It may be a bit of an exaggeration to say that 2017 was the best of times and the worst of times for classical liberalism in the United States but not much of one.
A while back I talked about the health care and health insurance market and how it is the result of tremendous government regulation. There are portions that involve competition, but they are limited by a variety of matters, including large distortions from licensing, regulation, tax exclusions, and government provided health care. The matters are so complicated, it is hard to get a handle on it. The transfers and redistributions are significant and hard to follow. But it is worthwhile just attempting to describe some basic aspects of this sector. One take on what is happening is the following story. It is my…
The world would be a much better place if economists, politicians and pundits had this line from Henry Hazlitt memorized: “What is harmful or disastrous to an individual must be equally harmful of disastrous to the collection of individuals that make up a nation.”
It’s arguably the most important line ever written in any economics book. Hazlitt (1894-1993) was making the essential point that an economy is not a living, breathing blob; rather it’s a collection of individuals.
In his column "Robber Baron Recessions" Paul Krugman argued this Monday that American companies have been investing less because of greater market concentration in their industries. Exhibit A for Krugman is Verizon: he contends that it has not sufficiently invested in Fios, a fiber optic system that would accelerate internet speeds. He thus wants more government intervention to police monopoly power and decrease economic concentration. Both Krugman’s claim and his remedy are dubious. Let’s begin with alternate explanations for low corporate investment. The most obvious is government regulation. The Obama administration has been one of the most aggressive regulators in history.…
In the last couple of generations, regulation has exploded, with harmful effects on both our freedom and the economy. One of the areas of regulation involve rules that are designed to protect consumers from being harmed by the products that they purchase. Yet, there is a strong argument that these regulations are largely unnecessary.
Free market advocates generally argue that much of this regulation is not needed – that the market will develop mechanisms for protecting consumers. The reputations of sellers and brand names provide strong incentives for sellers to provide safe and effective products. Moreover, private companies, such as consumer reports, can also test the products and sell the information to consumers.
Over the past few years, state attorneys general have brought dozens of lawsuits challenging the Obama Administration’s regulatory initiatives. In addition to leading constitutional challenges to the Affordable Care Act, AGs have sued to block new environmental regulations, implementation of the Dodd-Frank financial law, and a host of other federal policies. For those concerned about the size and scope of federal power, this is a welcome development. Who is better positioned than the states’ top litigators to use law as a bulwark to protect the rights of states against an expanding federal government?
‘Men,’ said Marx in his 18th Brumaire of Louis Napoleon, ‘make their own history, but they do not make just it as they please; they do not make it under self-selected circumstances, but under circumstances already existing, given and transmitted from the past.’ This is true, despite its provenance; indeed so obviously true that it is virtually a truism. For if it were otherwise, men would find themselves behaving in no circumstances at all, which is literally inconceivable. Circumstances are like the poor, only even more so: ye have circumstances with you always.
But it does not follow from the fact that men don’t make their history just as they please because they inherit particular circumstances (in part self-created, as our past always is) that they have no choice but to act as they do, any more than grammatical rules determine what people say. Those rules prohibit, or rather make meaningless, certain utterances, but there remain an infinite number of possible meaningful utterances.
Martin Wolf’s The Shifts and the Shocks—What We’ve Learned—and Have Still to Learn—from the Financial Crisis is a long book. Even for those of us fascinated by financial cycles and crises, it takes patience to read through it.
Amidst the long discussion are a lot of provocative financial thoughts, intertwined with a constant, naïve faith in the future superior knowledge and future ability of central bankers and other bureaucrats successfully to tell other people what to do. Wolf never claims this knowledge and ability have been demonstrated in the past—he fully admits that experience demonstrates the opposite–but he never seems to doubt that it can save us in the future, if these solons just get better economic ideas. In this way, he misses the most difficult and interesting element of the problem: the inescapable uncertainty and unknowability of the future.