I was talking with a fellow tennis player during a break in a game. I’m at my cottage in Canada, and we play 3 on 3, which sounds weird but is a real kick. He told me that he’s a socialist progressive and said that his beef with capitalism is the inequality it creates. He had in mind by “capitalism” the system that both Canada and the U.S. have. I replied that you couldn’t state that the current degree of inequality is due to capitalism because we don’t have capitalism; we have a mixed economy. I pointed out that term “mixed economy” is a good one. I came across it in Paul Samuelson’s introductory text in my only economics course at the University of Winnipeg, in 1969 to 1970. (Our text was actually authored by Samuelson and Anthony Scott, a Canadian economist at UBC, because Samuelson needed someone who could add some of the Canadian content that dealt with Canadian institutions.) The term was widely used at the time. But, I noted to my tennis friend, that term has virtually disappeared. What is the mixed economy. Wikipedia has a nice treatment here. The whole Wikipedia entry is worth reading but here are the first two paragraphs: A mixed economy is an economic system that accepts both private businessesand nationalized government services, like public utilities, safety, military, welfare, and education. A mixed economy also promotes some form of regulation to protect the public, the environment, or the interests of the state. This is in contrast to a laissez faire capitalist economy which seeks to abolish or privatize most government services while wanting to deregulate the economy, and a fully centrally planned economy that seeks to nationalize most services like under the early Soviet Union. Examples of political philosophies that support mixed economies include Keynesianism, social liberalism, state capitalism, fascism, social democracy, the Nordic model, and China’s socialist market economy.   Governments do many things that make inequality less and many things that make it greater. The particular example I pointed out to him of a government institution that almost certainly makes inequality greater is the government almost-monopoly on K-12 schools. Poorer kids get crappier education and the teachers’ union, which, like the government schools, is an almost-monopoly on the most important input in government schools, labor, makes things worse. I hereby announce that I am going to do my bit to bring back the concept of the mixed economy. UPDATE: I just noticed that I posted about this in 2011. Oh, well. It deserves to be said again, this time in the context of inequality. (0 COMMENTS)

My attention was recently drawn to a headline declaring that Washington, the state I grew up in, would no longer require aspiring lawyers to pass the bar exam in order to become practicing lawyers. I did a bit of reading on the subject and it turns out this decision was motivated by DEI concerns: During a September presentation before the Washington State Bar Association Board of Governors, Washington Supreme Court Justice Raquel Montoya-Lewis, one of the chairs of the Bar Licensure Task Force, said the movement comes in part “from law students who have raised issues about equity, not just in the history of the adoption of the bar exam, but also over the course of many decades, when you look at the disproportionate impacts that the bar exam has on examinees of color.” She went on to note, “They tend to fail the bar exam in disproportionate numbers.” Now, this might immediately strike you as a horrible shift in policy. But I see several ways to see some positive developments here.  First, it’s worth pointing out that concerns over a disproportionate impact of policies on minorities is not something libertarians need to disregard. In fact, it’s very common for libertarians to highlight how various government regulations disproportionately affect vulnerable communities as reasons to be opposed to such regulations. Milton Friedman famously argued that the disemployment effects of the minimum wage disproportionately harmed the black community – he clearly didn’t think this disproportionate impact was morally irrelevant. Second, libertarians often worry about barriers to entry into a profession, including when they take the form of official requirements for licensing and certification. Libertarians are much more confident than most that in the absence of such regulations, a variety of mechanisms would develop to ensure quality, such as private certification and reputation. See, for example, this case cited by David Friedman where private certification of egg quality due to market pressure in England produced superior results to government regulation of the same issue in America. Libertarians have long argued that legally mandated certifications invoke concerns about “the public good” as a smokescreen for entrenched interests to shield themselves from competition on the market.  Third, unlike many DEI-style initiatives, this is a change in rules that equally applies to everyone. Unlike in cases like college admission, where you can essentially get bonus points towards admission (or deducted from admission!) depending on what race you are, this program simply makes additional means to qualify as a lawyer available to everyone. The architects of this program certainly anticipate the outcome of this change in the rules will particularly benefit minorities, but that’s still not the same as applying different rules to people based on their race or holding them to different standards on account of their race. I’ve written before about how some states have loosened regulations on the provision of legal services, resulting in more legal services becoming available to people of limited means without any apparent negative effects. And Washington isn’t going so far as allowing just anyone to show up in a court and argue a case. This new law allows the bar exam to be substituted with a variety of other means to qualify to practice law, such as “completing a six-month apprenticeship while being supervised and guided by a qualified attorney and complete three state-approved courses, or finishing 12 qualifying skill credits and 500 hours of work as a legal intern, or completing standardized educational materials and tests under the guidance of a mentoring lawyer, in addition to 500 hours of work as a legal intern.” So the gates haven’t been thrown down – they’ve just been opened a bit wider. These extra options will allow more people to get their proverbial foot in the door. Perhaps because they didn’t qualify through the traditional bar exam, they’ll be in lower demand and start their careers at a lower rung making less pay – but as time goes on they can develop a reputation based on the skill they demonstrate and rise up in the profession, rather than being shut out at the gate. This seems good to me, at least from a directionalist stance.  So I can find reasons to like this policy change from a libertarian perspective. However, I wonder how progressives would interpret it from within a progressive perspective. Now, some progressives may oppose this move, of course. But some will support it. And among those who support it for the DEI reasons that were cited, it seems to create the following trilemma: The bar exam requirement isn’t necessary to ensure a high degree of competence among lawyers – this can be achieved through other means such as alternative qualifications and reputation gained through demonstrated competence. This fits with what I’ve argued so far, but I imagine this response could also make progressives nervous, because once you allow this, huge portions of the administrative state suddenly become very vulnerable. So this seems like a high risk argument for a progressive to make.  The bar exam is necessary to ensure a high degree of competence among lawyers, but having legal services provided by a competent lawyer isn’t that important, so we can drop the requirement for the bar exam. This, too, seems unpalatable from the progressive mindset, particularly given that progressives are often very worried about issues like criminal justice and incarceration. The bar exam is necessary to ensure a high degree of competence among lawyers, and having competent legal representation is indeed very important. However, ensuring that the demographic makeup of practicing lawyers looks the way we think it should is more important than both of these factors combined. This, too, seems pretty hard to say with a straight face.  So there’s my counterintuitive hot take on this issue – the removal of the requirement to pass the bar exam, taken in the name of DEI, is actually a policy move that libertarians can view optimistically but should make progressives very nervous. I admit, I didn’t expect to reach that conclusion when I started reading about Washington’s decision, but here we are.    (0 COMMENTS)

This is part one of three-part series. Over the past two and a half centuries, the world has seen significant progress. People live longer, are richer and better educated, and enjoy greater political freedom. (I previously explored the role of cities as engines of such progress for the Liberty Fund’s AdamSmithWorks project). But has that progress been enjoyed by only a few? Has the improvement in living conditions accrued mainly to a small elite, leaving much of the world behind? What many don’t realize is that these improvements have indeed been widely shared. It seems that globalization and market liberalization—whose power Adam Smith recognized more than two centuries ago—have raised absolute living standards to unprecedented heights and reduced overall inequality. The world is not only wealthier but also more equal. In this series, I will discuss what inequality is, how it’s measured, and how to understand it’s decline.   Part 1: Understanding Inequality A popular adage states that “the rich get richer and the poor get poorer”—encapsulating the view that progress is enjoyed only by some. In a much-quoted passage subject to various interpretations, Smith wrote, “Wherever there is great property, there is great inequality. For one very rich man, there must be at least five hundred poor, and the affluence of the few supposes the indigence of the many.” How readers understand Smith’s words on inequality often depends on whether and to what extent they consider inequality to be a problem. Smith was hardly the first to bring attention to the subject of inequality. Some research even suggests that concern about inequality may be evolutionarily hardwired. Human psychology evolved at a time when people lived in small hunter-gatherer bands that tended to divide meat in an egalitarian manner. Society has altered considerably, but moral intuitions remain largely unchanged—highly unequal distributions of resources often strike people as unjust. Of course, our genetic predispositions for thinking in certain ways should not be given undue weight: human impulses can be bad as well as good. What Smith calls “the odious and detestable passion of envy” is sometimes implicated in the desire to reduce inequality and has long been characterized as negative by sources such as the biblical Book of Proverbs (which says that “envy rots the bones”) and the playwright William Shakespeare (who wrote that “envy breeds unkind division”). The tendency to focus on relative, rather than absolute, measures of well-being can also be harmful because absolute rather than relative measures of progress are the best standard to assess the success of different institutions and policies. Furthermore, the majority of people have no objection to inequality arrived at by merit, and there is no evidence of widespread inequality-induced unhappiness. In developing countries, increased economic inequality that arises as part of the population escapes poverty is often seen as heartening—proof that upward mobility is possible—and can coincide with greater average happiness. Research has similarly found “a complete lack of any effect of inequality on the happiness of the American poor.” Of course, when the rich are protected through privileged status in law, inequality seems far more troubling. Smith recognized that incumbent businesses sometimes gain unfair privileges from the government—in the form of regulations that strangle competition, for example: The interest of the dealers, however, in any particular branch of trade or manufactures, is always in some respects different from, and even opposite to, that of the public. To widen the market and to narrow the competition, is always the interest of the dealers. . . . The proposal of any new law or regulation of commerce which comes from this order ought always to be listened to with great precaution, and ought never to be adopted till after having been long and carefully examined, not only with the most scrupulous, but with the most suspicious attention. (Wealth of Nations, Bk 1, Ch 11) The growth of government since Smith’s time makes those concerns even more relevant. Examples of such laws range from a needlessly expansive regime of occupational licensing stopping individual competitors from entering a field and overbearing regulatory barriers blocking new businesses from entering an industry to bailouts, mandates, and subsidies that artificially boost sales and coddle entire industries. Inequality that arises from such cronyistic government policies is concerning, and reforms to prevent governments from increasing inequality in this manner are a prudent idea with broad appeal. There are of course other possible causes of inequality, particularly in rich countries. Consider income inequality. As countries develop economically, income inequality becomes less and less useful as a measure of well-being. In subsistence economies, everyone is engaged in the same struggle for survival. In contrast, people are engaged in different pursuits in affluent societies because such societies offer diverse avenues for fulfillment. While some individuals seek to maximize their income, others may choose lower-paid professions that they find enjoyable or meaningful or that confer prestige or greater flexibility. Individuals may prefer work that allows more time for leisure or caring for their children. Smith famously observed that each person pursues self-interest—“the care of his own happiness, of that of his family, his friends, his country”—but as Lauren Hall previously noted for AdamSmithWorks, “Smith never argues that economic interest is or should be the sum total of all human activities” (emphasis added). When income inequality results from personal decisions that some people make to pursue things other than material prosperity, it is hardly a good measure of well-being. Income inequality in such societies reflects personal choices, not overall well-being. In other words, advanced economies provide numerous paths to happiness, diminishing the significance of income inequality. Fortunately, there is a more meaningful way of measuring inequality which I will discuss in part two of this series by focusing on the Inequality of Human Progress Index (IHPI) created by myself and Vincent Geloso.     Want more? Vincent Geloso on the Great Antidote podcast talking about Global Inequality at AdamSmithWorks Chelsea Follett’s Cities as Centers of Innovation: Lessons from Edinburgh and Paris at AdamSmithWorks Pedro Schwartz, Poverty and Inequality, at Econlib.   Chelsea Follett is the managing editor of Human​Progress​.org, a project of the Cato Institute that seeks to educate the public on the global improvements in well‐​being by providing free empirical data on long‐​term developments. (0 COMMENTS)

  Occupational licensing today directly affects more than one in five workers in the United States—up from one in 20 workers in the 1950s. This is nearly twice the fraction of workers belonging to a union and more than 15 times the fraction of workers receiving the federal minimum wage. Although licensing is widespread in the United States, it does not receive the same level of attention as either of these other labor market institutions. Occupational licensing is costly for both consumers and aspiring workers, but results in measurable benefits for existing market practitioners. Occupational licensing persists even though its costs very likely outweigh its benefits. This is the first paragraph of Edward J. Timmons, “Occupational Licensing,” in David R. Henderson, ed., The Concise Encyclopedia of Economics. It’s a badly needed update to the original article on occupational licensing in the Encyclopedia, “Occupational Licensing” by David S. Young. Young’s article stands up surprisingly well, given that it’s 31 years old. Still, lots has happened, both in policy and in research on the issue. Timmons is on the leading edge of this research. Another excerpt: Economists have estimated the effects of occupational licensing on consumers, aspiring workers, and existing practitioners. By restricting consumer choice and limiting the number of providers of licensed services, licensing, economic theory would predict, should increase prices. Research confirms that licensing raises the prices of licensed services by anywhere from 3 to 13%. Evidence is more mixed on the effects of licensing on the quality of services received by consumers. A few studies looking at licensing of physicians and midwives at the turn of the 20th century find evidence of some benefits for consumers in the form of lower mortality rates. Studies estimating the effects of licensing in the 21st century often find little evidence of benefits for consumers. A recent book published by the Upjohn Institute examining case studies of licensing in the US and Europe reaches the conclusion that licensing is not improving the quality of services delivered to consumers. It is also important to note that estimating the average effects of licensing on quality may not fully capture losses in access to service from reductions in the number of professionals. This has come to be known as the “Cadillac effect.” Milton Friedman introduced the idea in his 1962 classic, Capitalism and Freedom. The idea is that licensing limits consumers to either purchasing services from providers meeting standards set by licensing boards (Cadillacs), or not purchasing services at all. This may encourage consumers to seek services in the underground economy or incentivize consumers to do the services themselves. Early work by Carrol and Gaston supports the idea that consumers begin to perform more “do-it-yourself” work when licensing limits consumer choice by restricting entry. Notice in the above that Milton Friedman was one of the skeptics on licensing long before skepticism became popular. I remember being blown way, when I was 17, by his discussion of how we could have good medicine without licensing doctors. As Milton recognized at the time, he took the hardest issue to refute and, at least in my mind, refuted it. Thanks to Alicia Plemmons, who is one of the leading researchers in the area, for humbly recommending her colleague Edward Timmons as author of the piece and thanks also to Tyler Cowen for taking a quick look. (0 COMMENTS)

Does parenting make you a better person? Can it improve your life? Neuroscientist Erik Hoel makes the self-interested case for parenting arguing that it makes you less jaded and more heartbroken (in a good way) for how you experience the world. Listen as new father Hoel speaks with EconTalk host Russ Roberts about the universal […] The post Does Parenting Make You a Better Person? (with Erik Hoel) appeared first on Econlib.

A recent article in the OC Register discussed a $150 million house for sale in southern Orange County: A rare 42-acre San Juan Capistrano estate known for decades as “Porcupine Hill” has hit the market for the first time for $150 million. . . .Marketed as “Casa Grande,” the estate includes an existing 21,000-square-foot structure comprised of three apartments, offices and storage space completed in 2010 and permitted plans for a 38,000-square-foot main residence on a ridgeline with 360-degree views.The plans, more than 40 years in the making, also include two 10,000-square-foot guest houses and unlimited maintenance quarters for the existing agribusiness.While the future residences fall under Proposition 13, the agribusiness is taxed under the Williamson Act, offering reduced property tax savings based on production. It is not at all obvious that farms should pay a lower tax rate than other businesses.  Nor does it seem likely that this sort of “gentleman farmer” is what the legislature had in mind when they carved out those tax breaks for agriculture.  Many young people are moving away from Orange County due to the high price of housing, and yet the state offers tax breaks to preserve a 42-acre “farm” in an area that is in desperate need of more housing.  In the past, I’ve discussed the fact that New York City often taxes the Manhattan condos owned by billionaires at much lower rates than the houses owned by blue collar workers in Queens.  I’ve also discussed the fact that progressive politicians worked hard to repeal the federal luxury tax on large private yachts.  Many of these politicians also favor the SALT tax deduction, which overwhelmingly goes to higher income people. Both New York and California are theoretically “progressive” states, full of politicians that claim to favor a more egalitarian society.  Perhaps they would argue that their representatives in Washington favor higher taxes on “corporations”, as if non-human entities could actually pay taxes.  What can we infer about a politician’s values when they oppose high taxes on the consumption of the rich, but favor high taxes on investments made by the rich?  Some on the left would argue that the best way to tax the rich is through taxes on income and wealth.  But those taxes can be evaded through clever tax avoidance schemes: Say you own a successful business—so successful that your stake in it is worth $1bn. How should you fund your spending? If you pay yourself a wage of $20m a year, the federal government will collect 37%, or some $7.4m. So perhaps you should take a salary of $1 and sell $20m-worth of shares. If these were gifted to you upon founding the firm, the entire sum represents capital gains and will be taxed at 20%, which would mean a $4m hit. What if, instead, you called up your wealth manager and agreed to put up $100m-worth of equity as collateral for a $20m loan. In 2021 the interest rate on the loan might have been just 2% a year, meaning that returns from holding the equity, rather than selling it, would easily have covered the cost of servicing the borrowing. Because the proceeds of loans, which must be eventually repaid, are not considered income, doing so would have incurred no tax liability at all. . . . When the holder of an asset dies, the value for capital-gains assessments is “stepped up” from its purchase cost to its value at the time of death. In this way, “buy, borrow, die” does not simply defer capital-gains taxes—it can eliminate them entirely.  (0 COMMENTS)

Is Driving in California Subsidized? by Marc Joffe, Cato at Liberty, July 16, 2024. Excerpt: To determine whether the government is still subsidizing California drivers today, Krit Chanwong and I reviewed a variety of local, state, and federal disclosures for the 2022–2023 fiscal year. We used actual figures when available but were sometimes obliged to use budgeted amounts due to lack of sufficiently detailed actuals.   Teamsters Boss Sean O’Brien Put Political Spectacle Ahead of His Job by Eric Boehm, Reason, July 16, 2024. The reality, however, looks a bit different. The contract that the Teamsters and UPS signed only requires air conditioning in vans and trucks purchased in 2024 and beyond. In June, CNN reported that UPS has not yet purchased any new trucks that include air conditioning. As a result, Teamsters members working for UPS are still sweltering on the job this summer—while their boss turned a victory lap into a plum speaking gig at the RNC. A supporter of O’Brien’s might argue that progress in the labor moment is always incremental and that air conditioning only in newly purchased trucks is better than no air conditioning at all. Fair enough. But if unions were essential to extracting those concessions from employers, why are Amazon’s non-union delivery drivers working in fully air-conditioned trucks?   US Workers Earning $60,070 Face $3,063 in Higher Taxes to Keep Social Security Solvent by Romina Boccia, Cato at Liberty, July 18, 2024. Excerpt: If the Social Security program continues to operate as it currently does, a median US worker earning around $60,000 annually could soon face an additional burden of more than $3,000 in payroll taxes, bringing their total payroll tax burden to more than $10,000 a year. Figure 1 shows how much taxes would increase for a median US worker should Congress increase the payroll tax rate from 12.4 percent to 17.5 percent, which is necessary to maintain Social Security’s current benefit structure through 2097. With this higher payroll tax rate, the yearly payroll tax burden for median earners would rise by more than 40 percent, increasing from $7,449 to $10,512.   Social Security depends on immigrants — especially those in the U.S. unlawfully by Robert Posen and Charles Blahous, MarketWatch, July 16, 2o24. Excerpt: Social Security’s critical worker-collector ratio is boosted even more directly by immigration than by increased fertility. This is because immigrants are most likely to arrive as working-age, taxpaying adults, whereas it usually takes almost two decades before native-born Americans make appreciable payroll-tax contributions. The 2024 Social Security trustees’ reportcontains a sensitivity analysis showing that if future immigration were 35% higher than is now projected, Social Security’s financing shortfall would be reduced by 11%. Immigration can’t eliminate Social Security’s financing shortfall, but it helps. And: As a 2013 actuarial note from the Social Security Office of the Chief Actuary explains, these contributions only result in benefits for the individual if they subsequently achieve legal work authorization and resident status (or leave the U.S. entirely), and if they have contributed long enough to accrue a benefit. The vast majority of people who enter the country unlawfully fail to ever attain this status, and what’s more, the note says, “the evidence indicates that a relatively small portion of those who potentially could draw benefits do so.” As a result, nearly all such immigrants pay Social Security payroll taxes without ever claiming benefits. In effect, those immigrants subsidize Social Security for the rest of us. These subsidies are significant. For example, in 2010, Social Security began running cash deficits that have continued ever since. Were it not for payroll-tax collections on immigrants’ unauthorized earnings, Social Security would have begun running deficits a year earlier, in 2009. This last is especially important for people (and there are many of them) who think that immigrants are hurting Social Security. (0 COMMENTS)

Whether the accusations of sexual harassment and racism levied against the World Economic Forum (WEF) are true or false, they teach some lessons. It is worth reading the investigation report of the Wall Street Journal (Shalini Ramachandran and Khadeeja Safdar, “Behind Davos, Claims of a Toxic Workplace,” WSJ, June 29, 2024) and its follow-up (“World Economic Forum Opens Board Probe of Workplace Culture,” July 19, 2024). To summarize the investigation report in the WSJ’s own terms: Under Schwab’s decadeslong oversight, the Forum has allowed to fester an atmosphere hostile to women and Black people in its own workplace, according to internal complaints, email exchanges and interviews with dozens of current and former Forum employees and other people familiar with the Forum’s practices. To the extent that the accusations are true, they will show how hypocritical men can violate the faddish DEI (diversity, equity, and inclusion) ideology they proclaim. To the extent that they are false, they will show how a groupist and victimization ideology can incite immoral or resentful employees to falsely accuse innocent individuals. One way or another, the WEF will have been hoisted by its own ideological petard. The World Economic Forum of Davos fame is “economic” only in the sense of being a cartel of business leaders, rent seekers, and politicos who, to summarize without nuances, generally want to use the coercive power of the state to swindle ordinary people. Its unifying idea seems to be that collective choices have absolute priority over individual choices and that its own shade of mushy statism is the one to be imposed. The organization jumps on any fad—one of them being DEI—that can contribute to increasing their standing and the power of their ideal rulers. Its founder and current chairman, Klaus Schwab and a co-author wrote, among other clichés (Klaus Schwab and Thierry Malleret, Covid-19: The Great Reset [Forum Publishing, 2020]): In the post-pandemic world, questions of fairness will come to the fore, ranging from stagnating real incomes for a fast majority to the redefinition of our social contracts. … We are now at a crossroads. One path will take us to a better world: more inclusive, more equitable and more respectful of Mother Nature. (To further illustrate their chameleonic mushiness, they even speak of “societal equality,” which feels  more scientific and serious than the standard “social equality,” apparently old-fashioned and perhaps too tainted by spontaneous-order connotations.) The Wall Street Journal investigation observes that The Forum has sometimes struggled to live up to ideals it preaches about promoting diversity, equity and inclusion. In 2020, for example, the WEF released Diversity, Equity and Inclusion 4.0: A Toolkit for Leaders to Accelerate Social Progress in the Future of Work. Its 2020-2021 annual report boasts about “embedding diversity, equity, inclusion and social justice,” boasting of its racial conscience: Over the past year, in the wake of the Black Lives Matter protests in the United States and around the world, the Forum also set up the Partnering for Racial Justice in Business initiative. Nearly 60 companies joined the alliance and pledged to take immediate action on racial justice in their own organization and to work together to drive systems change. Consider sexual harassment, which the zeitgeist of our time often confuses with non-vulgar and non-bullying compliments. As long as men and women work together, flirting innuendos and tensions cannot be avoided. Harassment and bullying are another matter. Just as economics prevents one from neglecting individual choices, classical liberalism promotes a culture of individual respect and dignity. Its positive and normative theoretical background is based on individual consent. It is more unlikely for a culture of individual contempt to develop when the individual is conceived as freely choosing or declining his acts of exchange and possessing a theoretical veto right over collective choices. The same applies to racial matters. If we believe the WSJ’s examples, WEF management seems to have better reacted to vulgar racism in its work environment. The organization is still likely be sued or perhaps prosecuted for private discrimination, which is consistent with its preference for government solutions to all problems. It is not difficult to conceive how, in an ideological environment of power-broking and disregard for individuals, discrimination based on mere group membership, a sequel of tribalism, would be more rampant than under a culture of individual dignity. Libertarianism and classical liberalism constitute the only political philosophy favorable to DEI in the sense of free Diversity, formal Equality, and Individualism, as opposed to forced and artificial diversity, arbitrary equalization, and authoritarian inclusion. The WEF stands on the latter side. (0 COMMENTS)

Whether the accusations of sexual harassment and racism levied against the World Economic Forum (WEF) are true or false, they teach some lessons. It is worth reading the investigation report of the Wall Street Journal (Shalini Ramachandran and Khadeeja Safdar, “Behind Davos, Claims of a Toxic Workplace,” WSJ, June 29, 2024) and its follow-up (“World Economic Forum Opens Board Probe of Workplace Culture,” July 19, 2024). To summarize the investigation report in the WSJ’s own terms: Under Schwab’s decadeslong oversight, the Forum has allowed to fester an atmosphere hostile to women and Black people in its own workplace, according to internal complaints, email exchanges and interviews with dozens of current and former Forum employees and other people familiar with the Forum’s practices. To the extent that the accusations are true, they will show how hypocritical men can violate the faddish DEI (diversity, equity, and inclusion) ideology they proclaim. To the extent that they are false, they will show how a groupist and victimization ideology can incite immoral or resentful employees to falsely accuse innocent individuals. One way or another, the WEF will have been hoisted by its own ideological petard. The World Economic Forum of Davos fame is “economic” only in the sense of being a cartel of business leaders, rent seekers, and politicos who, to summarize roughly, want to use the coercive power of the state to swindle ordinary people. Its unifying idea seems to be that collective choices have absolute priority over individual choices and that its own shade of mushy statism is the one to be imposed. The organization jumps on any fad—one of them being DEI—that can contribute to increasing its standing and the power of its ideal rulers. Its founder and current chairman, Klaus Schwab, and a co-author wrote, among other clichés (Klaus Schwab and Thierry Malleret, Covid-19: The Great Reset [Forum Publishing, 2020]): In the post-pandemic world, questions of fairness will come to the fore, ranging from stagnating real incomes for a vast majority to the redefinition of our social contracts. … We are now at a crossroads. One path will take us to a better world: more inclusive, more equitable and more respectful of Mother Nature. (To further illustrate their chameleonic mushiness, they even speak of “societal equality,” which feels  more scientific and serious than the standard “social equality,” apparently old-fashioned and perhaps too tainted by spontaneous-order connotations.) The Wall Street Journal investigation observes that The Forum has sometimes struggled to live up to ideals it preaches about promoting diversity, equity and inclusion. In 2020, for example, the WEF released Diversity, Equity and Inclusion 4.0: A Toolkit for Leaders to Accelerate Social Progress in the Future of Work. Its 2020-2021 annual report boasts about “embedding diversity, equity, inclusion and social justice,” boasting of its racial conscience: Over the past year, in the wake of the Black Lives Matter protests in the United States and around the world, the Forum also set up the Partnering for Racial Justice in Business initiative. Nearly 60 companies joined the alliance and pledged to take immediate action on racial justice in their own organization and to work together to drive systems change. Consider sexual harassment, which the zeitgeist of our time often confuses with non-vulgar and non-bullying compliments. As long as men and women work together, flirting innuendos and tensions cannot be avoided. Harassment and bullying are another matter. Just as economics prevents one from neglecting individual choices, classical liberalism promotes a culture of individual respect and dignity. Its positive and normative theoretical background is based on individual consent. It is more unlikely for a culture of individual contempt to develop when the individual is conceived as freely choosing his acts of exchange and possessing a theoretical veto right over collective choices. The same applies to racial matters. If we believe the WSJ’s examples, WEF management seems to have better reacted to vulgar racism in its work environment. The organization is still likely be sued or perhaps prosecuted for private discrimination, which is consistent with its preference for government solutions to all problems. It is not difficult to conceive how, in an ideological environment of power-broking and disregard for individuals, discrimination based on mere group membership, a sequel of tribalism, would be more rampant than under a culture of individual dignity. Libertarianism and classical liberalism constitute the only political philosophy favorable to DEI in the sense of free Diversity, formal Equality, and Individualism, as opposed to forced and artificial diversity, arbitrary equalization, and authoritarian inclusion. The WEF stands on the latter side. (0 COMMENTS)

Let’s go ahead and get this out of the way: nothing will ever be “adequately funded.” In pretty much any circumstance, someone somewhere will have at least some idea of what else they could do with an extra dollar or two. The fact that they have to forsake something because they have limited resources means that, in their eyes, the problem is simply that the world is not “adequately funding” whatever initiative we think is important. There is a subtle social danger here: it is easy, therefore, to think that social problems are not because we face unavoidable trade-offs but because bad people out there have the wrong values and are thwarting the march of justice, prosperity, and equality for likely venal reasons. You’ve heard that a task tends to expand to fill the allotted time. The same is true of budgets and spending: a project expands to fill the resources allotted to it, and it is easy from that point to say, “if only we had more resources.” We see this in public policy all the time. Bad roads? They need more funding. Lousy schools? More funding. Illness? Funding again. There are a couple of problems, though. Roads and schools could always be better. People could always be healthier. Blaming problems on inadequate funding stubbornly refuses to acknowledge that trade-offs exist and are inevitable. When someone says they have “inadequate funding,” what they really mean is, “I could do a little more of what I find important if I had a little more money.” There are three problems. First, people can always do something with a little more money, even if they’re just insuring against a future calamity by adding it to a rainy-day fund. Second, funds for one thing can’t be used for another, and since we don’t have infinite resources, we have to make hard choices about when to say “yes” and when we say “no.” Third, even when a cause is adequately funded–or at least funded well enough to win a particular crusade, it usually doesn’t dissolve but moves on to a different crusade because we look harder to find the chaff among steadily-growing piles of wheat. A former colleague used to say, “the older I get, the better I was.” It’s easy and tempting to think there was once a golden age when we did things the right way. There are a few things wrong with this way of thinking. First, it’s simply false to think we’ve shortchanged things like education. Inflation-adjusted spending on K-12 education was 280% higher in 2020 than it was in 1960. The idea that education is being “de-funded” is simply false. Second, golden ages can be deceiving because of politicians’ incentives. When you’re spending future generations’ money and you know you will have moved on by the time the bill comes due, it’s easy to spend lavishly on public services and delay unremarkable things like maintenance. By the time the bill comes due, you’ve advanced in your career, and some other schmuck has been stuck with the bill. We shouldn’t blame problems on “inadequate funding.” Nothing will ever be “adequately” funded if we can think of something else to do with the next dollar–and people will always be able to think of something else to do with the next dollar.   Art Carden is Professor of Economics & Medical Properties Trust Fellow at Samford University. (0 COMMENTS)