Some Links

by Don Boudreaux on July 6, 2017

in Data, History, Myths and Fallacies, Reality Is Not Optional, Technology, Trade, Work

My Mercatus Center colleague Dan Griswold explains the real reason for the loss of steelworker jobs in the United States.  A slice:

The decline of jobs in the U.S. steel industry has nothing to do with the rise of imports. The primary driver of declining employment is dramatic productivity gains in the industry, fueled by automation and changing steel production methods. A secondary cause is the long-term decline in the relative importance of steel to a modern, information driven economy.

Philip Booth and Alberto Mingardi debunk the myth that the Grenfell Tower fire in London was caused by capitalism.

George Will offers sound life advice to millennials.  A slice:

In healthy societies, basic values and social arrangements are not much thought about. They are “of course” matters expressing what sociologists call a society’s “world-taken-for-granted.” They have, however, changed since President Lyndon B. Johnson proclaimed “unconditional” war on poverty. This word suggested a fallacious assumption: Poverty persisted only because of hitherto weak government resolve regarding the essence of war — marshaling material resources.

Sarah Burns celebrates colonial failures.

Bob Murphy writes about the private provision of roads.

Mike Munger argues that, while corporations are not people, they nevertheless are – or ought to be – protected in the U.S. by the First Amendment.

Here’s Nicholas Cachanosky on minimum-wage research.  (HT NtN)  A slice:

In this post I want to focus just one empirical problem. An incomplete sample in itself may not be a problem. The issue is whether or not the observations missing from the sample are relevant. This problem has been pointed out before as the Russian Roulette Effect, which consists in asking survivors of the increase in minimum wages if the increase in minimum wages have put them out of business. Of course, the answer is no. In regards to Seattle, a concern might be that fast food chains such as McDonald’s are not properly included in the study.

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It’s Not Simply A Matter of Getting the Facts Correct and Following Them

by Don Boudreaux on July 6, 2017

in Myths and Fallacies, Scientism, Seen and Unseen, Work

On this EconLog post on minimum-wage research by my colleague Bryan Caplan, commenter Thaomas writes:

Proponents of a higher minimum wage are trying for a political effect, raising the incomes of low wage workers when better methods like an EITC are not politically feasible. This still requires facts. Is the elasticity of demand in the specific market less than one?

Thaomas here sounds reasonable.  Yet he is mistaken.  Here’s my reply to Thaomas:

Thaomas writes that assessing the effects of minimum-wage policies on poverty-reduction “requires facts.” He’s correct. But he is incorrect to assume – as he does – that the relevant fact is whether or not “the elasticity of demand in the specific market [is] less than one.” Other facts are relevant, such as ‘Is the relevant test of a minimum-wage policy whether or not it increases the total income of a specified group of workers even if that policy reduces, perhaps to zero, the incomes of several of the members of that group?’

In one sense this latter question is normative, which is not to say irrelevant. In matters of government policy, facts are useful only insofar as mastery of them better enables us to achieve the goals that we wish to achieve. And the selection and ranking of goals is ultimately and unavoidably a value judgment.

Yet in another sense this latter question is factual: Do we, or do we not, agree that an acceptable outcome is achieved if a minimum wage raises the total income of low-skilled workers even if it reduces, perhaps to zero, the incomes of many individual low-skilled workers?

Drilling down just a bit, Thaomas overlooks the fact (!) that there is no objective – no factual – definition or description of the relevant group of workers over which the total-income effects of minimum wages is to be assessed. Does this group, in the U.S., consist only of workers currently earning $7.25 per hour or less? Or does this group consist of workers making, say, $7.98 per hour or less? Or, as a third alternative, does this group consist only of workers making, say, $8.00 per hour or less and who are heads of households?

Obviously, questions about what is the relevant group over which the elasticity of demand for its labor services is to be assessed factually must be asked and answered satisfactorily before any empirical investigation into the income effects on that group of a minimum wage can commence. The number of different ways to plausibly define this relevant group are many, and choosing which of these many definitions is the appropriate one cannot possibly be an exercise purely in determining ‘the facts’; it must involve value judgments.

It’s comforting to imagine that the formation of government policy can be reduced to an exercise in discovering, processing, and following only “the facts.” But such an imagined method of forming policy is just that: imaginary. It can never be otherwise. That’s a fact.

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Yet More On Nancy MacLean’s Utter Carelessness with Facts and Disregard of Logic

by Don Boudreaux on July 6, 2017

in Books, Myths and Fallacies

Nancy MacLean – author of the fantasy novel Democracy in Chains – misquotes the Cato Institute’s David Boaz in a way that gives the impression that David said something quite the opposite of what he actually said.

Here’s Daniel Bier on MacLean’s shoddy work of fiction.  A slice:

Nancy MacLean’s Democracy in Chains is a piñata of sloppiness and deceit: every time you whack it, more mangled quotes, factual errors, and misrepresented sources spill out.

And here is Steve Horwitz’s latest, successful whack at that pathetic piñata.

Arnold Kling.

And the always-wise Bob Higgs.

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Quotation of the Day…

by Don Boudreaux on July 6, 2017

in Reality Is Not Optional

… is from page 115 of my late Nobel laureate colleague Jim Buchanan’s 1983 article “The Achievement and the Limits of Public Choice in Diagnosing Government Failure and in Offering Bases for Constructive Reform,” as this article is reprinted in James M. Buchanan, Politics as Public Choice (2000), which is volume 13 of the Collected Works of James M. Buchanan; those who are unfamiliar with, or who reject, the public-choice perspective invariably compare real-world – and, hence, imperfect – market outcomes with imagined ideal government-generated outcomes; such comparisons always find real-world markets to be inferior to idealized, imaginary government ‘solutions’; Buchanan and other public-choice scholars worked to correct this bias in the analyses of policies, a bias that runs throughout much of modern welfare economics:

Public Choice theory, in its redress of the imbalance in the institutional comparisons informed by and inspired by welfare economics, has shifted the pendulum “rightward,” so to speak.  A comparison of market and government alternatives, both examined “warts and all,” and without the “benevolent despot” blinders on, will necessarily produce a private sector – public sector mix less dominated by the public sector that that mix that might have been generated on the basis of prevailing ideas in, say, 1950 or 1960.  Such a change in comparative results has nothing to do with any shift in the underlying ideology or nonideology of Public Choice, or of anything else.  The change in question emerges strictly from a better-informed comparison of relevant alternatives.

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I Love My Job

by Don Boudreaux on July 5, 2017

in Myths and Fallacies, Technology, Work

Here’s a letter written and sent in mid-April to a college student in Texas:

Mr. Caleb Woolf

Mr. Woolf:

Thanks for your e-mail.  Let me answer your question straight away: No, I don’t worry about “technology bringing forth a situation where there no longer are any jobs” for humans.

If you show me a job, I’ll show you a human want that that job satisfies.  The very existence of jobs implies the existence of human wants – human wants that are met by whatever goods and services workers produce for those people who hire them.  So if we ever do achieve a condition under which technology eliminates all need for us to work, we’ll have achieved a condition under which the satisfaction of our wants is so complete that none of us will have any need for the help of others.

I’m confident that we humans will never achieve such a state of complete want-satisfaction – which means that I’m confident that we humans will always have as-yet-unsatisfied wants that can at least potentially be satisfied by employing other humans.  But if I’m mistaken and such a state of complete want-satisfaction is in our future, then, yes, there will no longer be jobs for humans.  But there will also be no unsatisfied human wants.  We – all of us – will be in paradise.

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

To worry that technology eventually will destroy all human jobs is to worry that technology eventually will alone satisfy all human wants.

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Bonus Quotation of the Day…

by Don Boudreaux on July 5, 2017

in Adam Smith, Economics

… is from page 16 of my late Nobel laureate colleague Jim Buchanan’s 1983 article “The Public Choice Perspective,” as this article is reprinted in James M. Buchanan, Politics as Public Choice (2000), which is volume 13 of the Collected Works of James M. Buchanan (link added; original emphasis):

“What Should Economists Do?” – my 1962, as well as my 1982, response to this question was and is to urge that we exorcise the maximizing paradigm from its dominant place in our tool kit, that we quit defining our discipline, our “science,” in terms of the scarcity constraint, that we change the very definition, indeed the very name of our “science,” that we stop worrying so much about the allocation of resources and the efficiency thereof, and, in place of this whole set of ideas, that we commence concentrating on the origins, properties, and institutions of exchange, broadly considered.  Adam Smith’s propensity to truck and barter one thing for another – this becomes the proper object for our research and inquiry.

DBx: I challenge anyone to find within these words – within either their direct meaning or within their broader implications – any of the hidden racism or the fuel for oligarchs’ plans for world domination that Nancy MacLean ludicrously claims to lurk in the work of Jim Buchanan.

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More on MacLean’s Fiction

by Don Boudreaux on July 5, 2017

in Myths and Fallacies

Here’s a letter to a correspondent who accuses me of failing to understand just how deviously Jim Buchanan’s work was “hijacked” by the rich and powerful as a means for furthering their devilish designs.

Mr. Tony Swoboda

Mr. Swoboda:

Thanks for your e-mail about Nancy MacLean’s smearing of my late colleague Jim Buchanan with baseless claims of racism.  You argue that, while Buchanan himself was neither racist nor motivated “by desires to enrich the superrich,” Buchanan’s public-choice scholarship was “naturally hijacked” by oligarchs “to rob the public.”

Nonsense.  If there’s one overarching theme to all of Buchanan’s work it’s that power is subject to abuse and, therefore, people who wish to be free and flourishing must devise ways to keep power over others to a minimum while simultaneously ensuring that collective goods are adequately supplied.  Exactly how rapacious oligarchs seeking to enrich themselves at the expense of the masses can use work such as Jim’s for nefarious ends is utterly unclear.

Indeed, one of the most foundational conclusions of public-choice scholarship is that government power is especially prone to be used to unjustly transfer wealth from people for whom political organization is difficult, such as consumers, to people for whom political organization is relatively easy, such as producers.  Public-choice scholarship persuasively explains the existence and persistence, for example, of policies such as tariffs and business subsidies – policies that pick the pockets of the ordinary many and fill the purses of the affluent few. Jim’s support for constitutionally limited government springs chiefly from his sincere desire to prevent such politically arranged theft.  It is, therefore, beyond comprehension how Prof. MacLean and you manage to leap from the fact that Buchanan insisted that government be kept constitutionally limited to the conclusion that Buchanan’s work supplies intellectual justification for the state to enrich the already-rich few at the expense of the not-so-rich many.

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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Quotation of the Day…

by Don Boudreaux on July 5, 2017

in Myths and Fallacies

… is from page 246 of the original, 1957 edition of Anthony Downs’s pioneering book, An Economic Theory of Democracy:

But in fact his [an individual voter’s] vote is not decisive: it is lost in a sea of other votes.  Hence whether he himself is well-informed has no perceptible impact on the benefits he gets.  If all others express their true views, he gets the benefits of a well-informed electorate no matter how well-informed he is; if they are badly informed, he cannot produce these benefits himself.  Therefore, as in all cases of indivisible benefits, the individual is motivated to shirk his share of the costs: he refuses to get enough information to discover his true views.  Since all men do this, the election does not reflect the true consent of the governed.

DBx: David Friedman later summarized the point to make it even more pointed.

Downs’s work – along with (to name only a few of the more prominent scholars) the work of Kenneth Arrow, Gary Becker, Duncan Black, Jim Buchanan, Morris Fiorina, Dennis Mueller, Bill Niskanen, Mancur Olson, Vincent Ostrom, Charlie Plott, William Riker, Joseph Schumpeter, Kenneth Shepsle, George Stigler, Gordon Tullock, and Knut Wicksell – is central to modern public-choice scholarship.  Yet like these (and other) public-choice scholars, Downs, while he discovered and busted popular myths about the workings of democratic processes, cannot possibly be classified by any knowledgeable person as a racist water-carrier for demonic oligarchs.  Downs, for example, served on the Board of Directors of the NAACP’s Legal Defense and Education Fund; he now has emeritus status there.  But Nancy MacLean – author of the recent work of fiction, Democracy in Chains – apparently would conclude that Downs (and each of these other scholars) must be a racist leader of a fifth-column assault on democratic institutions because he rejects the elementary-school version of the marvels of majoritarian rule.

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Bonus Quotation of the Day…

by Don Boudreaux on July 4, 2017

in Immigration, Risk and Safety, Seen and Unseen

… is from Bruce Yandle’s insightful essay “Fearless Fosdick and Trump’s Immigration ‘Pause’,” which appears in the Summer 2017 issue of Regulation; Bruce’s essay is available here (after you scroll down a bit):

But removing risk is itself risky business.

DBx: Many conservatives forget this reality – this reality necessitating trade-offs – for matters involving military intervention and immigration.  Many “Progressives” forget this reality for matters involving government regulation of the environment and the economy.

In truth, it’s an excessively risky business to entrust risk-management to centralized political authorities.

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Quotation of the Day…

by Don Boudreaux on July 4, 2017

in History, Philosophy of Freedom

… is from page 42 of Georgetown University law professor Randy Barnett’s brilliant 2016 book, Our Republican Constitution:

The Declaration stipulates that those who govern the people are supposed “to secure” their preexisting rights, not impose the will of a majority of the people on the minority.

DBx: The author of the new fantasy novel, Democracy in Chains, apparently would regard John Adams, Benjamin Franklin, Thomas Jefferson, Roger Sherman, James Wilson and the 51 other signers of the American Declaration of Independence to be enemies of democracy.

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