… is from page 7 of the late economic-historian Jonathan R. T. Hughes’s classic 1977 book The Government Habit (this link is to the 1991 revised edition).  Although written 35 years ago, Hughes’s observation remains as true – and as lamentable – today as ever:

There are few branches of learning as devoid of history’s light as economics.  Economists are rarely informed by it.

Bryan Caplan on poverty and marriage.

David Henderson introduces Bob Murphy’s new EconLib essay on Solyndra.

David also introduces us to his wife’s, Rena’s, thoughts on the Komen controversy.

Steve Landsburg reminds us why modern-day Jews don’t farm.

Marian Tupy tells us about this video endorsing trade liberalization in Africa.

My latest column in the Pittsburgh Tribune-Review.

Insider trading. No comment necessary. HT: Drudge

Here’s a letter to one Elaine Marshall:

Dear Ms. Marshall:

I have no idea how I wound up on your e-mail list, but given that I’m there I take the privilege of responding to your e-mail of this morning in which you write that “Millions of women and grassroots activists expressed their outrage last week at Susan G. Komen Foundation’s decision to stop funding breast cancer screenings at Planned Parenthood.  And, thanks to their inspiring efforts, the Komen Foundation backed down.”

To me, nothing about those efforts are “inspiring.”  Quite the opposite.

The Susan G. Komen Foundation is a private organization whose ‘controversial’ decision is well within the bounds of legitimacy.  That Foundation’s officers – as opposed to you and the “millions of women and grassroots activists” – have the keenest insight into how its spending decisions affect its ultimate goal of finding a cure for breast cancer.  How do you and the “activists” you applaud know that the Komen Foundation’s goal would not have been better promoted had the Foundation reallocated its funds away from Planned Parenthood and toward some other recipient?  What wizardry transforms your “outrage” into insight about how the Komen Foundation’s grant-making decisions affect its fund-raising prospects?

That you presume to know better than the Komen Foundation how its privately raised funds are best spent to achieve its admirable goal reveals only your and the “activists’” insolence and utterly unmerited sense of self-importance.

Why don’t you practice minding your own business?

Sincerely,
Donald J. Boudreaux
Professor of Economics
George Mason University
Fairfax, VA 22030

… is from page 76 of Thomas Sowell’s 2009 book Intellectuals and Society:

At the heart of the social vision prevalent among contemporary intellectuals is the belief that there are “problems” created by existing institutions and that “solutions” to these problems can be excogitated by intellectuals.  This vision is both a vision of society and a vision of the role of intellectuals within society.

If what is legal becomes the norm rather than what is moral, we are all going to be very poor. The names of these people should be on the front page of the Washington Post every day until election day and their constituents should vote them out of office regardless of what they have “accomplished” with other people’s money.

This isn’t just pork. It’s special pork. I don’t know what to call it. Maybe the other other white meat.  Please use the comments for better suggestions.

From the Washington Post:

A U.S. senator from Alabama directed more than $100 million in federal earmarks to renovate downtown Tuscaloosa near his own commercial office building. A congressman from Georgia secured $6.3 million in taxpayer funds to replenish the beach about 900 feet from his island vacation cottage. A representative from Michigan earmarked $486,000 to add a bike lane to a bridge within walking distance of her home.

Thirty-three members of Congress have directed more than $300 million in earmarks and other spending provisions to dozens of public projects that are next to or within about two miles of the lawmakers’ own property, according to a Washington Post investigation.

Under the ethics rules Congress has written for itself, this is both legal and undisclosed.

The Post analyzed public records on the holdings of all 535 members and compared them with earmarks members had sought for pet projects, most of them since 2008. The process uncovered appropriations for work in close proximity to commercial and residential real estate owned by the lawmakers or their family members. The review also found 16 lawmakers who sent tax dollars to companies, colleges or community programs where their spouses, children or parents work as salaried employees or serve on boards.

Read the whole thing. Here’s another excerpt to whet your appetite:

In March 2007, Rep. Stephanie Tubbs Jones (D-Ohio) and Rep. Doc Hastings (R-Wash.), leaders of the House Ethics Committee at the time, defined a financial interest as “a direct and foreseeable effect” on a lawmaker’s assets.

“Remote, inconsequential or speculative interests” do not count, they wrote in an advisory opinion to members.

A few months later, the committee weighed in on the case of Rep. Ken Calvert (R-Calif.), who was seeking an earmark to build a bus terminal and park-and-ride center near seven commercial properties he owned in Corona, Calif. Five of them were within one mile of the project; one was less than three blocks away.

The committee found no conflict for Calvert. “It appears that any increase in the value of your properties resulting from the earmark would be incremental and indirect,” Tubbs Jones and Hastings wrote, “and would be experienced as a member of a class of landholders in the vicinity of the Transit Center.”

Two years later, Hastings himself sought an earmark for a project near property he was selling to his brother. In 2009, he secured $750,000 toward the planning of a new bridge that will replace an outdated railroad underpass in Pasco, Wash.

As Congress required, Hastings certified that he and his wife had “no financial interest” in the earmark. Hastings noted on his Web site that the project would “improve the safety of motorists and pedestrians, while improving freight mobility and response times for emergency services.”

He said nothing, however, about its proximity to Columbia Basin Paper & Supply, the janitorial supply company that Hastings owned and ran until he was elected. His brother now operates the company. County records show Hastings and his wife still own the land and a 7,000-square-foot building. The overpass, as planned, will start about three blocks away.

Hastings does not list the business property on his financial disclosure form. His press secretary said debts owed by immediate family members — spouses, parents, children or siblings — do not have to be reported.

“After winning election in 1994, the Congressman acted to remove himself from the business as he took office and made an agreement with his brother for him to purchase it over time,” wrote Erin Daly, Hastings’s press secretary.

City officials said replacing the underpass is one of their top priorities.

In an interview, Hastings said the location of his property had no bearing on his support for the project.

“It never crossed my mind,” he said. “Every business in Pasco will benefit by that.”

Russ (through Tyler) links to William Gadea’s concern that a commercial baker (in Gadea’s example, the maker of Arnold bread) can reduce competition by producing a large number of varieties of bread.  (Read Gadea’s post for the full account.)

Without commenting deeply on this matter here – I’m still on the road, at the end of a long series of trips – I note that Gadea’s post reminds me of the (in)famous action by the U.S. Federal Trade Commission in the 1970s alleging that Kellogg’s, General Mills, General Foods, and Quaker were harming consumer welfare through “brand proliferation” – that is, by offering such a broad and complete range of different types of breakfast cereals that each and every consumer demand for cereal was met, from demands by the health-conscious for unsweetened Corn Flakes to demands by children for sugary Lucky Charms.  These firms’ success at satisfying consumer demands, noted the F.T.C., made entry by upstart cereal producers more difficult.  So the F.T.C. accused Kellogg’s and other established firms of monopolizing the market.

….

I tell my students that almost anything is possible.  It is possible that firms that work unusually hard at meeting many nuanced differences in consumer demands can wind up with a monopoly that harms consumers over the long run.  (Note: the only standard here is consumer welfare.  A business practice should not be judged by its effects on actual and potential rivals.  Effects on rivals matter only insofar as these effects affect the prices, quantities, and qualities available to consumers.)  But any such possibility is too remote to take seriously; it’s (at best) an intellectual curiosity.  We economists had best focus our attention on understanding what is plausible.

In the Fall 1990 issue of Regulation, I addressed “brand proliferation” and other theories of so-called “non-price predation.”  My argument there is that proponents of non-price predation theories take inadequate account of counterstrategies readily available to rival firms.  (There are other flaws – in addition to inadequate attention to counterstrategies – that infect such theories.)

Common sense and basic economic intuition should cause one to approach with serious skepticism any alleged account of monopolization that features monopolist wannabes increasing consumer choice.

….

(In a total coincidence, I had dinner last night with Tom Campbell, one of the authors whose work on non-price predation I challenge in the above-linked article.  Tom – a wonderful and incredibly bright guy – is, btw, now Dean of the law school at Chapman University.)

William Gadea wonders (HT: Tyler) why Arnold Bread offers so many different kinds of bread:

100% whole wheat, 12 Grain, 7 Grain, German Dark Wheat, Health Nut, Healthy Multi-grain, Honey Whole Wheat, Oatnut, Country Oat Bran, Country Wheat, Country White, Country Whole Grain White, Healthfull 10 Grain, Healthfull Flax and Fiber, Healthfull Hearty Wheat, Healthy Nutty Grain, Double Fiber, Double Protein, Grains & More Flax and fiber, Triple Health, Dutch Country 100% whole Wheat, Butter Split Top, Extra Fiber, Premium Potato, Premium White, Rye Everything, Rye and Pump, Pumpernickel, Rye Seedless, Melba Thin, Rye with Seeds, Soft Family 100% Whole Wheat, Soft Family Classic White, Soft Family Honey Wheat, Soft Family Whole Grain White, Brick Oven Whole Wheat, Brick Oven Premium White, Premium Italian, Stone Ground, Light 100% Whole Wheat

He rejects the idea that customers like that much variety and argues instead that it is a way to squeeze out competitors:

By my count, there are 40 kinds of bread, and that is just counting the sliced breads, not the thins or buns. Is there really anyone in this world who loves the Arnold 10-grain, but can’t stand the 7-grain or 12-grain? More importantly in business terms, is the advantage of addressing these additional slivers of taste (if indeed people can make distinctions between the varieties – I can’t) really outweigh the additional expense of producing 40 separate packages, 40 separate categories of inventory, and 40 separate (at least slightly different) production processes?

My guess is no. The motivator here isn’t making the customer happier, it’s the oft-neglected fourth ‘P’ of marketing: placement. Even if the supermarket carries only half the varieties that Arnold offers, all of a sudden they are hogging a big part of the bread aisle. Arnold is the bread that is most likely to be close to your hand.

I think he needs to talk to someone in the grocery business. Yes, placement is very valuable. But that is why it’s expensive. The amount of shelf space a product gets in a grocery is not determined by how many varieties they offer. If  no one buys those varieties or buys very little of them, it is neither the grocery’s interest or the manufacturer of the product to take up space with it. My understanding is that groceries charge fees for shelf space and when stuff doesn’t sell, the manufacturer eats the inventory, not the grocery. Anyone from the business who can correct or corroborate this view, please weigh in.

This is a good topic to talk to your kids about over the dinner table. Not because it’s about food but because it will help your kids see how competition protects us from the natural urge of Arnold Bread and others to monopolize shelf space.

If you’re interested, below the fold.

I’m a Patriots fan. It was a very tough loss. I can’t imagine what it must feel like to be a player. But this was nothing like 2007. That was brutal because of its improbability. I didn’t expect the Patriots to win yesterday. I knew they could but it wasn’t anything I expected.

The Patriots lost because the Giants played a near-perfect game and the Patriots were good but not quite that good. It was clear that Gronkowski wasn’t close to 100% and the Pats still almost won. No doubt there were numerous errors that were not visible to the casual fan. But I noticed only two outright mistakes by Brady–the underthrow to Gronkowski that was intercepted and the safety on the first play from scrimmage. The latter was a fairly shocking judgment call but probably the right call. The underthrow might have been forgotten but the linebacker made a superb play. (UPDATE: I forgot the throw to Hernandez that hit Jason Pierre Paul in the chest and was described incorrectly as a knockdown. Could easily have been intercepted.) The throw to Welker that would have sealed the game was not a great throw but it was good enough. It was on his hands. It would have been a tough play, but my guess, Welker usually makes it. There was a drop by Hernandez. Other than that, I can’t remember a bad play by the Pats. The offense made no exceptional plays although Brady overall was quite accurate. The 98 yard drive was magnificent.

The Patriots defense played much better than people anticipated. They held the Giants to what was essentially 20 points on offense. They forced two fumbles but couldn’t recover them. Mainly luck. But they could not get a stop when they needed one at the end.

But the real difference in the game was the superb play of the Giants. Manning relentlessly put the ball where he had to, tight window after tight window into what was surprisingly good coverage. His receivers were spectacular. They consistently climbed high to make tough catches and in my memory, they made every one of them. The Manningham catch was superb–a perfect throw and a very hard catch. But there were many fine plays like that including the interception. The Giants made many many tough plays. The Patriots missed the few like that that would have made the difference.

Brilliant. At the end, he observes that we don’t really have any idea why Romney is running;

His attitude is: Tell me what you want me to be and I’ll be it. But one thing voters want is someone who doesn’t do that.
About Gingrich’s motive, there has never been any doubt: to feed an insatiable ego that makes him imagine he has a historic, God-given mission to transform the country. He’s a mad scientist, mixing volatile potions that may cure cancer or may blow up the lab. Either way, he’ll have fun.

Romney doesn’t have an obvious reason to run for president. That’s his trouble. Gingrich does. That’s his.

Read the whole thing.

I have written a few times about the Keynesian predictions that when WWII ended, the economy would be plunged into Depression and mass unemployment. In Fight of the Century, John Papola and I have Hayek say:

When that war spending ended your friends cried disaster
Yet the economy thrived and grew faster

Those friends were people like Paul Samuelson who had written (HT: David Henderson):

When this war comes to an end, more than one out of every two workers will depend directly or indirectly upon military orders. We shall have some 10 million service men to throw on the labor market. We shall have to face a difficult reconversion period during which current goods cannot be produced and layoffs may be great. Nor will the technical necessity for reconversion necessarily generate much investment outlay in the critical period under discussion whatever its later potentialities. The final conclusion to be drawn from our experience at the end of the last war is inescapable–were the war to end suddenly within the next 6 months, were we again planning to wind up our war effort in the greatest haste, to demobilize our armed forces, to liquidate price controls, to shift from astronomical deficits to even the large deficits of the thirties–then there would be ushered in the greatest period of unemployment and industrial dislocation which any economy has ever faced.

(From Paul Samuelson, “Full Employment after the War,” in S.E. Harris, ed., Postwar Economic Problems, 1943.)

John Cochrane writes (HT: Arnold Kling) about Lawrence Klein’s 1946 article wondering why the Keynesians went so wrong. W.S. Woytinsky responded to Klein in the April 1947 issue of  the JPE. It’s a fascinating self-described polemic. A few highlights:

The first step in an objective appraisal of the results of the test of forecasts should be to locate the errors. Klein labels the unlucky forecasters as “government” or “Washington” economists. Actually, various projections were prepared during the war in Washington, New York, Chicago, Boston, and other cities; some were made by government econo- mists, others by private experts. Some referred to 1950, some to 1946-47, others to a year described as “194x.” The worst of the projections-with postwar unemployment of 20 million and more- were prepared by research units of labor unions and by journalists crusading for full employment through deficit spending. Thus, the distinction between bad and good predictions did not follow the line of Washington versus the rest of the nation or of government economists ver- sus private economists. Apart from the purely political projections, too poor for a post-mortem, a deflationary spiral and mass unemployment after the end of the war was, in fact, predicted by R. G. D. Allen (London School of Economics), Michal Kalecki (International Labor Office), Jacob Mosak, Robert Nathan, John Pierson, Beardsley Ruml, Arthur Smithies, Everett Hagen, economists as- sociated with the National Planning Association, and many others. Opposite forecasts were prepared by Richard M. Bissell, Edwin B. George, Sumner H. Slichter, Rufus S. Tucker, economists of the Brookings Institution, of Fortune, and of the Committee for Economic Development, the present writer, and others. All in all, about thirty forecasts have come to my attention in recent years, some of them very general, others more elaborate. While many forecasts pointed toward depression and mass unemploy- ment, about half of them suggested inflationary tendencies after the war. For brevity, the predictions of the second group will be handled as “correct” in the following analysis and those of the first group as “erroneous,” although there were different degrees of correctness and error in both groups.

The outstanding feature in the distribution of errors is that nearly all forecasts classified as “erroneous” were sup- plied by proponents of the Keynesian theory, while most of the predictions originated by other schools-in the gov- ernment or private agencies-proved to be correct, at least for the transition period. The probability that this distribu- tion of errors is unrelated to theoretical differences is extremely small indeed.

This is followed by the incredibly large margin of error in the predictions of post-war calamity and a lengthy discussion of the attempts of the day to specify and estimate the consumption function. Here is Woytinsky’s summary of such techniques, which reminds me of what is wrong with say, the CBO’s “estimates” of job creation based on multipliers estimated from past relationships between government spending, output and employment:

The preceding reasoning does not pretend to prove that consumption expenditures and savings are not functions of disposable income. Nearly any time series may be expressed as a function of other time series; excellent fits may be obtained between such series as the number of visitors in our national parks and the number of automobile accidents in Australia or of divorces in Paris. Unfor- tunately, these functions are purely descriptive of observed data and permit no extrapolation. Consumption functions like those used in predictions of mass unemployment in 1945-46 belong to the same class. Klein may meet my criticism by a suggestion that new and better regression formulas be developed, relying on a longer series of observations and taking into account a number of inde- pendent variables. Such formulas certainly may be presented, and some of them will probably show excellent fit with empirical data. It is not clear, however, whether this will improve the technique of projection. Based on a mathematical elaboration of several independent series, the new formulas will defy any extrapolation unless it is assumed that the interrelation of observed features will remain the same in the future as in the period surveyed. In practice, after having extrapolated such a formula, one must use his judgment in deciding whether the result is good. If one likes the result, he accepts it; otherwise, he adjusts it to his own ideas. Regression or no regression, if the judgment of the analysis is sound, he has a good chance of hitting the nail on the head. If his judgment is poor, he will produce projections not much better than those which have covered with immortal glory the American-Keynesian school.

Woytinsky’s analysis of how the Keynesians came to make such poor predictions, is also very timely, and reminds me of what I have written on ideology and macro:

The authors of the false predictions rank too high as economists to warrant the belief that this was an accidental error. It seems more plausible to believe that they used the pattern of reasoning because it led to conclusions which appealed to them as correct. The process may have developed subconsciously, but it appears fairly certain that many people were attracted to the consumption-function theory not by its mathematical justification but by its social and political implications.

Moreover, such has been the origin of all spectacular false prophecies. Apprehension of the approaching terrible events comes first. Then, some dark passage is dug out from an Old Book that can be interpreted (extrapolated) in such a way as to point toward the approaching danger. The text catches the imagination of those who believe in the forthcoming calamity and becomes the foundation of their faith. Although the technique used for fitting the text to the coming developments is utterly irrelevant, it should be recognized that in most cases it is strictly honest, solemn, and mysterious. If the apprehension is correct, the prophecy will be fulfilled; if it was fallacious, it will be forgotten. In the particular case discussed here, the apprehension was not correct and the prophecy cannot be saved by a reinterpretation of the fatal passage.

It is remarkable how obscure the post-WWII Keynesian predictions had become until recently. They were forgotten. We’re trying to recover those memories. Interested readers with access to Jstor may also enjoy this analysis of the post-war predictions by Everett Hagen, a Keynesian who like Klein, tries to figure out what went wrong.

… is from page 210 of James Q. Wilson’s excellent 1993 book The Moral Sense:

Commercial life requires transactions – buying, selling, lending, borrowing – that are made easier by trust and a reputation for trustworthiness.  To acquire that useful reputation, fair dealing is necessary, even with people of different clans.  Industry progresses with the division of labor, a process that is facilitated by (and in turn reinforces) the view that each person should be judged on merit alone; that is, on the worth of his or her contribution to the collective effort.

Steve Horwitz – influenced, methinks, by my former student Adam Gurri – explains why pedestrian economics (here, alas, peddled by Paul Krugman) is mistaken to measure the contribution of entrepreneurs by how many workers they directly employ.

… is from page 119 of  the 1978 edition of David Friedman‘s 1973 The Machinery of Freedom:

Part of freedom is the right of each of us to go to hell in his own fashion.

Here’s a letter to Washington, DC’s, WTOP Radio:

During today’s 11am hour you interviewed a Nevada GOP official who listed “strong enforcement of drug laws” as a “family value.”

His claim is questionable.  Consider this observation by Pepperdine University Professor James Q. Wilson, a noted conservative and explicit proponent of the ‘war on drugs’: “Prohibiting the sale of certain commodities provides economic opportunities in which young males have a comparative advantage, and this in turn leads to the emergence of a warrior culture that underinvests in family life.  Economic activity is separated from family maintenance and organized around capital that can be seized by predation.”*

Regardless of any other demerits or merits of the ‘war on drugs,’ the case that waging that war promotes family values is more flimsy than drug warriors suppose it to be.

Sincerely,
Donald J. Boudreaux
Professor of Economics
George Mason University
Fairfax, VA 22030

* James Q. Wilson, The Moral Sense (New York: Free Press, 1993), p. 175.

In today’s European Wall Street Journal, Arnold Kling eloquently and concisely explains his idea of “PSST” – patterns of sustainable specialization and trade – and highlights how an understanding of the economy based upon PSST differs fundamentally from an understanding based on Keynesianism.  I encourage you to read the entire essay: it is not long on words but it is impressively long on insight.

Arnold has more here, and (especially) here.

Once again, perhaps the greatest calamity unleashed by Keynesianism is the – what shall we call it? – pedestrianization of scientific economics.

Pedestrian economics has always been with us, and will always be with us.  This is ‘economics’ that prompts its practitioners to look only at the seen and to ignore the unseen; it is ‘economics’ that mistakes personal experience for economic wisdom; ‘economics’ that seldom inspires people to ask sensible-yet-nonobvious questions (such as “Is the nation-state really as fundamental an economic or social unit as popular discussion presents it as being?”); ‘economics’ that (because it encourages excessive obsession with what is seen) speaks of jobs as ends in themselves; ‘economics’ that – precisely because it is pedestrian – sees consumer demand to be the great determinant of economic activity and economic health.

Stated differently, pedestrian economics is ‘economics’ devoid of recognition of the dispersion of knowledge; destitute of appreciation of the indescribably large volume and frequency of mostly small economic adjustments made daily throughout the modern economy by individuals each of whom has unique “knowledge of the particular circumstances of time and place“; empty of an understanding of the role of relative prices in coordinating these multitudes of individual plans and actions; and barren of any realization of the enormous creativity of entrepreneurs operating in economies that are at least reasonably free.

Keynesianism elevates this matrix of misunderstanding into an alleged science.  By focusing laser-like on the one feature of an economy (that is, demand) that fills the tunnel vision of pedestrians on the street – and then by focusing on demand as if its magnitude is largely determined independently, without being much (if at all) affected by supply – Keynesianism seems to these pedestrians to be smack-on correct.

Of course, Keynesianism is itself adorned in magnificent scientific costume and make-up, and its practitioners have built for themselves elaborate games to play that cause them to think that they’re engaged in something more than pedestrian economics.  They can shift IS-LM curves, as well as aggregate-demand curves; they can calculate multipliers (“balanced budget” and otherwise); they can impress hoi polli with mysterious terms such as “liquidity trap,” “marginal efficiency of capital,” and “marginal propensity to consume.”  But through it all, they – at least when doing Keynesian economics – ignore the very heart of the economy, namely, the goo-gob-gillions of daily adjustments that individuals make to changes in their knowledge, and the smaller – yet still large – number of creative acts that people do daily in hopes of improving their economic prospects.  Paying far too little attention to these micro-level matters (or – what is the same thing – assuming these micro-level matters to be fixed and given in ways that, by assumption, leave demand as the only available variable to affect the economy), Keynesians of course can build impressive models that show how exogenous changes in demand will do this or that to the economy.

But these models miss 99 percent of the relevant action – and they miss all of the action that pedestrian economists never become aware of.  No pattern of sustainable specialization and trade was ever created by aggregate demand.  And no such pattern can be explained or understood by using a method of analysis that focuses only on what, in the final analysis, are largely the consequences of people’s success or failure at establishing patterns of sustainable specialization and trade.

… is from page 61 of Frank Trentmann’s important 2008 book Free Trade Nation – a book that I thank Walter Grinder for bringing to my attention.  In the section of the book from which the following quotation is taken, Trentmann is discussing Joseph Chamberlain’s “Tariff Reform” – an attempt, at the dawn of the 20th century, to move Britain away from a policy of free trade and toward a policy of giving preferential treatment to imports from British colonies as well as protecting British producers from ‘cheap’ foreign goods:

At the time Chamberlain was widely (and rightly) suspected of having given Cecil Rhodes’ men a base from which to launch the invasion that started the war in the Transvaal in 1895.  Now, his Tariff Reform crusade appeared the automatic domestic follow-up to imperialist adventures abroad.  The combined offer of protection and old age pensions mixed jingoism with bribery.

Dean Baker comments on British austerity:

We have thousands of people in Washington who seem convinced that if the government would just stop spending money and lay off more employees then the private sector would respond with increased output and hiring.

While this might seem implausible on its face (what business hires people because the government has laid off school teachers or firefighters?), we no longer have to speculate about the impact of budget cuts and government layoffs, the United Kingdom is showing us.

The government elected last spring in the United Kingdom committed itself to rapidly reducing the size of its deficit. This government austerity was supposed to give a big boost to the private sector. It actually did the opposite. Growth has fallen to a near standstill. The IMF projects that the U.K. economy will grow by just 0.6 percent this year and an only slighter better 1.6 percent in 2013. This pace is not even fast enough to keep up with the growth of the U.K.’s labor market.

But as Scott Sumner and Don have pointed out, the UK appears not to have actually done anything austere. Notice that the only mention that Baker actually makes of the actual amount of austerity is a “commitment” to austerity. Is it possible they have failed or will fail to honor that commitment?

Anyone with data to the contrary that actually demonstrates UK austerity, please send it along and I will post it.

… is from pages 191-192 of Steven Landsburg’s 2009 book The Big Questions:

Your kids look to you for guidance, while your congressman looks to you only for votes.  So, quite sensibly, you think a lot harder and more clearly about what you’ll tolerate from your kids than what you’ll tolerate from your congressman.

Congressional Quarterly reports (unfortunately gated) that several members of Congress – from both parties – seek to raise tariffs on Americans who buy foreign goods that (allegedly) are subsidized by foreign governments – with the Chinese government, of course, being singled out as a culprit apparently guilty of special deviousness at foisting low-priced goods on us hapless Americans.  (HT Andy Roth)

I deal, in a short paper available here, more generally with the question of whether or not foreign subsidies justify domestic protectionism.

In this post I simply ask: Assuming that there is no question that Beijing is in fact subsidizing some of its exports to America (and I suspect that it really does engage in such subsidization), what allowance do these members of Congress make for the fact that the policies Beijing pursued from 1949 through circa 1978 cause Chinese producers today to be ‘artificially’ less productive than they would have been had such policies never been pursued?  How do folks such as Sen. Debbie Stabenow, Sen. Sherrod Brown, and Rep. Dave Camp adjust for the lingering economic consequences of Maoist tyranny in China?

Had Beijing not obstructed the Chinese economy so completely during Mao’s reign, that economy would unquestionably be today far more advanced and its workers and factories more productive than it actually is.  Even with Beijing now subsidizing, say, the production in China of automobile tires, the cost today to subsidized Chinese factories of producing and distributing those tires is likely higher than it would be had China not suffered decades of Maoist tyranny.

If Beijing’s intervention into the Chinese economy justifies U.S.-government ‘retaliation’ to ‘correct’ market distortions created by those interventions, shouldn’t the still-significant lingering negative consequences of Beijing’s interventions into the Chinese economy from 1949-1978 be considered?  Shouldn’t Beijing’s artificial destruction, during the middle decades of the 20th century, of production efficiencies in Chinese factories be weighed against Beijing’s artificial creation, in the early decades of the 21st century, of such efficiencies?

Asked differently: shouldn’t any hike in taxes on Americans who buy products whose production is subsidized today by Beijing be reduced, perhaps even to zero (or below!), to account for the still-lingering lower efficiencies of Chinese production – still-lingering lower efficiences artificially caused by unwarranted intervention by Beijing during the mid-20th century into China’s economy?

….

Oh heck, one more question: how would Pres. Obama and other protectionists in Washington address the point that Dwight Lee and I raised in this 2003 essay?