Why does the adult world seem a lot like high school? Duke University economics professor Timur Kuran has received some deserved publicity lately because of his insights into preference falsification.  He recently tweeted about an article in the Wall Street Journal by James Freeman, who cites a promotional blurb that, tweets Kurman, “describes both the acceptance of DEI pre-October 7 and the transformation of public discourse unleashed by that day’s events.” Here’s the blurb: A common effect of preference falsification is the preservation of widely disliked structures. Another is the conferment of an aura of stability on structures vulnerable to sudden collapse. When the support of a policy, tradition, or regime is largely contrived, a minor event may activate a bandwagon that generates massive yet unanticipated change. In distorting public opinion, preference falsification also corrupts public discourse and, hence, human knowledge. I remember being taken, in a positive way, by Kuran’s early work. He had given a paper on preference falsification at the 1989 Western Economics Association annual meetings in South Lake Tahoe and I was a discussant. I had been unfamiliar with his work but found it fascinating. The basic idea is that people lie about their preferences in order to fit in. Then something can happen that brings the whole structure down like a house of cards. I had never heard this before. My discussion was kind of rah-rah because I found it so insightful. I vaguely recall giving my own example from the discussion of the 1986 Tax Reform Act, whose progress through Congress I had followed closely. I noted that many economists seemed, like me, to think that taxing unemployment compensation benefits as ordinary “unearned” income was a good idea. The reason is that if those who received such compensation didn’t have much other income, the tax would be low. If they did have substantial other income, the tax would be substantial. That meant that the benefit would be targeted. But it also had good incentive effects, causing unemployed people to look somewhat harder for work and/or accept a job somewhat more quickly. But, I noted, few of the economists who I thought favored this seemed to be unwilling to speak up for the idea. I hypothesized that the reason so few economists discussed or defended the idea was that doing so would have brought publicity to an idea that non-economists might find objectionable. And those economists would be attacked. So what to do? Button their lips and let the reform sail through, which it did. I don’t recall for sure, but I think Timur liked this nuanced application of his idea. Rarely do I leave a conference thinking hard about an idea I just heard. But his paper stuck with me. It helped resolve an issue that I had been thinking about for a couple of decades. The issue was this: why does the adult world seem more like high school than I had expected when I was in high school? Even when I was very young, I was not very hesitant to state my views. But in high school, I noticed that there could be strong social sanctions against me (fortunately, short of threatening my life, which happened only once) if I stated unpopular views. I remember one particular incident that reinforced my idea that the world wouldn’t come crashing down on me if I did so. It was in 1964 and I was in 10th grade (or, as we called it in Manitoba, Grade 10.) It was in early September and the school year had just started. One of my “colleagues”–I’ll call her Christine–was asked by the teacher to stand in front of the class and tell us about her experience with the Model UN that she had attended that summer. She did so, and then turned to a current political issue. Barry Goldwater was running against LBJ. She asked the class if anyone thought that Goldwater was worthwhile. “Worthwhile” wasn’t the word but it was something like that. I sensed that if one did think he had anything going for him, now was not the time to say it. But a few days earlier, I had said to my friend–I’ll call him Bernard–that I kind of liked Goldwater’s line “Extremism in defense of liberty is no vice.” I didn’t exactly know what liberty was, but it sounded good. And if it was good, was there anything wrong with being extreme in defending it? One thing that had led to my views is that during the summer, after Goldwater had received the Republican nomination, my father and I were at our cottage at Minaki overlapping with his older brother Elmer and Elmer’s wife Edith. They had moved from Winnipeg to Texas in the 1930s. One evening at dinner, my father, who feared Goldwater, had said to Elmer, “So, Elmer, I’m sure you’re going to vote for LBJ.” “Actually, no, Stan, I’m not,” said Uncle Elmer, “I’m voting for Goldwater.” “What?” said my father, very angrily and very loud. That was normally enough to intimidate anyone. But Elmer calmly held his ground and referred to a paperback book he had read (he had brought a copy along) titled A Texan Looks at Lyndon. Recently, by the way, a friend gave me my own copy. I had never seen someone stand up to my father that way and I was charmed. So that had given me the courage to say good things about Goldwater to my friend Bernard. Still, I wasn’t dumb. I sensed that there would be a lot of nastiness if I responded to Christine that I found certain aspects of Goldwater interesting and potentially positive. So I buttoned my lip. But then Bernard whispered, “Come on, David. Speak up. You said good things about him the other day.” “What the hell,” I thought. So I said, “Yes, I think there are some positive things about Goldwater.” “Get serious,” a few people said almost in chorus. And those who said it included my friend Bernard, which is why I’m not saying his real name. I felt bad. But not that bad. That experience made me realize that I could handle people’s disapproval. It was pretty much from then on that I spoke my mind. So what did Timur Kuran do for me? Helped me understand the thinking of those around me, not just in high school but also in the adult world. It also helped me understand why I was different: I had handled high school; I could handle the bigger world. The picture above is of Timur Kuran.   (0 COMMENTS)

You take my friend Fenwick. He is an exceedingly loveable little man. His disposition is so sunny, his character so open, that even the Most Hardened Cynics, of whom my wife is International Chairman, call Fenwick “utterly adorable.” He is the very incarnation of the Boy Scout creed: “trustworthy, loyal, helpful, friendly, courteous, kind, obedient, cheerful, thrifty, brave, clean (great Scott! but he’s clean), reverent.” Now you would think that with a personality like that, Fenwick would be just about the most popular man on our block. That is not so. Fenwick is just about the most unpopular man on our block. People can’t stand him. I have seen Sunday-school teachers with unblemished complexions, and account executives with split-level ranch houses, throw conniption fits at the mere mention of Fenwick’s name. Why? Why? I puzzled over this for years, using the finest puzzling equipment money can buy, before I discovered the answer: Fenwick is a man who goes around being logical. He even uses reason at cocktail parties. Now, most people believe in reason the way they believe in cold showers: It’s O.K. if you don’t overdo it. Very few people are so insensitive as to go around applying logic to other people’s beliefs. The consistent application of reason to human affairs is irrational. It is also dangerous, as you shall soon find out. The basic trouble is that Fenwick, who is very intelligent, assumes that other people are very intelligent, too. And that, believe it or not, is the way he talks to them. This makes people uneasy, for nothing is more unsettling than to be treated as if you are extremely intelligent—especially by someone you hardly know. To avoid disillusioning such a man requires that you maintain a constant state of alert, and think before you speak, which imposes cruel demands on your brain. It even makes you examine the partly packaged platitudes you have always employed instead of thinking. Few activities tire one out so rapidly. This is from an essay by Leo Rosten, a long-time friend of Milton and Rose Friedman. “Fenwick” is Milton Friedman. Milton and Rose became friends with Rosten in the 1930s, a fact I didn’t know until I read their autobiography, Two Lucky People. Rosten is the author of, among others, The Joys of Yiddish, a book I’ve had on my shelf and dipped into since the 1980s, when I started wanting to understand Yiddish better (having married into a Jewish family.) I knew Milton pretty well, having first met him in May 1970. I think Rosten has him exactly right. Read the whole thing, which is delightful. (1 COMMENTS)

Many western experts have argued that China should switch from a model of investment-led growth to consumption-led growth. Some of their criticism of wasteful Chinese investment seems valid, but it’s not obvious that “more consumption” is the way to think about this issue.  Some articles give the impression that there is one group of economists that favors more consumption and another group that is opposed to the idea.  In fact, almost all economists view consumption as the ultimate goal of economic activity, and investment as a means to an end, a way of producing more consumption goods. Assume I’m a Chinese worker producing some sort of investment good; say a locomotive engine for their rail system.  The Chinese government decides that I should switch from building investment goods to building consumption goods.  They instruct me to stop building train cars and start building microwave ovens—a consumer good.  But how do I do this?  With my bare hands and some tools from my garage?  First, someone has to build a microwave oven factory, and that requires more investment.  It’s not obvious that there is any magical way of boosting consumption without first boosting investment. [Here some insights from Austrian economics may be helpful.  Changing what Arnold Kling calls “Patterns of Sustainable Specialization and Trade” can require new investment, even if the ultimate goal is a shift toward consumption.] Some economists might argue for “demand stimulus”.  Perhaps microwave oven factories already exist, but are underutilized due to a lack of aggregate demand.  In my view, this sort of Keynesian reasoning is of little help when thinking about long run growth issues, especially in a developing country like China.  In the long run, low income countries cannot get much higher levels of consumption by printing lots of money and boosting aggregate demand.  China may well have a small demand shortfall at the moment, and perhaps its monetary policy should be a bit more expansionary.  But this cannot be all that pundits have been debating for decades when they call for China to switch from an investment-led growth model to a consumption-led growth model.  For developing countries, the important problem is not reaching the production possibilities frontier; the bigger need is to rapidly shift the PPF outward, so that the economy is capable of producing more output.  And that requires lots of investment. So how do we square the circle?  China seems to be doing lots of wasteful investment, but it’s not clear how China can boost consumption without doing even more investment.  In my view, China has only two ways of boosting consumption; investing in more productive ways, and using its existing capital stock more efficiently.  Neither of those moves would normally be described as “consumption-led growth”, they’d be described as efficiency measures, or supply-side reforms. Consider this recent article in the Financial Times: For Beijing’s leadership, maintaining growth is of the utmost importance both economically and politically. In their eyes, the most viable way to keep the gross domestic product growth rate in the 4-5 per cent range in 2024 is to vigorously promote investment. That sounds like the Chinese leadership is ignoring western experts.  But then there is this: But this year’s local investment programme, in contrast to previous initiatives, shows a notable shift in objectives. First, the 2024 projects have a distinctly scientific flavour, focusing on new-generation information technology, biopharmaceuticals, artificial intelligence and low-carbon energies. This suggests an ambition to ascend the value chain and develop new growth engines. Second, there is an emphasis on investing in public welfare. Third, there is a noticeable decrease in real estate investment projects. And last, there is an increased emphasis on private investment. That sounds like an attempt at smarter investment—putting resources into areas that will do the most to boost living standards.  But I would not call this a shift to consumption-led growth, just the opposite. When China builds apartment buildings, the Chinese public can immediately consume more housing.  Thus the impact of consumption is rapid.  Investment in science and technology also boosts consumption, but there is a much longer time lag.  The usual argument is that much of the real estate investment in smaller Chinese cities is wasted, as buildings stand empty.  Rather than shift to consumption led growth, this fact suggests a need to shift to more efficient investment, in order to later boost consumption:   In the realm of public welfare, local investments are primarily targeting affordable housing, education, hospitals and environmental projects. According to the Chinese economist Yu Yongding, the country still has a significant gap in these areas compared with developed nations. Such investment will also boost consumption and the country’s economic growth. The FT article also discusses the need to use the existing capital stock more effectively, by reducing protectionism and encouraging the private sector: In the long run, the optimal strategy entails structural reforms aimed at eradicating local protectionism, fostering a fairer market and ensuring affordability in housing. A fairer market means creating an environment in which medium and small-sized private companies have opportunities to secure bank financing in the same way that state-owned enterprises do, and engage in competitive bidding processes. I don’t believe it makes any sense to talk about consumption-led growth.  As an analogy, suppose you wanted your child to be happy.  Would you encourage your child to pursue a “happiness-led lifestyle”?  Or would you encourage a set of behaviors that you believe over the long run would lead to greater happiness, such as the importance family and friends, of hard work and education, spiritual values, etc. China needs supply-side reforms so that investment funds are spent more wisely, and it needs privatization and deregulation so that the existing capital stock is used more efficiently.  Talk of “consumption-led growth” just confuses the issue. (0 COMMENTS)

People often look at my collection of Liberty Fund books and ask me whether I’ve read them all. I laugh. I wish I could say I’d read all of just the economics titles! (I am a firm believer in the art of tsundoku…) So I was delighted when Pete Boettke chose Arthur Seldon’s under-appreciated The Virtues of Capitalism as our December selection for our No Due Date book club. I was excited to dig into one of those titles I had not yet read. And I’m very glad I did. The history of Seldon’s conversion from socialism to capitalism and the history of his work with the Institute of Economic Affairs is certainly interesting. But Pete really got my attention when he said he wished every economic educator would read “Corrigible Capitalism, Incorrigible Socialism.”  When I asked him why, Pete said it was because of the way Seldon set the essay up. I think he’s right, and I think there are lessons to be learned for we free marketeers. Seldon calls the piece a celebration of capitalism, rather than a defense, and that’s a significant distinction for him. Seldom admits right up front that capitalism isn’t perfect; indeed he agrees that there are some “evils” inherent in capitalism, including income inequality, the tendency toward monopoly, worker alienation, and externalities. However, contrary to the ills of socialism, all of these are remedial. The greatest weaknesses of the state economy- ignorance, inefficiency, social conflict, [also] monopoly, corruption, and coercion- are inherent in the system and cannot be solved. This is very different than the defenses of capitalism we often hear, whether based on efficiency or moral claims. Leading with defects is a bold choice. (Don’t worry, he also lays out the benefits of capitalism…) I suspect it’s also a strategy that might be more effective in the long run. I’ll leave you to explore the details yourself. I’ll end by sharing the questions I asked Pete about Seldon’s book in our Virtual Salon. I’d love to hear how you would answer these, and look forward to seeing your responses in the Comments. P.S. Did I mention- tomorrow is the last day to save on an annual subscription to No Due Date. This month, we’re reading Viktor Frankl’s Man’s Search for Meaning, and EconTalk host Russ Roberts will join our salon at the end of the month. Why not subscribe and join us?   1- What lessons for changing the climate of public opinion should we take from Seldon? Should we even assume the lessons he offers are correct, given that the essay was written at the dawn of the Reagan-Thatcher era. How does Seldon’s approach look from the vantage point of 2024? 2- Seldon noted that the move of intellectuals from support for the state economy versus free markets was “historically remarkable.” Again, from the vantage point of today, should we now consider this an historical anomaly instead? 3- Are the criteria Seldon offers for judging the efficacy of free markets (choice, convenience, respect for individual idiosyncrasy) still appropriate? If not, what should we use instead? 4- One of Seldon’s most compelling points is that a major flaw of the state economy is its tendency toward social conflict. Capitalism, according to Seldon, mitigates conflict. To what extent do you agree, and how well does this argument play today?     (0 COMMENTS)

Something that seems obvious if you think about it for a minute is that a growing population pushing on a finite planet means that resources will become pricier and people will become, on average, poorer. In 2019, Bill Maher, for example, who most people, including me, think is a smart person, stated, “In 1900, there were less [sic] than two billion people on Earth; now it’s approaching eight. We can’t just keep on like this. The world is just too crowded.” He went on to propose that we “not have kids, die, and stay dead.” Maher is a 21st-century Malthusian. Thomas Robert Malthus, recall, was the person who wrote the famous 1798 Essay on the Principle of Population, in which he argued that food production grows arithmetically while population tends to grow geometrically. Malthus did more thinking than Maher, by the way. The fact that Britain didn’t have widespread starvation was what led Malthus to examine the ways people did check their tendency to multiply. But Malthus did not foresee what actually happened: huge increases in standards of living for a much greater population. Fortunately, we can think about this issue for much more than a minute. And our thinking can be informed not just by gut feelings but also by basic economic thinking about progress and by a vast economic history. It can also be informed by knowledge of a famous bet about resources. And the bottom line of all this thinking and economic history is that the vast majority of resources, especially those sold in relatively free markets, have become more plentiful relative to population. These are the opening paragraphs of my latest article for Hoover, “How Malthus Got It Wrong,” Defining Ideas, January 11, 2024. Another excerpt: In their article, Blackman and Baumol give some striking data on five minerals: tin, copper, iron ore, lead, and zinc. They show world reserves in 1950, world production between 1950 and 2000, and reserves in 2000. If we were running out of ihose resources, all of the reserves should have been smaller in 2000 than in 1950. In fact, all were larger. The case of iron ore is the most striking. In 1950, there were 19 billion metric tons. Between 1950 and 2000, 37.6 billion metric tons of iron ore were produced, which was more than the number of tons to begin with. By 2000, world reserves were 140 billion metric tons, over seven times as many as in 1950! Near the end, I propose a bet with former co-blogger Arnold Kling along the lines of the Simon bet with Ehrlich et al. Read the whole thing.   (0 COMMENTS)

Now, this is really funny. Not that in the current issue of Regulation, I review the latest book of Daron Acemoglu with his MIT colleague Simon Johnson, and that I didn’t find much to praise. What is truly funny is ChatGPT’s answer to a related question I asked him yesterday night. First, a short word on Acemoglu and Johnson’s book, Power and Progress. As I explained in my review, “A Fashionable Appeal to a Benevolent State,” the authors argue that for technology to be beneficial to society and create no unemployment, inequality, or poverty, it needs to be controlled by social power (especially trade unions) and government regulation. “Progress is never automatic,” they say; it must be directed. It seems that for Acemogly and his co-author, it is a general principle that individual choices are deficient and must be controlled by a benevolent state’s collective choices. My review contains many illustrations. I also point to some cheesy statements and clichéd expressions in the book. As we will see below, one of them, which is not the most damning, was used by ChatGPT without any prodding from me. In my review of Power and Progress, I noted: In a few places…, the magical “social” mutates into “societal,” which only has the look and feel of something more scientific. In this post, my intention was to quote a few, more substantial, passages of my review, when I had the idea of asking ChatGPT the following question: Please write something, in the style and ideology of MIT economist Daron Acemoglu, on the idea that for dating and marriage to be beneficial to society, they must be controlled by social power (including trade unions) and government regulation, not just by selfish individual choices. Our friendly robot’s answer threw me off course. I cannot but share it with the readers of EconLog instead of my own prose. I am quoting our whole conversation and ChapGPT’s whole answer, literally; I gave him no other hint. Here is what he answered (OpenAI. [2024]. ChatGPT [Large language model]. https://chat.openai.com January 10, 2023): In exploring the intersection of dating, marriage, and societal benefits, Daron Acemoglu’s framework of institutional economics can shed light on the role of social power and government regulation in shaping these fundamental aspects of human relationships. Acemoglu’s work emphasizes the significance of institutions in determining economic and social outcomes, arguing that inclusive institutions are crucial for fostering prosperity and well-being. Applying this perspective to the realm of dating and marriage, one might contend that the trajectory of these relationships should not be left solely to the discretion of individual choices but rather should be guided by broader social mechanisms. In this view, the overarching goal is to create institutions that promote equitable access to relationship opportunities and ensure positive externalities for society at large. Social power, including the influence of trade unions, can be seen as a force for balancing the dynamics of dating and marriage. Trade unions, traditionally associated with labor markets, could extend their influence to advocate for fairness and inclusivity in the realm of relationships. By negotiating and regulating aspects of dating and marriage, trade unions may contribute to reducing inequalities and promoting social cohesion. Government regulation, as proposed by Acemoglu’s perspective, becomes a crucial tool in shaping the incentives and constraints within the dating and marriage market. This could involve policies aimed at addressing issues such as income disparities, discrimination, and access to education – all of which influence the dynamics of relationship formation. Government intervention might also target areas like parental leave, childcare support, and affordable housing to create an environment conducive to stable and fulfilling relationships. In this framework, the emphasis shifts from an entirely laissez-faire approach to one that acknowledges the broader societal implications of individual choices in the realm of dating and marriage. By fostering institutions that encourage inclusivity, reduce inequalities, and promote social welfare, the collective benefits of stable relationships can be maximized, aligning with Acemoglu’s vision of inclusive institutions driving societal well-being. This is ChatGPT speaking, not Acemoglu, nor me interpreting the latter. But our friendly robot succeeded surprisingly well in extending the prestigious authors’ framework to another area of life.  In Aldous Huxley’s Brave New World, one of the novel’s characters repeats the observation of Miranda in Shakespeare’s The Tempest: “O brave new world, that has such people in it!” (0 COMMENTS)

I posted on Sunday about the Russian woman in Canada who was denied citizenship because she had denounced Vladimir Putin. I mentioned, but forgot to link to, George Mason University law professor Ilya Somin’s post on the issue. That is now corrected. The basic story is that Maria Kartasheva was charged by Russian authorities with the offense of disseminating “deliberately false information” about Russia’s military forces. According to Canadian Press reporter Dylan Robinson, “the department [Immigration, Refugees, and Citizenship Canada] sent her a letter, saying that her conviction in Russia aligns with a Criminal Code offence in Canada relating to false information.” Ilya was outraged, as was I. Kartahseva seems like exactly the kind of citizen that Canadians would want. My guess is that the majority of Canadians, if they knew about the issue, would want her. That doesn’t mean that the government would. Canada’s government has been assaulting freedom of speech for a few decades. A relatively recent example is Trudeau’s crackdown on the truckers’ strike. So it should not have come as a total surprise that Canada’s government makes disseminating false information a crime. Robinson doesn’t mention the specific crime. But CBC reporter Matthew Kupfer does lay it out here, writing: According to a December letter from Immigration, Refugees and Citizenship Canada (IRCC), the crime she committed in Russia “would equate to false information under subsection 372(1) of the Criminal Code of Canada.” Originally enacted in 1985, the Canadian law makes it illegal for individuals to intentionally injure another person or convey false information through telecommunication means. Note that the key is not whether she is innocent. It appears that information she disseminated was true. But she was tried, convicted, and sentenced by a Russian court in absentia. So if the law were to be followed, it does appear that Kartasheva should have been denied Canadian citizenship. There’s now good news. The Canadian government has relented. Ilya celebrated that in a post yesterday. I celebrate it also. Here’s what I found striking, though. Ilya Somin is a noted legal scholar who posts regularly on “The Volokh Conspiracy.” Usually, he makes a legal argument. This time he didn’t. Instead he wrote: I am happy that sanity prevailed in this case.  But it’s ridiculous the issue was ever in doubt in the first place. Speaking out against horrific war crimes is surely not the kind of “crime” that can ever justify denial of citizenship or deportation from any liberal democracy worthy of the name. It’s a good argument, but not a good legal argument. What it shows, sadly, given that I’m a dual citizen of Canada and the United States, is that Canada is no longer a “liberal democracy worthy of the name.” Ilya adds: Since the start of the conflict, I have been making the case that the US and other Western nations—including Canada –  should open their doors to Russians fleeing Vladimir Putin’s increasingly repressive regime. Even for those who wouldn’t go as far in this direction as I advocate, the case of a dissenter facing imprisonment for speaking out against Putin’s war war should be a no-brainer. I think this argument is harder for Ilya to make than for me to make. He’s a noted legal scholar who generally favors following the law. I’m not. I agree with him, though, that Canada and the United States and other Western countries should open their doors to people fleeing repression in Russia. I’ll up the ante. They should also open their doors to people fleeing repression (such as the draft) in Ukraine. (0 COMMENTS)

Donald Trump’s plan for a wall across the American southern border is one of the most controversial policy proposals in American history. Along with Trump’s usual dose of falsehoods and anti-immigration fear-mongering, the opioid crisis quickly became a favorite talking point to support his flagship policy, specifically the increase in deaths from fentanyl overdoses. Trump lauded the wall as a sure fire way to halt drugs from crossing over the border, even though “U.S. statistics, analysts and ongoing testimony at the New York City trial of drug kingpin Joaquin “El Chapo” Guzman show that most hard drugs entering the U.S. from Mexico come through land border crossings staffed by agents, not open sections of the border.” Of course, these are poor solutions, because they ignore the overdose crisis entirely, and simply rehash war on drugs rhetoric. The suggestion these policies make is that America needs to take its drug problem even more seriously, as severe drug possession and trafficking penalties are not enough. The “tough on drugs” policy over the last 60 years has failed to deliver America free from drug addiction, and has instead tied America’s drug crisis far beyond the southern border, to homelessness, destabilization of the family unit, income inequality, institutional distrust, worsening mental health, and the criminalization of poverty. But if the war on drugs isn’t the solution, then what is? Why has the drug epidemic increased in scale even though the nation has made such progress in economic growth, education, and crime since the 1970’s? Is American capitalism to blame for the drug epidemic? Has America given up on the least of us? Sam Quinones joins EconTalk host Russ Roberts to discuss the link between drug addiction and homelessness, the economics of drug cartel monopolies, and the possible solutions to the opioid crisis.  An important theme Quinones stresses is the sheer scale of the drug crisis. He argues that this wave of the drug epidemic is distinct from the problem faced in the 1970’s with its proliferation of drugs, specifically fentanyl and meth. Further, the epidemic is affecting the entire nation, not just pockets of certain urban areas. The crisis has shifted to devastating suburban and rural areas, and has become so rampant that Quinones believes that the overdose death toll is significantly undercounted by at least 20-30%. The COVID-19 pandemic brought this problem even more into the spotlight, as homelessness, suicides, and deaths from despair skyrocketed. I would say, that’s what differentiates this opioid epidemic from the one that we had in the 1970s, which was really just a heroin overdose. And, that was very isolated with certain urban areas, really New York, Los Angeles, San Antonio–places like that. This is far, far more widespread and grows from the beginnings of the opioid epidemic, which starts with, of course, what we talked about in our last conversation. One of the reasons overdose is so common is because of the rise of fentanyl. Quinones explains that fentanyl really only began to filter into American drug markets in the mid-2000’s, soon killing hundreds of thousands of people in a “big loop of a death curve.” So why is fentanyl so deadly? Mostly, unintended consequences. Roberts describes how fentanyl began as a fantastic drug for surgery, as it gets to the brain very quickly and also wears off very quickly. The rapid high of fentanyl also made it a miracle drug for cartels, and they quickly introduced it into other drugs. To Quinones, this innovation in the drug market was inevitable. But, the buyers of cocaine and methamphetamine, because those drugs don’t have the same kind of withdrawals that opioids have, the buyers of those things are not daily, desperate, almost religiously daily buyers of this stuff. Right? They’re the occasional users–‘Oh, I’ll buy it for the weekend,’ or that kind of thing. If you add fentanyl to the mix, what you eventually are going to get is an opioid-addicted customer, almost as if it were a heroin addict; and that customer is going to buy from you every single day. Maybe sometimes more than once a day. The war on drugs is also complicit in the incentivization of drug dealers. As elucidated by Benjamin Powell in an article for Econlib, the war was fought on the supply side, as it attempted to cut off the sales of drugs. However, all this did was further empower cartels through increased drug prices and monopolization, “Because the demand for drugs is not price-sensitive, each “victory” in the war on drugs enhances drug dealers’ revenue, making future decreases in supply all the harder to achieve. It is no accident that the number of annual drug-related deaths in Mexico almost quintupled from 2,300 in 2007 to 11,000 in 2010.” Quinones and Roberts discuss this same topic in reference to the Mexican government’s crack down on methamphetamines. The Mexican government outlawed possession of the key ingredient in methamphetamine, ephedrine; however, the adaptability of methamphetamine producers allowed for virtually endless strains of the drug. Drug kingpins being killed by the Mexican government simply allowed for further consolidation of the market for the remaining cartels, causing drug prices to rise, and creating more of an incentive for cartels to increase production. You can’t regulate it, the way you could–if you have only one chemical that’s kind of like the bottleneck, government can regulate that. Pay close, close attention to it. And, basically you have a difficulty going forward with it. And, that’s what happened with ephedrine. With this stuff, if you use one way to make P2P and they crack down on some of those chemicals, well, you can find another. And, it turns out according to organic chemists and DEA [Drug Enforcement Agency] chemists I’ve spoken with, that there’s really almost–not to say there’s no end to the numbers of ways you can make P2P, but there are many, many ways. And, they all use very common chemicals, chemicals that are common in the industrial world and legal industrial processes. Why is America addicted? Quinones and Roberts concur that the drug epidemic is not a problem in itself, it’s more of a symptom to the true disease: people are lost. Quinones makes this point by laying the blame on American capitalism, as to him, “Corporations behave like traffickers and traffickers behave like corporations.” And so, initially, I thought this was just a story about the enormity of the supply and the prices dropping. In Kentucky, where they before were doing that Sudafed pill reduction method–known as ‘shake and bake,’ is what they used to call it–now, that’s gone. All of that is just gone. All those little suppliers, like what Walmart did to Main street in America, that’s what Mexican meth does to all those small suppliers. To Quinones, monopolization through corporatization has created addiction through destitution. Americans put out business by large multinational corporations have almost nowhere else to turn but to sell drugs to get by financially and use drugs to cope with the loss of their life’s work.  Walmart’s success is just one example of America choosing prices over people, as small businesses on main street are far more important than just jobs, as they provide a source of community and social cohesion. In Quinones’ view, monopoly is inevitable. A perfect example, I think, of what’s happened to our country is in the big box stores. Primarily Walmart. You know? Walmart came in and destroyed a lot of mom and pop main streets, locally owned folks, people with lonely stores for sometimes generations. I think the whole opioid problem is largely rooted in part in that. Roberts disagrees with the indictment of capitalism. He emphasizes two areas of social life where Americans have typically found meaning and community: family and religion. Roberts believes that the decline in religious belief and the growing presence of divorce and people choosing not to get married is the true culprit of American drug addiction. So, two places where people found a sense of meaning and community–either their local church, synagogue, or mosque, or their nuclear family, their children, and their spouse–those are increasingly less common. And, I would suggest that we have not been able in America to find a way to cope with that social disruption…The drug usage that we’re talking about in this episode and the rise in depression that Johann Hari talks about, these are coming from a desperate, inadequate way to satisfy the basic human needs of belonging, of loving, of connecting. The theme of social isolation and dissolution is a common one among EconTalk episodes, as this episode “forms something of a trilogy with recent episodes with Johann Hari on Lost Connections, and Noreena Hertz on The Lonely Century,” Quinones ends up ardently agreeing with Roberts in this segment of the argument. Both think that the erosion of family and religious institutions has left few social institutions to care for “the least of us.” This is the reason he titled his book The Least of Us. The dissolution of community has produced apathy towards social problems, and an implicit refusal to solve them. Roberts is intrigued by this, and defends capitalism by saying the system itself is morally neutral, and is very good at giving people what they want, so the true question to him is why do so many people seem to want a life of opioid addiction? S what are the solutions? To Quinones, focusing on the least of us is necessary. Each individual has a role to play in curing an addicted America And, what must our response be then? Well again, the book’s title, The Least of Us, seems to me to be the appropriate one, where we return to local–focus on our neighbors, focus on our streets, focus on our churches, synagogues, mosques, what have you. Focus on our local business, patronize our local business. Get outside, for God’s sake. …we need to understand the power of walking down Main Street and seeing the guy who fixed your shoes, you know, a year ago, and say, ‘Hey, how are you doing?’ Be a part of a community. Quinones’ last point is one of hope. Quinones and Roberts end with agreement that incremental steps to rebuild one’s community is the best place to start. I had some questions [below] while listening to this episode. We hope you’ll share your thoughts with us as well!   1- The relationship Quinones is discussing between addiction and homelessness is interesting. Does addiction cause homelessness, as Quinones believes, or does homelessness cause the addiction problem? How do factors such as high housing costs, disabilities, the failed war on drugs creating institutional poverty, and systemic racism affect homelessness? How would policies such as drug decriminalization and rehabilitation combined with transitional housing for the homeless impact the link between homelessness and addiction?   2- A theme throughout the episode is unintended consequences. How can unintended consequences from morally neutral things be avoided? Legality doesn’t seem to be the answer, so how can civil society and the marketplace solve its own problems? How can the destruction in creative destruction be minimized?   3- Healthcare policy has a definite role to play in this discussion. How have policies such as certificate of need laws and restrictive scope of practice laws affected the ability of drug users to receive care? How would expansions to the social safety net such as with a public option healthcare system fare in alleviating the opioid crisis?   4- Quinones states that the cartels producing the fentanyl don’t care how deadly it is because of their position up the supply chain, they’re disconnected from the harm that a customer’s death from an overdose would cause to an individual seller, and this is why fentanyl continues to kill people. Why would the individual sellers themselves continue to sell such a deadly drug with a margin of error so low?   5- The thread of discussion mentioned in the above question led to Roberts’ question of why customers would ever willingly purchase a stronger version of meth that has far worse side effects, such as paranoia and a larger chance of overdose. In his words, “Why would anyone take this stuff? It turns you into this paranoid person who can’t hold a job. Now, I understand, once you’re addicted, you’re in trouble. But, how do you move from that to that world?” How does Quinones answer this question, and to what extent do you agree with his explanation? (0 COMMENTS)

Nostalgia is a heckuva drug. (I know, I am one of those suffering from the addiction.) But we should never confuse dreams and reality. This tweet caught my eye:I suppose you could argue that 1950s California was a middle class paradise.  If so, that’s even more true today.  Back when I was born, Orange County had about 400,000 people, mostly living in small ranch houses and bungalows.  Today it has over 3.1 million, most of whom live in homes built after 1955.  These newer homes are typically much larger and more lavishly furnished than the homes of our grandparents.  The residents drive far better cars, which are much less polluting.  They have access to technology our ancestors couldn’t even imagine.  So yeah, we are far better off in material terms and there are far more of us.  Are we any happier?  Who’s to say? It’s often said that average people can no longer afford to live in California, in which case it must be true that California contains 39 million very above average Americans. Those who wish to argue that we are worse off than back in 1955 often point to highly unrepresentative examples.  They don’t show towns in Appalachia or the Deep South full of shacks lacking indoor plumbing and electricity.  Instead, they find an unrepresentative upper middle class area that has recently become super trendy, and hence unaffordable for the class of people that formerly lived in that area.  Such as northwestern Santa Monica. When I began graduate work at the University of Chicago, my professor (Deirdre McCloskey) began the semester with a long list of forbidden words. I don’t recall the entire list, but do recall that “afford” was one of the forbidden words.  This term is so vague as to be almost useless.   When thinking about living standards, don’t think about what you believe people can or cannot “afford”, think about what people actually consume.  And in purely material terms, we consume far more than we did back in 1955.   Now you might argue that we work harder for that consumption than we did back in the 1950s, but I don’t believe that’s true.  The truly difficult jobs (like underground coal mining) are mostly gone.  Many office workers now spend part of their day surfing the web, doing online shopping.  California does have a housing problem, but it’s a problem of success, not failure.  Although we have 39 million people, the state is so desirable that far more people would choose to live here if the housing stock were larger.  I’d rather have this problem than the problems faced by cities such as Detroit (lots of empty houses that no one wishes to inhabit.)  We need to loosen our zoning laws so that millions more people can enjoy what Ross Douthat calls the California middle class paradise. PS.  I can go back to my hometown (Madison) and morn the loss of a certain way of living, such as “free range kids”.  But that nostalgia for the past tells us precisely nothing about how the economy has changed over the past 60 years.  In purely material terms, Madison is much richer than before, even though if my dad were still alive he could no longer “afford” the house we once lived in, partly because a subsequent addition has doubled its size from 2000 sq. feet to 4000 sq. feet.   Many houses in coastal areas of California have been extensively upgraded, and are no longer the same house that they were back in 1955. (0 COMMENTS)

When he was running for president in 2016, Donald Trump promised he would be “cutting regulation at a tremendous clip. I would say 70 percent of regulations can go.” Did he do it? My short piece in the current issue of Regulation compares two series of aggregate data on the total stock of federal regulations. They give very a similar picture (see the actual article for a revealing chart). My conclusion (in which the “restrictions” are those found in the Code of Federal Regulations by QuantGov): These data help us evaluate Trump’s claim to be a deregulator. Both indicators show a rough plateauing of the upward trend, with a very small increase between the last year of Barack Obama’s administration (2016) and the last year of Trump’s (2020). Between these landmark years, the number of pages in the CFR increased 0.8 percent (to 186,645), as did the number of restrictions (to 1,083,001). According to both series, then, the net effect (new regulations, including deregulatory rules, minus abrogated or simplified ones) of the Trump administration has not been deregulation but, at best, a plateau in the upward historical trend. At best, 0 percent of federal regulation did “go,” to use Trump’s expression. (0 COMMENTS)