Liberty Fund

Liu Xiaobo’s Fight for Freedom

It was the Czech writer Milan Kundera who said: “The struggle of man against power is the struggle of memory against forgetting.” His fellow writer Liu Xiaobo, who died this summer under police guard while serving an 11-year prison sentence,

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The Rich Get Richer...

But is that a bad thing? That may be the central question explored in this week's EconTalk episode with UC Berkeley's Gabriel Zucman. Working with Thomas Piketty and Emmanuel Saez, Zucman explored national income accounts to look for trends in income inequality in the United States since 1980.Their results suggest that the bottom 50% of Americans have seen no growth in income, while a disproportionate share of growth has accrued to the top 1%. How robust are these results, and what policy implications might be suggested? And how does income inequality in America compare to that in other nations? Do you feel richer than you did in the 80s? Share your thoughts with us today... We always love to hear from you.

1. In terms of income inequality, how are average growth rates misleading about the real state of the economy, according to Zucman?

2. How does Zucman's analysis differ from previous attempts to measure income inequality? What are the weaknesses of using tax data for such purpose? How might a cross-sectional approach yield different results regarding income inequality?

Don't change the forecast; change the policy, by Scott Sumner

Today the Fed abandoned its previous forecast, which called for 2% inflation in 2018. Now they forecast that inflation will run below 2% in 2018, as it has for most of the past decade.

I agree that it is likely that inflation will run below 2% in 2018. Nonetheless, I believe the Fed made a mistake by forecasting sub-2% inflation in 2018. Instead, the Fed should have changed its policy, so that it could continue to forecast inflation at 2% in 2018. This is what Lars Svensson means by "targeting the forecast."

The Fed is like a ship captain that intends the ship to arrive in New York, forecasts the ship will arrive in Boston, and then refuses to turn the steering wheel enough to equate the geographic goal with the geographic forecast.

Ken Burns’ Vietnam

Journalists often claim to write the first draft of history, but that statement raises the question when a story turns from current events into history.  The Vietnam War now stands closer to World War II than 2017.  A formative experience

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Democrats Are Gifting the Median Voter to Republicans

The party in control of the presidency typically loses seats in the House and Senate in midterm elections. Since Jimmy Carter, the presidential party has on average lost just over 20 seats in the House and just under four seats

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Economic Development, Mobility, and Political Discontent: An Experimental Test of Tocqueville’s Thesis in Pakistan

ANDREW HEALY, KATRINA KOSEC and CECILIA HYUNJUNG MO AMERICAN POLITICAL SCIENCE REVIEW, Volume 111, Issue 3 Abstract: We consider the thesis of Alexis de Tocqueville (1856) that economic development and increased mobility may generate political discontent not present in more stagnant economies. For many citizens, as they become aware of the potential for improved living standards, their aspirations may […]

Private Foundations and their Child-Like Customers, by Contributing Guest

by Jennifer K. Thompson

As we do with many institutions, we tend to think of nonprofits monolithically: nonprofits, we are likely to say, are tax-exempt organizations that benefit the public. We often understand philanthropy in much the same, one-size-fits-all way: philanthropy is giving (whether in time or dollars) that is "other-oriented," as Professor Reich puts it in the first few minutes of this EconTalk conversation on Foundations and Philanthropy.

The reality, however, is that the landscape of nonprofits and donors in the United States is diverse and extensive. Depending on how they are measured or defined, there are 1.5 million entities that qualify as tax-exempt organizations in the United States. You may wish to debate this figure, and, if you do, you'll find plenty of resources and material to assist you. Multiple organizations like Guidestar and Charity Navigator(both nonprofits themselves) collect, review, and analyze data about nonprofits.

Increasingly, institutions of higher learning (most of which are also nonprofits) dedicate considerable time and talent to the study of philanthropy and nonprofit entities. In 2008, Indiana University awarded the nation's first PhD in philanthropic studies. The number of academic departments and centers dedicated to philanthropic studies (like the Center on Philanthropy in Civil Society at Stanford where Professor Reich is faculty co-director) has increased dramatically since the early 1980s when the first nonprofit concentrations were established. New research on nonprofits and philanthropy is being produced every day.

Liquidation and the Problem of Constitutional Settlement

Gordon Lloyd and Steve Ealy make a compelling case for liquidation, what they call “Originalism for the Living Generation,” as the most Madisonian means of settling constitutional meaning. Grounded as it is in Madisonian text and example, from The Federalist …

The Wonder of International Adoption: High School Grades in Sweden, by Bryan Caplan

Moving young children from the Third World to Sweden wipes out about half of their national IQ deficit.  What about performance in high school?  Vinnerljung et al.'s "School Performance at Age 16 Among International Adoptees" (International Social Work, 2010)  compiles the numbers, once again breaking them down by regular Swedes, Korean adoptees, and non-Korean adoptees.  Since these are high school students rather than conscripts, the data include women, yielding a much larger sample.  But otherwise, the national origin of the adoptees is basically the same as in Dalen et al. (2008) and Odenstad et al. (2008).  India, Thailand, Chile, Sri Lanka, Colombia, Ethiopia, and Ecuador top the list.

To start, imagine growing up in Sweden had zero effect on high school performance.  How would the non-Korean adoptees do?  As discussed earlier, if the non-Koreans had average IQ for their home countries, their mean IQ would be 84.  On the international PISA tests of science, reading, and math, countries with IQs around 84 score about one standard deviation below Sweden.*

Does prosperity push us to the left?, by Scott Sumner

Bryan Caplan recently posted the following:

A while back, Scott Alexander defended what he called the "Thrive/Survive Theory" of left and right. Digest version:> My hypothesis is that rightism is what happens when you're optimizing for surviving an unsafe environment, leftism is what happens when you're optimized for thriving in a safe environment.Scott defends the theory vigorously, but seems most impressed by its ability to explain why "society does seem to be drifting gradually leftward." The more the world thrives, the more the leftist approach genuinely makes sense.

Many people in my circles now seem to take Thrive/Survive Theory as the default position; if it's not true, it's still the story to beat. But to be blunt, I find essentially no value in it. It's not always wrong, but it's about as right as you'd expect from chance.
Bryan then lists 6 reasons why Alexander is wrong, which seem fairly persuasive. On the other hand I do find something appealing in Alexander's theory. So let me try a slightly different formulation:

Liberalism is what happens when you are optimizing for a safe environment, and illiberalism is what happens when you optimize for thriving in an unsafe environment.

Encyclopedic Liberty and Industry

This illustrated essay explores some images of "liberty" and "industry" from Diderot’s Encyclopédie, ou Dictionnaire raisonné des sciences, des arts et des métiers (Encyclopaedia, or a Systematic Dictionary of the Sciences, Arts, and Crafts) (1751-1772). They have been taken from Liberty Fund’s anthology of articles, Encyclopedic Liberty: Political Articles in the Dictionary of Diderot and D'Alembert (2016) and the supplementary volumes of illustrations from the original 18th century edition.

The Society of Tomorrow (Gustave de Molinari)

The Society of Tomorrow: A Forecast of its Political and Economic Organization, ed. Hodgson Pratt and Frederic Passy, trans. P.H. Lee Warner (New York: G.P. Putnam’s Sons, 1904).

Gabriel Zucman on Inequality, Growth, and Distributional National Accounts

Gabriel Zucman of the University of California, Berkeley talks with EconTalk host Russ Roberts about his research on inequality and the distribution of income in the United States over the last 35 years. Zucman finds that there has been no change in income for the bottom half of the income distribution over this time period with large gains going to the top 1%. The conversation explores the robustness of this result to various assumptions and possible explanations for the findings.

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Time: 1:12:35

Karl Polanyi’s Irrelevance to Today’s Policy Debates

The increase in globalization over the last couple of decades, and the Great Recession, has spurred interest and attention in Karl Polanyi’s book, The Great Transformation. Republished in 2001 (and in 1957), scholars such as Nobel Prize winning economist

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Diderot on the nature of political authority (1751)

Bach asks God "when will I die"? (1700)

Does Prosperity Make Us Utilitarian?, by Bryan Caplan

Scott Sumner has some thought-provoking reactions to my critique of Scott Alexander's Thrive/Survive Theory of left and right.  Here's my reaction, point-by-point.  Scott's in blockquotes; I'm not.

Liberalism is what happens when you are optimizing for a safe environment, and illiberalism is what happens when you optimize for thriving in an unsafe environment.

Now of course this raises a whole new set of issues. What do I mean by 'liberalism' and 'illiberalism'? When I say liberalism, I am including classical liberalism, social democratic liberalism and neoliberalism. I'm basically referring to utilitarianism. When I say illiberal, I am referring to a wide variety of non-utilitarian views, including class warfare (Mao), fascism (Hitler), white nationalism (Bannon), racism (KKK), reverse racism (SJWs), tribalism (Afghanistan), religious fanaticism, militarism, etc.

This is deeply puzzling. 

First, if "Liberalism is what happens when you are optimizing for a safe environment, and illiberalism is what happens when you optimize for thriving in an unsafe environment," are we talking about selfish optimization or social optimization?  If the former, then how does being rich make caring about outsiders "selfishly optimal"?  If the latter, then it sounds like utilitarianism requires illiberalism in unsafe environments.

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Peter Boettke, "Hayek's Epistemic Liberalism" (September, 2017)

Peter J. Boettke, Professor of Economics and Philosophy at George Mason University, argues that is a common trope to claim that F. A. Hayek experienced a crushing defeat in technical economics during the 1930s.  At the beginning of the decade, Hayek emerged in the British scientific community as a leading economic theorist. Yet by the end of the decade Hayek was supposedly defeated in his debate both with Keynes and with Oskar Lange and Abba Lerner over market socialism. However, this narrative reflects a fundamental misunderstanding of the teachings of economics from the classical to the early neoclassical economists.  Economic life from Adam Smith to J. S. Mill never was treated as taking place in an institutional vacuum.  Instead, law, politics, and social mores all constituted the institutional background against which economic life played out. As Boettke argues in the Lead Essay, Hayek’s epistemic institutionalism, as articulated in the 1930s and 1940s, provided the foundation for his own reconstruction and restatement of liberal political economy as evidenced in The Constitution of Liberty (1960) and Law, Legislation and Liberty (1973-79). Recognizing this aspect of Hayek’s thought is a first step to recognizing his broader contributions to economic science and the art of political economy. Boettke is joined in this discussion by Steven Horwitz, the John H. Schnatter Distinguished Professor of Free Enterprise in the department of economics at Ball State University, Roger Koppl, professor of finance in the Whitman School of Management of Syracuse University, and Adam Martin is a Political Economy Research Fellow at the Free Market Institute and an assistant professor in the department of Agricultural and Applied Economics at Texas Tech University.

Guizot on liberty and reason (1851)

Encyclopedic Liberty: Political Articles in the Dictionary of Diderot and D’Alembert (Denis Diderot)

This anthology is the first endeavor to bring together the most significant political writing from the entire twenty-million-word compendium known as The Encyclopedia. It includes eighty-one of the most original, controversial and representative articles on political ideas, practices, and institutions, many translated into English for the first time. The articles cover such topics as the foundations of political order, the relationship between natural and civil liberty, the different types of constitutional regimes, the role of the state in economic and religious affairs, and the boundaries between manners, morals, and laws.

Spooner on the "knaves," the "dupes," and "do-nothings" among government supporters (1870)

Max Scheler and Adam Smith on Sympathy

ADRIANA ALFARO ALTAMIRANO THE REVIEW OF POLITICS, Volume 79, Issue 3 ABSTRACT: Recent efforts to theorize the role of emotions in political life have stressed the importance of sympathy, and have often recurred to Adam Smith to articulate their claims. In the early twentieth-century, Max Scheler disputed the salutary character of sympathy, dismissing it as an […]

Tough Talk for Venezuela?, by Alberto Mingardi

American threats often allow rather terrible regimes to flex their muscles and build up greater consensus.

In Venezuela, the government held nationwide armed forces exercises on Saturday, calling on civilians to join reserve units to defend against a possible attack after U.S. President Donald Trump warned that a "military option" was on the table for the crisis-hit country. ... Maduro used Trump's threat to try to energize his political base, broadcasting images of rifle-carrying civilians negotiating obstacle courses and learning hand-to-hand combat. The government created the hashtag #EsHoraDeDefenderLaPatria, which translates as "It's Time To Defend The Homeland," to promote the exercises.
Alvaro Vargas Llosa, in his latest column for the Independent Institute, points out that "Trump is right to want Maduro out, but whoever is advising him on matters of the Western Hemisphere should explain that the threat of military action only helps the Chavista dictatorship and risks debilitating the wide-ranging anti-Chavista political front that has lately emerged in Latin America".

Extend the Sphere of Identity Politics

Our identity politics could use some Madisonian wisdom.

In an earlier post, I argued that our current legal regime, which has created protected and non-protected classes of Americans, is one important source of our current political alignment and a

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Michel Montaigne on the danger of becoming accustomed to state power (1580)

The Soliloquies (Saint Augustine)

The Soliloquies of St. Augustine, translated into English by Rose Elizabeth Cleveland. With Notes and Introduction by the Translator (Boston: Little, Brown, and Co., 1910).

Himmelfarb on the Fabians, by Alberto Mingardi

I'm an unabashed admirer of historian Gertrude Himmelfarb. One of the many. Her work is always illuminating, erudite, and typically a rather splendid read. I was most happy to see a new book by her, published in 2017 by Encounter Publishers. Past and Present. The Challenges of Modernity, from the Pre-Victorian to the Postmodernists brings together a few scattered essays, which all pursue the aim of setting the (British) past and (American) present in a dialogue.

In chapter six, "Churchill's Welfare State - and Ours", Himmerlfarb deals with Obamacare and with the welfarist policies favoured by Winston Churchill as a young politician, namely the Labour Exchanges Act and the National Insurance Act. Himmelfarb focuses on Sydney and Beatrice Webb's criticism of these measures, which were deemed insufficient. Yet they established the true foundations of the British Welfare State.

Beckworth interviews Summers, by Scott Sumner

David Beckworth's recent interview of Larry Summers was a treat for two reasons; there was lots of thought-provoking discussion, and I found a written transcript of the interview. Here's an excerpt (discussing secular stagnation):

You have a demassification of the economy. Think about Amazon rather than malls. Think about the fact that an office building for lawyers now require 600 square feet of space per lawyer where it used to require 1200 square feet of space per lawyer because they no longer need filing cabinets or paralegals to deal with the content of those filing cabinets because of the cloud. And think about the fact that the country's leading technology companies and most valuable companies in the world, Google and Apple, have as their major business problem a surfeit of cash flow and how to manage that cash flow. All of these things taken together suggests ample reason for believing that real interest rates would have trended downwards, and that's in fact what we have seen. And while many at the Fed were very quick to attribute low interest rates to so-called head winds, I thought by 2013 that the head winds theory was implausible and by 2017 that the head winds theory was ludicrous, that it was hard to see what head wind there was by 2017 that one wouldn't expect to be semi-permanent.

Democracy and Unfreedom: Revisiting Tocqueville and Beaumont in America

SARA M. BENSON SAGE JOURNALS, Volume 45, Issue 4 Abstract: This essay reexamines the famous 1831 prison tours of Alexis de Tocqueville and Gustave de Beaumont. It reads the three texts that emerged from their collective research practice as a trilogy, one conventionally read in different disciplinary homes (Democracy in America in political science, On the Penitentiary in criminology, […]