Fred on evolutionism

As any fully sentient human must be, Fred is an evolution skeptic:

Evolutionists espouse the mechanistic and deterministic view, though more as metaphysics than science. Selective pressures, plausible though not measurable, defined, or confirmed, push evolution in certain directions. Much of it is wonderfully questionable, but we will pass over this. The evolutionist, again meaning the sort for whom evolution must explain all human behavior, falls into difficulties when he considers humanity.

Consider morality. For the evolutionist, everything must be explained in terms of maximizing the production of offspring so that, for example, honesty serves to promote cohesion in hunting bands, making them more efficient and therefore having more children. Right and wrong do not exist, nor Good and Evil, as these have no meaning within evolutionism unless they can be tied to fecundity.

Which leads the evolutionist into logical swamps. I have asked such people why I should not make a hobby of torturing to death the genetically feeble-minded. In evolutionary terms, killing them is a good idea, as it reduces the diversion of resources in maintaining them and raises the average intelligence of the group.

How they are killed has no evolutionary importance, and in any event executing them with a blowtorch would consist merely in substituting certain chemical reactions for others: Pain has no existence in physics.

Of course if I actually did such a thing, the evangelists of scientism would be horrified. They are not immoral. They just can’t explain why they are not.

I now await with no little pleasure the predictable attempts to redirect the discussion from the obvious problems with evolution to religion, creationism, and intelligent design in lieu of actually attempting to defend their “theorum”. Note to the insufficiently read: “theorum” is the word for a a statement that has been not proven on the basis of previously established statements, but one that credentialed midwits would like you to accept at face value.

Newsflash: government aid proves inadequate

It is shocking to discover that pumping $19 billion (nearly one year of its GDP) into aid for Afghanistan has achieved next to nothing in the way of substantive results in light of how providing financial resources to unproductive, low-IQ, semi-civilized populations has worked so well in the United States over the last 50 years:

After a thorough two-year review of U.S. aid efforts in Afghanistan, the staff of the Senate Foreign Relations Committee emphasized, “The unintended consequences of pumping large amounts of money into a war zone cannot be underestimated.”

Much of the aid effort was premised on the assumption that development would foster stability. Young men with jobs wouldn’t plant roadside bombs. Communities with growing economies would reject the Taliban. This assumption was based on the modern prejudice that bad behavior has material roots. Give people money and jobs and you will improve their character and behavior.

In Afghanistan, as elsewhere, this assumption seems not to be true. A conference of experts brought together last year in Wilton Park in Britain concluded that there is a “surprisingly weak evidence base for the effectiveness of aid in promoting stabilization and security objectives” in Afghanistan.

Violence doesn’t stem from poverty. It stems from grudges, tribal dynamics and religious fanaticism — none of which can be ameliorated by building new roads. The poorest parts of the country are not the most violent. Meanwhile, the influx of aid has, in many cases, created dependency, fed corruption, contributed to insecurity and undermined the host government’s capacity to oversee sustainable programs.

To put things in perspective, what the USA has done is the equivalent of someone giving Americans an additional $1.36 trillion every year for 10 years. Perhaps the greatest irony is that this attempt to replicate the War on Poverty on an international level was actually labeled “Smart Power”. Such an appellation highlights the supremely clueless arrogance of the government bureaucrat, where there is no such thing as a policy failure, even completely predictable disasters are put down to nothing more than the disappointing result of an improper implementation.

Card-carrying Red Faction members would do well to note that this grand distributional debacle was not the result of the evil Blue Faction running amok again, it was the enthusiastic policy of “national greatness conservatives” of the sort you are hoping will rescue you from another four years of the SSO administration.

Unpossible!

This would appear to be a timely article. However, this piece on prospective profit repatriation in the NYT must be a shameless lie. It’s simply not possible for there to be vast dollar balances sitting there in overseas accounts, remaining unused. After all, as we learned from Henry Hazlitt, “Because we have permitted the British to sell more to us, they are now able to buy more from us. They are, in fact, eventually forced to buy more from us if their dollar balances are not to remain perpetually unused. So as a result of letting in more British goods, we must export more American goods.”

Some of the nation’s largest corporations have amassed vast profits outside the country and are pressing Congress and the Obama administration for a tax break to bring the money home. Apple has $12 billion waiting offshore, Google has $17 billion and Microsoft, $29 billion…. “For every billion dollars that we invest, that creates 15,000 to 20,000 jobs either directly or indirectly,” Jim Rogers, the chief of Duke Energy, said at the conference. Duke has $1.3 billion in profits overseas.

We must, must we? Note that these are nominally American organizations that are doing precisely what the free trade champion claims that the British ones could not do. Furthermore, note that these offshore funds are not the result of imports, but rather exports. So, in addition to the loss of jobs due to imports, we’re actually seeing them lost – or at least delayed – due to supposedly beneficial exports.

This is a negative aspect of free trade that I do not believe was ever anticipated by either its historical advocates or its critics. And it underlines Ian Fletcher’s point that there are problems with free trade that go very far beyond simple matters of conventional protectionism and tariffs.

It is remarkable to see the likes of Rogers claim that each billion brought back would create 15,000 jobs, given his apparent failure to notice that if that were true, exporting that billion must have already cost a similar number of jobs. Of course, he’s incorrect about the relationship between repatriated profits and jobs, since the 2005 tax incentive that brought $312 billion back into the USA did not generate between 4,680,000 and 6,420,000 new jobs. What actually happened is that total employment increased to 2,383,000 in 2006, just barely more than the 2,268,000 increase in the year that preceded the repatriation program.

Note to the intrepid free trade advocates: This is the sort of post where it is perfectly appropriate for you to trot out your boilerplate arguments in support of free trade as if no one who studies economics has ever heard them before. They’re not necessarily going to be any more convincing than they were when you were erroneously presenting them as if they had anything at all to do with the arguments that Henry Hazlitt made in Chapter 11 of Economics in One Lesson, but they will at least be potentially relevant here.

This should not, however, be interpreted as an indication that I am inclined to pay any more attention to them now than I did previously.

Are the neocons losing Red Faction?

Ross Douthat defects in the New York Times:

Rubio is the great neoconservative hope, the champion of a foreign policy that boldly goes abroad in search of monsters to destroy. In the Senate, he’s constantly pressed for a more hawkish line against the Mideast’s bad actors. His maiden Senate speech was a paean to national greatness, whose peroration invoked John F. Kennedy and insisted that America remain the “watchman on the wall of world freedom.”

Paul, on the other hand, has smoothed the crankish edges off his famous father’s antiwar conservatism, reframing it in the language of constitutionalism, the national interest and the budget deficit. (As Matt Continetti noted in The Weekly Standard, “Whereas Ron Paul criticizes U.S. interventionism in tropes familiar to the left — anti-imperial blowback, manipulation by neocons, moral equivalence — Rand Paul merely says America doesn’t have the money.”)….

The country is weary of war, but the story Rubio tells, with eloquence and passion, is still tremendously appealing — the story of a great republic armed and righteous, with no limits on what it can accomplish in the world.

This is a story that many conservatives — and many Americans — want to believe. Once, I believed it myself.

But that was many years and many wars ago, and now I think Rand Paul is right.

One unmentioned factor here is that Rand Paul is an native American. Marco Rubio is not. He may have grown up in the United States, but he is a Cuban raised in a community that has been agitating for the USA to overthrow the Castro regime for decades. So, it should come as little surprise that Rubio is so content to ignore the American national interest in favor of the latest neocon cause du jour. Because neocons, regardless of their background, have limited allegiance to the national interest, they see the nation primarily as a means rather than an end.

As I have pointed out in the past, it was always mistaken to conflate neoconservatism with Jews and the Israel First lobby. They are merely the most obvious example of what would be more accurately be described as Neoconnery, (there is nothing conservative about it), and is a concept that is as old as the Roman Republic. Back then, when Rome ruled over the Mediterranean just as America rules over the Atlantic and Pacific, foreign nobles would come to Rome and offer promises of allegiance, troops, and gold in return for a Rome-supported crown. These Friends of Rome were the neocons of their day.

On the one hand, it is encouraging that even the moderate conservatives are beginning to respond to the geostrategic and financial realism of the Red Faction’s libertarians. On the other, it is depressing that even bankruptcy isn’t enough to slow down those like Rubio, who talks a good game but appears to see America as little more than a tool to serve foreign interests.

Those who deny that transnational freedom of movement will tend to ultimately work against the interests of human liberty would do well to pay attention to the way in which the foreign policy positions of second- and third-generation immigrants tend to diverge from those leaders whose families are more rooted in the nation. Consider: would any other British leader have intrigued so shamelessly to manipulate the USA into World War II as the half-American Winston Churchill? All great powers are tempted by the neocons of their day. And history indicates that most eventually succumb to the temptation, and as a result, follow the predictable trajectory of decline and fall. It is far from the only factor in national decline, of course, but it is an easily recognized one.

On a stylistic note, full credit to Douthat for referencing John Quincy Adam’s 1821 Independence Day address. Read it and mourn for an America that post-Americans like Marco Rubio have never known and would trample upon in their Wilsonian pursuit of “national greatness”.

America, in the assembly of nations, since her admission among them, has invariably, though often fruitlessly, held forth to them the hand of honest friendship, of equal freedom, of generous reciprocity…. Wherever the standard of freedom and Independence has been or shall be unfurled, there will her heart, her benedictions and her prayers be. But she goes not abroad, in search of monsters to destroy. She is the well-wisher to the freedom and independence of all. She is the champion and vindicator only of her own. She will commend the general cause by the countenance of her voice, and the benignant sympathy of her example. She well knows that by once enlisting under other banners than her own, were they even the banners of foreign independence, she would involve herself beyond the power of extrication, in all the wars of interest and intrigue, of individual avarice, envy, and ambition, which assume the colors and usurp the standard of freedom. The fundamental maxims of her policy would insensibly change from liberty to force.

WND column

In defense of libertarians

I am always intrigued when conservatives, many of whom genuinely believe themselves to be devoted to human liberty, make a point of attacking its most principled and consistent advocates. So, it was amusing to read the anti-libertarian arguments recently presented by Ann Coulter, whom I rather like and whose work I have praised in the past.

But even the finest minds are capable of making mistakes from time to time, and in such cases, who is better suited to provide correction than a fellow WND commentator and “prominent Christian libertarian”? While I can’t speak for Ron Paul or any other libertarian but myself, it should not be difficult to point out where this illustrious pillar of the Republican media establishment has gone awry in her attack on libertarianism.

Mailvox: a free trader defends Hazlitt

Much to his credit, Jake sets aside his “nations don’t exist” position long enough to attempt a courageous defense of the second aspect of Hazlitt’s case for free trade, which consists of an argument against using a tariff to establish a new industry. I have to commend Jake for taking the time to put in this effort, as I vastly prefer to see those who disagree with me honestly attempt straightforward defenses of their positions than to watch them skulk away in stubborn silence. Quotes from my post are in bold while Jake’s words are italicized.

1. The tariff grants $5 in domestic benefit for a domestic cost of $4.25.

It’s all the same. The $0.75 spent abroad is going to wind up buying American exports sooner or later. The only alternative is that they take the $0.75 and bury it, burn it, or otherwise not “cash in” their claim on American goods or resources. This “worse case” scenario amounts essentially to our trade partner “giving” the USA sweaters for nothing but green pieces of paper. Hardly a calamity for the US. I think this is what is happening to account for the oft-mentioned “trade deficit”, basically we’re importing cars, electronics, oil, food, etc and paying nothing but paper money for them. We’ve gotten away with this for a long time because of the Dollar’s status as the world’s reserve currency, foreign nations want dollars not only, or even primarily, for the American goods they can buy, but because every dollar they hold is a base on which they could pyramid more fiat money of their own. I agree this is a bad thing (long-term) and represents a serious disadvantage to domestic manufacturers, but the problem is the monetary policy, not trade. And cutting foreign trade won’t fix our problem or raise our living standards.

It’s not all the same. Jake has made the same error here that Hazlitt made in his primary argument, specifically errors #3 and 4. It’s not just a long-term issue, it is an immediate and more pressing short-term issue as well. Since it is a fact that the money may not come back to the United States for at least 35 years, the purported exports simply do not exist and their benefits cannot be assumed during the expected career of the average worker. And frankly, it should be deeply embarrassing for anyone with Austrian pretensions (referring to Hazlitt here, not Jake), to fail to recognize the massive importance of the TIME ELEMENT in economic transactions.

2. By positing a 50,000 loss of jobs in other industries, Hazlitt is assuming that labor productivity is the same in all domestic industries…. And more importantly, there is no reason to assume that the loss of domestic consumption could not be replaced with foreign consumption.

If exports are going to increase to offset the reduction in domestic demand brought about by a tariff increasing prices then we’re still going to be importing something in exchange the exports. We have to remember that a tariff on imports also harms exporting industries as they find it harder to sell their goods abroad. Also, even if domestic industries can find new markets abroad to offset reduced domestic consumption it will obviously be at a lower profit (else why wouldn’t have have already been exporting in larger quantities?).

Jake repeats his first error here and compounds it by committing new ones. It is totally incorrect to assume that all import tariffs are met with an immediate and equal response with tariffs on exports from other nations. The USA is not about to slap a tariff on Saudi oil simply because the Saudis decide to tax the import of American automobiles. This is the result of either willful theoretical blindness or complete ignorance of the existing and easily verified difference in tariff rates that now exist between countries. Nor must the exports necessarily be at a lower profit, for as Adam Smith pointed out, manufacturers first attempt to sell domestically because it is easier, not because it is more profitable.

3. It is incorrect to state that “the new tariff on sweaters would not raise American wages”

Well it’ll certainly raise wages in the sweater industry, but I don’t think that’s what Hazlitt is getting at here. Rather, he’s saying it will also lower wages in other industries that are harmed by the tariff either through reduced domestic demand for their products or reduced international demand caused by the reduction in trade a tariff brings. My reading of Hazlitt was that wages in the protected sector would rise (obviously) at the expense of wages in all other areas and general living standards. All we can say about the impact of the tariff on net is that because we’re reducing the division of labor and specialization we’d expect a negative net result.

Of course that’s what Hazlitt is saying. But both Jake and Hazlitt are incorrect, because the domestic division of labor is not being reduced, it is being expanded. Jake didn’t even address the point I made about higher wages in the new industry necessarily driving average wages higher. Even if we accept Hazlitt’s incorrect assumptions about jobs being lost, he is simply incoherent on the issue. If 50k sweater jobs replace 50k non-sweater jobs and the new sweater jobs have higher wages than the jobs they replace, average wages will obviously rise.

4. It is simply false to claim that “tariffs reduce wages”…. Even if he was correct and 50,000 jobs in the sweater industry were exchanged for 50,000 jobs outside it, the order in which those jobs would necessarily be gained and lost means that wages would go up.

But I think there would be a reduction in other industries as I discuss above. As well as a increase in the cost of living, which translates into a reduction in real wages.

Jake thinks wrong, as I show above. Moreover, he erroneously concludes that a second order effect must outweigh a first order effect.

5. The fact that American sweater manufacturing is less efficient than English sweater manufacturing does not mean that it is less efficient than any other American industry.

If it were true that American sweater manufacturing could be more efficient than alternative uses of capital within the US (even given still more efficient international production) then why would the tariff be needed? Wouldn’t entrepreneurs freely choose to divert capital from the less efficient US industries into sweater manufacturing if this were the case?

Because the relevant comparison is between the various efficiencies between the sweater-making industries and not between the efficiencies of the various domestic industries. It’s also useful to remember that entrepreneurs seldom operate outside their areas of expertise. It doesn’t matter how much more profitable it might be to make wireless tablets than tablecloths, as the average textile manufacturer is not going to start trying to compete with Apple simply because the profit margin is better in the tablet industry.

6. There is no paradox. Hazlitt’s assertion that a tariff “must” reduce real wages is simply incorrect and he repeats his error about assuming that production in the sweater industry will be less efficient than in other domestic industries on the basis of its inefficiency in comparison with English sweater manufacturing.”

Hazltt doesn’t say there’s a paradox, he says: “Only minds corrupted by generations of misleading propaganda can regard this conclusion as paradoxical.”

He DOES say that the tariff will divert resources into less productive ends and there I think he is right regardless of your assertion to the contrary. As I said in response to 5. If more efficient/productive uses of capital were available we wouldn’t need a tariff to get capital moving towards those uses, it’d happen spontaneously. This is (obviously) not to say that conditions under a free-market represent the perfect allocation of resources, but that it does continuously trend in that direction and that there is no alternative source of information on which one can argue that the market outcome is, in fact, sub optimal. In other words, if the market says the best use of resources is to import British sweaters and export grains, cars and technology then that may not be the absolute optimum perfect approach, but it is the best approach anyone has at that point been able to find, and those who say they know a better way, but require coercion and taxation to get there, are probably self-serving.

Very well, I accept that I should have simply pointed out that there is no paradox and no one actually believes there is a paradox. Hazlitt has erected a straw man. But Jake is still wrong as the spontaneous movement of capital he posits isn’t going to happen because the fact that American sweater-making might be more efficient than American widget-assembling is irrelevant so long as American sweaters can’t effectively compete on price with imported English sweaters. He is merely repeating his earlier error in point 5. Moreover, he doesn’t even attempt to defend Hazlitt’s erroneous statement that a tariff must reduce real wages.

As for the accusation that anyone who doubts that the international free market is the best approach anyone has been able to find is “probably self-serving”, that is simply an invalid ad hominem argument that is irrelevant, and in my case, incorrect. I absolutely benefit from the present US free trade regime and am nevertheless presenting an intellectual case that would be to my material detriment if it were to be adopted as US trade policy. As always, the facts are what they are and the truth is what it is regardless of whatever anyone happens to believe them to be. While there are many genuine reasons to be deeply concerned about the ability of any government to implement restrictions on free trade in a manner that is a net benefit to the entire nation, this does not change the fact that the foundations of international free trade ideology are riddled with flawed assumptions and false logic.

Fukushima in Nebraska?

Don’t look at me for any explanations. I don’t know anything about it, someone just shot me a link about a reported news blackout concerning reported flood-related problems at a nuclear plant in Nebraska earlier this month.

A shocking report prepared by Russia’s Federal Atomic Energy Agency (FAAE) on information provided to them by the International Atomic Energy Agency (IAEA) states that the Obama regime has ordered a “total and complete” news blackout relating to any information regarding the near catastrophic meltdown of the Fort Calhoun Nuclear Power Plant located in Nebraska.

According to this report, the Fort Calhoun Nuclear Plant suffered a “catastrophic loss of cooling” to one of its idle spent fuel rod pools on 7 June after this plant was deluged with water caused by the historic flooding of the Missouri River which resulted in a fire causing the Federal Aviation Agency (FAA) to issue a “no-fly ban” over the area.

Given the way in which the Japanese government and nuclear agency blatantly and unapologetically lied about the full extent of the damage to the Fukushima reactors, I tend to doubt the US government is going to be any more inclined to give out accurate information of what happened or did not happen at Fort Calhoun. But at least we can safely assume that whatever the problems might actually be, they are less catastrophic than what happened in Japan unless Nebraska also experienced an earthquake and subsequent tidal wave.

Mailvox: the Hazlitt international trade challenge II

This is the second part of what I expect will be a three-part critique of Chapter 11 of Henry Hazlitt’s Economics in One Lesson. The first part was posted on June 14th in response to Ampontan’s request. While it appears everyone was convinced by my initial rebuttal that Hazlitt’s particular case for free trade is incorrect, (though not that there is no case for free trade), I should fail to live up to my reputation if I did not continue to keep pounding upon the quivering mass of his argument until the critique is not only conclusive, but comprehensive.

Now let us look at the matter the other way round, and see the effect of imposing a tariff in the first place. Suppose that there had been no tariff on foreign knit goods, that Americans were accustomed to buying foreign sweaters without duty, and that the argument were then put forward that we could bring a sweater industry into existence by imposing a duty of $5 on sweaters.

There would be nothing logically wrong with this argument so far as it went. The cost of British sweaters to the American consumer might thereby be forced so high that American manufacturers would find it profitable to enter the sweater business. But American consumers would be forced to subsidize this industry. On every American sweater they bought they would be forced in effect to pay a tax of $5 which would be collected from them in a higher price by the new sweater industry.

Americans would be employed in a sweater industry who had not previously been employed in a sweater industry. That much is true. But there would be no net addition to the country’s industry or the country’s employment. Because the American consumer had to pay $5 more for the same quality of sweater he would have just that much less left over to buy anything else. He would have to reduce his expenditures by $5 somewhere else. In order that one industry might grow or come into existence, a hundred other industries would have to shrink. In order that 50,000 persons might be employed in a woolen sweater industry, 50,000 fewer persons would be employed elsewhere.

But the new industry would be visible. The number of its employees, the capital invested in it, the market value of its product in terms of dollars, could be easily counted. The neighbors could see the sweater workers going to and from the factory every day. The results would be palpable and direct. But the shrinkage of a hundred other industries, the loss of 50,000 other jobs somewhere else, would not be so easily noticed. it would be impossible for even the cleverest statistician to know precisely what the incidence of the loss of other jobs had been—precisely how many men and women had been laid off from each particular industry, precisely how much business each particular industry had lost—because consumers had to pay more for their sweaters. For a loss spread among all the other productive activities of the country would be comparatively minute for each. It would be impossible for anyone to know precisely how each consumer would have spent his extra $5 if he had been allowed to retain it. The overwhelming majority of the people, therefore, would probably suffer from the illusion that the new industry had cost us nothing.

It is important to notice that the new tariff on sweaters would not raise American wages. To be sure, it would enable Americans to work in the sweater industry at approximately the average level of American wages (for workers of their skill), instead of having to compete in that industry at the British level of wages. But there would be no increase of American wages in general as a result of the duty; for as we have seen, there would be no net increase in the number of jobs provided, no net increase in the demand for goods, and no increase in labor productivity. Labor productivity would, in fact, be reduced as a result of the tariff.

And this brings us to the real effect of a tariff wall. It is not merely that all its visible gains are offset by less obvious but no less real losses. It results, in fact, in a net loss to the country. For contrary to centuries of interested propaganda and disinterested confusion, the tariff reduces the American level of wages.

Let us observe more clearly how it does this. We have seen that the added amount which consumers pay for a tariff-protected article leaves them just that much less with which to buy all other articles. There is here no net gain to industry as a whole. But as a result of the artificial barrier erected against foreign goods, American labor, capital and land are deflected from what they can do more efficiently to what they do less efficiently. Therefore, as a result of the tariff wall the average productivity of American labor and capital is reduced.

If we look at it now from the consumer’s point of view, we find that he can buy less with his money. Because he has to pay more for sweaters and other protected goods, he can buy less of everything else. The general purchasing power of his income has therefore been reduced. Whether the net effect of the tariff is to lower money wages or to raise money prices will depend upon the monetary policies that are followed. But what is clear is that the tariff—though it may increase wages above what they would have been in the protected industries—must on net balance, when all occupations are considered, reduce real wages—-reduce them, that is to say, compared with what they otherwise would have been.

Only minds corrupted by generations of misleading propaganda can regard this conclusion as paradoxical. What other result could we expect from a policy of deliberately using our resources of capital and manpower in less efficient ways than we know how to use them? What other result could we expect from deliberately erecting artificial obstacles to trade and transportation?

Hazlitt does a little better in this second section than he did in the first one, but only a little better. This time, I count six distinct mistakes in his secondary case for free trade.

1. Hazlitt makes the mistake of assuming that only domestic goods are being consumed. As a result, he neglects to recognize that the additional $5 going towards the tariff might not necessarily be spent on domestic products. On current statistical average, about $0.75 would be spent on imports. This means the tariff grants $5 in domestic benefit for a domestic cost of $4.25.

2. By positing a 50,000 loss of jobs in other industries, Hazlitt is assuming that labor productivity is the same in all domestic industries. However, this is unlikely, since the new sweater industry would presumably be more productive on a per-unit basis due to its more recent capital investment and therefore newer technology. And more importantly, there is no reason to assume that the loss of domestic consumption could not be replaced with foreign consumption. As one who subscribes to Say’s Law, (which states that supply creates its own demand), Hazlitt cannot claim that existing production in other industries will disappear simply because people are spending 20 percent more money on sweaters.

3. It is incorrect to state that “the new tariff on sweaters would not raise American wages”. First, no one is going to leave their job for a new job in the sweater industry unless they get paid more and the new jobs in sweater production obviously have to precede any negative effect that eventually stems from sweater buying. Second, the new industry will require building a large amount of new infrastructure, so there additional demand for labor outside of the industry proper will be created, thereby increasing wages outside of it as well.

4. It is simply false to claim that “tariffs reduce wages”. Since there is an increased demand for labor both in and out of the sweater industry and no concomitant reduction in other industries, there is no rational basis for Hazlitt’s groundless assertion. Even if he was correct and 50,000 jobs in the sweater industry were exchanged for 50,000 jobs outside it, the order in which those jobs would necessarily be gained and lost means that wages would go up.

5. Hazlitt claims that “American labor, capital and land are deflected from what they can do more efficiently to what they do less efficiently as a result of the artificial barrier erected against foreign goods”. But this is a false assumption because it is a binary one. The fact that American sweater manufacturing is less efficient than English sweater manufacturing does not mean that it is less efficient than any other American industry. Especially given that in this case, we are dealing with a brand new industry with new capital investment, it will almost surely be more efficient than existing domestic industries. It is therefore totally false to say “the average productivity of American labor and capital is reduced”.

6. There is no paradox. Hazlitt’s assertion that a tariff “must” reduce real wages is simply incorrect and he repeats his error about assuming that production in the sweater industry will be less efficient than in other domestic industries on the basis of its inefficiency in comparison with English sweater manufacturing.

I’m a little embarrassed to have to note that I missed the errors that Giraffe caught in his first comment. He is correct to point out that Hazlitt was only looking at the $5 of domestic spending that the tariff redirects and not at the $25 that now remains in the American economy instead of leaving it and entering the English economy.

No need to tweet

Unlike the hapless ex-Rep. Weiner, I can demonstrate that I am a man merely by flexing my text. I submitted my most recent column, sans the Schumpeter quote, to the Hacker Factor’s Gender Guesser.

Genre: Formal
Female = 638
Male = 1377
Difference = 739; 68.33%
Verdict: MALE

So much for my budding career in chick lit.