Pyrmonter: Will we ever learn?

If recent history shows anything, it is that no idea is so bad that it will not be embraced by a political entrepreneur seeking out support among the ‘marginalised’ (or those voters who can be persuaded that they are victims).  So far we’ve seen funny money (Stephanie Kelton and MMT); anti-semitism (Corbyn, and Orban among a depressingly long list); and nationalisation (Corbyn again, as well as our local folly, the NBN).  Oh, and, of course,  trade protection (Trump’s tariffs.)

So it was always a matter of time before the policy class (clique?) started to recycle the ideas of ‘Industrial Policy’.  And so it has come to pass: Kota and Mahoney and (paywalled) Innovation Should Be Made in the USA.  When Pyrmonter was younger, this was the stuff of the populist Left (Lester Thurow, etc) with which respectable thinkers had no part (Ahem).

So it is refreshing to see the speed and clarity of Don Boudreaux’s replies in Café Hayek (here and here)  and for the AIER.

Study them carefully dear Cats.  For if there is one thing almost as certain as the revival of bad ideas, it is that, with a short delay, those ideas will be recycled into our local ‘policy debate’.  Fore-warned is fore-armed.

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35 Responses to Pyrmonter: Will we ever learn?

  1. Infidel Tiger

    Orban is not in any way an anti-Semite.

    A ridiculous thing to write.

  2. Behind Enemy Lines

    Unsurprisingly, industry policy (and its cargo-cult stepchild ‘innovation’ policy) is a magnet for the stupidest and most venal politicians and public servants. All the major parties have them, and each one is as useless as the next. Hard to exaggerate the damage their idiot meddling has done to this country over the years.

    So, yes, I suppose it’s about time this bright idea began to quiver and stink again.

    And as for a government Department of Innovation? Now there’s an oxymoron for you.

  3. RobK

    Fore-warned is fore-armed
    In practical terms there is no such thing as free trade across sovereign boarders which may need to be defended and have a need for strategic internal capacity.
    It will always be somewhat a circular argument unless you choose a universal totalitarian regime with no competition at all.

  4. Kurt

    Infidel, I think because Orban kicked out Soros and his open borders, unlimited immigration agenda. You see unlike most jews who aren’t actually semites most muslims are actually semites. And Orban is very much against Muslim immigration to Hungary and Europe. So technically I guess you could call him antisemitic.

  5. Cassie of Sydney

    Orban is NOT an anti-Semite……and in fact the Jewish community in Hungary is amongst the safest in Europe. Painting Orban as an anti-Semite is a favourite and very convenient smear of the left to belittle and delegitimise Orban and his government.

  6. Ƶĩppʯ (ȊꞪꞨV)

    two words: national security

  7. Pyrmonter

    @ RobK

    I commend the Boudreaux links to you. There are gains from trade – to both parties – even in the absence of textbook ‘free trade’. ‘There’s no such thing as free trade’ is a straw man.

  8. Pyrmonter

    @ Zippy

    Three words: Socialist Calculation Problem

    then

    Two words: Public Choice

    How is your benevolent securocrat supposed to know what ‘matters’, how, why, and how much?

    It is hard to assume benevolence on the part of a state when, to give two well-known local examples, it has engaged in bribery of the officials of other states (Securency) and procured the breach of lawyers’ most fundamental obligations to get shortcuts to prosecutions (Gobbo).

    Even when the state’s servants aren’t acting for self-interested reasons, they are tempted to act unlawfully and to do great harm.

  9. Tel

    How many times have we been warned of imminent disaster caused by Trump’s trade policies?

    There’s one fundamental rule of all science: if reality stubbornly refuses to align with your theory, then reality is never to blame for that.

    However, the theory isn’t as bad as it looks at first glance … it’s just that you have to use it correctly. Trump neither increased nor reduced taxation, he moved away from a heavy dependence on corporate income tax, and move towards a tariff style of tax with roughly the same revenue. I’m not a great fan of high tax, but anyone pushing for lower tax must necessarily also figure out how to reduce government spending. None of the anti-Trump articles even consider the government spending problem (to be fair neither does Trump manage to reduce the spending).

    Once you consider that, well the results we get are roughly what you expect: not brilliant but at least people have jobs, even if efficiency might be slightly less than ideal. Keeping middle aged working class men off the scrap heap and keeping the needle out of their arm might not be a big GDP boost but if you apply common sense it;s something you want to do.

  10. Suburban Boy

    Opposing Soros does not make you an anti-Semite. On the other hand, defending Soros’ views makes you a leftist enemy of liberal democracy.

    Left-aligned journalists (such as the fool who was linked to) smear opponents of Soros as anti-Semites. This is a transparent attempt to reduce the effectiveness of criticism of Soros’ illiberal and undemocratic policies.

  11. Orban is not an anti-semite.
    Trump isn’t using tariffs as trade protection. He is using tariffs as a bludgeon to get the other azzholes to do the right thing.

  12. Old Lefty

    Ronnie Reagan had a very good line against the wannabe protectionists in Congress: ‘I’m probably the only person in this room old enough to remember the Smoot-Hawley tariff of 1929 and the decade of economic devastation it caused throughout the world.’

    Those who neglect the lessons of history are dommednto repeat it’s mistakes?

  13. RobK

    Pyr,
    I had read the AEIR link which said steel tariffs caused price rise then price halved. There was much conflating of cause and effect. If China produces ten times the amount of steel that the US does; if there is a downturn for whatever reason, the US doesn’t want their strategic production wiped out. The article had internal inconsistencies in that it said tariffs increase price then it said the price was half.
    Of course tariffs are bad, like taxes and any interference with free trade but finding the next best thing to utopia is tricky. If sovereign nations are to complete in trade and politics they need some economic diversity for strategic and independence reasons so as not to be held to ransom. Does free trade include free movement of labour?(wishful thinking)

  14. Old Lefty

    Sorry: doomed to repeat ….

  15. Cassie of Sydney

    Suburban Boy
    #3215984, posted on November 19, 2019 at 7:24 pm
    Opposing Soros does not make you an anti-Semite. On the other hand, defending Soros’ views makes you a leftist enemy of liberal democracy.

    Left-aligned journalists (such as the fool who was linked to) smear opponents of Soros as anti-Semites. This is a transparent attempt to reduce the effectiveness of criticism of Soros’ illiberal and undemocratic policies.”

    Well said.

  16. Rob MW

    trade protection (Trump’s tariffs.)

    Is this specific case; is it ‘trade protection’ or simply “tax reciprocity” ?

    When the big boys/gals play in the sand pit it’s generally occasioned by reciprocity or retaliation.

  17. W Hogg

    Orban is not in any way an anti-Semite.

    A ridiculous thing to write.

    Yep. “Netanyahu is a friend of anti-Semites” is one of the more preposterous ideas I’ve ever seen an article on. This is some weapons grade fuckwittery even by Politico’s standards.

  18. Mark A

    Don’t follow all posters scribbling so I missed this ‘gem’

    I see others already corrected his ridiculous claim about Orban.
    Claiming that puts all your other arguments into the wastebasket.

  19. Iampeter

    Study them carefully dear Cats. For if there is one thing almost as certain as the revival of bad ideas, it is that, with a short delay, those ideas will be recycled into our local ‘policy debate’. Fore-warned is fore-armed.

    This is not some new development. Political discourse has been regressing for decades and many of the worst left wing ideas, like nationalism and trade protectionism, are being proudly advocated by conservatives.
    The whole reason this is happening is not because of a lack of forewarning, but because of a lack of alternative ideas to that of leftism.

    It’s kinda the running theme of my posts here.

  20. Pyrmonter

    It says something unhappy about the state of the Cat that a post on the nonsense of industrial policy descends rapidly into a defence of a ‘conservative’ politician of the likes of Orban, a man who has boasted of his ‘illiberal democracy’. Some of us can remember when both liberals and conservatives were rightly concerned at majoritarian tyranny.

    I presume those defending Orban would term the author a ‘self-hating J__’: https://www.haaretz.com/world-news/europe/.premium-orban-is-a-clever-anti-semite-corbyn-is-a-stupid-one-1.6292393

  21. max

    Iampeter
    #3216205, posted on November 20, 2019 at 5:46 am
    many of the worst left wing ideas, like nationalism and trade protectionism, are being proudly advocated by conservatives.

    The first tariff law passed by the U.S. Congress, acting under the then-recently ratified Constitution, was the Tariff of 1789. Its purpose was to generate revenue for the federal government (to run the government and to pay the interest on its debt), and also to act as a protective barrier around newly starting domestic industries.

    https://en.wikipedia.org/wiki/Tariff_in_United_States_history

  22. max

    Tel
    #3215961, posted on November 19, 2019 at 6:54 pm

    There’s one fundamental rule of all science:

    Political economy is not physics.

    anyone pushing for lower tax must necessarily also figure out how to reduce government spending.

    what ever was budget this year to be reduced 10% next yearend year after… until reach 5% of GDP

  23. Iampeter

    It says something unhappy about the state of the Cat that a post on the nonsense of industrial policy descends rapidly into a defence of a ‘conservative’ politician of the likes of Orban

    In the absence of political theory to base one’s positions on, all political discourse just descends into competing cults of personality. The entire Trump phenomena is an example of this.

    The first tariff law passed by the U.S. Congress, acting under the then-recently ratified Constitution, was the Tariff of 1789. Its purpose was to generate revenue for the federal government (to run the government and to pay the interest on its debt), and also to act as a protective barrier around newly starting domestic industries.

    Yep. So?

    Political economy is not physics.

    Both politics and economics are absolutely just like physics. But unlike physics nobody understands either of them that much. Especially politics. It’s a completely dead science at the moment.

  24. Pyrmonter

    @ max

    Tariffs have one advantage (and pretty much only one): in an unsophisticated economy, they are relatively cheap to collect. The US in 1789 traded through a few ports: raising revenue by tariff was much cheaper than, say, levying a property tax.

    The goal of a revenue tariff is, as the name suggests, to raise revenue. So far as it is protective – that is, it spurs the diversion of domestic resources toward production of goods that might be the subject of the tariff – the, tariff fails.

    That US history contains an example of a revenue tariff is of no importance in any modern policy debate. That the ‘revenue’ tariff the US adopted promptly turned into a protective tariff under political control tells us a lot about the dangers of ‘industry policy.

  25. JC

    Both politics and economics are absolutely just like physics. But unlike physics nobody understands either of them that much. Especially politics. It’s a completely dead science at the moment.

    That’s coming from someone totally ignorant of economics. The far more important part of economics is micro, which is not in dispute in terms of the broad swathe of that area.

    The area much in dispute, caused by leftists unable to put aside their poltical bias like you, is in the area of macro economics.
    Shut up and stop talking Plodes as you have no idea.

  26. Beachcomber

    It says something unhappy about the author of this post (that purports to be passing his sage judgement on what is useless academic and bureaucratic waffle) that he can’t resist having a snide, sneering, dishonest smear at a successful conservative leader of the West.

    Victor Orban is a very effective traditionalist conservative and nationalist leader, and he is popular with the uncouth proles. Can’t have that can we? I mean, conservative government elected by a massive democratic majority must by definition be “majoritarian totalitarianism”. Resisting the incursions of EU bureaucracy and the Soros cultural Marxists. Orban and his supporters must be raaacists!

    Our superior overlords in the establishment, such as the author of this post, are appalled. It’s deplorable!

  27. max

    Iampeter say:

    
many of the worst left wing ideas, like nationalism and trade protectionism, are being proudly advocated by conservatives.

    
It goes to your beloved founding fathers and constitution, basically you say: they are nationalist ( correct ) protectionist ( correct ) and conservatives ( correct ).



    Iampeter say:

    Both politics and economics are absolutely just like physics.

    Ludwig von Mises

    The objects of the natural sciences react to stimuli according to regular patterns. No such regularity, as far as man can see, determines the reaction of man to various stimuli. Ideas are frequently, but not always, the reaction of an individual to a stimulation provided by his natural environment. But even such reactions are not uniform. Different individuals, and the same individual at various periods of his life, react to the same stimulus in a different way.

    https://mises.org/library/epistemological-problems-economics/html/c/133

    The equations of mechanics may help us to foresee future events, because the physicist is able to find out approximately the empirically constant relationships between physical quantities. If we insert these constants in the equations we can work with them.

    With the equations of economics it is a different matter. For within the sphere of human trading activities we do not know any constant quantitative relationships. All quantities that we are able to ascertain have therefore no general significance but only an historical one.

    https://mises.org/library/equations-mathematical-economics-and-problem-economic-calculation-socialist-state-0

  28. max

    Pyrmonter
    #3216650, posted on November 20, 2019 at 4:12 pm
    The goal of a revenue tariff is, as the name suggests, to raise revenue.

    Nothing wrong with tariff as revenue rising — let say 5% on everything and for every one.

    better tariff than income tax or property tax ( only if fixed and not changeable with out referendum to pass needed 90% )

  29. struth

    Tariffs Bad.
    One side has tariffs and then you jump up and down about the other side applying retaliatory tariffs is beyond stupidity.

    And now we see, with Trump, that “no it’s still makes it more expensive for the buyers” doesn’t hold.

    Trumps retaliatory tariffs are absolutely justified and his country’s economy is booming.
    A shame he had to apply them, but he did.
    They are working to lower China’s and Europe’s oppressive tariffs on the States, and IN THE END THOSE MAKING STUFF get wealthy.

  30. Pyrmonter

    @ max

    Taxes should be raised with as little impact on the rest of us as possible. It’s unlikely that in a modern economy a tariff will be an efficient tax. The idea that a tariff is either ‘fair’ or efficient flies in the face of the experience of levying our own tariffs; it also opens the gates to the sort of political chicanery and special pleading that created the monster that was the US ante-bellum tariff.

  31. Pyrmonter

    @ struth

    The US isn’t ‘booming’. It might be in less of a slump than the EU, but if you can see a perceptible change in policy here, you’re reading a different graph to me:

    https://fred.stlouisfed.org/graph/fredgraph.png?g=lJde

  32. max

    for Pyrmonter

    The Case for Tariffs-Only
    Gary North – March 19, 2018

    For over two centuries, one of the most useful litmus tests of economic rationalism has been the tariff test. Does a would-be economist support tariffs as the way to national wealth? If he does, he is probably a crank.

    Probably is not absolutely.

    Personally, I think tariffs are excellent as stand-alone revenue-generating devices. Why? Let me count the ways.

    First, tariffs are sales taxes imposed on imported goods. The key political fact about sales taxes is this: they are flat taxes. They cannot be used to extract more wealth from one taxpayer than another. This is what state-loving, envy-succumbing economists and politicians call a regressive tax. It sounds terrible; it in fact is quite wonderful. A regressive tax is a tax that is imposed equally on every taxpayer. Regression means that every proponent of the tax will pay the same percentage as the next guy. It keeps voters a bit more honest.

    Second, tariffs are almost impossible to impose on services. A cross-border service is hard to trace. The main way that governments track them today is through corporate income tax returns. Imported services are deductible from corporate income taxes. But I am recommending a world with no income taxes. Anyone in such a world who reports a service purchased abroad is saying, “Come and get me!” to the tax collector. The experts say that we live in a service economy. I say: “Then let’s impose taxes on goods.” As few as possible.

    Third, tariffs are imposed on a narrow class of goods: imports. If we do not count services purchased from off-shore, imports account for well under 15% of the U.S. economy — probably under 10%. In a world of tariffs-only, most of the economy would get off Scot-free.

    Fourth, tariffs are collected from commercial importers, not private citizens. In a world of tariffs, there would be no direct contact between me and a tax collector. Overnight, it would be 1912 again — America’s golden age: before the income tax and after indoor plumbing.

    Fifth, tariffs on imported information would be almost impossible to collect. The Internet, coupled with encryption, would seal the doom of tariffs on imported information. We live in an information economy. This means that tariffs would apply to less and less of the productivity of most Americans.

    Sixth, the U.S. is the richest free trade zone on earth. Geographically, China and Russia are larger, but not economically. Americans would prosper more than any other people in a tariff-only tax system.

    Seventh, the U.S. Constitution prohibits internal tariffs: “No Tax or Duty shall be laid on Articles exported from any State” (Article I, Section 9, Paragraph 5). This means that national politicians would not be able to compensate for the loss of revenue by imposing internal tariffs. It would take a Constitutional amendment to legalize them.

    Eighth, tariffs are not imposed equally on all goods. They are discriminatory. Some goods escape. This means greater freedom from taxes if we choose our imports well.

    Ninth, because tariffs are never imposed equally on all imported goods, they would become a matter of intense political warfare. In a world where only tariffs generated revenues, this would keep politicians busy in allocating favors within a shrinking percentage of the economy. I call this the sandbox effect. Cats, toddlers, and politicians belong in sandboxes.

    Tenth, hiking tariffs enough to increase revenues significantly would lead to consumer substitutions. Consumers would start looking for domestically produced goods. Unlike most taxes, tariffs are a tax that you can legally avoid paying, at some marginally higher price. Better to fill the coffers of some protected industry than to fill the coffers of the U.S. Treasury. I say, “Better a robber baron than a robber Congress.” Who knows? Maybe my daughter will marry his son. There’s hope. Not with Congress.

    CONCLUSION

    I believe in free trade, and the thing I’d like to trade most is the income tax for tariffs.
    https://www.garynorth.com/public/17855.cfm

  33. Pyrmonter

    @ max

    The US Constitutional issues aside, not a paragraph of that piece passes avoids an economic fallacy, or worse.

  34. Iampeter

    It goes to your beloved founding fathers and constitution, basically you say: they are nationalist ( correct ) protectionist ( correct ) and conservatives ( correct )

    No it doesn’t. We’ve been over this before. You need to learn to think in terms of fundamentals not random non essentials.

  35. classical_hero

    Struth and Baa Humbug have said what I wanted to say.

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