Highlights of My Weekly Reading, August 25, 2024

Industrial Policies Aren’t Working

by Donald J. Boudreaux, American Institute for Economic Research, August 21, 2024.

Excerpt:

This development is unsurprising. No matter how smart and clever are President Xi and his lieutenants, they cannot work miracles. If the Chinese have no comparative advantage at producing EVs on a scale as large as the one desired by these government officials, diverting resources on this scale into EV production is likely to backfire — as it’s now doing. It’s possible that if Beijing diverts yet more resources into this industry that eventually the Chinese will come to have the necessary comparative advantage at producing EVs. But as things now look, this possibility is a bad bet — although it’s a good bet that Beijing will in fact strive to buoy China’s troubled EV producers with yet more subsidies and special protections. After all, the money that Chinese-government officials are spending isn’t their own; it’s money forcibly taken from Chinese taxpayers and consumers.

 

Tax Incentives for Having Children Are Pushing the Wrong Buttons

by Ryan Bourne, Cato at Liberty, May 16, 2024.

Excerpt:

Fewer babies mean pay-as-you-go welfare states will face increasing financial strain, and many economists worry that fewer people will mean fewer groundbreaking ideas that drive economic growth. In response, there’s been a pro-natalist push for government baby bonuses, tax breaks, or subsidies for childcare or other costs to make child-rearing more affordable.

The problem is that these policies typically yield tiny results. Nordic welfare states still grapple with below-replacement birthrates despite numerous “family-friendly” policies. Childcare subsidies haven’t meaningfully shifted the dial here. Australia’s former baby bonus, worth thousands of pounds, caused only a temporary birth spike and the country’s fertility rate is now back around 1.6. The main effect of financial incentives seems to be the “re-timing” of births, where those already planning to have children do so sooner to obtain the cash benefits.

DRH comment: This is an issue I discussed in my review of Matt Yglesias’s 2020 book, One Billion Americans. Here’s a relevant section of my review:

In a book that advocates massive increases in immigration, a natural next step to take would be to argue for reducing the cost of child rearing by allowing millions of immigrants, probably disproportionately women, into the United States from the poorest countries in Latin America, such as Guatemala and El Salvador, the poorest countries in Africa, such as Zimbabwe and the Congo, and the poorest countries in Asia, such as India. It would not be hard to get 50 million immigrants from those places in a period of, say, five years. They would benefit and many current U.S. families would benefit from a dramatic fall in the cost of childcare.

But that is not where Yglesias goes. Instead, he advocates massive new government programs to subsidize the provision of childcare. He writes that “the United States has been shamefully slow compared with some peer countries to provide subsidized child care.” But the closest he comes to explaining why U.S. policy is shameful is to argue that because other countries are doing it, we should too.

I say more in that review.

‘Transparency’ Mandate Would Burden Small Brewers and Distilleries

by C. Jarrett Dieterle, Reason, August 24, 2025.

Excerpt:

It’s hard to oppose “transparency,” “common sense,” and “informed choices.” But labeling mandates always fall heaviest on the smallest of businesses.

The concept of nutritional and ingredient labeling is even more complex in the alcohol space since the TTB uses a pre-approval system for alcohol labeling, meaning that alcohol producers have to submit their proposed labels to the agency for approval before the product ever hits the market. No approval, no market access. This is in marked contrast to most food labeling, which the Food and Drug Administration enforces after a product goes to market.

Not only are most craft breweries, distilleries, and wineries small, local businesses, but much of their appeal is the ever-changing array of products that they offer. Some of the most cutting-edge and popular microbreweries in America release multiple new beers per week or month alongside seasonal releases that vary in availability depending on the time of year.

Breweries often release annual products, such as Christmas Ales, that use the same base set of spices but may have some small variations and tweaks from year to year. If these mandates are in place, a brewery could face the prospect of having to get new labels preapproved every single year, a time and cost burden that few small breweries could absorb.

Who knew that we in America, the land of the free, would be hemmed in by central planning on beer labels?

Ford Wants To Build Hybrids Instead of All-Electric Cars. The EPA Hates That.

by Joe Lancaster, Reason, August 23, 2024.

Excerpts:

One of the country’s largest automakers announced this week that it was shifting its focus away from battery-powered electric vehicles (E.V.s) in favor of hybrids that still use some amount of gasoline. The decision to prioritize a transitional technology makes sense, even though federal regulators might not be happy.

And:

Unfortunately, federal regulations adopted this year by the Environmental Protection Agency (EPA) could complicate the switch.

In March, the EPA released rules that would cut the number of new gas-burning vehicles on the road over the next decade. Under its “more stringent emissions standards” for consumer vehicles, the agency foresaw that by 2032, 56 percent of all new vehicles on the road would be electric, while only 16 percent would be hybrids.

 

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