Persecution Bet

I’ve already seen George Mason University badly mistreat non-conformist professors.  Should I expect the same to happen to me?  I wouldn’t be surprised, but I’m not greatly worried either.  I’m definitely not going to self-censor to protect myself.  Yet quite a few people tell me that I’m in grave danger.  One of them, Todd Proebsting, a C.S. professor at the University of Arizona, has offered to bet me.

To be clear, Todd wishes me well.  He does not want me to suffer mistreatment; he merely predicts it.  Here are the terms on which we have agreed.

I bet Todd Proebsting $50 at even odds that I will NOT be “clearly mistreated” by George Mason University before January 1, 2031.

If there is a dispute, Phil Magness will have final authority to determine the winner of the bet.

Examples of “clear mistreatment” include but are not limited to:

1. Any public announcement by an agent of my university’s administration that my speech or writings are under investigation, or a subject of further inquiry.

2. Any GMU investigation or inquiry into my speech or writing. This could be done by administrators or an ad hoc committee or HR or whatever.

3. Any official disciplinary action due to my speech or writing, even if limited to a mere “warning”.

4. Cancellation of a public talk by me at GMU.

5. Any negative financial consequences explicitly justified by my speech or writings.

6. “Clear mistreatment” does NOT include any employee of GMU expressing disapproval of the content of my speech or writings, but DOES include any official personal or professional condemnation.  So: Todd doesn’t win for “GMU strongly disagrees with what Prof. Caplan said about pickpockets,” but Todd does win for “GMU strongly condemns Prof. Caplan for saying that about pickpockets.”

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U.S. Tariffs Are Not “More Punishing to China”

The world would be a different place, more rational and convivial, if all politicians, journalists, and editors had some clear notions of supply and demand as well as of the history of economic thought—if, for example, they had read David Hume, Adam Smith, Jean-Baptiste Say, James Mill, and John Stuart Mill. As an illustration, consider a sentence in yesterday’s Wall Street Journal (“Trump’s Trade War Will Be Left for Biden to Win,” January 3, 2021—my emphasis):

[Mr. Biden] has already said he wouldn’t immediately lift the tariffs, which should prove more punishing to China than the U.S., as its economy generally depends more on exports.

It is not clear whether the explanation I have emphasized is the journalist’s paraphrase of Mr. Biden’s thinking or the journalist’s own opinion. It could well be both. My guess is that, as the sentence is written, it expresses the journalist’s belief. On the other hand, it is quite obvious that Mr. Biden is as ignorant of trade as Mr. Trump, although the ignorance of the former is not as militant as the ignorance of the latter.  But whoever’s thinking it represents, the clause ignores two centuries and a half of economic understanding, to which only some extreme left and some extreme right have been completely immune.

Increasing the tariffs “against China” would increase them against American consumers, who, as was again demonstrated by President Trump’s trade war, end up paying the tariffs in increased prices, which reimburse the tariffs paid by American importers. The only sense in which Chinese exporters pay is that higher tariffs and prices translate into a lower quantity demanded for their wares, assuming they cannot sell them elsewhere in world markets. Thus, increasing the tariffs on Chinese goods would prove more punishing to American consumers. (See my Econlog posts “The Poverty of Protectionism and the Impact of Tariffs,” June 17, 2019; and “Anecdotes and Data in the Trade War,” July 9, 2019.)

The last clause of the quote above, “as [China’s] economy depends more on exports” is also (at the very least) misleading. As such, exports do not increase domestic prosperity: they divert to the benefit of foreign consumers (Chinese consumers, in this case) domestic (American) resources that would otherwise be used to produce goods or services for domestic (American) consumers. American exports benefit Americans only in the sense that they allow them to produce more of what they have a comparative advantage in and thus import more goods which are produced relatively more cheaply in China or in other countries. The only benefit of exports for the domestic economy is that they allow more imports. Otherwise, exports would be just a gift from “the Americans” to “the Chinese.” (For an elaboration of this point, see my “Logic, Economics, and Protectionist Nationalists,” Regulation 43:3 (Fall 2020), pp. 9-11.)

 

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Joe Stiglitz Channels Armen Alchian

For instance, government support for higher education is often viewed as enabling the children of the poor to go to college, and thus is viewed to have a positive redistributive impact. But, on closer examination, children of the middle- and upper-middle-classes are more likely to avail themselves of a higher education and whatever government support for it they can obtain. Thus the net benefits accrue disproportionately to the children of middle- and upper-middle-class individuals, and in this perspective, state support appears to be regressive. Moreover, it is not clear that parents’ income provides the appropriate focus of attention; the beneficiaries of education are not the parents but the children; it is the children who will receive higher wages as a result of the increased level of education.

This is from “The Analysis of Expenditure Policy,” Chapter 9 of Joseph E. Stiglitz, Economics of the Public Sector, 2nd edition, 1988.

This is yet another example of Stiglitz’s clear thinking about government policy. Notice in the 2nd and 3rd sentences how he makes the standard argument that many economists have made. The first place I saw this point made was in a 1960s article by, I think, Burton Weisbrod and W. L. Hansen of the University of Wisconsin. Interestingly, William F. Buckley, Jr. made this argument before a New York college audience while running for mayor of New York in 1965. Buckley writes about it in The Unmaking of a Mayor.

But then Stiglitz goes even deeper, the way Armen Alchian did in his article “The Social and Economic Impact of Zero Tuition,” New Individualist Review, Winter 1968. Stiglitz points out that since the recipients of college age are typically adults, the income of their family isn’t that relevant. College aid will go to people whom the aid makes wealthy.

Stiglitz almost gets to where Alchian got. Alchian focuses on wealth and points out that just as owner of land sitting on a pool of oil is wealthy even before he has drilled it, someone capable of getting through college is sitting on an untapped pool of wealth in his brain.

This is my third post on Stiglitz’s textbook. The first two are here and here. I’ll have a few more Stiglitz posts and at some point I’ll explain why I was rereading a 30-years-old book.

 

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