Don Boudreaux, over at CafeHayek, quotes Roger Scruton’s criticism of the “globalized form” of the free market. Here’s the quote: Although I’m very much in favor of the free market, I’m very suspicious of the globalized form of it, and the way in which it does not respond to the demands of local communities and local forms of value. So this is a problem for real conservatism – to develop an economic doctrine that does not menace the local communities on which we all depend. Don is in the top 5 worldwide defenders of international trade and so his response is, as always, quite good. He focuses on the disruption that new suppliers bring to local communities and points out that there’s nothing special about the suppliers being foreign: Walmart is just as capable of bringing disruption. But I think–and this is rare–that there is a response to Scruton that he missed. Well, he didn’t exactly miss it–it’s implicit–but I think it should be explicit. Suppliers, whether domestic or foreign, succeed in any community by providing goods and services that people want. Precisely because we in the United States are relatively free to buy goods from other countries, local communities get served better. As I sit here writing, I’m in my Altra shoes in which I played pickleball Saturday morning. I believe that they were made in either China or Vietnam. As one person in the Monterey community, I find the makers have nicely responded to my local demand for shoes that help my plantar fasciitis rather than make it worse. (0 COMMENTS)

  Two thousand years ago, the proudest boast was civis Romanus sum [“I am a Roman citizen”]. Today, in  the world of freedom, the proudest boast is “Ich bin ein Berliner!”… All free men, wherever they may live,  are citizens of Berlin, and therefore, as a free man, I take pride in the words “Ich bin ein Berliner!” –John F. Kennedy   The Industrial Revolution was the beginning of our changing times, the period that made possible the prosperity we have today. Usually, we give credit and gratitude to the machines and the personalities who made them, but it might all be misplaced. I’d say that the Industrial Revolution was just the tipping of the trend that began long ago with Pericles’ Athens and something that we take for granted today: citizenship.   Can Industrialization be Planned? The idea that prosperity follows from industrialisation will fail if we look at countries like the USSR, Maoist China, or Nehruvian India. Looking at the West, making full use of  Marxist-Leninist or Fabian ideas, central planners fixed their eyes on industrializing rapidly, an objective they achieved. But where was the prosperity? They had the factories, the experts, and all the machines. What went wrong? Why did the pristinely planned countries have many running factories that couldn’t produce anything of value or minimise their losses? Cush countries rapidly industrialised, but the revolution they anticipated never happened. This unexpected failure can be explained by the context within which they industrialised – citizenship or the lack of it. Citizenship is the state of man distinct from that of a subject, serf, cattle, or some form of a slave. It is the recognition of man as an end in himself. As an institution, it is supported by others such as the rule of law, self-governance, and property rights.   Industrialization or Individual Rights? From this, we can see that while people in parts of post-Enlightenment Europe were citizens, the people in the rest of the world were not. This, I believe, is the foundation of their success. With the privilege of enjoying rights predicated on responsibilities, protected by laws, rather than by the transitory goodwill and patronage of aristocrats and autocrats, the citizens of  Europe had more legal and economic latitude to paint, write, build, farm, create,  discover, or litigate. Unlike the rest of the world, citizens of Europe didn’t have to worry about being arbitrarily jailed, killed, or deprived of personal property or inheritance. There were no authorities to tell them where and how to live, so they had personal control over their lives and property, and often, their communities prospered as a result. They would go on to create grassroots enterprises, making use of their talents and bearing the financial risks. The son of a blacksmith in England would discover the effects of induced current. A few years later, a Serb financed by an American investor would create the AC motor, one of the cornerstones of our electrical world. Likewise, industries would pop up around the ideas of individuals and backed by their sweat and blood, while the rest of the world would watch in awe and envy.   The Secret Ingredient Many revolutionaries would come and go, trying to achieve the same prosperity and success through their ingenious plans and grand visions for society. It would all be in vain, as they assumed industrialization to be the sole factor for prosperity. In doing so, they confused the effect to be the same as the cause. Nobody planned the progress that the Western world went through. However, this is not to say that there weren’t any plans. In fact, millions of individuals, like you and I, planned their lives and made their own choices. These plans may have only concerned bread and shoes, but it was these little plans that would change the world for the better. It all happened because unlike ever before, the wills of millions of citizens aligned toward common goals of prosperity. It wasn’t the result of theoretical ideas based on universal brotherhood but the cumulative outcome of voluntary cooperation of individual citizens. The history of liberalism is not a history of kings, conquerors, or statesmen. It is the  ‘scholastically insignificant’ history of all of us. Its grand consequences don’t follow from the passions of great men or the writ of great bodies but from human action.   Aashay is a Writing Fellow with Students for Liberty’s Fellowship for Freedom in India. He is currently pursuing his Bachelor of Technology in Computer Science Engineering and is interested in studying emergent phenomena. (0 COMMENTS)

Regular reader Kevin Corcoran has sent me yet another short essay, this time on why requiring that all charging cables comply with the same standard is a really bad idea. I particularly like his last paragraph, which really drives the point home by asking us to imagine what would have happened had such a standard been imposed any time in the past. Here’s Kevin: I’m a tech nerd. I enjoy new gadgets and gizmos, and I enjoy reading about the development of these things. So it caught my eye when I saw that a few Democratic Senators (Including Senators Elizabeth Warren and Bernie Sanders, of course) are pushing to have the government enforce a universal charging cable standard. What draws the Senators’ ire is that Apple has two different charging cables in its lineup. Most non-Apple devices, like Android phones and laptops, use USB-C. And many of Apple’s products, like their MacBooks and some of the higher end iPads, also use USB-C. But the iPhone and many other devices use Apple’s own Lightning cable. The Senators have divined that This Is The Wrong Way To Do Things, and want to force Apple to put USB-C on all of its devices. For what it’s worth, I’m not a fan of Apple’s proprietary cable. I would have preferred that it had switched entirely to USB-C a while ago. USB-C can charge devices faster and transfer data faster and having to carry two sets of cables around if you’re traveling with multiple devices can be a minor hassle. That said, I think the Senators are totally in the wrong here. First, having a legally mandated standard for charging cables is a surefire way to stifle innovation. Smartphone ports and chargers have gone through several stages of evolution since they first came to market; this process would not have been helped if from the beginning companies needed to get government permission to try a new standard, or if they were all required to use the same standard all at once. Had that been the case, I suspect ports and chargers today would still be in the state they were 10 years ago. Second, using older standards is a common cost saving mechanism for budget devices. Android phones have been using USB-C as a standard for a while now, but until recently it was very common for low end budget phones to use the older Micro-USB standard as one way to save on hardware costs and sell to consumers at lower prices. Not only would universal standards slow down the rate at which we’d get new technologies, but also they would limit the ability of tech companies to use older standards to offer lower cost options to consumers who have tighter budgets. Looking back, I can’t see any point in the past where it would have been a good idea for the state to come in and point to a specific technological development and say, “This right here – this is where all companies and consumers need to be, all at once, going forward.” It’s easy to see why that would have been a bad idea in the past, because here in the present we also know of all the successive improvements that have been made since then that might have been thwarted by such a move. There’s nothing magical about this moment that would make a universal standard in August 2022 a wiser move.  The Senators and others who think they can determine otherwise for consumers everywhere are indulging in Hayek’s fatal conceit. Now, here’s me, DRH, with my additional thought. It’s understandable that Bernie Sanders would advocate such a coercive proposal. After all, recall the statement he made in 2015: You don’t necessarily need a choice of 23 underarm spray deodorants or of 18 different pairs of sneakers when children are hungry in this country. He’s right that you don’t need 23 underarm spray deodorants. Only one will do as long as it’s the one I want and the rest of you be damned. Or sneakers? I have plantar fasciitis in my right foot and I’ve finally found a pair of sneakers that seems to be making it better, not worse. The brand is Altra. The sneakers cost me about $130. Does my spending money on it mean that some children are going hungry? No. To say that, you would have to believe that my next best choice for the $130 is to spend it on feeding children. It’s not. But whatever I would have spent it on, it’s my money and there’s a company out there producing something I badly want. More choices are generally good, not bad. (0 COMMENTS)

Robert Barro recently asserted that the US entered a recession in early 2022: The bottom line is that, with the announcement on July 28 of a two-quarter GDP decline, we can be highly confident that the US economy entered a recession early in 2022. I believe that claim is extremely unlikely to be true, although it’s quite possible that we are about to enter a recession. Barro points out that since WWII, two consecutive quarters of negative RGDP have invariably been associated with recessions.  So why is he wrong about early 2022? There are several mistakes that people make when looking for statistical patterns.  One is data mining.  Thus they might notice that Super Bowl wins from former AFL teams are almost always associated with a certain stock market performance.  Once the pattern is discovered, it usually proves unreliable going forward, as there is no reason to expect such a correlation.  Barro is not guilty of that sin.  It has long been known that falling GDP is a good rule of thumb for there being a recession, and for good reason.  He is not engaged in data mining. Barro is guilty of another mistake, however.  He doesn’t pay enough attention to other important information that tends to conflict with his claim.  For instance, it’s also a good rule of thumb that industrial production always falls during recessions.  Always.  No exceptions.  And yet industrial production rose very rapidly during the first 6 months of 2022 (at an annual rate of 5%): Here’s another reliable pattern.  Payroll employment usually falls during recessions.  In a few occasions such as 1974 and 1980, it rose modestly during the early months of recession.  But even then the rate of growth was slowing.  Furthermore, the 1970s and early 1980s was a period of very rapid growth in the labor force–the trend in employment was sharply higher (as both boomers and women entered the labor force in large numbers.) In recent years, in contrast, we have very slow growth in the labor force, mostly due to sharply lower immigration and retiring boomers.  And yet despite that very slow underlying growth in the labor force, employment in the first 6 months of 2022 grew at a phenomenal rate of 461,333/month.  Nothing like that has ever happened before during a recession.  Indeed not only is that an above normal rate of growth in employment, it is faster growth in employment than the US normally sees during an economic boom.  And the second half of the year began with the economy still red hot, as 528,000 jobs were added in July. Indeed there is a wide range of indicators whose behavior is completely inconsistent with the notion that the economy was in recession in early 2022.  One of those indicators is real GDP measured using the “income method”.  That’s right, the US measures real GDP in two different ways, and one of those methods actually showed positive growth in the first quarter. Instead of focusing on one metric, the NBER relies on wide variety of monthly indicators such as payroll employment and industrial production, not just quarterly GDP.  Most of those suggest that the US experienced a strong economic boom in the early months of 2022.  It seems very unlikely to me that the NBER will date the recession as beginning in the first quarter.  I even doubt that a recession began in the second quarter, although I’d say that’s somewhat more likely (say a 10% chance, vs. a 1% chance in Q1.) I suspect that many economists don’t know that the quality of US macro data has been declining for many decades.  Modern economies are much harder to measure than the commodity-based economies of 100 years ago.  That’s why we see so many bizarre anomalies in the data for variables such as GDP. In some respects, it’s even worse in other countries.  Unlike the US, many countries do use two negative quarters as an official definition of recession.  This leads to some pretty absurd claims; such as that Japan has had 4 recessions since 2007!  Oddly, their unemployment rate data shows only 2 of the 4 recessions: In previous posts, I’ve called the other two recessions (during the 2010s) “phony recessions”.  The problem here is that Japan’s trend rate of RGDP growth has fallen to such a low level that even a tiny slowdown can briefly push RGDP growth below zero.  When there’s an actual recession (as during the global crisis of 2008 and the Covid crisis), you see a noticeable rise in the Japanese unemployment rate.  In contrast, when there’s a brief slowdown, say due to the timing of purchases around a Japanese sales tax increase, the labor market is largely unaffected. If people insist on calling those minor slowdowns “recessions”, that’s their prerogative.  But if you are going to do so, don’t act like recessions matter at all. You say that Japan had recessions in 2011 and 2014?  Oh really, and why should I care? PS.  You may be wondering about the fall in US industrial production during 2016.  That wasn’t a recession, but it did hurt certain sectors on the economy.  It was caused by a combination of tight money and a drop in fracking (which uses a lot of equipment made in the USA.)  It probably cost Hillary Clinton the election, as it hit Pennsylvania, Michigan and Wisconsin harder than other states.  But in retrospect, I suspect Trump would have won in 2020 if he’d lost in 2016, so it all evens out in the long run. PPS.  Hillary would have reappointed Yellen, who would have implemented a less inflationary policy, benefiting Trump in 2021.  Trump appointed Powell, who was reappointed by Biden.  Powell’s inflationary policies have made things more difficult for Biden.  It’s funny how things work out.   (0 COMMENTS)

“Buy local” is one of the most simplistic political slogans. It obliterates complex analytical ideas such as the division of labor and comparative advantage. As I wrote in another article, If something costs less to import, it is better to send the money out of the community and to bring more money back into the community by exporting what local producers have a comparative advantage in. Google’s Books Ngram Viewer suggests that the expression “buy local” started spreading at the end of the 19th century but grew rapidly only after the mid-1970s (see figure below). It looks like it reached its peak in 2010, although perhaps its occurrence in books (which is what the Ngram Viewer measures) does not correctly measure the phenomenon in popular culture. Merriam-Webster online defines “local” as “primarily serving the needs of a particular limited district.” Whether something is local depends on how “district” and “limited” are circumscribed. The online Oxford US dictionary defines “local” as “belonging or relating to a particular area or neighborhood, typically exclusively so.” Until you determine which “particularly area or neighborhood” is referred to and to which extent the good or service is “exclusive” to that area, you don’t know whether it is local or not. I remember, in my Maine suburb, following a Maine-registered Japanese-made (or Japanese-brand) car with a bumper sticker saying “Buy Local.” An online survey showed that Canadian consumers consider beef to be local if it comes from less than 100 miles away. A few days ago, I saw a sign at Whole Foods in Portland, Maine, saying, with a heart symbol for “love” (see the featured image of this post): We love local. Supporting over 850 farmers and suppliers from across New England From northern Maine to the south-west point of Connecticut, New England is 500 miles long and up to 300 miles wide. That’s a large place to buy local. Not to mention that buying anywhere on Earth is buying very locally in the Milky Way, and that the James Webb telescope gives another scale to the concept of local. Let’s keep our feet on Earth. However you define “local,” it is likely that at least part of what you buy there comes from far-away places. This was true even in the “good old times.” In Laura Ingalls Wilder’s delicious novel Little House on the Prairie (1935), Charles had to travel 40 miles on his horse-drawn wagon to the nearest city (Independence, Kansas) when the family needed such things as nails, sugar, seeds, or a plow. The steel for the nails and the plow must have come from England or Ohio. The injonction “buy local” is only meant to elicit political emotions or, as Hayek would have likely said, tribal emotions. (0 COMMENTS)

Jane Shaw Stroup wrote a short and rather effective piece on Hayek’s “atavism thesis”. Hayek came to it, as she writes, after a life of struggling with socialism and economic interventionism. F.A. Hayek was born in 1899, he fought in WWI (contracting the Spanish flu and malaria on his way back from the trenches), and was exposed, as a young man, to the most unpropitious series of events – which did not make liberalism very popular among men and women of his generation. On the contrary, liberalism was on the wane. 19th century liberalism had many nuances but all shared the urge to move from discretionary rule to something which resembled automatic mechanisms, reducing politics at best to a very limited, technical endeavour. Of course some politicians tended to be larger than life, flamboyant personalities who could mastermind public opinion in the 19th century too. But liberals, of all sorts, were skeptical of their playing public opinion as a piano in order to be legitimised in taking decisions of their own liking. Public opinion ought to be a tribunal, severely scrutinising all collective action and possibly keeping precisely those types in check. The 20th century was the triumph of boldness: bold leaders, bold decisions, bold ambitions. Politics, quite far from being a limited endeavour, was to reshape the very nature of man. The few savvy people around asked themselves how it was possible that the most educated societies which ever existed could fall for that. Many thought it was a problem of education. The truths of political economy were, for example, by and large counterintuitive and hence difficult to digest. Hayek followed that path too, hence his insistence in better educating “second hand dealers in ideas” (journalists, high school teachers, etc) who tended to spread bad ideas in good faith. But at a certain point, after many a year of struggling within those ideas while treating in the kindest, more gentlemanly and scholarly manner those holding them, Hayek realised that perhaps the problem lies not in education but before education. Hayek concluded that humans have instincts that evolved genetically, starting with humans’ predecessors, animals in a pack, and continuing when humans lived together in small bands. This evolution ended only about 12,000 years ago. Those instincts weren’t inherently bad. In fact, they included essential emotions, such as solidarity and compassion, that kept the band alive. But they were beneficial only when people lived in small groups. The growth of what Hayek called the “extended order”—trade and communication outside the band, the modern economy—required people to act differently. “Mankind achieved civilization by developing and learning to follow rules (first in territorial tribes and then over broader reaches) that often forbade him to do what his instincts demanded, and no longer depended on a common perception of events.”[5] Humans have never entirely given up their early instincts, however, and that draws them to socialism and fascism, said Hayek. Socialism and fascism give them the “visible common purpose”[6] so essential in the distant past. But forcing people to share a visible common purpose is not compatible with freedom. Contemporary research on cognitive biases tends to reinforce Hayek’s point. I’d like to add, to Jane Shaw’s splendid little essay, only one caveat. These innate instincts are not something of concern only when we deal with the masses or with ordinary people – as many educated people tend to believe. They are deeply ingrained with all of us, and make even the most educated and sophisticated experience lust for super-imposed “order” or enjoying the vertigo of feeling part of the team of the good and right. (0 COMMENTS)

In 2019, Leigh Phillips and Michal Rozworski published an article in Jacobin arguing that, “Yes, a Planned Economy Can Actually Work.” Their article, based on their book, The People’s Republic of Walmart: How the World’s Biggest Corporations are Laying the Foundation for Socialism, argues that large companies like Walmart have solved the problem of central planning: In The People’s Republic of Walmart, we show how contrary to the historic argument of the likes of free market economists Ludwig Von Mises and Friedrich Hayek, economic planning of millions of products and services involving infinitudes of variables in supply chains and lots of non-price information is not just feasible, but works incredibly well… Walmart, the largest company in the world, employs more workers than any other private firm; it is the world’s third-largest employer after the US Department of Defense and China’s People’s Liberation Army. If it were a country, its economy would be roughly the size of Switzerland. Walmart, of course, sells goods on the market. Under capitalism prices are still inputs into the planning process for corporations and states alike. In addition to prices, however, firms today have at their disposal exponentially increasing amounts of information that is directly about people’s preferences or the use of resources… Walmart engages in large-scale planning without the direct intermediation of markets at scales to make Hayek bristle. Internally, like nearly all firms large and small, it is a dictatorial planned economy: managers tell workers what to do, departments realize goals from on high, and goods flow by fiat.   Sam Gindin, also writing in Jacobin, throws a wrench into their claims: Aside from the fact that the scale of organizing a total society in a nonmarket way is of a different order of magnitude than addressing a single, even vast, corporation, internal corporate calculations under capitalism have an advantage that centralized socialist planning would not have: they have external market prices and market-driven standards by which to measure themselves.   Moreover, though they admit that “under capitalism prices are still inputs into the planning process for corporations and states alike,” the authors never grapple with the problem of how to compare the relative values of disparate goods and services other than to wave it away: There is a hard question about how we relate things to one another — cotton to steel or mind-numbing drudgery to art — but it is a poverty of imagination to think only markets can determine these multidimensional comparison questions rather than we ourselves, democratically.   While someone unencumbered by an impoverished imagination could conceivably devise a way in which to democratically answer “these multidimensional comparison questions,” no one, including Karl Marx, has succeeded in over a century and a half. In addition, the question of how to compare different production processes and capital goods without market prices is not mentioned at all. The authors’ solution to the Mises-Hayek socialist calculation problem is to get a bigger calculator: Jack Ma, the founder of China’s Alibaba Group — one of the largest and most valuable companies in the world — argues that previous state planners in the Soviet Union and the early People’s Republic of China failed due to insufficient information. He has predicted that over the next three decades thanks to artificial intelligence and the sheer volume of data to which we now have access, we will finally be able to achieve a planned economy.   Before conceding that an Artificial Intelligence program running on a supercomputer can direct an economy, however, let’s consider solving something vastly simpler: the game of chess. Compared to an economy, chess is child’s play. First, there are only thirty-two “individuals” on a chessboard, and none of them has free will.  Their movements are severely constrained: only one piece may move at a time, each side moving a single piece in alternating turns; each piece’s position is restricted to no more than sixty-four squares arranged in two dimensions; and each piece has a set way in which it can be moved. But even in this simple world, there are over 318 billion ways of playing just the first four moves on each side.  It has been estimated that in a 40-move game there are more possible moves than there are atoms in the universe. As a result, no computer programs have yet been able to solve the game, even though they can now routinely beat even the best human players. Let’s make the game a bit more like real life. Suppose that each piece is magically given free will and the ability to move itself. Now the pieces may all choose to move at once or to never move at all. A pawn could decide to act like a Queen or a Knight. A Rook might turn traitor and attack pieces of its own color, or the Kings could negotiate a peace settlement and leave the board entirely. The number of possible board positions after only the first move just became infinite. Yet even this revised game of chess is immeasurably simpler than an economy consisting of millions of people – all acting and interacting at the same time – each with his or her own motivations, incentives, responsibilities, cares, and circumstances; and each thinking and acting in four-dimensional space and time. But it’s even worse than that. A supercomputer trying to solve the game of chess needs no data; it’s just a matter of pure number crunching and access to an impossibly large storage array. By contrast, “solving” an economy requires the ability to acquire vast amounts of knowledge, some of which can’t even be articulated, and some of which is generated by myriad market transactions that occur second-by-second. Worse still, this data must be collected, transmitted, formatted, and “crunched” in real time. In 2007, computer games expert Jonathan Schaeffer reportedly solved the  game of checkers by performing 100,000,000,000,000 (1014) calculations on an array of as many as 200 desktop computers over a period of 18 years. Checkers is much simpler than chess (with a mere 1020 possible board positions vs 10120) and is vastly simpler than a nation’s economy. So, assuming a lower bound of 18 years to determine the relative prices of billions of products and services, even if we could accomplish the impossible tasks of: identifying all the world’s products and services, creating a supercomputer, or computer array, big enough to handle the calculations, creating a storage array big enough to hand the data, and instantaneously acquiring and uploading all the needed data to our computer the uploaded information would be out of date and useless years before the computer finished its work. Like many a politician, Phillips and Rozworski claim that the country can be “run like a business.” Such a presumption is based in unfathomable ignorance and arrogance – a deadly combination.   Richard Fulmer worked as a mechanical engineer and a systems analyst in industry. He is now retired and does free-lance writing. He has published some fifty articles and book reviews in free market magazines and blogs. With Robert L. Bradley Jr., Richard wrote the book, Energy: The Master Resource. (0 COMMENTS)

  Under my contract with the Wall Street Journal, I am now free to post this article. ESG Feeds Inflation, Hurts Economic Growth When companies divert their attention to social goals, they produce less, driving prices higher. By David R. Henderson and Marc Joffe With inflation running at a four-decade high, it’s time to reconsider the idea that the economy will benefit if corporations sacrifice their bottom lines in favor of environmental, social and governance considerations. The truth is that diverting corporate attention away from long-term profitability depresses output and raises prices. In 2019 the Business Roundtable, an association of large companies’ CEOs, abandoned its longstanding dedication to the idea that the “purpose of a corporation” is to maximize shareholder value. Instead, the group argued, businesses should follow a “multistakeholder” model. If corporate management gave a shifting set of ESG concerns priority over long-term profit maximization, the roundtable believed, firms could create “an economy that serves all Americans.” It hasn’t panned out that way. When companies focus solely on maximizing profits, their principal aim is to produce more at lower cost. Admittedly, some profitability strategies—such as constraining supply—are at odds with maximizing output. But that’s impossible without an organized and powerful monopoly. Even companies with great monopoly power lose that power over time as competitors arise. In a competitive market, corporations serve themselves and consumers by making more for less. ESG investing and the management practices it promotes, however, usually increase production costs and constrain capacity. If a company diverts resources into a formal diversity, equity and inclusion program, with all its attending human-resource hires and bureaucracy, it will have less resources available to conduct product research and development. Similarly, if a company whose core competence is oil and gas production chooses to move into wind and solar despite having limited expertise in these modes, its output will suffer. In general, an investment framework that de-emphasizes production in favor of social objectives will divert money away from efficient producers—in the same way taxes will. Milton Friedman showed that raising the money supply’s growth rate increases the rate of inflation. But it’s also true that slowing the growth of overall output can increase inflation. If we think of the economy as one giant market in which we trade dollars for anything that dollars can buy, reducing the supply of available goods increases the price level, all else being equal. If enough companies focus on ESG priorities, then, they risk higher inflation and slower growth or stagflation. That isn’t to say that the general principles ESG emphasizes are undesirable, but that it’s more important to do good than to be labeled good. A company can be profitable with a diverse workforce without having a formal DEI policy. And such a company will ultimately serve a diverse group of Americans better by providing them more goods at lower cost. To get the U.S. economy back on a path to sustainable growth and low inflation, the Fed must rein in excess liquidity, as it is now doing. But that alone won’t be enough. Businesses, investors and those advising them must push back on ideas such as ESG that undermine corporate productivity. Mr. Henderson is a research fellow with Stanford University’s Hoover Institution and editor of the Concise Encyclopedia of Economics. Mr. Joffe is a senior policy analyst with the Reason Foundation. David R. Henderson and Marc A. Joffe, “ESG Feeds Inflation, Hurts Economic Growth,” Wall Street Journal, July 5, 2022 (July 6 print edition.) (0 COMMENTS)

If you want an executive assistant and can’t find one because of the labor “shortage,” a Wall Street Journal story of today gives the solution: pay her (or perhaps him) more than $200,000 a year and the shortage is over. If you still have problems finding the assistant you need, boost her title to “chief of staff” and bid up the prospects’ salary to $300,000 or $400,000. (“Paying $400,000 for an Executive Assistant? Do-It-All Aides Are Pricier Than Ever,” August 4, 2022). The subtitle gives the flavor of the story: Wealthy executives are shelling out six figures for sophisticated aides smart enough to handle complicated tasks yet humble enough to take on tedious ones One aspect of market complexity lies in the submarkets that characterize any good or (as in this case) service that is not perfectly homogeneous. There are different kinds of labor and different kinds of executive assistants. But in all cases, supply and demand determine wages if the market is free. An older WSJ story, on which I considered writing an EconLog post at the time, illustrated the same phenomenon on another market where the price is not capped: if you really want to hire somebody, just pay the market wage or bid it up. If you don’t, it’s just that you don’t really want it given what you are willing to pay and what the other bidders pay. And don’t complain there is a “shortage”! The title of the story was self-explanatory: “Teen Babysitters Are Charging $30 an Hour Now, Because They Can” (May 2022). The subtitle gave more flavor, although again the respectable newspaper did not use the term “shortage” correctly, the proof being that you do get a babysitter if you pay $30 an hour plus some perks: Sitter shortage has parents treating teenagers like VIPs; ‘order anything you want for dinner’ One question as an exercise: Are teen babysitters “wage gougers”? All this reminds me of an old economist joke. Walking on the sidewalk, an economist and his friend pass by a Ferrari dealership with a red 296 GTB in the window. (An economist, by definition should we say, thinks of individual choices in terms of individual preferences and outside constraints such as prices, income, etc., but the friend still doesn’t understand that.) “I want this,” the friend says as they continue walking. “No, you don’t,” replies the economist. (0 COMMENTS)

There were two sides to the late Geoffrey Brennan.  The first was the world class academic and intellectual who was multidisciplinary, curious, committed to the principles of liberty and freedom, and rigorous in his theory and method.  That’s how he collaborated so effectively with James Buchanan, Gordon Tullock, and other members of the first generation of public choice scholars first at Virginia Tech and later at George Mason University.  It was also how he and Loren Lomasky and Philip Petit wrote groundbreaking and important books on democracy and deliberation. But the other side to Brennan, the side those of us frequently saw who were fortunate enough to have known him, was the deeply kind, generous, outgoing, person who made time for students and colleagues, smiled easily, sang beautifully, and made numerous friends during an academic career that was cut short this week by leukemia at the age of 77. And that personality was important in succeeding at the Public Choice Center during his tenure there.  Not everyone could handle Buchanan’s formidable intellect and particular personality, but Brennan’s razor sharp mind, along with his patience, decency, and giving spirit were more than up to the task of bringing out the best in his co-authors, colleagues, and students over his time in Blacksburg and beyond. Brennan liked to describe himself as the young “blue eyed boy” who arrived in Blacksburg in the 1970’s and began a collaboration with Buchanan that spanned more than 20 years and included co-authoring such seminal works as The Power to Tax and The Reason of Rules.  After leaving Blacksburg, he returned to his native Australia only to be lured back to the US where he helped found one of the first of the new generation of PPE programs that are sprouting up all over the world.  Along with Mike Munger, Brennan started and oversaw the joint PPE at Duke and UNC-Chapel, splitting his years living in North Carolina and Canberra, teaching and writing. After his collaborations with Buchanan, Brennan become more interested in questions at the intersection of politics and philosophy and used his economics training with skill in co-authoring Democracy and Decision in which he and Loren Lomasky tried to tackle a long standing puzzle to economists – why do people bother to vote at all understanding that their individual vote plays no tangible role in the outcome of elections.  Their solution was to model voting as an emotive act rather than an instrumental one.  He then turned his attention to concepts of esteem and norms in his later work, again blurring the boundaries between disciplines. Brennan’s relationship with Liberty Fund spanned more than five decades.  He attended, directed, and discussion led more than 70 colloquia on various topics in economics, philosophy and politics.  Along with Hartmut Kliemt and Robert Tollison, he served as the co-editor for Liberty Fund’s 20 volume set of The Collected Works of James Buchanan.  I had the privilege of serving as the Fellow for his final Liberty Fund conference, appropriately in Blacksburg, in 2018 on Buchanan’s legacy.  As Geoff often, perhaps always, did, he made everyone feel welcome, challenged and pushed the conferees politely but firmly, and of course sang with that majestic baritone voice on the closing night.  He will be missed.   (0 COMMENTS)