My recent article for IER. You may be surprised by the charts.
If you feel compelled to comment on my beard, keep in mind that my office is a safe space.
I can’t remember if I pushed this before? Anyway this was the talk I gave last August in Rosario, Argentina. Keep in mind for my opening joke routine that people in the crowd needed to hear the translators, since many of them didn’t speak English. That’s why I had to sloooooow it down.
==> On the latest episode of Contra Krugman, Tom and I are a bunch of softies and mostly agree with Krugman about the tough spot Republicans are in, vis-a-vis ObamaCare.
==> A long interview I did with Scott Horton on all kinds of stuff.
==> Dan Mitchell of CATO discusses new research showing that “fiscal austerity” via spending cuts is much better for the economy than via tax hikes. (It’s almost like, giving resources to politicians is worse than letting people in the private sector keep them.)
==> Don Boudreaux has been spilling ink on the issue of trade deficits, pointing out that a current account deficit is the flip side of a capital account surplus. As such, if a foreign company invests in the US (even to build a factory here), then by itself that action would increase the US trade deficit. So is Trump for or against? This post is nice because it shows the technicalities of these arguments and also that Don is willing to admit when he oversteps.
==> I realize that super-low interest rates have something to do with it, but FYI right now the Shiller CAPE PE Ratio is at a level only seen before in 1929, 2000, and 2008.
==> The only thing more shocking than Michael Malice’s 6-pack abs is that his article about them is very interesting.
==> Don’t worry, James Hansen now tells us we have a little more wiggle room before “it’s too late” to stop climate change.
==> I feel really bad that I’m doing this to him, but a while ago Josiah Neeley sent me this post on the “anarchist case for climate action.” I had been waiting to “do it justice” but I’m still swamped through Christmas. I’d better just post it here and hope to come back to this stuff next semester in a journal article.
I am quite certain that most people will dislike this post, but for the few who see what I’m saying, I hope you appreciate the new angle I may open for you.
First, a digression. I am an unabashed troll on Twitter and Facebook (and sometimes on Scott Sumner’s blog). However, I would argue that I’m a good troll. My purpose is never to hurt someone’s feelings, but instead to say something funny and/or intelligently provocative. I am just about always either (a) trying to directly entertain people and/or (b) educate them. Even for the people who are my “targets”–where perhaps I will point out what I think is a contradiction in their professed positions–my ideal outcome isn’t that I “blow them up,” but rather that they see it and then grow from the encounter. (For example, no matter what cockamamie inflationist scheme he cooks up next Thursday, I will go to the grave grateful for Nick Rowe freeing me from my mental prison regarding the government debt debate.)
But what’s funny is that a lot of people GET REALLY MAD AT ME when I troll them, especially if they don’t know me. (For example, sometimes I troll close friends on their Facebook posts, but their friends don’t know who I am and they bite my head off for “attacking” their friends.) They may think I’m stupid, insensitive, cruel, and oblivious to their personal situation. They think I’m trying to hurt them when really I’m trying to help them.
OK I think you guys see where I’m going with this. I think in addition to realizing He is utterly good, when we encounter God in the afterlife we will look back at the (previously) inexplicable events from human history and say, “Ohhhhhh… OK that’s really funny.”
I don’t want to make too much of this, and I’m not even saying there is an outright contradiction here. I’ll succinctly state the interesting combination in the form of a script, loosely based on actual events that I observed firsthand on social media.
TRUMP SUPPORTERS: You idiot libertarians need to drop your faith in free trade. US manufacturers can’t compete when foreign governments subsidize their exporters through special tax rebates and looser regulations. If we had a level playing field, where foreign companies faced the same taxes and regulations that US companies did, then American workers would come out on top.
LIBERTARIANS: Ha ha, you’re afraid of “dumping”? What a loaded term. Uh, if goods come in more cheaply, that only *helps* Americans. Sure, it might throw particular US manufacturing companies out of business, but the country as a whole benefits because of the gains to consumers. Haven’t you read Bastiat? Are you mad about the “unfair” competition from the sun? Do you even econ, bro?
BOB MURPHY ON CARRIER DEAL: It’s not the tax cut I would’ve proposed, but from a purely ethical perspective, this is reducing a firm’s taxes and in that sense reduces injustice.
LIBERTARIANS: That’s not the issue here Murphy. The issue is providing a level playing field. How are other US manufacturers supposed to compete when Carrier is getting special tax rebates and regulatory relief? How obtuse can you be to not see this?
[UPDATE: Amash clarified what happened; see the bottom of the post. Now I can sleep peacefully.]
In Episode 799 of the Tom Woods Show, I was the guest and we were talking about the Carrier deal. Tom brought up the fact that I had mentioned on Twitter that I thought Rep. Justin Amash (R-MI) had misunderstood (at least initially) the point that Dilbert creator Scott Adams brought up.
I’ve had a few people challenge me, saying that *I* was the one missing things. I wasn’t going to bother with this, because I don’t want it to seem like I was taking Trump’s (or Adams’) side on the broader debate. FOR THE RECORD: I TOTALLY AGREE WITH JUSTIN AMASH’S DEFENSE OF FREE TRADE, AND HIS OPPOSITION TO TRUMP’S THREATS AGAINST U.S. COMPANIES THAT ARE CONSIDERING OUTSOURCING.
However, since I guess the cat’s already out of the bag, I might as well be clear on exactly what motivated my remarks on Tom’s show. One last thing, though: If you go and listen carefully, I hedged and said something like, “At the very least, one reading Amash’s tweets would understandably *think* that he didn’t get the point.”
So anyway, here we go. I’ll paste in a selection of Amash’s tweets taken from the debate, with my commentary following each:
— Justin Amash (@justinamash) December 4, 2016
This is what got the ball rolling. Clearly, at this point Amash is thinking of a general tariff that actually gets implemented. If he *weren’t* thinking that, then the 35% figure would be wrong (because it would be arbitrary). For example, suppose it would only take, say, a 28% tariff to scare every US firm and keep it from outsourcing. Well then, if Trump had threatened a 28% tariff, then no company would move, and Amash would tweet, “This is a 28% tax on all Americans…” If Trump then jacks it up to 35%, it would still be the case that no company moved, but that wouldn’t make their products more expensive yet again. In that case, Amash would still have to write, “This is a 28% tax on all Americans…”
Thus, at this initial stage, when Amash is first responding to Trump’s twitter rant, it is clear that Amash is thinking the 35% tariff will actually be triggered, and *that’s* why Amash is (correctly!) saying it’s not just a penalty on the outsourcing company, but on American consumers.
In the next stage, Scott Adams replies:
No, the whole point is that no company would move with that risk hanging over them. So no tax is triggered. https://t.co/1XJnuiuIyp
— Scott Adams (@ScottAdamsSays) December 5, 2016
OK, so we see that Adams is challenging the initial logic. (By the way, I had never considered this possibility until Adams brought it up. I don’t know whether Trump himself was thinking this.) OK fair enough. Let’s see what Amash says in reply:
No. American consumers are taxed even if no companies move. Tariff increases production costs & limits competition. This is basic economics. https://t.co/JjBAnpflbE
— Justin Amash (@justinamash) December 5, 2016
OK, so *this* is the point where I, Bob Murphy, jumped into the twitter debate. At this point, it sure seemed like Amash missed what Adams had argued. For one thing, Amash is talking about a tariff increasing production costs. But in this scenario, there IS NO tariff. Rather, it’s the THREAT of a tariff that is doing the work.
That may sound like quibbling to some (and we’ll get to that in a moment, over the narrow vs. broad use of the term “tax”), but look how weird Amash’s usage would be in other circumstances. Suppose Trump says, “If a CEO wants to outsource, I will shoot him in the head.” Then Amash says, “Outrageous! Bullets hurt brains.” Then Scott Adams says, “No, the idea is that no CEO will want to get shot in the head, so no outsourcing.” Them Amash comes back and says, “No, even if no company moves, the bullet still causes damage. This is basic physiology.” Wouldn’t people think Amash had misunderstood?
OK, you still don’t believe me? Then what about Amash’s claim in the tweet that, “This is basic economics.” If we interpret the previous sentence to mean, “A tariff is imposed on goods coming into the US,” then yes of course, it IS basic economics. But if we interpret the previous sentence to mean, “No tariff is actually imposed, but the threat of it keeps companies from outsourcing and thereby keeps their production costs artificially high, and makes US consumer prices higher than they would otherwise be,” then HECK NO that’s not basic economics. In fact this is the first time I’ve ever heard such a claim. I *agree* with it, but it’s not basic economics.
Thus, I think I was on solid ground when I said, at this point in the debate, that Amash had missed Scott Adams’ point.
Next, Amash tweeted out a link to Don Boudreaux’s blog post:
Open Letter to “Dilbert’s” Scott Adams https://t.co/w4nhqOmPGX
— Justin Amash (@justinamash) December 5, 2016
Now here I made a mistake. I started skimming Don’s piece, and saw that he immediately said that Amash was right and Scott Adams was wrong. Since at this point I was confident that Amash had misunderstood Adams’ point, I stopped reading (I was in an airport, cut me some slack) and I tweeted that Amash and Don were both missing the point. However, I realized later (when I had time to carefully read Don’s post) that Don fully understood Adams’ point, and gave a great reply.
At this point, let me just post a screen shot of the back-and-forth Amash and I had:
OK, so after I said I thought Amash and Don were missing Adams’ “narrow point,” Amash assures me he gets it. I PROMISE YOU, folks, at this point I totally believed him. After all, Amash is a sharp guy, and Adams’ point wasn’t too hard to grasp.
So I threw in the towel, and said, “OK,” and just clarified why I thought he had been unclear by calling it a tax, rather than a *threat* of a tax. I was ready to walk away; my work was done here. At this point, I would’ve bet $1,000 that Amash understood Adams’ point.
And yet… and yet… look at how Amash then replied to me, in the last item above. The entire point of Scott Adams’ argument was that no tariff would exist. And yet Amash chooses to wrap up the debate by saying, “…the existence of a tariff increases prices…” Again, for someone trying to convince me that he understands we’re talking about a scenario where no tariff exists, summarizing his whole position as being based on the existence of a tariff is a bit confusing.
In light of the above, I stand by my remarks on Tom’s show. After his last comment, I would no longer bet $1,000 that Amash fully grasped Scott Adams’ original point. Maybe he did, maybe he didn’t, but at this point I was once again unsure.
AND JUST TO REPEAT: I TOTALLY OPPOSE TRUMP’S THREATS AGAINST COMPANIES. I SUPPORT AMASH’S DEFENSE OF FREE TRADE.
Update: Amash read this post and then resolved all problems by explaining:
@BobMurphyEcon Ha. Twitter's character limit has made this more complicated than necessary. Tariff can exist (in law) even if not triggered.
— Justin Amash (@justinamash) December 10, 2016
This isn’t Contra Krugman; instead it’s episode 799 of the Tom Woods Show.