Monday , August 19 2019
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Pierre Lemieux



Articles by Pierre Lemieux

And They Want to be Sovereign!

2 days ago

Under the title “The U.K. Banned a Cream Cheese Commercial Due to Gender Stereotypes,” Reason Magazine journalist Ben McDonald reports:
The first ads to fall prey to the U.K.’s new ban on gender stereotypes in advertising are tepid spots for Philadelphia Cream Cheese and Volkswagen. The law, which is enforced by the U.K.’s Advertising Standards Authority (ASA), went into effect in June … The ASA said it received 128 complaints regarding the cream cheese ad and three complaints about the car ad.
It’s worth reading the whole story. Reason Magazine, which used to be a sympathetic libertarian voice, has become an essential source of information about the absurdities and dangers of statism and our authoritarian culture.
I know that some Brexiteers honestly believe that

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Ethnic Studies and Hxrstory: Not Doubleplusgood

2 days ago

In his last book, The Fatal Conceit, Nobel Laureate economist Friedrich Hayek seemed too pessimistic on the future of civilization. But when one looks at the current project of a mandatory Ethnic Studies class for California high school and Cal State students (“Ethnic Studies May Soon Be Mandatory. Can California Get It Right,” August 13, 2019), some pessimism is warranted.
Hayek believed that traditional, evolved morality formed the basis of a civilized society. He was referring to rules of property, freedom, justice, exchange, privacy, and such. (He pointed out that some moral rules, such as those related to sexual mores, may need to change because they have outlived their usefulness: he was a classical liberal more than a conservative.) His pessimism came from

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El Paso etc.: A New Behavioral-Economics Bias?

6 days ago

Over the last few decades, behavioral economists have found rational limitations or biases that, they claim, prevent individuals from pursuing their own good. State agents who intervene to correct individual biases, however, are typically not subject to biases that would prevent them from implementing the common good. (See my recent Reason Foundation paper.) But what if the state instead fuels dangerous individual biases?
Consider the “Big Chief bias,” a new bias that, I suggest, behavioral economists should add to their long list. It describes the tendency of many individuals to blindly follow the big chief of the group—tribe, nation, race, party—they identify with. If the state fuels this bias, the consequences will likely be more detrimental than they would be

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A Simple Economic Question About Guns

6 days ago

Dylan

Aug 14 2019 at 8:32am

Why would they?  I think we can make a large list of places they don’t/haven’t targeted yet, and it doesn’t seem particularly illuminating.  Why not dog shows? Or Pokemon conventions? Or yoga retreats?
I think it first makes sense to classify what seem to be the basic motivations for mass shootings as far as we understand them.  I should note that I do my best to avoid much reporting on mass shootings, so completely possible I’ve missed something here, but I think we can broadly put motivations into 3 buckets.
Animus towards a particular institution or set of people.  I think a lot (but not all) school shootings fall into this

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Reflections on an Interview with Bernie Sanders

7 days ago

If you watch the interview of Bernie Sanders by Joe Rogan, which has been clicked close to eight million times, you will find that the Vermont senator and presidential candidate looks honest and persuasive. One reason is that he has been a politician for nearly all his life, but there is more than that.
One thing is that he stands on the shoulders of two centuries of socialists. He is promising lots of goodies: free college, free health care, free dental care, higher wages at no cost (nobody will lose his job), protectionism, a ban on assault weapons but no confiscation of the millions already owned, saving the earth, no oil, more income for everybody except the corporations and “the billionaires,” rebuilding communities, retrofitting buildings…
This looks like a

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Are Trade Wars “Good and Easy to Win”?

13 days ago

“Trade wars are good and easy to win,” President Donald Trump famously tweeted on March 2, 2018. (His circumstantial qualifications do not matter because they are based on a trade-balance fetish.) Anybody with reasonable knowledge, or perhaps even just a good intuition, of economic theory and history would beg to differ.
Adam Smith knew something about economics and economic history. In fact, he knew more than nearly all his contemporaries and more than Mr. Trump and his ignorant or sycophantic advisors. Smith was a moderate classical liberal, although very radical compared to the garden variety of today’s conservatives and “liberals.” He did not benefit from the future development of economic analysis that his own work would launch. He believed in exceptions to a

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Madman or Madwoman in Power: A Simple, Realistic, Urgent Idea

18 days ago

Is it possible that a madman or egomaniac (perhaps combined with an ignoramus) become president of the United States? The same question can be asked for any other country although it takes special importance in the United States given the importance of the country in the world and the extraordinary power of its president.
Liberal governments, that is, classical-liberal governments were ideally supposed to be madman-proof. Even a madman at the helm of the government would have little power to do good and thus to do bad. Friedrich Hayek expressed the gist of this idea in his famous article “Individualism: True and False” (reproduced notably in his Studies on the Abuse and Decline of Reason, Liberty Fund, 2010). He wrote:
[Adam] Smith’s chief concern was not so much

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Brexit and the Divine Right of the Majority

26 days ago

A photograph published in Monday’s Wall Street Journal shows supporters of Boris Johnson, the incoming British prime minister, brandishing signs saying “We Voted Leave.” Problem is, against the 51.9% of the voters who did vote “Leave,” 48.1% voted “Remain.” If you further consider that the referendum turnout was 72.2%, these numbers reduce to 37.5% and 34.7% respectively: about a third of the electorate voted one way, a third the other way. (See BBC, “EU Referendum Results.”) Why should such a slim majority (and a fortiori a mere plurality) allow the winners to impose their preferences on the minority? Is there a divine right of the majority?
One answer is that to avoid conflict, a procedure is required to decide public choices, and majority voting is such a

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Minimum Wage: A Most Remarkable Belief

July 17, 2019

In a study published earlier this month, “The Effects on Employment and Family Income of Increasing the Federal Minimum Wage,” the Congressional Budget Office (CBO) estimated that a gradual increase of the federal minimum wage to $15 an hour by 2025 (from the current $7.25) would boost the wages of 17 million workers at the cost of 1.3 million pushed out of employment. (Lower increases in the minimum wage would have similar but reduced effects.) The reaction of Rep. Bobby Scott (D., Va.), as reported by the Wall Street Journal (“$15 Minimum Wage Would Bring Mixed Fortunes for U.S. Workers,” July 8, 2019) was typical of what many if not most minimum wage advocates believe:
If you look at the whole report, there’s no question there are significant benefits for a

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Anecdotes vs. Data in the Trade War

July 9, 2019

Anecdotes are not necessarily useful to understand the social and economic world. An anecdote based on a sample of one can be worse than useless. A related point: we don’t expect a plumber to be able to criticize the mechanics of fluids; and we don’t expect a businessman to successfully challenge the economics of international trade. Jean-Baptiste Say, author of the 1803 Treatise on Political Economy, was an exception, and he wrote a whole treatise to prove it.
Brian Tedesco, the owner of an unidentified “consumer-electronics sales and distributing company,” wrote an op-ed in the Wall Street Journal of June 30, where he boasts that his customers did not pay the 25% tariff on the goods he imports from China. He says he has “a different perspective,” and that he was

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Prescription Drug Prices: Retaliatory Socialism

July 6, 2019

Yesterday’s Wall Street Journal (“Trump Plans Order to Tie Drug Prices to other Nations’ Costs,” July 5, 2019) reported:
President Trump said Friday he was preparing an executive order that would lower drug prices so that the federal government would pay no more than the costs paid by other countries.
Mr. Trump is quoted as saying:
As you know for years and years, other nations paid less for drugs than we do, sometimes by 60, 70%. We’re going to be, and we’re working on it right now, we’re working on a favored-nations clause, where we pay whatever the lowest nation’s price is.
It’s not clear that he sees a difference between countries, nations, states, and individuals. But let’s ignore this point.
Prices differ between the United States, where the market for drugs

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A Delight in Despotism: The Case of Vaping

July 5, 2019

Not jumping the Berlin Wall can save lives. Somebody won’t get shot. Over the longer term, however, it is likely that tyranny wastes more lives than liberty. Anyway, the real question is not how many lives are destroyed under the two regimes, but what can justify forbidding a specific individual to cross what he thinks is a wall against his own flourishing.
I was reminded of this sort of questions when I followed a link in Tuesday’s Wall Street Journal about a “debate” the newspaper hosted some months ago on the question “Do E-Cigarettes Do More Good Than Harm?” The subtitle explained that it was “a debate over which is bigger: the damage from the rise in teenage vaping or the benefits of using e-cigarettes to stop tobacco smoking.”
The elephant missing in the room

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Founders Turning in their Graves

July 4, 2019

Especially on July 4, James Madison must be turning in his grave. Here is one reason, among others.
The Harmonized Tariff Schedule of the United States lists all tariffs imposed by the U.S. government. Revision 8 of the 2019 edition, dated July 2019, contains 3,882 pages. You can download it from the United States International Trade Commission. It will occupy 16 GB on your hard disk, which corresponds to a big chunk, if not all, of the storage space in your smartphone. At Walmart, you can get a Lenovo Chromebook laptop (S330) for $169 (at the time of writing): including the OS, its hard disk of 32 GB would be more than half full after you download the Harmonized Tariff Schedule.
To be fair, the Harmonized Tariff Schedule also contains tariffs at a zero rate, that

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Antitrust and Ideology

July 2, 2019

Most people, including many among those who think of themselves as defenders of free markets, believe that antitrust laws are justified. It nearly goes without saying. So the recent paper of Ryan Young and Clyde Wayne Crews (“The Case Against Antitrust Law,” Competitive Enterprise Institute, April 2019), which reviews the case against these laws, is most welcome. They conclude:
Antitrust regulation harms competition, consumers, and innovation, and therefore should be repealed. Congress should repeal the Sherman Act of 1890, the Clayton Act of 1914, and the Federal Trade Commission Act of 1914, as amended, including the Celler-Kefauver Act of 1950 and the Hart-Scott-Rodino Act of 1976. …
Consumers and competition would greatly benefit from the repeal of antitrust

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A Move to the Left?

June 27, 2019

That Scott Gottlieb, who recently resigned his position as FDA commissioner, has returned to the American Enterprise Institute (after two earlier stints there) perhaps illustrates the move to the left that The Economist and others have detected in American public opinion and politics (“Donald Trump’s Presidency Has Moved America Left,” June 15, 2019). What I call “the left” incorporates the ideology according to which the state, as opposed to individuals, should make the choices that it thinks are detrimental to these individuals themselves or to “society”—which is what some elite thinks “society” likes or dislikes.
I agree that a large part of “the right” has come to think the same way, which is a return to the old European right’s authoritarian ways. So replace

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A Chicken Game Between Two Governments

June 23, 2019

If President Trump called off an Iranian attack in order to save innocent civilians, he deserves praise. Render to God what is God’s, and to Caesar what is Caesar’s. But, as a Wall Street Journal editorial emphasized, there is something off in this story (“Iran Calls Trump’s Bluff,” June 21, 2019):
It’s important to understand how extraordinary this is. The Commander in Chief ordered ships and planes into battle but recalled them because he hadn’t asked in advance what the damage and casualties might be? While the planes were in the air, he asked, oh, by the way? This is hard to take at face value. …
More likely, he changed his mind because he had second thoughts about the military and political consequences of engaging in a conflict he promised as a candidate to

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The Poverty of Protectionism and the Impact of Tariffs

June 17, 2019

The arguments for liberty are richer and belong to a deeper and more credible tradition than the authoritarians’ arguments. Nowhere perhaps is this more obvious than in the area of international trade. We can speak of the poverty of protectionism—even if, no doubt, many of the doctrine’s proponents have much of what hell is paved with. I cannot resist the temptation to quote a consistent authoritarian and defender of slavery before the Civil War, George Fitzhugh, who argued against liberty and free trade:
Admit liberty to be a good, and you leave no room to argue that free trade is an evil—because liberty is free trade.
A few days ago, one study of the impact of Chinese-import tariffs on American prices was praised by some protectionist tweeters. Published in

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Tiananmen Square, June 5, 1989

June 9, 2019

Tank Man is a just-released  15-minute drama film by Robert Anthony Peters, a young libertarian producer. It dramatizes the decision and action of a young Chinese man to stop (temporarily) a column of tanks one day after the very violent attack against Tiananmen Square demonstrators in June 1989. You can watch the film on You Tube.
Sarah Skwire, a senior fellow at Liberty Fund, wrote:
It made me cry. It’s a beautiful story. If you get the chance to see it, you should.
After watching Peters’ film, I watched the 2006 PBS documentary The Tank Man, on the same tragic and heroic event. Although the documentary is a bit dated, it is also worth watching. Just ignore the few comments by social justice warriors who understand little about economics—for instance, that nobody

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New Sanctions Against Americans

June 5, 2019

The US government is expanding its sanctions against Cuba (“U.S. Imposes New Travel Curbs on Cuba,” Wall Street Journal, June 4, 2019). It will make it more difficult for the slaves of the Cuban state to earn a living in the tourist industry. Writes the Journal:
Analysts say the U.S.’s latest action will be devastating to a growing private sector of Cuban entrepreneurs who operate thousands of bed-and-breakfasts in private homes, drive private taxis, and run private restaurants in Havana and throughout the island.
The official goal of the US government is to force change in the political regime of sovereign Cuba. (Not that one should defend national sovereignty at any cost, but the current US president professes to do so. A and non-A.) The US government apparently

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Navarro’s “Fair, Reciprocal, and Balanced Trade”

June 3, 2019

Peter Navarro is director of the Office of Trade and Manufacturing Policy, a White House agency created by President Trump, and one of the latter’s main trade advisers. He is a mystery: despite an economics Ph.D. in economics from Harvard University, he seems ignorant of economics. What he now says contradicts virtually everything he wrote in his 1984 book, The Policy Game: How Special Interests and Ideologues Are Stealing America, where he defended free markets and attacked protectionism with standard economic arguments. His Wall Street Journal op-ed of May 28 (“A Tariff Issue on Which Free and Fair Traders Can Agree”) illustrates his current arguments or lack thereof.
The keystone of his claims in this op-ed is the distinction between “pure free trader” and

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Rare Earths: Make Trade, Not War

June 1, 2019

It would not be the first time in the history of mankind that an expansionary or imperial state decides to grab instead of trading or, more in tune with modernity, instead of letting its subjects free to trade. Thus far, it is only a possibility, but it does not take much imagination to see what could happen. The current issue of The Economist (May 30, 2019), summarizes one possibly triggering issue:
The latest skirmish in the trade war saw China threaten to limit supplies to America of rare earths, a group of 17 metals vital to fast-growing businesses such as electric cars but also widely used in the defence industry. China accounts for the vast bulk of rare-earth production; for some of the metals it is the sole producer.
The threat is serious enough to have led

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Gross Domestic Error in The Economist

May 28, 2019

The Economist is a serious magazine engaged in rational discourse, whatever you think of its political philosophy. Exceptions happen. One can be found in the opening section (“The World this Week”) of the current issue (May 25, 2019). It is all the more surprising as it relates to a simple and narrow topic. We read:
There was some head-scratching this week, as data showed Japan’s economy growing by 2.1% in the first quarter at an annualised rate, defying expectations of a slight contraction. Most of the growth was explained by a huge drop in imports. Because they fell at a faster rate than exports, gdp rose.
As I and other economists, including Scott Wolla of the St. Louis Fed, have explained, a change in imports cannot explain measured GDP growth, for the simple

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Recognizing a Tyrant or Tyrant-To-Be

May 18, 2019

Societies are made of more than one individual. If a ruler governed only one individual, it would be easy to find whether or not he is a tyrant: just ask his single subject. Does “society” love its ruler? But in any actual country, the fact that a minority or even a majority of the ruled supports a ruler does not mean that he is not a tyrant. That a society must not be conceived as a single individual is a central feature of the methodological individualism used by economics to analyze society.
These considerations were illustrated by a response to a tweet where I had called Hungarian Prime Minister Victor Orbán a tyrant. Somebody replied:
Have you ever asked some hungarians [sic] what they think of him? They adore him. He’s no tyrant. Angela Merkel is one.
The

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Trusting the State: the Stock Market Case

May 16, 2019

Recent stock market gyrations illustrate one interesting phenomenon. Each time the administration promises an easing in the “trade tensions” it itself created, the stock market picks up. Every time the promises are not realized, the market drops. And the process starts again.
Today’s Wall Street Journal writes (“Stocks Turn Higher on Trade Hopes,” May 15, 2019):
Stocks erased declines from earlier in the day after Treasury Secretary Steven Mnuchin said U.S. negotiators are likely to travel to Beijing soon and reports emerged that the Trump administration is putting off a final decision on whether to impose broad tariffs on automobile and auto-part imports.
Updates on global trade policy have swung markets in recent days, with stocks rising and falling on shifting

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Walmart Bullied by Government, or Was It?

May 13, 2019

Walmart is a private company that should be at liberty to discriminate against whom it wants. This is a moral argument inspired by economics, and it should be a general principle in a free society. Walmart just caved in to pressures from the Federal Drug Administration (FDA) and will start discriminating against some adults who want to purchase tobacco products or e-cigarettes.
The Wall Street Journal reports (“Walmart to Raise Tobacco Age to 21, Drop Fruit-Flavored E-Cigarettes,” May 8, 2019):
Walmart’s action follows similar moves by other retailers in the wake of FDA criticism and bills introduced in the House and Senate that would raise the minimum age to purchase tobacco nationwide to 21 from 18.
The federal government wants to discriminate against individuals

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Theatre of the Absurd: Godot, Trump, and Xi

May 10, 2019

In Samuel Beckett’s postwar play “Waiting for Godot,” a defining work in the theater of the absurd, Didi and Gogo are waiting for Godot, nobody knows who Godot is, and he never comes. In many ways, the current trade negotiations between the American government and the Chinese government verge on the absurd: for most subjects of the two governments, such negotiations are meaningless and tragic. Look at the economics and politics of international trade with the economist’s non-romantic eyes.
(The picture below represents the two actors who play Didi and Gogo in a Berliner Ensemble interpretation of “Waiting for Godot”: respectively, from left to right, Axel Werner and Michael Rothmann.)
Axel Werner, Michael Rothmann – Theaterproduktion “Warten auf Godot” (von Samuel

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The Trump Economic Boom

May 5, 2019

As the two charts below show, it is far from sure that there is a Trump economic boom. Of course, we must remain open to surprises. What is perhaps most surprising at this point, however, is how certain Trump’s economic policies and policy attitudes haven’t wrecked the economy. Yet, let’s keep in mind that, contrary to Juan Perón or Nicolás Maduro, a US president, thanks God, does not yet run the economy, as much as he can try. We probably overestimate the power of the big chief (which is not new in the history of mankind).
What happened since the end of the Great Recession in 2009 is a slow and gradual recovery. The first chart below shows this with the unemployment rate. It is as clear as anything can be that the unemployment rate (seasonally adjusted on the

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Pushing Down Interest Rates in a Boom

May 4, 2019

Standard Keynesian theory claims that the government should stimulate the economy during a slump and cool it during a boom. Many objections exist to this interventionism, but there is apparently a new kind of interventionism concocted in the White House: stimulate the economy during a boom. Would this imply slowing it down during a recession?
In Keynesian theory, one way to stimulate the economy is to lower interest rates by increasing the money supply. John Maynard Keynes himself, however, did not trust monetary policy and preferred increasing government expenditures and the budget deficit. Later Keynesians reclaimed monetary policy and the idea of pushing down interest rates during a slump. The current administration apparently wants both higher budget deficits

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Live and Let Live

May 1, 2019

Although many contemporary phenomena would illustrate my argument, consider far-right nationalism in Europe. Nationalists disagree not only with nationalists in other countries (“With Mainsteam Parties Struggling, Europe’s Nationalists Band Together,” Wall Street Journal, April 25, 2019), but also with non-nationalists or other nationalists in their own country. This reflects the general problem of politics, which is the necessity of agreement on social rules, combined with the reality of individual diversity. I take “politics” in a very general sense, as the processes that determine rules of life in society (whether under zero formal government, or under total Leviathan, or somewhere between).
Whatever the causes of their diversity, individuals have different

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Effects of the 2018 Tariffs on Washing Machines

April 23, 2019

When President Donald Trump announced tariffs of 20% to 50% on imported washing machines in January 2018, the prediction of economic theory was quite straightforward: the price of all washing machines in the U.S., both imported and domestic, would rise in roughly the same proportion as the tariffs. In an essay for Regulation, (“Putting 97 Million Households through the Wringer“, Spring 2018), I wrote:
Goldman Sachs, an investment bank, forecasts that the price of washing machines will increase by 8%–20% during the first year. This is probably an underestimate and it would not be surprising if prices increase by at least 25%.
My back-of-the-envelope calculation was that this price increase would cost American consumers $1.4 billion dollars.
Three economists, Aaron

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