Adam Smith, portrayed in video production, An Animal that Trades. In the original version of a now classic thought experiment, five people are about to be killed by a runaway trolley. Would you divert the trolley knowing that your choice will kill a single innocent bystander? Listen as Michael Munger of Duke University argues that Adam Smith gave […] The post Michael Munger on How Adam Smith Solved the Trolley Problem appeared first on Econlib.

Lydia Dugdale was comfortable talking about death well before she became a medical doctor. Then her experiences in hospitals made her realize that most people weren’t. She long wondered how conversations about dying could be started earlier in such settings. When she came across an ancient manual for death- the Ars moriendi– she was inspired to write her book, The Lost Art of Dying, based on this genre of literature that existed for more than 500 years- and then disappeared. In this episode, EconTalk host Russ Roberts welcomes Dugdale to talk about it. The two talk about how attitudes toward death have changed over time- from the Civil War to picnics in cemeteries- as well as across religious traditions. How we die, and where we die, and with whom are all vital parts of the conversation. There’s a lot to think about in listening to this conversation- some of it uncomfortable. As always, we’d like to hear what you have to say. Please share your thoughts in the comments below, or use our prompts to start your own conversation offline.     1- Dugdale asks how we might make our health care system more conducive to facilitating conversations about death, as well as why they seem so resistant? How would you respond to this challenge?   2- As Dugdale reminds us, there are legal and technical considerations related to dying. She relates the story of an elderly patient who was “brought back to life” three times. Why does this story trouble her? Should patient have been resuscitated? How would you make this decision if you were this man’s family? His physicians? Or him?   3- A central thread in the Ars moriendi and all of these manuscripts is that if you want to die well, you have to live well. What do you understand this to mean? How has this episode changed the way you think about death?   4- Roberts says that when people die today, we expect doctors to be more involved than clergy or family. What should be the role of community in death, and what should constitute this community? What does it mean to die alone versus to die lonely? What does Dugdale mean when she says, “…we need to practice being a burden on others and we need to practice receiving the burden that others impose on us,” and to what extent do you agree with her?   5 Roberts and Dugdale discuss the role of ritual related to death and the power of connection to the past. Dugdale reminds us the root of the work “ritual” is “rite,” as in a rite of passage, a transitional moment, not a practice. How can ritual help us to address our existential angst, or death anxiety. Must ritual always be an appeal to the Divine? How might ritual assist us to think about our own impending deaths in the ways that Roberts and Dugdale suggest?   (0 COMMENTS)

Some highlights from reading blog posts, articles, and tweets this week. Interesting Vincent Geloso thread on tax cheating according to income groups. Bottom line: As a percent of income lower-income people cheat more. I’ve always suspected this. If someone makes $30k a year and makes another $10k off the books, that’s easier to do than someone making $200k a year and making another $67k off the books. In the latter case, we get 1099s. He gives some indirect evidence but his reasoning is similar to mine. Happy Yeltsin Supermarket Day. A powerful story by Scott Lincicome about how Yeltsin dropped his view that Communism creates plenty. I remember hearing in a speech by the late Barry Asmus about 30 years ago that Harry Truman had said that if every Soviet citizen got a Sears catalogue in his mail on Friday, by Monday Communism would be dead. To use that line myself, of course, I wanted to see if it was accurate. I couldn’t track it down and so I called the Truman library. The person I talked to had no evidence that Truman had said that. But he should have. The problems with relying on regulated electric utilities to build the huge amount of infrastructure required to bring about a less-carbon-intensive electrical future. This is by the Conversable Economist. He consistently delivers quality. As I’ve seen saying for years in talks, the middle class has been disappearing: upward. By Daniel Griswold. An economist who became an important bureaucrat in the Philippines vents, with one graph, shown above, about the destruction caused by price controls. (0 COMMENTS)

The Economist has an excellent piece on the link between nationalism and corruption: Tunisia reflects a global trend: more leaders are using nationalism as a tool to amass power—and to abuse it (see chart 1). Whereas nationalism was once a means to dismantle deplorable colonial empires, it is increasingly becoming a device to remove legitimate constraints on government power. Leaders who chafe at checks and balances need a pretext to scrap them. They cannot admit that they want to muzzle the press and purge the courts because they find it irksome to follow the rules and would prefer to rule with unfettered authority. So they accuse journalists and judges of being traitors, or agents of foreign powers. After declining during the neoliberal era, nationalism has been increasing since 2012: They discuss a University of Gothenburg Study that found a link between rising nationalism and rising levels of corruption: We combined our measure of how nationalist governments are with data on perceptions of public-sector corruption from Transparency International (ti) for the years 2012 to 2021. Using a statistical model, we found that where governments rely on nationalist rhetoric to stay in power, experts think the public sector is much more corrupt (see chart 2). Moreover, comparing countries with themselves over time, going back to 2012, we find that more nationalist rhetoric has been associated with more corruption, and less nationalism with less corruption. Both these findings remain true after controlling for average incomes, and changes in them, and worldwide trends in nationalism and corruption. Nationalism also reduces the quality of governance, and makes a country more violent: A paper co-written by Abhijit Banerjee, a Nobel prize-winning economist, found that when voters pick candidates by ethnicity instead of, say, probity or competence, they end up with less honest, less competent representatives. Andreas Wimmer of Columbia University crunched data from nearly 500 civil wars and found that when political parties are ethnically based, civil war is nearly twice as likely. And instability is perhaps 30 times as likely if the country in question is neither a dictatorship (which can crush unrest before it escalates) nor a full democracy (where disputes are typically resolved peacefully). In short, when a leader invokes blood and soil, expect things to get bloody, or soiled.  There is only one point on which I disagree: Nationalism can be positive or negative. The positive sort—love of one’s country—can be a force for good.  I’d call love of one’s country “patriotism”, not nationalism: 1.   A patriot believes free trade makes their country richer.  A nationalist fears dependence on foreigners. 2.  A patriot believes immigration makes their country stronger.  A nationalist fears immigrants will change the culture. 3.  A patriot supports equal rights for women and gays.  A nationalist views women’s rights and gay rights as a suspicious foreign idea. 4.  A patriot wants to teach children a true version of their country’s history.  A nationalist wants schools to conceal their country’s crimes. 5.  A patriot views all citizens as being of equal worth.  A nationalist sees minority groups as being less than equal citizens. 6.  A patriot wishes to work peacefully with other nations.  A nationalist is suspicious of international agreements to promote peace and trade.  In the future, I believe 2012 will come to be seen as the year when the world started a long period of political decline—much like 1913 in the previous century.  A period of rising statism in economics and rising nationalism in politics.  I fear that we are still in the early stages of this new era. (1 COMMENTS)

If governments really believed that anthropogenic CO2 emissions will seriously harm their citizens or subjects, and if they were really pursuing the general welfare, isn’t it prima facie obvious that reducing these emissions would be their first priority, as opposed to competing priorities based on debunked, prescientific economic theories? Looking at what is happening in practice provides a good introduction to how governments actually work and what they pursue. Western governments are “protecting” their subjects from less costly imports of solar panels and other “green” products, in order to reduce competition and keep prices higher for domestic producers. Joe Biden’s “smart” investments favor inputs “Made in America” for green projects. He has maintained most of Trump’s solar panel tariffs.  With a view to increasing tariffs on EVs made in China, the European Union government just announced an “anti-subsidy investigation” into the extent to which they are subsidized by the Chinese taxpayers. The US government also impose tariffs on Chinese EV. (See “China Attacks EU’s ‘Naked Protectionist Act’ on Electric Cars,” Financial Times, September 14, 2023; “Chinese Carmakers Are Under Scrutiny in Europe,” The Economist, September 14, 2023.) Chinese, American, and European EVs are all subsidized by their manufacturers’ governments. In passing, it is a strange argument that subsidies from one’s own government, that is, from one’s fellow taxpayers, are deemed good, while subsidies from foreign taxpayers are bad. This idea is based on the same 17th-century mercantilist and dirigiste theories. But why subsidize with one hand and push up prices through custom tariffs with the other? Either the US and EU governments don’t believe in the large risks officially attributed to anthropogenic CO2 emissions, or else they are not benevolently pursuing the general welfare, or both. Much economic theory and historical evidence suggest that governments as we know them (“the state”) do not pursue anything like the “general welfare,” if this expression has any meaning. Instead, they pursue power and, for that purpose, favor the cronies and clientele on which they depend for support and propaganda, such as domestic manufacturing lobbies, to the detriment of the general public. Public-choice analysis (including Anthony de Jasay’s theory) tries to explain the state as it is, as opposed to how it should be in the mind of such or such philosopher-king, social engineer, or armchair ideologue. It is true that the state’s corporate cronies pay a price for their subsidies and protection against foreign competitors. They are subject to government mandates to increase their production of EVs. For example, the Wall Street Journal reports that “Ford lost nearly $60,000 on each EV it sold in 2023’s first quarter (“An Auto Strike Made in Washington,” September 15, 2023). This churning—subsidizing domestic producers, protecting them against foreign competitors, bossing them around and undermining their profitability—is paid by American taxpayers, consumers, and shareholders. That the earth is reportedly burning does not seem to be a real priority for governments; they are just in the business of power as usual. If half of that is true, it would be a tragic illusion to let governments grab more power to fight another trumpeted emergency that is quite certainly less threatening than the preservation of a free society. (0 COMMENTS)

1062733970 In my last TaxBytes column, I laid out the strange economics of so-called “tax expenditures.” I gave as an example the tax deduction for mortgage interest. That provision leads some people to own rather than rent and others to buy a more expensive house than they would have. Those are bad effects. But, I noted, it would be more straightforward for economists and politicians to say that those provisions have bad effects rather than using the convoluted language of tax expenditures. It gets worse. Sometimes economists and politicians use the term tax expenditures to refer to tax provisions that have good effects on economic growth. They do that because they are stuck in the Haig-Simons view of income. According to this view, named after early 20th century tax scholars Robert M. Haig and Henry C. Simons, it doesn’t matter whether income comes from working or from interest and capital gains—all should be taxed equally. This view has sometimes been summarized as “A buck is a buck.” This is from David R. Henderson, “Reducing ‘Tax Expenditures’ Can Hurt Economic Growth,” TaxBytes, Institute for Policy Innovation, September 13, 2023. Read the whole thing.   (0 COMMENTS)

Conventional wisdom is that more information is always better, but oncologist Vinay Prasad rejects that way of thinking and argues that cancer screenings can do more harm than good. We love bucking conventional wisdom here on EconTalk, and we hope you find this conversation illuminating. Deciding what cancer screenings to receive or not is something most people don’t even realize is a decision, but Prasad wants you to question blind acceptance of the status quo to make better choices for your health. I was surprised to learn that oncologists generally have no way to tell if a cancer in a particular patient is likely to grow quickly (and be a threat) or stagnate and pose no threat. Let us know what you thought was interesting about this conversation. Join us in the comments, or use the prompts below to start your own conversation offline.     1 – Prasad describes cancers as farm animals to illustrate the potential effectiveness of treatments. Did anything about that metaphor for cancer surprise you or seem different from the conventional narrative about cancer?   2 – Some people dismiss concerns about over-diagnosis of cancers with, “Just don’t treat it then. It is better to know if there is a cancer.” What is the problem with that way of thinking from Prasad’s perspective?   3 – Patients generally feel good about having their cancer removed and say that the screening saved their lives even though many incidents of cancer would have never grown or spread. Do you think this is an insurmountable problem for Prasad’s attempt to increase skepticism of cancer screening? What evidence do you think might be persuasive to patients considering screening?   4 – Why is it important to know the “all cause” mortality rate after cancer treatment rather than just the mortality rate from that cancer? How does the example of breast cancer treatment illustrate this difference?   5 – Prasad emphasizes that one of the problems with screenings is the lack of informed consent – patients are encouraged to receive the screening as a matter of routine with no discussion of the potential risks. Why do doctors present the screenings this way? What changes do you think would reduce this problem? (0 COMMENTS)

In just the past few months, NFL quarterbacks have been signed to contracts that pay them a jarring amount of money. Justin Herbert of the Los Angeles Chargers just signed a contract for 5 years that is worth a total of $262.5 million ($52.5 million per year); former NFL MVP Lamar Jackson signed with the Ravens for 5 years, $260 million; and Jalen Hurts of the Philadelphia Eagles reached a contract agreement for 5 years and $255 million. Go back a few years and you see even more examples, including Aaron Rodgers (4 years, $200 million) and Patrick Mahomes (10 years, $450 million).  At face value, this seems like an incredibly large salary for tossing a pigskin. These figures are especially shocking when you consider that the current running back market is such that the top players at the position are struggling to sign for even $12 million a year. What explains this insane amount of money being spent on great quarterbacks? Economics can. I was listening to Nick Wright on his podcast “What’s Wright? With Nick Wright”, my favorite sports podcast. Despite not having an economic background (as he points out), he understands key economic concepts like “thinking on the margin” and “opportunity cost” that we preach to our undergraduates.  Employers, acting as rational economic agents, pay salaries based on a variety of factors, but most notably: the employee’s opportunity cost, the player’s marginal product of labor, and the employers’ opportunity cost. The employee’s opportunity cost is the opportunity cost of their time, so what else they could be doing with their time other than being an NFL quarterback for their specific team. (There’s also the alternative of not being an NFL quarterback, but the salary earned from playing in the NFL is almost always higher than any other alternative). The marginal product of labor for an NFL quarterback is how much extra value (in terms of points, number of wins, likelihood of success, etc.) this player brings to the team. This is why it doesn’t really pay to have two highly paid quarterbacks on your team, since the second one does not add much marginal value to the team, even though they are highly skilled in their own right. For NFL teams, their opportunity cost of signing their quarterback (player X) is who else they could sign to play the position if not for player X. This is where marginal analysis can really come into play. Is the cost of signing Justin Herbert really $52.5 million a year? Well, in pure monetary terms, yes. However, compared to an average quarterback, the Chargers are only paying him an extra $20 million. Let me explain.  The opportunity cost of paying a top-tier quarterback (assuming you want at least some baseline level of performance) is the salary you pay the top-tier quarterback minus the cost of a competent quarterback.  So, what is the going rate for basic competency in the NFL? Derek Carr recently signed with the New Orleans Saints for 4 years/$150 million. (In reality with not-fully guaranteed contracts that are often used in the NFL, it’s really guaranteed to be 3-years for $100 million dollars, or $33.33 million per year). Derek Carr is the epitome of a baseline competent quarterback. According to Mike Sando of the Athletic, who yearly polls 50 NFL coaches and front office personnel, Carr ranked 14th in the NFL.   Daniel Jones also recently signed a large contract with the New York Giants for 4 years and $160 million. (Taking the whole contract in mind, it’s really 3-years for $112.5 million, or $37.5 million per year). In the same aforementioned poll, Jones ranked 20th among starting NFL quarterbacks, putting him right around average to just below average.  So, it costs anywhere between $33.34-37.5 million per year just to have a basic, competent quarterback in the NFL. The real cost that NFL teams like the Chargers, Ravens, and Eagles face with their superstars is not the $50ish million, but instead the $50 million minus $33.33 million (or, $16.67 million). At the margin, that’s not too bad! You are facing a cost roughly the same for a superstar quarterback (compared to the counterfactual competent one) about as much as you would pay for a high-quality wide receiver or offensive linemen.  In short, don’t be fooled by the headlines. Top-level superstar quarterbacks are not being paid that much money relative to other quarterbacks. If anything, they are paid too little (due to the artificial constraints imposed by the NFL by way of a salary cap); but, alas, another point to be made a different day.   Justin Callais is an Assistant Professor of Economics at the University of Louisiana at Lafayette and a Research Fellow with the Archbridge Institute.  (0 COMMENTS)

Is antitrust enforcement good per se, no matter what its effect on consumers? Reading an August 26 New York Times editorial, one could easily conclude that the Times editors think so. Indeed, the content of the editorial is in tension with the editorial’s title. The title is “Americans Pay a Price for Corporate Consolidation.” You might think on that basis that the editors would point out how consolidation of corporations would create market power, causing consumers to pay higher prices. But you would be wrong. The editors explicitly reject the idea of judging mergers by their effects on consumers. There are powerful forces arrayed on their side, specifically the head of the Federal Trade Commission, Lina Kahn, and the head of the Department of Justice’s Antitrust Division, Jonathan Kanter. If Kahn, Kanter, and the Times editors get their way on enforcement of current law, the odds are high that we consumers will be worse off. This is the opening paragraph of David R. Henderson, “To Antitrust Enforcers, Consumers Are Irrelevant,” Defining Ideas, September 14, 2023. Another excerpt: One of the striking things about the Times editorial is that the editors admit that the more stringent enforcement of antitrust will not help consumers. For example, the editors discuss the DOJ’s and the FTC’s proposed tighter rules for allowing mergers. They start by suggesting that the tighter rules will increase competition, which “keeps pressure on prices.” But then in discussing the looser restrictions that came about early in the Reagan administration and under subsequent administrations, they write: It wasn’t enough to show a merger would reduce competition; the government generally sought to block deals only when it could show a merger would result in higher prices for consumers or that it would clearly cause some other quantifiable harm—a standard that was rarely met. Did you catch that? The standard was rarely met. In other words, when companies proposed mergers and the federal government’s antitrust enforcers approved, those measures were not expected to hurt consumers. So much for the Times’s argument, then, that tighter rules on mergers will “keep pressure on prices.” That line makes sense only if the pressure is upward, that is, to keep prices high. Finally, how to get more competition: allow it: The Times points out that we are now left with “four major airlines, three major cellphone companies, and two dominant makers of coffins.” Of the three industries mentioned, the one I know best is airlines. The Timespoints out that US airfares are significantly higher than European fares. There’s a reason for that, a reason that immediately suggests a solution. The reason is that the EU allows many more airlines. Cut-rate Ryanair, for example, based in Ireland, flies between London and Sofia, Bulgaria, and charges a fare under $100. The US government should follow suit: allow foreign airlines to compete on domestic routes. If the federal government did so, we could conceivably have six or seven major airlines competing on heavily traveled routes such as San Francisco to New York or Los Angeles to Chicago. Moreover, although I don’t know much about the coffin industry and hope not to for at least another twenty years, state governments in the past have helped cement the dominant position of the leading coffin producers. Indeed, one of the many victories of the pro-market public interest law firm called the Institute for Justice was in getting rid of the restrictions that prevented a bunch of monks in Louisiana from selling lower-priced coffins. Are the Times editors even aware of that victory for competition? Read the whole thing.   (0 COMMENTS)

Over the past 6 years, I’ve read a number of news articles pointing to California legislation aimed at making it easier to build housing. But have these bills actually been effective?   California recently enacted two new housing bills, one of which makes it easier to build on church owned land and the other reduces barriers to construction in certain coastal areas.  According to Reason magazine, the bill relating to church owned land comes with a number of restrictions: Any new housing made legal by the bill would have to be offered at below-market rates to lower- and moderate-income residents. Developers would generally have to pay prevailing wages to construction workers. The new housing would also have to come with at least one parking space per unit unless other state or local laws dictated a lesser minimum standard. S.B. 4 projects also couldn’t be built in industrial zones or near active oil wells. (There are a lot of those in Los Angeles.) The list goes on.  Nonetheless, Reason suggests that these initiatives will have a big impact: The state will build more housing with S.B. 4 and S.B. 423 in effect. At a minimum, they’ll provide evidence that removing regulatory barriers can unleash a lot of badly needed housing. I hope they are correct, but I have my doubts.  I worry that if you go from a situation why there are 12 reasons why it’s not feasible to build housing in California, to a situation where there are only 7 reasons why housing construction is not feasible, you still end up not building housing. Did previous bills have an impact on housing construction in California?  If so, it’s hard to see any impact in the data for housing starts: At first glance, it seems as though the YIMBY forces are having a surprisingly easy time rolling over their opposition, as one reform after another is making it through the California legislature, beginning with SB 35 back in 2017.  But I wonder if the surprisingly weak NIMBY opposition reflects the fact that they understand these reforms will have little effect—that there will continue to be enough regulatory barriers to prevent any meaningful surge in California homebuilding.  I hope I’m wrong about this and certainly believe the reforms are better than nothing.  But at the moment I don’t see much evidence that anything meaningful has changed in California.  Home building here is currently so weak that even a 10% or 20% increase would not significantly move the needle—the state needs a dramatic rise in housing construction. Meanwhile, in other areas the California legislature seems determined to ruin the business climate.  (This and this both occurred in just the past week.) PS.  Chris Elmendorf has a good twitter thread discussing another California housing reform bill.    (0 COMMENTS)