I was just on an NPR panel on Capitalism, squaring off against socialists Kristen Ghodsee and Vivek Chibber.  Enjoy the full show! (0 COMMENTS)

I rarely read a whole 300+ page novel in a day, but I did so on Saturday. It’s Campusland by Scott Johnston. Johnston, who worked at Salomon and opened some nightclubs in New York, also founded two tech start-ups. But those are not what the book’s about. It’s about Ephraim Russell, a young assistant professor of American literature who teaches at fictitious Devon University, a small elite private university with a multi-billion dollar endowment. Russell is up for tenure but, while trying to teach Adventures of Huckleberry Finn, gets caught in the buzzsaw of phony charges of racism. Later he gets charged with coming on sexually to a precocious 18-year old freshman (excuse me, I shouldn’t have said “man:” I mean “first-year.) There are so many things to like about the book. It took about 40 pages for me to get into it but once I was, I wanted to know what happens. Even though much of what transpires seems overdone, one can believe that this kind of thing can happen in a Title IX, “Dear Colleague” universe. If you don’t know what I’m referring to, look it up or, better yet, read the book. Johnston is quite good at examining the motives and incentives of the various players who try to get Professor Russell in hot water. Each motivation seems plausible. One passage in particular is worth reporting in an economics blog, the unintended, but believable, consequences of changes in laws, in particular the law on drinking. One of Ronald Reagan’s worst domestic policy mess-ups was his signing a federal law to raise the drinking age to 21. (It doesn’t compare with his ratcheting up of the war on drugs but it’s pretty bad.) The stick Reagan and Congress used for states that didn’t comply was a threat to withhold highway funds. Johnston doesn’t mention Reagan but he does lay out some unintended consequences of the law. Here are a few. Effect on Fraternities Despite determined efforts over many decades by Devon administrators, fraternities remained a part of the school ecosystem. There was a time, back in the 1970s, when the administrators had almost succeeded in purging them, but then the drinking age was raised to twenty-one and off-campus fraternities sprouted like invasive weeds. Effect on Size of Parties and Type of Alcohol Consumed But big, campus-wide parties? Those were now a thing of the past. Students slithered into the nook and crannies, mainly dorm rooms and fraternities, consuming what they wanted behind closed doors where they wouldn’t be caught by RAs and other mandated busybodies. Beer, the college beverage of choice since the first student was forced to read Proust, faded away. Too bulky. No way to sneak a keg into your dorm. Vodka was the new poison, its primary virtue lying in its efficiency–a mere ounce was equivalent to a whole beer, so it was easy to sneak around, and it mixed with about anything. Notice the solid economic reasoning above about the effect of illegalization on risk and therefore on relative prices. Effect on Mixing of Demographic Groups There were other, subtler consequences. Unintended ones. Social life became cliquey, balkanized. With the open-to-all, campus-wide parties gone, students now huddled in groups of six or ten or twelve. These groups had an irritating habit, from a progressive college administrators point of view, of self-selecting almost completely along demographic lines. HT2 Jonathan Meer, for recommending the book.         (0 COMMENTS)

Bryan’s Comments “BC” indicates Bryan’s comments; “MH” is me (from the book). 1. Argument from Design MH:     Even if you’d never seen a watch before, you would immediately know that this thing had to have been designed by someone. It’s too intricately ordered to have just happened. BC:      The reason why we infer a watch-maker from a watch is not that the watch is “intricately ordered,” but that we have independent reason to believe that watches are not naturally occurring. The “even if you’d never seen a watch before” is meant to exclude that. I.e., if you showed the watch to a person who had never seen (or heard of) a watch before, they’d still immediately know that it was an artefact. I assume that’s clear. That excludes the possibility that the conclusion is based on background knowledge about watches. Maybe Bryan thinks they actually wouldn’t know this? Or he thinks there is some other reason for believing that watches are not naturally occurring? But I have no idea what this would be (?). BC:      Consider this rock formation: [image of Bryce Canyon] Now compare it to this rock carving: [image of rock with heart carved in it] The former is far more “intricately ordered” than the latter. But the latter shows design, and the former does not. Why? Because we have independent knowledge that only intelligent beings create rocks with little hearts on them. Bryce Canyon is not really very ordered (though admittedly more ordered than just a big junk pile); you could move large parts of it around in lots of ways and not upset any salient pattern or activity. This is very unlike a watch: If you move parts of the watch around, for almost all ways of doing so, it stops working. The rock carving has a simple order. But I don’t understand how Bryan thinks we know that it was carved by a person. I don’t know what “independent knowledge” he’s referring to. Maybe it’s the knowledge that a lot of people like heart shapes? Maybe it consists of having seen people drawing such shapes in the past? Suppose it was a rock with a different shape on it, one that you had never seen before. Like this: I’ve never seen that shape before I found it on the internet just now. I bet a lot of readers haven’t either. I also have not looked up what that is, or whether it is natural or man-made. This one object is my entire sample of surfaces with that shape etched into them. Q: Can I tell whether that’s man made? Yes, I can. I have zero doubt. This doesn’t rest on background knowledge about instances of that shape. BC:      But would it not be even more implausible to think that God just appeared by chance? Theists standardly say that God either always existed or exists “outside time” (whatever that means), and often claim that God exists necessarily. They wouldn’t say that God appeared by chance. Btw, I didn’t address this in the book, but sometimes people say, “But isn’t God himself even more intricately ordered than living things?” No; I have no idea why people say that. Theists typically think that God is a single, simple entity. God is not supposed to have organs arranged in a body, etc., the way you do. 2. Fine Tuning MH:     [W]hy does the universe in fact have life-friendly parameters? The theist says: Because an intelligent, benevolent, and immensely powerful being set the parameters of the universe that way, in order to make life possible. BC:      I say this is an obviously terrible argument, and I don’t say such things lightly. Why? Because we have zero evidence that the anyone can “set the parameters of the universe”! I don’t know why Bryan thinks we have no evidence of that. The theist cited the evidence: the fact that the universe has life-friendly parameters. To say that we have no evidence of anyone being able to set the parameters of the universe, you have to assume that the evidence the theist just cited is not in fact evidence of what the theist says it is evidence of. That begs the question. I note that this type of evidence is common, and it is not in general controversial that it counts as evidence (at least when we’re talking about things other than God). I.e., the fact that a seemingly improbable phenomenon exists, and that some theory would explain that phenomenon, is standardly accepted as evidence for that theory. That is in general how we have evidence for unobserved, theoretical phenomena (atoms, magnetic fields, quarks, etc.) And you don’t have to have some other evidence for those phenomena, independent of the inference to the best explanation. I don’t know what view of evidence Bryan is assuming or why he claims that there’s no evidence in this case, so it’s hard for me to say more. MH:     [“Made by God” example] BC:      I’d say this is excellent evidence for intelligent English-speaking life on Mars, but zero evidence for God’s existence. Zero evidence? So the probability of God doesn’t go up at all? How can that be? God isn’t even a possible explanation of the evidence in the story? The prior probability of God existing is zero? I deliberately designed the example to be absurdly heavy-handed evidence pointing to God (theists can only dream of finding evidence so powerful and so obvious). I didn’t think anyone would have a problem with saying that ridiculous story would count as evidence for God if it happened. BC:      After all, everything on Earth labelled “made by God” is made by garden-variety intelligent English-speaking life, so why shouldn’t we make a parallel inference on Mars? I’ve never seen anything labelled “made by God”, so I’m not sure what things Bryan is referring to. Of course, if I saw an ordinary object, like a shirt, labelled “made by God”, I would think it was made by a human being. This, however, was not a plausible explanation in my example, because (i) there are no people on Mars before the astronauts go there, (ii) it was stipulated that the formations are consequences of the laws of nature. Human beings do not have the ability to design the laws of nature. If there is a being with the ability to design laws of nature, I would say that being has some fairly godlike powers. I suppose it could still be incredibly advanced aliens, but I don’t know why that theory would completely overwhelm the theistic theory. 3. The Anthropic Principle MH:     [Firing squad example] BC:      My reply: Entertaining such hypotheses only makes sense because we have independent reason to believe that people normally don’t survive fifty-man firing squads. Again, I don’t know what independent reason Bryan is talking about. Explain it to me like I’m a baby. I think it makes sense to entertain hypotheses for how you survived, because it is initially extremely improbable that you would survive the 50-man firing squad. Is that the independent reason Bryan is referring to? Or is that not enough, and you need some other reason? If so, I don’t know why Bryan thinks that you need some other reason. BC:      In contrast, it’s not weird for humans to exist on [a] planet hospitable to human life. And if you ask, “How did this happen?,” saying, “If the universe were very different, we wouldn’t be here [to] ask such questions” is illuminating. I don’t understand at all why Bryan says either of those things, so I can’t respond to this other than to repeat what I said in the book. It is weird for us to exist, once you know about the incredibly specific conditions required for us to exist. It’s weird because, well, it’s extremely improbable. Also, it’s true in the Firing Squad example that if the shooters hadn’t all missed, you wouldn’t be there to ask questions about it; yet that comment is not at all illuminating about why the shooters missed. Similarly, therefore, the statement “If the universe were very different, we wouldn’t be here to ask questions” is unilluminating about why the universe is the way it is. BC:      In any case, if you take fine tuning seriously, why can’t you just ask, “How did we happen to be in a universe where a divine being fine-tunes the laws of nature to allow our survival?” You can ask that, but there’s nothing at all odd on its face about a conscious being deciding to create a universe that would have intelligent life. This question strikes me as being no better motivated than the parallel question one could raise for any explanation. Someone posits X to explain evidence E. You can always say, “Why can’t you just ask, ‘How did it happen that X was the case?’” Well, sometimes you can ask that (perhaps always), but (a) this doesn’t mean that X doesn’t explain E, or that we should never make inferences to the best explanation, and (b) often X is less weird or more understandable on its face than E was. 4. Burden of Proof BC:      If X has a low prior probability of existing, and there’s no evidence of X’s existence, we should conclude that X has a very low posterior probability of existing. What gives X “a low prior probability of existing”? Many things, including (a) being very specific (e.g. X=”a guy with a feathered hat named Josephus who likes pickle-flavored ice cream and has exactly 19 hairs on his head”), and (b) being fantastical (e.g. X=Superman). I note that Bryan is not defending the burden of proof principle as it is usually formulated, because the standard burden-of-proof principle claims that there is a burden of proof for any assertion of existence; it’s not limited to things with specially low prior probabilities (or it claims that every hypothesized entity has a low prior probability). Anyway, I agree that the more specific the description of X is, the lower is the probability that X exists. But I’m not sure what counts as “fantastical”. In particular, I’m not sure whether the idea of a conscious being that can adjust the parameters of the universe is fantastical. If it is, then I’m not sure why we should think all “fantastical” things have a low prior probability. 5. Free Will BC:      My position, which I warrant Huemer would also accept: Libertarian free will and behavioral predictability are totally compatible. […] I’m going to continue taking care of my kids. Still, this doesn’t show that I can’t do otherwise, only that I won’t. Agreed. And that’s a good example. If you think that predictability (with high probability) rules out free will, then you’d have to say that when people do stuff that is obviously the only sensible thing to do, they’re not acting freely. Which is counter-intuitive. Another example: I find someone living in a penthouse in Denver worth $3 million. I offer that person 50 bucks for the condo. I can predict, with very high probability, that the owner is going to turn down my offer. Surely that doesn’t mean that the owner’s decision to reject my offer is not free. 6. Degrees of Freedom BC:      I say, for example, that alcoholics are fully free to stop drinking. They rarely do, but they absolutely can. Indeed, there is strong empirical evidence that I’m right, because changing incentives changes alcoholics behavior; and if changing incentives changes behavior, that is strong evidence that you were capable of changing your behavior all along. I would say that changing the incentives changes how difficult it is to stop drinking. The more difficult it is to stop, the less free the alcoholic is. The extreme of difficulty (the maximum level) is impossibility, and that is where the person is not free at all. Being “fully free”, or “maximally free” would be at the opposite extreme, where it is completely easy to stop drinking. I think that view coheres with the fact that changing incentives sometimes alters the alcoholic’s behavior. It also explains why we blame someone less for bad actions that were, as we say, “more difficult” to resist. BC:      We condemn a starving man for stealing bread much less than a well-fed man for doing the same. The reason, though, [is] not because the latter choice is “freer” than the other, but because the latter choice is less morally justified than the [former]. Indeed, the starving man’s action sounds like it’s not wrong at all! But not all cases are like that. You can imagine a pair of cases in which the action is equally justified objectively, but it was more psychologically difficult for one person to do the right thing than the other. E.g., maybe it was harder for A to do the right thing than B because A is a child and hasn’t yet developed good habits, or A was drunk, or A was very emotional at the time, or A didn’t have enough time to think about it, etc. Whereas B, faced with the same options with the same consequences, didn’t have any of those problems. Then we’d blame B more. By stipulation, the reason can’t be found in a difference in the actions or the external conditions. It has to be about degree of responsibility for the action. 7. “The Soul” Terminological note: Yes, you can basically write “mind” for “soul” if you prefer, and many people like that better. However, I take the term “soul” to be more specific. The term “mind” is neutral between physicalist and dualist (and idealist) views. The term “soul”, however, is not; it basically means “the mind on a Cartesian conception of it”. So most physicalists are happy to say that we have minds, but no physicalist would say that we have souls. 8. Hard Determinism BC:      In other words, determinism is a supremely unscientific theory that begins by throwing away ubiquitous conflicting evidence that each of us experiences in our every waking moment. Yep. Reader Comments There are a lot of these, so I’m going to be really brief. (a) why huemer thinks the standard multiverse argument doesn’t solve this I said that the multiverse is a viable explanation at the end of that chapter. (b) Sabine Hossenfelder argues that the fine tuning argument begs the question because it assumes a probability distribution that makes the constants of the universe unlikely… The “Made by God” example was designed to (and does) refute precisely this view. (c) How does one really disagree with the idea that all human behavior can be traced to physical causes? Partly by being a mind-body dualist! (d) The soul theory is subject to plenty of devastating reductio arguments as well. I don’t think there are any devastating arguments there at all. (e) To know what we seem to observe, wouldn’t we first have to know what the options would look like? If both theories predicts the same observation, we can’t tell if we seem to observe theory 1 or theory 2. I think this question conflates observation with inference or theory. You don’t observe a theory, and you don’t have to know anything about any theory to know what you seemingly observed. (f) …portrayals of Jesus in the Gospels aren’t implausibly specific. Agreed. But I don’t think many people (and surely not either Bryan or me) doubt that Jesus existed. The issue is whether there is an intelligent designer of the universe. (g) “God did it” is not an explanation at all; it’s a declaration that no explanation is possible. I don’t understand why the commenter said either of those things. Both are false on their face; “God did it” is an explanation, and it’s certainly not a declaration that no explanation is possible. (h) But the Wagerer must also make herself forget that she is going through the motions, instrumentally, in the hope of acquiring belief. She must act to forget-and-believe. I don’t see why she would have to do that. There seem to be many people who do the sort of things I described, and they don’t have to forget doing them. E.g., many people only watch “news” sources that support their ideology, they don’t forget that they’re doing this, and they have no trouble believing their ideology. (i) why does Philosophy accept the descriptions of Gods given by the worshippers? They are almost certainly inflated. […] If God is as great as the believers make him out to be, humans are probably an unimportant side-show. Fair points. If God made the universe, there are probably many other planets with life out there, so God would not be focused on Earth in particular. (j) If Determinism is established, then we will continue to do what we have (and will) be doing. This assumes that the establishment of determinism would not itself have any causal powers. But it would (just like all the other events in the world).   (0 COMMENTS)

Journalist and author Sebastian Junger talks about his book, Freedom, with EconTalk host Russ Roberts. The book and conversation are based on a 400-mile walk Junger took with buddies along railroad rights-of-way, evading police, railroad security, and other wanderers. Junger discusses the ever-present tension between the human desire to be free and the desire to be interconnected and part of something. Along the way, Junger talks about the joy of walking, the limits of human endurance, war, and why the more powerful, better-equipped military isn’t always the winner. (0 COMMENTS)

Journalist and author Sebastian Junger talks about his book, Freedom, with EconTalk host Russ Roberts. The book and conversation are based on a 400-mile walk Junger took with buddies along railroad rights-of-way, evading police, railroad security, and other wanderers. Junger discusses the ever-present tension between the human desire to be free and the desire to […] The post Sebastian Junger on Freedom appeared first on Econlib.

At a time when majorities everywhere seem to believe that the market is imperfect and the government (the government each one thinks he would run, not the current one run by others) is perfect, America sometimes or perhaps often looks like a relatively enlightened spot. Compared to probably all advanced countries, a sizeable minority- if not sometimes a majority- of Americans hold opinions that are economically more realistic and more consistent with the ideal of a free society. Thanks to Peter Van Doren, editor of Regulation, for bringing to our attention a working paper titled “Price Gouging in a Pandemic” by Christopher Buccafusco (Yeshiva University School of Law), Daniel Hemel (University of Chicago Law School), and Eric Talley (Columbia Law School). The authors compared the results of a 1985 Canadian opinion survey on the “fairness” of increasing shovel prices by 33% following a big snowstorm with their own survey and (extensive) analysis of American opinion on the “fairness” of increasing prices of hand sanitizer by 33% in May 2030. In most American states, such an increase is forbidden during emergencies, as precisely documented by Buccausco et al. While 82% of Canadians found this sort of increase unfair, the researchers report, “only” 47% of Americans did so. I may add that Canadian opinion is probably representative of the typical opinion in what used to be called the “free world.” This being said, the fact that the Canadian survey covered only two cities, Toronto and Vancouver, may have affected its representativity. Strangely, nearly all Americans surveyed expressed a preference for rationing scarce supplies instead of auctioning them off, oblivious to the fact that auctioning is equivalent to letting the market determine prices, which a majority of them thought was not unfair! Perhaps this is just an instance of voters’ irrationality (the paradox of voting)? Still, three-fifths opposed any legal punishment to charging higher prices, which suggests that their preference for rationing was only a moral one—like when stores voluntarily reduce the number of items a customer can purchase in one visit. These results must have something to do with the American tradition of individualism and liberty. I would conjecture that they are also related to the large proportion of Americans who have real business experience. This reminds me of a fascinating Wall Street Journal story featuring a 16-year-old American, Max Hayden, who, during the pandemic, purchased and resold scarce goods such as game consoles with a profit of $110,000 (see Sarah E. Needleman, “Sixteen Years Old, $1.7 Million in Revenue: Max Hits It Big as a Pandemic Reseller,” June 9, 2021; it’s well worth reading). Max was able to do this—thus making sure that the scarce goods were going to those who valued them most as well as smoothing prices over time—without being sued or prosecuted by the government because, in New Jersey, goods deemed to be luxury goods are not hit by the “price gouging” legislation. His father, though, did not have a very enlightened opinion; the WSJ wrote: Max’s father, whose name is also Max Hayden, said he was initially uncomfortable with his son’s business success because he benefited from a situation created by the health crisis. But he concluded that it was permissible because his son only resells luxury goods, not necessities. “It is a real distinction,” said Mr. Hayden, 61. “This is capitalism.” Perhaps the older Mr. Hayden never reflected on the idea that letting each consumer decide for himself what is a necessity or a luxury is also capitalism, and so is moving goods in time—buying now for the purpose of reselling later when the anticipated price is anticipated to be higher. French economist Jean-Baptiste Say explained the last point two centuries ago. In A Treatise on Political Economy, Say wrote: There is a further branch of commerce, called the trade of speculation, which consists iu the purchase of goods at one time, to be re-sold in the same place and condition at another time, when they are expected to be dearer. Even this trade is productive; its utility consist in the employment of capital, warehouses, care in the preservation, in short, human industry in the withdrawing from circulation a commodity depressed in value by temporary superabundance … so as to discourage its production, with the dcsign and purpose of restoring it to circulation when it shall become more scarce … The evident operation of this kind of trade is, to transport c0mnodities in respect of time instead of locality. If it prove an unprofitable or losing concern, it is a sign that it was useless in the particular instance, and that the commodity was not redundant at the time of purchase, and scarce at the time of resale. The young Max Hayden was a successful entrepreneur and did not create “an unprofitable or losing concern.” As for the older Mr. Hayden’s moral concern, he was probably just caught in the conventional statist wisdom. The paper by Buccafusco et al. also provides a good review of the debates on the economics and ethics of letting prices rise and fall with the conditions of supply and demand. (0 COMMENTS)

  “John Tamny bravely describes the terrible and senseless economic pain caused by politicians panicking in the face of a health concern that—let’s be real—is no worse than a bad flu season.” So writes Forbes publisher Rich Karlgaard in his blurb for John Tamny’s latest book, When Politicians Panicked. Let’s see: The worst flu season in the last 100 years was in 1957–1958, when the Asian flu (technically H2N2) killed between 70,000 and 116,000 Americans. If a flu today killed the same percentage of the U.S. population, the U.S. death toll would be between 135,000 and 223,000. Given that the official U.S. death toll from COVID-19 is nearing 600,000 as this goes to print, and given that 600,000 is almost three times the upper limit of the worst flu in a century, it’s Karlgaard who should “be real.” After reading that blurb, I didn’t expect to find Tamny’s book impressive. Fortunately, I did. The highest compliment I can give it is that it’s Hayekian. Friedrich Hayek, in his 1945 article “The Use of Knowledge in Society,” argued that central planners could not successfully plan an economy because they didn’t have the necessary knowledge of people’s individual circumstances. Although I read every page and every footnote of When Politicians Panicked, I didn’t see Tamny ever referencing Hayek. (The book doesn’t have an index.) But his book is thoroughly Hayekian. He argues that government officials didn’t know enough, and couldn’t know enough, to shut down whole sectors of the economy. He also argues quite persuasively that government policies like the Paycheck Protection Program badly misallocated both labor and capital, making us poorer than otherwise. This is from David R. Henderson, “Overreacting to COVID,” Regulation, Summer 2021. Another excerpt: And then there was the federal government’s more than $600 billion Payroll Protection Plan, which paid small businesses substantial amounts to keep their employees on the payroll even if the employees were being underemployed. Was that a good idea? Absolutely not, says Tamny. He points out what should have been obvious to all but apparently wasn’t: government officials had no way of knowing which jobs should be kept and which ones shouldn’t. Precisely because some customers might want less human interaction because of their fear of the virus, “it was possible that businesses would devise all manner of ways to save on labor while meeting new or evolving needs of customers that they didn’t express before the spread of the coronavirus.” He notes that some factories and warehouses were rushing to “automate away some aspects of human exertion simply because employees of companies like Amazon were demanding the evolution.” But isn’t it important that government save jobs? Every economist knows, or should know, the problem with that view, but Tamny has a particularly refreshing way of making the point. In a chapter titled “They Would Stop You at ‘Job Creation,’” Tamny writes that the fact that the Paycheck Protection Plan “was all about job preservation was the surest sign of how pointless and wasteful it was.” No one, he writes, starts a business with the goal of creating jobs. You create a business to make money and you make money by creating goods and services that people value. Indeed, often you do well by introducing technologies that allow you to produce more with fewer workers. That’s the story of agriculture, steel making, auto production, and pretty much everything else. Tamny writes, “If readers are looking for 100 percent labor force participation, just travel to the world’s poorest countries.” There you will see very little unemployment and a lot of people working in “unrelenting drudgery.” I also point out a major failing in an otherwise very good book: his mistaken caricature of economists. Read the whole thing. (0 COMMENTS)

The Economist has an interesting article discussing regulatory changes regarding child safety seats: During the Reagan era, only the truly wee—tots aged under three—had normally to be secured in child-safety seats. But states’ governments have, since then, gradually ramped up the requirements. Today, most places in America make children sit in safety seats until their eighth birthdays. That concern for youngsters’ safety has had the unintended consequence, Dr Nickerson and Dr Solomon suggest, of fewer three-child families. . . . They discovered that tightening those laws had no detectable effects on the rates of births of first and second children, but was accompanied by a drop, on average, of 0.73 percentage points in the number of women giving birth to a third while the first two were young enough to need safety seats. . . . They estimate that laws requiring children to sit in special seats until they are eight years old saved about 57 lives in 2017 and contrast that number with the 8,000 children who might have been conceived and born in the absence of such rules. There is, they conclude, no “compelling social interest” in requiring child seats for children over four. This seems weird. Comparing putative lives forgone to actual lives saved is, to put it politely, a strange moral calculation. The writer for The Economist seems to think the government’s moral calculation is more sensible than the one employed by the authors of this paper, but doesn’t explain why.  Do they entirely reject cost/benefit analysis (an approach The Economist generally favors), or do they reject the specific moral calculation in this case?  And if so, what’s the numerical equivalence that they think is more accurate? Does one life lost equate to one foregone child?  To 10 foregone children? To 100 foregone children?  How about a million foregone children?  A billion? It seems to me that the “strange moral calculation” is being made by the government regulator that believes they are better positioned than the child’s parents to solve these difficult moral problems. I’m completely agnostic on this issue; I don’t have a clue as to how one should weigh 57 lives lost against 8000 children never born.   If you are confident that you can do that sort of moral calculation, then please tell me your conclusion.  What is the correct equivalence ratio to employ in this sort of cost/benefit analysis? Because I don’t know the answer, I’d prefer to leave those decisions up to parents, not government regulators. PS.  This has nothing to do with my view on the value of a higher birth rate.  I use the same agnostic moral reasoning on issues like abortion, where deregulation cuts in the other direction. PPS.  The decision to have children is implicitly a decision to risk the life of a living mother in order to gain a potential human being. (0 COMMENTS)

Scott Lincicome and Huan Zhu have a new Cato working paper on industrial policy. The paper is very good and reviews—and builds on—the recent literature on the subject. It also makes a point of clarifying what industrial policy is and what is not, and what successes it can and what it cannot claim. Here’s an enlightening bit on industrial policy and Covid-19 mRNA vaccines: the COVID-19 vaccines developed under “Operation Warp Speed” have been heralded as a triumph of American industrial policy, but the first vaccine to market (Pfizer/BioNTech) disproves the assertion. BioNTech was a German company that had been working on mRNA vaccines for years and began its collaboration with Pfizer (based on an earlier working relationship) months before the U.S. government began OWS in May 2020 or contracted with the companies for a vaccine in July of that same year. (Management actually predicted in April 2020 that distribution of finished doses would occur in late 2020.) The companies famously refused government funds for R&D, testing and production–efforts that instead leveraged Pfizer’s substantial pre-existing U.S. manufacturing capacity, as well as multinational research teams, global capital markets and supply chains, and a logistics and transportation infrastructure that had developed over decades. In fact, the Trump administration’s contract with Pfizer was for finished, FDA-approved vaccine doses only and expressly excluded from government reach essentially all stages of vaccine development (i.e., “activities that Pfizer and BioNTech have been performing and will continue to perform without use of Government funding”). There is even some evidence that OWS’ allocation of vaccine materials to participating companies (some of which still have not produced an approved vaccine) may have impeded non-participant Pfizer’s ability to meet its initial production targets and expand production after the vaccine was approved. Surely, some state support (e.g., support form RNA research and a large vaccine purchase commitment) was involved both before and during the pandemic, but it all lacked the necessary commercial, strategic, or nationalist elements of “industrial policy.” In fact, mRNA visionary Katalin Karikó actually left her government-supported position at the University of Pennsylvania “because she was failing in the competition to win research grants” and thus “moved to the BioNTech company, where she not only created the Pfizer vaccine but also spurred Moderna to competitive imitation.” The NIH grant supporting her early work actually came through her colleague, Drew Weissman, and “had no direct connection to mRNA research.” Other efforts, such as Moderna’s mRNA vaccine, had more state support, but the BioNTech/Pfizer vaccine shows that it was not a necessary condition for producing a wildly successful COVID-19 vaccine (0 COMMENTS)

Don Boudreaux hosted an excellent podcast discussion on Discourse Magazine Podcast on the abolition of the Corn Laws. The debate involved Steve Davies and Douglas Irwin and Arvind Panagariya. It is worth listening to today, as it was on June 25th, 1846, that the Duke of Wellington persuaded the Lords to approve the repeal of the Corn Laws (following the Commons). The conversation is really great and a lot of interesting points are made. Both Davies and Irwin explain clearly how grain protectionism functioned. Steve Davies captures the political spirit of the age, placing the Anti-Corn Law League in context and alluding to the power of that movement, perhaps one of the first that really heralded contemporary politics by putting together “a mass movement which made use of all of the means of communication that were becoming available at the time, such as the use of the newly established railways and turnpikes, to build a national organization”. Circumstances of course helped. This is a crucial point, a point often overlooked by politically oriented people, either classical liberal/ libertarians or, I suppose, within different political movements too, hardly see. “The Anti-Corn Law League was increasingly pushing, if you like, at a door that was being slowly opened by the Whig aristocrats.” One crucial part of the League’s success was rooted in its circumstances, which of course does not imply to diminish the role and courage and commitment of people like Cobden and Bright, nor the admirable ability to communicate with people they displayed, nor their organizational efforts.   Davies sees the long term consequences of the League not so much in the Repeal itself (Peel may have been persuaded purely on intellectual grounds: quite a sentence to write about a prime minister!) but on two fronts: One is it ensured that when the repeal came, it was total and immediate—well, free of a phasing-in period, but effectively immediate. It wasn’t a kind of slow, gradual or half-hearted process. It was an abrupt and dramatic one. But the other, more important thing was the thing you alluded to that Frank Trentmann talks about. They had a huge effect on the popular culture, and they fixed in the minds of the British working class in particular, right up to the present day, the profound belief that free trade is good for the poor and the working man and woman and that protectionism is basically a conspiracy by the rich and special interests to screw over the working class. On this latter point, how the repeal influenced long term consensus, see also this admirable essay by Sam Gregg on Law & Liberty. Gregg refers to Clement Attlee endorsing a free trade position vis-à-vis Neville Chamberlain. See how long allegiance to free trade lasted. My favorite bit of the conversation is a summary of a recent paper of his by Irwin: The Corn Laws had been revised in 1815. There was a huge debate that involved David Ricardo and a bunch of others. Some pressure to reduce it in the 1830s, but it was really appeals for reforms in the 1840s that got rid of it. At that time, when the Corn Law tariff, the ad valorem equivalent, hit about 40%, it was basically prohibitive. In the late 1830s, early 1840s, there were no imports of grain for certain periods when world prices were low. Therefore, the tariff was high. But right around the time of the repeal, the tariff was about 28%. So what Maksym and I do in our paper is we do a simulation of, what is the economic consequences of getting rid of a 28% tariff on grain? This is a time when agriculture is a pretty big sector in Britain. About 9% of employment was in grain agriculture. About 24% of total British employment was in agriculture altogether. First of all, that’s an important note, that grain agriculture was not all of British agriculture; it was just a segment of it. There was pastoral agriculture, which is actually exporting from Britain. BOUDREAUX: That would be things like sheep farming and— IRWIN: Exactly. Wool, meats, other things like that. That’s important because the claim is always “You can’t open up your market because it will devastate the sector.” Well, there’s different components of the sector, and some actually did very well after the repeal of the Corn Laws. Not grain agriculture, which is important for bread, as Steve was saying. When you get rid of an import tariff, you’re going to import more of those commodities. You’re going to have to pay for that, so your exports of other goods will go up. You’re going to be reshuffling resources around the economy when you do that, and we basically find three things. One is, yes, there are efficiency gains from doing this. You’re going to reallocate capital labor to where you have a comparative advantage, and the economy will be better off for that. But also, Britain was a large player in world markets at this time, and there are some adverse terms-of-trade effects, namely that the prices of your exports will go down because Britain was a big player in the world textile market. You might depress some of those prices. You’re going to drive up the world price of grain and cotton because you’re once again drawing on the world’s resources, and Britain was such a major economy. It turns out what we find is the terms-of-trade losses and the efficiency gains basically wash out. They offset each other. The second thing is that there’s going to be a lot of redistribution of income within the country. Here’s where David Ricardo and others really nailed it. Land grants went down, and that’s what we find in our simulation, but real wages will go up and the return to capital will go up. Then the third thing we find is we actually disaggregate income distribution effects a little bit in a very crude way. What we find is that the top 10% of income earners were worse off and the bottom 90% were better off. Read (listen to) the whole thing. (0 COMMENTS)