It’s sad when an enterprise fails. Each one represents someone’s hopes and ambitions. Some are poorly thought out, some cynical cash grabs, but many startups represent people’s well-intentioned efforts to provide for themselves and their loved ones. Every failure is someone’s dashed dream. As sad as this is, it’s good that bad firms and bad products fail. It would be better if every idea were good and every undertaking created value. That’s not going to happen on this side of eternity, however. Given that people make mistakes, it’s important to have some kind of social mechanism that corrects them. In a free market, failure is that mechanism. “It’s good that bad firms and bad products fail” is exactly what you would expect a heartless economist to write. “Serves you right,” you can imagine a stern, portly, monocled fellow in a suit that fits too tightly huffing when observing someone with the temerity to waste society’s resources. “Perhaps you should die, along with your business, and decrease the surplus population. Survival of the fittest, you know.” That’s not how it works. No actual organisms have to die when a business “dies.” When a business dies, it frees up the resources it had tied up in a venture that, sadly, did not pan out. It is important that those resources be freed up for other ventures instead of remaining under-used. Free market competition has Darwinian elements, but it’s not “Darwinian” in that the free market is, like nature, red in tooth and claw. It’s “Darwinian” in that it features variation and selection, with those ideas and enterprises best adapted to their surroundings being the ones that survive.  Variation? It comes from innovation. Joseph Schumpeter uses the evolutionary metaphor specifically in his discussion of “creative destruction.” Here’s Schumpeter, from p. 83 of Capitalism, Socialism, and Democracy: The fundamental impulse that sets and keeps the capitalist engine in motion comes from the new consumers’ goods, the new methods of production or transportation, the new markets, the new forms of industrial organization that capitalist enterprise creates. … The opening up of new markets, foreign or domestic, and the organizational development from the craft shop and factory to such concerns as U.S. Steel illustrate the same process of industrial mutation–if I may use that biological term–that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one. This process of Creative Destruction is the essential fact about capitalism. It is what capitalism consists in and what every capitalist concern has got to live in. And selection? In a free market, selection happens on the basis of profits and losses. There is no Great Mind that can understand, evaluate, and articulate what makes an innovation “good” or “bad.” That knowledge emerges from competition whereby innumerable consumers vote with the fruit of their labors–handily summarized in mostly-electronic chits we call dollars and cents–for or against the “candidates” producers put on offer. Crucially, the money-measured cost of producing something represents consumers’ votes for something else to be done with the necessary resources. If you have to pay $5 for a box of pens for your tire shop, you’re overcoming 500 one-cent votes for the pens to be used doing something else. You should only buy the pens if you can use them to create tire repairs for which people will pay you at least $5.01. People vote on your product when you bring it to market. If their votes for what you are doing add up to more than their votes for something else, then congratulations: your services repairing tires have been selected…for now. If their votes don’t add up to more than their votes for something else, then they’re coming together and telling you “do something else.” It is wise to listen. When a company records a loss, it tells them to turn from their wicked ways. When a company records enough losses, it is people telling them to let go of the resources they have procured and go do something else. To ignore the clamor is to persist in holding resources in lower-value uses as judged by other people with a say in the matter–namely, everyone who votes with their own money for or against your idea. What would happen if we didn’t let businesses fail? We see the answer when we look at the overlap between business and politics. We would probably still have New Coke. The Wall Street Journal asks “Why Is America Still Flying the A-10 Warthog, a Cold War Relic?” and answers (predictably, unfortunately), “Lawmakers protecting jobs and commerce for their districts block the military from retiring outdated equipment, impairing efforts to counter rapidly modernizing Chinese forces.” Nothing as serious as national survival might be at stake when we’re talking about propping up companies that should have been allowed to go bankrupt years ago, but we’re stuck with lower standards of living than we would otherwise enjoy. Consider the efforts to challenge the major sports leagues since World War II. In the late 1940s, the All-America Football Conference challenged the NFL but ultimately folded, with the Cleveland Browns, Baltimore Colts, and San Francisco 49ers joining the NFL. The Browns, incidentally, are an interesting case. They won four NFL Championships and ten Conference Championships before the merger, but they remain, along with the Detroit Lions, Jacksonville Jaguars, and Houston Texans, one of the only teams that have never played in a Super Bowl.  The 1960s and 1970s were a little kinder to startups. For a brief but glorious decade in the 1960s, the American Football League competed successfully with the National Football League, and the leagues merged in 1970. The World Hockey Association ran a tumultuous operation during the 1970s before four of its teams merged with the NHL (the Edmonton Oilers, Hartford Whalers, Quebec Nordiques, and Winnipeg Jets). The American Basketball Association overlapped the AFL and WHA, and while the Denver Nuggets, Brooklyn Nets, Indiana Pacers, and San Antonio Spurs are all that remain, the league succeeded in that its owners got the merger with the NBA that they were after. The World Football League was not so lucky. Later efforts were less successful. The first incarnation of the United States Football League tried to go head-to-head with the NFL and failed. The Canadian Football League ventured south of the border and welcomed several American teams in a move that did not work out. The World League of American Football worked with the NFL, but no one paid attention to what was happening with the North American teams and it rebranded and relaunched as NFL Europe before it ceased in 2007. The first incarnation of the XFL failed. The Alliance of American Football, which also tried to work as an NFL minor league, didn’t last a year. It remains to be seen how the new versions of the XFL and the USFL will fare. Thanks to Ebay and thrift stores, Birmingham’s entries into these ill-fated leagues are memorialized with pennants on my office wall and shirts in my closet. Now imagine what the world would look like if these enterprises (and so many others) hadn’t been allowed to fail. We would have too much labor and capital dedicated to producing football no one wants to watch. One of my colleagues worked for the Birmingham Barracudas back in the mid-90s. I doubt the world would be a better place if the Barracudas were still squandering her talents. Does this mean it would be good if the new incarnations of the USFL and XFL were to fail? No, it doesn’t. I sincerely hope they succeed and spend many decades creating more value than they consume. While it wouldn’t be good if they did fail, it’s good that they might fail. First, the prospect of failure makes us think a little harder before we potentially squander humanity’s blood and treasure. Second, if it turns out that Spring professional football is a dud yet again, then the resources tied up producing it need to be let go of so they can be used for something else.   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)

I was talking to a friend today who recently saw the movie Napoleon. She said that she hadn’t known much about Napoleon. I told her that I thought he was one of the most evil men in the 19th century. The reason: he was the inventor of the modern version of conscription, where men could be drafted and send over a thousand miles away to fight. As a result he got a lot of his own soldiers killed. What I had in mind was the point made by German economist Johann Heinrich von Thunen in 1850. Here’s what he wrote: The reluctance to view a man as capital is especially ruinous of mankind in wartime; here capital is protected, but not man, and in time of war we have no hesitation in sacrificing one hundred men in the bloom of their years to save one cannon. In a hundred men at least twenty times as much capital is lost as is lost in one cannon. But the production of the cannon is the cause of an expenditure of the state treasury, while human beings are again available for nothing by means of a simple conscription order. . . . When the statement was made to Napoleon, the founder of the conscription system, that a planned operation would cost too many men, he replied: “[Ce n’est rein.] That is nothing. The women produce more of them than I can use.” This is at the tail end of Christopher Jehn, “Conscription,” in David R. Henderson, ed., The Concise Encyclopedia of Economics. The picture above is the famous one by Minard that Edward Tufte uses to show how disastrous Napoleon’s move on Russia was. The thickness of the line shows the number of soldiers alive at a particular place. You can see that it goes from a fire hose at the start to a tiny straw at the end of the return. Postscript: I remember reading, although I can’t find the source quickly, that by instituting the draft and getting a lot of his fellow Frenchmen killed, Napoleon reduced the average height of the French population by about half an inch. Why? because the draft tended to get big guys. (0 COMMENTS)

If you’ve followed the news today, you probably know that Warren Buffett’s friend and fellow investor Charlie Munger died today at age 99. That’s a nice long run. I never met the man but I did have an interaction with him in 1981. Warning: The whole rest of this will be about me, not him. So if you’re not interested in me, don’t read on. In early 1981, I was following the turmoil in Poland closely. Someone had given a talk on Poland at Santa Clara University, where I was a visiting assistant professor in the economics department. I thought Poland would be an interesting place to be. In the speaker’s group was a young married Polish couple. I hit it off afterwards with the guy. I was single and feeling the need for adventure. I told him of my interest. He recommended that I contact a charity that Charlie Munger was involved with to apply for funds to go to Poland for a year. I contacted the charity. I can’t remember whether I spoke to Charlie or an aide. I actually think it was Charlie. I would certainly remember if I had known just how big a player Charlie was, but there was a lot I didn’t know. Remember that this was about 15 years before Google. So either Charlie or his aide told me that the first step was for me to write an intellectual autobiography. That sounded like a neat idea, so I began. Even though I had just bought an IBM Selectric typewriter, for some reason I decided to write long hand. I started thinking about my early childhood and the thoughts I had had about revenge (I was against it), theft (I was against it), honesty (I was for it), and other things. I talked about the particular experiences that led me there. After about 30 pages of writing, I had reached age 6. I realized that to do justice to the project, I would probably need to write well over 100 pages. And then who would read it? So I put the writing aside and didn’t apply. Was that a mistake? I don’t know. By staying around at SCU, I met my wife in the fall of 1981, when we were both teaching there. If I had gone to Poland, I wouldn’t have met her. I still owe Charlie though. By writing that 30 pages, I ended up thinking of myself as being a more interesting person than I had previously thought. Without having done it, I might never have written The Joy of Freedom: An Economist’s Odyssey, which Milton Friedman called, in his blurb for the book, “a quasi-autobiographical clarion call for a free society.”     (1 COMMENTS)

There’s a debate about whether LLMs such as GPT-4 have some sort of consciousness.  That is, are they able to think, analyze, understand, etc., in a way that is somewhat analogous to how the human mind works?  Back in 2022, Gwern argued that LLMs have agency: Powerful generative models like GPT-3 learn to imitate agents and thus become agents when prompted appropriately. This is an inevitable consequence of training on huge amounts of human-generated data. This can be a problem. Is human data (or moral equivalents like DRL agents) necessary, and other kinds of data, such as physics data, free of this problem? (And so a safety strategy of filtering data could reduce or eliminate hidden agency.) I argue no: agency is not discrete or immaterial, but an ordinary continuum of capability, useful to a generative model in many contexts beyond those narrowly defined as ‘agents’, such as in the “intentional stance” or variational approaches to solving physics problems. Thus, a very wide range of problems, at scale, may surprisingly induce emergent agency. At one point he referred a famous anecdote attributed to Ludwig Wittgenstein: He once greeted me with the question: ‘Why do people say that it was natural to think that the sun went round the earth rather than that the earth turned on its axis? I replied: ’I suppose, because it looked as if the sun went round the earth.’ ‘Well,’ he asked, ‘what would it have looked like if it had looked as if the earth turned on its axis?’ He is asking those who are skeptical of LLMs having agency to consider what their behavior would look like if they did have agency. When I first discovered the Wittgenstein quotation, I immediately recognized that it almost perfectly illustrated the point I was trying to make about the crisis of 2008 being produced by tight money.  Indeed I used the quote as an epigraph for my book entitled The Money Illusion. It occurs to me that Wittgenstein’s insight has many applications in economics.  Consider the following  examples: 1. Economists often argue that the US current account deficit is caused by low rates of domestic saving.  In contrast, for many people it looks like the deficit is caused by US firms being unable to compete with cheaper foreign rivals.  One response to those with this common sense view might be:  What would it look like if it looked as if a lack of domestic saving caused the exchange rate for the dollar to appreciate strongly enough to where many US firms were no longer competitive with foreign rivals? 2. Economists often argue that the US benefits from importing foreign goods.  In contrast, to many people it looks like imports hurt the US economy by negatively impacting domestic firms that compete against imports.  One response to those with this common sense view might be:  What would it look like if it had looked as if  international trade caused the US economy to reorient production toward goods in which we have a comparative advantage, boosting total output? 3. Economists often argue that inflation is caused by the effect of monetary policy on aggregate demand. In contrast, to many people it looks like inflation is caused by greedy firms raising prices and boosting profits.  One response to those with this common sense view might be:  What would profits look like if it had looked as if monetary policy caused aggregate demand to rise sharply at a time when nominal hourly wages were sticky? The Money Illusion is basically a long examination of why I believe the Great Recession was caused by tight money, rather than housing and  banking problems.  Step by step, I show that the facts fit the tight money explanation far better than the conventional view.  I show that all of the stylized facts that are typically viewed as causal factors are actually better viewed as the consequence of tight money.  I also showed that the conventional view is inconsistent with most stylized facts, such as the fact that the sharp economic slump began several months before Lehman failed and the fact that the Great Recession was worse in Europe, despite the subprime crisis being in America.  (Europe had tighter money.)  And before you try to come up with an ad hoc explanation for those anomalies, recall that (in 2008) conventional economists almost universally expected the Great Recession to be worse in America, because they were working with the wrong model of the economy. A geocentric model of the solar system with epicycles may work for a while, but with a close enough examination of the data you’ll eventually find anomalies.  And I found dozens of inconvenient anomalies.  Read the whole thing: (0 COMMENTS)

To to be recognized as a card-carrying progressive (called “liberal” in America), one sine-qua-non condition is a near-unconditional support for trade unions and the power that the state has outsourced to them—such as to force employers to negotiate or employees to pay dues. With that usually comes a deep reverence for the “Nordic model,”  “Swedish model,” or “German model” in which powerful unions regiment most of workers. This “corporatist model” is named as such and celebrated in the recent book of Daron and Acemoglu and Simon Johnson, Power and Progress—which is somewhat surprising as they seem to ignore the history of corporatism, including in Mussolini’s fascism. (I review Acemoglu and Johnson’s book in the forthcoming Winter issue of Regulation.) Another sine qua non for a progressive is to worship “the environment,” which of course includes promoting EVs (at any cost to the taxpayer). As Vladimir Lenin could have said, what is to be done when these legalized beliefs clash? When idealized trade unions want to grab money from capitalists producing glorified EVs? The Financial Times, itself philosophically closer to progressives than to classical liberals, reports on such a developing case (“Telsa Strikes in Sweden Are ‘Insame’, Says Elon Musk,” November 23, 2023) : Dockworkers and car dealers have since refused to work with the brand, in sympathy strikes that threaten to harm the company’s business in Sweden and potentially further afield. The latest strike by postal workers means Tesla cars will not have their licence plates delivered to customers. … Unions in Norway, one of Europe’s biggest markets for electric vehicle sales, said they will stop Teslas destined for Sweden being unloaded in the neighbouring Scandinavian country. … “It could snowball into different countries and be replicated elsewhere,” warned [independent auto analyst Matthias] Schmidt. “The biggest risk is obviously Germany. We expected something similar to happen in Germany when they opened their plant there, with the unions being so strong.” Yesterday and again today, the Financial Times provided more information on how the conflict is evolving (“Tesla Wins Interim Decision Against Swedish State Over Car Number Plates,” November 27, 2023): Swedish unions argue that Tesla needs to sign a collective agreement as almost all businesses in the country do, meaning that wages and working conditions are set jointly in negotiations between unions and employer organisations. Postal workers who deliver spare parts and registration plates, cleaners who clean Tesla’s dealerships, and dockworkers unloading their cars have all since refused to work with the US brand. On impersonal markets with contractual freedom, it is difficult to imagine such conflicts, just as no inherent conflict opposes consumers who want cars and suppliers who make them available to whoever is willing to pay the market price. All parties to a voluntary exchange benefit; anyone who does not expect to will decline to participate. The more the state coercively intervenes, the more life becomes conflictual as we can now observe in so many areas. All that is a matter of degree, at least up to a point, and Nordic countries are more “capitalist” than what many of our progressives usually like to believe. But they have also gone a long way on what Friedrich Hayek called the road to serfdom. (0 COMMENTS)

In my initial critique of Hazony’s Conservatism: A Rediscovery, I noted some objections to the way he defines conservative and liberal. But in addition, Hazony falters in some of his philosophical commentary as well. He tells us “there is much mediocre philosophy in circulation, and so one sometimes hears it said that There is no such things as a family, only the individuals who make up the family. This is analogous to the claim that There is no such thing as a table, only the atoms that make up the table – which we also hear on occasion.” The mediocre school of philosophical thought Hazony references, but does not name, is known as ontological antirealism. To very briefly summarize this school of thought, suppose I gave you a standard deck of playing cards and asked you to count out how many things were. It would be very odd of you to say “There are 53 things here. First, there are 52 cards in the deck, plus there is also a deck of cards itself, which is one more thing, so the final count is 53.” There isn’t anything that itself is a “deck of cards,” that’s just a name we give to a collection of other things. In a nutshell, ontological antirealists extend that argument to everything that exists – that the things we see and name are not themselves individual things. They are really shorthand terms for groupings of smaller, individual things. Now, had Hazony simply dismissed this school of thought and went on his way that would be fine. But oddly, in attempting to show how foolish it is, he ends up making an argument that is in fact identical to the argument ontological antirealists themselves make. He says that in order to effectively repair a table, he must think of it as a single entity, arguing “It is precisely because I regard the table as a whole as having a real existence, and a discernible good toward which it can be moved, that I am able to engage in practical efforts to repair it. No amount of tinkering with the thought that the table consists of atoms or molecules will help me in this context.” And he makes the same analogy for why it’s useful to think of societies or nations as having an independent composite existence rather than viewing it as a collection of individuals, saying the “king, president, or prime minister at the head of a nation can have the good of the collective as a whole before his mind. But he cannot move back and forth between considering the good of the nation as a whole and thinking about each individual under his rule—as the head of a household or the commander of a small military unit does—because it is impossible for him to be familiar with all of the individuals in his charge.” But not only does this not contradict the arguments made by ontological antirealists, they actually say the same thing. Trenton Merricks, in his book Objects and Persons, argues that the existence of composite objects is technically false but “nearly as good as true.” That is, by viewing the world as if tables were things that had a real existence, we are able to make our way much more effectively through the world than if we attempted to view and interact with them as collections of particles. Ontological antirealists believe that accepting the existence of ordinary objects is a pragmatically good idea because it’s cognitively useful and helps direct effective action – and Hazony, in attempting to show that ontological antirealists are mediocre thinkers, defends the idea of composite objects by arguing that they are cognitively useful and help direct effective action. Hazony’s discussion of economics suffers from some factual errors along with theoretical weaknesses. He complains that the liberal commitment to free trade has resulted in policymakers “abandoning America’s manufacturing capabilities.” Here Hazony is making the all-too-common error of conflating America’s manufacturing capabilities with its manufacturing employment. This is no small thing – a decline in manufacturing employment does not imply a decline in manufacturing capacity, and in fact, while American manufacturing employment has declined, American’s manufacturing capabilities have only grown. Conflating employment with capability would also lead one to worry that America’s capacity to produce food has plummeted over time. Farming represents a low single digit percentage of employment in America, whereas it was once the single largest source of American employment. This does not mean farming capacity has fallen – it has risen, drastically, due to improvements in technology that allow more food to be produced with fewer workers. This is how economic growth works, and what brings about increases in material prosperity. Granted, America does participate in a global food market as well, but in both farming and manufacturing, the jobs lost to trade are utterly dwarfed by the jobs lost to labor-saving technological improvements. Far more American farming jobs were lost to the combine harvester than to Colombian farmers. If the loss of manufacturing employment is truly Hazony’s concern, he’s unduly focused on what amounts to a trivial factor in that regard – he should be spending far more time attempting to put an end to technological progress itself. If, however, Hazony is concerned with manufacturing capabilities, as he says, then he one less thing to worry about – America’s manufacturing capabilities have only been increasing. Hazony also argues that free trade undermines the bonds of mutual loyalty on which nations depend, but he never really fleshes this out other than by repeatedly invoking the idea of mutual loyalty among fellow citizens. But this doesn’t go where Hazony wants it to go. Suppose I’m looking to build a house, and I need to purchase a certain amount of lumber to do so. Walter, from Washington state, can provide me what I need at a certain price. However, Carl the Canadian can also offer me the same lumber at the same quality, but Carl’s selling price is $35,000 lower. Under free trade, I am free to favor Walter over Carl, because I prefer to buy from an American, or I may also choose to buy from Carl over Walter to save a significant sum of money. Presumably, Hazony thinks there is an obligation rooted in loyalty to buy from Walter over Carl, but it’s not clear why. After all, what Hazony invokes so often is the idea of mutual loyalty – and the thing about mutual loyalty is that it’s mutual. The obligation goes in both directions. So why would we say I’m failing to show Walter proper loyalty by buying from Carl? Why not say Walter would be failing to show proper loyalty to me, by insisting I buy from him despite the huge additional financial burden it would impose on me? Simply saying “mutual loyalty” does nothing to resolve this. Additionally, with the $35,000 I’d save buying Canadian lumber from Carl, I could support other businesses that might provide furnishings to my new home or hire landscapers to help design and build up the yard. Would it be failing to show proper “mutual loyalty” to those unseen people, by buying from Walter? Hazony offers nothing that answers these questions, or even acknowledge their existence. In my next and last post, I’ll be examining Hazony’s arguments regarding religion and his claims of its necessary connection to the conservatism he advocates. (0 COMMENTS)

This Friday, I’ll be giving the keynote speech at a conference at Arizona State University in Tempe, AZ. The day-long conference (I’m the first speaker) is run by the Center for the Study of Economic Liberty and is titled “Avenues to Opportunity.” My talk is titled “The Power to Regulate is the Power to Destroy.” I first heard that line from Harold Demsetz when he spoke at the University of Winnipeg in January or February 1970. One of the other speakers is former Arizona governor Doug Ducey, one of the few recent U.S. governors whom I admire. Here are more details. You can pre-register here. If you do register, use the code a2o2023-friendsofscetl By doing so, you’ll get a $20 discount. If you attend, please come up and say hi before or after. I plan to attend the whole event. The pics above are of Ducey and me. (0 COMMENTS)

Hoover Institution economist (and colleague) John Cochrane has an excellent long post on dollarization in Argentina. One highlight: Dollarization is no panacea. It will work if it is accompanied by fiscal and microeconomic reform. It will be of limited value otherwise. I’ll declare a motto: All successful inflation stabilizations have come from a combination of fiscal, monetary and microeconomic reform. (italics in original) That reminds me of what Michael K. Salemi wrote about what has been learned about ending hyperinflations. He wrote the entry “Hyperinflation” in The Concise Encyclopedia of Economics. While Argentina is far from having hyperinflation, which, as Salemi notes, is typically used “to describe episodes when the monthly inflation rate is greater than 50 percent,” Argentina does have very high inflation, in excess of 100% in the last 12 months. So the same principles for ending hyperinflation apply for ending, or at least substantially reducing, Argentina’s inflation. Here are Salemi’s two key paragraphs on ending hyperinflations: How do hyperinflations end? The standard answer is that governments have to make a credible commitment to halting the rapid growth in the stock of money. Proponents of this view consider the end of the German hyperinflation to be a case in point. In late 1923, Germany undertook a monetary reform, creating a new unit of currency called the rentenmark. The German government promised that the new currency could be converted on demand into a bond having a certain value in gold. Proponents of the standard answer argue that the guarantee of convertibility is properly viewed as a promise to cease the rapid issue of money. An alternative view held by some economists is that not just monetary reform, but also fiscal reform, is needed to end a hyperinflation. According to this view, a successful reform entails two believable commitments on the part of government. The first is a commitment to halt the rapid growth of paper money. The second is a commitment to bring the government’s budget into balance. This second commitment is necessary for a successful reform because it removes, or at least lessens, the incentive for the government to resort to inflationary taxation. If the government commits to balancing its budget, people can reasonably believe that money growth will not rise again to high levels in the near future. Thomas Sargent, a proponent of the second view, argues that the German reform of 1923 was successful because it created an independent central bank that could refuse to monetize the government deficit and because it included provisions for higher taxes and lower government expenditures. Another way to look at Sargent’s view is that hyperinflations end when people reasonably believe that the rate of money growth will fall to normal levels both now and in the future. My EconLog co-blogger Scott Sumner also has insights about dollarization.   (0 COMMENTS)

Who is the greatest economist of all time? In Tyler Cowen‘s eclectic view, you need both breadth and depth, macro and micro. You can’t have been too wrong–and you need to be mostly right. You have to have had a lasting impact, and done both theory and empirical work. If you meet all these criteria, […] The post Tyler Cowen on the GOAT of Economics appeared first on Econlib.

Last April, I did a post discussing the factors behind the severely restricted number of flights between the US and China. In recent months, the US government has allowed more flights, but only under the condition that Chinese airlines fly a much longer route between the two countries. US airlines had complained that they were at a competitive disadvantage, due to their inability to fly over Russian airspace because of the Ukraine sanctions dispute.US airlines are at a competitive disadvantage, just as US exporters to Hawaii that are limited by the Jones Act are at a competitive disadvantage to Chinese exporters to Hawaii.  But would that be a reason to extend the Jones Act to the rest of the world? Requiring the Chinese airlines to avoid Russian airspace has the following effects: 1. Turning a painful 13-hour flight from the East Coast to China into an excruciating 20-hour marathon. 2.  Sharply raising ticket prices. 3.  Increasing global warming. 4.  Reducing tourism between the two countries. This last item is especially important, as I believe that tourism is one of the best ways to improve international relations.  Covid travel restrictions pushed the world toward nationalism. The Biden administration suggests that global warming is one of the most severe crises facing the human race.  But when it comes to a choice between nationalism and environmentalism, their actions suggest they care more about nationalism.  They’ve also put trade barriers on the importation of clean technologies.  Don’t tell me what you care about, show me what you care about. PS.  Readers of Kurt Vonnegut may recognize the reference in the post title. PPS.  One recent study estimated the impact of the Jones Act on the Hawaiian economy: Thanks to this new research, we now know that local families pay almost $1,800 every year because of the act, including $389 for housing costs, $248 for groceries and restaurants, and $62 for gasoline. Overall, the act costs Hawaii’s economy an extra $1.2 billion a year, with side effects including thousands of lost jobs and lower tax revenues for our state and local governments.     (0 COMMENTS)