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Here’s a letter to the Wall Street Journal:

Editor:

Attempting to defend her agency’s ban on noncompete clauses, FTC Chairwoman Lina Khan proclaims that “robbing people of their economic liberty also robs them of all sorts of other freedoms” (“FTC Bans Noncompete Clauses That Restrict Job Switching,” April 23). Ms. Khan has mastered Newspeak. Noncompete clauses are contractual terms negotiated between employers and employees. Employers who offer noncompete clauses no more ‘rob’ employees who agree to these clauses of their economic liberties than do employees who offer, or agree to, these clauses rob employers who agree to these clauses of their liberties. As is true of all contracts, each party gives a concession to the other and receives in return a benefit that each believes to be worth the bargain.

Ms. Khan nevertheless is correct that robbing people of their economic liberties is a grievous offense. But in this case the chief bandit is none other than Ms. Khan, for it is she who is robbing employers and employees of the liberty to structure their economic affairs as they see fit.

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 2 of Douglas Irwin’s excellent 1996 monograph Three Simple Principles of Trade Policy:

Exports and imports are inherently interdependent, and any policy that reduces one will also reduce the other.

DBx: Doug here relates an elementary truth of economics – yet a truth overwhelmingly ignored by pundits and politicians. How many are the pundits and politicians in America who assert that the U.S. trade deficit can be reduced or even eliminated with higher tariffs and other barriers on American imports more onerous restrictions on Americans seeking to purchase foreign-made goods? How many are the pundits and politicians who support the ExIm Bank because they think it to be a means of increasing America’s exports relative to her imports?

When it comes to trade, most politicking and punditry (outside of too few publications such as the Wall Street Journal and Reason) is the intellectual equivalent of Cliff Clavin offering to Sam Malone and Norm Peterson his informed opinion on string theory. If most of today’s politicians and pundits who hold forth on questions of trade had any idea of just how silly and uninformed their ‘analyses’ are, they would be deeply embarrassed to be on record uttering, muttering, and writing what they utter, mutter, and write.

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The Editorial Board of the Wall Street Journal decries the ‘progressive’ monoculture on (especially ‘elite’) U.S. campuses – a monoculture that today is increasingly openly antisemitic. Two slices:

Many protesters on and near campus wear masks or kaffiyehs to disguise their identities. Students have to walk through a gauntlet to get to class. The protesters carry banners calling to “Honor the Martyrs of Palestine” and a sign pointing to pro-Israel counterprotesters as “al-Qasam’s next targets.” Al-Qassam is the military wing of Hamas. That’s a call to kill Jews.

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This crisis in liberal education has been decades in the making. These schools have sown the intolerance their students are demonstrating by putting identity and left-wing politics above the free exchange of ideas. A progressive faculty monoculture has fueled divisive narratives blaming the Middle East’s ills on colonialism and imperialism.

Antisemitism has too often been tolerated within Near Eastern Studies departments. On Oct. 8, 2023, Columbia professor Joseph Massad praised the “awesome” scenes of the Oct. 7 massacre “witnessed by millions of jubilant Arabs.” In 2018 Columbia professor Hamid Dabashi posted on Twitter (now X) that “Every dirty treacherous ugly and pernicious act happening in the world” could soon be traced to “the ugly name of Israel.”

The liberal elites who run these institutions seem to lack the moral self-confidence to stand up to these student bullies. College presidents have to take charge, restore order and protect Jewish students, or the trustees should fire them and find someone who will.

GMU Econ alum Alex Salter’s letter in today’s Wall Street Journal is spot-on:

Mr. Biden argues military aid to Israel and Ukraine would boost the U.S. economy by “buying American products made by American workers.” But using up resources won’t make us richer—especially when they’re spent on means of destruction.

Economists call this the Broken Window Fallacy. Physical destruction appears economically creative, since mobilizing the resources to repair the damage creates jobs and employment. This ignores opportunity cost: but for the destruction, there would be a different but no less valuable flow of economic activity.

The fallacy is even more forceful in the case of military spending. Now we’re consuming resources with the goal of destroying even more resources. If you’ve ever heard that World War II got us out of the Great Depression, you’ve encountered the fallacy in its most dangerous form.

Supporting Israel and Ukraine may be in the national interest. If so, it won’t be because of economics. The president’s proposals could make us freer. But they definitely won’t make us wealthier.

Prof. Alexander William Salter
Texas Tech, Rawls College of Business
Lubbock, Texas

“Why turn off lights for Earth Day when California is already growing dark?”

In the video here, Johan Norberg makes the case that the best economic system for the earth (and for humanity) is capitalism.

J.D. Tuccille writes that “Julian Simon was right: Ingenuity leads to abundance.”

Arnold Kling reflects on his excellent 2004 book, Learning Economics.

My Mercatus Center colleague Alden Abbott explains that “blocking the Nippon Steel acquisition [of U.S. Steel] through CFIUS would have serious negative implications for U.S. international economic policy.” A slice:

Moreover, the U.S. steel industry is very unconcentrated, with U.S. Steel holding a market share of just under 7% in revenue terms. The largest U.S. producer, Nucor, holds a roughly 13% share. What’s more, no U.S. company is among the world’s 10 largest crude steelmakers (seven of the 10 are Chinese). Nippon Steel is the third or fourth largest.

Because of U.S. tariffs and other company contractual commitments, only a very small portion of Nippon’s current market share can be attributed to the U.S. market. (Nippon is essentially absorbing U.S. Steel’s market share.) In essence, the Nippon Steel acquisition would have, at best, a minor (if not zero) effect on market concentration in the unconcentrated American market.

Based on that information, it is hard to envision what antitrust risks or theories of harm based on “increased concentration” (a major concern of the Biden administration) could be concocted.

Mike Munger is correct: “Competition can’t be perfect.” A slice:

If you’ve ever taken an intro economics class, you’ve heard of the idiotic concept of “perfect competition.” The idea is that no firm has any market power, and is forced to accept the “competitive” price. One sign that competition is “perfect” in this way is zero profits. Since if something is perfect, it must be desirable, a new generation of attorneys is attempting a wholesale takeover of antitrust enforcement. They are being led by advocates such as Lina Khan of the FTC, and Timothy Wu of Columbia Law School, who is hailed by some as the “architect” of the Biden administration’s competition policy.

GMU Econ alum Dominic Pino recommends Jay Nordlinger’s essay on the Nobel-laureate economist Vernon Smith.

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… is from pages 342-343 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):

Advocates of reducing the U.S. trade deficit should realize that doing so would also reduce the inflow of capital from abroad. Do we really want to do that? If so, why? U.S. governors and mayors who now go to Europe and Japan with delegations of boosters to attract investors may not have heard that they might be boosting the trade deficit by encouraging capital inflows.

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… is a statement made by my Nobel-laureate emeritus colleague Vernon Smith when he was interviewed recently by National Review‘s Jay Nordlinger:

The reason you’re producing something is that someone wants to consume it, and if there’s no consumption, there’s no production.

DBx: Indeed. And so when advocates of tariffs and industrial policy assert that they want to elevate production over consumption, they are talking gibberish, as the former occurs only insofar as it enables the latter.

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Continuing to archive here at Cafe Hayek as many as possible of my writings….

In my February 25th, 2014, column for the Pittsburgh Tribune-Review I write about my being invited to join the White House Council of Economic Advisors. You can read my column in full beneath the fold.

[continue reading…]

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Wall Street Journal columnist Mary Anastasia O’Grady decries “the Biden-Trump trade war with Mexico.” Two slices:

American politicians on both sides of the aisle seem eager to conflate Chinese EV production in Mexico with the U.S.-Mexico-Canada Agreement, or USMCA. The idea is to denounce anything made in Mexico, as if the U.S.’s southern neighbor and one of its largest trading partners is an enemy.

This is a sop to Big Labor and to the grievance brigades in swing states who pine for the protectionism of the 1980s. It’s also dishonest and dangerous and threatens to drag the U.S. economy back into the destructive 1930s era of the Smoot-Hawley tariff.

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Slumping China is hungry for export markets where it can be competitive. But in the near term that probably doesn’t include the U.S., which is already violating WTO rules with a 27.5% tariff on autos from China—25 points above the “most-favored nation” rate of 2.5%.

Mr. Trump says he’s ready to make it 100% on China cars made in Mexico. The Commerce Department has launched an investigation into what it calls the “national security risks of connected vehicles, specifically PRC-manufactured technology in the vehicles.” In following up on the news from Mexico last week, Reuters reported that “a White House spokesperson said [President Biden] will not let Chinese automakers flood the market with vehicles that pose a threat to national security.”

I don’t know about you, but I can think of a lot of ways that China can spy on the U.S. and a car, which is today a computer on wheels, is hardly required. This is raw protectionism. It’s bad for the innovation and competition that is good for Americans and none of it has anything to do with the USMCA.

The Editorial Board of the Wall Street Journal rightly applauds Columbia University removing from its campus the “Gaza solidarity encampment.” A slice:

It is hardly surprising that the most progressive cities have seen the most protests. No surprise, either, that among those arrested at Columbia Thursday was Barnard student Isra Hirsi, daughter of anti-Israel Rep. Ilhan Omar (D., Minn.). An unbowed Ms. Hirsi tweeted that, in addition to Columbia’s divestment from Israel, she and her fellow protesters are demanding “FULL amnesty for all students facing repression.” Naturally.

Ms. Hirsi and the other protesters are fully entitled to express their view that Israel is pursuing genocide in its war with Hamas. But what the country saw Thursday at Columbia wasn’t about free expression. As President Shafik pointed out, the protest was about disrupting campus life for everyone else and creating “a harassing and intimidating environment for many of our students.” It’s the same for protests designed to prevent others from commuting to work, catching a flight or getting to class.

Ricardo Gomes reports on Elon Musk’s defense of free speech in Brazil.

Bill Shughart understandably criticizes the Department of Justice’s antitrust persecution of Apple. Two slices:

Put another way, 30 to 35 percent of the U.S. smartphone market, as the DOJ defines it, is served by Apple’s competitors, the two most “meaningful” being Google (parent Alphabet) and South Korea’s Samsung Group. Meaningful indeed.

Apple is not a monopolist as economists understand that concept because it does not control anything close to 100 percent of the antitrust-relevant smartphone market. Apple may be big, and the iPhone may now dominate U.S. smartphone shipments, but large market shares today do not guarantee future market supremacy.

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And those rivals, Google and Samsung, are no shrinking violets needing protection by the Justice Department’s antitrust lawyers, who apparently think they know better than smartphone buyers and sellers what the market should look like today and tomorrow. Antitrust law enforcement processes have morphed over the past few years into an ersatz industrial policy that pays lip service to consumers’ welfare but ignores consumers’ choices in favor of indulging the preferences of bureaucrats.

Scott Sumner notes some “anti-Chinese roots of American public policy.” A slice:

Today, American politicians continue to blame the Chinese for corrupting our youth.  China is supposedly to blame for America’s fentanyl epidemic–as if we have no agency.  Not because China exports fentanyl to America, nor because they export fentanyl to Mexico that is re-exported to America.  Rather they are blamed for exporting chemicals that can be used elsewhere to create fentanyl.  As viewers of Breaking Bad are well aware, Americans are quite capable to creating illegal drugs without any help from the Chinese. And prison sentences have generally been longer for drugs preferred by African-Americans (crack cocaine) as compared to drugs preferred by white Americans (powder cocaine).  Racial bias has always been a factor in the war on drugs.

Here’s Jeff Jacoby on the new PBS documentary on the late William F. Buckley, Jr. A slice:

The same combination — ideological clarity, polemical skill, and joy — characterized everything Buckley did. “The Incomparable Mr. Buckley” recounts his support for Barry Goldwater’s 1964 presidential campaign, his own quixotic but influential race for mayor of New York in 1965, his 30-year run as host of TV’s “Firing Line,” his bestselling Blackford Oakes spy novels, and — his towering achievement — the landslide election of Ronald Reagan, who always credited National Review for turning him into a conservative.

The film dwells, understandably, on the most grievous failing of Buckley’s career: his early and strenuous opposition to the civil rights movement. In 1957, National Review published “Why the South Must Prevail,” an odious editorial that argued that as long as whites were “the advanced race,” they were entitled to “prevail, politically and culturally,” over Black citizens.

Unmentioned in the documentary is that Buckley and National Review completely reversed their position on civil rights over the next decade. More than once Buckley acknowledged that he had been wrong. As Tanenhaus has noted (though not in the film), Buckley greatly admired Martin Luther King Jr. and was an early advocate of a national holiday to honor him.

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… is from Royall Brandis’s review, in the January 1979 Southern Economic Journal, of Charles Lindblom’s Politics and Markets:

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GMU Econ alum Dominic Pino puts the recent UAW victory in Tennessee into perspective. A slice:

The reason the election is such a big deal is that this same facility in Tennessee voted against UAW representation in 2014 and 2019. Tennessee is a right-to-work state, and without the aid of government coercion to make workers join, the vast majority of Americans don’t want to be part of a union.

Despite wall-to-wall positive coverage of labor unions in the past two years, and constant press about the union “renaissance” and “resurgence,” the union membership rate in the U.S. declined to a record low of just 10 percent in 2023. It’s only 6 percent in the private sector.

The Editorial Board of the Wall Street Journal is rightly critical of “the quiet student loan forgiveness scam.” Two slices:

Under Mr. Biden’s SAVE plans, a typical borrower will pay only $6,121 for every $10,000 borrowed. Hence, the plans covert loans into a 39% “grant” without an appropriation from Congress. “Indeed, the Federal Government bragged in March that the clear majority of individuals on this new plan—57%—are paying nothing,” one state lawsuit notes.

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As for legal authority, the department refers to a section of the Higher Education Act that supposedly lets Mr. Cardona “craft ‘an alternate repayment plan,’ under certain circumstances.” But it omits that the law specifies that this authority is to be exercised “on a case by case basis” to “accommodate the borrower’s exceptional circumstances.”

The Administration is making millions of borrowers eligible for forgiveness and zero payments no matter the circumstances. Even the Obama Administration in a 2015 rule-making disclaimed the authority to relax repayment terms as Mr. Biden has done because “such a change would require congressional action.”

Andrew Stuttaford decries the Tories’ illiberal effort to ban tobacco in Britain.

“Socialism is a luxury good.”

On a note related to the link just above, The Economist reports that “Generation Z is unprecedentedly rich.” A slice:

In America hourly pay growth among 16- to 24-year-olds recently hit 13% year on year, compared with 6% for workers aged 25 to 54. This was the highest “young person premium” since reliable data began (see chart 3). In Britain, where youth pay is measured differently, last year people aged 18 to 21 saw average hourly pay rise by an astonishing 15%, outstripping pay rises among other ages by an unusually wide margin. In New Zealand the average hourly pay of people aged 20 to 24 increased by 10%, compared with an average of 6%.

Emma Camp reports on the Biden administration’s latest battering of liberal values.

Here’s the abstract of a new paper by Matteo Crosignani, Lina Han, Marco Macchiavelli, and André Silva: (HT Tyler Cowen)

Amid the current U.S.-China technological race, the U.S. has imposed export controls to deny China access to strategic technologies. We document that these measures prompted a broad-based decoupling of U.S. and Chinese supply chains. Once their Chinese customers are subject to export controls, U.S. suppliers are more likely to terminate relations with Chinese customers, including those not targeted by export controls. However, we find no evidence of reshoring or friend-shoring. As a result of these disruptions, affected suppliers have negative abnormal stock returns, wiping out $130 billion in market capitalization, and experience a drop in bank lending, profitability, and employment.