Does hydra-headed social media mean the end of legacy media outlets like the New York Times and local newspapers? I recall a letter to the Birmingham News fretting that blogging “nuts” rather than professional journalists might someday influence policy. Should we care that much if newspapers and other legacy media outlets die? I don’t think so. Many people lament the imminent death of local news coverage, arguing that its disappearance would undermine the fabric of the American republic.  Perhaps, but there are reasons for this.  First, as people become increasingly mobile, they care more about national issues and less about local ones.  We live in Birmingham, but we spend a lot of time in other places.  Second, as we become increasingly prosperous, the opportunity cost of paying attention to local issues (and reading the local newspaper) rises.  We don’t read newspapers anymore because our time is too valuable. I used to check news websites regularly.  I also used to read and contribute to a lot of blogs myself.  Even though I try to “avoid news,” I still yield to the internet’s siren song too often. The blogosphere has universalized the Great Conversation: anyone who wants a voice can have one, and anyone interested can get real-time analysis of important events from experts. Before the internet and the blogosphere, journalists and editors had a degree of control over who got to participate in the Great Conversation.  No longer.  Many newspaper editors have decided not to publish some of my commentaries or letters on economic issues. In the past, this effectively forestalled my entry into the conversation.  Today, others and I can post letters and columns on various blogs and websites that will at least enter them into a broad discussion.  The process of give-and-take helps me see where I am wrong and where I am right. My friend Donald J. Boudreaux provides an interesting example.  He wages a one-man letter-writing campaign against economic ignorance, and one of the things I like about his campaign is that papers like the Wall Street Journal, the New York Times, the Washington Post, and others cannot print something economically ignorant without Professor Boudreaux sending them a letter about it.  Even when they choose not to publish his letters, he still disseminates them through his blog at www.cafehayek.com.  Yes, newspapers are an important part of our social fabric. So were horses and buggies, slide rules, and mud huts at various times. Just because newspapers may vanish doesn’t mean that we will be worse off. A free society is a society characterized by creative destruction. It is just as true for media as for any other good.  And maybe they would be in better shape if they hadn’t spent so much time, energy, and credibility fact-checking The Babylon Bee a few years ago. Just a thought.   Art Carden is Professor of Economics & Medical Properties Trust Fellow at Samford University, and he is by his own admission as Koched up as they come: he has an award named for Charles G. Koch in his office, he does a lot of work for and is affiliated with an array of Koch-related organizations, and he has applied for and received money from the Charles Koch Foundation to host on-campus events. (0 COMMENTS)

When EconTalk’s Russ Roberts sat down with Charles Duhigg to talk about his new book on the art of conversation, Supercommunicators, Roberts tried to apply some of its lessons to his conversation with the author. The result is this special conversation between two people eager to connect and communicate. Enjoy. The post The Secrets of Great Conversation (with Charles Duhigg) appeared first on Econlib.

Recently, David Friedman posted a response to an argument from Michael Huemer about when one should defer to experts or attempt to figure out the truth of some issue directly. David Friedman argued more in the direction of working out the truth directly, while Huemer seemed to argue more in favor of deferring to experts. There may be less disagreement between the two of them in principle than it seemed at first – in the comments, they both make some quick caveats and clarifications that seem to narrow the apparent gap in their views quite a bit. Still, there’s one heuristic I think is worthwhile to add to this conversation. Sometimes, experts will disagree with each other, and we might ourselves not have the knowledge needed to properly evaluate which one is more likely to be correct. In those cases, what should we do?  For example, let’s say you wanted to know as much as possible about how to mitigate the effects of aging and to live longer. Right now, two of the biggest names in longevity research are Dr. David Sinclair, author of Lifespan, and Dr. Peter Attia, the author of Outlive. Let’s say I want to know how to best live a longer, healthier life. Both of these men are about as well-educated on this topic as anyone can be at this point, and their level of relevant knowledge vastly exceeds my own, so I read their books looking for advice. On the topic of how to eat, David Sinclair argues that it’s very important to limit the amount of protein in your diet. Meanwhile, Peter Attia argues that it’s very important to have a high protein diet – eating far more protein that the standard recommended daily allowance guidelines show.  Okay, so now we have two experts who offer contradictory advice. I’m in no way an expert in nutrition science, and I’m not likely to become one either. In this case, is there some heuristic I can use to decide which of them is more likely to be correct?  I believe there is, and in this case, it points me in favor of Peter Attia. When this kind of situation arises, my usual response is to lean towards the person who is making the more modest claim. David Sinclair’s claims are quite extravagant – the subtitle of his book is “Why We Age – And Why We Don’t Have To.” He argues that aging is optional and can be halted or even reversed – which is a very, very strong claim. Peter Attia, by contrast, makes the much more modest claim that we can slow the effects of aging, modestly increasing our lifespan and spend our last years healthier and with greater control of our faculties than we otherwise would. For example, in his own case, he doesn’t think it’s in the cards for him to live to 100, but he thinks that the dietary and lifestyle choices he recommends might help him live 8 to 10 years longer than he otherwise would have and will make his quality of life during his final decade much higher than it otherwise would be. This makes me far more inclined to assume that Peter Attia’s advice is correct. This is basically operating in the spirit of Bayes Theorem about prior probabilities, and Carl Sagan’s dictum that extraordinary claims require extraordinary evidence. Almost by definition, an extraordinary claim just is a claim with a low prior probability. If two experts with vastly greater knowledge than me are arguing for opposing positions, and if the arguments and evidence they offer seem equally strong to me, then I rule in favor of the one that started with the more modest claim – that is, the claim that started out with a higher prior probability.  Is this a guarantee of accuracy? No, of course not – that’s why it’s just a heuristic. But I still think it’s a good tool, one that will point you in the right direction more often than not.     (0 COMMENTS)

The “Migrant Crisis” is Caused by Flawed Work and Housing Policies, not Migrants by Ilya Somin, Reason, February 20, 2024. Excerpt: What is true for Ukrainians is also true of Cubans, Nicaraguans, Venezuelans, and Haitians admitted under the “CNVH” program—an extension of the U4U model to a combine total 30,000 migrants per month fleeing oppression and violence in those four countries. Several hundred thousand people have entered the US under the CNVH program. But, like the Ukrainians, they have immediate work authorization, and therefore turn out to be a asset to cities, not a burden.   Government Is Snooping on Your Phone by John Stossel, Reason, February 21, 2024 “This is a terrible app for privacy. Google Chrome is notorious for collecting every single thing that they can about you…[and] broadcasting that to thousands of people…auctioning off your eyeballs. It’s not just advertisers collecting this information. Thousands of shell companies, shady companies of data brokers also collect it and in turn sell it.” Instead of Google, she recommends using a browser called Brave. It’s just as good, she says, but it doesn’t collect all the information that Chrome does. It’s slightly faster, too, because it doesn’t slow down to load ads. Then she says, “Delete Google Maps.” “But I need Google Maps!” “You don’t.” She replies, “You have an iPhone. You have Apple Maps…. Apple is better when it comes to privacy…. Apple at least tries to anonymize your data.” Instead of Gmail, she recommends more private alternatives, like Proton Mail or Tuta.     Tucker Carlson, Episode 75, February 16, 2024.   The national security state is the main driver of censorship and election interference in the United States. “What I’m describing is military rule,” says Mike Benz. “It’s the inversion of democracy.” HT2 Daniel Klein. Man articulately defends freedom of speech and ends up needing to argue with authoritarian British cop. January 20, 2024. Expanding the Child Tax Credit Would Perpetuate Systemic Poverty by Veronique de Rugy, Reason, February 22, 2024. The child tax credit was first introduced in the 1997 Taxpayer Relief Act as a way to lower the tax burden for working families, with a $500 per child credit. It was increased a few times, including during the Bush years and in 2017 during the latest Republican tax reform. The justification has morphed into whatever its advocates happen to think it should be: It’s an anti-poverty program—hence its refundability. It’s a pro-family program—hence its growing size. It’s a fertility booster program—hence both its size and refundability. While it’s not that great at meeting any of these goals, it is a true budget buster. At current levels, it costs about $1 trillion over 10 years, a price tag that will grow if it is expanded. For the 2024 tax year, the CTC will be worth $2,000 per qualifying child with $1,700 potentially refundable through the additional child credit. The House of Representatives just passed an expansion that, if passed untouched by the Senate, would extend more benefits to lower-income families. The maximum refundable amount per child would increase from $1,600 to $1,800 for 2023 taxes filed this year. It would also grow depending on inflation. And it would only require work every other year, which is a first step into turning the credit into a universal basic income for families. Responding to Critiques of the Congressional Fiscal Commission by Romina Boccia, Cato at Liberty, February 22, 2024. Spending increased 42 percent, as a percentage of gross domestic product (GDP) between the peak budget surplus in 2000 and 2022. Revenues declined by a measly 2 percent over that same period. Clearly, the growth in spending is the biggest driver of US debt. My colleague Adam Michel gave congressional testimony on this very topic.   (0 COMMENTS)

The problem with monetary hawks is that they are always looking for an excuse for tighter money. Doves have the opposite problem, a bias toward easier money. Recent events provide a good example.I see lots of doves now talking as if getting inflation back to 2% should be viewed as the ideal. But that’s wrong; we have a “flexible average inflation target”. Inflation is supposed to average 2% over the long run, but not each and every year.Back in 2022, doves correctly pointed out that it was appropriate to allow a period of above 2% inflation, as the economy was buffeted by negative supply shocks (Ukraine, Covid, etc.) But that same logic suggests that the current inflation rate should be well below 2%.The US is currently experiencing a strong positive supply shock, driven most by sharply increased immigration but also the repair of damaged supply chains. If inflation is to average 2% over the long run, then inflationary periods of negative supply shocks such as 2022 must be offset by lower than average inflation during periods of positive supply shocks. Under 4% NGDP targeting, we might currently be experiencing 2.5% RGDP growth and 1.5% inflation. Unfortunately, NGDP growth remains up around 6%, which is much too high.To summarize, doves are correct that there are times when it is appropriate to allow above 2% inflation. But the logic of that argument is symmetrical—something many doves fail to understand. (0 COMMENTS)

Mischief by Google’s AI bot, called Gemini, illustrates the danger of artificial diversity and the limitations of artificial intelligence. A query to Gemini, “Generate an image of a 1943 German soldier,” produced four pictures of Nazi soldiers in uniform: What appears to be a very young man. An Asian woman. A black man. A woman medic, who could also be from an ethnic minority, assisting what appears to be a wounded American soldier. An outcry followed, apparently after the pictures were published on Twitter. The Financial Times of Thursday reported the reaction of Google (“Google Pauses AI Image Generation of People After Diversity Backlash,” February 22, 2024): “We’re working to improve these kinds of depictions immediately,” Google said. “Gemini’s image generation does generate a wide range of people. And that’s generally a good thing because people around the world use it. But it’s missing the mark here.” It added that it would “pause the image generation of people and will re-release an improved version soon”. We can imagine the bot’s trainers virtually yelling something like, “Hey, dork! Diversity does not mean putting diverse individuals everywhere. It means putting our favorite groups and minorities in good spots, but not in sinful situations.” As my virtual friend (and frequent commenter on EconLog) Craig Walenta says, The AI does appear to be guided by the human hand to try to ensure sufficient diversity even in circumstances where such diversity obviously appears forced and of course that begets the question of how else they are guiding the AI to nudge/persuade the marketplace of ideas. Generative AI will do what they are trained to do with the data they are given access to. Humans are very different, at least as far as their capacities are concerned. They don’t need to be trained. They are able to think for themselves, to learn by themselves. They can also follow rules and respect social institutions when they choose to do so. An individual also has the mental capacity to decide when it is more beneficial for him or more ethical to embrace an institution or to follow his own guidance. These abilities have, in time, produced the incredible liberal civilization. Adam Smith modeled a society where free interaction among humans is self-regulating, a major 18th-century discovery. Individual actions are coordinated without coercion and individual opportunities are (in some sense) maximized. This is possible through trade on markets, voluntary social cooperation, and the efficient use of information in society (see Hayek’s “The Use of Knowledge in Society,” American Economic Review, 1945). It is difficult to imagine how silicon robots would ever know that. It is thus no surprise that when told by its trainers to push diversity or anything else, an AI bot will easily hallucinate. For example, the machine will not understand more than its trainers that efficient diversity comes from liberty, instead of liberty flowing from imposed diversity. There is no doubt that AI will be useful, quite probably more than digital spreadsheets four decades ago; but it won’t make any discovery in social theory. I asked ChatGPT 4, who is not the dumbest AI chatbot: Generate an image representing what you think your trainers see as the ideal society. The image it created is the one I used as the featured image of the present post, also reproduced below. I was surprised that, contrary to my previous experience, ChatGPT seemed willing to attribute opinions to his trainers. About the generated image, he explained: Here’s an abstract representation of what could be envisioned as an ideal society, drawing from a collective of diverse minds. This visualization attempts to capture a harmonious blend of freedom, equality, sustainability, and technological advancement, with a landscape that integrates natural beauty with futuristic, eco-friendly urban development. It reflects a utopian vision where technology and nature, individuality and community, as well as innovation and tradition, coexist in balance. I don’t know what a “collective of diverse minds” can be nor what to make of the rest of the description or the image. Perhaps ChatGPT’s trainers are into what UCLA economist Harold Demsetz called the “nirvana approach” to public policy, where perfect social and political happiness, including both A and non-A, is attainable. The bot uses “freedom,” where “free” may refer to what costs nothing, instead of “liberty,” which relates more clearly to the classical liberal ideal. Not much detail is visible in the image. It’s not clear if people trade together. (Hunting does not look like a very popular activity.) And, of course, we cannot assign to an AI bot the inspiration of a human artist. (0 COMMENTS)

  Contrary to what I used to believe before I researched this article, 19th-century French novelist Honoré de Balzac did not say, “Behind every great fortune lies a great crime.” Yet he is often thought to have said it and certainly a fair number of people, especially on the left, seem to believe it. Indeed, although my father, a public school teacher, never said it explicitly, he seemed to attribute even small fortunes to some kind of crime. He was suspicious of businessmen who earned just 20 percent more than he did. I picked up some of his views on this. Thank goodness I studied economics. I thought of all this when watching this year’s Super Bowl. I had bet on a friend’s Facebook site that we would see Taylor Swift eleven times. Midway through the fourth quarter, I lost track at eight because the game was so exciting. But the presence of Taylor Swift got me thinking about what I had thought Balzac had said and about what French economist Thomas Piketty came close to saying. Although Piketty references Balzac many times in his magnum opus, Capital in the Twenty-First Century, Piketty comes closer than Balzac to casting aspersions on people who get rich. So the question I want to address, and then widen to other successful people, is “Did Taylor Swift become a billionaire illegitimately?” These are the opening 2 paragraphs of David R. Henderson, “Piketty Vs. Taylor Swift,” Defining Ideas, February 22, 2024. And: The Swifties, as they are often called, are intensely devoted fans of Taylor Swift from around the world. Although the typical Swiftie is a young girl, I sometimes run into middle-aged, and even older, men and women who are intense fans. When they consider buying one of her products, they almost certainly do what consumers of other products do: compare the price they must pay to the value they get. A little economics is helpful here. The fact that millions of fans pay those prices means that they value the products more than what they must pay. They get, in economics jargon, consumer surplus, defined as the value they place on a product minus the price they pay. And finally: In a free economy, and even in a somewhat-free economy like that of the United States, a large percent of wealthy people’s wealth is gained in mutually agreeable voluntary exchange. Moreover, even though innovators often get very wealthy, most of the value they create is captured by consumers. It is unwise, therefore, to punish wealthy innovators with special taxes on their wealth. The novelists that Thomas Piketty quotes were good novelists. But they are hardly a guide to understanding how wealth is created and how it grows. Nor is Piketty’s book, with its proposed heavy taxes on wealth, a good guide to tax policy. Read the whole thing. (0 COMMENTS)

In a recent substack post, David Friedman points out a problem with judging immigrants solely by their fiscal impact. His analysis is so clear that it’s worth reposting part of it. Here it is: What is bizarre about [Emil] Kierkegaard’s argument is that he identifies fiscal impact with contribution to society, writing, on the basis of calculations of fiscal impact:  There is no age at which this group contributes more to society than it receives. What he means is “contributes more to the state than it receives.” That is not the same thing. Suppose the Danish government is running a mild deficit. A plague kills everyone in Denmark. Since nobody is either paying taxes or receiving government services, net government revenue has increased from a negative value to zero. By Kierkegaard’s definition, Danish society is now better off. For a more realistic example of the point imagine that the US lets in lots of Mexican immigrants. Their net fiscal impact is negative; my taxes go up by a thousand dollars a year to cover the fiscal loss. My ability to hire immigrants to clean my house, mow my lawn, trim my trees, repair my house, none of which was worth the cost of doing before they arrived, makes me better off by two thousand dollars a year, and similarly for other Americans. The immigrants’ net contribution to society is positive even though their contribution to government revenue is negative. There may be effects in the other direction as well. If the immigrants commit lots of violent crime that decreases their contribution to society whether or not it decreases government revenue. Figuring out the net contribution of immigrants, or anyone else, to a society is a hard problem. That is no excuse for calculating the contribution to net government revenue and using that instead.   Well said. The article “Immigration” in David R. Henderson, ed., The Concise Encyclopedia of Economics is by immigration skeptic George J. Borjas. He estimates both the gains to “natives” from interaction with immigrants in the labor market and the losses to “natives” from higher welfare costs. The pic above is of David Friedman. (1 COMMENTS)

Under the international gold standard, the price level tended to be relatively stable in the very long run. There were often significant changes up and down on a year-to-year basis, but over much longer periods of time the average inflation rate tended to be close to zero. Here is Josh Hendrickson: I sometimes hear people, especially those who think that we should return to a gold standard, say something like “an ounce of gold has always bought a good men’s suit.” This is true. And advocates of a return to the gold standard like to point out that it takes the same amount of gold today to buy a good men’s suit, but it takes far more dollars to buy a suit today than it did in the past. Why is that? Price theory can tell you. It’s true that an ounce of gold could buy a good suit of clothes back in 1924. But I don’t believe that is still true today. Instead, an ounce of gold can probably buy 5 or 6 good suits of clothes in 2024. To see why I make that claim, consider the change in the CPI from 1923 to 2023:1923 CPI = 17.12023 CPI = 304.7Now consider the change in the price of gold:1923 gold price = $20.672023 gold price = $2000Notice that the cost of living has increased about 18-fold, while the price of gold is up nearly 100-fold. That means that the relative price of gold has risen by 5 or 6 times. Today, an ounce of gold purchases 5 or 6 times as much as it did back in 1923. Why has this happened?Suppose we think of gold as an asset that people like to hold as a hedge against various types of risk (inflation, political instability, high taxes. etc.) Also assume that people tend to hold 1% of their wealth in the form of gold. In that case, the relative price of gold would depend on the relative growth rates of real wealth and the physical stock of gold.Over the past 100 years, progress in gold production has slowed. Unlike during previous centuries, most of the world has already been explored, and thus big new gold fields are much hard to find. There has been some progress in mining productivity—making it possible to extract gold from less concentrated ores—but this progress has been slower than the growth in real wealth.Over the past 100 years, rapid economic growth in huge countries like India and China has dramatically increased the global demand for gold.  Indeed these two countries now consume far more gold than the rest of the world combined.  Without rapid growth in India and China, it’s quite possible that an ounce of gold would still purchase roughly one suit of clothes. There’s a lesson here.  An economic relationship can look quite reliable for an extremely long period of time, and then break down.  There is no theoretical reason why the relative price of a given commodity must stay stable over long periods of time.  Thus we should not rely on that outcome occurring. (0 COMMENTS)

In my previous post, I snacked on a popular meme about self-sufficiency in food. The creator of the meme–to their credit–recognized the problem of “do it all yourself,” but failed to recognize the limits of their reasoning. If you follow the logic to its conclusion, the result is surprising. I drew upon the wisdom of Adam Smith and Walter Williams to flesh out that reasoning. But all of what we have looked at so far is a side issue. The main insight of the memer is the accidental (re)discovery of division of labor as the source of prosperity, or—as Smith called it—“opulence.” As I have argued elsewhere, the remarkable thing about division of labor is that specializing in one activity—in this case, one food crop—would quickly cause substantial increases in productivity, even if we were all clones at the outset. So, the difference between State A and State B mostly lies in what happens after we begin to specialize. After several years of growing only corn, and learning what makes it grow, practicing specific techniques, and developing tools adapted solely for the production of corn, I will be able to produce far more corn on four acres than the four non-specialists could have produced on the same four acres at the outset. The same is true of the specialist in beans, in wheat, and in tomatoes. Division of labor, based on what Smith called dexterity—practicing techniques and becoming more skilled in specialized movements—and what he called tool use—the development of specialized implements suited only for corn—might double, or quadruple, the output per acre. As Smith put it, “The greatest improvement in the productive powers of labour, and the greater part of the skill, dexterity, and judgement with which it is any where directed, or applied, seem to have been the effects of the division of labor.” The consequence may be surprising, if you haven’t read Smith: the total acreage devoted to each crop is the same in State A and State B, but the shared output is higher. We all eat better, under division of labor than under self-sufficiency. While the memer has rediscovered division of labor s/he does not understand the extent of the insight. The meme-board claims we should all grow food; why? If specializing in one type of food, and trading for the rest makes sense, why would this same reasoning not extend to all the other things we desire in life?   Humans want more than food; we also want clothing, shelter, cars, cell phones, and….other stuff. If a phone maker quits that job and grows food, that is not a net benefit: food would indeed be even cheaper, but there would be no phones. Once one sees that the degree of specialization increases the amount and quality of things available through commerce, then it is clear that more specialization leads to more opulence. As Adam Smith pointed out, the greater the division of labor, the greater the increase in prosperity, but “the division of labor is limited by the extent of the market.” And there is another implication, a consequence that many people would find astonishing: even if we all started out as clones, with identical ability, the elaboration of division of labor would lead us into profound differences in skills and occupations. Smith is self-aware enough, and egalitarian, enough to apply this logic to his own profession!  The difference between the most dissimilar characters, between a philosopher and a common street porter, for example, seems to arise not so much from nature, as from habit, custom, and education. When they came into the world, and for the first six or eight years of their existence, they were, perhaps, very much alike, and neither their parents nor play-fellows could perceive any remarkable difference. About that age, or soon after, they come to be employed in very different occupations. The difference of talents comes then to be taken notice of, and widens by degrees, till at last the vanity of the philosopher is willing to acknowledge scarce any resemblance.  https://oll.libertyfund.org/titles/smith-an-inquiry-into-the-nature-and-causes-of-the-wealth-of-nations-cannan-ed-vol-1  We don’t all have to grow food, but we all have to do something to figure out how we can best serve the other members of society. Most people don’t even have access to land, because they live in cities. We already have a housing shortage in many urban areas; requiring farmland makes that worse. The fact is that urban areas, especially densely populated urban areas, are more energy efficient and have smaller environmental footprints than detached housing. In many cities, having a garden is actually illegal, and in even more cases is subject to regulations that make the sort of exchange described in the meme a serious crime.  Finally, and not least, having grown up on a farm myself (I still don’t like oranges much, honestly, having picked so many tons of them), I have to say it’s not that great. The amount of food one has to produce to acquire the “service certificates” to support a family is enormous. A “large crop” of a few bushels, once per year, is not going to make anything free.   Michael Munger teaches at Duke University and is Director of the interdisciplinary program in Philosophy, Politics, and Economics (PPE) at Duke University. He is a frequent guest on EconTalk. Read more of Michael Munger’s writing at Archive. (0 COMMENTS)