine rate of job loss – it seems to me to be mistaken to blame that measured rise in mortality on NAFTA.

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

Tweet

… is from page 489 of Columbia University law professor Philip Hamburger’s brilliant 2014 book – whose title poses a question to which the book’s text gives the answer “yes” – Is Administrative Law Unlawful?:

Indeed, administrative governance is a sort of power that has long been understood to lack legal obligation. It is difficult to understand how laws made without representation, and adjudications made without independent judges and juries, have the obligation of law; instead, they apparently rest merely on government coercion. They therefore cannot be perpetuated on a theory of consent or acquiescence, and they traditionally would have had the potential to justify revolution. Certainly, when the English Crown justified its power as constitutional, the English and eventually the Americans engaged in revolutions against it.