Blogroll: Mises Institute

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Explaining Kenneth Arrow's Impossibility Theorem for Social Choice

Sat, 05/12/2020 - 17:30

First Bob explains his contest involving Adventures in Pacifism–winner gets 100 smackers. Then he explains the incredibly powerful, and surprisingly Austrian, result by which Kenneth Arrow showed it was impossible to coherently aggregate individual preferences into a social ranking.

Mentioned in the Episode and Other Links of Interest:

For more information, see BobMurphyShow.com. The Bob Murphy Show is also available on iTunes, Stitcher, Spotify, and via RSS.

Categories: Current Affairs

Climate Change Policy Isn't Worth Its High Cost

Sat, 05/12/2020 - 17:00
Numerous thought leaders agree that climate change is the defining issue of the twenty-first century. To garner widespread support for their cause, activists often present climate change as an existential risk. We are repeatedly told that there is incontrovertible evidence that humans are the main cause of climate change and that its effects are cataclysmic. Failing to uphold any of these positions can result in great reputational damage for pundits and scholars. Due to fear of backlash many choose to remain silent. Revisiting the history of climate change, however, would temper the hysteria of climate alarmism. Climate change is not a new phenomenon, and neither is it synonymous with disasters. By showing that the mainstream position on climate change is misguided, we will demonstrate that radical recommendations are unwarranted and hence more likely to inflict damage than prosperity. joinrenew_button_mint.png Join or Renew Today!

The first egregious error asserted by mainstream pundits is that climate change is a twenty-first-century problem. In contrast to this outlook, climate change is a natural event than can occur irrespective of our existence. Because of its variability, the climate is always subject to changes. The Little Ice Age along with the Medieval Warm Period are examples of climate change. It is evident that climate activists are unable to ascertain the relationship between previous cyclical variations and climate change. Had this been the case they would have recognized that for centuries humans have been cognizant of climate change and therefore have judiciously embarked on ingenious strategies enabling adaptability to new circumstances. According to a 2020 study published in the National Science Review describing responses to climate change in China’s Nihewan Basin during the Pleistocene era: “The unstable environmental conditions at the onset of the Mid-Pleistocene Climate Transition provide a good example of the adaptive versatility of hominins in China during the Early Pleistocene, contrasting with the notion of long-lasting conservative behaviours and undifferentiated technologies across the Pleistocene.” Human ingenuity can avert possible disadvantages stemming from climate change. Besides, contemporary individuals, like their ancestors, have an immense capacity to innovate. For example, scientists from Purdue University in America to their counterparts at the Australian National University are constantly exploring new ways to reduce the implications of drought. Climate change is not a novel scenario that should scare us into defeatism. The only constant is change, and humans never fail to illustrate their dexterity when managing disruptive processes.

Furthermore, like humans other species have shown an impressive ability to adjust to climate change and its effects. Although the rantings of activists portend gloom, rigorous analyses indicate that biodiversity thrives in warm periods. In a 2009 study published in the Journal of Forest Ecology and Management the authors contradict the assumption that global warming is detrimental to the health of plant species by writing that “increases in future temperatures could lead to growth in forest productivity in the Pacific Northwest, especially in Washington.” A 2012 report authored by ecologists in PLOS ONE is even more critical of the thesis that climate change depletes wildlife: “Arctic and subarctic (i.e., [sub]arctic) ecosystems are predicted to be particularly susceptible to climate change. Consequently, species at high latitudes should be especially susceptible to climate change, likely experiencing significant range contractions. Contrary to these expectations, our modelling of species distributions suggests that predicted climate change up to 2080 will favour most mammals presently inhabiting (sub)arctic Europe. Assuming full dispersal ability, most species will benefit from climate change, except for a few cold-climate specialists.” Nonhuman species rely on a litany of strategies to navigate climate change. This is made clear by some researchers’ concluding remarks: “That extant species have survived abrupt, historical climatic changes might be—at least partly—good news. It suggests that species’ ability to survive drastic climate change is greater than hitherto recognized, perhaps due to the phenotypic variability of populations, or to their ability to survive in microclimatic pockets in a heterogeneous landscape.”

So far, we have deduced that climate change is a normal process with positive implications ranging from improved vegetation to dynamic ecosystems. Now we need to establish if CO2 is causing global warming. Based on the orthodoxy of the school of global warming, rising levels of CO2 can trigger warming. But there is a mountain of evidence stating otherwise. For instance, in the peer-reviewed study titled “On the Existence of a 'Tropical Hot Spot' and the Validity of EPA’s CO2 Endangerment Finding,” the authors write: “At this point, there is no statistically valid proof that past increases in Atmospheric CO2 Concentrations have caused the officially reported rising, even claimed record setting temperatures.” Moreover, several researchers attribute warming to oceanic cycles. As professor of atmospheric sciences Anastasios Tsonis explains: “El Niño Southern Oscillation cycle and its 'cousins' do not tell us anything about human contributions to climate change. They do, however, underscore the importance of natural variability in climate change. While humans may play a role in climate change, other natural forces such as the oceans and extraterrestrial influences such as the sun and cosmic rays may play important roles too.” Absent a direct consensus that CO2 is driving global temperatures, does it make sense to pursue net-zero policies? 

Many of these proposals require divesting from fossils fuels and in other cases full-scale deindustrialization. Yet the uncertainty surrounding the role of CO2 in activating global warming does not inspire confidence in such actions. Intriguingly, however the research is quite damning on the ability of anticarbon measures to reverse prosperity. Reporting for the BBC, Matt McGrath conveys research arguing that negative emissions technologies may spur a rise in food prices:

Technologies that can remove carbon dioxide from the air could have huge implications for future food prices, according to new research….One of the ideas on how to achieve this is called BECCS—bioenergy with carbon capture and storage. It means growing crops that soak up CO2, then burning them for electricity while capturing and burying the carbon that's produced….Critics say this idea would need the deployment of huge amounts of land which would reduce the amount of land for agriculture at a time of increasing global population….Another technology that has raised much interest is called Direct Air Capture (DAC), where machines pull CO2 directly from the atmosphere….This would require energy equal to 115% of current global natural gas consumption.

On the other hand, contrary to the unfortunate portrayal of CO2 as a pollutant, its fertilization effect is widely acknowledged by scientists. Commenting on this process in the Journal of Environmental and Experimental Botanyscientists aver that “elevated CO2 concentration increases the plant growth and leaf photosynthesis, even under water stress conditions.” Although, real analysis informs us that this gas has some beneficial effects, mainstream pundits persist in misinforming the citizenry. Unless we confront their errors the war on carbon dioxide will succeed in making humanity worse off.

Additionally, we cannot conclude a discussion on climate change without comparing global warming to cooling. Writers lament global warming, but cooling is less conducive to prosperity. Here is an excerpt from a study documenting the relationship between climate and development in China’s Hexi Corridor over the last two millennia: “Results found the region's reconstructed temperature to be strongly coupled with precipitation dynamics, i.e., a warming climate was associated with a greater supply of moisture, whereas a cooling period was associated with more frequent drought. A prolonged cold period tended to coincide with societal instability….In contrast, a prolonged warm period coincided with rapid development.’’ Another article also discussing China yields a similar conclusion: “The overall impacts of climate were negative in the cold periods and positive in the warm periods.” As we highlighted earlier, warming is compatible with growing vegetation and ecological diversity, so declining agricultural productivity in cooler periods may be a possible contributor to conflict and economic distress. For example, Murat Iyigun, Nathan Nunn, and Nancy Qian (2017) in assessing conflicts in Europe, North Africa, and the Near East from 1400 to 1900 remarked that cooler periods are likely to be characterized by warfare: “We show that cooling is associated with increased conflict. When we allow the effects of cooling over a fifty-year period to depend on the extent of cooling during the preceding period, the effect of cooling on conflict is larger in locations that experienced earlier cooling.”

It is apparent that though climate change is a real issue, several claims postulated by climate activists are overstated and not supported by scientific evidence. Further climate change is a dynamic process that is beyond our control, with diverse effects. The doomsday mantra of climate activists is guided by antihumanism and a desire for control. Such a worldview will not induce human flourishing and must be rejected by well-thinking people. In sum, radical and expensive proposals like the Green New Deal are not justified by the phenomenon of climate change.

Categories: Current Affairs

Biden’s Covid "Supply Commander" Is Bad Medicine

Sat, 05/12/2020 - 16:00

Joe Biden thinks a centrally planned supply chain for healthcare supplies is necessary, because "We can no longer leave this to the private sector." There are many reasons why this is so very wrong.

Original Article: "Biden’s Covid "Supply Commander" Is Bad Medicine​".

This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Millian Quinteros.

Categories: Current Affairs

Lockdowns Haven't Brought down Covid Mortality. But They Have Killed Millions of Jobs.

Sat, 05/12/2020 - 14:45

Strict lockdowns have devastated millions of families' incomes while failing to bring success in suppressing covid mortality.

Original Article: "Lockdowns Haven't Brought down Covid Mortality. But They Have Killed Millions of Jobs.".

This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.

Categories: Current Affairs

Why Government Stimulus Sometimes Looks like It Revives the Economy

Sat, 05/12/2020 - 13:00

Even when an economic bust appears, there may still be enough real savings in the economy to quickly put the economy back on track. This is what brings economic recovery, not artificial "stimulus."

Original Article: "Why Government Stimulus Sometimes Looks like It Revives the Economy".

This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Millian Quinteros.

Categories: Current Affairs

Taxation and Forced Labor

Sat, 05/12/2020 - 13:00

Not only is taxation theft, but by taking away part of the money you earn, the government is forcing you to work for it.

Original Article: "Taxation and Forced Labor​".

This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Millian Quinteros.

Categories: Current Affairs

Deflation Doesn't Undo the Problems Caused by Past Inflation

Sat, 05/12/2020 - 12:00

By a popular way of thinking, it is the role of the central bank to make sure that economy follows a path of stable economic growth and prices. The economy is perceived to be like a spaceship that occasionally slips from this trajectory.

Following this way of thinking when economic activity slows down and strays from the path of stable economic growth and stable prices, it is the duty of the central bank to give it a push, which will put it back on track. The push is given by means of a loose monetary policy, i.e., lowering interest rates and raising the growth rate of money supply. joinrenew_button_mint.png Join or Renew Today!

Conversely, when economic activity is perceived to be “too strong,” then in order to prevent an “overheating” it is the duty of the central bank to “cool off” the economy by introducing a tighter monetary stance. This amounts to raising interest rates and slowing down on monetary injections. It is believed that a tighter stance is going to place the economy on a trajectory of stable economic growth and stable prices.

Hence, following this way of thinking it makes a lot of sense for the central bank to watch the economy all the time and to make the necessary adjustments in order to keep it on a stable growth path. It also appears as if a tighter monetary stance could offset the effects of the previous loose monetary stance.

Why Tight Monetary Stance Cannot Erase the Effects of an Easy Stance

A tight monetary stance cannot undo the negatives of the previous loose stance. A tighter stance cannot reverse the misallocation of resources that occurs during a loose one.

According to Percy L. Greaves Jr. in The Causes of the Economic Crisis, and Other Essays before the Great Depression,

Mises also refers to the fact that deflation can never repair the damage of a priori inflation. In his seminar, he often likened such a process to an auto driver who had run over a person and then tried to remedy the situation by backing over the victim in reverse. Inflation so scrambles the changes in wealth and income that it becomes impossible to undo the effects. Then too, deflationary manipulations of the quantity of money are just as destructive of market processes, guided by unhampered market prices, wage rates and interest rates, as are such inflationary manipulations of the quantity of money.

A tighter monetary stance while likely to undermine various bubble activities is also likely to generate various distortions, thereby inflicting damage to wealth generators. A tighter stance is still intervention by the central bank, and in this sense it does not result in the allocation of resources in line with consumers’ top priorities. Hence, it does not follow that a tighter stance can reverse the damage caused by inflationary policy.

Freeing the economy from central bank interference with interest rates and money supply will arrest the process of wealth destruction. This is going to strengthen the process of real wealth generation. With a greater pool of real wealth, it is going to be much easier to absorb various misallocated resources. (Note that some resources, however, due to their nature will be probably much harder to absorb. For instance, a demand for some capital goods and certain human skills could disappear or weaken significantly in the new free market environment.)

Can Central Bank Policies Keep the Economy on Stable Growth Path?

Most experts are of the view that a major obstacle to getting on the path of stable growth and stable prices is the fluctuation of the federal funds rate around the neutral interest rate.

The neutral interest rate, it is held, is one that is consistent with stable prices and a balanced economy. What is required, then, is for Fed policymakers to successfully target the federal funds rate toward the neutral interest rate. According to this view, the main source of economic instability is the variability in the gap between the money market interest rate and the neutral interest rate.

In this framework of thinking the neutral interest rate is established at the intersection of the aggregate supply and aggregate demand curves. If the market interest rate falls below the neutral interest rate, investment will exceed savings, implying that aggregate demand will be greater than the aggregate supply. Assuming that the excess demand is financed by the expansion in bank loans, this leads to the creation of new money, which in turn pushes the general level of prices up.

Conversely, if the market interest rate rises above the neutral interest rate, savings will exceed investment, aggregate supply will exceed aggregate demand, bank loans and the stock of money will contract, and prices will fall. Hence whenever the market interest rate is in line with the neutral interest rate, the economy is in a state of equilibrium and there are neither upward nor downward pressures on the price level.

The main problem here is that the neutral interest rate cannot be observed. How can one tell whether the market interest rate is above or below the neutral interest rate?

Despite the fact that the neutral interest rate cannot be observed, economists are of the view that it could be estimated by various indirect means. In order to extract the unobservable neutral interest rate, economists now employ sophisticated mathematical methods such as the Kalman filter.1 In the process of attempting to ascertain the stable growth path, economists assume the existence of aggregate supply and demand curves. The intersection of these curves generates the so-called equilibrium that supposedly corresponds to the growth path of economic stability.

But the law of supply and demand as presented by popular economics does not originate from the facts of reality but rather from the imaginary construction of economists. None of the figures that underpin the supply and demand curves originate in the real world; they are purely imaginary. According to Mises,

It is important to realize that we do not have any knowledge or experience concerning the shape of such curves. (Human Action, p. 333)

Yet economists heatedly debate the various properties of these unseen curves and their implications regarding government and central bank policies.

Why General Equilibrium Is a Fiction

The existence of a general equilibrium as depicted by the intersection between the overall economy supply curve with the overall economy demand curve is questionable. The economy as such does not exist apart from individuals. Hence, something that does not exist cannot strive to some kind general equilibrium. The concept of equilibrium is only relevant to individuals.

Equilibrium in the context of an individual’s conscious and purposeful behavior has nothing to do with the imaginary equilibrium as depicted by popular economics. Equilibrium is established when individuals’ ends are met. When a supplier is successful in selling his supply at a price that yields profit, he is said to have reached an equilibrium. Similarly, consumers who bought this supply have done so in order to meet their goals. Again, every individual in his own context achieves his equilibrium whenever he reaches his goal.

Observe that in the absence of central bank interference the interest rate that will be established is going to be in line with individuals’ various goals. This interest rate will reflect individuals’ goals and not the wishes of central bank planners. Thus, some individuals might discover that the interest rate that they would have to pay is much lower than what they are ready to pay. For some other individuals the free market interest rate may turn out to be far too high. Consequently, they are going to be out of the market. It is the marginal lender and the marginal borrower that set the market interest rate, not the intersection of the supply and the demand curves.

Now, once policies are implemented to achieve the neutral interest rate, which supposedly reflects the so-called general equilibrium as established by the mathematical models, this is likely to be in contradiction of what the free market would have established. As a result, this is going to generate the misallocation of resources and the weakening of the process of real wealth generation, i.e., economic impoverishment. By setting the federal funds target rate, Federal Reserve policymakers are pretending that they have the numerical information about the interest rate that corresponds to the growth path of stable economic growth and stable prices.

The failure of various centrally planned economies such as the former Soviet Union is testimony that central authorities’ attempt to push the economy toward the growth trajectory as dictated by the government bureaucrats results in an economic disaster.

  • 1. Thomas Laubach and John C Williams, “Measuring the Natural Rate of Interest” (working paper, Board of Governors of the Federal Reserve System, November 2001), https://www.federalreserve.gov/pubs/feds/2001/200156/200156pap.pdf. John C. Williams, “The Natural Rate of Interest,” FRBSF Economic Letter, no. 2003–32, October 31, 2003, https://www.frbsf.org/economic-research/publications/economic-letter/2003/october/the-natural-rate-of-interest/.
Categories: Current Affairs

"The E Stands for Excellence": A Tribute to Walter E. Williams

Sat, 05/12/2020 - 11:45

Walter E. Williams, prolific author, piercing cultural commentator, old-school economist (that’s a good thing), devoted husband, loving father, and longtime friend of Grove City College, has passed from this world.

To the rest of America, Williams was known as a “suffer-no-fools” commentator on perennial, hot-button public policy issues, particularly those pertaining to race and discrimination. To the Grove City College family, he was known as a long-serving member of the board of trustees, an adjunct professor in the Grove City College Department of Economics during the 1990s, a graduation commencement speaker (twice), and a recipient of a GCC honorary doctorate. While a student in George Mason University’s doctoral program in economics, I knew him as “Dr. Williams.” And if I was going to make a favorable impression during my first semester microeconomics course, I’d better internalize the wisdom of “UCLA-style price theory”—of which Williams was the greatest living communicator. More on that in a minute. joinrenew_button_mint.png Join or Renew Today!

He was born in 1936 in a poor part of Philadelphia—a city he was fond of describing as having a “property rights problem.” Those of us who were his students caught his drift. But he hadn’t always thought of things with such piercing analytical clarity. In his youth, Williams described himself as a “radical,” someone “sympathetic to Malcolm X,” and a proponent of minimum wage laws because he believed they “helped poor people and poor black people and protected workers from exploitation.”

Though later repudiating many of his self-proclaimed “radical” views (and arguably adopting others that were just as “radical” along different lines), Williams had identified and experienced true racial injustice while serving as a private in the army. During his military stint, Williams’s passion for justice—particularly racial justice—caused him to write to President John F. Kennedy, decrying the pervasive racial discrimination he observed and experienced in the army’s ranks.

His campaign for justice didn’t stop with letter writing, though, and it eventually got him in big trouble. As relayed in this documentary, one day Williams’s commanding officer, a man with manifestly prejudiced views, barked out: “Williams! Paint that truck!” Young Walter knew he’d been assigned the grunt work—once again—merely because of his officer’s racist proclivities. “Yessir!” he replied. “The whole truck?” he asked for clarification. The commanding officer was hot: “Of course the whole truck, Williams! Now get it done!” Walter E. Williams proceeded to paint every square inch of the truck’s exterior—windows, tires, the whole kit and kaboodle. For his fidelity to the officer’s command, Williams was awarded a court martial proceeding, but was eventually exonerated.

After leaving the army, Williams resumed his education at California State College at Los Angeles, where he graduated with an economics degree in 1965. But it was his matriculation in the economics PhD program at UCLA that made him the Walter Williams we know and love today. At UCLA, he was dazzled with the brilliance of his professors Armen Alchian and future Nobel Prize winner James Buchanan. Gradually—and only gradually because Williams was stubborn—Alchian, Buchanan, and other faculty (like Axel Leijonhufvud) convinced Willliams, with hard-nosed economic theory, that minimum wage and discrimination laws only add to the hurts of disenfranchised communities. While stubborn, he was always too much a truth seeker to demur for long. Walter E. Williams the economist was born.

Thankfully for us, Williams didn’t nurse the grievances he’d endured at the hands of racist army officers; instead, they were a source of curiosity to him. He became a fervent disciple of Armen Alchian’s distinct “UCLA” approach to microeconomic theory. The UCLA approach pursues “opportunity cost” reasoning unflinchingly, all while emphasizing that opportunity costs vary with the property rights arrangement. For Williams, this meant asking questions like: “Why could I experience such vicious discrimination in the military, all while African Americans have begun to dominate the NBA?” Williams found the answer at UCLA: the opportunity cost of acting like a bigot is lower for the military man than the owner of a professional sports franchise. The latter will see his income fall if he indulges his bigoted tastes by passing over the best ball players merely to avoid association with African Americans. The military man’s income is secure regardless of his prejudicial behavior. One man can discriminate with virtual impunity; the other must forgo profits to exercise his bigotry.

Williams taught me and my classmates that “discrimination” is merely a synonym for “choice.” Each of us discriminates when we choose a college, a spouse, a church, and so on. So, the question arises: What are the conditions that allow space for racially discriminatory actions to breathe? In books such as his classics The State against BlacksSouth Africa’s War against Capitalismand Race and Economics: How Much Can Be Blamed on Discrimination? Williams incisively demonstrated the role that public policies play in lowering the costs of racially discriminatory behavior. Reading Williams’s airtight logic, grounded in his UCLA price theory days, is a devastating blow to all who reason that union activity, minimum wages, or antidiscrimination laws are a boon to the disenfranchised.

Though an academic economist, Williams was that rare talent who could compellingly communicate with lay audiences. It’s for that reason that most of America knew him as a substitute host for popular talk radio programs like Rush Limbaugh’s. Or they knew him from the thousands of columns that he wrote on a syndicated basis for decades.

What most people don’t know is that Williams’s impressive ability to speak on wide-ranging issues with unusual clarity derived from his steadfast commitment to the “economic way of thinking”—evidence for which can be found on his personal website. There, you can test your own economic knowledge on any of the 111 questions that he believed any self-respecting, PhD-holding economist should be able to answer. At the same time, he assured my classmates and I that “99 percent of the economists in Washington, DC,” would perform dismally on his 111-question test. If you are anything like me, revisiting the list will give you an urge to brush up on your price theory—an outcome that I’m sure would make Dr. Williams smile.

But if you’re not an economist, Walter E. Williams is still your man. His writing is for you. Pick it up today and understand the world better than you did before. Let Walter E. Williams be your guide to the contentious issues of race and discrimination that have come to the fore in our day. You won’t be disappointed. After all, he used to tell us, “the E stands for excellence.”

Categories: Current Affairs

Dan McCarthy Trusts the People More Than the Elites

Fri, 04/12/2020 - 22:30

Dan McCarthy, Editor at Large of The American Conservative, joins Bob to discuss his view that conservatives and libertarians should stop heaping contempt on democracy. McCarthy argues that the elites are the real threat to liberty, not the masses.

Mentioned in the Episode and Other Links of Interest:

For more information, see BobMurphyShow.com. The Bob Murphy Show is also available on iTunes, Stitcher, Spotify, and via RSS.

Categories: Current Affairs

There Is No Chinese Economic Miracle

Fri, 04/12/2020 - 17:00

The year 2020 will be an extremely tough year for the European economy. Added to an unprecedented drop is a strong impact in the fourth quarter due to the new lockdowns. Morgan Stanley estimates that the eurozone’s GDP will fall by 2.2 percent in the fourth quarter, a 7 percent drop in the full year 2020. In addition, the investment bank has lowered the outlook for 2021, with a rebound of only 5 percent in the average of the euro area, delaying the recovery of 2019 GDP to 2023.

The “jobless recovery” is even more worrying. The apparently spectacular rebound data for the third quarter resulted in zero job creation. Unemployment in the eurozone in September stood at 8.3 percent and in Spain at 16.5 percent, not counting the millions of furloughed jobs in Europe. joinrenew_button_mint.png Join or Renew Today!

In this environment, the United States’s recovery seems much stronger. GDP recovered in the third quarter to just 3.5 percent below 2019 levels. Unemployment has fallen to 6.9 percent in October but remains well above the record employment levels of 2019.

However, the data from China is apparently spectacular. The manufacturing and services index already shows an enviable expansion. GDP for the first three quarters is already growing at 0.7 percent after an expansion of 4.9 percent in the third quarter. Urban unemployment in China is 5.4 percent after shooting to a paltry 6 percent. What is behind the Chinese miracle compared to the poor eurozone?

A planned GDP. The GDP of China is dictated by production, not demand. It is not an observed GDP, but rather planned by the federal government together with the provinces. For this reason, many analysts scrutinize the data and deduct various factors, including the increase and valuation of inventories. It is not by chance that inventories of iron ore, automobiles, and finished goods have risen to the highest level in seven months as the economy recovers. If the economic situation were in the announced expansion, inventories would be falling rapidly when sold. Much is produced that is then not sold and remains in warehouses. Thus, it is not surprising that industrial prices fell 2.1 percent in September, export prices 0.9 percent, and the country’s debt soared 13.5 percent amid an apparently miraculous recovery. Industrial business profits have fallen 2.4 percent between January and September and, furthermore, factory door prices fell faster than expected in September and were at risk of deflation. These are signs of a slowly recovering economy, like all others, but not of a growth miracle.

In most economies, inventories are valued at market prices, while in China they are valued by the authorities and adjusted later. Constant methodological and base changes also lead to doubts regarding annual growth, despite the evident increase in transparency in recent years. Another difficult factor to analyze is the growth of construction activity in a country where overcapacity is evident and ghost cities and white elephant uneconomical projects are multiplying.

The reduction in urban unemployment also hides a more complex reality. Unemployment in China is close to 11 percent on average, according to the "Long Run Trends in Unemployment and Labor Force Participation in China" study (NBER Working Paper No. 21460) and probably well above 13 percent in the midst of the covid-19 crisis. 

According to Capital Economics, Nomura, or HSBC University of Beijing, another important challenge is calculating GDP with a realistic deflator. By using a deflator—the impact of prices on GDP—that is much lower than the observed one, GDP appears artificially higher than it really is. In an economy where inflation is underestimated, nominal wages, which grow at an official 3.6 percent, lose purchasing power almost every year due to the real cost of living, especially in food and daily expenditures, which are much higher than the official ones.

In a recent study ("A Forensic Examination of China’s National Accounts" [2019]) the authors concluded that China’s GDP may have been exaggerated by around 2 percent per year between 2008 and 2016, showing that China’s real GDP is probably 18 percent lower than the official figure. China’s GDP is never revised, and the December figure simply stands and is consolidated without question. This is an important factor that the Chinese authorities have tried to correct with greater transparency and adjustments by the NBS (National Bureau of Statistics). The problem is that provinces have accelerated their race in the effort to provide spectacular figures and the magnitude of the corrections of the national office does not compensate for these “exaggerations.”

Another problem is that annual revisions compute for growth but are not revised in the GDP figure for the year. The calculation base is reduced. For example, according to independent consultancy China Beige Book, gross capital formation for the third quarter of 2019 has been revised down by ¥2.3 trillion. As the 2019 figure falls, the growth on the same data for 2020 seems spectacular. That same review was made with the retail sales figure: those for August 2019 were revised down by ¥50 billion and the growth figure for 2020 seems miraculous. However, a revision of such depth in the base calculation of figures for 2019 did not generate a downward revision of the GDP for that year.

These methodological problems are added to the survey used for the calculation. The government uses a list of companies that generate a minimum amount of revenue. That list grows and shrinks, creating homogeneity problems that the NBS tries to adjust for.

In the United States, each daily, weekly, and monthly data is analyzed by different independent entities and each data point is impossible to manipulate by a government authority. That is why the GDP is constantly revised. China’s GDP is the only one that is not revised. It is published and consolidated.

It is a shame because the reality observed by companies and citizens in China is that the economy is recovering slowly and unevenly, but it is recovering, probably with a year-on-year drop of 2.5 percent, which would be, in any case, a very positive figure. Falling into planned overcapacity and excessive triumphalism on the part of some provinces competing to provide better data than others ends in questioning the reality of the improvement in the economy.

Beijing has pledged to bring the data up to IMF standards, but lack of independent scrutiny and the competition between provinces when it comes to providing positive and spectacular figures continue to generate inconsistencies between sales, inventories, consumption, and profits. The recovery of the real economy in China is happening, but it is not dissimilar to that of many of the leading Asian countries.

Categories: Current Affairs

The Problem of Measuring the Utility Gained from Taxes

Fri, 04/12/2020 - 16:45
A common way of understanding the history of welfare economics goes something like this. The British economist A.C. Pigou in his The Economics of Welfare (1920) argued that progressive taxes increase social welfare. By the law of diminishing marginal utility, as you accumulate more dollars, each new dollar is worth less to you than the previous one. Doesn’t it follow, then, that that if money is taxed away from a rich person and given to a poor person, total social welfare will go up? Consider, on the one hand, Jeff Bezos with his billions of dollars, and, on the other, someone who is starving and homeless. Isn’t it obvious that if the government transfers a few thousand dollars from Bezos to the poor man, there will have been a gain in utility? ye-join-button_250x55.png ye-join-button_250x55.png

According to the common understanding, another British economist, Lionel Robbins, pointed out that Pigou’s reasoning rests on a fallacy. Pigou is assuming that you can measure utility interpersonally. A dollar is valued as so-and-so many units of utility by Bezos and as another number of units of utility by the poor man, and the latter number is greater. But this calculation isn’t valid. Utility is ordinal, not cardinal. You can say that a person ranks his tenth dollar higher than his 10 millionth dollar on his preference scale, but there aren’t measurable units of utility that underlie this comparison. If you can’t measure a person’s utility, it makes no sense at all to measure one person’s utility against that of another. You can’t legitimately say, then, that a dollar gives the poor man more utility than it does Bezos. Interpersonal comparisons of utility have to be banned from welfare economics. They are unscientific. This is in fact the Austrian view of Mises and Rothbard, and it is in defense of this view that Robbins is alleged to have argued.

In fact, Robbins doesn’t say this. In his article “Interpersonal Comparisons of Utility: A Comment” (Economic Journal, December 1938), he doesn’t rule out as meaningless interpersonal comparisons of utility. He says that “My own attitude to problems of political action has always been one of what I might call provisional utilitarianism….I do believe that, in most cases, political calculations which do not treat them as if they were equal are morally revolting.”

He thus viewed with great sympathy Pigou’s proposals about taxation. But a problem confronted him. As long as we stick to one person, we can make utility comparisons that can be verified. “The assumptions of the propositions which did not involve interpersonal comparisons of utility were assumptions which had been verified by introspection or observation, or, at least, were capable of such verification.”

But this isn’t true for interpersonal comparisons. You can’t introspect someone else’s mind, and here Robbins quotes Jevons: “’I see no means, Jevons had said, whereby such comparison can be accomplished. Every mind is inscrutable to every other mind and no common denominator of feeling is possible.’”

What follows from this? Here is where the myth arises. Robbins does not say that because we can’t prove the validity of interpersonal comparisons of utility, that we therefore shouldn’t make them. To the contrary, he says that we should continue to make them. But in doing so, we should recognize that we are introducing the value judgment that we take people to have equal capacities for satisfaction. “All that I [Robbins] proposed to do was to make it clear that the statement that social welfare was increased, itself involved an arbitrary element—that the proposition should run, if equal capacity for satisfaction on the part of the economic subjects be assumed, then social welfare can be said to be increased.”

Robbins, contrary to the myth, does not want to ban proposals like that of Pigou from economics. “I confess that I was very much surprised when I found myself held up for advocating for economists the impossible and sterile virtue of never attempting to apply their conclusions---rapt astronomers of the social universe deigning no aid to navigators in search of the desired haven. All that I had intended…was that they might better realise the exact connection between the normative and the positive, and that their practice as political philosophers might be made thereby more self-conscious.”

Robbins sums up his difference from economists such as Roy Harrod in this way: “They think that propositions based on the assumption of equality are essentially part of economic science. I think that this assumption comes from outside, and that its justification is more ethical than scientific. But we all agree that such assumptions should be made and their implications explored with the aid of the economist’s technique.”

An example will serve to show the myth about Robbins in action. The philosopher Hilary Putnam says in his book The Collapse of the Fact/Value Dichotomy and Other Essays (Harvard, 2002), “it was during the depths of the Depression that Lionel Robbins, certainly one of the most famous economists in the world, persuaded the entire economics profession that interpersonal comparisons of utility are ‘meaningless.’”

Putnam thinks he is countering Robbins when he asks, isn’t it plausible “that the marginal utility of say, a thousand dollars to someone at the point of going hungry…is greater than the marginal utility of a thousand dollars to, say, Bill Gates?” Putnam admits that we can’t measure interpersonal utility scientifically, but can’t we achieve a democratic consensus relevant to policy about comparisons like that between Gates and the starving man? But that is just what Robbins thinks. Putnam, contrary to what he imagines, is defending Robbins, not attacking him. And that is a positive and not a normative judgment.

Categories: Current Affairs

Why Marx Never Figured Out How to Distribute Goods in a Socialist Society

Fri, 04/12/2020 - 16:00

Contra Marx, Mises understood that human desires and needs are not determined merely by biology. 

Original Article: "Why Marx Never Figured Out How to Distribute Goods in a Socialist Society​".

This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Millian Quinteros.

Categories: Current Affairs

Jeff Deist on Election Fraud and Shutdown Lunacy

Fri, 04/12/2020 - 15:45

Jeff Deist returns to the show to comment on allegations of voter fraud; the future of politics in a post-Trump America; the death of the old GOP; the push for a “great reset;” the crippling of the economy via shutdown and bailouts; and more.

Find more from David Gornoski on A Neighbor's Choice.

Categories: Current Affairs

Why GOP Loyalists and Candidates Keep Moving Left

Fri, 04/12/2020 - 15:00

Unless the Left's opponents focus on changing voters' ideological drift to the left, candidates who want to actually win elections will have to keep moving left also.

Original Article: "Why GOP Loyalists and Candidates Keep Moving Left".

This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.

Categories: Current Affairs

What Chile’s Vote to Change Its Constitution Means for Its Future

Fri, 04/12/2020 - 14:30

In recent decades, Chile set itself apart from the rest of Latin America with successful market reforms and a stable political system. Average Chileans prospered. But now that's all at risk.

Original Article: "What Chile’s Vote to Change Its Constitution Means for Its Future".

This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.

Categories: Current Affairs

Thanks to Lockdowns, American Big Cities May Not Be Worth the Trouble Anymore

Fri, 04/12/2020 - 12:00

All due deference to Jerry Seinfeld, the man who is one of the geniuses behind the greatest American sitcom about nothing, but in the recent war/argument/discussion/exchange over the status and future of New York City, it is hard to award dear Jerry with a win.

Seinfeld took to the New York Times (only the sophistication of the old Gray Lady would do) to upbraid former Manhattan comedy club owner and entrepreneur James Altucher for declaring the New York as they once knew it, well, dead. ye-join-button_250x55.png ye-join-button_250x55.png

Frankly, Altucher makes a compelling case for this time being different than other seemingly existential threats of the past that might have appeared to compel the city that never sleeps to do just that—for good. For Altucher, the heavy, onerous arm and boot of government have become too much for New Yorkers—residents and businesses alike—to bear. The covid hysteria, inept lockdowns, and mismanagement by the likes of DeBlasio, Cuomo, and their sycophant ninnies have all led to, not only the snuffing out of the entrepreneurial spirit but very much destroyed, in the most direct means imaginable, the enterprises themselves. Back that up with the New York police being ordered to stand down in front of BLM and Antifa rioters (and asinine Ruth Bader Ginsberg riots?!) looting stores and burning down their fronts, and the civil authorities have not held up their end of even the corrupt Rousseauan social contract.

Altucher is not the only sensible one to leave New York for greener and warmer pastures—many have, are, and will be doing so in the future. Thus, what New York and other massive cities in the United States like my own formerly fair Chicago now face is a retraction of what had characterized the past few decades of people of means moving back into the inner cities. Cities gentrified. Formerly unattractive and even dangerous neighborhoods received an injection of interest and capital, and of course, the requisite Starbucks. Hipster artist types faux lamented the increase of "balconization" as ever-increasing lofts and condos with balconies dotted the new façades of old buildings. To be sure, they did not seem to recognize that loss of traditional, cultural neighborhood identification came with all of their suburban friends moving into the place as they sipped their chais and waxed unpoetic about how horrible all of the capitalism was from their iPhones.

Hypocrites and the genuine alike enjoyed and even relished the comforts of urban living. The museums and parks were within walking distance. Amazing restaurants. Easy Uber to sporting events. A new local favorite pub.

Now, pandemic hysteria and race riots have exposed the latent sore. Without the culture, the life, the hum, and the energy of the city, without the shopping and walks, the theater or a ball game, city life now has all of the dangers and inconveniences and none of the comforts. High taxes, potholed roads, homeless encampments, no parking, and violent crime have rendered city life rather unlivable. And to the politicians who have long contributed to cities' deterioration and the squandering of those previous local tax windfalls, shame on you—but the problem lies with the voters who put them into power.

Will these same citizens be able to muster enough intestinal fortitude to resurrect these cities with much-needed integrity and sacrifice? Will the Phoenix City (Chicago’s actual nickname) rise again? I don’t think so. We are witnessing the effects of a long and sustained decline. Contrast the culture of the city of Chicago today (or insert your city name here) with that of the founders of the city back in 1837. Here’s the history lesson: Chicago was one of scores of cow towns turned trading posts in the West whose fortunes rested with their leaders’ ability to attract capital from the East; namely, from New York, Boston, and Philadelphia banks. A founder and the first mayor of the city, William Butler Ogden, an Easterner himself, knew that if Chicago was to be great (that means rich), it could not default on loans provided to the city’s enterprises and entrepreneurs during the epic Panic of 1837. In other words, Ogden tasked himself with making sure that Chicago did not become the equivalent of a third-world, capital-starved nation among many other cities vying to become America’s next top metropolis. He had some convincing to do. The easy road would have been default and run.

Ogden advocated for the opposite as a public gathering convened intent on debt relief. From historian Donald Miller:

The crisis peaked when large numbers of the city’s frightened debtors organized a mass movement for relief from their financial obligations. A public meeting was called to have "stay laws" passed for the suspension of court action on the collection of debts. "Inflammatory speeches greatly excited and made desperate many of the crowd, and everything looked as if dishonor would crown the city’s brow," said an early city historian. At that point, Ogden stepped forward to address the crowd, his first and only public talk as mayor. Speaking in cool, reasoned tones, he urged his fellow citizens to have the "courage of men" and to remember "that no misfortune [is] so great as one’s own personal dishonor….Above all things…do not tarnish the honor of our infant city." Ogden’s measured eloquence carried the meeting. Efforts to repudiate debts were voted down, and Chicago emerged with its credit image intact. Later, this allowed Ogden to help put together a bond and loan package with Arthur Bronson and other outside investors that allowed the state to resume canal construction in 1845.

Our contemporary urbanites do not—as a habit—display anything remotely akin to personal responsibility or the "courage of men." That would require some tough love about lowering collective time preference and ending the expectation that government can and will save the day. Blue city mayors and blue state governors instead have their hands out to Congress and the Fed, begging them to bail them out of decades of disastrous, self-inflicted policies.

As a libertarian an-cap, I have no team in the fight, red or blue. However, I do hope that the red state politicos have enough gumption and sense to understand that no promises, no kickbacks are worth bailing out the criminal blue politicians and their constituents. Those are very, very bad loans that no bankers in 1837 or 2020, for that matter, would issue.

And, who cares about L.A.?! As a comely and insightful British lass exclaimed to me in Nice, France, in 1998: "Californians couldn’t grow culture in a Petri dish!"

As true then as it is now.

Categories: Current Affairs

The Wisdom of Walter Williams

Fri, 04/12/2020 - 11:00

Walter E. William, who many consider one of greatest modern economists, has just passed on at age 84. My connections with Walter go back to UCLA, where we both got our doctorates (though I was a bit later, and it was my misfortunate we did not overlap). Then I started writing popular articles in defense of Americans’ liberty not too long after he did, which made me very aware of his writing (in fact, I once jokingly told my wife that I didn’t like him because his articles were often too good a substitute for mine). And I know lots of people with connections to George Mason and stories about him.

Because many were closer to Walter than I, the large outpouring of appreciation and endorsements upon his passing is better done by others. But I believe that I have something worth adding for those who didn’t know about him but whose interest in his work has been piqued by the powerful response he has engendered.

In 2016, I published a book titled Lines of Liberty, in which I curated what I felt were the best quotes on liberty I could find, by those who had labored in the front lines to defend it. Walter was not included, like his best friend, Thomas Sowell. But that was only because I had restricted my attention to people who had died, so I could consider the entirety of their work. Now, while I have not yet had time to do more than scratch the surface of his work, offering an initial collection of some of his most important insights may be the best tribute I could offer.

I must say that after many years of thinking about liberty, I can get a thrill out of a well-made, ear-catching argument on its behalf. Reading Walter’s words gave me such a thrill. But it was quickly obvious that there was far too much inspiration and wisdom to fit in a compact space. So I limited my collection to very short statements on only a few of the core issues he dealt with.

Consider my “top ten” lists (so far) in three different areas Walter thought deeply about as just the beginning of wisdom that can be found in Walter’s work, and as an invitation to further consideration.

Property, Rights and Justice

  • My definition of social justice: I keep what I earn and you keep what you earn. Do you disagree?...how much of what I earn belongs to you--and why?
  • If one person has a right to something he did not earn, of necessity it requires that another person not have a right to something that he did earn.
  • Nothing in our Constitution suggests that government is a grantor of rights. Instead, government is a protector of rights.
  • There is no moral argument that justifies using the coercive powers of government to force one person to bear the expense of taking care of another.
  • Government has no resources of its own…government spending is no less than the confiscation of one person’s property to give it to another to whom it does not belong.
  • We don’t have a natural right to take the property of one person to give to another; therefore, we cannot legitimately delegate such authority to government.
  • Exercise of a right by one person does not diminish those held by another.
  • No matter how worthy the cause, it is robbery, theft, and injustice to confiscate the property of one person and give it to another to whom it does not belong.
  • The better I serve my fellow man…the greater my claim on the goods my fellow man produces. That’s the morality of the market.
  • The act of reaching into one’s own pockets to help a fellow man in need is praiseworthy and laudable. Reaching into someone else’s pocket is despicable.

Liberty versus Coercion

  • Government is about coercion. Limiting government is the single most important instrument for guaranteeing liberty.
  • Democracy is little more than mob rule, while liberty refers to the sovereignty of the individual.
  • The true test of one’s commitment to liberty and private property rights…comes when we permit people to be free to do those voluntary things with which we disagree.
  • In a free society, government has the responsibility of protecting us from others, but not from ourselves.
  • The essence of government is force, and most often that force is used to accomplish evil ends.
  • Economic planning is nothing more than the forcible superseding of other people’s plans by the powerful elite backed up by the brute force of government.
  • If we buy into the notion that somehow property rights are less important, or are in conflict with, human or civil rights, we give the socialists a freer hand to attack our property.
  • Substituting democratic decision making for what should be private decision-making is nothing less than tyranny dressed up.
  • It’s government people, not rich people, who have the power to coerce and make our lives miserable.
  • The moral tragedy that has befallen Americans is our belief that it is okay for government to forcibly use one American to serve the purposes of another--that in my book is a working definition of slavery.

Protecting our Rights and Liberties

  • Always be suspicious of those who…claim their way is the best way and are willing to force their way on the rest of us.
  • People who denounce the free market and voluntary exchange…are for control and coercion.
  • Economic planning is nothing more than the forcible superseding of other people’s plans by the powerful elite backed up by the brute force of government.
  • Politicians have immense power to do harm to the economy. But they have very little power to do good.
  • What our nation needs is a separation of “business and state”…That would mean crony capitalism and crony socialism could not survive.
  • The best good thing that politicians can do for the economy is to stop doing bad. In part, this can be achieved through reducing taxes and economic regulation, and staying out of our lives.
  • If we care about our remaining liberties we must at some point …let politicians and bureaucrats know we will not tolerate further encroachment on our God-given rights to liberty.
  • The public good is promoted best by people pursuing their own private interests.
  • Most of the great problems we face are caused by politicians creating solutions to problems they created in the first place.
  • If we’re ignorant, we won’t even know when government infringes on our liberties. Moreover, we’ll happily cast our votes for those who’d destroy our liberties.

Walter Williams had a great deal of wisdom to offer, and he passed that wisdom on to many. But there are many more of us who could still benefit from it. I hope the examples here touch a chord with readers and lead them to further consideration of what he understood. Walter will be gone, and widely missed, but his insights are not.

"Most of the great problems we face are caused by politicians creating solutions to problems they created in the first place."

Categories: Current Affairs

The Rise of Mega–Gambling Facilities: A New Skyscraper Curse?

Thu, 03/12/2020 - 22:00

Circa casino’s new three-story, 78 million–pixel, high-definition screen in its sportsbook gambling compound may represent a new frontier in mega–building trends similar to those of skyscrapers.

Original Article: "The Rise of Mega–Gambling Facilities: A New Skyscraper Curse?".

This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.

Categories: Current Affairs

How Walter Williams Helped Me Lose a Job

Thu, 03/12/2020 - 21:45

The passing of economist Walter Williams this week is a blow to anyone who cares about free markets and the negative effects of government intervention on human progress. Professor Williams articulated the role of markets, prices, and private property about as well as any economist outside of Ludwig von Mises or Murray Rothbard.

Like Mises and Rothbard, he was uncompromising in his views. Free markets, Professor Williams believed, provided the best way for humans—and especially people born on lower rungs of the economic ladder—to advance materially and in other ways, too, and he never passed on a chance to bring those views to the larger public. While he published in the “scholarly” journals such as American Economic Review, he is better known for his columns and books that dealt with race, discrimination, and economics.

My personal history with Walter Williams goes back to September 1982 at the meetings of the Mont Pelerin Society, which were held at the Intercontinental Hotel in what then was West Berlin. I had won the Olive W. Garvey Economic Essay Contest, entering at the encouragement of William H. Peterson, who became an early mentor for me in learning economics, and especially from the Austrian school.

Professor Williams, his wife, and his daughter (then age seven) attended the meetings, and I took the opportunity to meet him and pick his brain, so to speak. He was tall, imposing, uncompromising—and approachable. Our very first encounter was instructive of the man.

At the opening meeting, we heard speeches by F.A. Hayek and others, and I accepted my award (given by Arthur Shenfield). By the end of the meeting, we were tired (most of us had jet lag) and more than a bit tipsy from all the Rhine wine the waiters were pouring into our glasses. We also were anxiously awaiting the meal that came with the banquet and looked forward to eating whatever cuisine the Germans had prepared for us.

The long meeting mercifully ended, and as they announced that dinner would be served, someone pulled open the curtains on the side of the hall and there stood a long table full of food, with smiling men in chef’s hats standing by. If you wanted to eat, it was “Come and get it.” And we did, sort of.

There was no orderly line, just a crush of people grabbing plates and trying to get whatever they could from the dwindling food supply. Here were people whose academic lives were dedicated to presenting an orderly view of the universe engaged in pushing, shoving, and grabbing in hopes of getting a few morsels of whatever the German chefs had prepared before the platters were emptied. I don’t remember getting much on my plate.

Amid the chaos, I saw Professor Williams nearby and asked him, “Is this anarchy?” (Sorry, Professor Rothbard. I was not yet fully versed in libertarian thinking.) “No,” he replied calmly, ever the teacher, “This is high cost, zero price.” Many people that evening went to bed hungry and a little bit drunk.

Professor Williams and I conversed many times after that and occasionally wrote letters to each other, this being an age prior to cell phones and email. I did not see him in person again until seven years later, and it would be a fateful meeting.

In 1989, I was the executive director of the now defunct Chattanooga Manufacturers Association and our annual meeting was to be held in October. I was looking for a speaker and Tom DiLorenzo, who at the time held the Probasco Chair of Free Enterprise at the University of Tennessee–Chattanooga, presented a solution. Walter Williams was speaking at UTC the same week of our annual meeting, so we asked if he would stay an extra night for a small speaker’s fee ($1,000), and he agreed to do so.

This was quite historic for our association, as no black man ever had spoken to this organization in this forum before, not that Professor Williams seemed to care about his small place in history. Many people that attended were familiar with him through his columns and he gave his standard free market speech, and people received it very well. It was vintage Walter Williams educating people on economic thinking, ever the teacher.

During the Q&A, someone asked Professor Williams about the textile bill (Textile, Apparel, and Footwear Trade Act of 1990) that was being written in Congress, a bill that would have imposed quotas for textile imports, especially from China. For Professor Williams, it was an easy answer and he made clear that he believed free trade was best for our economy even if elements of the textile industry opposed such economic doctrines.

At the time, textiles and apparel were significant in the Chattanooga area. Dan Frierson, the CEO of what was then Dixie Yarns, a large textile manufacturer in Chattanooga, at the time was president of the American Textile Manufacturers Institute and he was a major player in pushing the textile bill. He also happened to be the chairman of our board of directors and, thus, my boss, and he decidedly was not happy with Professor Williams’s statements. Frierson had denounced free trade at every opportunity to speak, and we could see his reaction, and it was not good.

While Frierson never said anything to me about the speech, it was clear that I had fallen from favor and I was not the executive director at the 1990 annual meeting. In the long run, it was the proverbial blessing in disguise, as I would go on to graduate school at Auburn University and follow what had been my dream since I won the Garvey award. Three decades later, the CMA no longer exists, but I am still teaching college economics and teaching the concepts that Professor Williams presented, using his materials on occasion.

When someone of the stature of Walter Williams passes away, one naturally asks about the person’s legacy. What did he leave behind?

For Walter Williams, we see the statements from his colleagues and especially his former students, the numerous students who took his famous graduate class in price theory and the undergraduates being introduced to Economics 101. One of the constant themes I read from comments of colleagues and students is his emphasis upon exactness. Just as he gave me an economic interpretation of the chaos at that fiasco of a dinner in West Berlin, he expected his students and colleagues to explain their statements using precise economic theory and he would accept nothing less.

Because of the dominance of left-wing ideology in higher education, the academy is not producing people like Professor Williams, as the woke mobs have substituted bullying for scholarship. Walter Williams was not easy to bully; his superiors in the US Army found out he could be a formidable opponent. Alex Tabarrok writes:

Walter led a remarkable life, recounted in his autobiography, Up from the Projects. He was arrested for disorderly conduct several times and drafted into the army. He was later court-martialed but, acting as his own attorney, he wins his case. He’s sent to Korea and when asked to fill in a form stating his race he writes Caucasian because the Negros got all the worst jobs. He tells his commanding officer that he has pledged to defend the constitution against all enemies foreign and domestic and that he, the commanding officer, is a domestic enemy of the constitution. He writes to complain to President John F. Kennedy. The army gives him an honorable discharge.

A man with this kind of independent streak, who expects his students to engage in clear thinking and for his colleagues to expect academic excellence from their students and from themselves, is not going to fit well into the current higher education environment. He never ran from racial issues, and because his economic views did not embrace the welfare state and what might be called “liberal” economics, the Left—and especially prominent blacks in the media and in academe—rained invective upon him.

The man who stood up to the white establishment of the army at a time when blacks had little legal protection was called an “Uncle Tom,” a “race traitor,” and worse. The black political establishment in the USA does not treat dissenters well, and because the mainstream media embraces progressivism as its established religion, anyone who is critical of progressive economic and social thinking is shown no mercy. He did not suffer fools, and he considered many of his critics to be fools, not because they “offended him,” but rather because they could not couch their accusations in coherent language of economic analysis.

That Professor Williams was none of the things his detractors accused him of being didn’t matter, given that the current academic climate more resembles Mao’s Cultural Revolution than anything one might expect from a civilized sector of education. Furthermore, we cannot expect the situation on college campuses to improve any time in the near or even far future. Walter Williams passed away at a time when college administrators, faculty, and students have chosen dysfunction over discourse. If he were still living, Professor Williams would have told them that their chosen path heads straight to academic perdition and nowhere else.

Looking back to thirty-one years ago, I have no regrets in having had Walter Williams as our annual meeting speaker. That my superiors didn’t appreciate it and took out their anger on me was the best thing in the long run. I was able to have the career I wanted because he and others like him had cleared a path for people like me.

Categories: Current Affairs

The Absurdity of Lockdown 2.0

Thu, 03/12/2020 - 20:30

As Ludwig von Mises said, “whoever wants peace among nations must seek to limit the state and its influence most strictly.” This is applicable to peace within nations, too.

Original Article: "The Absurdity of Lockdown 2.0".

This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.

Categories: Current Affairs

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