The Elitists’ Trump Excuse – WSJ

Source: The Elitists’ Trump Excuse – WSJ

Meanwhile, week after week, the same people who accuse Mr. Trump of lacking depth and nuance toss off allusions to Hilter, Stalin and a parade of murderous dictators. Channeling Mrs. Clinton, they insist that anyone who would chose Mr. Trump over her—or God forbid, agree to serve in a Trump administration—isn’t just wrong but forever morally tainted.

The people aren’t stupid. The 63 million Americans who voted for Mr. Trump—some as an unappealing but better alternative to Mrs. Clinton, but many with gusto—recognize that what is going on here is a concerted effort to overturn the results of a legitimate presidential election. Is it really unreasonable to ask whether this might be as much of a threat to American democracy as anything Mr. Trump has said or done?

The Conquest of Climate – Progress and Peril

Source: The Conquest of Climate – Progress and Peril

How bad will climate change be? Not very.

No, this isn’t a denialist screed. Human greenhouse emissions will warm the planet, raise the seas and derange the weather, and the resulting heat, flood and drought will be cataclysmic.

Cataclysmic—but not apocalyptic. While the climate upheaval will be large, the consequences for human well-being will be small. Looked at in the broader context of economic development, climate change will barely slow our progress in the effort to raise living standards.

To see why, consider a 2016 Newsweek headline that announced “Climate change could cause half a million deaths in 2050 due to reduced food availability.” The story described a Lancet study, “Global and regional health effects of future food production under climate change,” [1] that made dire forecasts: by 2050 the effects of climate change on agriculture will shrink the amount of food people eat, especially fruits and vegetables, enough to cause 529,000 deaths each year from malnutrition and related diseases. The report added grim specifics to the familiar picture of a world made hot, hungry, and barren by the coming greenhouse apocalypse.

But buried beneath the gloomy headlines was a curious detail: the study also predicts that in 2050 the world will be better fed than ever before. The “reduced food availability” is only relative to a 2050 baseline when food will be more abundant than now thanks to advances in agricultural productivity that will dwarf the effects of climate change. Those advances on their own will raise per-capita food availability to 3,107 kilocalories per day; climate change could shave that to 3,008 kilocalories, but that’s still substantially higher than the benchmarked 2010 level of 2,817 kilocalories—and for a much larger global population. Per-capita fruit and vegetable consumption, the study estimated, will rise by 6.1 percent and meat consumption by 5.4 percent. The poorest countries will benefit most, with food availability rising 14 percent in Africa and Southeast Asia. Even after subtracting the 529,000 lives theoretically lost to climate change, the study estimates that improved diets will save a net 1,348,000 lives per year in 2050.

What Happens When an MBA Student Raised in Communist China Reads Hayek – Foundation for Economic Education – Working for a free and prosperous world

When I was in college, we had four exchange students from Mainland China. A couple of them were majoring in physics, and we’d have occasional conversations in the physics lounge. One day, one of the students asked me what my monthly ration of potatoes was. He just couldn’t believe they weren’t rationed.

If he’d asked me that question a few years later, my response would have been to state my monthly income, and divide it by the per-pound price of potatoes. And then part two of my answer would have been to introduce the opportunity cost of buying only potatoes.

 

Source: What Happens When an MBA Student Raised in Communist China Reads Hayek – Foundation for Economic Education – Working for a free and prosperous world

Planning Is Counterproductive
The Chinese students in that 1999 economics class began their MBA studies much like the essay writer who explained, “I had trouble conceiving of an economic or social order that is not deliberately made for a specific purpose.” “Government planning,” it seemed to him, was needed “to bring order and coordination to otherwise chaotic economic conditions.”

Reading Hayek’s, “The Use of Knowledge in Society” convinced him otherwise. He wrote, “Central planning ignores its impossible knowledge requirements. It demanded that all the fragments of knowledge existing in different minds be brought together in one mind, a feat requiring that single mind process knowledge far in excess of what anyone could ever comprehend.”

The student realized, quoting Hayek from his book Law, Legislation and Liberty, Vol. 2, there is no need to agree on aims: “The Great Society arose through the discovery that men can live together in peace and mutually benefiting each other without agreeing on the particular aims which they severally pursue.”

Even Jeanne Dixon got a few right

Tomorrow, Sunday, April 22, is Earth Day 2018 In the May 2000 issue of Reason Magazine, award-winning science correspondent Ronald Bailey wrote an excellent article titled “Earth Day, Then and Now” to provide some historical perspective on the 30th anniversary of Earth Day. In that article, Bailey noted that around the time of the first Earth Day […]

via 18 examples of the spectacularly wrong predictions made around the first “Earth Day” in 1970 — Watts Up With That?

Markets are the worst system…

…except for all the others that have been tried.

Markets Fail. Use Markets.

Among Arnold’s themes that I especially like is this one: “Markets fail. Use markets.” The idea is the vital one that the case for markets does not depend on markets being perfect—or to use economists’ terms, the case for markets doesn’t collapse simply because of the existence of some “market failures.”

First, the concept “market failure” is notoriously slippery. The absence, say, of more light-rail transportation in Little Rock might plausibly be seen by Jones as evidence of market failure but also might plausibly be seen by Smith as evidence of the prohibitively high cost of expanding such transportation in Little Rock. Social and economic reality being what it is, there are simply no tests available to settle this question with the sort of certainty that is often achieved by tests of physical matter.

Importantly, Jones’s assessment might be correct. Perhaps investors and entrepreneurs really are underestimating the demand for—or overestimating the costs of building and operating—more light-rail lines in Little Rock. Arnold wisely advises friends of free markets to recognize and to publicly concede that markets can and do fail, even though such failure might never be provable in the way that the earth’s elliptical rotation around the sun is provable.

To reject Arnold’s advice is inadvertently to strengthen the hand of those who insist that instances of market failure are sufficient justification for government intervention. It is (at least to appear) to concede that if and when markets should fail, government should intervene to correct the failure.

But in reality markets aren’t perfect. They’re just not. Markets do sometimes fail because of (bear with me as I parade before you a band of fancy economics terms) “asymmetric information,” “moral hazard,” “time inconsistency,” “free-rider problems,” “opportunism,” “strategic behavior,” “empty cores,” “lumpiness,” “transaction costs,” “bounded rationality,” and other features of reality that prevent markets from performing ideally.

These sources of market imperfections are themselves a second reason to take seriously Arnold’s advice to use markets even though markets sometimes fail. Too many people—including economists—remain stubbornly unaware that even the proven existence of a “market failure” is only a necessary condition to justify government intervention; market failure is not a sufficient condition.

Voters and government officials don’t become more godlike simply by acting in the domain of politics. So voters and government officials are at least as likely as are investors, consumers, and other private-market participants to be poorly informed, to let their emotions block their rational faculties, and to suffer each of the other decision-making quirks that can lead to market failure.

But this fact suggests only that political outcomes are likely to be as imperfect as market outcomes. It does not suggest that political outcomes are likely to be worse than market outcomes. So why the strong advice to “use markets”?

The answer is that market institutions are better than political institutions at minimizing the frequency, intensity, and ill consequences of uninformed, emotion-ridden, and otherwise fallible decision-making.

The competition among businesses for consumers’ dollars, being never-ending, is more continuous than is the intermittent competition among politicians for citizens’ votes.

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Yet another feature of government that causes its outcomes to be less desirable than those of the market is “lumpiness.” When Congress and the president agree on an annual appropriation for the U.S. military, every American is party to that specific annual appropriation. I—a dove—don’t get to have a lower appropriation than does my neighbor the war hawk. Government’s provision of national defense comes in a largely indivisible lump.

Not so in markets. If I prefer wine to beer, I get to have more wine than beer while my neighbor with opposite preferences gets to have more beer than wine. And all the while the teetotaling couple down the block chooses—and receives—a third, alcohol-free bundle of consumption goods.

Arnold Kling endorses free markets not because they are foolproof or flawless. They aren’t. Arnold supports them because the alternative is generally much worse: an especially flawed institution that fosters unusual amounts of foolishness.

Trump Tax Cuts Are Boosting Growth And Mostly Paying For Themselves, CBO Report Says

Source: Trump Tax Cuts Are Boosting Growth And Mostly Paying For Themselves, CBO Report Says

When the Congressional Budget Office released its updated budget forecast, everyone focused on the deficit number. But buried in the report was the CBO’s tacit admission that it vastly overestimated the cost of the Trump tax cuts, because it didn’t account for the strong economic growth they would generate.

Among the many details in the report, the one reporters focused on was the CBO’s forecast that the federal deficit would top $1 trillion in 2020, two years earlier than the CBO had previously said.

And, naturally, most news accounts blamed the tax cuts. “U.S. budget deficit to balloon on Republican tax cuts” is how Reuters put it in a headline.

But there’s more to the story that the media overlooked.

First, the CBO revised its economic forecast sharply upward this year and next.

Last June, the CBO said GDP growth for 2018 would be just 2%. Now it figures growth will be 3.3% — a significant upward revision. It also boosted its forecast for 2019 from a meager 1.5% to a respectable 2.4%.

“Underlying economic conditions have improved in some unexpected ways since June,” the CBO says. Unexpected to the CBO, perhaps, but not to those of us who understood that Trump’s tax cuts and deregulatory efforts would boosts growth.

In any case, the CBO now expects GDP to be $6.1 trillion bigger by 2027 than it did before the tax cuts.

The CBO report also makes clear that this faster-growing economy will offset most of the costs of the Trump tax cuts.

In a table buried in the appendix of the CBO report, it shows that, before accounting for economic growth, the tax cuts Trump signed into law late last year would cut federal revenues by $1.69 trillion from 2018-2027.

But it goes on to say that higher rate of GDP growth will produce $1.1 trillion in new revenues. In other words, 65% of the tax cuts are paid for by extra economic growth.

That faster growth will also reduce federal entitlement spending keyed to the economy — unemployment insurance, food stamps, welfare and the like — by $150 billion, the CBO says.

If you subtract that from the cost of the tax cuts, the net cost drops to $440 billion.

This is what we and other backers of the tax cuts had insisted all along. Not that tax cuts would entirely pay for themselves. But that the economic growth they generate would offset much of the costs.

Looks like we were right.

Spending Is the Real Culprit
That still leaves the problem of the deficit. By 2022, federal deficits will top 5% of GDP, something that happened only once between World War II and President Obama’s spending spree.

What’s more, national debt is on track to top 91% of GDP by 2025 and reach 96.2% by 2028.

Despite what Democrats and the media insist, the culprit here isn’t tax cuts. It is out-of-control spending, which will be nearly $1 trillion higher over the next decade thanks to recent spending deals.

Even with Trump’s tax cuts in place, federal revenues climb every year as a share of GDP, going from 16.6% this year to 17.5% by 2025. (The post-World War II average for revenues is 17.2% of GDP.)

Unfortunately, spending is on track to climb even faster — going from 20.6% of GDP this year to 23.6% by 2028. (The highest spending ever got under Obama was 24.4% of GDP, and the post-War average is 19.3%.)

This is little short of a disgrace, and shows that Republicans love spending taxpayer money as much as Democrats.

In fact, some GOP senators don’t even want Trump to use his rescission authority to strip some of the worst spending items out of the bipartisan $1.3 trillion spending monstrosity.

Someone needs to remind these alleged fiscal conservatives that if they can’t get control of spending today, it’s a virtual guarantee they’ll end up agreeing to a “deficit cutting” tax hike tomorrow.

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