Don Boudreaux's October 1998 column in the Freeman.
DB is on target.
Politics, as practiced and as will be practiced, is a dishonorable profession.
--------------------------------------
Supporters of campaign-finance “reform,” meaning, supporters of greater government financing and central planning of electoral campaigns—routinely lament the fact that politicos must raise large sums of money to run for office. This requirement not only risks making elected officials indebted to the interest groups that fund their campaigns, but it also is said to dissuade honorable people from pursuing political office. Even George Melloan of the Wall Street Journal wrote (in the August 4, 1998, edition of that newspaper) that “[s]ome very capable persons who would make admirable public servants are turned off by this requirement” to “spend a great deal of time with begging bowl in hand.”
Melloan is wrong.
First and least importantly, describing politicians as public servants is inaccurate. Does anyone really believe that the typical politician seeks office, not to enjoy the fame and career opportunities afforded by elected office, but mainly to help the public? Call me cynical, but I rank such a belief on an intellectual par with belief in levitating swamis and in messages sent from the beyond by Princess Di.
Second, politicians don’t beg for money; they sell a service: namely, use of government’s coercive power to achieve for interest groups what these groups cannot or will not achieve peacefully on the market. A politician seeking office gets his funds by begging no more than an accountant or an architect gets his funds by begging. Like the accountant and architect, the politician offers a quid pro quo in exchange for campaign contributions. The difference, of course, is that the quid pro quo supplied by the accountant or architect—unlike that supplied by most politicians—isn’t a promise to reduce the liberties or confiscate the wealth of innocent third parties.
Third, and very importantly, raising funds is commonplace in reality and not (as proponents of campaign-finance “reform” insinuate) unique to electoral politics. As FEE’s president, I raise funds by convincing contributors that monies given to FEE will be used wisely to promote a free society. The same is true for fund-raisers at the Cato Institute, the Reason Foundation, and other free-market organizations. The president of General Motors raises funds whenever his firm borrows money, issues new stock, or sells any of its automobiles. Banks raise funds by offering attractive interest rates to depositors. Novell raises funds by developing and selling software.
In a very real way, the entire commercial society is one immense fund-raising enterprise. The particular means of fund raising differ from enterprise to enterprise, just as the specific purposes for which these funds are raised differ from enterprise to enterprise. But everyone who makes a living in the market must persuade others voluntarily to part with some of their money.
Politicians, however, don’t make their livings in the market. They are in the coercion business and, as such, are unaccustomed to the voluntary nature of peaceful market relationships. Their salaries are paid out of funds forcibly extracted from taxpayers, and their careers are spent drafting and debating prospective statutes that diminish the freedoms of innocent people.
In general, the kinds of men and women attracted to politics are precisely the kinds of men and women who disdain the reciprocities required for success in the market. Market relationships are inherently co-equal: Because I can buy my car from Toyota or Ford, General Motors has no power over me. When I walk into an automobile dealership (or a supermarket, or a department store, or a restaurant, or a bank, or a brokerage firm, or a hardware store, or any private firm that enjoys no government privileges) I walk into an establishment that has no power to coerce me. The consequence is that the owners of that establishment treat me with respect, for if they don’t, I spend my money elsewhere.
In contrast, I have no real choice but to obey whatever commands are dictated to me by politicians. Any class of people accustomed to issuing commands that are enforced with threats of coercion is a class of people who regard as degrading any need on their part to resort to persuasion rather than force as a means of getting what they want.
The need to raise campaign funds is one of the few areas of a politician’s life where he must actually persuade others voluntarily to give to him; he cannot (yet) steal these funds. Is it any wonder, then, that many in the political class are attempting to use government to spare them the necessity of hawking for campaign funds?
I am, therefore, unpersuaded by the argument that honorable people are dissuaded from pursuing political office because of the need to raise campaign funds. Again, honorable people raise funds all the time. More likely, honorable people steer clear of politics for the following two reasons. The first is that honorable people have no taste for minding other people’s business or for living off of the fruits of other people’s earnings. Nor do honorable people enjoy the kinds of public attention given to politicians.
H. L. Mencken was exactly correct when he observed that “[t]he typical politician is not only a rascal but also a jackass, so he greatly values the puerile notoriety and adulation that sensible men try to avoid.”
The second reason that honorable people avoid politics is that they could not stomach having to utter all that politicians must utter to win office. Judging from modern American practice, successful pursuit and maintenance of political office require the utterance of an unending stream of statements that are silly, vapid, or false. No honorable man or woman would say to an audience of millions “I feel your pain” or “I didn’t inhale” or any of the countless other lunacies that spew daily from the mouths of politicians of every party.
Honorable people value their reputations and their integrity too highly to sacrifice these for the dubious distinction of elected office. Again, Mencken saw matters clearly.
He is willing to embrace any issue, however idiotic, that will get him votes, and he is willing to sacrifice any principle, however sound, that will lose them for him. I do not describe the democratic politician at his inordinate worst; I describe him as he is encountered in the full sunshine of normalcy.
Honorable people avoid political careers not because of the need to raise funds. Rather, honorable people avoid politics because they are revolted by the prospect of behaving indecently.
Friday, January 05, 2018
Our future
Don Boudreaux in the November 1998 Freeman.
DB is on target.
A free society is, historically, an anomaly, and we are in the process of proving it.
------------------------------------------------------
Until this afternoon, I had planned to write this month about the folly of Social Security, or about the perils of central banking, or about the internal contradictions of government regulation; I forget which, exactly. I forget because a far more interesting topic sprang to mind a few hours ago: my son, 15-month-old Thomas Macaulay Boudreaux.
This afternoon I watched Thomas toddle joyfully about the playground in our hometown of Irvington-on-Hudson. He pointed quizzically at the geese squawking near the water’s edge; he was entranced by an acorn; he laughed and laughed as we slid down a sliding board; and he studied with the seriousness of a surgeon the sand that he held for the first time in his tiny hands. I was overcome with the joy that parents feel when they see their children learning how wonderful life can be. And intense affection washed over me as I saw him make his way across the grass while prattling his sweet non-words.
Just as Thomas paused and looked back to ensure that I was still there—just as his eyes met mine my mood completely changed. For reasons I do not know, at that moment my mind recalled what is for me the most vivid and horrible scene in Steven Spielberg’s film Schindler’s List. The scene shows Nazi trucks stuffed with frightened children being forcibly taken from their parents—parents left standing in a detention yard, screaming and wailing, as they helplessly watch as their little ones are driven off to no-one-knows-where.
Recollecting that single movie scene and knowing that it depicts a reality less than 60 years past caused me to shake physically. The pain even of imagining such a horror was acute.
I ran to Thomas and held him tightly. He slobbered on my cheek as I laughed and cried simultaneously. “My boy is here, safe, with me,” I repeated to myself.
“But what if they come?” asked the darker part of my mind. “What if one day such beasts show up in America to take Thomas from me as if he were trash on the curb?”
The calmer part of my mind assured me that no such beasts are darkening the horizon.
As I strolled Thomas back home, however, I wondered. I wondered about the source of such brutal totalitarianism. If such vileness arose during this century in Germany (and in Russia, and in China, and in Cuba, and in other countries too numerous to list), are we Americans really secure against the scourge of unlimited totalitarianism?
It’s unthinkable that in 1998 the U.S. government will engage in Nazi-style beastliness. But it’s not at all unthinkable that such brutal displays will become commonplace in America sometime in the future. Totalitarianism is inevitable if enough people come to believe that government’s proper role is to solve all problems. A people who demand that their government engineer them into a state of collective holiness will in fact end up in an earthly hell.
Consider the powers that are today exercised in America by the national government. In the name of water conservation, Washington specifies the amount of water that our toilet tanks can hold. In the name of ecology, Washington micromanages private use of privately owned lands. In the name of fairness to the handicapped, Washington intrudes itself into the building-design business. In the name of child safety, Washington vetoes parents’ choices of which toys to buy for their children. In the name of adult safety, Washington dictates which pharmaceuticals we may and may not use. In the name of energy conservation, Washington specifies the fuel efficiency of our automobiles. And as I write these words, Congress is considering federal legislation to override state statutes that permit people to carry concealed handguns. Fewer and fewer aspects of our lives are off-limits to Washington.
Why do we tolerate such intrusiveness from strangers – intrusiveness that none of us tolerate even from members of our own family? The reason is that Americans generally believe not only that government means well, but also that it possesses unique powers to right all wrongs. In short, too many Americans believe government to be godlike.
Thus the danger: that which we deify we trust without question. But government is an institution of mortals, not of gods or quasi-gods. When anyone treats another person as being more-than-mortal, he who is ludicrously elevated in this way suffers an inflated ego. And he who treats others as more-than-mortal suffers a correspondingly deflated sense of self-respect and loses his independence of mind. The initial sentiment of those who are elevated might be a warm paternalism toward those who do the elevation. But if not removed from their perch, the elevated inevitably come to regard all others as clay to be beaten, molded, and baked into whatever shapes the elevated happen to fancy.
Modern totalitarianism grows from the dangerously wrongheaded belief that those who wield government power are somehow greater than, wiser than, and more trustworthy than ordinary men and women. And it is fertilized by the childish wish that every inconvenience no matter how minor, every affront no matter how innocent, and every possible danger (except that of the state itself!) no matter how remote be prevented by government.
People who are ceded the power necessary to engineer society eventually become monsters.
This eventuality is what I fear as I look at my little son. He is safe today. But if I reflect upon all the power that government wields now that it did not wield when I was born 40 years ago, and then consider the real possibility that government’s power will grow at the same pace over the next 40 years, I tremble with fright. A government with such power would assuredly treat Thomas and his children, not as humans, but as cattle or clay. And if Thomas should resist by asserting his individuality, the government would summarily slaughter him along with all the rest of those truly heroic people who refuse to be babied or bullied by the state.
No calling for me is higher than warning against the awful dangers of statism. Nothing less than my son’s life depends upon reversing the modern trend of deifying government.
DB is on target.
A free society is, historically, an anomaly, and we are in the process of proving it.
------------------------------------------------------
Until this afternoon, I had planned to write this month about the folly of Social Security, or about the perils of central banking, or about the internal contradictions of government regulation; I forget which, exactly. I forget because a far more interesting topic sprang to mind a few hours ago: my son, 15-month-old Thomas Macaulay Boudreaux.
This afternoon I watched Thomas toddle joyfully about the playground in our hometown of Irvington-on-Hudson. He pointed quizzically at the geese squawking near the water’s edge; he was entranced by an acorn; he laughed and laughed as we slid down a sliding board; and he studied with the seriousness of a surgeon the sand that he held for the first time in his tiny hands. I was overcome with the joy that parents feel when they see their children learning how wonderful life can be. And intense affection washed over me as I saw him make his way across the grass while prattling his sweet non-words.
Just as Thomas paused and looked back to ensure that I was still there—just as his eyes met mine my mood completely changed. For reasons I do not know, at that moment my mind recalled what is for me the most vivid and horrible scene in Steven Spielberg’s film Schindler’s List. The scene shows Nazi trucks stuffed with frightened children being forcibly taken from their parents—parents left standing in a detention yard, screaming and wailing, as they helplessly watch as their little ones are driven off to no-one-knows-where.
Recollecting that single movie scene and knowing that it depicts a reality less than 60 years past caused me to shake physically. The pain even of imagining such a horror was acute.
I ran to Thomas and held him tightly. He slobbered on my cheek as I laughed and cried simultaneously. “My boy is here, safe, with me,” I repeated to myself.
“But what if they come?” asked the darker part of my mind. “What if one day such beasts show up in America to take Thomas from me as if he were trash on the curb?”
The calmer part of my mind assured me that no such beasts are darkening the horizon.
As I strolled Thomas back home, however, I wondered. I wondered about the source of such brutal totalitarianism. If such vileness arose during this century in Germany (and in Russia, and in China, and in Cuba, and in other countries too numerous to list), are we Americans really secure against the scourge of unlimited totalitarianism?
It’s unthinkable that in 1998 the U.S. government will engage in Nazi-style beastliness. But it’s not at all unthinkable that such brutal displays will become commonplace in America sometime in the future. Totalitarianism is inevitable if enough people come to believe that government’s proper role is to solve all problems. A people who demand that their government engineer them into a state of collective holiness will in fact end up in an earthly hell.
Consider the powers that are today exercised in America by the national government. In the name of water conservation, Washington specifies the amount of water that our toilet tanks can hold. In the name of ecology, Washington micromanages private use of privately owned lands. In the name of fairness to the handicapped, Washington intrudes itself into the building-design business. In the name of child safety, Washington vetoes parents’ choices of which toys to buy for their children. In the name of adult safety, Washington dictates which pharmaceuticals we may and may not use. In the name of energy conservation, Washington specifies the fuel efficiency of our automobiles. And as I write these words, Congress is considering federal legislation to override state statutes that permit people to carry concealed handguns. Fewer and fewer aspects of our lives are off-limits to Washington.
Why do we tolerate such intrusiveness from strangers – intrusiveness that none of us tolerate even from members of our own family? The reason is that Americans generally believe not only that government means well, but also that it possesses unique powers to right all wrongs. In short, too many Americans believe government to be godlike.
Thus the danger: that which we deify we trust without question. But government is an institution of mortals, not of gods or quasi-gods. When anyone treats another person as being more-than-mortal, he who is ludicrously elevated in this way suffers an inflated ego. And he who treats others as more-than-mortal suffers a correspondingly deflated sense of self-respect and loses his independence of mind. The initial sentiment of those who are elevated might be a warm paternalism toward those who do the elevation. But if not removed from their perch, the elevated inevitably come to regard all others as clay to be beaten, molded, and baked into whatever shapes the elevated happen to fancy.
Modern totalitarianism grows from the dangerously wrongheaded belief that those who wield government power are somehow greater than, wiser than, and more trustworthy than ordinary men and women. And it is fertilized by the childish wish that every inconvenience no matter how minor, every affront no matter how innocent, and every possible danger (except that of the state itself!) no matter how remote be prevented by government.
People who are ceded the power necessary to engineer society eventually become monsters.
This eventuality is what I fear as I look at my little son. He is safe today. But if I reflect upon all the power that government wields now that it did not wield when I was born 40 years ago, and then consider the real possibility that government’s power will grow at the same pace over the next 40 years, I tremble with fright. A government with such power would assuredly treat Thomas and his children, not as humans, but as cattle or clay. And if Thomas should resist by asserting his individuality, the government would summarily slaughter him along with all the rest of those truly heroic people who refuse to be babied or bullied by the state.
No calling for me is higher than warning against the awful dangers of statism. Nothing less than my son’s life depends upon reversing the modern trend of deifying government.
The Constitution is only words on paper, unfortunately
Don Boudreaux's December 1998 column in the Freeman.
DB is on target.
The correlation between politicians views on the Constitution and their political interests has magnitude approximately 1. It is pretty much the same for everyone else. There is no chance that the freedoms the Founders tried to preserve will be preserved.
--------------------------------------------------
All the talk of cigars, blue dresses, and other paraphernalia of modern presidential amours has drawn national attention away from how the prospect of impeaching Bill Clinton is inspiring a sea-change in constitutional theory. Many big-government advocates now champion strict constitutional construction. The President’s defenders are probably at this very moment poring over Robert Bork’s scholarly articles in search of intellectual ammunition for Clinton’s defense against impeachment.
For example, when interviewed recently on National Public Radio, Rep. Zoe Lofgren (D-CA), a member of the House Judiciary Committee, sounded downright Borkian. She solemnly intoned that we moderns are not free to read into the Constitution’s phrase “high crimes and misdemeanors” (which governs impeachment) anything that we wish. Instead, she advised that the proper meaning of these words “comes from Alexander Hamilton, from George Mason, from Madison.” Rep. Lofgren added that she has “spent a lot of time researching, going back and reading again The Federalist Papers [and] the notes from the Constitutional Convention.”
She concludes that members of Congress “are constrained by what the law is, what the Constitution says. If we’re just going to do whatever we think, then we’re not going to have a constitutional form of government.”
Hear, hear! Ms. Lofgren is a member of a political class that for sixty years has waxed eloquent over “a living constitution” whose plain language should never curb Washington’s zeal to regulate the economy, redistribute wealth, and take private property. This the-Constitution-says-what-we-fancy-it-to-say conviction was most notably championed by the late Justice William Brennan, who justified his rejection of strict constructionism by arguing that “[i]t is arrogant to pretend that from our vantage we can gauge accurately the intent of the Framers on application of principle to specific, contemporary questions.”
This is an expedient view of the Constitution for those who disapprove of that document’s clear restrictions on government power. The framers feared government, and the Constitution they ratified is crystal clear that government power in America was to be severely limited. But since 1937 or thereabouts, Congress, the various Presidents (yes, even Reagan), and the judiciary have refused to be constrained by the constitutional text. The consequence inundates us: a behemoth, obnoxious, deceitful, and ravenous government.
Fortunately, judging from her remarks made soon after Independent Counsel Ken Starr released his report, Rep. Lofgren would now rightly scold those who cling to Justice Brennan’s politically convenient view that the Constitution means whatever we moderns want it to mean. Perhaps Rep. Lofgren now has courage to direct her colleagues’ attention to Federalist #10 in which James Madison says that the protection of people’s abilities to own property “is the first object of government” and that government efforts to redistribute property are “improper or wicked.”
Hey, maybe the era of big government really is over!
Of course, cynics might accuse Rep. Lofgren and her fellow converts to original-intent constitutionalism (such as Rep. Barney Frank of Massachusetts) of insincerity–of advocating original intent only on the question of impeachment, and then merely to save this particular president’s political skin. In light of the dubious ethics of today’s politicians, this possibility can’t be dismissed. Thankfully, it’s easy to test the sincerity of Rep. Lofgren & Co. If they are willing to repeal the vast bulk of regulatory legislation enacted by Congress since the New Deal, then their belief in Constitutional government is genuine. But if Rep. Lofgren and her colleagues resist repealing these statutes, we can conclude only that she and her friends are hypocritical, insincere, bamboozling politicians much like Clinton, according to his critics.
Why is repeal of this legislation a sound test of Rep. Lofgren’s sincerity?
The Constitution delegates to Congress only a handful of powers. All powers not explicitly delegated to Washington are, as the Tenth Amendment says, “reserved to the States respectively, or to the people.”
Article I, Section 8 is where the Constitution spells out most of the powers delegated to Congress. These powers include regulating only interstate and foreign commerce, coining money, establishing post offices, creating a federal court system, supporting an army and a navy, and a handful of other powers that the framers thought were necessary to forge the states into a nation without stripping them of their plenary powers or the people of their rights under the common law.
On any plausible reading of the Constitution – and of the accompanying commentary by the framers, such as The Federalist Papers – the vast bulk of what Washington does today is unconstitutional. Nowhere does the Constitution give to Washington the power to specify the size of our toilet tanks, the fuel-efficiency of our automobiles, or what constitutes sexual harassment in the workplace (another issue, incidentally, on which Clinton’s supporters insist on strict construction). Nowhere does the Constitution give to Washington the authority to use taxpayer funds to subsidize farmers or to help corporations advertise their products in foreign markets. And nowhere does the Constitution authorize Washington to dictate minimum wages, to prevent private landowners from developing their properties, or to distribute welfare. The framers left most regulatory powers with the states and even these powers were understood to be constrained by common-law protections that citizens enjoyed against intrusion by any government.
So let Rep. Lofgren and her fellow Constitutional scholars in Congress prove that they respect the framers as much as they now claim: repeal federal minimum-wage legislation, the Americans with Disabilities Act, the Endangered Species Act, and the countless other statutes and regulations that today plague ordinary Americans.
If the Constitution again becomes the law of the land, America can look forward to a great flourishing of freedom and prosperity. Bill Clinton and his paramours will be forgotten. And future generations might even erect a statue of Zoe Lofgren and her friends, Defenders of the Constitution.
DB is on target.
The correlation between politicians views on the Constitution and their political interests has magnitude approximately 1. It is pretty much the same for everyone else. There is no chance that the freedoms the Founders tried to preserve will be preserved.
--------------------------------------------------
All the talk of cigars, blue dresses, and other paraphernalia of modern presidential amours has drawn national attention away from how the prospect of impeaching Bill Clinton is inspiring a sea-change in constitutional theory. Many big-government advocates now champion strict constitutional construction. The President’s defenders are probably at this very moment poring over Robert Bork’s scholarly articles in search of intellectual ammunition for Clinton’s defense against impeachment.
For example, when interviewed recently on National Public Radio, Rep. Zoe Lofgren (D-CA), a member of the House Judiciary Committee, sounded downright Borkian. She solemnly intoned that we moderns are not free to read into the Constitution’s phrase “high crimes and misdemeanors” (which governs impeachment) anything that we wish. Instead, she advised that the proper meaning of these words “comes from Alexander Hamilton, from George Mason, from Madison.” Rep. Lofgren added that she has “spent a lot of time researching, going back and reading again The Federalist Papers [and] the notes from the Constitutional Convention.”
She concludes that members of Congress “are constrained by what the law is, what the Constitution says. If we’re just going to do whatever we think, then we’re not going to have a constitutional form of government.”
Hear, hear! Ms. Lofgren is a member of a political class that for sixty years has waxed eloquent over “a living constitution” whose plain language should never curb Washington’s zeal to regulate the economy, redistribute wealth, and take private property. This the-Constitution-says-what-we-fancy-it-to-say conviction was most notably championed by the late Justice William Brennan, who justified his rejection of strict constructionism by arguing that “[i]t is arrogant to pretend that from our vantage we can gauge accurately the intent of the Framers on application of principle to specific, contemporary questions.”
This is an expedient view of the Constitution for those who disapprove of that document’s clear restrictions on government power. The framers feared government, and the Constitution they ratified is crystal clear that government power in America was to be severely limited. But since 1937 or thereabouts, Congress, the various Presidents (yes, even Reagan), and the judiciary have refused to be constrained by the constitutional text. The consequence inundates us: a behemoth, obnoxious, deceitful, and ravenous government.
Fortunately, judging from her remarks made soon after Independent Counsel Ken Starr released his report, Rep. Lofgren would now rightly scold those who cling to Justice Brennan’s politically convenient view that the Constitution means whatever we moderns want it to mean. Perhaps Rep. Lofgren now has courage to direct her colleagues’ attention to Federalist #10 in which James Madison says that the protection of people’s abilities to own property “is the first object of government” and that government efforts to redistribute property are “improper or wicked.”
Hey, maybe the era of big government really is over!
Of course, cynics might accuse Rep. Lofgren and her fellow converts to original-intent constitutionalism (such as Rep. Barney Frank of Massachusetts) of insincerity–of advocating original intent only on the question of impeachment, and then merely to save this particular president’s political skin. In light of the dubious ethics of today’s politicians, this possibility can’t be dismissed. Thankfully, it’s easy to test the sincerity of Rep. Lofgren & Co. If they are willing to repeal the vast bulk of regulatory legislation enacted by Congress since the New Deal, then their belief in Constitutional government is genuine. But if Rep. Lofgren and her colleagues resist repealing these statutes, we can conclude only that she and her friends are hypocritical, insincere, bamboozling politicians much like Clinton, according to his critics.
Why is repeal of this legislation a sound test of Rep. Lofgren’s sincerity?
The Constitution delegates to Congress only a handful of powers. All powers not explicitly delegated to Washington are, as the Tenth Amendment says, “reserved to the States respectively, or to the people.”
Article I, Section 8 is where the Constitution spells out most of the powers delegated to Congress. These powers include regulating only interstate and foreign commerce, coining money, establishing post offices, creating a federal court system, supporting an army and a navy, and a handful of other powers that the framers thought were necessary to forge the states into a nation without stripping them of their plenary powers or the people of their rights under the common law.
On any plausible reading of the Constitution – and of the accompanying commentary by the framers, such as The Federalist Papers – the vast bulk of what Washington does today is unconstitutional. Nowhere does the Constitution give to Washington the power to specify the size of our toilet tanks, the fuel-efficiency of our automobiles, or what constitutes sexual harassment in the workplace (another issue, incidentally, on which Clinton’s supporters insist on strict construction). Nowhere does the Constitution give to Washington the authority to use taxpayer funds to subsidize farmers or to help corporations advertise their products in foreign markets. And nowhere does the Constitution authorize Washington to dictate minimum wages, to prevent private landowners from developing their properties, or to distribute welfare. The framers left most regulatory powers with the states and even these powers were understood to be constrained by common-law protections that citizens enjoyed against intrusion by any government.
So let Rep. Lofgren and her fellow Constitutional scholars in Congress prove that they respect the framers as much as they now claim: repeal federal minimum-wage legislation, the Americans with Disabilities Act, the Endangered Species Act, and the countless other statutes and regulations that today plague ordinary Americans.
If the Constitution again becomes the law of the land, America can look forward to a great flourishing of freedom and prosperity. Bill Clinton and his paramours will be forgotten. And future generations might even erect a statue of Zoe Lofgren and her friends, Defenders of the Constitution.
How an increase in the minimum wage hurts workers
Here is a column by David Henderson about how an increase in the minimum wage hurt the workers of a coffee shop chain.
DH is on target.
Note: In competitive labor and product markets it pays for a firm to hire labor until wage equals the value of marginal product (w=P*dQ/dL). If the nominal wage is increased, either labor is decreased or other benefits are decreased.
-----------------------------------------------------
What do economists predict employers of low-wage workers will do when a government raises the minimum wage by a large amount, say, $2.40 an hour?
DH is on target.
Note: In competitive labor and product markets it pays for a firm to hire labor until wage equals the value of marginal product (w=P*dQ/dL). If the nominal wage is increased, either labor is decreased or other benefits are decreased.
-----------------------------------------------------
What do economists predict employers of low-wage workers will do when a government raises the minimum wage by a large amount, say, $2.40 an hour?
An increase in the minimum wage doesn't magically make low-wage workers more productive. So we predict that employers will reduce other components of the compensation package: reduce paid breaks, reduce their contribution for benefits such as health and dental insurance, and reduce other components of the pay package.
That is exactly what two owners of Tim Hortons coffee shops in Cobourg, Ontario are doing in response to the $2.40 per hour increase in the minimum wage that became law in Ontario on January 1. This is from a Canadian Press news story published in The Globe and Mail, a major national publication based in Toronto:
In a letter dated December 2017, Ron Joyce Jr., son of company co-founder Ron Joyce, and his wife, Jeri Horton-Joyce, who is Tim Hortons' [sic] daughter, told employees at two Tim Hortons restaurants they own in Cobourg, Ont., that as of Jan. 1, they would no longer be entitled to paid breaks, and would have to pay at least half of the cost of their dental and health benefits.
The minimum wage in Ontario between October 1, 2017 an December 31, 2017 was $11.60 per hour. As of January 1, it is a whopping $14.00 per hour. In U.S. dollars, as of today, that is $11.20 an hour. (The average hourly wage of workers 15 years of age and over in Ontario in November 2107 was $26.82. So the new higher minimum wage is 52% of the average wage.)
And what was Ontario premier Kathleen Wynne's reaction? Was it "Oops. I blew it. I should have realized that employers would adjust to make it worthwhile to keep hiring their lower-wage and lower-productivity workers?" No. Was it "I should have also realized that employers and employees are better than me at coming up with the optimal mix of money wages and other benefits?" Again no.
It couldn't have been her fault. Instead, she attacked the employers. The news story continues:
Premier Kathleen Wynne said if Joyce Jr. wants to challenge the Ontario government policy, he should come directly to her and not take it out on his workers.
But they didn't challenge the Ontario government policy. Instead, they announced how they were going to comply with it. Ms. Wynne doesn't even get the basic story right.
And what is Wynne saying would have happened if they had "come directly to her?" Is she saying she would have reconsidered the policy? Probably not, given that she also said:
When I read the reports about Ron Joyce, Jr., who is a man whose family founded Tim Hortons, the chain was sold for billions of dollars, and when I read how he was treating his employees, it just felt to me like this was a pretty clear act of bullying.
Kathleen Wynne was right to identify the fact of bullying. She was wrong, however, in identifying who engaged in bullying. To know who the bully is, she need only look in the mirror.
That is exactly what two owners of Tim Hortons coffee shops in Cobourg, Ontario are doing in response to the $2.40 per hour increase in the minimum wage that became law in Ontario on January 1. This is from a Canadian Press news story published in The Globe and Mail, a major national publication based in Toronto:
In a letter dated December 2017, Ron Joyce Jr., son of company co-founder Ron Joyce, and his wife, Jeri Horton-Joyce, who is Tim Hortons' [sic] daughter, told employees at two Tim Hortons restaurants they own in Cobourg, Ont., that as of Jan. 1, they would no longer be entitled to paid breaks, and would have to pay at least half of the cost of their dental and health benefits.
The minimum wage in Ontario between October 1, 2017 an December 31, 2017 was $11.60 per hour. As of January 1, it is a whopping $14.00 per hour. In U.S. dollars, as of today, that is $11.20 an hour. (The average hourly wage of workers 15 years of age and over in Ontario in November 2107 was $26.82. So the new higher minimum wage is 52% of the average wage.)
And what was Ontario premier Kathleen Wynne's reaction? Was it "Oops. I blew it. I should have realized that employers would adjust to make it worthwhile to keep hiring their lower-wage and lower-productivity workers?" No. Was it "I should have also realized that employers and employees are better than me at coming up with the optimal mix of money wages and other benefits?" Again no.
It couldn't have been her fault. Instead, she attacked the employers. The news story continues:
Premier Kathleen Wynne said if Joyce Jr. wants to challenge the Ontario government policy, he should come directly to her and not take it out on his workers.
But they didn't challenge the Ontario government policy. Instead, they announced how they were going to comply with it. Ms. Wynne doesn't even get the basic story right.
And what is Wynne saying would have happened if they had "come directly to her?" Is she saying she would have reconsidered the policy? Probably not, given that she also said:
When I read the reports about Ron Joyce, Jr., who is a man whose family founded Tim Hortons, the chain was sold for billions of dollars, and when I read how he was treating his employees, it just felt to me like this was a pretty clear act of bullying.
Kathleen Wynne was right to identify the fact of bullying. She was wrong, however, in identifying who engaged in bullying. To know who the bully is, she need only look in the mirror.
Thursday, January 04, 2018
A balanced-budget amendment
George Will in the Washington Post.
This won't happen, but GW is on target.
----------------------------------------
Today’s political discord is less durable and dangerous than a consensus, one that unites the political class more than ideology divides it. The consensus is that, year in and year out, in good times and bad, Americans should be given substantially more government goods and services than they should be asked to pay for. Lamentations about the paucity of bipartisanship ignore the permanent, powerful incentive, which both parties share and indulge, to run enormous deficits, thereby making big government cheaper, for the moment. Government borrows part of its costs; the borrowing’s burden falls on future generations. This is a form of expropriation — taxation without representation of the unborn.
The federal debt held by the public was 39 percent of gross domestic product 10 years ago; it is 75 percent today. Before last month’s tax changes, the debt was projected to reach 91 percent in 10 years. No one knows whether the tax changes will hasten this; no one should assume that they will not. No one knows at what percentage the debt’s deleterious effect on economic growth becomes severe; no sensible person doubts that there is such a point.
We will discover that point the hard way, unless Congress promptly sends to the states for prompt ratification a constitutional amendment requiring balanced budgets. The amendment proposed by R. Glenn Hubbard, dean of Columbia University’s business school, and Tim Kane, economist at the Hoover Institution at Stanford University, would limit each year’s total spending to the median annual revenue of the previous seven years, allowing temporary deficits to be authorized in emergencies by congressional supermajorities.
Because reverence for the Constitution is imperiled by tinkering with it, and because the supply of ideas for improving Madison’s document always exceeds society’s supply of Madisonian wisdom, the document should be amended rarely and reluctantly. Today, however, a balanced-budget amendment is required to counter two developments: the abandonment of the original understanding of the Constitution and the death of the political morality that expressed that understanding.
For approximately 140 years, the government was restrained by the Constitution’s enumeration of its powers, which supposedly were “few and defined” (Madison, Federalist 45). Before Congress acted, it considered what James Q. Wilson called the “legitimacy barrier”: Did the Constitution empower the government to do this or that? As late as the 1950s, Congress at least feigned fealty to constitutional limits: When it wanted to build the interstate highway system and subsidize college students, it referred, if perfunctorily, to the enumerated responsibility for defense in naming the National Interstate and Defense Highways Act (1956) and the National Defense Education Act (1958). Wilson thought the legitimacy barrier’s collapse was complete in 1965 when Congress intruded into the quintessentially state and local responsibility with the Elementary and Secondary Education Act.
Democracy generally, and especially legislative bargaining, is inherently additive: Majorities are assembled by attracting components with particularized benefits. Christopher DeMuth, president emeritus of the American Enterprise Institute, notes that from the Founding to the 1930s-1960s New Deal-Great Society era, this natural tendency of government to grow was inhibited by the bipartisan political ethic: Deficits were neither prudent nor seemly except when “borrowing was limited to wars, other emergencies, and investments such as territorial expansion and transportation; and incurred debts were paid down diligently.”
This tradition of borrowing for the future dissipated as government began routinely borrowing from the future in order to finance current consumption of government goods and services. DeMuth argues that a balanced-budget amendment is required because of the transformation of government from a provider of public goods (defense, infrastructure) to a provider of benefits (money and services) directly to individuals.
Transfer payments are now about 70 percent of federal spending.
A constitutional amendment imposing congressional term limits would not obviate, but would lessen, the need for a balanced-budget amendment by diminishing the incentive to think of the next election rather than the next generation. Unfortunately, the careerism that makes term limits advisable means that Congress will also never vote for this version of Warren Buffett’s instant fix for deficits: When, absent a war or other emergency, the budget is not balanced, all congressional incumbents are ineligible for reelection.
Critics of a balanced-budget amendment warn that Congress will evade it by means of creative bookkeeping, stealthy spending through unfunded mandates on state governments and the private sector, the promiscuous declarations of spurious “emergencies” and other subterfuges. Such critics inadvertently make the case for the amendment by assuming that the political class is untrustworthy. And that the people’s representatives unfortunately are representative of those who elect them.
This won't happen, but GW is on target.
----------------------------------------
Today’s political discord is less durable and dangerous than a consensus, one that unites the political class more than ideology divides it. The consensus is that, year in and year out, in good times and bad, Americans should be given substantially more government goods and services than they should be asked to pay for. Lamentations about the paucity of bipartisanship ignore the permanent, powerful incentive, which both parties share and indulge, to run enormous deficits, thereby making big government cheaper, for the moment. Government borrows part of its costs; the borrowing’s burden falls on future generations. This is a form of expropriation — taxation without representation of the unborn.
The federal debt held by the public was 39 percent of gross domestic product 10 years ago; it is 75 percent today. Before last month’s tax changes, the debt was projected to reach 91 percent in 10 years. No one knows whether the tax changes will hasten this; no one should assume that they will not. No one knows at what percentage the debt’s deleterious effect on economic growth becomes severe; no sensible person doubts that there is such a point.
We will discover that point the hard way, unless Congress promptly sends to the states for prompt ratification a constitutional amendment requiring balanced budgets. The amendment proposed by R. Glenn Hubbard, dean of Columbia University’s business school, and Tim Kane, economist at the Hoover Institution at Stanford University, would limit each year’s total spending to the median annual revenue of the previous seven years, allowing temporary deficits to be authorized in emergencies by congressional supermajorities.
Because reverence for the Constitution is imperiled by tinkering with it, and because the supply of ideas for improving Madison’s document always exceeds society’s supply of Madisonian wisdom, the document should be amended rarely and reluctantly. Today, however, a balanced-budget amendment is required to counter two developments: the abandonment of the original understanding of the Constitution and the death of the political morality that expressed that understanding.
For approximately 140 years, the government was restrained by the Constitution’s enumeration of its powers, which supposedly were “few and defined” (Madison, Federalist 45). Before Congress acted, it considered what James Q. Wilson called the “legitimacy barrier”: Did the Constitution empower the government to do this or that? As late as the 1950s, Congress at least feigned fealty to constitutional limits: When it wanted to build the interstate highway system and subsidize college students, it referred, if perfunctorily, to the enumerated responsibility for defense in naming the National Interstate and Defense Highways Act (1956) and the National Defense Education Act (1958). Wilson thought the legitimacy barrier’s collapse was complete in 1965 when Congress intruded into the quintessentially state and local responsibility with the Elementary and Secondary Education Act.
Democracy generally, and especially legislative bargaining, is inherently additive: Majorities are assembled by attracting components with particularized benefits. Christopher DeMuth, president emeritus of the American Enterprise Institute, notes that from the Founding to the 1930s-1960s New Deal-Great Society era, this natural tendency of government to grow was inhibited by the bipartisan political ethic: Deficits were neither prudent nor seemly except when “borrowing was limited to wars, other emergencies, and investments such as territorial expansion and transportation; and incurred debts were paid down diligently.”
This tradition of borrowing for the future dissipated as government began routinely borrowing from the future in order to finance current consumption of government goods and services. DeMuth argues that a balanced-budget amendment is required because of the transformation of government from a provider of public goods (defense, infrastructure) to a provider of benefits (money and services) directly to individuals.
Transfer payments are now about 70 percent of federal spending.
A constitutional amendment imposing congressional term limits would not obviate, but would lessen, the need for a balanced-budget amendment by diminishing the incentive to think of the next election rather than the next generation. Unfortunately, the careerism that makes term limits advisable means that Congress will also never vote for this version of Warren Buffett’s instant fix for deficits: When, absent a war or other emergency, the budget is not balanced, all congressional incumbents are ineligible for reelection.
Critics of a balanced-budget amendment warn that Congress will evade it by means of creative bookkeeping, stealthy spending through unfunded mandates on state governments and the private sector, the promiscuous declarations of spurious “emergencies” and other subterfuges. Such critics inadvertently make the case for the amendment by assuming that the political class is untrustworthy. And that the people’s representatives unfortunately are representative of those who elect them.
Don't buy Whirlpool products
Here is an example of a US company, Whirlpool, trying to stiff consumers.
Teach Whirlpool a lesson - don't buy its products.
The following is from the National Review.
------------------------------------------------
After determining that increased imports of washing machines and component parts are causing “serious injury” to the American washing-machine industry, the United States International Trade Commission (ITC) has just recommended that President Trump impose steep “safeguard” tariffs on those imports.
At first glance, the washing-machine case is a simple story of a beleaguered producer seeking temporary government protection from low-priced imports — part of the age-old trade-policy give-and-take between American workers and consumers. A deeper look, however, reveals something far more complicated and far less benign.
First, the U.S. producer’s situation is much of its own making. Whirlpool, a Michigan-based company with its washing-machine factory located in Clyde, Ohio, is a longstanding American company and has been a dominant player in the home-appliance market for decades. In recent years, however, its share of the market has declined due to increased competition from foreign companies such as Samsung and LG, both of which eagerly embraced emerging technologies, including touchscreens and the Internet of Things. Whirlpool, by contrast, was slow to embrace these new technologies.
Finally, there is little historical evidence that safeguard tariffs will actually save Whirlpool. For example, a recent Cato Institute historical survey by Scott Lincicome found that U.S. protectionist measures, including Section 201 safeguards, not only levied enormous costs on the economy (costing American consumers $620,000 per year for every job supposedly saved) but also failed in all but one case — bicycles — to revive the protected industry at issue. One reason: Protected companies didn’t invest their windfall profits in new technologies that could cut costs or improve quality in order to boost their long-term competitiveness. As a result, even with import curbs, these companies eventually went bankrupt or lobbied the government for subsidies and even more protection. The results of such protectionism, the paper concludes, would be even worse today due the advent of global supply chains, the growth of American export markets, and the creation of the World Trade Organization to provide foreign governments with a lawful means of retaliating against American exporters in response to U.S. protectionism.
Given this history, it’s likely that new import restrictions would be a pyrrhic victory. Though they would temporarily pad Whirlpool’s bottom line, restrictions would also delay necessary changes to a failing business model by blunting the market’s clear signals about Whirlpool products. Recall that this is now Whirlpool’s second request for import protection. Large tariffs would also raise costs on consumers, hurt major retailers such as Sears, jeopardize Samsung’s and LG’s investments in a thriving domestic manufacturing hub, and encourage similar government bailouts of domestic companies that simply made bad business decisions. It also would open the door to retaliation against American exports — potentially ensnaring unrelated U.S. companies and workers into the dispute. It would be just the type of myopic and self-destructive Washington favoritism that Americans rightly detest. Protectionism is a tool of a bygone era, not a business model for the 21st century.
Over the last few decades, the world economy has undergone a rapid transformation. Trade liberalization and the advent of the global trading system have not only improved living standards but also fostered sophisticated supply chains and multinational investments upon which millions of American jobs depend. Attempting to reverse this beneficial evolution is a futile exercise — one that will hurt American workers and consumers and likely fail, yet again, to resuscitate yesterday’s industries.
Teach Whirlpool a lesson - don't buy its products.
The following is from the National Review.
------------------------------------------------
After determining that increased imports of washing machines and component parts are causing “serious injury” to the American washing-machine industry, the United States International Trade Commission (ITC) has just recommended that President Trump impose steep “safeguard” tariffs on those imports.
At first glance, the washing-machine case is a simple story of a beleaguered producer seeking temporary government protection from low-priced imports — part of the age-old trade-policy give-and-take between American workers and consumers. A deeper look, however, reveals something far more complicated and far less benign.
First, the U.S. producer’s situation is much of its own making. Whirlpool, a Michigan-based company with its washing-machine factory located in Clyde, Ohio, is a longstanding American company and has been a dominant player in the home-appliance market for decades. In recent years, however, its share of the market has declined due to increased competition from foreign companies such as Samsung and LG, both of which eagerly embraced emerging technologies, including touchscreens and the Internet of Things. Whirlpool, by contrast, was slow to embrace these new technologies.
Rather than creating more-innovative or lower-priced products, however, Whirlpool invested in good old-fashioned protectionism — petitioning the ITC under Section 201 of the Trade Act of 1974 for 50 percent tariffs on imported washing machines and quotas on component parts. Known as “safeguards,” Section 201 remedies provide temporary relief — trade restrictions such as tariffs and quotas against fairly traded imports — designed to give a domestic industry the time and space it needs to become competitive with imports. Whirlpool’s recent plea for protection comes on top of a 2013 anti-dumping order that imposed tariffs on washing machines from South Korea and Mexico.
Second, Whirlpool is actually fighting, at least in part, against American companies and workers. Most obviously, higher appliance prices will affect major U.S. retailers, many of whom are brick-and-mortar establishments that are themselves struggling to remain relevant. Sears, for instance, recently announced that it would stop selling Whirlpool, Maytag, and KitchenAid appliances after a century-long partnership due to a pricing dispute.
Furthermore, though both Samsung and LG are headquartered in South Korea, each has recently made significant investments in building domestic manufacturing plants in southern states (Tennessee and South Carolina, respectively) with vibrant manufacturing sectors — a stark contrast to the many Rust Belt states that cling to outdated labor, regulatory, and tax policies (and house many protection-seeking industries).
In this way, the washing-machine battle is a microcosm of one that has been raging in the United States for decades: the rise of manufacturing in the freer-market Sun Belt at the expense of northern and midwestern states that can’t — or simply won’t — keep up. Some of the South’s rise has been driven by foreign investment, but certainly not all of it. In the steel industry, for example, North Carolina’s Nucor initially embraced innovative technologies and outperformed its Rust Belt competitors, which are heavily reliant on subsidies and protectionism. (Only after dominating its northern competitors did Nucor conveniently begin to seek government protection from its foreign ones.)
Finally, there is little historical evidence that safeguard tariffs will actually save Whirlpool. For example, a recent Cato Institute historical survey by Scott Lincicome found that U.S. protectionist measures, including Section 201 safeguards, not only levied enormous costs on the economy (costing American consumers $620,000 per year for every job supposedly saved) but also failed in all but one case — bicycles — to revive the protected industry at issue. One reason: Protected companies didn’t invest their windfall profits in new technologies that could cut costs or improve quality in order to boost their long-term competitiveness. As a result, even with import curbs, these companies eventually went bankrupt or lobbied the government for subsidies and even more protection. The results of such protectionism, the paper concludes, would be even worse today due the advent of global supply chains, the growth of American export markets, and the creation of the World Trade Organization to provide foreign governments with a lawful means of retaliating against American exporters in response to U.S. protectionism.
Given this history, it’s likely that new import restrictions would be a pyrrhic victory. Though they would temporarily pad Whirlpool’s bottom line, restrictions would also delay necessary changes to a failing business model by blunting the market’s clear signals about Whirlpool products. Recall that this is now Whirlpool’s second request for import protection. Large tariffs would also raise costs on consumers, hurt major retailers such as Sears, jeopardize Samsung’s and LG’s investments in a thriving domestic manufacturing hub, and encourage similar government bailouts of domestic companies that simply made bad business decisions. It also would open the door to retaliation against American exports — potentially ensnaring unrelated U.S. companies and workers into the dispute. It would be just the type of myopic and self-destructive Washington favoritism that Americans rightly detest. Protectionism is a tool of a bygone era, not a business model for the 21st century.
Over the last few decades, the world economy has undergone a rapid transformation. Trade liberalization and the advent of the global trading system have not only improved living standards but also fostered sophisticated supply chains and multinational investments upon which millions of American jobs depend. Attempting to reverse this beneficial evolution is a futile exercise — one that will hurt American workers and consumers and likely fail, yet again, to resuscitate yesterday’s industries.
Tuesday, January 02, 2018
Diabetes drug "significantly reverses memory loss" in mice with Alzheimer's
From Science Daily.
---------------------------------------
A drug developed for diabetes could be used to treat Alzheimer's after scientists found it "significantly reversed memory loss" in mice through a triple method of action.
The research, published in Brain Research, could bring substantial improvements in the treatment of Alzheimer's disease through the use of a drug originally created to treat type 2 diabetes.
Lead researcher Professor Christian Holscher of Lancaster University in the UK said the novel treatment "holds clear promise of being developed into a new treatment for chronic neurodegenerative disorders such as Alzheimer's disease."
Alzheimer's disease is the most common cause of dementia and the numbers are expected to rise to two million people in the UK by 2051 according to Alzheimer's Society, who part- funded the research.
Dr Doug Brown, Director of Research and Development at Alzheimer's Society, said: ""With no new treatments in nearly 15 years, we need to find new ways of tackling Alzheimer's. It's imperative that we explore whether drugs developed to treat other conditions can benefit people with Alzheimer's and other forms of dementia. This approach to research could make it much quicker to get promising new drugs to the people who need them."
Although the benefits of these 'triple agonist' drugs have so far only been found in mice, other studies with existing diabetes drugs such as liraglutide have shown real promise for people with Alzheimer's, so further development of this work is crucial."
This is the first time that a triple receptor drug has been used which acts in multiple ways to protect the brain from degeneration. It combines GLP-1, GIP and Glucagon which are all growth factors. Problems with growth factor signalling have been shown to be impaired in the brains of Alzheimer's patients.
The study used APP/PS1 mice, which are transgenic mice that express human mutated genes that cause Alzheimer's. Those genes have been found in people who have a form of Alzheimer's that can be inherited. Aged transgenic mice in the advanced stages of neurodegeneration were treated.
In a maze test, learning and memory formation were much improved by the drug which also:-
---------------------------------------
A drug developed for diabetes could be used to treat Alzheimer's after scientists found it "significantly reversed memory loss" in mice through a triple method of action.
The research, published in Brain Research, could bring substantial improvements in the treatment of Alzheimer's disease through the use of a drug originally created to treat type 2 diabetes.
Lead researcher Professor Christian Holscher of Lancaster University in the UK said the novel treatment "holds clear promise of being developed into a new treatment for chronic neurodegenerative disorders such as Alzheimer's disease."
Alzheimer's disease is the most common cause of dementia and the numbers are expected to rise to two million people in the UK by 2051 according to Alzheimer's Society, who part- funded the research.
Dr Doug Brown, Director of Research and Development at Alzheimer's Society, said: ""With no new treatments in nearly 15 years, we need to find new ways of tackling Alzheimer's. It's imperative that we explore whether drugs developed to treat other conditions can benefit people with Alzheimer's and other forms of dementia. This approach to research could make it much quicker to get promising new drugs to the people who need them."
Although the benefits of these 'triple agonist' drugs have so far only been found in mice, other studies with existing diabetes drugs such as liraglutide have shown real promise for people with Alzheimer's, so further development of this work is crucial."
This is the first time that a triple receptor drug has been used which acts in multiple ways to protect the brain from degeneration. It combines GLP-1, GIP and Glucagon which are all growth factors. Problems with growth factor signalling have been shown to be impaired in the brains of Alzheimer's patients.
The study used APP/PS1 mice, which are transgenic mice that express human mutated genes that cause Alzheimer's. Those genes have been found in people who have a form of Alzheimer's that can be inherited. Aged transgenic mice in the advanced stages of neurodegeneration were treated.
In a maze test, learning and memory formation were much improved by the drug which also:-
- enhanced levels of a brain growth factor which protects nerve cell functioning
- reduced the amount of amyloid plaques in the brain linked with Alzheimer's
- reduced both chronic inflammation and oxidative stress
- slowed down the rate of nerve cell loss
Professor Holscher said: "These very promising outcomes demonstrate the efficacy of these novel multiple receptor drugs that originally were developed to treat type 2 diabetes but have shown consistent neuro- protective effects in several studies."
"Clinical studies with an older version of this drug type already showed very promising results in people with Alzheimer's disease or with mood disorders"
"Here we show that a novel triple receptor drug shows promise as a potential treatment for Alzheimer's but further dose-response tests and direct comparisons with other drugs have to be conducted in order to evaluate if this new drugs is superior to previous ones."
Type 2 diabetes is a risk factor for Alzheimer's and has been implicated in the progression of the disease. Impaired insulin has been linked to cerebral degenerative processes in type 2 diabetes and Alzheimer's disease. Insulin desensitisation has also been observed in the Alzheimer's disease brain. The desensitisation could play a role in the development of neurodegenerative disorders as insulin is a growth factor with neuroprotective properties.
"Clinical studies with an older version of this drug type already showed very promising results in people with Alzheimer's disease or with mood disorders"
"Here we show that a novel triple receptor drug shows promise as a potential treatment for Alzheimer's but further dose-response tests and direct comparisons with other drugs have to be conducted in order to evaluate if this new drugs is superior to previous ones."
Type 2 diabetes is a risk factor for Alzheimer's and has been implicated in the progression of the disease. Impaired insulin has been linked to cerebral degenerative processes in type 2 diabetes and Alzheimer's disease. Insulin desensitisation has also been observed in the Alzheimer's disease brain. The desensitisation could play a role in the development of neurodegenerative disorders as insulin is a growth factor with neuroprotective properties.
Perspective on Trade
Don Boudreaux's May 1998 essay "Cursed by Economic Knowledge and Ignorance.
DB is on target.
--------------------------------------------------
Economic understanding is a curse. Americans are fed a steady diet of idiotic commentary and specious “analyses” most of which flow smoothly down the gullets of unsuspecting nightly-news, viewers, newspaper readers, and National Public Radio devotees. But for those of us vexed with some comprehension of supply and demand, comparative advantage, the role of prices, the nature of money, and other economic insights, most of what is uttered or written by the news media on economic topics is so ignorant that it hurts to hear it.
This pain is inescapable. Save for those glorious days in the Fall of 1989 when the headlines reported the draining of one communist cesspool after another, I have never as an adult read a newspaper or watched television news without wanting to throw a wrench at some writer or reporter. (Of course, in practice I throw only words.)
News-media discussions of international trade unleash the most wrench-throwing urges.
First and foremost, of course, critics wrongly allege that imports reduce domestic employment. It’s true that cars imported into the United States might reduce the number of jobs in the American auto industry. But employment in other U.S. industries rises because foreign auto producers use the dollars they earn to purchase American goods, services, or assets. Contrary to the suggestion underlying too many newscasts, foreigners don’t sell their cars in the United States because they are abnormally fond of thumb-sized, green-tinted portraits of dead American statesmen. Foreigners, no less than Americans, want to spend the dollars they earn.
If Congress were to prevent Americans from buying foreign cars, employment prospects for U.S. auto workers would improve. But those foreigners who would have received dollars in exchange for automobiles they sell in America no longer receive these dollars. Consequently, foreigners purchase fewer American products and services. Workers in other U.S. industries suffer, as do American consumers.
Protectionism never increases domestic employment; it merely shifts it around.
I proudly report that over the years I’ve taught international trade to hundreds of students and have knowingly failed in only one case to persuade a student of this fundamental lesson. (For the record, this lone student was a member of the Italian Communist Party.)
My students’ first reaction to the realization that protectionism never increases domestic employment is this: “While it would be a mistake to protect domestic workers from foreign competition, the government should provide job re-training and unemployment benefits to help workers who lose their jobs to imports.”
Such cruelty appalls me. Forget that government handouts weaken the incentive for unemployed workers to find new employment. More relevant is the fact that such retraining programs and handouts must be paid for out of taxes. Every dollar taxed away to help so-called “displaced workers” is a dollar taken from the private economy where it would otherwise be spent on goods, services, or investments. Raising taxes to help workers displaced by imports displaces other workers. It’s cruel – or at least grossly arbitrary – for government to assist Mr. Jones by plaguing Mr. Smith.
Another frequent misunderstanding has to do with trade deficits. Whenever the U.S. trade deficit increases, Dan Rather and his brethren intone seriously that such increases are ominous. Such reporting suggests that Dan, Tom [Brokaw], and Peter [Jennings] are each as ignorant of economics as King Tut was of quantum physics.
Here’s a quick lesson in international economic accounting. Every nation’s foreign trade is always balanced. That’s the way the accounting system is designed. If one part of a nation’s trade account is in deficit by $1.96 billion, other parts must be in surplus by $1.96 billion.
When newscasters and other professional chatterers report on America’s “trade deficit,” they are necessarily telling us about only one part of the balance sheet. Sometimes they have in mind the merchandise-trade account, a meaningless report of the dollar value of physical goods that cross our borders in commerce during (say) the month. Worrying about a merchandise-trade deficit makes as much .sense as worrying about a unicorn invasion.
If foreigners buy American lumber or laser printers, these purchases deflate America’s merchandise-trade deficit. But if foreigners switch from buying American goods to buying vacations at DisneyWorld or Merrill Lynch financial services, these purchases inflate our merchandise-trade deficit. There’s no fundamental economic difference between purchases of tangible goods and purchases of services. And yet, one kind of purchase leads to merchandise-trade deficits, while the other kind doesn’t.
A more useful concept is the current account. Unlike the merchandise-trade account emphasized by the news media, the current account includes trade in services in addition to trade in goods. The current account also reckons investment income earned abroad as well as international transfers. It’s quite possible for a country simultaneously to run a merchandise-trade deficit and a current-account surplus – although you’ll never learn this fact from a television reporter.
Even a current-account deficit, however, is no cause for concern. One helpful way to relieve our fears of a current-account deficit is to know that there’s something called a capital account that precisely balances the current account. So if the current account shows a $2.9 million deficit, the capital account shows a $2.9 million surplus.
Suppose that in 1998 we import $2.9 million more goods and services than we export. Disregarding investment income and transfers, America will then run a $2.9 million deficit in its current account for 1998. But foreigners didn’t provide us with $2.9 million of goods and services for nothing. Foreigners must now be holding $2.9 million more in U.S. cash or dollar-denominated assets.
This deficit both signals and promotes economic health. Foreigners investing their dollars in America, rather than cashing their dollars out immediately for goods or services, indicate that the U.S. economy enjoys solid long-run prospects. (The story is more complicated when the current-account deficit is caused by heavy government borrowing at home. But even here the problem is government debt financing, not the current-account deficit.) Moreover, these investments put downward pressure on interest rates, easing U.S. firms’ access to capital. The result is greater productivity and higher wages. And yet reporters and politicians, in their ignorance, invariably regard current-account deficits as omens of Armageddon.
Despite the news media’s juvenile grasp of economics, I watch the evening news and read the newspapers regularly. I do so not for enjoyment, but to keep current on the state of economic ignorance – which, alas, is a far worse curse than economic understanding and illustrates the task confronting FEE and other economic educators.
DB is on target.
--------------------------------------------------
Economic understanding is a curse. Americans are fed a steady diet of idiotic commentary and specious “analyses” most of which flow smoothly down the gullets of unsuspecting nightly-news, viewers, newspaper readers, and National Public Radio devotees. But for those of us vexed with some comprehension of supply and demand, comparative advantage, the role of prices, the nature of money, and other economic insights, most of what is uttered or written by the news media on economic topics is so ignorant that it hurts to hear it.
This pain is inescapable. Save for those glorious days in the Fall of 1989 when the headlines reported the draining of one communist cesspool after another, I have never as an adult read a newspaper or watched television news without wanting to throw a wrench at some writer or reporter. (Of course, in practice I throw only words.)
News-media discussions of international trade unleash the most wrench-throwing urges.
First and foremost, of course, critics wrongly allege that imports reduce domestic employment. It’s true that cars imported into the United States might reduce the number of jobs in the American auto industry. But employment in other U.S. industries rises because foreign auto producers use the dollars they earn to purchase American goods, services, or assets. Contrary to the suggestion underlying too many newscasts, foreigners don’t sell their cars in the United States because they are abnormally fond of thumb-sized, green-tinted portraits of dead American statesmen. Foreigners, no less than Americans, want to spend the dollars they earn.
If Congress were to prevent Americans from buying foreign cars, employment prospects for U.S. auto workers would improve. But those foreigners who would have received dollars in exchange for automobiles they sell in America no longer receive these dollars. Consequently, foreigners purchase fewer American products and services. Workers in other U.S. industries suffer, as do American consumers.
Protectionism never increases domestic employment; it merely shifts it around.
I proudly report that over the years I’ve taught international trade to hundreds of students and have knowingly failed in only one case to persuade a student of this fundamental lesson. (For the record, this lone student was a member of the Italian Communist Party.)
My students’ first reaction to the realization that protectionism never increases domestic employment is this: “While it would be a mistake to protect domestic workers from foreign competition, the government should provide job re-training and unemployment benefits to help workers who lose their jobs to imports.”
Such cruelty appalls me. Forget that government handouts weaken the incentive for unemployed workers to find new employment. More relevant is the fact that such retraining programs and handouts must be paid for out of taxes. Every dollar taxed away to help so-called “displaced workers” is a dollar taken from the private economy where it would otherwise be spent on goods, services, or investments. Raising taxes to help workers displaced by imports displaces other workers. It’s cruel – or at least grossly arbitrary – for government to assist Mr. Jones by plaguing Mr. Smith.
Another frequent misunderstanding has to do with trade deficits. Whenever the U.S. trade deficit increases, Dan Rather and his brethren intone seriously that such increases are ominous. Such reporting suggests that Dan, Tom [Brokaw], and Peter [Jennings] are each as ignorant of economics as King Tut was of quantum physics.
Here’s a quick lesson in international economic accounting. Every nation’s foreign trade is always balanced. That’s the way the accounting system is designed. If one part of a nation’s trade account is in deficit by $1.96 billion, other parts must be in surplus by $1.96 billion.
When newscasters and other professional chatterers report on America’s “trade deficit,” they are necessarily telling us about only one part of the balance sheet. Sometimes they have in mind the merchandise-trade account, a meaningless report of the dollar value of physical goods that cross our borders in commerce during (say) the month. Worrying about a merchandise-trade deficit makes as much .sense as worrying about a unicorn invasion.
If foreigners buy American lumber or laser printers, these purchases deflate America’s merchandise-trade deficit. But if foreigners switch from buying American goods to buying vacations at DisneyWorld or Merrill Lynch financial services, these purchases inflate our merchandise-trade deficit. There’s no fundamental economic difference between purchases of tangible goods and purchases of services. And yet, one kind of purchase leads to merchandise-trade deficits, while the other kind doesn’t.
A more useful concept is the current account. Unlike the merchandise-trade account emphasized by the news media, the current account includes trade in services in addition to trade in goods. The current account also reckons investment income earned abroad as well as international transfers. It’s quite possible for a country simultaneously to run a merchandise-trade deficit and a current-account surplus – although you’ll never learn this fact from a television reporter.
Even a current-account deficit, however, is no cause for concern. One helpful way to relieve our fears of a current-account deficit is to know that there’s something called a capital account that precisely balances the current account. So if the current account shows a $2.9 million deficit, the capital account shows a $2.9 million surplus.
Suppose that in 1998 we import $2.9 million more goods and services than we export. Disregarding investment income and transfers, America will then run a $2.9 million deficit in its current account for 1998. But foreigners didn’t provide us with $2.9 million of goods and services for nothing. Foreigners must now be holding $2.9 million more in U.S. cash or dollar-denominated assets.
This deficit both signals and promotes economic health. Foreigners investing their dollars in America, rather than cashing their dollars out immediately for goods or services, indicate that the U.S. economy enjoys solid long-run prospects. (The story is more complicated when the current-account deficit is caused by heavy government borrowing at home. But even here the problem is government debt financing, not the current-account deficit.) Moreover, these investments put downward pressure on interest rates, easing U.S. firms’ access to capital. The result is greater productivity and higher wages. And yet reporters and politicians, in their ignorance, invariably regard current-account deficits as omens of Armageddon.
Despite the news media’s juvenile grasp of economics, I watch the evening news and read the newspapers regularly. I do so not for enjoyment, but to keep current on the state of economic ignorance – which, alas, is a far worse curse than economic understanding and illustrates the task confronting FEE and other economic educators.
Statists' Foolish Inconsistencies
Don Boudreaux's 1998 essay "Foolish Inconsistencies".
DB is on target.
------------------------------------------
When a domestic steel producer solemnly croons for the television cameras about how high tariffs on imported steel are good for the American economy, you can be sure that he is not really interested in the well-being of his fellow citizens. He is undoubtedly a swindler motivated by no ideal more elevated than fattening his own wallet at the expense of American consumers. The same is true of the great majority of interest groups whose lobbyists infest Washington and other seats of government power.
It’s a mistake, however, to suppose that all champions of intrusive government are out for gains at the expense of others. Many proponents of high taxes and intrusive government sincerely believe that the state can outperform the market.
The sincerity of such beliefs, however, does not render them correct. Indeed, even the most sincere statist is typically so confused that his ideas are a muddle of foolish inconsistencies.
Consider that statists are firmly convinced that capitalism is bad because capitalists are concerned exclusively with squeezing every drop of profit out of their businesses. And yet, many statists are no less firmly convinced that capitalism promotes racial and sex discrimination.
Both beliefs can’t be true. If capitalists care only about the bottom line, they will energetically pursue profitable deals with anyone regardless of skin color or sex. A capitalist focused only on maximizing profits will not refuse to hire a black woman if this black woman promises to add greater net value to the firm than does a white man competing for the same job. To be single mindedly focused on profit is to be unconcerned about irrelevant matters such as employees’ or customers’ skin color or sex. In contrast, a capitalist intent on satisfying his own racial or sexual bigotry when hiring employees or choosing customers will not focus exclusively on the bottom line.
Statists also believe that large corporations are simultaneously obsessed with profits and indifferent to relatively small expenses. I attended a conference recently at which a participant remarked that a $1 million per day fine doesn’t bother Microsoft “because Microsoft is worth billions.” Perhaps. But if the company is indeed indifferent to being fined $1 million per day, then it is not (contrary to accusations) dogged about maximizing its profits. Microsoft and other corporations will not be cavalier about even small unnecessary expenses if these corporations in fact are consumed with a passion for making their bottom lines as large as possible.
Among my favorite statist inconsistencies is their insistence, in one breath, that income inequality is an evil of the first rank, along with the accusation, in the next breath, that free-market advocates have an unsavory concern with material matters. Enemies of the market are forever applauding themselves for recognizing that non-material pursuits are far more ennobling and satisfying than the pursuit of financial gain.
Well, if non-material pursuits are deeper and more rewarding than are material pursuits, then income inequality should rank very low on statists’ list of capitalist outrages. The minimalist poet earns far less money than does the CEO of Coca-Cola, but the poet presumably enjoys far greater spiritual and mental rewards than does the corporate chieftain. Rather than taxing the CEO more heavily than the poet, perhaps government should offer the CEO a lower tax rate to help compensate him for his meager spiritual rewards.
Statists are also inconsistent in their assessments of self-interested actions. Corporations are scolded for seeking profits for their shareholders, while labor unions are glorified for seeking higher wages for their workers. There are, of course, differences between the self-interested actions of private corporations and those of labor unions. Corporations unaided by government privilege profit only by making those with whom they deal better off. Modern labor unions, in contrast, derive most of their effectiveness from government privileges and achieve their gains only by making those with whom they deal – and even many with whom they do not deal [chiefly, other workers]! — worse off.
Another statist inconsistency is the confused attitude toward change. Statists today condemn the market because it brings change. Once-thriving industries are rendered obsolete by newer products and sources of supply. Towns once built around a particular industry are depopulated by the demise of that industry. Dejected workers, pink slips in hand, trudge haplessly across the television screen. Abandoned factories, windows broken and weeds overrunning their parking lots, appear in faux-poignant newspaper photos. The message is clear that market forces unfeelingly unleash immense changes that upset familiar and cherished ways of life.
The market is indeed a force for change, but always change that results in far more improvement than harm. Anyone who doubts that the market is a continual source of improvements for humankind need only reflect on what life in America was like, say, 50 years ago. Polio still raged, only the wealthy elite could afford air travel, all but the very rich sweated through the summer heat without air conditioning, and even top-of-the-line automobiles broke down with appalling frequency. Advances spawned by entrepreneurs and made widely available by the free market solved these and countless other problems that plagued Americans in 1948.
It’s true that workers who manufactured iron lungs for polio victims suffered job losses when Dr. Jonas Salk rendered their services unnecessary. But should we condemn the market for this change? Or should we applaud the market for making possible Salk’s cure? The answer is obvious — and the same answer holds for all changes, big and small, promoted by free markets.
Yet it is these improvements that statists condemn while going on in speech after speech about the nobleness of efforts to “change the world.”
They can’t have it both ways. If change is bad, then it’s bad whether it’s achieved by government or by markets. If some change is acceptable, then statists must make the case that change sponsored by government is superior to change sponsored by markets. But such a case is never made. Statists are content to condemn market-directed change and to praise all change that results in greater politicization of our lives.
If inconsistency of thought is a symptom of bad ideas, then the “ideas” sported by statists are surely about as bad as ideas get.
DB is on target.
------------------------------------------
When a domestic steel producer solemnly croons for the television cameras about how high tariffs on imported steel are good for the American economy, you can be sure that he is not really interested in the well-being of his fellow citizens. He is undoubtedly a swindler motivated by no ideal more elevated than fattening his own wallet at the expense of American consumers. The same is true of the great majority of interest groups whose lobbyists infest Washington and other seats of government power.
It’s a mistake, however, to suppose that all champions of intrusive government are out for gains at the expense of others. Many proponents of high taxes and intrusive government sincerely believe that the state can outperform the market.
The sincerity of such beliefs, however, does not render them correct. Indeed, even the most sincere statist is typically so confused that his ideas are a muddle of foolish inconsistencies.
Consider that statists are firmly convinced that capitalism is bad because capitalists are concerned exclusively with squeezing every drop of profit out of their businesses. And yet, many statists are no less firmly convinced that capitalism promotes racial and sex discrimination.
Both beliefs can’t be true. If capitalists care only about the bottom line, they will energetically pursue profitable deals with anyone regardless of skin color or sex. A capitalist focused only on maximizing profits will not refuse to hire a black woman if this black woman promises to add greater net value to the firm than does a white man competing for the same job. To be single mindedly focused on profit is to be unconcerned about irrelevant matters such as employees’ or customers’ skin color or sex. In contrast, a capitalist intent on satisfying his own racial or sexual bigotry when hiring employees or choosing customers will not focus exclusively on the bottom line.
Statists also believe that large corporations are simultaneously obsessed with profits and indifferent to relatively small expenses. I attended a conference recently at which a participant remarked that a $1 million per day fine doesn’t bother Microsoft “because Microsoft is worth billions.” Perhaps. But if the company is indeed indifferent to being fined $1 million per day, then it is not (contrary to accusations) dogged about maximizing its profits. Microsoft and other corporations will not be cavalier about even small unnecessary expenses if these corporations in fact are consumed with a passion for making their bottom lines as large as possible.
Among my favorite statist inconsistencies is their insistence, in one breath, that income inequality is an evil of the first rank, along with the accusation, in the next breath, that free-market advocates have an unsavory concern with material matters. Enemies of the market are forever applauding themselves for recognizing that non-material pursuits are far more ennobling and satisfying than the pursuit of financial gain.
Well, if non-material pursuits are deeper and more rewarding than are material pursuits, then income inequality should rank very low on statists’ list of capitalist outrages. The minimalist poet earns far less money than does the CEO of Coca-Cola, but the poet presumably enjoys far greater spiritual and mental rewards than does the corporate chieftain. Rather than taxing the CEO more heavily than the poet, perhaps government should offer the CEO a lower tax rate to help compensate him for his meager spiritual rewards.
Statists are also inconsistent in their assessments of self-interested actions. Corporations are scolded for seeking profits for their shareholders, while labor unions are glorified for seeking higher wages for their workers. There are, of course, differences between the self-interested actions of private corporations and those of labor unions. Corporations unaided by government privilege profit only by making those with whom they deal better off. Modern labor unions, in contrast, derive most of their effectiveness from government privileges and achieve their gains only by making those with whom they deal – and even many with whom they do not deal [chiefly, other workers]! — worse off.
Another statist inconsistency is the confused attitude toward change. Statists today condemn the market because it brings change. Once-thriving industries are rendered obsolete by newer products and sources of supply. Towns once built around a particular industry are depopulated by the demise of that industry. Dejected workers, pink slips in hand, trudge haplessly across the television screen. Abandoned factories, windows broken and weeds overrunning their parking lots, appear in faux-poignant newspaper photos. The message is clear that market forces unfeelingly unleash immense changes that upset familiar and cherished ways of life.
The market is indeed a force for change, but always change that results in far more improvement than harm. Anyone who doubts that the market is a continual source of improvements for humankind need only reflect on what life in America was like, say, 50 years ago. Polio still raged, only the wealthy elite could afford air travel, all but the very rich sweated through the summer heat without air conditioning, and even top-of-the-line automobiles broke down with appalling frequency. Advances spawned by entrepreneurs and made widely available by the free market solved these and countless other problems that plagued Americans in 1948.
It’s true that workers who manufactured iron lungs for polio victims suffered job losses when Dr. Jonas Salk rendered their services unnecessary. But should we condemn the market for this change? Or should we applaud the market for making possible Salk’s cure? The answer is obvious — and the same answer holds for all changes, big and small, promoted by free markets.
Yet it is these improvements that statists condemn while going on in speech after speech about the nobleness of efforts to “change the world.”
They can’t have it both ways. If change is bad, then it’s bad whether it’s achieved by government or by markets. If some change is acceptable, then statists must make the case that change sponsored by government is superior to change sponsored by markets. But such a case is never made. Statists are content to condemn market-directed change and to praise all change that results in greater politicization of our lives.
If inconsistency of thought is a symptom of bad ideas, then the “ideas” sported by statists are surely about as bad as ideas get.
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