Last week, Chris Edwards, a budget policy analyst at the Cato Institute, and Ilana Blumsack, his research associate, issued an extensive report in which they graded the fiscal policy records of forty-six of America’s fifty governors. Why only forty-six? The authors explain that the governors of New York, Rhode Island, and Virginia had not been in office long enough to establish a record and that Alaska’s governor was excluded because of “peculiarities in that state’s budget.” When I read analyses of taxes and spending by governments in the United States, I expect mainly bad news. To be sure, there’s much of that in their report, but there’s also a large amount of good news. We often hear that there’s not much difference between the policies of Republicans and Democrats. But Edwards and Blumsack show that, at the state level, there are huge differences between the top Republicans and the bottom Democrats. Specifically, the five governors who earn an A for their tax cutting and budget restraint are Republicans: Kim Reynolds of Iowa, Chris Sununu of New Hampshire, Pete Ricketts of Nebraska, Brad Little of Idaho, and Doug Ducey of Arizona. The eight governors who earn an F are Democrats: Tim Walz of Minnesota, Tom Wolf of Pennsylvania, J. B. Pritzker of Illinois, Gretchen Whitmer of Michigan, Phil Murphy of New Jersey, Kate Brown of Oregon, Gavin Newsom of California, and Jay Inslee of Washington. These aren’t just opinions; the authors go into great detail about the governors’ accomplishments or lack of same. This is from David R. Henderson, “Good News on State Taxes,” Defining Ideas, October 20, 2022. Also notice my discussion of the flypaper effect. Read the whole thing. (0 COMMENTS)

It’s no longer news that industrial policy is making a comeback. Too bad, that. In the zombie parade of bad policies that the left and the new right are now staging, this one is particularly baffling. Industrial policy has been tried on large scales – think the Soviet Union – and on smaller scales, including in the US and many other countries. The fact that past industrial policy attempts were abandoned due to grotesque failure to achieve their goals seems to make no difference to those who are intent on reviving this practice. Indeed, we need not look as far back as the 1980s for evidence of the folly of trusting government to guide industrial development; we have a contemporary example. And this example is detailed by none other than the New York Times, which recently reported that, after years and billions of dollars, California’s effort to build a high-speed train has been a disaster.  A tidbit: Now, as the nation embarks on a historic, $1 trillion infrastructure building spree, the tortured effort to build the country’s first high-speed rail system is a case study in how ambitious public works projects can become perilously encumbered by political compromise, unrealistic cost estimates, flawed engineering and a determination to persist on projects that have become, like the crippled financial institutions of 2008, too big to fail. This effort qualifies as industrial policy because the government claims to know better than private markets what is the best means of transportation and worth high-jacking resources to produce bureaucrats’ preferred outcome. But as usual, government officials – spending other people’s money – miss the obvious. There’s a reason why trains in the U.S. trains are far less popular than planes. There’s a reason why travel by rail make more sense in small countries, and along the densely populated northeastern coast of the U.S. But politicians and intellectuals, enamored of the notion that trains are more friendly to the planet than are planes, ignore these realities in pushing for an industrial outcome that will likely never be profitable. For a walk down failed-rail-project memory lane see this piece by Phil Klein. Building a high-speed rail connecting Los Angeles and San Francisco was always going to be challenging due to California’s geography. And of course, most of you will not be surprised to learn that this large-scale government project is in fact failing, in large part because of the perverse incentives that pervade such a government project. From conception to planning to building, the incentives consistently encourage waste and error. Again, legislators aren’t funding this boondoggle with their own money. Nor will they be personally accountable for cost overruns, failure to deliver, or what are certain to be many technical problems. The cost overruns here are almost comical for something that literally hasn’t been built yet. In 2008, the train’s cost was projected to be $33 billion. Fourteen years later the final plan is projected to cost $113 billion – a mere 242 percent more than the sum used to peddle the scheme to the general public. In addition, decisions on construction are unduly – but not unsurprisingly – influenced by special interests rather than by good economic sense. As the Times writes: “political deals created serious obstacles in the project from the beginning.” Here’s more: A review of hundreds of pages of documents, engineering reports, meeting transcripts and interviews with dozens of key political leaders show that the detour through the Mojave Desert was part of a string of decisions that, in hindsight, have seriously impeded the state’s ability to deliver on its promise to create a new way of transporting people in an era of climate change. As if the project wasn’t difficult enough to deliver on, legislators decided to create costly detours to serve political friends: Political compromises, the records show, produced difficult and costly routes through the state’s farm belt. They routed the train across a geologically complex mountain pass in the Bay Area. And they dictated that construction would begin in the center of the state, in the agricultural heartland, not at either of the urban ends where tens of millions of potential riders live…. Mike Antonovich, a powerful member of the Los Angeles County Board of Supervisors, was among those who argued that the train could get more riders if it diverted through the growing desert communities of Lancaster and Palmdale in his district, north of Los Angeles. Even the SNCF engineers from France who came to work on the project eventually gave up: There were so many things that went wrong,” Mr. McNamara said. “SNCF was very angry. They told the state they were leaving for North Africa, which was less politically dysfunctional. They went to Morocco and helped them build a rail system. Morocco’s bullet train has been in service since 2018. The report is worth reading in its entirety. It is the most ridiculous and clichéd story of why industrial policy fails. Such projects are often taken over by special interest groups (remember Alaska’s bridge to nowhere) that bloat the cost, and in extreme cases lead the project to failure. This experience is commonplace. My colleague Jack Salmon told me about the plans for HS2, a high-speed rail project in the U.K., that started in 2009 to link London to Birmingham, Manchester, and Leeds. The high-speed train was promised to reduce the time of the journey by 30 minutes. Salmon sent me the following information: The first stage was predicted to be completed by 2020, and with a further connection to Scotland operating by 2030. In 2010, the new conservative-led coalition amended 50% of the planned route after rural conservative MPs made a fuss about noise pollution and property values. At the time, the cost was estimated at about £30 billion. In 2013, the cost of the project was revised up to £50 billion. In 2014, the cost was revised to £57 billion. By 2019, the Oakervee review estimated that the projected cost, in 2019 prices, had increased to £88 billion. Lord Berkley, deputy chair of the review, said that these estimates were very optimistic and could actually be as high as £170 billion. The route is now estimated to be completed by 2045, although this will likely be pushed back. By that time, this £30 billion gravy train could end up costing £1 trillion. That’s the problem with industrial policy, and such gravy train projects. Politicians can’t help themselves and these projects are always highjacked by special interests.   Veronique de Rugy is a Senior research fellow at the Mercatus Center and syndicated columnist at Creators. (0 COMMENTS)

How do books change our lives? In this episode, host Russ Roberts welcomes Columbia University professor Roosevelt Montás to help answer that question and to talk about his new books, Rescuing Socrates. Montàs directed Columbia’s Core Curriculum program for many years, and remains a fierce advocate of the liberal arts- something he sees as valuable for all students, whether formal or informal settings. He shares his inspiring personal story, and offers all of us a great deal to think about- and read! What makes Columbia’s core curriculum so unique? How broadly applicable is it; is it just an Ivy League thing, or is there something we can all benefit from? If so, where and how might we do so? Montàs puts a great deal of emphasis on the discursive nature of the liberal arts. So let’s keep the learning and  the conversation going. As always, we love to hear from you.     1- Why do the liberal arts seem so out of favor today? Is it simply a question of “bad marketing,” as Roberts suggests? Are the liberal arts and the model of the modern research university incompatible? (You might think here about the role of the non-expert professor leading the liberal arts courses at Columbia. To what extent is there value in learning with someone who holds no particular expertise in the field?)   2- Roberts suggests we look to where the word “liberal” in liberal arts comes from, as a notion of freedom is part of its origin. What does Roberts mean when he says this sort of education is something everyone has to figure out for themselves? What is the role of freedom in a liberal arts education?   3- Montàs tells a story about four thinkers who profoundly influenced him: Freud, Ghandi, Plato, and Augustine. What is your experience with these thinkers? Who would you choose to answer the question of the most influential thinkers in your life, and why?   4- Unsurprisingly, the question of dead white men and the western canon arises. What does Montàs mean when he suggests we run the risk of conflating diversity with chronological order? How did you react to his claim that, “…one of those great values is that we can see in those ancient texts–in those minds and writers from a different world, a different time, a different class, a different culture than our own–we can see what is fundamentally human.”   5- Why are liberally educated people better for a democracy? Montàs says, “…I wouldn’t blame the crisis in our political discourse, kind of the discursive crisis in which America finds itself today–I wouldn’t blame that on higher education. But I would say that higher education has failed to make its contribution to preventing that.” What does this mean? What should be the role of higher education in shaping our political discourse?     (0 COMMENTS)

  The latest EconTalk, Russ Roberts’ interview with Devon Zuegel, is first rate. It shows how someone who’s not an economist, Zuegel, but who pays careful attention, can suss things out. She makes the point early on that she’s not alone: dinner conversations in Argentina ultimately turn to the issue of how to protect one’s assets in a country with high inflation where you can’t trust the government or even the banks. Interesting story after interesting story. Some highlights follow. Argentine’s GDP Per Capita 100 Years Ago Many economists, including me, have spoken or written about how bad economic policies brought Argentina from being one of the highest per capita income countries a little over a century ago to one that’s basically in the middle today. According to Zuegel, we’re half right. She argues that Argentina during World War I had unusually high income per capita because of its exports of high-priced agricultural output. I haven’t checked, but it seems plausible. Long-Term High Inflation “In the last hundred years, Argentina has seen an average of 100% annual inflation.” By the way, that doesn’t come close to hyperinflation, which is typically defined as inflation of 50% per month, but it’s high and destructive nevertheless. See Michael K. Salemi, “Hyperinflation,” in David R. Henderson, ed., The Concise Encyclopedia of Economics. Bricks as an Inflation Hedge You read that right. How Law-Abiding are Argentinians? And, I think in the United States people tend to be kind of bashful about breaking the law, at least in my friend circles. In Argentina everybody breaks the law. Every single day. Because otherwise you get half the income, and like, you can’t pay your rent. And so people–everyone knows exactly what the black market rate is at all times. Politicians will even quote it. Like, it’s well understood that this is out there. Long story short: Everyone tries to be in the black market as much as they can. There are certain transactions where that’s really difficult, but for the most part people will try to exchange their money in the black market. The only thing I know of that comes anywhere close in the United States is sellers of used cars cooperating with buyers to understate the price of the transaction to save the buyer on sales tax. A huge percent of people who have sold their used car have told me that they do so if the buyer asks. German Wheelbarrows Russ Roberts says: When you read about hyperinflation, say, in the Weimar Republic in Germany after World War I, you’d read about people who would take wheelbarrows of cash to the store–literally–because it took so many pieces of paper to buy stuff, suddenly. He could have added, because it’s true (although I can’t find the reference immediately), that in one case the person left the wheelbarrow with money outside while entering the store and returned to find the money on the ground and the wheelbarrow stolen. Buying Houses Depends on Trusting Third Party Read the part about avoiding banks and relying on a third party to hold the money in escrow. Extended Discussion of Cryptocurrencies and How They Are Vital to Argentinians in a Way That We Americans Have Trouble Imagining Absolutely worth listening to or reading. I have nothing to add. Inflation Propagates Unevenly As Russ points out, this could be simply big changes in relative prices due to big changes in supply conditions. But I do think she’s making a good point. In economics, we call them Cantillon effects. The Tragedy of Wasted Minds Zuegel says: Just to tie that up, at the beginning I joked that every dinner conversation in Argentina ends up on the topic of what to do about your money so it doesn’t lose value. And, it’s kind of funny, but it’s also, if you think about it, it’s really wasting the minds of generations of people. There’s all these really smart people who are spending half of their brain just trying to figure out how to store their money so that they don’t get wiped out tomorrow. It’s just really tragic. I see all these really smart people who I love who could be doing so much more, but they’re stuck in this cycle.       (0 COMMENTS)

I recently left Czechia, and I’ll probably never return to that country.  (Not because it’s not worth revisiting, but I have many other places that I’d like to visit and limited time to do so.) Perhaps you’ve had the same experience.  You are at the train station or airport with a bit of local cash that will be useless at your next stop.  Too little to exchange.  What should you do with it? I’ve seen airports with a bin where extra cash can be deposited.  They say it will go to charity.  Alternatively, you could burn the currency note.  What should a utilitarian do?  Here’s how I think about the issue: 1. Assume that it costs 5 cents to manufacture one dollar’s worth of Czech currency.  Then burning currency notes is like donating 95 cents on the dollar to the Czech government.  It provides them with “seignorage”. 2. If I believe that donating 95 cents to the Czech government will have more positive effects than donating $1 to a charity I know nothing about, then I should burn the currency, and vice versa. If this result seems odd, it’s because we are used to thinking about currency as net wealth.  Burning money seems grotesquely wasteful.  The currency stock as a whole is net wealth, as it provides useful transactions services to society.  But burning one currency unit doesn’t significantly reduce that value of the total currency stock, as it would be almost costlessly replaced by the Czech government.   The only waste involved is the cost of printing a unit of new currency. If you suspect that the quantity theory of money is lurking somewhere in the background, you are correct.  But only in a ceteris paribus sense.  In the long run, boosting the money supply by X% will reduce the purchasing power of each unit of money by the same proportion, other things equal. PS.  I can’t get used to all of these name changes.  First Bohemia, then Czechoslovakia, then Czech Republic, and now Czechia.  When will they settle on a name?  (Yes, I know–they don’t all cover exactly the same region.) PPS.  Because we also spent two weeks in Austria, I have a few thoughts on why Vienna has once again topped the rankings of the most livable cities in the world. I suspect that the break-up of the Austro-Hungarian Empire in 1918 indirectly caused Vienna to become a very nice city today.  By the early 20th century, Vienna had rapidly expanded into a city of roughly 2 million, presiding over a large empire.  Buildings constructed during the decades leading up to WWI had a lot of character—Vienna has “good bones”. If the empire had survived, Vienna would have expanded greatly during the 20th century, adding lots of ugly utilitarian architecture, such a public housing projects.  But for a small country such as Austria, a capital city with 2 million people is plenty large, and hence Vienna has roughly the same population as it had 100 years ago.  As Austria has become richer after WWII, the city expanded to fill out the older city, much like a boy grows into his older brother’s clothing.  It didn’t have to add as many ugly buildings as Paris and London, and also avoided some of their congestion. Modern Vienna is thus preserved in amber to a greater extent than most other European capitals.  In most cases, being stagnant is a sign of poverty.  But Austria is a relatively rich country, without its capital city being very dynamic.  Perhaps it is that combination that explains Vienna’s high ranking. PPPS.  I took this picture in Amsterdam: (0 COMMENTS)

In a previous EconLog post I discuss the origins of ska. But how did we get from ska to ska punk? Jamaican immigration to England was crucial to the birth of ska punk. Evan Nicole Brown writes that:  In 1948, the United Kingdom opened its doors to citizens of British territories, because it needed a larger labor force to help rebuild its economy after World War II. As a result, West Indian immigrants traveled in great numbers to London, specifically neighborhoods like Brixton and Peckham. By the time ska was born on Orange Street these families were firmly settled in their new place across the pond, so, when the time came, ska music found a home in London, too. Around the early 1960s, the first British-Jamaican sound system was up and running, and British youths started to become exposed to ska music through their proximity to these Jamaican enclaves, which were working-class areas similar to Kingston back home. “They gathered together at house parties because that was their culture, and they missed home,” Augustyn says of the immigrant community. It wasn’t long before their English neighbors developed a taste for the sound and ethos of ska music, played from the classic Jamaican vinyls booming through the sound systems, and with the growing presence of bands like The Specials, The Selecter, and Bad Manners, ska’s second wave, Two-Tone, was born. “[The British] loved [ska], and then they blended it with what they knew, which was early punk rock,” says Augustyn. This European twist on ska didn’t forget its roots. In fact, Two-Tone bands were known for being diverse, as most usually had one or more Jamaican members. A popular band of this era, Madness, got its name from a Prince Buster song of the same title. Immigration allows people to associate and learn from people with very different knowledge and life experiences. One result is that they can combine their ideas, creating something new and wonderful. In this case, a genre of music and a scene that brings many people joy to this day. As economists, we can measure many of the benefits of immigration. For example, a substantial literature on the place premium shows how much immigrants can increase their earnings by moving to a wealthier country. This obviously benefits the immigrants enormously. But it also benefits many other people, because the immigrants are earning more largely because they’re able to do labor that creates more value. This is part of why some economists estimate that abolishing migration restrictions could roughly double world GDP.  However, not all benefits of immigration will be captured in prices. While ska punk may not have come about without immigration, not all ska punk artists were Jamaican immigrants. Even if we were to aggregate all the final sale prices of ska punk records, concert ticket sales, and merchandise, this might underestimate the benefits. While I have purchased all of these, much of my enjoyment of ska happens when I listen to ska music on YouTube or streaming sites. In these contexts, I am receiving substantial consumer surplus relative to what the artist is paid! Ska punk may not be your favorite genre. But chances are that at least one thing you love, whether it’s a type of music, food, art, technology, or consumer product, is a similar result of the creativity, cultural exchange, and entrepreneurship that immigration enables.  But in recent decades, wealthy countries have been increasingly restrictive of immigration. This hurts prospective immigrants enormously. But it also hurts the rest of us. As Michael Clemens teaches us, migration restrictions leave trillion dollar bills on the sidewalk. When you see a trillion dollar bill on the sidewalk, be an alert entrepreneur and pick it up, pick it up, pick it up!   Nathan P. Goodman is a Postdoctoral Fellow in the Department of Economics at New York University. His research interests include defense and peace economics, self-governance, public choice, institutional analysis, and Austrian economics. (0 COMMENTS)

They [the Russians] live under a system of tight state-controlled information. But probably the attitude to take toward this is not to get too excited about it. When we take account of what the U.S.S.R. has accomplished in the 20 years of its existence, we can make allowances for certain shortcomings, however deplorable. For that matter, even 15 years ago the Russian economy had scarcely yet changed from the days of the Czars, and the kulaks of the steppes were still treating modern industrial machines like new toys. In 1929 the Soviet Union did not have a single automobile or tractor plant and did not produce high-grade steel or ball bearings. Today the U.S.S.R. ranks among the top three or four nations in industrial power. She has improved her health, built libraries, raised her literacy to about 80%–and trained one of the most formidable armies on earth. It is safe to say that no nation in history has ever done so much so fast. If the Soviet leaders tell us that control of information was necessary to get this job done, we can afford to take their word for it for the time being. We who know the power of free speech, and the necessity for it, may assume that if those leaders are sincere in their work of emancipating the Russian people, they will swing around toward free speech–and we hope soon. This is from an editorial in Life, March 29, 1943. The whole issue was devoted to the USSR. Indeed, the title on the front, along with the picture of Joseph Stalin, is Special Issue USSR. (The issue was being thrown out when a neighboring office was being emptied and I retrieved it.) The picture above is the cover. The picture, by the way, was taken by the famous photographer Margaret Bourke-White in 1941. (0 COMMENTS)

By the end of 2021, Fed officials realized that they had made a mistake, allowing aggregate demand to grow at an excessive rate. They began to move toward tightening monetary policy. Unfortunately, they moved so slowing that there ended up being almost no tightening during the first nine months of 2021. They worried about frightening markets.  This was a big mistake. While inflation was accelerating in early 2022, the Fed was content to let short-term rates stay near zero.  All the Fed did was move from “not even thinking about raising rates” to “thinking about raising rates”.  Many Fed watchers wrongly thought that this represented tightening.  In mid-March, they raised rates by a measly quarter point, far too little to slow the relentless rise in core inflation.  Policy was still expansionary.  And yet many pundits thought the Fed was overreacting, moving too aggressively. Now we are about to pay the price for the Fed gradualism.  Bloomberg just suggested that there is a 100% chance of recession next year.  I think that’s too high, but the risk is clearly increasing.  By not tightening aggressively at the end of 2021, the Fed let inflation get much more deeply entrenched in the economy.  With even core inflation now rising, the pain associated with bringing it down will be much greater.  A small recession in 2022 would have been better than a bigger one in 2023.  As Matt Yglesias likes to say, if the Fed expects to gradually raise rates by 200 or 300 basis points over the next year, it should probably do it right away.  It’s like getting into a cold lake—just jump in; don’t wade in one inch at a time. The Fed needs to stop worrying about scaring markets and focus on their core responsibilities.  In the long run, the worst thing that can happen to markets is a bad macroeconomy.  Get the economy right and the markets will follow.  Markets like stable NGDP growth. PS.  Just to be clear, gradualism was not the Fed’s primary error.  The biggest mistake was abandoning the policy of average inflation targeting.  That’s what allowed inflation to accelerate in the first place.  A huge unforced error, which severely damaged the Fed’s credibility. PPS.  The Guardian is still arguing that the problem is supply-side inflation, despite 9.5% NGDP growth over the past year: “Raising interest rates isn’t working, and the Fed’s overly aggressive actions are shoving our economy to the brink of a devastating recession,” said Rakeen Mabud, chief economist at the progressive Groundwork Collaborative think tank. “Supply chain bottlenecks, a volatile global energy market and rampant corporate profiteering can’t be solved by additional rate hikes.” The Fed and some economists maintain that demand generated by a hot labor market and higher wages are driving inflation, and higher unemployment and interest rates are panaceas. . . . The price drops aren’t materializing because current inflation largely isn’t demand- or labor-driven as it often is during inflationary periods, said Claudia Sahm, a former Fed economist and founder of Sahm Consulting. “High inflation is not workers’ fault, but the Fed is waging a war on US workers,” Sahm said. Not sure I’d call the lowest unemployment rate in 53 years “a war on US workers”. (0 COMMENTS)

“By choosing an Agropur product you are choosing to promote and contribute to the Canadian economy.” This statement appears on every milk container they sell in the Great North. In one fell swoop, this company is choosing to attack both the free enterprise system, as well as basic economic law. It does so in two different ways. First, consider buying any consumer item at all. Does this promote the economy? Well, yes, if you are a Keynesian. Here, the buyer is king. The entire economy revolves around the consumer.  But economic science and common sense soon puts paid to this economically illiterate idea. Who do you think can better develop an economy: four big fat huge guys with beer bellies who can consume, oh, 10,000 calories per day with ease, but can’t produce their way out of the proverbial paper bag? Or four thin fellows who thrive on 2000 daily calories and can work all the day long? The former foursome can consume like crazy, but are too obese to produce much of anything. For the latter group, the very opposite is the case. No, it is producers, not consumers, who create economic growth and development. Production necessarily comes before consumption. You can have the former without the latter (not that you would want to), but not the reverse.  If the general public drank less milk, not more, scarce capital could be devoted to mining, education, research, etc., and other such pursuits which enrich us all. On the other hand, we have no reason to doubt that actual practices in this regard are optimal. Secondly, posit a given level of milk drinking which is claimed to be to Canada’s benefit, but only if this stems from domestic cows. This only follows if we ignore the benefits of specialization and the division of labor. Sometimes it is easier to understand economic concepts if we exaggerate matters. So, instead of merely focusing on Canadians buying made-in-Canada milk, let us posit that people from this country simply refuse to purchase anything not produced north of our southern border. We would then be completely self-sufficient. Would this enrich us? You can believe this only if you never took Economics 101, failed this course, or were “socially” passed. Why not? This is simply because foreigners can often manufacture some things more cheaply, and better, than we can, and we can do so with regard to other items. For example, we are better at maple syrup than are the Hawaiians, and they can wipe the floor with us insofar as pineapples are concerned. So much for what economists call absolute advantage. But there is also comparative advantage. Even if Canadians are better than another country (or worse) at producing both goods in bilateral trade, it still sometimes pays not to be inward looking as this milk company would have it. Consider the following numerical example:                                                 Good X                                 good Y                                   GDP Country A                            100                                         50                                           150 Country B                            10                                           40                                           50 No trade                              110                                         90                                           200 Trade                                    200                                         80                                           380   A is ten times as effective as is B in X (100 to 10) but only slightly better in producing Y (50 to 40). B is only 10% as good in X as A is, but 80% as efficient at producing Y. If no trade occurs, there are 110 Xs in existence, 90 Ys for a total of 200 (we assume these goods are additive); the GDP of A is 150, that of B, 50, again for a total of 200. But if trade occurs, each country specializes not in what it is absolutely best at (A wins in both cases), but rather according to its comparative advantage. A doubles down on X and produces 200 units, while B does the same in Y and comes up with 80 units. GDP now rises to 280 units. Everyone wins. Should this company’s message be cancelled? Yes, if you support truth and economic efficiency; no, if you favor free speech. By the way, note this, Canadian snowbirds. With no trade, there will be no winter vacations in the Bahamas or Florida. That would be but one logical implication of Agropur’s anti free trade argument, if taken to its logical conclusion.     Walter E. Block is Harold E. Wirth Eminent Scholar Endowed Chair and Professor of Economics at Loyola University New Orleans and is co-author of An Austro-Libertarian Critique of Public Choice (with Thomas DiLorenzo). (0 COMMENTS)

Giorgia Meloni’s coalition won the recent parliamentary elections in Italy. Some think she is an “illiberal democrat” of the right like Victor Orbán and other current strongmen. Professor Alberto Mingardi, director general of the Bruno Leoni Institute, challenges this idea. In my opinion, the quote that John O. McGinnis provides from a Meloni speech is strongly suggestive of illiberal democracy (see “New Avatars for the Right,” October 13, 2022): Why is the family an enemy? Why is the family so frightening? There is a single answer to all these questions. Because it defines us. Because it is our identity. Because everything that defines us is now an enemy for those who would like us to no longer have an identity and to simply be perfect consumer slaves. And so they attack national identity, they attack religious identity, they attack gender identity, attack family identity. … Because … when I no longer have an identity or roots, then I will be the perfect slave at the mercy of financial speculators. The perfect consumer … We will defend the value of the human being. … We will defend God, country and family. Assuming that the translation is faithful, Meloni does look like a populist of the right and a would-be strongman. (See my review of Gideon Rachman’s The Age of the Strongman in the current issue of Regulation.) It is not difficult to see that the identity she is glorifying is a unicorn. If the family defines us, “is our identity” as she says, it cannot be our nation or our religion or our “gender” that really defines us. Ms. Meloni would probably answer that an Italian is defined by all of these (“God, country and family”) in a sort of composite identity. But this does not work. Fragmented identities don’t maker an identity. Not only are there Italians of different genders (or sex), but also some who are atheists or otherwise non-Catholics. Only with two characteristics, Catholic or not, male or female, we already have four sorts of Italians. Add nationalist vs. non-nationalist and we have eight sorts. These identities can easily become conflictual. What if “country” —“the fatherland” as the Financial Times renders the country part of Meloni’s triadic slogan—requires somebody to sacrifice his family to conscription at the service of the Italian state, embodiment of the fatherland? This reminds me of what Rose Wilder Lane wrote after her travels in Italy (and other countries including Russia) in the 1920s (“Give Me Liberty,” Saturday Evening Post, March 7, 1936): I was finally compelled to admit to my Italian friends that I had seen the spirit of Italy revive under Mussolini. And it seemed to me that this revival was based on a separation of individual liberty from the industrial revolution whose cause and source is individual liberty. I said that in Italy, as in Russia, an essentially medieval, planned and controlled economic order was taking over the fruits of the industrial revolution while destroying its root, the freedom of the individual. “Why will you talk about the rights of individuals!” Italians exclaimed, at last impatient. “An individual is nothing. As individuals we have no importance whatever. I will die, you will die, millions will live and die, but Italy does not die. Italy is important. Nothing matters but Italy.” The quote above from Meloni deserves to be repeated urbi et orbi, because it shows how the right’s identity politics is similar to the left’s identity politics, at least on the more extreme parts of the standard political spectrum. Only the identity characteristics and the favored groups are different. In both cases, state authoritarianism is required to try to impose the correct identity on everyone. It is not surprising, then, that both the right and the left are opposed to free markets, which allow each individual to make his own choices and define his own identity, even in most cases if the majority or “the people” does not agree. Except in a small primitive tribe, an individual has several “identities” along many dimensions and one could not easily find two individuals with the same composite identity. Finding a common denominator—a common value or common preference—among Italians or in any large group of modern individuals would only point to a common interest in the existence of an abstract social order that allows each individual to be himself, that is, to be different. A common interest could in no way justify imposing on all the same identity. It is the essence of classical liberalism and libertarianism that each individual should be free to choose his own identity—without, of course, forcing other people to adopt it. Reading Friedrich Hayek or James Buchanan (or Buchanan with Gordon Tullock) would help Ms. Meloni, like most of our rulers, realize that collective identity is a dangerous mirage. Reading Anthony de Jasay would be a therapeutic shock of another magnitude. But the reader of these authors must be lucky enough to have learned the prerequisites necessary to understand, or must be able to learn something radically new. (0 COMMENTS)