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Cafe Hayek

Bonus Quotation of the Day…

…  is from Book IV, Chapter 3 – on page 493, Vol. 1, of the 1981 Liberty Fund edition – of Adam Smith’s 1776 An Inquiry Into the Nature and Causes of the Wealth of Nations: By such [mercantilist] maxims as these, however, nations have been taught that their interest consisted in beggaring all their neighbors.  Each nation has been made to look with an invidious eye upon the prosperity of all the nations with which it trades, and to consider their gain as its own loss.  Commerce, which...

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More Evidence Against Autor, Dorn, and Hanson

The Autor, Dorn, and Hanson ‘China shock’ thesis is lately taking something of a beating.  In addition to Jonathan Rothwell’s paper (mentioned at Cafe Hayek yesterday) is this new paper by Ildikó Magyari, a newly minted econ PhD from Columbia University.  (HT Tyler Cowen)  Here’s the abstract from Magyari’s paper: What is the impact of Chinese imports on employment of US manufacturing firms? Previous papers have found a negative effect of Chinese imports on employment in US manufacturing...

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D.J. Trump Is No Modern-Day W.G. Sumner

Here’s a letter to IPI PolicyBytes: Merrill Matthews commits a rare error in writing that the election of Donald Trump heralds a return to the original understanding of William Graham Sumner’s term “the forgotten man” (“Taxpayers are the Real Forgotten Man,” Feb. 28). It’s true that Sumner introduced the term “forgotten man” in 1883 to remind us of the overlooked decent and hard-working people whom the government taxes, pushes, and prods in order to acquire the resources and create the...

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Some Links

My colleague Walter Williams explains the easy-to-miss distinction between prices and costs.  A slice: In his 2012 State of the Union address, President Barack Obama boasted that “over 1,000 Americans are working today because we stopped a surge in Chinese tires.” According to a study done by the Peterson Institute for International Economics (http://tinyurl.com/jdtbktu), those trade restrictions forced Americans to pay $1.1 billion in higher prices for tires. So though 1,200 jobs were...

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Reagan vs. Trump

I know that Ronald Reagan talked a better line than he walked.  (He was a successful politician, alas – seldom a good situation for one’s character.)  And I do not excuse Reagan’s many violations of the free-market and free-trade principles that he espoused.  But it remains noteworthy that Reagan did espouse such principles, often with great eloquence and far deeper understanding than is typical even among the relatively better sort of politicians. Take a look at the portion of this...

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Arrow – and Coase, and Lerner

Here’s a letter to the Wall Street Journal co-written with my dear friend Ken Elzinga: We applaud Larry Summers’s fine remembrance of Kenneth Arrow (“Farewell to Kenneth Arrow, a Gentle Genius of Economics,” Feb. 25).  Yet we’re surprised by this sentence: “Arrow’s impossibility theorem regarding voting and combining preferences is the only theorem that I know of that is named for an economist.” There are other theorems named for economists, the most well-known being the Coase theorem....

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Trump’s Trade Ignorance

Here’s part of what’s reported to be a taped telephone conversation late last year between then-Pres.-elect Trump and Wilbur Ross (who has just been confirmed – irony of ironies – as U.S. Secretary of Commerce!).  I can’t vouch for the authenticity of the recording or the accuracy of the transcript, but it is reported here.  (HT Bryan Riley)  (To listen to the recording I’d have to download some program onto my computer; I don’t want to do that.) TRUMP: [Inaudible] free trade bullshit—so...

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Transition Problems and Costs

Joe works in a Pennsylvania steel mill.  Many of Joe’s fellow Americans start buying more imported steel and, hence, less American-made steel.  Because of this change in trade patterns, Joe – a good, hard-working, honest, play-by-the-rules, middle-aged family man who toiled in the steel mill all of his adult life – loses his job.  Joe is devastated. How can we help Joe transition to another job or to otherwise cope with his job loss?  This question is frequently asked.  Crafting clever...

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Not So Fast to Canonize the Findings of Autor, Dorn, and Hanson

Here’s the abstract of a new paper by Jonathan Rothwell (emphasis added):  (HT Bryan Riley) In any dynamic economy, there is a risk of job loss. Job loss resulting from foreign rather than domestic competition has come under intense scrutiny recently with Britain’s exit from the European Union and the election of Donald Trump as president of the United States. While economists generally conclude that trade is broadly enriching, recent works have brought attention to the costs of trade to...

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Walter Williams Asks a Probing Question

Being a world-class economist, my colleague Walter Williams spends much of his time asking probing questions.  Here’s one that he posed to me recently by e-mail: Don: I don’t think there are tariffs on coffee and I know of no organization calling for coffee tariffs. I wonder why. Great, probing question. The answer is that there are very few coffee growers in the United States.  In the U.S. states, coffee is grown commercially only in Hawaii.  Coffee is also grown commercially also in...

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