A Financial Times headline reads “IMF Raises Russia Growth Outlook as War Boosts Economy” (January 30, 2024). The story (to use journalistic jargon) essentially reports on the International Monetary Fund’s January World Economic Outlook, and its headline does correspond to what the IMF claims about Russia: Growth in Russia is projected at 2.6 percent in 2024 and 1.1 percent in 2025, with an upward revision of 1.5 percentage points over the October 2023 figure for 2024, reflecting carryover from stronger-than-expected growth in 2023 on account of high military spending [my underlines] and private consumption, supported by wage growth in a tight labor market. In my post of yesterday, I explained the danger of confusing GDP growth with higher welfare for the country’s residents, especially when what grows is dictated by the state. It is even more obvious when war is what is decreed. It may be, of course, that submission to a foreign tyrant would be more detrimental than a defensive war. In this case, we might want to say, in an impressionistic way, that the war is stimulating “the economy” compared to what it be under the foreign tyranny. But this is not true if the economy we are referring to is that of the country whose rulers are the war aggressors—except for the eventual looting of the aggressed after the war. In the case under consideration, the tyrant aggressor has been the Russian state, and it cannot be sensibly argued that the war is benefiting the economy of its subjects even if the GDP numbers are up. John Maynard Keynes is famously known for arguing that, during a recession with involuntary unemployment, “pyramid-building, earthquakes, even wars may serve to increase wealth” (The General Theory of Employment, Interest and Money [1936], p. 129). He did add, though, that doing useful projects would still be better. At any rate, Russia was not in a recession before the invasion of Ukraine. So the IMF’s line does not make much sense anyway. If it were true that war promotes economic growth, I would advance the following proposal. Let every national state create a Special Growth Zone (SGZ) proportional to the size of the country. By law, the inventories of many commodities and materials, if not of consumer goods, would have to be stored there: wheat, steel for car manufacturing, plastic for baby cribs, wood for house building, etc. The government would also offer free land and other subsidies to companies interested in building their factories there. When the country’s rulers feel a need to boost the economy, the SGZ would be activated by an emergency declaration from the president. Adding to what is already in the SGZ, the government would move whatever is movable (at reasonable cost) by air, water, and road: tanks, airplanes, air defense batteries, etc. Then, the country’s own armed forces would reduce the SGZ to rubble with artillery and missiles. In case of serious economic underperformance, tactical nuclear weapons could be used. Gladiator fights could be organized on the rubble to destroy some human capital too. Would the IMF say that GDP growth was stronger than expected on account of the (fake) war? (1 COMMENTS)

Janan Ganesh, an often original if not iconoclastic columnist, asked why bad governments such as populist ones don’t seem to undermine economic growth, at least in the short run (“Why Hasn’t Populism Done More Economic Harm,” Financial Times, January 23, 2024). This provides us with a good opportunity to review what GDP numbers cannot prove. For seven or eight decades, it has been known to economists (at least to those who studied the issue) that, if GDP might help those who get more of it, it does not measure “social welfare” (sometimes called “aggregate utility”). There is much welfare-economics theory behind the reasons for this, but they can be intuitively rendered in a few more or less equivalent ways, or at least that’s what I will attempt to do. (The basic theory can be found in Paul A. Samuelson’s “Evaluation of Real National Income [Oxford Economic Papers, 1950] and Francis M. Bator’s “The Simple Analytics of Welfare Maximization” [American Economic Review March 1957].) Consider different descriptions of what happens after the government forces the economy to move on the production possibility frontier (PPF) by authoritatively deciding that more of something and less than something else will be produced: Some consumers and possibly some workers and owners of capital are harmed. In economic jargon, the move is not a Pareto improvement. Since some gain and others lose, there is no social-scientific (economic) way to tell if “social welfare” has increased or decreased, whatever the GDP figures show. There is typically no practical way, nor even (as shown in the Samuelson article cited above) theoretical formulas, to compensate those who are harmed. Ultimately, the cause lies in the impossibility of interpersonal comparisons of utility. (Of course, if everyone gets a higher real income with nothing else changed, we would know that everyone’s utility, or individual welfare, has increased, and thus “social welfare” too.) Prices, which serve to add apples and oranges to make up GDP, lose their previous correspondence with consumer valuations. It is not consumer sovereignty that determines what will be produced in the economy, but government rulers or some majority. Imagine, for example, that real GDP grows at 10% and that all the growth accrues to the king, all other individuals being impoverished: “the economy” has improved, but there is no scientific way to establish that welfare has increased. The free interaction between demanders and suppliers is prevented from determining what “economic growth” is made of or what it is used for. To see this in a slightly different way, imagine that as the year 2023 progressed, the state continuously seized all its subjects’ incomes over subsistence level and invested the proceeds in a portfolio mirroring the S&P 500. Given that the latter increased by 24% during the year and assuming that the government invested the money as it seized it regularly (linearly) during the year, the investment portfolio would have yielded a return of 12%. Even if the government paid this gain back to its subjects, it makes no sense to say that “the economy” grew at 12%. To summarize: If, and to the extent that, producers are not at liberty to make money by producing what consumers demand on free markets (what is called consumer sovereignty), the configuration of the number of units of goods and services produced and their prices (GDP is the name of this configuration) is basically meaningless; or, if you will, it represents what the rulers want to be produced at prices that represent the trade-offs they make. In economic jargon, a government-dictated increase in GDP does not signal a Pareto improvement, that is, an increase in the welfare of some individuals without a decrease in the welfare of anybody else. Most economists, however, would view as Pareto improvements the production or financing of “public goods” wanted by everybody but not excludable to non-payers (such as territorial defense), as well as the reduction of “externalities.” Thus, if a dirigiste ruler’s policies result in the production of, say, more steel and less wheat, an increase in GDP does not imply that the economy has grown in the sense of increasing the value of consumption as evaluated by the consumers themselves. It is only in the longer run and mainly negatively that the evolution of GDP (per capita) can lead to some conclusion: if it plunges or stagnates (as it did in Argentina for long periods), we may, especially if other indicators confirm the trend, consider that as a refutation of the ruler’s beneficial contribution to economic efficiency. ***************************************** Featured image: Busts of Juan and Evita Peron covered with snow. (1 COMMENTS)

David Beckworth recently interviewed Gauti Eggertsson, who is an important member of what I called the Princeton School of Macroeconomics. (He currently teaches at Brown University.) In the interview, Eggertsson made a number of astute observations about monetary policy. Here he pushes back against the “Fiscal Theory of the Price Level”, which blames the recent inflation on the increase in the national debt: I don’t think the Fed was interpreting this stimulus as a license to, or a mandate to, keep interest rates low in order to keep the debt burden lower. I think it was more just the fact that that increased demand to a degree that people were not quite expecting. Additionally, and maybe more importantly, and this was one of the rationales for the framework and why it was asymmetric, was that people thought that the cost of employment going above its maximum… the risk of inflation was very low. The large fiscal stimulus might have played some role in the recent inflation, but the Fed could have and should have offset enough of the stimulus so that the average inflation rate stayed close to 2%.  Unfortunately, the Fed had an asymmetric interpretation of its flexible average inflation targeting policy.  Eggertsson suggests that this was probably a mistake: And I think that the average inflation target is a valuable tool, I don’t think it played a role here, but I think it may be relevant in the future, and I would keep that there. But, maybe this asymmetry, I think, is a bit problematic. Eggertsson suggests that it might be hard to explain nominal GDP targeting to the general public, but then correctly notes that the important audience is the financial markets, which are perfectly capable of understanding the concept: I guess one aspect of it that I suspect would make the Fed quite reluctant [to go] down that route is just the communication element of it, that it might be more difficult to communicate to people, “Well, we are targeting nominal GDP, not something we have been talking about,” and everybody understands, which is the price level. Although, I’m not particularly sympathetic to those kind of objections, in the sense that I think that the people you’re mostly communicating to are really the financial markets. I would go even further.  The Fed could simply call NGDP level targeting by the name “Flexible Average Inflation Targeting”, as it fits that name far better than the policy the Fed has actually adopted over the past 4 years.  Then tell the financial markets that NGDPLT is the Fed’s preferred interpretation of Flexible Average Inflation Targeting.  After all, any “flexible” policy rule needs a specific interpretation to become meaningful.  In other words, don’t change the name, just change the policy to match the current name. (0 COMMENTS)

In the 1956 film, Invasion of the Body Snatchers, extraterrestrial seed pods replicate individuals and replace them with identical-looking, emotionless automatons. My first week at Columbia, Phillip Cagan, the serious-faced, reedy-voiced director of graduate studies seemed to promise to do something similar to us newcomers. Standing before us at our first gathering as a class, he rubbed the back of his own head, as was his habit while speaking, and told us something along the lines of: “This is a department of economics. After you finish here, you’ll think economics, eat economics, drink economics, walk economics, talk economics, sleep economics, and dream economics. You’ll filter every thought you have through economics.” Some of us sat in silent fear of this pledge to rewire our brains for some as-yet-unknown process. It sounded like the early stages of recruitment into a cult. In the 44 years since, I’ll have to say that Cagan’s promise was absolutely on the mark, but the results turned out to be humanizing, rather than dehumanizing. Economic methodology, in turned out, demanded a level of respect for humanity that is often missing in other social sciences. In studying how people make choices, for example, economists don’t presume that, “People drive too fast because (unlike me) they’re too stupid to understand the dangers.” Economists, instead, must ask, “Why do intelligent people drive too fast, given that they know and understand the dangers of doing so?” It turns out that assuming that people are smart is more challenging than assuming they’re stupid. But assuming they’re smart yields far greater insights.   All of the above is from Robert F. Graboyes, “The Minds of Economists,” Bastiat’s Window, January 31, 2024. I had planned to put this on my Weekly Reading that I post on Sunday, but the whole thing is so good that it deserves its own post. What I found particularly heartwarming was his story about C. Lowell Harriss. Harriss lived from 1912 to 2009. Often, I would get a letter from him after I had published an op/ed in the Wall Street Journal or even, occasionally, in less well-known publications. He would often comment briefly, sometimes to praise, sometimes to criticize gently, and would enclose a host of cartoons. He would always say. “No reply expected.” Unfortunately, therefore, I didn’t reply except maybe once, and I now wish I had replied more. He was such a gentleman. Fortunately, I kept a file of many of his letters. In one, he enclosed his first formal photograph. It’s above. (0 COMMENTS)

Oren Cass’s recent Law & Liberty post has been criticized on many fronts.  Co-bloggers David Henderson and Pierre Lemieux, as well as GMU economist Don Boudreaux, have addressed serious theoretical and empirical issues that underlie Cass’s argument.  I will address his discussion of comparative advantage.  Cass does err in his discussion of comparative advantage, but the mistakes he makes are common and even infect some economists’ thinking on trade.  For that reason, while Cass is the motivator for this post, I am writing for all students of economics. Cass presents comparative advantage as an argument concocted by past economists to justify free trade: countries should trade along comparative advantage patterns.  This assertion about trading patterns, he states, is just blithely accepted by modern economists.  But Cass is mistaken: comparative advantage is empirical. It is an explanation of how and why people actually trade, not how they should trade.  There is substantial evidence supporting comparative advantage’s empirical worth (for example, see here or here).  Economists accept the theory of comparative advantage for the same reason physicists accept the theory of gravity: it survives empirical scrutiny.  Consequently, comparative advantage isn’t some policy that is chosen; to override the patterns of trade that have developed would cause substantial harm.   Second: no nation has comparative advantage in anything.  Comparative advantage, by definition, exists only at the individual level.  Comparative advantage looks at the differences in opportunity costs among trading partners.  Opportunity cost requires evaluation and choice among alternatives.  Choices and evaluations can be made only by individuals.  For pedagogical reasons, economists often refer to patterns that develop at the national level as a “nation’s” comparative advantage.  But, strictly speaking, this terminological shorthand is not accurate.   This point about individuals, rather than a nation, choosing is important as it reverses the logic Cass (and many interventionists) employ.  A nation’s “opportunity costs” are not the same as costs at the individual level.  Prices at the individual level can reasonably be interpreted as providing a proxy for the utility an individual gets from the action he takes.  But aggregate costs (individual costs added together) carry no such interpretation.  So, national patterns of trade can provide no useful interpretation that is analogous to individual patterns of trade.  We cannot discuss national opportunity costs, national tradeoffs, in the same manner as individual tradeoffs.  Comparative advantage is something that emerges, not something that is chosen.  I hasten to note: this point does not mean that aggregate costs are devoid of any reasonable interpretation.  Rather, they represent just the tip of the iceberg.   For example, Cass provides an example of a tradeoff between producing cloth and producing computer chips.  Cass reasons that if a nation is importing chips, it must be specializing in cloth and not producing chips (and vice versa).  Cass asserts that this relationship where a nation produces only one good or another, in turn, reduces a nation’s ability to produce what is imported.  The US, therefore, by importing computer chips, is destroying its ability to produce chips and instead is producing only low value things. There are two problems here: first, Cass has the relationship switched.  The US is a major producer of computer chips.  The United States is the 6th largest exporter of semiconductors (which include computer chips), which are primarily exported to China, and one of the largest manufacturers in the world.  But the US also imports many computer chips.  The US is one of the largest importers of chips in the world.  This phenomenon, where a nation both imports and exports the same good, is known as intra-industry trade.  If we view comparative advantage through an individualistic lens, the result makes sense.  Individual buyers of chips face a choice: buy domestically or buy internationally.  Depending on the relative costs and benefits, some will buy domestically and others internationally.  Likewise, producers of chips face a similar choice: sell domestically or sell internationally.  Depending on the relative costs and benefits, some will sell domestically and some will sell internationally.  The US, as an accounting unit, both buys from and sells chips to the world.  This gets us to a similar mistake many people make when considering comparative advantage: specialization.  Comparative advantage tells us that each party in a trade will specialize in the good/service he has a comparative advantage in and trade for the good in which he has a comparative disadvantage.  Many misinterpret this result as implying complete specialization: each party will produce only the good/service he has a comparative advantage in and not produce the good he trades for.  Those who understand comparative advantage make no such claim.  The actual degree of specialization will depend on relative prices.  Relative prices, as discussed above, influence people’s choices.  Thus, one should not expect that trade will destroy, or even necessarily reduce, one’s ability to produce a good/service. Like many ideas in economics and other sciences, the comparative advantage idea is simple.  But, despite how simple it is, it provides many powerful insights to those who understand it.  Misunderstanding the idea, though, and consequently the theory, can lead to terrible mistakes.  Cass, like many protectionists, fundamentally misunderstands comparative advantage, levies irrelevant and mistaken criticisms, and proposes an alternative that makes little sense.   Jon Murphy is an assistant professor of economics at Nicholls State University. (0 COMMENTS)

One of my favorite songs when I was a teenager in the late 1960s was “Harper Valley PTA.” In it, Jeannie C. Riley sings about a woman whom the Harper Valley PTA criticizes for the way she dresses. The woman doesn’t sit back. Instead, she shows up at the PTA meeting that afternoon and asks some embarrassing questions designed to show the hypocrisy of many of the members of the PTA. I thought of this song when watching Argentine president Javier Milei’s masterful speech last month to the World Economic Forum in Davos, Switzerland. The WEF meets every January in Davos to discuss world affairs. Based on reports I’ve read over the years, it’s fair to say that while WEF participants seem to favor some good policies such as freer trade, they also want to arrange people’s lives. This shows up especially on the issue of fossil fuels. In 2020, for example, law professor William Burke-White expressed his hope that “teenage climate activist Greta Thunberg” is an opinion setter and celebrated the fact that a few “CEOs and government ministers joined youth from around the world in Greta’s climate march down the main street of Davos.” I wonder if only a few CEOs showed up because they hadn’t parked their companies’ private jets in time. (If you think I’m not taking global warming seriously enough, realize that even the UN Intergovernmental Panel on Climate Change agrees with me. As former Caltech physicist Steven E. Koonin pointed out in his 2021 book, Unsettled, the IPCC predicted that if the global temperature increases by up to 3 degrees Celsius in 2100, world gross domestic product will be 3 percent lower than it would have been. As I wrote in 2022, “So instead of world output in 2100 being 387.5 percent higher than it is now, it would be ‘only’ 368.8 percent higher.”) The WEF was due for a “Harper Valley PTA” moment, and Javier Milei delivered it masterfully. This is the opening of my latest Defining Ideas article for the Hoover Institution, “The Day Milei Socked it to the Davos Crowd,” Defining Ideas, February 1, 2024. Read the whole thing. (0 COMMENTS)

It’s been said there is nothing new under the sun. I don’t know if that’s exactly true, but still, much of what’s discussed today can be seen in past discussions as well. Recently, a memory fired off in my brain reminding me of an EconTalk podcast from 2008 that touched on two themes I’ve posted about over the last month. The guest of that episode was Mike Munger (because of course it was Mike Munger), and the subject was the bus system in Santiago, Chile. In the episode, Munger and Russ Roberts discuss how Santiago used to have a bus system that was purely privately run and operated. And, as Munger points out early on, the bussing system operated profitably, making an industry wide profit of about $60 million per year. As Munger described it: There were no public subsidies of any kind. Thousands of people, every day, went from where they were to where they wanted to go, and nobody had to pay except the person who was taking the trip. Then, a new leftist government outlawed private bussing and implemented a government-run bussing system. And as a result of this reform, total travelers using busses for transit decreased, average transit times tripled from forty minutes to two hours, and the new system operated at a loss of $600 million per year. You read that right – it was annually losing ten times as much money as the previous system was making while taking three times as long to transport fewer people.  The whole episode is worth listening to, but there are some themes that come up in the discussion that are also reflected in some of my recent posts. For example, while unpacking some of Alexander Field’s work in this post, I talked about how one of the reasons wartime planners often made such inefficient and wasteful choices was because they lacked any kind of feedback mechanism for the decisions they made. Munger identifies the same problem with the publicly run transit system as well.  At one point, Russ brings up the idea of comparing the routes the old system used to provide with the new system’s routes. Munger explains that the new system “eliminated almost all the routes” used previously, in order to replace the organically grown system with a rationally planned system. Thus, Munger says,  They didn’t use that information. There was a lot of information in the previous system. So your first thought, Russ, because you’ve read Hayek and you know about markets, was to say “Let’s look at a map of the old system.” That was not their first thought. They said, “What should the map look like?” And they drew it from a planning perspective, rather than from a perspective of serving the demand of commuters.  And using the planning perspective cut them off from two of the great things markets can provide: Markets provide two things. One is information about demand and cost and the other is the incentive to do things in a particular way rather than in some other way. So, we take those two things out. Now, we don’t have any information about where people want to go, or when. And it’s hard for planners to say, “Let’s have a route here.” Well, why? Why there and not somewhere else? “Let’s have a route at this time.” How would you know? Without competition to winnow out which of these is better, there’s no way you could know. Additional themes touched on in this podcast came up in my recent discussions about Nathaniel Robinson’s rather odd takes on the education system. For example, Robinson assured his readers that as a good leftist, he sees profit as a “dirty word.” And Munger points out this mindset was present among the new government implementing the reforms. While the idea of a bus system operating profitably might seem like a good thing to some, to the leftist government, Munger says, “the very fact that anyone was making profits on this meant that the system was inherently flawed.”  Robinson’s arguments also reflect a similar flaw in judgment motivating these reforms. To see that, let’s briefly reconsider a worry Robinson expresses about private schools subsidized by vouchers. He says, “if we have a school district comprised in total of three for-profit elementary schools, and all of them simply pocket most of the voucher money while failing to educate the children, then no matter what ‘choices’ among schools parents make, they won’t be able to improve the quality of the schools. One might expect new operators to enter the market, but if the only way to make any real money on the children is to neglect them, then new operators won’t be any better than the old ones.” One wonders why Robinson doesn’t generalize this concern to public schools. After all, what if instead of having a choice of three elementary schools, you’re simply assigned one based on your zip code. And if the administrators of that school district “simply pocket most of the [tax] money while failing to educate the children,” then there won’t even be an option for most parents to take their kids to a better school, nor will there be any opportunity for a new operator to “enter the market” and try to provide a better option. This possibility seems even worse than what Robinson describes. So why doesn’t he consider it?  It’s because Robinson, like the reformers of the Santiago bus system, seem to think that if you just take something away from the market, and take away profits, then there will be what Munger calls “a sort of human transubstantiation. They’ll be different, and they’ll just work for public service.”  Robinson doesn’t seriously consider the alternative scenario I described above because in his mind, people would only ever behave in such a way as private citizens seeking to make a profit. But if teachers and administrators are public employees operating in an unprofitable enterprise, then they will just do what he sees as the right thing, because as when acting as agents of the state they will just “see children as an ends.” Pocketing money for personal gain at the expense of others is just something government employees would never do – the only people who would do such a thing are people who are making profits! And since government agencies are unburdened by the need to be profitable to operate, Robinson sees no reason to consider the possibility I described – he can rule it out a priori.    Munger points out the flaw in this thinking with an example of how bus drivers’ behavior changed when buses no longer operated in the market. In the previous system, bus drivers who wanted to make as much money as possible did so by transporting as many people as they could from where they were to where they wanted to go. The more people I help, the more money I make. The new system changed the incentive – drivers weren’t paid according to how many passengers they transported. They were paid according to how closely the stuck to their schedule. As a result, a bus driver with a nearly empty bus could be coming up on a bus stop with fifty people waiting, but if he was three minutes behind schedule, he’d simply drive past the stop without picking anyone up. Leaving those people behind at the bus stop wouldn’t cost him anything, since he wasn’t paid by the traveler anyway. Picking them up would actually cost him money because the time letting people on the bus would push him even further behind schedule. So why would he stop?  Munger brings this all together by pointing out what happens to people’s thinking when they fail to understand the role markets play in generating information and incentivizing responses to that information, and who fail to understand that human nature isn’t changed by government diktat. In the absence of these insights, when people see a public system that seems to be failing in every conceivable way, they only solutions they can think of is to spend even more money on it, or to pass some kind of reform. Is the local public school doing a poor job? Don’t respond by giving people the ability to seek alternative options – just solve the problem by using reforms to improve the quality of all the public schools! And you end up in a situation where public programs become ever more costly each year, with new bundles of reforms and regulations being thrown at them every so often, without the fundamental problems ever really being fixed, or outcomes ever getting any better.  Which, unfortunately, sounds like a pretty accurate description of how the political process actually works.    (0 COMMENTS)

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Imagine you have a team designing a new bridge.  One guy suggests that cost could be reduced if you used less steel.  Of course that might make the bridge more susceptible to collapse, so he also suggests reducing the force of gravity in the area of the bridge.  Obviously, the idea would be viewed as highly impractical.This is roughly how I feel about proposals to end wage stickiness.  There are a few types of wage stickiness that could be addressed by economic reforms—notably the minimum wage laws.  But the vast bulk of wage stickiness is an inevitable part of a free market economy, not subject to public policy. David Beckworth has an excellent podcast with Jonathon Hazell, which discusses important new research on the topic.  Some economists had argued that wage stickiness was actually not much of a problem, as the wages or new hires was quite flexible, and it was new hires that mattered for decisions to change output at the margin. Research by Hazell and his co-author Bledi Taska found that even the wages of new hires are quite sticky, at least in the downward direction: In the end, the finding is very simple, which is that, surprisingly, wages for new hires are, in fact, quite downwardly rigid, though flexible upwards. . . . I think, probably, it’s to do with internal equity, as originally conceived of in this very famous book by this Yale professor, Truman Bewley, which is called, Why Don’t Wages Fall During Recessions? It’s an amazing book. Bewley imagines the following, that, I think, probably applies to my analysis. He says, “Look, the first logic, the simple logic, that you might have, is that wages for new hires would fall during recessions,” exactly because of the LSE professor example. I become a new professor, I’m willing to accept a lower wage, because I have no reference point. Then Bewley says, “Not so fast.” What about this idea that he calls internal equity? Internal equity works like the following. I arrive at LSE, and I go around the hallways, and I say, “I just got hired, great job, I’m on $10 an hour.” Then, my colleague, who’s the same rank as me, he’s not a tenured, chaired professor, he’s just another assistant professor who got hired just the year before, he says, “Well, you’re only being paid $10 an hour, I’m being paid $20 an hour, they’ve screwed you.” People occasionally ask me why we need to stabilize nominal GDP growth.  Why not instead try to eliminate wage rigidity, and let the free market determine NGDP? First of all, it’s not clear exactly what the “free market” means in reference to money, which due to network effects is a natural monopoly.  The monopolist that controls the supply of money will always need some sort of policy regarding the value of money, even if by default.  So why not a sensible policy, which avoids aggravating the distortions caused by wage stickiness? As in so many areas of life, the pragmatic solution is often the best solution. (0 COMMENTS)

  Both David Boaz and Bryan Caplan recently sent a link to a YouTube audio recording of a talk that Milton Friedman gave in the early 1990s. After his talk came a back and forth between Milton, moderator David Boaz, Hannes Gissurarson, Sally Pipes, and me. Milton was his usual cogent and clear self, surveying the landscape and focusing on ways that government messed things up in area after area. I won’t bother giving play by play but I will highlight a few things with a rough estimate of where they appear in the 1 hour and 19 minute audio. There is an interesting discussion starting at 38:00 about the low quality of programming on TV, with me advising Hannes to get cable and Milton pointing out that the FCC had banned pay TV for years. It reminded me of my first major trip in United States when my friend Clancy Smith and I hitchhiked and took buses from Rockford, IL to Philadelphia and then went on to New York. In the midwest, we saw ads on movie theatre marquee saying “Stop Pay TV.” In New York, as Clancy noted, it was slightly more subtle: “Save Free TV.” Good discussion of medical care at around 47:00. At the 58:00 point, Milton says, “No one believes in majority rule as a general principle.” He makes his case well with his 60/40 example. At the 59:38 point, in a discussion of how you get change that undercuts special interest legislation, David Boaz says, “Mancur Olson’s book The Rise and Decline of Nations made it look like you have to lose a war.” Interesting discussion around the 1:03:00 point about whether Milton is right that changing the personnel in government doesn’t work. David Boaz gives the Alfred Kahn counterexample. One argument Milton uses a couple of times in his talk and in the discussion has less force than it used to: he objects to taxing poor and low-income people to help middle- and higher-income people. Given the way the federal tax system has evolved, poor people pay no income tax and even lower-income people pay little or no income tax. It’s a little different at the state level. Note: The picture in the featured image is from that day. Milton is at the head of the table, Hannes and David Boaz are on the left, with Hannes closest to Milton, and I’m on the right. I assume it was Sally who took the picture. In those days, I don’t think we had timers on cameras and, even if we did, no one had bought a tripod.   (0 COMMENTS)