Javier Milei, who says he is an anarcho-capitalist, has been elected president of Argentina’s government. It is difficult not to applaud the defeat of his opponent from the populist party that robbed the Argentines for decades. Still, I previously suggested that we should not get our expectations too high. If Mr. Milei asked my advice, I would give three general recommendations. First, be careful how you talk. It is difficult to think individualist and to teach liberal individualism if you speak collectivist. Consider an example from the Wall Street Journal story of yesterday (and this morning) on Mr. Milei’s election (“Javier Milei, a Self-Described Anarcho-Capitalist, Is Elected President of Argentina,” November 19): Milei’s proposals include … prioritizing commerce with capitalist nations like the U.S. over China. There are no quotation marks so Milei may have expressed this idea in different terms. The translator could have interpreted it with his own usual way of thinking, or it could be the journalist (or editor) who unconsciously transcribed it in collectivist-talk. The government of a free country does not (except perhaps in wartime) “prioritize commerce” with anybody anywhere; the government is content to leave each of “its” own citizens (or group of citizens) free to import from whom he wants and export to whom he wants if he finds agreeable the terms offered by the other party (even if the latter is coerced by his own illiberal government). My second recommendation relates to the interface between deeds and talk. Like any politician in a not totally free country—an understatement for Argentina—Milei will have to make compromises. Public choice theory taught us much on the constraints and incentives of politicians who need the support of special interest groups asking for favors and privileges. These demands are more difficult to resist the more dependent people have become on government. Milei will often have to compromise his classical-liberal or a fortiori anarcho-capitalist ideals, if that is what he truly pursues. What’s important, I think, is that he explains openly and clearly that anything he does and should not do is only a short-term compromise in order to continue the pursuit of individual liberty. He should explain that the welfare state is only kept in place to the extent that it is necessary during the transition to the liberty and prosperity that will make it gradually obsolete. And so forth. This does not imply that reducing and eliminating inflation, which is officially at 143% per year, is not a pressing task. It is, and some other priorities will have to wait. If he fails in taming inflation, he will fail everywhere else. But I am focussing here on general, “methodological” recommendations. Third, I would recommend Mr. Milei to stay away from bad companions. He should be careful not to be compromised by people whose opinions are obviously inconsistent with the long-term goal he is (presumably) pursuing. This includes the extreme right and the extreme left. The fact that he is described as a “radical libertarian” and “far to the right” fuels a dangerous confusion (see, for example, “Radical Libertarian Javier Miley Elected President of Argentina,” Financial Times, November 20, 2023). “I am very proud of you,” Trump pedantically told Milei from his social network platform. “You will turn your Country around and truly Make Argentina Great Again!” Like classical liberalism, libertarianism is beyond left and right. For what they are worth, I would argue that these recommendations are valid for any politician in the world who takes liberal ideals seriously. (0 COMMENTS)

What’s different about companies that accomplish amazing things? Perhaps surprisingly, says Andrew McAfee of MIT, it has nothing to do with being agile or with better technology. Instead, they’ve developed what he calls “geek” cultures, which emphasize intense cooperation, rapid learning curves, and a lack of hierarchy. Listen as McAfee talks about his book The […] The post Andrew McAfee on the Geek Way appeared first on Econlib.

Here are some highlights of my weekly reading and viewing. Fiona Harrigan, “The Good Samaritans Who Saved Syrian Refugees,” Reason, December 2023. Excerpt: There is a story about crisis relief that a lot of people believe instinctively, one that’s built into our institutions: Governments and major international organizations, armed with resources and authority, are best equipped to quickly help people harmed by war, hunger, and violence. Dana Sachs offers a different narrative in All Else Failed: The Unlikely Volunteers at the Heart of the Migrant Aid Crisis. A million migrants crossed the Mediterranean Sea to reach Europe in the year 2015 alone. As the refugees reached shore in Greece, “traditional relief networks proved themselves incapable of delivering a productive response,” she writes. Major humanitarian groups such as the International Rescue Committee and the United Nations High Commissioner for Refugees (UNHCR) “offered only limited support on the ground.” The European Union shelled out “millions of euros in aid but failed to disburse the funds effectively.” Harrigan does express her disappointment that Sachs won’t reach the conclusion that Harrigan and I share: There will be humanitarian crises to come, making it all the more important to lay blame and praise at the appropriate feet. Sachs writes moving passages about the boundlessness of human generosity, and she constantly highlights how volunteers with local knowledge kept the humanitarian aid machine moving in Greece. Her account suggests a clear conclusion: that the volunteer effort was better, not out of necessity, but because it is better suited for the task. But she never quite says that aloud. Fiona Harrigan, “Trump and DeSantis Won’t Stop at Keeping Out Illegal Immigrants,” Reason, November 17, 2023. Excerpt: This isn’t something that you’ll hear former President Donald Trump and Florida Gov. Ron DeSantis say on the campaign trail. “We talk a lot about illegal immigration,” saidDeSantis at an event last week. “But no one really talks about the legal immigration system and there’s some Republicans that say, ‘As long as it’s legal, it doesn’t matter.’ I don’t subscribe to that.” Nor are Trump’s second-term crackdown ambitions limited solely to undocumented immigrants, The New York Times reported on Saturday. Instead of targeting legal status, many of Trump’s policies would target ideologies he dislikes. “The visas of foreign students who participated in anti-Israel or pro-Palestinian protests would be canceled,” per the Times. “U.S. consular officials abroad will be directed to expand ideological screening of visa applicants to block people the Trump administration considers to have undesirable attitudes.” Fiona Harrigan, with a careful attention to facts, has become one of my favorite writers on immigration. “Marian Tupy: I Saw Communism with My Own Eyes,” PragerU, November 14, 2023. I’ve been a fan of Tupy’s work for some time. He wrote the piece “European Union” for the second edition of my Concise Encyclopedia of Economics. I knew Marian was an immigrant but I didn’t know from where. He lays out the daily horror of living under Communism. He also says something at the 4:14 point that I wish he had expanded on. It was that under Communism, “You had to become a moral monster.” I believe him, but I will would have liked to see more. Fiona Harrigan, “Kansas Thinks You Need 1,000 Hours of Training To Remove Hair,” Reason, November 17, 2023. Excerpt: For the past few years, Green has received sugaring services—a noninvasive, nonhazardous hair removal procedure that involves applying a sugar, water, and lemon juice paste to a client’s skin. A sugaring business, she thought, could be “something that I could do part time” or on “a super flexible schedule that would allow me to stay home with my son and also provide some additional income for our family,” Green tells Reason. But Green quickly learned that it’s illegal to remove a single hair from a client as a sugarer without a state-issued occupational license. I didn’t notice until I went to post this that, yes, the author is Fiona Harrigan. She won the trifecta. (0 COMMENTS)

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)