Tuesday , June 22 2021
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Pierre Lemieux

Articles by Pierre Lemieux

Individualism and Western Civilization

8 days ago

In his 1944 book The Road to Serfdom, Friedrich Hayek, a future (1974) Nobel economics prize winner, spoke about “the individualist tradition which has created Western civilization” (p. 73 in the edition edited by Bruce Caldwell, University of Chicago Press, 2007).
Stokely Carmichael, a black nationalist of the 1960s and chairman of the Student National Coordinating Committee, said (as quoted in Donald Critchlow’s In Defense of Populism [University of Pennsylvania Press, 2020], p. 97):
When you talk about black power, you talk of building a movement that will smash everything Western civilization has created.
This trope has been common for at least several decades among the people who call for a political system that would impose their ideas by force and reduce the

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Individualism and Western Civilization

8 days ago

In his 1944 book The Road to Serfdom, Friedrich Hayek, a future (1974) Nobel economics prize winner, spoke about “the individualist tradition which has created Western civilization” (p. 73 in the edition edited by Bruce Caldwell, University of Chicago Press, 2007).
Stokely Carmichael, a black nationalist of the 1960s and chairman of the Student National Coordinating Committee, said (as quoted in Donald Critchlow’s In Defense of Populism [University of Pennsylvania Press, 2020], p. 97):
When you talk about black power, you talk of building a movement that will smash everything Western civilization has created.
This trope has been common for at least several decades among the people who call for a political system that would impose their ideas by force and reduce the

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The Centrality of Exchange

11 days ago

Most government interventions consist in forbidding adult individuals (or their voluntary associations) to freely engage in acts of exchange: securities laws, antitrust laws, minimum-wage laws, maximum prices (like in “price gouging” laws, for example), laws and regulations mandating or banning discrimination, legal privileges for trade unions, tariffs and import controls, and so forth. Some believe that all these interventions are required, and required in growing number.
Many people including some economists ignore or forget the benefits of voluntary exchange. In The Wealth of Nations (1786), Adam Smith illustrated the centrality of exchange in economic relations (and, in fact, in all social relations) when he wrote about
a certain propensity in human nature …

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Tax Maximizers: Good Greed and Bad Greed

14 days ago

Greed is good or useful when greedy people automatically serve the interests of their fellow humans; exchange on free markets is the paradigmatic case. Greed is bad when it works by exploiting or dominating others, including through political force or deceit. At least, that is the way an economist would think if he is willing to make a value judgment in favor of the consumer, which is what he generally does when evaluating a public policy or an economic system.
Assuming that a corporate income tax is justifiable, we can apply the same principle to the international corporate tax system and to the new minimum tax proposed by the G-7 governments (Paul Hannon, Richard Rubin and Sam Schechner, “G-7 Nations Agree on New Rules for Taxing Global Companies,” Wall Street

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Lessons from China (and from Hayek)

16 days ago

A Wall Street Journal report of today (Stephanie Yang, “China’s Tech Clampdown Is Spreading,” June 6, 2021) suggests that the Chinese government is clamping down on tech companies just like the US and EU governments are doing, and often using the same rhetoric. Any economic theory of politics—in fact, any political theory—must be able to explain that. The WSJ writes:
Not a week seems to go by without Chinese regulators calling out tech companies for alleged offenses ranging from inconsistent pricing to imperiling user privacy to difficult working conditions. In May, China’s cyber regulator accused 105 apps, including short-video and job-recruitment apps, of illegally collecting and using personal data. It ordered the companies to fix their problems within three

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Economic Justification for Chinese Coercion?

20 days ago

The Chinese government relaxed to three children per family its former limit of one child after 1979 and two after 2015 (Lyian Oi, “China Delivers Three-Child Policy, but It’s Too Late for Many,” Wall Street Journal, June 1, 2021). Standard economic analysis provides an easy justification for limiting children: a child can be viewed as a negative externality “for society” because a more numerous population imposes costs on taxpayers and, through reduced family resources for education and other factors, on economic growth. This argument has been used, sometimes via environmentalism (example: a World Bank study of 1990).
This, however, mainly demonstrates the plasticity and omnipresence of externalities and the uselessness or danger of the concept itself. As I

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Tulsa Under an Economics-of-Politics Lens

21 days ago

One hundred years ago today, on May 31 and June 1st, 1921, white mobs descended on a prosperous black enclave of Tulsa, Oklahoma, dubbed “Black Wall Street.” The original purpose was to lynch a black man who was in custody after being accused of raping a white woman. The riots that followed, in which armed black men also (understandably) participated, ended up with hundreds of black residents killed or injured, and the burning and looting of most of the neighborhood (as shown on the feature image of this post, a photograph taken on June 1, 1921). For example, Dr. A.C. Jackson, a nationally renowned surgeon, “was shot dead by the mob, after he walked out of his home with his hands held up.”
A debate is going on in Oklahoma about how public schools taught or should

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The Producer as a Guilty Prostitute

25 days ago

Following a lawsuit brought by environmental groups, a court in The Hague (Netherlands) just ordered Shell to cut 45% of its carbon emissions by 2030 because the company “is partially responsible for climate change,” as the Wall Street Journal puts it (Sarah McFarlane, “Shell Ordered by Dutch Court to Cut Carbon Emissions,” May 26, 2021). The company will quite certainly appeal the ruling but, irrespective of the final result, it is interesting to ask what could have led to that and what are the implications.
If Shell may be bossed around by a court not because it did anything illegal but to force it to do in the future something considered good, what prevents a court from giving direct non-purchase or lower-purchase orders to its customers? Consumers are the ones

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Elon Musk and the Economics of Resistance

28 days ago

Elon Musk seems engaged in resistance against government controllers, those whom people softly, politely, and incorrectly call “regulators.” A Wall Street Journal story recently explained how, not content to publicly cross swords with the untouchable Securities and Exchange Commission, the famous entrepreneur has also refused to obey injunctions of other regulators, “ignored enforcement attempts,” and refused government inspectors access to his large factory in Nevada (Susan Pulliam et al., “Elon Musk’s War on Regulators,” April 28, 2021). The subtitle of the article reads:
The Tesla and SpaceX chief courts conflict with an alphabet soup of government agencies—and generally gets away with it.
It is not sure that Mr. Musk is defending a principle of private property

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Should Hateful Speech Be Banned?

May 19, 2021

Hate is not productive in the context of rational discussions. It is collectivist when it fabricates collective sins. And it is downright bigot in many social interactions. Yet, it is not always and everywhere useless. Hating slavery or other forms of tyranny, for example, would seem commendable in any libertarian ethics. Being an expression of human emotions, art cannot blacklist hate—except with the threat of force and especially state force.
The Hong Kong government, under the domination of Big Brother in Beijing, is under pressure to prevent the inclusion of dissenting art in the opening exhibition of the M+ Museum (see Joyu Wang and Yoko Kubota, “Pro-China Lawmakers in Hong Kong Find a New National-Security Target: Art,” Wall Street Journal, May 18, 2021). One

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Politics Without Romance

May 16, 2021

The public-choice school of economics, developed since the mid-20th century, assumes an individual who moves from the private sector to the public sector, whether as a government bureaucrat or a politician, remains the same mostly self-interested individual. He does not metamorphose into an altruist angel. This view of “politics without romance” (to quote James Buchanan) led to new and fruitful explanations of government actions.
We should expect that a president (or another top ruler) will, if not effectively constrained by institutions (constitution, laws, and other sets of established rules), redefine his own self-interest as the “public interest.” Even if he wanted to do good for all citizens, he would typically be unable to do so because not all of them have

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No Mystery in the Current Used-Car Market

May 12, 2021

Consider a story in Monday’s Wall Street Journal regarding the current market for used cars, “Looking to Buy a Used Car? Expect High Prices, Few Options (May 10, 2021).” Financial press reporters are usually more reliable than their colleagues in the general media because they have a knowledge of supply-demand analysis acquired from economic classes or at least on-the-job training. But it is not always true and finding errors in the financial press is a good exercise and an easy hunt. Similarly, to use a formula from the late Financial Times columnist Samuel Brittan, “businessmen are paid to operate the system rather than understand or expound it” (Capitalism and the Permissive Society, Macmillan, 1973).
The WSJ report contains some useful information provided it

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Saying Just About Anything

May 3, 2021

Yesterday, I pointed out the flimsiness of President Joe Biden’s economics as expressed in his speech of last week before Congress. What he said in the same speech comparing the First and the Second Amendments does not make more sense. It confirms one conclusion of the economics of politics: for a politician, the cost of saying just about anything or of plain lying is low.
In arguing for still more gun controls, he explicitly invited a comparison between the limits of the First Amendment with those he wants for the Second Amendment:
This [gun control reform] shouldn’t be a red or blue issue. And no amendment to the Constitution is absolute. You can’t yell “Fire!” in a crowded theater.
If there is no fire in a theater, one does not have a First Amendment right to

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Tabula-Rasa Economics in Biden’s Speech to Congress

May 2, 2021

A good exercise for economics students is to find instances of economic nonsense in a politician’s speech. In his speech of last Wednesday before Congress, President Joe Biden provided good course material. The proverbial Martian landing on Earth would have thought that Biden’s goal was to emulate his immediate predecessor.
Even some elements of style—the interrupted and hanging sentences, and the repeated words, for example—look like an imitation. By the way, render unto Caesar what is Caesar’s: it’s all to the honor of the White House to have reproduced multiple misspeaking events in the official transcript; refreshing honesty, it seems! But this is not what I want to focus on; I will give instead three substantive illustrations of Biden’s “economics.”
On free

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The Slippery Slope of Anti-Discrimination Laws

April 27, 2021

Non-discrimination can easily come to mean discrimination. Suppose a law bans discrimination against individuals of Group 1. If that means the interdiction of imposing special obstacles or constraints on individuals of Group 1, it is pretty clear what non-discrimination means. But suppose that non-discrimination against Group 1 means giving privileges (in terms, say, of affirmative action) to individuals who are part of that group. The consequence is to directly harm individuals of Group 2, who will resent being discriminated against for non-discrimination reasons. With this slip in the meaning of non-discrimination, discrimination has just been shifted from Group 1 to Group 2: the latter is now discriminated against in the name of non-discrimination against the

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Mrs. Grundy Against Ryan Anderson’s Book

April 26, 2021

I used to say, half-jokingly, that the ACLU reduced life and freedom to what happened between the waist and the knees. It is true, though, that the venerable association was defending free speech, so I should have said “between the upper lip and the knees.” They were also defending the 4th and 5th Amendments. That kept me a due-paying member for a number of years. The woke movement and its LGBTQ+ wing, which are in many ways the successors of the ACLU,  reduce life to what happens between the chest and the knees (due account being taken of the skin color).

The delisting by Amazon of Ryan Anderson’s book When Harry Became Sally (Encounter Books, 2018) is revealing. As a private company, of course, Amazon has and should have the right to refuse to bake Anderson’s

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That Time Was Different?

April 21, 2021

Economic theories of politics sound warnings against oppression and tyranny. The prospect may seem abstract and theoretical, but history provides many examples of idealized political leaders who turned out to be self-interested tyrants and betrayed the power that naive citizens had granted them. Here is a telling one.
At the end of the 19th century, many considered Germany to be the most advanced country in the world. It was at the first ranks of public health and the welfare state. Frederic C. Howe, an Ohio politician later associated with the FDR administration, “portrayed Germany as the world’s most advanced scientific state.” Many young economists who founded the American Economic Association in 1885 had studied there. (See Thomas C. Leonard, Illiberal

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The Problem in Bertrand de Jouvenel

April 19, 2021

At Law and Liberty, Daniel Mahoney has an interesting and often challenging article on Bertrand de Jouvenel. Mahoney, like Jouvenel, tries to reconcile the danger of the state (“the Minotaur” in Jouvenel’s terms) with the ancient philosophical ideal of a “common good” that political authorities are supposed to protect.
My own reading of Jouvenel, specifically of his book On Power, has been mainly classical-liberal or libertarian, although I have emphasized the contradictions that professor Mahoney claims to resolve.
One fundamental problem, which Mahoney does not discuss in his Law and Liberty article, is: What is the “common good”? Can you find many trade-offs or values on which everyone in society agrees? If not, who does the agreeing, who makes the choice?

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Hitler’s Version of MMT

April 15, 2021

I am well aware we should never make any comparison between today’s well-meaning statists and Adolf Hitler. But the latter’s “table talk,” his table monologues to inner-circle guests, recorded by shorthand writers, are sometimes instructive. On October 15, 1941, for example, he explained his monetary theory (Hitler’s Table Talk, 1941-1944, Enigma Books, 1953, pp. 65-66). By happenstance, they show some resemblance with so-called Modern Monetary Theory, perhaps even more in what would likely be MMT’s political consequences.
He starts by confusing a definition and a causal theory: inflation is not caused by money creation but by an increase in prices. His reported statement is:
Inflation is not caused by increasing the fiduciary circulation. It begins on the day when

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A Better Solution: Tax Rocks or Churches

April 9, 2021

The Biden administration may be realizing that a corporate minimum tax is inconsistent with the multitudinous tax preferences that Leviathan himself gives corporations in order that they do what he wants them to do. Here is another idea to finance the $2.3 billion of proposed “infrastructure” or whatever pleases Leviathan: tax rocks instead.
The proposal is succinctly explained in my article “Joe Biden’s Economic Agenda: An Early Appraisal,” in the Spring issue of Regulation:
However, corporations don’t pay taxes any more than, say, rocks do: if the government were to tax rocks, the actual incidence of the tax would fall on some flesh‐and‐blood individuals. In the case of corporations, those individuals are some combination of shareholders, employees, and

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Should Karl Marx Be Canceled?

April 5, 2021

There are good arguments to the effect that nobody should be “canceled”; but if somebody should, it would be Karl Marx. For all we know, he was a bigot and a racist who even used the N-word, something worse for the current dominant culture than what many did who were canceled or will soon be. One of economist Walter Williams’s columns was titled “The Ugly Racism of Karl Marx.”
The main economic argument against the cancel culture is that of John Stuart Mill in On Liberty: freedom of speech is necessary in the search for any sort of truth. Not only do mobs historically and literally lynch unpopular individuals, but the fear of the mob also reduces the incentives to look for the truth and turns many people into wimps. Anybody can make youth errors but they are easily

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Externalities and Our Children

April 1, 2021

The reason why things don’t work properly is that the right people are not in politics. Of course, what you think are the right people is not necessarily what your neighbor thinks, so ultimately the problem is a lack of national unity. What is needed is that we share the same values under democratic political leadership. And even this is not enough. Every voter must spend at least as much time studying every major political issue as he spends buying a new car. Add inclusivity to all this, and the proliferation of externalities would become solvable. If we are one, there cannot be anything external to us (reminder: the main characteristic of externalities is that they are external to the market). With more Alexandria Occasio-Cortezs and more Sidney Powells in

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Privileges and Privacy for the Rulers

March 29, 2021

Recent journalistic investigations revealed that the family and friends of New York governor Andrew Cuomo benefited from nomenklatura privileges at the time when ordinary people had problems getting Covid-19 tests and timely results. These state-privileged people could be tested rapidly, often at home and many times if they wished. Their tests were often rushed to laboratories by state troopers and treated in priority. Liz Wolfe of Reason Magazine writes:
There was limited testing if you thought you’d been exposed, and long wait times if you did manage to nab one of those precious few tests.
But not if your last name starts with a C and ends with an uomo! …
The Albany Times Union reported last night that Democratic Gov. Andrew Cuomo directed the state’s top health

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Public Health Is Not What Many Think It Is

March 24, 2021

Many people seem to think that that “public health” is a scientific white knight. For sure, many medical experts in the public health movement do have real scientific knowledge, but the science stops there. The rest is essentially a political movement.
The Reason Foundation just published my primer on public health: “Public Health Models and Related Government Interventions: A Primer.” A few excerpts:
“In many respects,” says a major textbook of public health, “it is more reasonable to view public health as a movement than as a profession.”
With its wide definition, ideology, and scope, public health is as much as, or more of, a political movement than a field of scientific inquiry. Elizabeth Fee agrees with “the idea that public health is not just a set of

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Individual and Collective Choices in Cars

March 22, 2021

There appears to be something basic that most people in most of human history don’t understand. Or is it me (along with a lot of economists)? Here is the argument.
It would be better if our car were chosen democratically. A democratic referendum could ask voters to choose which car will be available to consumers. (How individual purchases would be financed, either with private money or by government, does not matter at this point.) Assume the voting system is the one you prefer and that the number of choices or write-in options is also what you think is most democratic. The voters are asked to vote for the single brand and model of car to be produced or imported. Each individual has one vote, however “one vote” is defined in your preferred voting system. The

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Did Price-Gouging Laws Increase Covid Deaths?

March 19, 2021

An interesting working paper was published this month by economists Rik Chakraborti (Christopher Newport University) and Gavin Roberts (Weber State University), “How Price-Gouging Regulation Undermined COVID-19 Mitigation: Evidence of Unintended Consequences.”
These price controls created shortages, which, according to economic theory, would have been more severe in the 42 states that already had price-gouging laws on the books or (inexplicably for an economist) rushed to legislate them after Covid hit. The federal Defense Production Act, invoked by Donald Trump, added more biting price controls on pandemic-related supplies (such as personal protection equipment) but is not considered in the Chakraborti-Roberts paper.
The authors used a database of

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Logical and Praxeological Impossibilities

March 17, 2021

The use of logical impossibilities makes rational discourse impossible. A and non-A cannot both be true. Everybody cannot have an income higher than the median or the average. Nobody can consume if nobody produces (including do-it-yourself). Everybody cannot consume more if everybody produces less. You can’t be inclusive without admitting the non-inclusive in your inclusive set. And so on.
There also exist praxeological impossibilities which make any rational discourse about society impossible. I take “praxeology” to mean the logic of human action in relation to individual incentives. For example, you cannot consume something that you want but cannot produce yourself, except if somebody else is motivated to produce it for you through exchange or out of

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The Pandemic in Europe and America

March 13, 2021

The pandemic evolution now appears to be more worrying in Europe than in America, as illustrated by the graph below reproduced from yesterday’s Wall Street Journal (Marcus Walker, Bertrand Benoit, and Stacy Meichtry, “Europe Confronts a Covid-19 Rebound as Vaccine Hopes Recede,” March 12, 2021). In France, for example, after two very long and restrictive (even tyrannical) national lockdowns, ICUs are close to 80% capacity. The Wall Street Journal explains:
Europe’s efforts continue to suffer from the EU’s slowness in procuring and approving vaccines, production delays at vaccine makers, and bureaucratic holdups in injecting available doses.

The “production delays at vaccine makers” are most likely due to the fact that the EU government has not purchased them in

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The President and the Good King Dagobert

March 5, 2021

It is suggested that the good President Biden called off one air strike in Syria after being told in extremis that a woman and a couple of children were near the planned impact (Gordon Lubold et al., “Biden Called Off Strike on a Second Military Target in Syria Last Week,” Wall Street Journal, March 4, 2021), just the opposite of what happened in the movie Eye in the Sky. I suspect that Joe Biden is, in private life, a decent human being. But he has some potential, prefigured in his previous politician’s life, to be a monster in politics. Jason Brennan argues in Against Democracy (Princeton University Press, 2016) that “politics makes us worse.”
But there are two related lessons of the aborted Syria strike that are perhaps less immediately obvious.

The first one

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Is Amazon a Corporate Mother Teresa?

March 3, 2021

Amazon is in many ways a fascinating company and deserves to be defended against most of its mainstream critics. However, it would be simplistic to explain its campaign for a $15 federally-imposed minimum wage by identifying it with a corporate Mother Teresa. Its more obvious reasons to preach for minimum wages are not defendable.
I will not repeat all the arguments against the minimum wage, summarized in a good article by Cato Institute’s Ryan Bourne (“The Case Against a $15 Federal Minimum Wage: Q&A”). My co-blogger David Henderson has also defended many of the standard economic arguments. There exist some disagreements among economists about the employment effect of minimum wages, but they mainly relate to the size and victims of the negative effect (see

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