I reminded of the title of Karl Popper’s famous book when I read about current political developments.  In America, both parties are increasingly hostile to an open society.  According to Jon Hartley, things look much better north of the border: Poilievre’s conservative economic-policy platform — largely built on zoning reform to promote housing affordability and on occupational-licensing reform to get skilled immigrants to work — have handed his party a significant lead in the polls. . . . Poilievre’s conservative plan directly confronts the tight local and provincial land-use regulations. These regulations prevent new housing construction in many Canadian cities, and that in turn spawns skyrocketing housing prices, making it nearly impossible — especially for younger voters — to own a home. . . As a result of Poilievre’s plan to withhold federal infrastructure funds from municipalities that don’t hit housing supply-growth targets that cheapen housing, young voters, an almost universally progressive demographic, have been miraculously galvanized to support the Canadian conservatives. . . . Poilievre is also winning votes from legal Canadian immigrants by proposing occupational-licensing reforms that help such immigrants use skills previously honed in their home country that can’t be used in Canada because of onerous laws.  For instance, Poilievre has proposed a “Blue Seal Test” for 20,000 Canadian immigrant doctors (many of whom currently drive for rideshare) to allow these doctors to practice in Canada, contingent on their passing a medical exam. In the US, substantial portions of both political parties are opposed to “YIMBY” measures to boost housing construction.  While some individual proposals are flawed, it’s telling that opponents tend to avoid offering alternatives.  For many, a lack of new housing in their area is a feature, not a bug. Canada’s conservatives are also far more supportive of free trade than either political party in the US.  They are also supportive of Canada’s immigration policy, which admits about 500,000 immigrants per year.  And that’s in a country of only 40 million, vs. 330 million in the US. Many of the open society issues do not fit neatly on the left-right axis.  It’s heartening to see Canada’s conservatives embrace this general approach, so different from what we see in the US. PS.  Speaking of Canada, this Bloomberg article caught my eye: Legal Cocaine Is Coming, This Canadian Startup Predicts Safe Supply Streaming begins trading on Canadian exchange Company to push for legal drugs, invest in addiction clinics (0 COMMENTS)

In the wake of the ransomware attack on Chinese bank ICBC and its impact on US-Treasury trading, the Security and Exchange Commission says it “continues to monitor with a focus on maintaining fair and orderly markets” (“Wall Street and Bejing Fight Fallout of Ransomware Attack on China’s Biggest Bank,” Financial Times, November 13, 2023). Governments all over the world are in the game of substituting “fair” for “free” in their declarations and propaganda. Even free trade has lost its “free” to be called “fair”; in the same vein, “free trade” agreements often don’t include “trade” either. What looks free is out; what sounds fair is in. Words are just labels, of course, and people can start calling dogs cats if they want to; it won’t change the nature of the animals or the way these things behave. But when people, and especially their rulers, change a label associated with a social, political, or economic concept, it is usually because they view and or want others to view the phenomenon differently. It is rarely innocent or without consequences. Pretty much everybody knows, or used to know, what “free” means in the modern, liberal conception of liberty. It means exchange without violence or fraud by individuals each of whom may accept the exchange or, if the terms proposed by the other party don’t increase his own utility compared to his pre-exchange situation, decline the exchange. “Fair,” on the contrary, is fuzzy and conflictual, depends on who defines it, and generally requires some authority to impose it coercively on those who don’t agree with the definition. Although some may give it a moral meaning, a fair wage or a fair price, for example, means that the wage or price that the party who has the guns (or the backing of those who have the guns) can impose on others. Crucially, the latter may not decline. It is unfortunate that John Rawls, whose theory (or some version of it) has been blessed by both Friedrich Hayek and James Buchanan (and Gordon Tullock), partly defined justice in terms of fairness, encouraging the drift of justice as liberty to justice as fairness. (On justice as liberty, Robert Nozick’s 1974 book Anarchy, State, and Utopia is a classic.) It is true that the label “fair” sometimes passes as innocuous, but it must be manipulated with utmost care. On this issue as on so many others in political philosophy and political economy, Anthony de Jasay distills much wisdom. According to him, the word “fair” (and its derivatives) exists only in English “and has not even remote foreign equivalents.” (But isn’t the French “équitable” closer to “fair” than to “just”?) In de Jasay’s view, “fair” is an empty and chameleonic word that means “nice” and has served mainly to corrupt “justice” into “social justice.” In a classical liberal perspective and in de Jasay’s anarchism,  justice lies in voluntary contracts and interactions. Justice is contractual while fairness is redistributive. What the state does is to replace contract and justice with command and fairness. (If you have some background in political economy and political philosophy, a challenging book that bears on this topic is his 1989 Social Contract, Free Ride: A Study of the Public Goods Problem. It is not the easiest reading I ever recommended to you! Don’t get bogged down in his mathematical proofs, which are not always obvious.) (0 COMMENTS)

President Biden signed a sweeping executive order to “harness” and “keep” artificial intelligence, two words you never want to hear from the government. This new regulation will inhibit Americans’ flourishing because restricting free markets never works. The EO is reported to ensure safety, equity, and responsible development. While these goals may appear laudable, delving deeper reveals that this motion will hinder economic progress and stifle the innovation it aims to promote. That’s why policies must always be judged by their results rather than their intentions. Details of the order’s objectives include safety tests, industry standards, and government oversight to address potential risks associated with AI. Forcing AI companies to conduct safety tests before going public, known as “red teaming,” will significantly slow the development and deployment of AI technologies.  It’s well-established that innovation thrives in an environment of minimal regulatory interference called “permissionless innovation.” So introducing these bureaucratic hurdles will hinder fast-growing AI and all the industries that have begun to rely on it. Medicine and biotech, in particular, have realized remarkable potential with AI that has life-saving ramifications. But Biden’s overreaching EO wants to harness that.  As is the case with many regulations, the EO comes at not just a cost to the individuals it affects but to the government’s pocketbook as well.  As part of its endeavor to “preserve individuals’ privacy,” the administration will fund the Research Coordination Network. At a time when wages aren’t keeping pace with inflation and the average American family is losing real money due to a suffering economy, the government adding an expense like this is an insult to injury. Congress needs to reduce spending, and the Fed needs to slash its bloated balance sheet now more than ever.  One of the most troubling aspects of the EO is its emphasis on regulating AI in the workforce out of concern for the technology displacing workers. Although there has been some uproar out of concern over AI destroying jobs, research shows that only 34% of Americans fear job displacement due to AI.  And for good reason.  Not only now but historically, concerns about new technologies displacing workers have been overblown. A Harvard paper published in 2013 predicted that by 2023, almost half of all American jobs would be replaced by AI. Clearly, the calculation has not come to pass.  That’s because technology is a tool, not a threat. Frequently, implementing AI and technology like it allows humans to do more complex or human-facing jobs that AI can’t do or that people don’t want AI to do.  AI is a transformative technology that has the potential to revolutionize various industries, from healthcare to finance and beyond. In a free market, competition drives innovation and efficiency, benefiting consumers and businesses. Restricting AI through excessive regulations and government oversight threatens this dynamic. While the intention behind Biden’s EO on AI may be to ensure responsible development and safe use, the economic consequences could be dire. To maintain America’s leadership in AI and foster economic growth, lawmakers and leaders must avoid overregulation and unnecessary restrictions on this transformative technology.  Instead, we should encourage innovation, protect intellectual property, and ensure that AI remains a powerful tool for driving economic prosperity and improving the lives of all Americans.  In the fast-paced world of technology, the last thing we need is government interference that hampers progress.     Vance Ginn, Ph.D., is president of Ginn Economic Consulting, host of the Let People Prosper Show podcast, chief economist or senior fellow at think tanks, and the former chief economist of the White House’s Office of Management and Budget. Follow him on X.com at @VanceGinn. (0 COMMENTS)

Good reporting goes a long way. The Wall Street Journal’s Joanna Stern has a great news story in the November 15 electronic edition. The title tells you a lot: “I Visited Over 120 EV Chargers: Three Reasons Why So Many Were Broken.” Some highlights: L.A. County has more public DC fast chargers than any other in the country, according to the Atlas Public Policy research group. From the beach in Santa Monica to parking garages under Rodeo Drive, my video producer Adam Falk and I visited 30 different non-Tesla DC fast-charger stations in a Rivian R1T pickup. I ran into problems at 13 of them—that’s over 40%. Oof is right. She identified 3 problem categories and discussed each. They are (1) Out of Order; (2) Payment Rejected; and (3) Handshake Failed. This does not augur well for California’s coming EV mandate. (0 COMMENTS)

In my previous post, I laid out the premises that make up Enlightenment liberalism and conservatism, according to Yoram Hazony. Both conservatism and liberalism, in Hazony’s telling, make individual liberty a virtue. The difference is that liberalism treats individual liberty as a value of categorical importance, always functioning as a trump card over any other concern. To conservatives, however, “the liberty of the individual is a fine thing, both good in itself and worthwhile for its beneficial effects, when taken in the right proportion. It has, and will always have, an important place in a broader theory of political conservatism.”  But it must, as Hazony says, be taken in the right proportion. And he argues that this is in keeping with the American tradition. The preamble to the Constitution lists the purposes and aims of the new American nation, which are “to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defense, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity”. Liberty is part of that list, but it is still only one part among many. While all of these are good and worthwhile things, in real life things that are good in principle may conflict with each other in practice. It may sometimes be the case that some of these values might need to be constrained for the sake of others. For example, peace, unity, and justice are all important values, yet when face with a “shameful and ongoing injustice, as with the racial segregation laws in the American South, there may be no choice but for the peace and unity of the country to be damaged for a time, so that injustice may be corrected.” In the same way, it may be the case that the blessings of liberty may need to be constrained, for the sake of securing the general welfare or domestic tranquility.  But the liberal philosophy rejects the idea other values taking priority over individual liberty, or that there are tradeoffs to be made among competing values: “In Enlightenment liberalism, the consent of the free and equal individual is the ultimate principle from which everything else in the system is deduced. Indeed, a dogmatic liberal finds it difficult to justify any kind of law or policy that is not derived from this principle. Conservatives, on the other hand, consider the liberty of the individual to be a precious good to be cultivated and protected, but one that finds its place within a complex of competing principles that must be balanced against one another if the life of the nation is to be sustained.”  Individual liberty matters, but it is not the only thing that matters, and when too heavily emphasized it can make people free to behave ways that destroy the very conditions that make individual liberty possible. For example, “Enlightenment liberalism supposes that political obligation has its source in the consent of the individual” and therefore “if the source of political obligation is consent, political obligation ceases when consent is withdrawn.” But this predictably leads to destructive results: “The results of this happy form of reasoning, according to which no one is ever under any obligation he does not want, are plain to see. Liberal society is one in which everyone is free to pursue happiness, but the most obvious things that must be done to ensure that a family, community, or nation remains functional and whole have become optional.”  But conservatism recognizes that individual liberty must be constrained in order to be survive, and people must bear responsibility to fulfill obligations they did not choose. Liberals are mistaken to assume the existence of individual liberty as an axiom, Hazony says: “Too many believe that the freedom of the individual is a gift that is ours by nature. But there is little truth to this. Every form of liberty that the individual enjoys is due to a tradition of constraint that is inculcated at every level of certain societies from childhood.” Much of the work of ensuring people will constrain themselves in the necessary way has been mediated through strongly held traditions and customs which individuals felt themselves bound to uphold even when found personally undesirable, and for which they were honored for upholding. “The propagation of such self-constraint depends on the honor that a given society is willing to award those who practice it. Indeed, the only known means of causing individuals to shoulder hardship and constraint without coercion or financial compensation is by rewarding them with honor.”  But liberalism lacks any tools to designate one lifestyle or choice as better than any other, or more deserving of honor and respect – as long as the choices are made by an uncoerced, free individual, they are all equally valid in the eyes of liberalism. In seeking to liberate the individual from the constraints of tradition and social obligation, liberalism becomes “an engine of perpetual revolution, which brings about the progressive destruction of every inherited institution, yet without ever being able to consolidate a stable consensus around any new ones.” It is in this way that the liberal focus on individual liberty above all else becomes self-defeating, for “it is precisely those who wish for mild government and generous liberties who should make it their business to speak of the cohesiveness of their society and to find ways of heightening this cohesion and resilience, rather than ceaselessly breaking it down.” Hazony sees a role for government in this, because history teaches us that how a government approaches these issues has major implications for the order of society. As Hazony sees it, “Whatever government does not honor is weakened by this neglect.” And because “government does, in fact, wield this great influence over what is honored by the respective parties under its rule, and because the very existence of the government and the state itself depends on the degree to which the factions or parties under its rule give honor to one another, it is obvious that government must aim to shape the society it governs in such a way as to encourage mutual loyalty and the mutual exchange of honors that leads to it.” Government is not some impartial overseer of public life, run by detached philosopher kings entirely in the background. It is intrinsically integrated into the functioning of a society, even by its acts of omission, and therefore cannot be relieved of a responsibility to uphold time-honored and socially useful institutions, particularly those that are part of the inherited tradition of the nation over which the government functions.  Hazony is particularly insistent on this point when it comes to religion. He argues that the Judeo-Christian system is intrinsically part of the inherited institutions of Western nations generally and of the United States in particular. Hazony does not shy away from this, clearly insisting “the time has come to regard the encouragement of the traditional religion (or religions) of the nation as having a place of especial importance among the responsibilities of national government. We should, in other words, regard the encouragement of religion as a distinct purpose of national government.” In the next post, I’ll summarize what Hazony believes the conservative alternative to liberal government would look like.  (0 COMMENTS)

The ideas that government must fund most basic research, that such research is crucial for advanced technology, and that advanced technology is a strong contributor to economic growth have all become cliches. Not only President Clinton, but also many others, assume that these ideas are true without bothering to examine them. William Niskanen was not one of those people. More than almost any other economist of his era, he marched to the beat of his own drummer. In doing so, he often challenged accepted views. And in this case, his challenge hit the mark. These are the last 2 paragraphs of David R. Henderson, “Underappreciated Wisdom from Niskanen,” Defining Ideas, November 15, 2023. Read the whole thing. (0 COMMENTS)

How would you feel if you saw the following headline: “Gas stations to be saddled with major new tax on gasoline” Perhaps you might suspect that motorists will ultimately pay the higher gas tax. OK, so tell me how you feel reading this Bloomberg headline: Big Banks to Be Saddled With Tab for SVB, Signature Depositors This might sound good to many Bloomberg readers.  Big banks keep taking risks, which leads to government bailouts.  Sounds good to require them to pay for cleaning up the mess.  But on closer inspection, is this any different from the gasoline tax? In its May proposal, the FDIC said that the extra fees, known as a special assessment, would be collected at an annual rate of about 12.5 basis points over the eight periods. The proposed formula was based on criteria, including the amount of a bank’s deposits that are uninsured. Fee is a more polite term for tax.  FDIC fees are a tax on bank deposits.  In my view, bank customers will eventually end up bearing most of the cost of FDIC fees. As in so many other cases, “who pays” is not a useful way of thinking about taxes.  In the end, all taxes are paid by people.  And it’s very difficult to estimate the incidence of a tax, the proportion paid by people in different income categories, especially in the long run (which is what matters.). It is much more useful to think about the impact of taxes on incentives.  Our deposit insurance system bails out the depositors of risky banks and then puts a tax on safer banks to pay for those bailouts.  How would you expect that system to impact bank behavior? PS.  Check out Alex Tabarrok’s new post for a visual presentation of the impact of taxes on behavior. (0 COMMENTS)

In my two previous posts (here and here) I described how hyperinflation hit the Weimar Republic after the end of World War 1. On November 15, 1923, the German Papiermark hit an exchange rate of 2.5 trillion to $1. Two weeks earlier, $1 had bought 133 billion marks; at the start of the year 17,972 marks; on the currency’s introduction in 1914, 4.19. Germany’s currency died. What killed it?   We can begin to answer that question with the equation of exchange, only of the few genuinely useful equations in economics: MV=Py This says that the money supply in an economy (M) multiplied by the number of times it is spent in a given period (velocity of circulation, V) equals the price level (P) multiplied by output (y); nominal spending (MV) equals nominal income (Py).   Assuming that V and y are fixed, it follows that any increase in M must lead to an increase in P: inflation. But in Germany in 1921-1923, Theo Balderston writes, “prices did not rise in step with the money supply as the quantity theory implies.” Instead, he notes that: ..whereas the rate of growth of the monetary base was fairly steady from 1916 to mid-1922, the rate of price rise was anything but steady. In particular, the money supply continued to grow, albeit slowly, in 1920-21, while prices were falling. The quantity theory of money – as restated by Milton Friedman – can account for this, however. It incorporates the ‘demand for money,’ or the demand to hold cash balances. Balderston explains that holding money balances: …gives the holder benefits, chiefly in terms of the convenience of liquidity – the ability to spend without forethought. Thus, a stock of ready money is an asset. However, the convenience afforded by this asset must be balanced against the loss of income or pleasure due to holding one’s wealth in this form…because there is an opportunity cost to holding money, people will not hold unlimited amounts of it. When those opportunity costs change, so does the demand for money. Besides the “‘opportunity cost’ of holding wealth as money balances in terms of the interest income foregone,” Balderston notes that: There is also an ‘opportunity cost’ in holding wealth as money and not as goods if prices are expected to rise, and, finally, in domestic and not in foreign currency if the domestic currency is expected to depreciate. One can therefore hypothesise that, if domestic price inflation and/or nominal interest rates, and/or currency depreciation are expected to increase, the ‘opportunity cost’ of holding real money balances will be perceived to rise, and individuals and firms will economise on these balances. They ‘economise’ by spending their balances: in other words, when the opportunity cost of holding money balances is perceived to rise, the demand for money falls, V increases, and p rises, even if M is kept constant. And, in reverse, when the opportunity cost of holding money balances is perceived to fall, the demand for money rises, V decreases, and p falls, even if M is kept constant.  Data on the forward exchange rate of the mark from 1921 do show a stable, negative relationship between expected inflation and the real demand for money. What drove expectations? Carl-Ludwig Holtfrerich, Balderston notes, “connected expectational changes to reparations crises.” Germany was wrangling with the Allies over the terms of the Versailles Treaty which had concluded World War One. In April 1921, the Allies presented their bill. Seen as unpayable by most Germans, they believed the government would resort to printing money to meet its liabilities. The opportunity cost of holdings marks was perceived to rise and Germans sought to ‘economize’ on their mark holdings by spending them. Further fiscal pressures arising from the Franco-Belgian occupation of the Rhur in January 1923 exacerbated this.     But there is a limit to this. The demand for real money balances cannot fall below a certain level because the time between acquiring money and spending it cannot be compressed to zero. By late 1922, Frank D. Graham argued, marks were being spent as fast as possible. This was the period of people running to the shops as soon as they received their wages.  Thus, Balderston argues, “in the long run, inflation cannot persist if the money supply does not expand.” “In this final period,” he writes, “inflation was probably driven by the money-supply process” outlined by Steven B. Webb, who argued that inflation expectations prompted people to dump government debt which the central bank bought with newly printed money to keep government borrowing costs down.   Milton Friedman famously argued that: Inflation is always and everywhere a monetary phenomenon in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output. That description fits the Weimar hyperinflation, even if the story is a little more nuanced than that famous formulation suggests.           John Phelan is an Economist at Center of the American Experiment. (0 COMMENTS)

I was talking to a good friend recently about the war between Israel’s government and Hamas. We both agreed that Hamas is out to destroy Israel. (If you don’t agree with that, I’d like to see your comments about why. But even if you don’t agree, you might find the following discussion relevant.) For that reason, my friend and I agreed that it’s legitimate for Israel’s government to fight Hamas. I argued that it’s important that a war be fought justly. That’s the second of the three components of just war theory. (The three are Jus ad bellum, Jus in bello, and Jus post bellum.) Thus the title of this post. I’m focusing on the second part: fighting a war justly. My friend argued that because Hamas is using innocent Gazans as human shields, it’s legitimate to kill those innocent people as a way of getting at the guilty. I, uncomfortably, agreed with him but wanted to find a limiting case. So I came up what I thought would be one. “Suppose, ” I said, “that the only way to kill one Hamas fighter is to kill 10,000 innocent Gazans. Would you agree that that’s too many?” His answered surprised me. “No,” he said, “if that’s the only way to kill that one Hamas person.” I was momentarily speechless, which doesn’t happen to me often. In defending his position, my friend went back to the Jus ad bellum point, the idea, which we both agreed on, that Israel’s government’s fight against Hamas is legitimate. For him, the fact that the fight was just was enough to justify killing tens of thousands of innocent people. But, to be fair, I didn’t have a good idea of the right ratio. Is it 1 to 1, 10 to 1, 100 to 1, 1,000 to 1? I was pretty sure it was under 100 to 1, but I couldn’t say why. So I talked to another friend who has been thinking about this. He gave me a way to think about it that was better than anything I had. “Suppose,” he said, “that the Israeli government knows that beneath an apartment block containing 300 innocent people is a machine gun nest of 5 members of Hamas. If the government has a reasonable expectation that killing the 300 innocents along with the 5 guilty would prevent more than 300 innocent deaths that otherwise would have been carried out by the 5 guilty, then it’s legitimate.” But if it’s fewer, then it’s not. Of course, it’s hard to know. But what probably isn’t hard to know is that those 5, if they survived, would not have killed 10,000 people each. Which would mean that my first friend’s 10,000 number was way too high. That’s all I’ve got. What do you think? ADDENDUM: I should add, in case there’s any doubt, that I think it’s wrong to use innocent people as human shields. That’s why the Israeli Supreme Court, in 2005, said that no longer could the Israeli military do so. There’s some evidence, though, that, even recently, the Israeli military has done so. (0 COMMENTS)

The US government, under the chameleonic excuse of the “public interest,” forbids prediction markets about federal politics except under special permissions and restricted conditions. A bureau, manned by bureaucrats and run by Democratic and Republican appointees, the Commodity Futures Trading Commission (CFTC), is tasked with that. A Financial Times article presents an interesting overview of the situation (Oliver Roeder, “Prediction Markets Can Tell the Future. Why Is the US So Afraid of Them?” November 10, 2023). Illustrating with the case of PredictIt, the only political prediction market currently allowed in America but with severe restrictions, the journalist explains how it works: A share on PredictIt settles at $1 if the listed event comes to pass and $0 if it doesn’t, and its price fluctuates somewhere in the middle meanwhile. Shares can be bought and sold at any time, as a candidate’s fortunes wax and wane before election night, say. The price, therefore, can be read as a probability. A share of Joe Biden winning re-election, for example, is trading at 43 cents, implying a 43 percent chance of him winning a second term. … Donald Trump trails at 37 cents, and anyone else is a long shot. The standard argument for prediction markets is that, similarly to standard financial markets do, they generate prices that incorporate the knowledge of insiders and anybody who chooses to participate. Political prediction markets also motivate participating citizens to acquire relevant information—although it is presumably more about what the other voters will do with their own (meager) information than about substantive issues. Some academic research suggests that the electoral forecasts of prediction markets have been more accurate than opinion polls. Such markets can be useful for more practical purposes. The Financial Times quotes an executive of KalshiEX, a prediction market that allows trading on the probability of events such as government shutdowns but is prohibited by the CFTC from intermediating trading bets on which party will control Congress: “There’s no greater risk that Americans face nowadays than election risk,” Luana Lopes Lara, Kalshi’s CTO, said in an interview with Bloomberg in October. While large investors and institutions can access financial products with exposure to this risk, she said, it’s “a little crazy” to think that everyday Americans shouldn’t also be able to. Interesting argument. But to the extent that political prediction markets would be used as insurance against political risk, which involves betting in favor of the most harmful party or candidate, would dilute these markets’ predictive power. Of course, the bet limit per trader would need to be much higher than the current $850 imposed on PredictIt. At any rate, we can understand why politicians wouldn’t like people being able to partly insure against them. The reasons given last Summer by a group of Democratic senators, including Dianne Feinstein and Elizabeth Warren, to oppose political prediction markets betray their strange democratic mystique. They fear that the bad superrich would wage “extraordinary bets” on the same party to which they contribute (presumably through Political Action Committees). It’s not clear what exactly this would change, but the letter seems to assume that voters are so clueless enough about politics as to be influenced by mere electoral predictions. This last possibility is not incompatible with the individual voter’s well-known rational ignorance of politics (because he has practically zero influence on election results), but it does not exactly glorify democratic politics. The angelic conception of democracy that the senators try to project is not consistent with their poor opinion of voters. They speak about “the sanctity and democratic value of elections,” as if a prediction market was blasphemy. They claim that “introducing financial incentives into the elections process fundamentally changes the motivations behind each vote, potentially replacing political convictions with financial calculations.” As if politicians did not introduce “financial calculations” in their electoral promises and their trillion-dollar deficits. As if they did not buy votes with taxpayers’ money. As I have argued elsewhere, less muddled and more realistic theories of democracy can be found in the works of such theorists as Friedrich Hayek and William Riker (who argues that politics is a quasi-random game) or in the economic school of constitutional political economy that developed around James Buchanan. Note also that, in the UK, political betting is allowed through bookies and the democratic sky hasn’t fallen yet. The politicians’ opposition to political prediction markets may simply reflect the sanctity of their power. This transpires in what Oregon senator Jeff Merkley, the lead author of the letter, told the Financial Times: But he wishes that PredictIt had come to him and his legislative colleagues for authorisation. “They should have come to Congress and said, ‘Well, we’d like to allow very limited gaming for research purposes.’” Under strict conditions—low ceilings on position sizes, transparency and checks for any corrupting influence—“I could see an argument for it,” Merkley said. (0 COMMENTS)