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David Henderson explains why he suggests that the Trump-Vance motto should be MTLA – or, “Make Toasters Less Affordable.”

Also calling out Trump and Vance for their ignorance of trade and protectionism is Wall Street Journal columnist Allysia Finley. Two slices:

J.D. Vance isn’t weird, but his ramblings on economics are. The senator earlier this year dismissed economics as “fake” in a rant about modern refrigerators. He expounded at a rally last week in Henderson, Nev.: “We believe that a million cheap knockoff toasters aren’t worth the price of a single American manufacturing job.”

That’s a strange place to preach from the populist pulpit, considering that the number of manufacturing jobs has nearly doubled in Nevada in the past two decades and grown faster than in any state since the start of the pandemic.

Pace Mr. Vance, U.S. manufacturing jobs aren’t leaving for China. They are shifting from the Rust Belt, Northeast and West Coast to Sunbelt states such as Nevada, Arizona, Texas and Florida, which have young and growing workforces, cheaper energy, lower taxes, right-to-work laws and proximity to trade partners, especially Mexico.

It’s true that U.S. manufacturing employment has declined since the start of the century. Mr. Vance blames China’s entry into the World Trade Organization, which gave Beijing increased access to the U.S. market. But that’s only part of the story. Technology also increased labor productivity, enabling manufacturers to produce more with fewer employees.

The combination of cheap Chinese imports and more efficient U.S. manufacturing kept prices down and increased Americans’ purchasing power. In the two decades before the pandemic, prices for clothes, furniture, appliances, toys and televisions declined, often sharply.

…..

Cheap labor isn’t the reason manufacturers are building new factories in the Sunbelt. Wages for manufacturing workers in Texas now rank among the highest in the country. Instead, they are foremost seeking a business-friendly environment, something China increasingly lacks, and a large pool of industrious workers who can pass a drug test.

Mr. Vance’s toaster line may win some votes, but his prescription for higher tariffs won’t bring back Midwest manufacturing jobs.

Chris Freiman weighs in on the ill-consequences of rent control. A slice:

Suppose Caroline is an extraordinarily talented surgeon who has received a lucrative job offer at a big city hospital. She’s looking for nearby housing. Dave is a professional Youtuber who films his content in an apartment near the hospital, although he could do his job anywhere. Without rent control, Caroline could outbid Dave for the apartment, which, again, would be the efficient outcome. It’s more important that a surgeon live near the hospital so that she can perform surgeries than that a Youtuber live near the hospital because he enjoys the local coffeeshops. But if rent controls cap the amount that Caroline is able to offer for the apartment, she’s not able to outbid Dave and he may well end up with the apartment instead. And if Caroline is unable to secure nearby housing, she may be unable to accept the job. This outcome is not only bad for her, it’s also bad for the patients who would have benefited from her surgical expertise. So while rent control with exemptions is better than rent control without exemptions, it is still unable to match the productive and allocative virtues of a free market.

The Wall Street Journal‘s Editorial Board understandably asks:

Does anybody in politics understand tax policy these days? The Biden-Harris Democrats want to raise tax rates to Thomas Piketty French socialist levels. Republicans want to cut taxes, but they want to do so for specific groups to buy their votes. They’ve all lost the growth plot.

Washington Post columnist Megan McArdle isn’t impressed with Kamala Harris’s record on crime. A slice:

If and when Harris is asked to defend her previous remarks, expect to hear one talking point again and again: that violent crime is down from its pandemic peak and, in many U.S. cities, is actually a smidge lower than it was in 2019, according to the Council on Criminal Justice. She’ll say this because it’s true (and because it’s great news). But that won’t necessarily soothe voters, who are worried about a lot more than the homicide rate. They’re worried about the air of lawlessness that pervaded a lot of public spaces during the pandemic and still hasn’t cleared.

David Harsanyi isn’t fooled by Biden’s scheme to politicize the U.S. Supreme Court.

The Wall Street Journal‘s Mary Anastasia O’Grady decries the support in election-stealing given by Brazil’s far-left ‘leader,’ Lula, to Venezuela’s far-left ‘leader,’ Maduro. A slice:

The July 28 presidential election in Venezuela is causing trouble for Brazilian President Luiz Inácio “Lula” da Silva. The 78-year-old leftist has spent his adult life endorsing Fidel Castro while claiming to care deeply about human rights and democracy. He’s mostly gotten away with it. But now he’s up to his neck in the defense of the military dictatorship of Nicolás Maduro as the Venezuelan tries to steal an election.

There’s a fallacy about an evolved Lula being a vegetarian rather than a meat-eating man of the left. You know, he’s no longer a real communist. But his treachery in Venezuela suggests he’s as red as a raw steak. There’s nothing remotely civilized about putting the goal of ideological domination above the lives of millions of innocent Venezuelan civilians, as he is doing.

Nick Gillespie talks with Glenn Loury.

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… is from page 464 of F.A. Hayek’s profound and important 1964 article “Kinds of Order in Society” (available without charge on-line here) as it appears in Liberty Fund’s 1981 single-volume collection of New Individualist Review:

[I]f the overall character of an order is of the spontaneous kind, we cannot improve upon it by issuing to the elements of that order direct commands: because only these individuals and no central authority will know the circumstances which make them do what they do.

DBx: The knowledge problem first identified by Ludwig von Mises, and elaborated so brilliantly by Hayek, doesn’t arise only when full-on socialism is attempted. This problem condemns to failure even industrial policy and other milder forms of government ‘planning’ of resource allocation. Yet this problem is today completely ignored by proponents of industrial policy. By ignoring this problem they effectively assume it away – and then they, these proponents of industrial policy, think themselves clever and cutting-edge by labeling as “market fundamentalists” or “neoliberals” those of us who point to the reality and inescapability of the knowledge problem, as if attaching derogatory labels to an argument and its proponents suffices to answer that argument convincingly.

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Here’s a letter to a thoughtful Café patron:

Mr. E__:

Thanks for your e-mail and kind words about Café Hayek. They mean much.

You write: “One question often in my mind when reading your posts is, ‘but what about the fact that the CCP are brutal dictators driven by an evil ideology?’  Seems this should color an otherwise purely economic analysis, e.g., on free trade vs tariffs with China.”

Your question is excellent, but it has, I think, no sober answer that can’t be soberly challenged. The difficulties that prompt it are purely pragmatic, and so too must be the considerations in dealing with these difficulties. I have no firm answers, only some thoughts. Here are three.

First, the extent of the Chinese people’s integration into the global economy is a good, although not perfect, measure of their de facto economic freedom. For the Chinese economy to continue to produce outputs that Americans want to buy, and to do so in ways that enrich rather than impoverish China, producers there must have some minimum amount of at least de facto property rights in inputs and be largely free to respond to market signals. If they have too few of these property rights or too little of this freedom, then on-going economic activity in China will make the Chinese people ever poorer.

As awful as the situation is today under Xi, under Mao the CCP was far more repressive and hostile to markets. The Chinese under Mao were, to put it mildly, not successful exporters. As the CCP moves China further back in the direction of Maoism, China will itself reduce its people’s ability to trade with the west.

Second, the Chinese people aren’t the CCP and the CCP isn’t the Chinese people. The vast majority of Chinese people, I’m sure, are decent individuals with the misfortune of being ruled by a brutal thugocracy. When the U.S. government restricts Americans’ trade with the Chinese, it therefore makes both Americans and innocent Chinese people poorer. On the other hand, such restrictions also reduce the resources available to the Chinese state, potentially diminishing its ability to wage hot wars. Reasonable people can disagree about the weights to be attached to each of these effects, but reasonable people cannot deny this trade-off or conclude a priori that even the smallest negative impact of U.S. trade restrictions on the Chinese state is worth whatever are the negative impacts of these restrictions on ordinary Americans and Chinese.

Third, while no one should be so foolish as to suppose that trade eliminates all prospects of hot shooting wars, trade does reduce these prospects – and, hence, trade restrictions increase them. I think that Dan Drezner was correct when he wrote last September that “the geopolitical benefits of interdependence have been underestimated. Even in 2023, China’s interdependence with the Organisation for Economic Co-operation and Development economies has acted as a constraint on its foreign policy behavior.”

There are no guarantees. Trade enriches the people of trading nations and, hence, enriches their governments. The former consequence is unambiguously good; the latter not nearly as much. But history is crystal clear that economic nationalism fuels both domestic impoverishment and international conflict. The strong presumption should be in favor of keeping trade with China free.

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 page 199 of David Mamet’s 2022 book, Recessional: The Death of Free Speech and the Cost of a Free Lunch:

The Constitution exists not to provide “unity” but to assert and demand the subjugation of unbridled interest to previously agreed-upon laws (and so, perceived or not, to the underlying customs upon which these laws are based).

DBx: Yes.

What Mamet here calls “laws” are what the late Nobel-laureate economist James Buchanan and others who work in the tradition of the Virginia School of Political Economy call “constitutional rules.”

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George Will decries Kamala Harris’s and Donald Trump’s unseriousness. Two slices:

The Republican Party, in its Trappist mood, has taken a vow of silence, not mentioning the debt in its platform. But at least it has a platform. In 2020, it just preemptively endorsed whatever pleases its Dear Leader. Democrats, who are comparatively serious, promise to make unpopular minorities (the rich, corporations, etc.) cough up the trillions squirreled away in their mattresses.

Both candidates have (to dignify their irresponsibility with Jeffersonian cadences) “sworn upon the altar of God eternal hostility against” any modification of the entitlement programs (Social Security, Medicare) that are driving the nation’s indebtedness. This is redundant evidence that, beneath the foam of rhetorical discord, the political class is more united by class interest than it is divided by ideology: Both parties enjoy running huge annual deficits even when, as today, the economy is growing and unemployment is low.

…..

Unfortunately, the candidates will pass the time until Election Day pelting each other with insincerities. Vice President Harris vows to end the border crisis that became one because of actions and inactions of the Biden-Harris administration. She promises to improve the cost of livingthat soared during the inflation that reached a 40-year high under that administration. And she promises to rescue women from Trump’s supposed abortion extremism. (Never mind that the overturning of Roe, which she operatically deplores, put abortion policy beyond the federal government’s reach.)

Trump is promising whatever pops into his skull during one of those bouts of rhetorical diarrhea that enchant his audiences. For example, during his acceptance speech, which was of Castroite length, he assured the Milwaukee convention that the Green Bay Packers will have a swell season.

The Wall Street Journal‘s Editorial Board wonders why Chevron took so long to move its headquarters from California to Texas. Here’s the Board’s conclusion:

To sum up, California’s regulators want to take over an industry in the name of mitigating the costs of their own destructive policies. No wonder Chevron is fleeing for its life.

Also writing about the Chevron corporation’s decision to leave California is National Review‘s Andrew Stuttaford.

Juliette Sellgren talks about experimental economics with Charles Noussair.

Bob Graboyes explores some fascinating counterfactual history.

Emma Camp reports distressing survey results about Americans’ attitude toward the First Amendment.

The only thing surprising about this excellent new post by Arnold Kling is that he seems to be somewhat surprised by just how utterly scurrilous is the typical successful modern American politician and political hanger-on. [DBx: My strong presumption has long been that politicians, regardless of party, who attain national prominence are so exclusively and narrowly self-interested that they would shame homo economicus. A heavy burden is on each of them individually to persuade me otherwise. I’m surprised when, as sometimes happens, I encounter an honorable person occupying high public office in Washington. I’m never surprised to be confirmed in my presumption, as I usually am, that Sen. Jones, Rep. Williams, or Commissioner Jackson is a haughty and venal – and often dangerous – jackass.]

Matt Darling busts the myth that most Americans live paycheck-to-paycheck. (HT HumanProgress.org)

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… is from page 5 of Milton and Rose Friedman’s essential 1962 book, Capitalism and Freedom:

As it developed in the late eighteenth and early nineteenth centuries, the intellectual movement that went under the name of liberalism emphasized freedom as the ultimate goal and the individual as the ultimate entity in the society. It supported laissez faire at home as a means of reducing the role of the state in economic affairs and thereby enlarging the role of the individual; it supported free trade abroad as a means of linking the nations of the world together peacefully and democratically. In political matters, it supported the development of representative government and of parliamentary institutions, reduction of the arbitrary power of the state, and protection of the civil freedoms of the individual.

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Here’s a letter to a rising college senior who asked me to keep him anonymous.

Mr. N__:

Thanks for your e-mail. I’ll be happy to read a draft of the paper that you plan to write this coming semester.

You say in your e-mail that you “see no real problem in letting industrial policymakers experiment with different ways to improve economic performance.  An experiment which fails will be ended with another one tried.  Where’s the harm?”

With respect, I disagree, and for too many reasons to list here. But I spell out what is perhaps my most fundamental disagreement.

The seriatum experiments carried out under industrial policy are wholly unreliable compared to the concurrent experiments that are always taking place in free markets. Industrial-policy experiments compete only against hypotheticals – against the goals articulated beforehand by their proponents, as well as against what people imagine might have occurred otherwise. No such experiment competes concurrently – that is, at the same time – against actual alternative attempts to satisfy market demands.

Suppose that ABC, Inc., protected from competition and subsidized by industrial policy, annually produces 250 million smartphones. Is this outcome successful or not? It’s impossible to tell because other producers were restricted in their ability to compete with ABC. Had competition not been restricted, perhaps the XYZ Co. would have arisen to annually produce 300 million smartphones or, maybe, would have innovatively introduced a completely new kind of device that’s far superior to the smartphones produced by ABC.

With restrictions on entry into the industry and on consumers’ ability to spend their incomes as they see fit, if ABC nevertheless goes bankrupt we can confidently conclude that this industrial-policy experiment failed. But if ABC remains solvent and active, we can make no confident conclusion about the outcome of this industrial policy because we have no knowledge of what would have occurred if ABC weren’t protected and subsidized. What appears to be a brilliant success might well be a stunning failure when compared to what would have arisen under market competition. Yet with industrial policy, no such comparisons are possible. In free markets, such comparisons are made every moment of every day.

Despite their eloquence, the excellence of their motives, and the fervor of their pleas, proponents of industrial policy have no access to the knowledge they’d need in order for them to engineer actual economic improvements. And as Deirdre McCloskey writes, “the model of the future is no substitute for the entrepreneur’s god-possessed hunch.”

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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David Henderson argues that compulsory national service is worse than even military conscription. A slice:

One of the most important freedoms we have is the freedom to choose what to do with our lives, whether we are old or young. A national-service draft would destroy that freedom whether, depending on the particular version, for one year or two years. That’s wrong and is inconsistent with one of our proudest founding documents, which many of us celebrated last month. The Declaration of Independence stated that among our “unalienable rights” are “Life, Liberty, and the pursuit of Happiness.” A draft, whether for military or civilian service, violates the right to liberty.

And it’s not just the Declaration of Independence that speaks to liberty. The US Constitution, specifically the Thirteenth Amendment, guarantees freedom not to be drafted. Section I of that Amendment states, “Neither slavery nor involuntary servitude, except as a punishment for crime whereof the party shall have been duly convicted, shall exist within the United States, or any place subject to their jurisdiction.” Some people argue that Congress’s goal in passing that amendment was to end slavery and prevent its reimposition. But if that had been the only goal, Congress would not have added the words “nor involuntary servitude.” A draft is clearly involuntary servitude.

Steven Landsburg proclaims and explains the value of price theory. Two slices:

Here’s an economics brain teaser: Apples are provided by a competitive industry. Pears are provided by a monopolist. Coincidentally, they sell at the same price. You’re hungry and would be equally happy with an apple or a pear. If you care about conserving societal resources, which should you buy?

Most of my sophomore-level economics students can solve this problem, which I posed on an exam. Almost nobody else can. I’ve tried it out on a lot of smart lawyers, accountants, entrepreneurs and scientists. Neither can the latest version of ChatGPT.

First I’ll tell you the answer; then I’ll tell you the moral. In a competitive industry, prices are a pretty good indicator of resource costs. Under a monopoly, prices usually reflect a substantial markup. So a $1 apple sold by a competitor probably requires almost a dollar’s worth of resources to produce. A $1 pear sold by a monopolist is more likely to require, say, 80 cents worth of resources. To minimize resource consumption, you should buy the pear.

The moral is that we need well-trained economists. Economists know things that are true, important and entirely counterintuitive to anyone who hasn’t had the right kind of training—and at least for now, that includes the bots.

Economists learn to reason quickly, rigorously and accurately from facts to an important conclusion. That skill is usually taught in courses called price theory, or sometimes Chicago price theory in honor of the academic venue where it was developed into an art form by such practitioners as Milton Friedman, George Stigler, Gary Becker and Deirdre McCloskey.

…..

Economics without price theory is knowledge without wisdom. Any economist can analyze data to estimate how many lives you’d save by requiring car seats for toddlers on airplanes. It takes a price theorist to ask how many lives you’d lose when the resulting increase in airfares prompts families to drive—which is far more dangerous—instead of fly. Price theory breeds wiser policymakers and wiser voters. If we fail to teach it, that’s a tragedy.

[DBx: At GMU Econ we still teach price theory, at both the undergraduate and graduate level. Unfortunately, as Landsburg indicates, GMU Econ is today a rarity.]

Arnold Kling is correct about the economist Raj Chetty – an economist who does not seem to be much-interested in price theory. A slice:

Whenever Chetty mines data, he discovers golden ways for government to reduce poverty. Pay kindergarten teachers more! Change people’s neighborhoods! Social engineering can work — follow the science!

GMU Econ alum Nikolai Wenzel warns against wealth taxes.

Chelsea Follett talks with Rainer Zitelmann about how nations escape poverty.

Steven Greenhut traces J.D. Vance’s “odd political evolution.” A slice:

Vance’s statement defines the central dividing line between paleo-conservatives such as Patrick Buchanan—and classical liberals such Ronald Reagan. The former believe America is a nation built by and for a specific people. They dislike free markets, which are corrosive of their cultural preferences. They want to vastly limit immigration. They have no problem with big government as long as they control it.

By contrast, classical liberals believe America is based on the universal idea of freedom and economic opportunity. They focus on reducing the size and power of government—and creating opportunities for everyone wherever they or their ancestors were born. Classical liberals may want an orderly immigration process, but they’re more interested in turning immigrants into Americans than sending them home.

Classical liberals—and I count myself among them—view free trade as a wonder, not a threat. And while I’m a long-time critic of America’s endless foreign interventions and wars, I care (unlike Vance) about what happens in Ukraine. We believe in liberty for everyone, not just members of our clan.

My Mercatus Center colleague Liya Palagashvili asks if gig work is transforming the labor market.

Andrew Sullivan reflects insightfully on the choice – “choice” – we Americans have in November between Harris and Trump. (HT Peter Minowitz) A slice:

But with Harris, we don’t just have a leftist. We have someone intent on ending any kind of color-blind meritocracy in America and replacing it with equity-based, systemic discrimination against “oppressor” groups in favor of the “oppressed”. That is as radical an assault on liberal democracy and a free society as the authoritarianism on the right. That its diktats are enforced by teachers’ unions, activist journalists, DEI consultants, and federal bureaucrats doesn’t lessen its unaccountable clout. And so far, what passes for Harris’ campaign is largely identity-based. Instantly and instinctively, her supporters divided into ethnic and demographic groups, segregating men and women, white and black, as wokeness demands. White Dudes For Harris! White Women For Harris! AANHPI for Harris! LGBTQIA2S+ for Harris!

Here’s Sheldon Richman on classical liberalism and democracy. A slice:

First, classical liberalism, or what we moderns call libertarianism, is not mainly about believing; it’s about respecting each individual’s person, property, and liberty, and particularly about the government’s respecting those things. It’s also about understanding that freedom leads to social cooperation (the division of labor and trade), peace, and prosperity. Economic theory and history show it.

Second, it’s democracy, not freedom, that requires faith in the absence of evidence. It’s a religion that holds that If we believe hard enough, tens of millions of us going to the temple polls to vote will make the right decisions. No one explains why it should work out that way. And it doesn’t. It’s a faith in magic, and magic is not real.

There is a glitch in the democratic religion: most voters are ignorant. Poll after poll shows that most people know little about the government and the economic process, which the government regulates. They are not only ignorant of basic economic theory, which the evaluation of candidates requires; they are also ignorant of basic indisputable political facts, such as who their so-called representatives are, how they vote, which party controls the Senate and House, and how much the government spends and borrows. How can they vote wisely? (For more on voter ignorance, check out the many YouTube appearances of George Mason Law Professor Ilya Somin and his book Democracy and Political Ignorance: Why Smaller Government Is Smarter, 2d ed.)

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… is from Winston Churchill’s August 22, 1936, essay in Collier’s, “What Good’s A Constitution?“:

One of the greatest reasons for avoiding war is that it is destructive to liberty. But we must not be led into adopting for ourselves the evils of war in time of peace upon any pretext whatever. The word ‘civilization’ means not only peace by the non-regimentation of the people such as is required in war. Civilization means that officials and authorities, whether uniformed or not, whether armed or not, are made to realize that they are servants and not masters.