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… is from page 201 of my late, great colleague Walter Williams’s May 1993 article in Reader’s Digest, “What Trade Laws Cost You”:

By maintaining trade barriers or erecting new ones in “retaliation,” we abet an absurd misconception. A Sheldon Richman of the Cato Institute notes: “People often view world trade as if it were the Olympics and only one nation could come in first in any contest.” But we are not talking contest; we are talking market. When someone buys a Buick made in Oklahoma rather than a Chevrolet made in Ohio, we don’t read news headlines about Oklahoma “beating” Ohio and ruining that states’s “balance of trade.” The bottom line in any trade situation should be how satisfied the individuals involved in the transactions are – whether it’s the American driver of the German car or the German businessman who invests the profits from that car in an American business.

DBx: Yes.

……

I can find no on-line version of this article by Walter.

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George Will rightly ridicules today’s ridiculous FTC. Two slices:

Occam’s razor, or the principle of parsimony, says that when seeking to solve a puzzle, first try the simplest explanation. So: Perhaps the Biden administration, with its pronoun police and it’s-for-your-own-good-that-we-are-coming-for-your-stoves annoyances, is riddled with Republican moles bent on making progressivism ridiculous.

How else to explain the Federal Trade Commission’s antitrust worrywarts mounting their high horses and galloping off to rescue affluent consumers from the threat to “affordable luxury” or “accessible luxury” in the market for women’s high-end handbags? Those phrases are, however, semi-oxymorons. And what can “monopoly” mean concerning entirely discretionary purchases?

Tapestry, which owns Kate Spade, Stuart Weitzman and Coach, wants to buy, for $8.5 billion, Capri, which owns Versace, Jimmy Choo and Michael Kors. The two firms’ combined 2023 revenue was about $12 billion. This is about $80 billion less than the revenue of the Paris-based luxury giant LVMH, which owns, among many other status conveyors (e.g., Tiffany, Bulgari, Dior, Louis Vuitton), Hermes, which makes Birkins, the ne plus ultra of to-die-for handbags.

…..

The current FTC, which thinks it has a roving commission to prevent all imperfections, actual or anticipated in the U.S. economy, also opposes the Tapestry-Capri merger because the firms’ hourly wage workers might suffer from diminished competition for such labor. Making a mountain from this hypothetical molehill will strain even the FTC’s imagination: The two companies combined have only 33,000 employees globally, fewer than Walmart has just in Wisconsin.

Gary Galles makes a strong case for repealing the appalling Robinson-Patman Act.

Colin Grabow’s letter in today’s Wall Street Journal is superb:

The starting point for the kind of U.S. maritime renewal called for by Rep. Mike Waltz and Sen. Mark Kelly (“China’s Sea Power Leaves U.S. Adrift,” op-ed, May 23) must be addressing the Jones Act. This protectionist law restricts domestic waterborne transportation to vessels built and registered in the U.S.

Theoretically meant to assure a capable fleet and robust maritime industrial base, the Jones Act has instead helped produce a shipbuilding industry whose output trails the likes of Singapore and Croatia, and a fleet of aging ships reliant on Chinese state-owned shipyards for their considerable maintenance needs. Shielding shipyards from foreign competition and forcing Americans to pay vastly inflated prices for vessels hasn’t proved conducive to either a large, modern fleet or competitive shipbuilding.

To bring a measure of sanity to this law, vessels constructed in allied shipyards should be exempted from the Jones Act’s U.S.-built requirement. Access to less costly vessels would promote the U.S. merchant fleet’s expansion and modernization and generate more repair and maintenance opportunities for U.S. shipyards.

Vague calls for action and tepid proposals that leave sacred cows such as the Jones Act untouched will not suffice. An urgent course correction is needed.

Colin Grabow
Cato Institute
Washington

Scott Lincicome is inspired by Ryan Bourne’s reflections on the war on prices.

These revelations, as we discussed here in Capitolism two years ago, materialize because prices “are a giant neon sign about what’s going on in a particular market,” quickly conveying massive amounts of fragmented knowledge via a single, easily understood, and highly visible number. Thus, “High prices … tell difficult truths about supply and demand and, more importantly, government policies affecting each.”

And often politicians backing those policies simply can’t handle the truth.

The Editorial Board of the Wall Street Journal asks a reasonable question: “Which is a bigger danger to retailers in California—thieves or state lawmakers?” Two slices:

California has been losing retail jobs amid an increase in online shopping and theft. Walgreens has shut more than a half dozen stores in San Francisco in recent years, blaming in part organized retail crime. At the same time, discount grocers with lower labor costs are gaining ground. These trends increase the need for retailers to become more efficient, which unions oppose when it reduces dues-paying union employees.

Enter the state Senate, which last week passed a bill to limit self-checkout at grocery and drug stores. Some stores now task one employee with supervising several kiosks and assign more when needed. The legislation would require one employee who is “relieved of all other duties” to monitor at most two self-service stations.

…..

The bill’s sponsor, Sen. Lola Smallwood-Cuevas, claims her goal is to reduce shoplifting, as if retailers want to be pillaged. If Democrats truly cared about theft, they’d champion reforms to the state’s Prop. 47, which effectively lets organized criminals plunder stores with impunity as long as they steal less than $950 in goods each time.

Instead, Democrats are hitting retailers when they’re down. When their regulations harm workers, they will blame the businesses. Robots could surely run California better than the gang in Sacramento.

Paul Schwennesen is no fan of Steven Conn’s The Lies of the Land. Two slices:

Though he doesn’t come right out and say it, Conn clearly wants to skewer the sacred cow of the American Rustic in pursuit of larger game—Big Capital or the free market more generally. Conn repeatedly betrays a predictable lefty-historian’s anti-capitalist streak: using “land grab” to describe voluntary sales, claiming that capital “often bought up the state and local politicians,” or that “almost as an afterthought, Capital paid for the workers … as exploited a class of workers as Karl Marx ever imagined.” He trots out the tired fabricated Upton Sinclair clichés about slaughterhouses with “satanic dark interiors,” that “brutalize their workers” while paying them “pittance wages,” and so on. He doesn’t, in short, have much faith in the ability of free peoples to freely transact—all are instead victims, trapped in the pernicious thrall of a cabal of corporate cutthroats. He doesn’t imagine that people are free to make comparatively better choices for themselves at the margins, and that these choices have enormous positive cumulative effects.

…..

The New Yorker magazine (which wrote an elegant, if predictably sympathetic, review of Conn’s book), shares Conn’s disaffection with the dynamism of the marketplace. It laments the corporatization of small-town America, noting the dramatic shifts in labor force and retail choices that confront rural Americans today:

As jobs rush out, discount retail chains swoop in—notably Dollar General, which has more than four times as many stores in the US as Walmart. Although its former chief executive, Cal Turner Jr. has written a book about Dollar General’s “small-town values,” the corporation essentially preys on distressed rural communities. It pursues profits by minimizing staff and pay, and by shutting its stores whenever they stop making money.

“Essentially preys” is also a way to say Dollar General does not prey on its customers—instead it offers competitively priced things rural people want in places they don’t have to drive hours to get to. I share Conn’s and the New Yorker’s tender aesthetic sensibilities and would frankly prefer the quant little brick mercantile that replaced our steamboat docks two centuries ago, but I don’t get to make that decision for people. And so I go to Dollar General—our local outlet is run by a guy named Clint, who knows the kids’ names and who fills the same role as his shopkeeper forebears. Beyond the ugly façade, I really have a hard time justifying the antipathy toward Dollar General. Conn’s critique of rural America’s sellout of its values, in short, rings hollow. Moreover, Conn’s and the New Yorker’s brand of sneering embodies precisely the elitism that powers the rural angst Conn professes to want to understand.

Boston Globe columnist Jeff Jacoby looks back 100 years on “the law that ruined America’s immigration system.” A slice:

ONE HUNDRED years ago this month, President Calvin Coolidge signed the Immigration Act of 1924. Passed by large majorities in the House and Senate, the law overturned the system of mostly free immigration that had prevailed for the previous century and a half, transforming America from a collection of English colonies hugging the Atlantic Coast into a mighty, continent-spanning nation of immigrants. In place of the old system, Congress created strict limits on the number of newcomers who could immigrate to America and imposed an annual global quota of just 165,000.

For the first century and a half of American history, “illegal immigration” was a nonexistent concept. Individual foreigners could be excluded by law for specific reasons — for example, being guilty of crimes of “moral turpitude,” having a contagious disease, or being a known anarchist. Immigrants were not admitted if they were likely to become a “public charge,” dependent on government assistance. Otherwise, almost anyone who could get to America was welcome to become a legal permanent resident.

David Henderson argues that both legal and illegal immigrants promote U.S. economic growth. A slice:

[Donald] Luskin points out, and it’s hard to disagree, that the state of the southern border is a mess. Yet, there is a partial fix that he doesn’t discuss: get rid of the restriction that those who apply for asylum must wait 180 days before working. It’s that restriction that causes many of the recent immigrants to go on welfare and help break the budget of the city governments of New York and of other major cities.

Amichai Magen uses Adam Smith as a “guide to the evolution of better political order.”

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… is from page 92 of Thomas Sowell’s 2023 book, Social Justice Fallacies:

In politics – whether electoral politics or ideological politics – the word “crisis” often means whatever situation someone wants to change. Far from automatically indicating some dire condition threatening the public, it often means simply a golden opportunity for surrogates to use the taxpayers’ money and the government’s power to advance the surrogates’ interests, whether these interests are political, ideological, or financial.

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Here’s a letter to the Wall Street Journal:

Editor:

Henry Lessner claims that “school choice in Texas will benefit no one except those who already pay for private school. Moving to public funding of private schools will also tend to resegregate society” (Letters, May 30).

Wrong on both counts. With school choice, even if not a single child from poor- and middle-income families ends up being enrolled in private schools, the enhanced potential of such enrollment created by school choice will incite government schools to improve the quality of the schooling they offer to their pupils. As for Mr. Lessner’s assertion that school choice will “resegregate society,” I recommend that he survey his local grocery-store scene. He’ll find there no evidence that the ‘food choice’ made possible for poor people by food stamps – which are vouchers to spend government money on food sold by private companies – has resulted in segregated grocery stores. Why would school choice produce a different outcome for schooling?

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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In my latest column for AIER, I address some misconceptions about economics and liberalism. A slice:

Efficiency describes a relationship between means and ends. Efficiency says nothing whatsoever about the contents of the ends. If you want to drive this morning from Philadelphia to New York in the shortest period of time, a well-functioning GPS navigator will show you the appropriate route, one that would likely include a long stretch on I-95. If, in fact, there’s no alternative route that you could drive that would get you to New York more quickly, then the route displayed by your GPS device is efficient given your goal. But if your goal is instead to take in some beautiful scenery along the way, subject to getting to New York before nightfall, then the most-efficient route will be one that keeps you off of I-95 and in your automobile for several hours more than you’d spend if you took the fastest route.

To act efficiently is simply to act in that way that best enables you to achieve your goal, whatever that goal might be. And because you have many goals, to achieve a goal efficiently leaves you with as many as possible resources — money, time, energy — left over to pursue your other goals, whatever they might be. You want to drive from Philadelphia to NYC this morning as quickly as possible so that you have as much time as possible to prepare for a late-afternoon job interview in Manhattan. Had you erred and driven a route other than the shortest, some of the time and energy that you would have had available to prepare for your job interview gets wasted driving. That same amount of time and energy would not, however, have been wasted had your goal instead been to take in lots of beautiful scenery.

There is, in short, no way to identify an efficient course of action independently of the actor’s goals. Yet once acceptable goals are specified, along with alternative, available means of pursuing them, there can be no objection to choosing the efficient course. Legitimate objections might well be made to the goals. Goals might be justly classified as ill-advised or even immoral. But given any set of acceptable goals, it’s foolish to warn against pursuing them efficiently. And it is literally illogical to insist that some degree of efficiency in pursuit of these given goals should be sacrificed in order to achieve some other objective or to better promote some other outcome, for to so insist would be to treat the stipulated set of goals, not as given, but as changeable.

When we liberal economists praise the market for its efficiency, we praise nothing more — or less — than what we believe to be the free market’s singular success (although, of course, not perfection) at enabling people to achieve as many as possible of their peaceful goals. When we protest against government interventions such as protective tariffs, we ultimately do so not because these interventions result in lower real GDP or wages. Rather, we protest because some individuals’ ability to pursue their peaceful goals is artificially restricted in order to artificially enhance other individuals’ ability to pursue goals – which, in effect, means that the government uses its coercive power to conscript some individuals to serve the ends of other individuals. Because there’s no reason to think that such coerced engagements are mutually beneficial – indeed, because there’s every reason to think that such coerced engagements are “negative sum” – the classical-liberal economist concludes that, insofar as the goal of economic policy is maximum possible material welfare for everyone, interventions such as protectionism are inefficient because these interventions prevent the achievement of that goal.

Reasonable people can and do disagree about what are and aren’t acceptable goals. Among the virtues – so says the classical liberal – of the free market is that it minimizes the role of coercion in settling such disputes. Aware of his and everyone else’s intellectual puniness, the classical liberal is never certain enough of the merits of his own particular concrete values to believe that these should be imposed on others. He is content to allow other adults to pursue goals that he finds questionable or unattractive as long as these pursuits involve no violation of anyone else’s equal freedom to pursue their goals.

In this way, it might be said, classical liberalism is morally too ‘thin.’ It imposes no moral code beyond keeping your hands to yourself and your promises to others. It tolerates activities that many wise and good people correctly understand to be self-destructive. But first, we can never really be certain that an activity that appears to be without merit won’t eventually prove to be advantageous for society. Second and more importantly, the hard fact that different people have different substantive conceptions of the Good and the Bad means that the moment we call on government to enforce, or even just to give preference to, our preferred ‘thick’ moral code, we effectively grant permission to those whose ideas of morality differ from ours to impose on us their own ‘thick’ moral code if and when the government falls into their hands — as we would be wise to assume it eventually will.

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Ryan Bourne reports on the war on prices. A slice:

The long sweep of history, from ancient Egypt to modern America, shows us that price controls can’t quell inflation, because they don’t fundamentally change the money supply or aggregate production. What controls on market prices guarantee is inefficiency. They squelch the delicate coordination mechanism that prices and their movements provide to encourage economical action. Price ceilings, the most common incarnation, are thus a tried-and-tested recipe for shortages, declines in product quality, and black markets.

Speaking of the war on prices, John Stossel tells of the damage done by California’s minimum wage for workers at fast-food restaurants.

If you want to learn more about where prices come from and what roles they play, this opportunity is excellent.

And Brian Albrecht explains that its not price-only theory.

el gato malo corrects Paul Krugman.

Michael Strain shows that “the American dream is alive and well (and the problem of U.S. inequality greatly exaggerated).”

The Wall Street Journal‘s Editorial Board ponders the antitrust paradox of Lina Khan’s case against Amazon. A slice:

The Biden Administration’s antitrust policy is an intellectual and legal mess these days, and look no further than the Federal Trade Commission’s curious move last week to oppose booksellers that want to join its lawsuit against Amazon. FTC Chair Lina Khan doesn’t want the booksellers contradicting her arguments in court.

The American Booksellers Association (ABA) is seeking federal Judge John Chun’s permission to intervene in support of the FTC lawsuit. The independent bookseller group says Amazon unfairly leverages its size to negotiate better deals with publishers. As a result, Amazon sells books at low prices that they struggle to match. “We believe the facts we bring to the table will significantly bolster key arguments made by the FTC in their already strong and compelling case,” says ABA CEO Allison Hill.

Strange but true, Ms. Khan doesn’t want those allies. The booksellers’ intervention “would essentially create a ‘whole new suit’” because their claims are “different from those in this case,” the FTC wrote last week in a brief opposing the ABA’s request. Translation: Booksellers contradict the FTC’s arguments.

Start with their conflicting views of market competition. The FTC narrowly defines the market in which Amazon competes as “online super stores”—namely, Walmart, Target and eBay—to argue that it has monopoly power. But small booksellers rightly argue that they also compete with Amazon. As do thousands of other retailers.

Bryan Caplan has a better understanding of “luxury beliefs” than does Rob Henderson. A slice:

The fundamental flaw here, as I’ve explained, is that crazy political beliefs are a “luxury” that no one is too poor to buy. The vast majority of individuals, Harvard-Princeton-Yale grads included, have near-zero ability to change government policy. This is the foundation of the central thesis of my The Myth of the Rational Voter: Since the same policies prevail no matter what you believe, you can embrace even the most absurd political views, free of charge.

If bad policies are broadly popular, of course, the social consequences are often catastrophic. Popular belief that “National Socialism means peace” (an actual 1932 Nazi election slogan) eventually devastated Germany along with much of the known world. The point, however, is that Germans who disbelieved this slogan perished just like their most fanatical Nazi neighbors, so the marginal selfish cost of folly was still pretty much nothing.

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… is from page 535 of the 1982 Liberty Fund version of the 1978 Oxford University Press edition of Adam Smith’s Lectures on Jurisprudence (spelling modernized):

In general, however, all taxes upon importation are hurtful in this respect, that they divert the industry of the country to an unnatural channel. The more stock there is employed in one way, there is the less to be employed in another.

DBx: This truth is simple, important, and undeniable. Nevertheless, this truth is routinely ignored by protectionists who ‘reason’ that ten peaches that the government arranges, through its trade restrictions, to be transferred from Ann to Bob – because this transfer obviously leaves Bob with more peaches – not only does not leave Ann with less fruit, but increases the total amount of fruit available to be enjoyed by both Bob and Ann.

Such is the ‘logic’ of protectionism: 10-3=15. Protectionists spend untold hours and amounts of effort denying or hiding this core feature of their doctrine. But at day’s end, economic protectionism boils down to this feature – to this bizzaro-land arithmetic.

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Art Carden reviews my GMU Econ colleague Bryan Caplan’s new graphic non-fiction book, Build, Baby, Build. A slice:

We don’t have as much housing as would be necessary to keep housing costs low because it’s illegal. Governments manufacture scarcity by wrapping building permissions in red tape. It’s absurd, for example, that so much space is zoned for single family detached housing. Many lots where apartment complexes and towers would fit are, unfortunately, limited to single family detached housing: 75 percent of residential land in LA, 77 percent on Portland, 79 percent in Chicago, 81 percent in Seattle, 84 percent in Charlotte, 94 percent in San Jose, and 38 percent in San Francisco. He states his point clearly on page 64, and I paraphrase: the status quo closes off some options, which wastes land, which makes all the options more expensive.

My Mercatus Center colleague Ben Klutsey explains that “America’s ‘non-crusaders’ personify the case for classical liberalism.” A slice:

Political liberalism ensures our freedom to participate in self-governance. Economic liberalism promotes the freedom to innovate, produce and exchange goods and services for our mutual benefit. Epistemic liberalism encourages freedom of thought and expression, as well as respectful exchange of conflicting ideas. And cultural liberalism encourages us to respect the choices of others so long as they don’t violate anyone else’s rights.

The Editorial Board of the Wall Street Journal reports that reality isn’t optional even in California and even when it comes to minimum wages.

As usual, Democrats don’t want to eat their own lousy cooking. Gov. Newsom this spring also signed legislation to carve out fast-food restaurants on government property from California’s new $20-an-hour fast-food minimum wage, which kicked in last month. Democrats don’t want the mandate interfering with government concession licenses.

California’s wage minimums are another illustration of how progressive mandates boomerang. Average weekly earnings for leisure and hospitality employees in California have declined by 2.6% over the last year owing to a steep drop in hours worked. By contrast, those average weekly earnings rose 3% nationwide, 3.2% in Florida and 5.2% in Texas.

Tom Savidge warns about the explosion in so-called “entitlements.”

GMU Econ’s Alex Tabarrok explains that the FDA is blocking your access to effective sunscreen. A slice:

Americans visiting beaches in France, Spain or Italy often do something that’s illegal back home: They purchase and use European sunscreens for better protection against sunburn and skin cancer. Many dermatologists argue that American sunscreens are far behind the scientific frontier, and they worry that the Food and Drug Administration’s decadeslong delay in approving new sunscreens for purchase in the U.S. is contributing to rising rates of skin cancer.

David Friedman asks if climate catastrophe passes the giggle test. Here’s his conclusion:

The claim that we have good reason to expect climate change on a scale that will produce not merely problems for some but catastrophe for many is one that no reasonable person should take seriously.

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… is from pages 95-96 of the 1948 printing of the second edition (1935) of Lionel Robbins’s classic 1932 tract, An Essay on the Nature & Significance of Economic Science (original emphasis; footnote deleted):

Every first-year student since the days of Adam Smith has learnt to describe equilibrium in the distribution of particular grades of labour in terms of a tendency, not to the maximisation of money gains, but to the maximisation of net advantages in the various alternatives open.

DBx: I offer this quotation from an influential book written nearly a century ago by one of the 20th-century’s most prominent economists as evidence that economists do not assume that each person acting in the market seeks maximum monetary gains to the exclusion of the satisfaction of all possible non-monetary benefits. And yet pundits who wish to discredit economics continue to insist that economics is narrowly focused on the maximization of monetary gains and, thus, cannot be trusted as a guide to public policy in a world in which individuals, in their roles as producers, have multiple goals not all of which involve increased monetary income.

These critics of economics either are ignorant of economics or they choose to distort it. (I suspect that the former is more likely, in most cases.) Slaying an especially pathetic straw man, these critics of economics take pride in their intellectual victory and then proceed to recommend government policies – for example, protective tariffs – that they mistakenly suppose are immune to the criticisms offered by competent economists. These critics never stop to consider that if their straw man were real, then economics would predict that individuals would spend only enough money to keep themselves in peak condition as producers.

Ironically, if this straw man were real, economists would be leaders of the cult that insists that genuine consumption is not and ought not be among anyone’s activities. And Adam Smith would never have said what he said about consumption.