Liberty Fund

Ran Abramitzky on the Mystery of the Kibbutz

Economist and author Ran Abramitzky of Stanford University talks about his book, The Mystery of the Kibbutz, with EconTalk host Russ Roberts. Abramitzky traces the evolution of the kibbutz movement in Israel and how the kibbutz structure changed to cope with the modernization and development of the Israeli economy. The conversation includes a discussion of how the history of the kibbutz might help us to understand the appeal and challenges of the socialism and freedom.

Are Cars Much Better than 50 Years Ago?, by David Henderson

Short answer: Yes.

My reason for asking is this paragraph from a recent Tyler Cowen post:

I walked to my (non-fancy) car and turned on the ignition right after watching the movie.  It was immediately striking how much better and more reliable was the software in my car than in the whole well-funded moon program.  In this sense technological progress has been immense.  That said, most cars in operation today are not that much better than cars from 1969, and they perform more or less the same functions, albeit more safely.  Improving car manufacture is not that hard, but improving the usefulness of cars in our daily lives is where the problem lies.

I’m challenging the second-last sentence and to some extent the last sentence.

That said, most cars in operation today are not that much better than cars from 1969, and they perform more or less the same functions, albeit more safely.

Social Media—What a Bummer

The capitalists who embarked on a lefty, socialist mission and got entangled in mammoth contradictions.

Can fiscal rules constrain the size of government? An analysis of the “crown jewel” of tax and expenditure limitations

PAUL ELIASON, BYRON LUTZ JOURNAL OF PUBLIC ECONOMICS, Volume 166 Abstract: Fiscal rules attempt to alter budget outcomes by constraining policy makers. They have been one of the primary responses to the recent string of fiscal crises around the globe. We ask if these rules succeed in altering fiscal outcomes by examining what is arguably the […]

Magna Carta guaranteed the freemen of the kingdom their liberties forever (1215)

Some Thoughts on the Apparent Demise of Sears, by Steven Horwitz

Sadly, the company that made its name on mail orders couldn’t quite figure out what to do in a world of email orders.

Sears was, in many ways, the Amazon of its time. It made the mail-order catalog a staple of American households, and in so doing brought the latest and greatest products of American capitalism to people in every corner of the country at significantly lower cost. The catalog also offered African-Americans in the rural south not just access to goods, but provided them a way to shop with dignity and equality in a world of Jim Crow. Our contemporary shopping experience with Amazon and other online retailers is a descendant of the Sears catalog.

Even when the car and suburbanization created a shopping mall culture that made their catalog secondary, Sears was able to adapt, and their stores were omnipresent anchors across the country. But like the catalog, the shopping mall experience has fallen by the wayside as consumers seem to be less willing to devote several hours to driving to the mall to go to multiple stores to get what they want. The exceptions are often high-end malls and department stores, with whom Sears could not compete.

National Environmental Policy Act and Chevron Deference Aren’t the Problem

NEPA is a quite limited statute; and judicial deference to federal agencies can be good if the agencies are pursuing deregulatory measures.

The Dialogues of Plato, vol. 1 (Plato)

The Dialogues of Plato, vol. 1, translated into English with Analyses and Introductions by B. Jowett, M.A. in Five Volumes. 3rd edition revised and corrected (Oxford University Press, 1892).

Behavioral Economics

How Behavioral Economics Differs from Traditional Economics

All of economics is meant to be about people’s behavior. So, what is behavioral economics, and how does it differ from the rest of economics?

Economics traditionally conceptualizes a world populated by calculating, unemotional maximizers that have been dubbed Homo economicus. The standard economic framework ignores or rules out virtually all the behavior studied by cognitive and social psychologists. This “unbehavioral” economic agent was once defended on numerous grounds: some claimed that the model was “right”; most others simply argued that the standard model was easier to formalize and practically more relevant. Behavioral economics blossomed from the realization that neither point of view was correct.

The standard economic model of human behavior includes three unrealistic traits—unbounded rationality, unbounded willpower, and unbounded selfishness—all of which behavioral economics modifies.

Nobel Memorial Prize recipient Herbert Simon (1955) was an early critic of the idea that people have unlimited information-processing capabilities. He suggested the term “bounded rationality” to describe a more realistic conception of human problem-solving ability. The failure to incorporate bounded rationality into economic models is just bad economics—the equivalent to presuming the existence of a free lunch. Since we have only so much brainpower and only so much time, we cannot be expected to solve difficult problems optimally. It is eminently rational for people to adopt rules of thumb as a way to economize on cognitive faculties. Yet the standard model ignores these bounds.

Roberts Must Recognize that Court Also Errs in Striking Down Laws

The Supreme Court has wrongly invalidated laws, just as it has upheld unjust ones.

Goethe’s Works, vol. 4 (Recreations of the German Emigrants, Wilhelm Meister’s Apprenticeship) (Johann Wolfgang von Goethe)

Goethe’s Works, illustrated by the best German artists, 5 vols. (Philadelphia: G. Barrie, 1885). Vol. 4: W. Meister’s Apprenticeship.

Hamilton, Madison, and American Oligarchy: A Conversation with Jay Cost

Jay Cost, author of The Price of Greatness, discusses the political and economic debates between Hamilton and Madison.

Stubborn Detachments, by Bryan Caplan

I’ve known Tyler Cowen for 25 years.  Straussian misreadings notwithstanding, I assure you that he has little patience for open borders and even less for my brand of pacifism.  But given the general moral theory that he embraces in his new Stubborn Attachments, it’s hard to see why Tyler doesn’t already agree with me.  At minimum, he ought to take my contrarian views far more seriously.  What else can he logically conclude, given his endorsement of the “Principle of Growth Plus Rights”?  After strongly endorsing the moral value of maximizing economic growth, Tyler adds:

The Principle of Growth Plus Rights.  Inviolable human rights, where applicable, should constrain the quest for higher economic growth.

Virgil Storr, "Marx and the Morality of Capitalism" (October, 2018)

This year is the bicentennial of the birth of Karl Marx (1818-1883) and in this month's Liberty Matters online discussion we will explore the strengths and weaknesses of Marx's political, economic, and social thought. The lead essay is by Virgil Store, senior research fellow at the Mercatus Center and a professor of economics at George Mason University, where he explores Marx's "moral critique of capitalism" which he argues underlies his economic and social critiques of capitalism. He is joined in this discussion by Pete Boettke, Professor of Economics and Philosophy at George Mason University; Steve Horwitz, Distinguished Professor of Free Enterprise in the department of economics at Ball State University in Muncie, Indiana; David Prychitko, professor of economics at Northern Michigan University; and David Hart, the Director of Liberty Fund's Online Library of Liberty Project.

See the Archive of "Liberty Matters".

The Merchant of Venice (William Shakespeare)

The Complete Works of William Shakespeare (The Oxford Shakespeare), ed. with a glossary by W.J. Craig M.A. (Oxford University Press, 1916).

Light from the North: The Scottish Enlightenment

Thomas Hodgskin wonders how despotism comes to a country and concludes that the "first step" taken towards despotism gives it the power to take a second and a third - hence it must be stopped in its tracks at the very first sign (1813)

Two questions about commercial real estate lending, by Scott Sumner

The S&L crisis of the 1980s was centered around loans to real estate developers. The banking crisis of 2007-09 was centered around loans to real estate developers (not mortgage loans). Dodd-Frank was supposed to fix this problem. How’s it working so far?

This Financial Times story suggests the answer is “not well”:

Fears that smaller US banks are taking excessive risks in commercial real estate deepened on Friday as shares plunged in an Arkansas lender that has ploughed billions of dollars into developments in states as far away as New York.

Bank OZK — which this year changed its name from Bank of the Ozarks — revealed that it was taking a $45m writedown on two commercial real estate (CRE) loans, sending its shares down by more than a quarter in afternoon trading.

Bank OZK has $22bn in assets, half of which are CRE and multi-family real estate loans, making it a leading example of a nationwide trend: As big banks have pulled back from CRE and regulators have warned about high valuations, small banks have turned to the asset class as opportunities to expand in other areas have declined.

Locke On Toleration, (In)Civility and the Quest for Concord

T. M. BEJAN HISTORY OF POLITICAL THOUGHT 37.3 (2016): 556-587 Abstract: Lockean toleration has long been criticized as ethically minimal and indifferent to the interactions of private individuals. Yet these criticisms ignore Locke’s lasting preoccupation with intolerance and incivility as obstacles to coexistence. These concerns were instrumental in the development of his understanding of toleration as […]

Human Capital

Supplementary resources by topic. Human Capital is one of 51 key economics concepts identified by the Council for Economic Education (CEE) for high school classes.

Human Capital, from the Concise Encyclopedia of Economics

To most people capital means a bank account, a hundred shares of IBM stock, assembly lines, or steel plants in the Chicago area. These are all forms of capital in the sense that they are assets that yield income and other useful outputs over long periods of time.

But these tangible forms of capital are not the only ones. Schooling, a computer training course, expenditures of medical care, and lectures on the virtues of punctuality and honesty also are capital. That is because they raise earnings, improve health, or add to a person’s good habits over much of his lifetime. Therefore, economists regard expenditures on education, training, medical care, and so on as investments in human capital. They are called human capital because people cannot be separated from their knowledge, skills, health, or values in the way they can be separated from their financial and physical assets.

Roman Virtues

Here are some etchings of some of the Roman virtues: Libertatis (liberty), Pacis (peace), Victoriae (victory), and Virtutis (manly virtue).

How Nation-States Secure Freedom

It’s the supranational institutions, unrepresentative and unaccountable, that tend to do the opposite—and that spur destructive forms of nationalism.

Mill on the dangers of the state turning men into "docile instruments" of its will (1859)

Omnipotent Government: The Rise of the Total State and Total War (Ludwig von Mises)

Published in 1944, during World War II, Omnipotent Government was Mises’s first book written and published after he arrived in the United States. In this volume Mises provides in economic terms an explanation of the international conflicts that caused both world wars. Although written more than half a century ago, Mises’s main theme still stands: government interference in the economy leads to conflicts and wars. According to Mises, the last and best hope for peace is liberalism—the philosophy of liberty, free markets, limited government, and democracy.

Francis Hutcheson's early formulation of the principle of "the greatest Happiness for the greatest Numbers" (1726)

Reforming U.S. Environmental Policy

Start with two big obstacles to good policymaking on the environment: federal review under NEPA, and undue judicial deference to the executive branch.

Ancient Law (Sir Henry Sumner Maine)

Ancient Law, its connection with the early history of society and its relation to modern ideas, with an introduction and notes by Sir Frederick Pollock. 4th American from the 10th London edition (New York: Henry Holt and Co., 1906).