Walter Cronkite Fox News commentary host Tucker Carlson and CNN news anchor Don Lemon—both highly paid network stars for their audience ratings—were summarily fired during the same week in April 2023 for undisclosed reasons. Regardless of their professional and/or personal indiscretions (if any), their departures are notable because the journalists fell from grace in networks with polar-opposite politics, each with stridently contrasting ideological takes on the same news stories, as well as barbs about the other’s network. The expanding ideological and partisan divide in television journalism has been largely explained by the growing political polarization of voters, which is, no doubt, an operative force I cover. But here, I explain the growing political divide among newscasts by drawing on the insights of the late public choice economist Gordon Tullock who suggested two additional forces at work: (1) growth in the range of substantive policy issues considered to be in the “public square” and (2) the expansion in the array of news outlets. These forces have pressed newscasts to diverge on their ideological and partisan slants on news stories. The Homogenization of News in the 1960s In the 1960s, network newscasts were only 15 minutes long and accessible by only 9 percent of homes. They covered similar stories, with all three broadcast networks—NBC, CBS, and ABC—having no overt political or ideological differences in their on-air treatments of news. In this earlier epoch, journalists—epitomized by CBS anchor Walter Cronkite—seemed genuinely committed to “reporting the facts.” If there was a partisan divide between the NBC anchors Chet Huntley and David Brinkley and CBS anchor Walter Cronkite, it was never so great that they traded on-air hostilities. Why have the political and ideological divides among news programs emerged? Explanations abound. One popular explanation, considered later, emphasizes the expanding political and partisan divisions tied to the growing diversity of racial, ethnic, and political groups in the electorate. Here, I seek to explain the growing divide by stressing economic forces, the dramatic expansions in the number of issues taken up in policy debates, and the growth in the array of news outlets. Growth in Policy Issues In the 1960s, strong political divisions among Americans were hardly nonexistent. The Vietnam War, civil rights protests, and President Lyndon Johnson’s Great Society policies were divisive major issues, and they dominated newscasts for the entire decade. In the following decades, these issues never faded, given the intervening spread of U.S. military operations around the world, racial tensions, and the growth in federal spending, among other events. Between 1980 and April 2023, federal outlays grew from a fifth to a fourth of gross domestic product, despite GDP rising almost ten-fold during the period. Without doubt, growth in federal spending has translated into growth in contentious policy issues (for example, student-loan forgiveness) debated in Congress and media circles. But few people in the 1960s (and before) ever thought about gay marriage, transgender bathroom rights, defunding the police, and late-term abortion—to name several contemporary hot-button policy issues. The Growth in Media Outlets Since the 1960s, the number of media outlets has grown substantially. In the 1960s, there were only two major television networks that divided most of the news audience, NBC and CBS, with ABC coming in a distant third. And these two (or three) networks broadcast their signals for news and entertainment programs, which meant competition for viewers’ attention was constrained and kept limited by FCC’s entry (and content) restrictions and by cable companies’ limited cable lines. (The percentage of households with cable didn’t reach 60 percent until 1989.) Today, after the gradual breakdown of FCC entry barriers to cable television, Americans have access to hundreds of cable channels (as well as millions of news-related podcasts accessible worldwide via the internet). The contraction of cable subscriptions over the last decade or so with the advent of streaming services has likely intensified the competition among newscasts for viewers, likely pressing them to become ever-more divided.1 Median Voter Model: One Issue, Two Candidates In 1948, Scottish economist Duncan Black laid the foundation for public economics by postulating that in a majoritarian democracy with only two candidates seeking election on a single issue, the candidate whose policy position best matches the policy preferences of the “median voter” will tend to win the election. This point is illustrated with the aid of Figure 1, which covers a normal distribution of voters on a left-right/liberal-conservative political spectrum. Figure 1. Normal Distribution, Voters, Left-Right/Liberal-Conservative If the two candidates—tag them D and R—stake out positions in the right wing of the distribution, say, at D’ and R’, they each will face pressure from the other candidate to move toward the center. At D’ and R’, R will receive all the votes to the right of R’ and half the votes between D’ and R’. D will also receive half of the votes between them D’ and R’, plus all the votes to the left of D’. D would then obviously win by a super majority. R can change that outcome by moving just to the left of D’, a then-winning position, but only if D stays put, which is unlikely. D can also move to the left of R’s new position. The two candidates can be expected to hopscotch one another until they reach the middle, taking centrist positions such as D and R. Each can be expected to squeeze out as many votes as possible by moving even closer together (but only if they can do so and still give voters a reason to vote). If the candidates take identical positions, voters will have no reason to incur the costs of voting; the same partisan ideology (or the same police expenditures) would be adopted, no matter who wins. The analysis can be applied with ease to the varying preferences of television viewers for, say, news reports on the contested size of the police budget. If there are two television newscasts with reports on police funding, competitive pressures for viewers will drive the newscasts toward representing the police-budget preferences of viewers in the middle of their distribution, at, for example, D and R. If the stations provide widely divergent representations, with D in the left wing of the distribution and R in the right wing, each can figure that a move toward the center can increase its share of viewers (and advertising revenue), with shareholders reaping benefits from rising share prices. The Partisan Parting of Newscasts: Two Issues and Three News Outlets Gordon Tullock had a knack for identifying issues in need of new twists on old arguments that changed settled conclusions in economics (consider his notable development of the now well-established theory of “rent-seeking”2). By the late-1960s, the median voter model was a staple of public choice economics (used most prominently in explaining why presidential candidates tended to adopt centrist policy positions). Tullock effectively asked, “What if there are three candidates—X, Y, and Z—who seek election concerned with two issues and who can win the election with a plurality?” Tullock addressed the question with the aid of Figure 2, which has police expenditures on the horizontal axis and fire protection on the vertical axis. Voters are, again, assumed to be numerous and spread evenly within the space of the graph. Given the analytics of the previous median-voter model (one issue and two candidates), an initial presumption might be that the three candidates would be pressed to adopt similar positions on the two expenditure levels, in the center of the distribution, for example, at X, Y, and Z. But X has a clear incentive to move away from position X. X can lose votes among the “centrists,” but can pick up votes by more closely representing the interests of Y and Z voters. Figure 2. Police Expenditures and Fire Protection Candidates Y and Z have similar incentives to move away from the center, both to gain votes and to fend off the other two candidates’ movements to garner greater vote counts. By moving from their initial positions to Y’ and Z’, they can retake votes that X peeled off by moving from X to X’. After moving away from the center and apart, each has a strong disincentive to move back toward the center: they will lose votes on balance. Of course, it follows that as the voters spread out in the two-dimensional graph, the greater the policy distances among the candidates. No one should be surprised if an increase in the number of candidates gives rise to a greater spread in the candidates’ positions. With a growing count of candidates, new entrants might find that taking more “extreme” (less-centrist) positions, say, closer to one of the four corners in the graph, improves their chances of being elected. The corners may have few votes, but entering candidates can reason that those corners still improve their election chances over what they would be if they moved closer to other candidates’ positions and divided the votes between them. More Issues and More Media Competitors Our foregoing discussion relating to politics has an obvious application to the evolving journalism market over the past five or more decades. With the dramatic growth in the number of issues of interest to news consumers and in the number of media competitors, news outlets should be expected to move apart on their coverage of policy issues, just as growth in candidates and policy issues should be expected to move the candidates apart in their efforts to win elections. News competitors can be expected to part ways in their ideological and partisan coverage to “news” stories as Fox and CNN have clearly done. Fox now offers a daily menu of conservative takes on policy issues such as federal spending, border crossings, charter schools, critical race theory, climate change—and much more. CNN offers sharply contrasting liberal takes on many of these issues, with no less stridency. The major force moving newscasts further apart? Their competitive drive for viewers and ad revenues. Key Changes in Media Markets “The growing divisions among national news outlets over the last several decades could have been predicted, Tullock would surely have insisted, given the growth in the array of contested issues.” The growing divisions among national news outlets over the last several decades could have been predicted, Tullock would surely have insisted, given the growth in the array of contested issues. In addition, cable and internet technologies have dramatically increased opportunities for alternative newscasts pressed to search out (profitable) segments of consumers. During the early history of television news, diversity was throttled by government regulations (and limited competitors). In 1949, the Federal Communication Commission required news outlets to abide by its fairness doctrine, which meant that they had to provide a “balance” of views in their treatments of controversial issues to keep their FCC operating licenses. However, the FCC dropped its restriction in 1987. The relaxation of the fairness doctrine was all the media deregulation News Corp. head Rupert Murdock needed to extend his conservative-leaning media empire with the launch of Fox News in 1996, and with a decidedly conservative (and Republican) news slant, an obviously winning strategy. By 2019, Fox News had become the top-rated cable news network, attributable in part to other newscasts’ centrist (or even left of centrist) slants to news stories. CNN’s initial 24/7-straight-news coverage (launched by Ted Turner in 1976) was challenged in 1996 by the entry of MSNBC, with the goal of providing an alternative 24/7 cable news source to CNN, but with contrasting liberal slants to Fox’s conservative news takes. To fend off the erosion of its viewership and ad revenues from Fox and MSNBC, CNN was pressed to move left, seeking to increase its appeal to Democrats with liberal leanings. The Polarization of America The growing divisions in news journalism have been compounded by the growing partisan divides among Americans, self-evident in polls, most notably those taken by the Pew Research Center. Consider the changing distribution of polled Democrats and Republicans from six Pew polls undertaken between 1994 and 2017 on Americans’ political leanings, with their responses distributed along a spectrum that runs from “consistently liberal” to “consistently conservative.” Pew found that between 1994 and 1999, the two parties’ bell-shaped distributions shifted somewhat left but notably, with the “median voters” of the two parties moving closer to one another. However, the Democrat/Republican distributions started moving apart sometime after Pew’s 2004 poll. The two distributions moved even further apart in Pew’s 2011 and 2017 polls.3 The growing political polarization of Americans is also reflected in their representatives’ votes in the U.S. Senate and House, as reflected in Pew’s assessments of congressional members’ “liberal” and “conservative” votes back to the early 1970s (92nd Congress) and forward to 2022 (117th Congress). Pew’s vote assessments show that in the Senate and House, both Democrat and Republican members’ votes diverged from centrist positions over the last half century, but Republicans have steadily become more conservative than Democrats have become more liberal. Pew analysts have concluded that “on average Democrats and Republicans are farther apart ideologically today than at any time in the past 50 years.”4 Concluding Comments The growing divisions among television newscasts can be attributed partially to the growth in the array of policy issues subject to debate, as noted. The growth of issues provides increased opportunities for ideological and partisan divisions among television news audiences and their newscasters. The competition among outlets for viewers’ limited attention spans has encouraged media outlets to cultivate ideological and partisan identities, and brand loyalties that can expand their audiences and defend them against erosion by established competitors and new entrants, a point illuminated above with the aid of Tullock’s two-policies/three-candidates graph. These divisions among Americans and their news sources are, understandably, interactive and self-perpetuating (at least up to a point). With many news consumers moving to newscasts that appeal to (and reinforce) their favored policy positions, and then blocking out competing newscasts with different, competing slants (to hold at bay the discomfort of cognitive dissonance), many viewers’ news biases have likely been reinforced and hardened, if not made more extreme. For more on these topics, see Public Choice, by William F. Shughart II. Concise Encyclopedia of Economics. Martin Gurri on the Revolt of the Public. EconTalk. Russ Roberts on the Information Revolution, Politics, Yeats, and Yelling. EconTalk. Of course, any strengthening of viewers’ ideological and partisan preferences will only encourage news sources to make their coverage more strident, peppered with derision for opposing views. In the process, viewers’ trust in the integrity of opposing newscasts can be progressively undermined. And, indeed, Pew has found a gradual dissipation of viewer trust in national news programs between 2016 and 2022. With open entry in news markets, newscasts can be expected to emerge that base their appeals on being “fair and balanced,” but without the partisan and ideological barbs. Footnotes [1] Bobby Chernev, “27 Curious Cable TV: Subscribers Statistics to Know in 2023.” TechJury, April 20, 2023. [2] Gordon Tullock, 1967. “The Welfare Costs of Tariffs, Monopolies and Theft.” Western Economic Journal. 5: 224-232. [3] See Pew Research Center, 2017. “The Shift in the American Public’s Political Values,” posted February 20. [4] Drew Desilver, 2022. “The Polarization in Today’s Congress Has Roots that Go Back Decades,” Washington, D.C.: Pew Research Center, March 10. *Richard B. McKenzie is a professor emeritus of economics at the University of California, Irvine and author of The Selfish Brain: A Layperson’s Guide to a New Way of Economic Thinking. For more articles by Richard B. McKenzie, see the Archive. (0 COMMENTS)

A Liberty Classics Book Review of Theory and History: An Interpretation of Social and Economic Evolution, by Ludwig von Mises. 1 How is social cooperation possible without command? The answer to this question requires that we have a conceptual framework (i.e. theory) to interpret social and economic evolution (i.e. history), hence the title of Ludwig von Mises’s last book, Theory and History, originally published by Yale University Press in 1957. By the time Mises had written this book, he had long been known as a world-renowned economic theorist. However, it would be incorrect to conclude that Mises disregarded the importance of the details of history in order to understand the concrete details of applied theory and economic policy. This is evidenced by Selected Writings of Ludwig von Mises2 (see Ebeling 2000, 2002, 2012), which contains the writings of Mises early in his career as an applied economic theorist and policy analyst. It is for this reason that I stress the subtitle of this book, An Interpretation of Social and Economic Evolution, to emphasize the underlying theme of Mises’s argument. According to Mises, the “history of mankind is the record of a progressive intensification of the division of labor” and among the greatest scientific achievements “of eighteenth-century social philosophy is the disclosure of the role which the principle of higher productivity resulting from division of labor has played in history” (1957 [2005], p. 156). The unifying substantive proposition of social order that social philosophers of the 18th century and political economists of the 19th century had discovered and developed was the science of invisible hand theorizing, in which private property and freedom of contract under the rule law were the governing institutional prerequisites for social cooperation without command. Understood this way, Mises’s task is twofold. First, before elaborating on the relationship between theory and history, Mises goes to great lengths and provides careful detail to distinguish economic theory from its scientific neighbors both in the natural sciences as well as other social scientists. Only then can Mises address other “sciences” that not only reject the universal validity of the science of human action across time and place, but also attempt to understand social and economic change without theory. The nature of any science, whether natural or social, according to Mises, is to explain a sequence of historical events as being determined by a systematic chain of cause and effect. “History is entirely guided by the category of cause and effect” (1957 [2005] p. 62). Although the social sciences (or the “sciences of human action” as Mises refers to them) and the natural sciences have this common point of analytic departure, how such systematic generalizations of cause of effect are explained differs because of a methodological dualism between the social sciences and the natural sciences. According to Mises, the “genuine history of mankind is the history of ideas. It is ideas that distinguish man from all other beings. Ideas engender social institutions, political changes, technological methods of production, and all that is called economic conditions. And in searching for their origin we inevitably come to a point at which all that can be asserted is that a man had an idea” (1957 [2005], p. 126). Because of the fact that ideas in human minds are the catalyst for social and economic events, but “we do not know how external events—physical, chemical, and physiological—affect human thoughts, ideas, and judgments of value” means that an unavoidable split between the natural sciences and the sciences of human action. If the effects of human action could be directly reduced to physiological causes, then human history could be reduced to the laws of the natural sciences, one that discovers patterns of human action in terms of passive response to stimuli. But, whereas as under “identical conditions stones always react to the same stimuli in the same way,” human beings “react to the same stimuli in different ways, and the same man at different instants of time may react in ways different from his previous or later conduct” (1957 [2005], p. 3). Such a methodological dualism by no means implies a shortcoming of the sciences of the human action, as Mises argues (1957 [2005], p. 6). Thus, the sciences of human action share the same ontological status as the natural sciences in terms of discovering systematic generalizations of cause and effect that are valid across time and place, but how we come to know how such processes of cause and effect unfold across time and place differs in the sciences of human action. “Being himself a valuing and acting ego,” human beings know by introspection what it means to assign value to a set of means and act according to the purposive application of a set of means to achieve a particular end. “Thus, we are aware that he is not neutral with regard to the various states of his environment, that he prefers certain states to others, and that he consciously tries, provided the conditions for such interference on his part are given, to substitute a state that he likes better for one he likes less” (1957 [2005], p. 188). It is in this sense, Mises argues, that what historians refer to as “progress” or “civilization” results from human beings striving “to substitute more satisfactory conditions for less satisfactory ones. Ideas determine what are to be considered more and less satisfactory conditions and what means are to be resorted to to alter them. Thus ideas are the main theme of the study of history” (emphasis added; 1957 [2005], 150). The adoption of methodological dualism has important implications regarding how outcomes are “determined” according to theory, the relationship between cause and effect, and therefore the how theory and history intersect with one another, in both the natural sciences and the sciences of human action. Mises provides a careful and subtle understanding of these implications not by rejecting the role of “determinism” in the social sciences, but by drawing a distinction between a “fatalistic determinism” and an “active determinism” (1957 [2005], p. 117). While indeed Mises refutes indeterminate “theories” to explain social and economic phenomena, such as those held by the German Historical School, which rejected the universal validity of economic laws across time and place (see Chapter 10), “the old antagonism of determinism and indeterminism is inappropriate” and “does not correctly describe the substance of the controversy” (1957 [2005], p. 61). According to Mises, fatalistic determinism refers to a historical process driven by individuals passively responding to external stimuli, whereby social outcomes in history were driven directly by external forces independent of human volition. One example of such fatalistic determinism is the dialectical materialism of Marxism (see Chapter 7), in which “individual” goals are driven by class struggle and “the inexorability of a law of nature” in which “capitalistic production begets its own negation” that inevitably ushes in socialism (emphasis original; Mises 1957 [2005], pp. 95-96). Another example of such fatalistic determinism to which Mises refers is “scientism,” which refers to the inappropriate procedure of applying the methods of the natural sciences to the social sciences. To the extent that the science of human action is about ends being put into effect by the purposive application of means, this implies that the sciences of human action are not only about means, but meaning attached to purposive human action, scientism can generate. But if the purpose of science is primarily driven about predicting human outcomes in terms of behavioral constants, rather than understanding the pursuit of concrete human purposes, then economics is purged of its primary subject matter: meaning. There is no doubt that economic laws, such as the quantity theory of money, can predict that over a period of time an increase in the money supply will result in a proportional increase in the price level. However, such a macroeconomic outcome cannot be understood without first understanding that “money” does not exist as an object without human beings first attaching meaning to a particular object with the expectation that it will be accepted as a commonly accepted medium of exchange, nor that what drives up the price level is that human beings are competing for relatively fewer goods with a relatively greater quantity of money. For Mises, to the extent that such doctrines can be called “theory,” they are best understood as theories of human inaction rather than human action, whereby human beings are passengers driven by external social, technological, or other material forces of history. Thus, if economic theory can predict, it does so by contributing to “the elucidation of future events; it can predict within the limits drawn to praxeological prediction” based on filtering the category of human action by understanding the historical circumstances of time and place within which an individual is acting (Mises 1957 [2005]: 136). “Mises is quite clear that the outcomes of history, though certainly based on human action, are not a product of rational human design“ By active determinism, Mises refers to a historical process of cause and effect in terms of an indirect relationship between purposive human action and social outcomes. Such an indirect relationship means that social outcomes cannot be directedly reduced to the goals pursued by individuals. Nor can such goals themselves be reduced either to internal physiological, chemical, or physical processes in the human body or to passive responses to the context of an individual’s physical or ideological environment. As Mises writes, “ideas have a real existence and are genuine factors in shaping the course of events. The offshoots of human mental efforts, the ideas and the judgments of value that direct the individuals’ actions, cannot be traced back to their causes, and are in this sense ultimate data” (1957 [2005], p. 52). Thus, Mises is quite clear that the outcomes of history, though certainly based on human action, are not a product of rational human design: The conscious intentional actions of individuals, great and small, determine the course of events insofar as it is the result of the interaction of all men. But the historical process is not designed by individuals. It is the composite outcome of the intentional actions of all individuals. No man can plan history. All he can plan and try to put into effect is his own actions which, jointly with the actions of other men, constitute the historical process (emphasis added; Mises 1957 [2005], p. 131).   Both the quote above and the notion of active determinism, which undergirds the sciences of human action (i.e. praxeology)—including its most developed branch (as Mises refers to it), economics—implies that what Mises refers to as praxeology or “theory” must be understood as having two distinct parts: pure theory and applied theory, as illustrated in the Venn diagram in Figure 1. Figure 1. Venn Diagram Pure theory is the necessary core of praxeology, which is based on the category of direct cause and effect: human beings have goals and they deliberately choose the most effective set of means to achieve those goals. Such purposive human action is the origin of social phenomena such as money, prices, law, and other institutions, which originate from human action but are not of human design. This leads us to the second part of praxeology, applied theory, also known as “catallactics,” which is that portion of praxeology that deals specifically with social interaction between individuals. It is the realm of spontaneous-order analysis, from which the unintended emergence of money, prices, and institutions can be traced back to human action, but nevertheless based on human beings choosing productive specialization and exchange as the means by which to achieve their goals. For more on these topics, see Peter Boettke on Mises. EconTalk. Human Action: A Treatise on Economics, by Ludwig von Mises. Econlib. Though pure theory is necessary, its application to understanding history is contingent on various subsidiary assumptions of a particular time and place, such as private property, prices, and profit-and-loss signals, the economist can explain the various manifestations of rationality under alternative institutional contexts. Thus, for Mises, theory and history are inextricably intertwined and supported by what Mises refers to as “thymology,” a historical discipline that complements theoretical explanation by interpreting why human beings have chosen a particular set of ends, and perceived a particular set of means as appropriate for that end for that particular time and circumstance. “The outstanding fact about history is that it is a succession of events that nobody anticipated before they occurred” (Mises 1957 [2005], p. 250), but the social scientist, aided by theory not as reality itself, but as a tool for understanding reality, can render intelligible how social cooperation without command became possible in the past, and understand what are the institutional preconditions for its continuation in the future. References Ebeling, Richard M. (ed.). 2012. Selected Writings of Ludwig von Mises, Vol. 1: Monetary and Economic Policy Problems Before, During, and After the Great War. Indianapolis: Liberty Fund. Ebeling, Richard M. (ed.). 2002. Selected Writings of Ludwig von Mises, Vol. 2: Between the Two World Wars: Monetary Disorder, Interventionism, Socialism, and the Great Depression. Indianapolis: Liberty Fund. Ebeling, Richard M. (ed.). 2000. Selected Writings of Ludwig von Mises, Vol. 3: The Political Economy of International Reform and Reconstruction. Indianapolis: Liberty Fund. Mises, Ludwig von. 1957 [2005]. Theory and History: An Interpretation of Social and Economic Evolution. Footnotes [1] Mises, Ludwig von. Theory and History: An Interpretation of Social and Economic Evolution. Liberty Fund, 1957 [2005]. Also available online at: Theory and History: An Interpretation of Social and Economic Evolution (LF ed.). [2] Selected Writings of Ludwig von Mises. Liberty Fund Books. * Rosolino Candela is a Senior Fellow in the F.A. Hayek Program for Advanced Study in Philosophy, Politics, and Economics, and Program Director of Academic and Student Programs at the Mercatus Center at George Mason University. For more articles by Rosolino Candela, see the Archive. (0 COMMENTS)

… despite spending billions of dollars supporting its infrastructure, and publishing untold thousands of white papers, the establishment Right has registered no clear gains and many clear losses. Much of the nation was conquered on its watch. … In terms of political and moral power, the Left currently rules every consequential sector of society, from the nation’s educational institutions (K-12 and higher education), to large parts of the media, corporate America, Big Tech, and the federal administrative apparatus. ——Arthur Milikh, ed., Up from Conservatism1 “Introduction” (p. viii). Almost twenty scholars contributed to Up from Conservatism: Revitalizing the Right after a Generation of Decay, a volume of essays edited by Arthur Milikh, published in 2023. The authors articulate their paranoia about the progressive left, their frustration with the center-right, and their contempt for libertarians. Milikh argues that while conservatives were busy on the economic front defending free markets, America’s cultural and legal regime was invaded and conquered by the Left. One cannot defend civilization, or do what is necessary to preserve it, when consumption and private frivolity are the goals…. The Right seems to have forgotten that a nation can easily combine, in the short term at least, both prosperity and moral degeneracy which undermines self-rule. (Milikh, p. ix) He sees mainstream conservatism as having made too many concessions to the Left. He rejects a politics of give-and-take, arguing that this has meant too much give and not enough take. The New Right has abandoned the soothing illusion that, despite a few hiccups, things are essentially normal and stable in America, and that we can go on down the present trajectory in collegial give-and-take with the Left. Our crisis demands a bolder and sometimes more confrontational approach…. The leftist revolution in America has already taken place. As counterrevolutionaries, the New Right must have a strategy for creating and retaking space for its constituents, breaking and replacing captured institutions, and liberating them from the moral horizons of the Left. (Milikh, p. xi) Milikh and other contributors offer bold suggestions for rolling back the progressive tide once conservatives obtain political hegemony. They have much less to say about how to achieve this ascendancy. One will not find here a plan for locating the political center or constructing a coalition. Richard Hanania writes, Conservatives should put their energies into fighting to take over—or, in some cases, denigrating and destroying—those institutions that are most important and most influenced by leftist politics. (Hanania, p. 20) For example, The federal government forces private institutions to classify individuals according to race and sex, to prefer protected groups, that is non-whites and women, over others, and even to regulate social life. There are a handful of government agencies that are most responsible for enforcing compliance… Congress needs to defund them, or at the very least tie their hands by specifying that discrimination means intentional discrimination, not disparate impact (Hanania, p. 22) Hanania argues that conservative complaints, … can only be fixed by doing the unglamorous work of building the kinds of institutions that hold politicians accountable on the issues they care about. In certain areas—guns, abortion, taxes—conservatives have already done this and so have created litmus tests for Republican politicians hoping to advance their careers. It is the job of activists to make sure civil rights law, school choice, defunding university bureaucracies, and giving the president greater control over the federal workforce are added to this list. (Hanania, p. 30) He says that conservatives have a new clarity of focus on progressive power centers. For example, they recognize the need to target teachers’ unions, who favored school shutdowns during the pandemic and want to promulgate controversial ideas on race and gender in the classroom. Helen Andrews argues that establishment conservatives have passively watched as education in “family planning” has focused on how to prevent pregnancy, without informing women of the biological challenges of waiting until they are thirties to start having children. Conservatives should recommend that women put family ahead of career. If you put family first, you can end up doing both. If you set out trying to do both, you are quite likely to end up with just the career. (Andrews, p. 72) Heedless of that, young adults today are increasingly unmarried and childless. Projections have it that 25 percent of millennials will be childless—one in four. By comparison, for baby boomers it’s closer to one in nine…. If you want to look at how married a generation is, you look at age 21 to 36. In 1965, 17 percent of that age block had never been married. In 2017, it was 57 percent (Andrews, p. 72) Scott Yenor laments that The conservative movement’s broad trajectory on family is one of loss after loss: feminism, followed by the gay revolution, followed by same-sex marriage, and followed soon (perhaps) by trans rights. (Yenor, p. 80) One can say that the various sexual liberation movements asked for more than “love the sinner, hate the sin.” They demand that everyone love the sin. Yenor argues that Society must honor man-woman, marital procreative sex over other expressions of sexual mingling if it wants to survive and thrive over the long haul. (Yenor, p. 87) The Revanchist Right (my term, not theirs) employs pugnacious rhetoric. For example, in a chapter on education, Milikh and Yenor write, The New Right must endorse government and private actions to harm, humiliate, and destroy our education establishment and rebuild a competitive, patriotic, moral educational model suitable for a great country. (Milikh and Yenor, p. 108-109) As a specific suggestion, they offer Red states could break up universities between “hard sciences” and “pretend sciences,” funding only the hard sciences with public monies, while allowing the others to compete or wither away on the vine. (Milikh and Yenor, p. 118) The contributors to this volume are ready to do away with free trade and laissez faire. David P. Goldman writes that libertarian economic policies, … unleashed two related monsters that ate American business: the establishment of monopolies, and the destruction of our industrial base, which led to vast trade deficits based on consumer pathology. (Goldman, p. 128) Later, he writes, … we need selective subsidies for mission-critical industries, including semiconductors, advanced materials, quantum computing, quantum communications, high-speed broadband, and other technologies (Goldman, p. 136) Theodore Wold reviews the history of the administrative state. He points out that it was justified initially as a way to achieve government coordination in the context of an increasingly complex society. But, What began as a type of separation-of-powers “innovation” beyond the Constitution has persisted as nothing less than tyranny. The vast majority of our governance today is created, maintained, and enforced by unelected bureaucrats who are almost entirely insulated from accountability to any branch of government, let alone the people. (Wold, p. 168) Wold does not see reform or incremental deregulation as the answer. He asserts that, … rule by experts and technocrats is not the self-evident and necessary solution to the problem of modernity… The only prescription for the administrative state is deconstruction. Dismantling. (Wold, p.179) Robert Delahunty advocates reining in the FBI and other parts of the intelligence apparatus. In proposing legislation to curtail the use of surveillance against citizens, he writes, Such legislation would likely be supported by civil libertarians on the Left (Delahunty, p. 198) His is the only contribution that mentions the possibility of a coalition. More typical is Jesse Merriam, who cannot even stomach praise for the conservative judicial movement. Nearly all scholars, on the Left and Right alike, treat the legal branch of the conservative movement—the “legal conservative movement” (LCM)—as triumphant. In one scholar’s words, the LCM has mounted a “conservative counterrevolution” against the liberal establishment. But this account is wrong. The LCM has failed to achieve its original goal of restoring the pre-1960s constitutional order (Merriam, p. 227) Subsequent to the book’s publication, the Supreme Court ruled against Harvard’s race-based admissions policies. In my view, this represents a genuine triumph for the legal conservative movement. I believe that this ruling could prove as culturally significant as Brown vs. Board of Education, for the same reason. That is, the American people were fed up with racial segregation in 1954, and they are fed up with affirmative action today. Nevertheless, it took a court decision to shock the system. “The Revanchists seem to have no desire for allies.” The Revanchists seem to have no desire for allies. For example, Michael Anton writes, Many of the most powerful people in our country—CEOs, high government officials, prestige professors—were born elsewhere. This is one of those things one is allowed to notice only if one approves. (Anton, p. 11) Evidently, he does not approve of these immigrant success stories. He cares about their country of origin, not the content of their character. Concerning the phrase “A Nation of Immigrants,” which was used by then Senator John F. Kennedy for a book title, Jeremy Carl writes, The first outlined draft was written by a historian hired by the Anti-Defamation League, the premier Jewish NGO in America. That outline was turned into a book by Kennedy staffer Myer Feldman (whose Jewish parents had arrived from Ukraine three years before his birth). The law itself [Hart-Cellar Act, 1965] was passed in no small part owing to heavy lobbying from Catholics and Jews, whom Kennedy (a Catholic) had been targeting in his campaign. Many Jews, stung by the many instances of oppression experienced in ethnically unified countries in Europe in which most had formerly resided, were eager not to have an ethnically unified America in which the majority might discriminate against them. (Carl, p. 247) That is quite an accusation to hurl against Jews. That the whole reason they supported immigration reform was to keep the United States from being an ethnically unified country. For more on these topics, see Jonah Goldberg on The Suicide of the West. EconTalk. Arnold Kling on the Three Languages of Politics, Revisited. EconTalk. George Will on the Conservative Sensibility. EconTalk. The contributors to this volume could have been content to make their case for using political power to address institutions in education, government agencies, and the broader culture that are captive to extreme progressive ideology. Instead, they also aim their fire at people with other conservative persuasions and other ethnic backgrounds. They see themselves as surrounded by adversaries. And they are correct. Footnotes [1] Arthur Milikh (ed.), Up from Conservatism: Revitalizing the Right after a Generation of Decay. Encounter Books, 2023. *Arnold Kling has a Ph.D. in economics from the Massachusetts Institute of Technology. He is the author of several books, including Crisis of Abundance: Rethinking How We Pay for Health Care; Invisible Wealth: The Hidden Story of How Markets Work; Unchecked and Unbalanced: How the Discrepancy Between Knowledge and Power Caused the Financial Crisis and Threatens Democracy; and Specialization and Trade: A Re-introduction to Economics. He contributed to EconLog from January 2003 through August 2012. Read more of what Arnold Kling’s been reading. For more book reviews and articles by Arnold Kling, see the Archive. As an Amazon Associate, Econlib earns from qualifying purchases. (0 COMMENTS)

Rather than breaking capitalism… A.G.I… is more likely to create a powerful… ally for capitalism’s most destructive creed: neoliberalism. —Evgeny Morozov. The New York Times1 The New York Times for decades has been America’s bellwether of coming political, ideological, and cultural trends. Even those who rarely agreed with it (Ayn Rand is a prime example) quote it to indicate trial balloons for new ideas and causes readying to launch full-blown propaganda campaigns. I include in the trial balloon category a recent story, “The True Threat of Artificial Intelligence,” which argues that cutting-edge digital technology poses an existential threat to humanity. Existential has come to mean threatening the existence of something. No, this trial balloon is not referring to the threat of a robot takeover. Open AI’s new ChatGPT app has merely revived a controversy at least as old as Isaac Asimov’s 1991 novel, I, Robot, with its famous “laws of robotics.” The threat today is that artificial intelligence will reach a stage where robots would launch an effort to take over the world, displacing humankind. (That is not what the article is about.) Sam Altman, co-founder of Open AI, is quoted in the article defining Artificial General Intelligence (AGI, or AI) as “systems that are generally smarter than humans,” and he adds they are not yet here but are coming. This brief definition is not especially helpful. My laptop is a lot smarter than I am if that means possessed with information, calculation ability, speed of problem solving, and a host of other mind jobs. What Mr. Altman’s definition means, in the context of the AI “threat,” is AI systems that can outsmart humans. President Joseph Biden, Senator Chuck Schumer, Elon Musk, Steve Wozniak (co-founder of Apple), and many others have gotten into the act, calling for responsible innovation sessions to alert industry executives and others to the dangers of AI and calling for a moratorium on development of advanced AI until someone figures out what we might be getting ourselves into. A statement in May from 350 industry executives, researchers, and academics compared “the risk of extinction” from AI with that of pandemics and nuclear war.2 The Times article takes note of these alarms but says there are also many tech executives who view AI as yet another benefit to humankind by increasing efficiency, solving ultra-complex problems in science and other fields, and creating greater economic prosperity. Mr. Altman, not unnaturally, is a leader in making the case that this technology, like previous technologies, can be made safe, and that this technology, like previous technologies, will make our lives better. It is that attitude, says the NYT article that is the real problem, the “existential threat.” Mr. Altman and others who support AI are “beholden to an ideology that views this new technology as inevitable and in a safe version, as universally beneficial.” Well, that has been the overwhelming verdict on technology since the 18th century Age of Enlightenment, with its philosophical commitments to reason, science, technology, human progress, and happiness on earth—giving rise to discoveries and inventions, including efficient steam power, which launched the Industrial Revolution. The industrialization of cotton and wool mills was not without opposition, the most direct from a movement called the Luddites, who in the name of saving jobs and high wages made raids to smash the new machinery. The movement did not last long, but the name has remained and today refers to ideological opposition to technology, in particular to computer technology. “According to Morozov, we simply have not yet realized that AI is the latest technology to fall into the hands of the neoliberals.” So, what is the real problem with AI? The article’s author, Evgeny Morozov, gets right to the point. According to Morozov, we simply have not yet realized that AI is the latest technology to fall into the hands of the neoliberals. Neoliberal, of course, refers to those who seek to revive the credo of free markets and capitalism that began as early as Adam Smith and the French philosophes and was carried on later by (true) liberals like John Stuart Mill and Jeremy Bentham—to name but a few. Of course, neoliberalism is no longer “neo,” nor limited to the United States. “Unbeknown to its proponents,” writes Mr. Morozov, “A.G.I.-ism [i.e., favoring advanced technology] is just the bastard child of a much grander ideology, one preaching that, as Margaret Thatcher memorably put it, there is no alternative, not to the market.” What exactly does that entail? Writes Morozov, “Fascinated with privatization, competition and free trade, the architects of neoliberalism wanted to dynamize and transform a stagnant and labor-friendly [extensively unionized with government-backed above-market wages] economy through markets and deregulation.” That certainly is what many neoliberals set out to do. With the examples of the Soviet economy, post-war Britain under Labor Party socialism, the New Deal, and later the Great Society, it was unmistakably clear to neoliberals that under direct and relentless attack was capitalism and the free markets that had made America the world’s most prosperous economy and freest country. Yes, neoliberalism had its successes, concedes Mr. Morozov, but at immense cost? What costs? For one, he points to the Great Recession and financial crisis of 2008. But advocates of neoliberalism did not support the U.S. government’s relentless increase of the money supply, which drove interest rates down to historically unprecedented lows—fostering a runaway real-estate boom that encouraged banks to push out loans under increasingly shoddy lending standards. It was not neoliberalism that advocated that government-sponsored agencies such as Fannie Mae and Freddie Mac purchase unlimited quantities of mortgage-backed securities from Wall Street firms. No, it was the classic boom-and-bust cycle of government money supply expansion, increasingly unjustified lending with artificially cheap money, and the inevitable bust when the shoddy investments went belly-up. This game had been going on ever since the creation of the Federal Reserve Banking system in 1913. Mr. Morozov explains that the (supposed) performance of (supposed) neoliberals scared President Biden, foundations, think tanks, and academics away. (The implication that they ever were attracted to a movement to restore capitalism and free markets warrants only a string of laughing emojis.) Mr. Morozov goes on to say that, “Neoliberalism is far from dead. Worse, it has found an ally in A.G.I.-ism, which stands to reinforce and replicate [neoliberalism’s]… main biases: that private sector actors outperform public ones (the market bias), that adapting to reality beats transforming it (the adaptation bias), and that efficiency trumps social concerns (the efficiency bias).” Mr. Morozov devotes the remainder of the article to explaining how these biases will not “save the world” but “make things only worse.” As Mr. Morozov sets out to demonstrate the consequences of neoliberalism’s three biases, he offers examples from today’s headlines (Uber, Theranos, Airbnb, Facebook). I hardly view these examples as revealing systemic flaws in the operation of free markets. They are examples, Mr. Morozov says, of “solutionism,” which is a “worldview [that] reframes social problems in terms of for-profit technological solutions” so that concerns that “belong in the public domain are reimagined as entrepreneurial opportunities…” Uber is offered as an example of the failure of the market bias that private is better than public. According to Mr. Morozov’s narrative, Uber came along supported by venture capitalists and was touted as a cheap solution to the public transportation problems of cities. Especially exciting was the prospect of self-driving vehicles bringing down fares so those with subway budgets could ride like taxi passengers. Uber started charging low rates, says Mr. Morozov, but the promise of self-driving vehicles proved a ‘pipedream.’ Investors in Uber wanted to make a profit, so fares have gone up. “Uber users that relied on it… were left on the sidewalk.” And Airbnb was not “a savior for the beleaguered middle class.” And Tesla electric vehicles have not proven a remedy for global warming. And Facebook has not solved connectivity deficiencies in poorer nations…. Then there is the adaptation bias of neoliberalism. Mr. Morozov, not exactly neutrally, defines this as “a knack for mobilizing technology to make society’s miseries bearable.” He cites a scheme in Chicago to improve commuters’ use of the subways by encouraging more traveling at off-peak times. All this did, says Mr. Morozov, is postpone the day that the city’s government must put up the substantial funds needed to fix the city’s deteriorating infrastructure. According to Morozov, the public sector can and should fix big problems; the market provides only Band-Aids and pain relievers. But hasn’t private enterprise solved such big problems as supplying transportation by land, sea, and air; providing the best food supply in human history; providing pharmaceutical solutions that have revolutionized health and longevity; housing a nation at a historic level; accelerating worldwide delivery of goods and services; manufacturing goods representing the highest standard of living in history? Mr. Morozov concludes that the market can merely adapt, when what we need is transformation. “To be sure, Silicon Valley’s many apps—to monitor our spending, calories and workout regimes—are occasionally helpful. But they mostly ignore the underlying causes of poverty and obesity. And without tackling the causes, we remain stuck in the realm of adaptation not transformation.” Regarding the efficiency bias of neoliberalism (producing the same economic value with less expenditure of resources), Morozov argues this prevents us from solving social problems. He writes, “…these solutions [increasing efficiency] often fail to grasp the messy interplay of values, missions and traditions at the heart of institutions—and interplay that is rarely visible if you only scratch their data’s surface.” All Morozov’s examples of neoliberalism’s supposed failings involve either very recent or merely promised technologies. The article is purportedly about computer technology, but Morozov’s attack is really on neoliberalism—capitalism—, not AI. The attack is broadly and generally on the nature of the market economy, the profit motive, operating principles like efficiency, and philosophical premises like the individual as the locus of morality and responsibility. To deign to judge capitalism’s record and potential by selecting a few instances of the problematic application of new (or expected) technology in the past decade or two is worse than irrelevant. I cannot convince myself that Mr. Morozov is acting in good faith in conjuring this case against neoliberalism. Mr. Morozov duly concludes with a positive suggestion: “… wouldn’t our quest for augmenting intelligence be far more effective [than A.G.I. technology] if the government funded a Manhattan Project [i.e., all-out national crash program] for culture and education and the institutions that nurture them…?” And what if we don’t do this? Then the “vast resources of our existing public institutions risk becoming mere data training sets for A.G.I. start-ups, reinforcing the falsehood that society doesn’t exist.” Because neoliberalism (at its best) stands consistently and in principle for free markets, neither A.G.I. start-ups nor any company or group of companies has any power to force any technology on our public institutions—or anyone else—only the freedom and incentive to create and offer products and services at competitive prices. Capitalism does not set out to save the world, because private individuals whose choices in the market are made in pursuit of their own goals, their own self-interest, make decisions. Mr. Morozov concludes: “… A.G.I. may or may not prove an existential threat [via a robot rebellion]. But with its antisocial bent and its neoliberal biases A.G.I.-ism already is.” For more on these topics, see Erik Hoel on the Threat to Humanity from AI. EconTalk. Marc Andreessen on Why AI Will Save the World. EconTalk. Eliezer Yudkowsky on the Dangers of AI. EconTalk. More EconTalk Podcast Epidosodes on Artificial Intelligence. Category Archive. “The Unacknowledged Success of Neoliberalism,” by Scott Sumner. Library of Economics and Liberty, July 5, 2010. I have seen no particular evidence that developers, manufacturers, and marketers of AI are more neoliberal than any other businesspeople. In fact, doesn’t Silicon Valley keep fingered for cozy relationships with politicians? The proponents of AGI will have to understand the theory and historical record of capitalism much better than do most businessmen if they are to counter the new Luddites who try to equate neoliberalism with the uncertainties, failures and disappointments, and sometimes exaggerated potential that are inevitable at the frontiers of tomorrow’s technology. Footnotes [1] Evgeny Morozov, “The True Threat of Artificial Intelligence,” The New York Times Sunday Opinion. June 30, 2023. Gated. [2] Statement on AI Risk. Safe.AI, Center for AI Safety. No date. *Walter Donway is an author and writer with more than a dozen books available on Amazon and an editor of the e-zine Savvy Street. He was program officer or director at two leading New York City foundations in the healthcare field: The Commonwealth Fund and the Dana Foundation. He has published almost two dozen articles in the Blockchain Healthcare Review. For more articles by Walter Donway, see the Archive. (0 COMMENTS)

Instead, plans focused on protecting the most vulnerable but trying to keep society as a whole up and running. What set Sweden apart was that it stuck to that plan, and from a Swedish perspective, it looked like it was the rest of the world that was engaging in a risky, unprecedented experiment. This is from Johan Norberg, “Sweden during the Pandemic: Pariah or Paragon?,” Cato Policy Analysis, No. 959, August 29, 2023. I’ll save you the suspense. While Norberg doesn’t literally claim that Sweden was a paragon, his bottom line is that it was close. The Swedes had a much gentler touch, depending mainly on persuasion rather than, as almost every other government did, on coercion. Why the title of my post? Because President Donald Trump, like most of the establishment, favored coercive measures early on. On April 30, 2020, Trump tweeted, “Sweden is paying heavily for its decision not to lockdown [sic].” Norberg goes through the details, pointing out the few cases where the Swedish government tried coercion but also highlighting the many areas in which the government left people free to make their own decisions. Fun humor: Perhaps social distancing comes naturally to introverted Swedes, so that we don’t have to be compelled to engage in it. A joke that made the rounds was that “Finally no more 2-meter rule, now Swedes can go back to the usual 5-meter distance.” Norberg also assesses loss of learning for Swedish school kids versus children in other countries: no learning loss versus huge learning losses in the United States and other countries. Also, the economy did better than the economies of other countries, according to OECD data. Norberg writes: The world economy was 2.9 percent smaller after 2021 than it would have been[,] according to the Organisation for Economic Co-operation and Development forecast before the pandemic; the Eurozone 2.1 was percent smaller, and the U.S. economy 1.2 percent smaller. The Swedish economy was 0.4 percent bigger.36 This is even more exceptional since the Swedish government introduced much less fiscal stimulus than most other countries. And the big one, of course, is deaths. Sweden’s COVID-19 death rate from January 5, 2020 to June 14, 2023 was 2,322 deaths per million versus only 1,024 deaths per million for Norway, and towards the upper end of his comparison, 3,332 deaths per million for the United States. Norberg points out that if a Swede died with COVID-19, he/she was counted as having died from COVID-19. In Norway, by contrast: deaths were counted as a COVID-19 death only if the attending physician concluded that COVID-19 was the cause of death and called the country’s public health agency to report it. “It is possible that Norway could have a higher number of registered deaths if we counted as Sweden,” said a doctor at Norway’s public health agency in April 2020. For that reason, the data on excess deaths may be a better measure. And Sweden’s excess death rate during the pandemic was the lowest in Europe. The data are quite striking. The excess death rate between 2020 and 2022 was 4.4% in Sweden, versus 5% in Norway, 12.2% in Greece, and a whopping 19.8% in Bulgaria. One obvious reason might be that because medical care was not shut down as much in Sweden as it was in other countries, people didn’t go without cancer treatments, heart surgeries, etc. as much as they did in other countries. Another reason for the low excess death rate, of course, although Norberg doesn’t discuss this, is that a large percent of Swedes got vaccinated whereas in some other European countries, a smaller percent got vaccinated. But even that large percent could be an indirect effect of Sweden’s light-handed approach to lockdowns. For people to get vaccinated, they need to trust in the vaccines and distrust is likely to be higher in countries where the government ruled with a heavy hand. Moreover, if governments in other countries lied about face masks, for example, as Anthony Fauci admitted he had, it was reasonable for people to ask what else they might lie about?     (0 COMMENTS)

Speaking about the forthcoming presidential election and the prospects of Donald Trump, an Iowa GOP official said that “anything can happen” (“The Inevitable Nominee? Trump’s Election Momentum Builds Even as Legal Problems Mount,” Wall Street Journal, August 27, 2023). Considered in light of what we know about the economics of politics, this reflection is more than just an intuition from a minor party official. The idea that anything can happen in political space is supported by science—logic, mathematics, economics, and some historical and empirical confirmations of political chaos. In his influential 1982 book Liberalism Against Populism, political scientist William Ricker summarized what was already known. I am quoting a whole paragraph (from p. 187), but the penultimate sentence gives the concise result: In a remarkable discovery, [the late MIT economist Richard D.] McKelvey has shown that, for a wide class of differentiable utility functions, once “transitivity breaks down, it completely breaks down, engulfing the whole space in a single cycle set. The slightest deviation from a Condorcet point (for example, a slight movement of one voter’s ideal point) brings about this possibility.” Hence not only is a Condorcet winner unlikely, but also when one does not exist, anything can happen. There is no “small” set of probable outcomes. (I have explained elsewhere the Condorcet Paradox and related theories as well as some of their implications for a realistic conception of democracy and elections; see my Independent Review article “The Impossibility of Populism” and also in my Regulation review of Riker.) A breakdown of the rule of law, a civil war, the Argentinization of America, or something banal like the election of Joe Biden or Mike Pence—any of that can happen. All of this follows from rational-choice analysis; it assumes that individual voters are rational. (Dropping this assumption, we could envision the possibility that if Caligula’s horse were running under the QAnon banner, the horse might win.) These results must be qualified. As long as certain institutions—courts, constitutions or fundamental laws, political parties, government assemblies, bureaucracies, decentralized power centers, a free press—frame and constrain voting and its consequences, ordinary times will display more standard and predictable results, which public-choice analysis has explained. In times when the institutional structure of a society is under heavy strain, like in America today, political processes do resemble a roulette wheel. And we can’t seek refuge in “ordered anarchy” (a Buchananian term), because this is not the situation now and it is very unlikely to be after the political wheel is spun. (0 COMMENTS)

Can economics and better measurement help us understand racial disparities and suggest how to reduce or eliminate them? Economist Roland Fryer of Harvard University believes deeply in the power of data to help us understand how the world works and how we might change it. Listen as he tells EconTalk’s Russ Roberts of his devotion to this […] The post Roland Fryer on Race, Diversity, and Affirmative Action appeared first on Econlib.

Here are four particularly notable articles, blog posts, or videos from this week. First, the case for drinking. Highlight: [Alcohol] helps us to be more creative. It helps us to be more communal. It helps us to cooperate on a large scale. It helps to make it easier for us to kind of rub shoulders with each other in large-scale societies that we live in. So it solved a bunch of adaptive problems that we uniquely face as a species because of this weird lifestyle we have. The speaker is Edward Slingerland, author of Drunk: How We Sipped, Danced, and Stumbled Our Way to Civilization. If you read Tyler Cowen much, you know how hostile he is to drinking alcohol. What I’ve always found striking is that he tends to emphasize the costs and doesn’t even attempt to assess benefits. Second, Scott Beyer, “Africa’s Planned Cities Need Unplanning,” Reason, October 2023. Highlight: The more “formal” a project is—with master plans, institutional investors, and government involvement—the more slowly it materializes. The more “informal” it is, with minimal rules other than how locals self-govern, the more quickly it becomes a real city. Another highlight: Such ingenuity is common in other slums. Days later we visited Agege on the northwest side. It too is packed with markets, including one that, due to lack of space elsewhere, has grown organically along the train tracks. The area has become known as a place to buy furniture, with patrons hopping off the line and back on with their new cabinets and beds. When a new train arrives, every few hours, merchants move their belongings to let it pass. They reoccupy the tracks afterward. Third, Lee Ohanian, “I Once Thought California Would Fix Itself. I Was Wrong,” Hoover Institution, September 1, 2023. Highlight: One reason state government compensation significantly exceeds private-sector compensation is because few public-sector agencies seriously benchmark their compensation practices to those in the private sector. Private-sector compensation is disciplined by the value created by their employees. In a competitive marketplace, private-sector employers need to pay enough to attract the talent they seek but will suffer losses if they overpay. These compensation dynamics are largely absent in the public sector, which leads to public-sector workers receiving higher compensation than they would in the private sector. For example, average compensation in California’s Highway Patrol was $209,000 in 2019. For comparison, total compensation in the highest paying private-sector industry in the country (utilities) averaged about $128,000 in 2019. This is for an industry that is extremely capital intensive and that tends to hire highly skilled specialists. In contrast, the primary requirements for becoming a highway patrol officer are high school graduation or equivalent, a valid California driver’s license, and no felony convictions. The reason highway patrol employees receive such high compensation is because they are represented by a powerful union, and there are inadequate incentives within state government to do anything other than agree every three years to the union’s lucrative collective bargaining agreements. If Ron DeSantis has the sense to quote facts like these when he debates Gavin Newsom, he wins. Fourth, Michael Chapman, “Cato Report: Zero Chance of Being Killed by Terrorist Who Crossed U.S. Border Illegally, 1975-2022,” Cato at Liberty, August 28, 2023. Highlight: In that period [1975-2022], the report documents that “the approximate annual chance that an American resident would be murdered in a terrorist attack carried out by a foreign‐​born terrorist was 1 in 4,338,984.”         (0 COMMENTS)

Tyler Cowen has a good post on the debate over China’s economic policy, which links to a recent WSJ article on the topic. I’ve noticed that when people debate this issue, they tend to talk past each other. This is because people throw around phrases like “more consumption”, without clearly indicating what they are talking about. Regarding China’s economy, here are some issues to consider:1. Nominal demand vs. real demand.2. Fiscal policy vs. monetary policy.3. Consumption vs. investment.4. Private investment vs. public investment. I cannot emphasize enough that each of these four issues is radically different from the other three. Let me first describe what I think China needs, and then discuss the WSJ article:1. China needs steady growth in nominal demand (NGDP.)2. China needs to rely on monetary policy, and should not use fiscal policy for stabilization purposes.3. China should let the market determine the relative size of consumption and investment.4. China should reduce the role of the government in investment. With this framework in mind, lots of confusing issues raised in the WSJ article begin to make more sense: Economists and investors have been calling on Beijing to make bolder efforts to boost output—especially by promoting consumer spending, if necessary, by offering cash handouts, as the U.S. did during the pandemic. Accelerating China’s transition to a more consumer-led economy—such as that of the U.S.—would make growth more sustainable in the long term, economists say. But top leader Xi Jinping has deep-rooted philosophical objections to Western-style consumption-driven growth, people familiar with decision-making in Beijing say. Xi sees such growth as wasteful and at odds with his goal of making China a world-leading industrial and technological powerhouse, they say. Xi believes Beijing should stick to fiscal discipline, especially given China’s deep debt. That makes stimulus or welfare policies akin to those in the U.S. and Europe less likely, the people said. Notice that the WSJ frames this as welfarism vs. austerity.  So which view is right?  I’d say neither.  Xi’s right that welfarism is not right for China, and the economists are right that China needs stimulus. So if there is to be no fiscal boost to consumption, and yet demand must increase, does that mean I favor more government investment?  No.  I favor monetary stimulus to boost NGDP. This is where the Keynesian framing is so counterproductive:  GDP = C + I + G + NX.  This framing tempts economists to want to play God, to wave a magic wand and determine how much of GDP will be C, how much will be I and how much will be G.  The government clearly determines G.  But the government should not be determining the mix of consumption and investment.  No policymaker could realistically have the information required to make that judgment. Take a second look at this: Accelerating China’s transition to a more consumer-led economy—such as that of the U.S.—would make growth more sustainable in the long term, economists say. How can we make sense of this claim, which on the surface seems bizarre?  For growth to be sustainable, you need investment.  And yet these western experts are not fools; they must have some sort of valid argument for this claim. I suspect the actual claim here is that China needs to stop its extremely wasteful investment in certain areas, in order to avoid ending up with lots of “white elephants” and a mountain of unsustainable debts.  In a healthy economy, only productive investments are undertaken.  The current level of China’s investment as a share of GDP seems higher than can be justified by the low rates of return experienced in recent years: Investment in roads, factories and other hard assets to drive growth has been yielding diminishing returns as the government runs out of useful projects to build. Rather that say,”China needs more consumption”, I’d argue that China needs less wasteful investment.  Aren’t those the same thing?  Not really: Also unlikely are major market-oriented changes, or a dramatic reversal in the multiyear shift toward more centralized control of the economy. Although Beijing has eased off efforts to clamp down on consumer internet firms and other private companies—a campaign that led to weaker private investment—it remains skeptical of their unregulated expansion. . . . More likely options now include greater spending on infrastructure and other government-favored projects, as well as further credit loosening—following several recent interest-rate cuts—economists and people familiar with Beijing’s thinking say. Such moves reflect Beijing’s preference for having the government play the central role in goosing growth, either by investing in infrastructure or by channeling funds to selected sectors such as semiconductors and artificial intelligence that can advance Communist Party aims. The Chinese government has been discouraging private investment and encouraging public investment (as well as quasi-public investment, as in real estate and favored tech sectors.)  That’s a mistake. For many western economists, “stimulus” is synonymous with fiscal stimulus, whereas stimulus should be done by the central bank.  And monetary stimulus is viewed as being synonymous with low interest rates and more investment, whereas the term ‘monetary stimulus’ should mean more nominal GDP—which might be either consumption or investment. Some might argue that my analysis is naive because China is far from being a laissez-faire economy.  Monetary stimulus won’t necessarily go into the most efficient sectors.  I agree.  I am describing the sort of outcome that China should be aiming for.  Determining which policy levers to push requires an in depth knowledge of the current policy distortions that lead to a misallocation of resources.  Thus monetary stimulus might be combined with banking reform to reduce moral hazard.  The goal would be to reduce lending for nonproductive investments, such as dubious real estate projects.  But again, that’s not aiming for “less investment”, that’s aiming for less wasteful investment.  I am not suggesting that public investment should be zero.  By all means continue doing public investments that pass cost/benefit tests.  But that will not include more bridges in Guizhou province, an area that is already absurdly overbuilt.  (And many “public investments” could be done by the private sector—look at Hong Kong’s excellent subway system.) To summarize, much of the debate conflates unrelated concepts.  Pundits conflate nominal demand and real demand.  They conflate monetary and fiscal stimulus.  They conflate public and private investment.  They conflate consumption with aggregate demand. Sorry, but “More consumption!” and “More investment!” are meaningless slogans.  The real issues are using monetary policy to assure nominal stability, and moving to a more market oriented economy to insure economic growth and higher living standards for the future. If you want a simple slogan, here’s something that all sides should be able to agree upon: More Chinese consumption in the year 2040!! PS.  Here’s China Daily: Guizhou is home to 49 of the 100 tallest bridges in the world, including four of the 10 tallest, the commission said. Four bridges in the province have won the Gustav Lindenthal Medal, one of the most prestigious bridge construction awards in the world. Check out the link.  They sure built some beautiful white elephants in Guizhou province, a poor mountainous backwater in China’s interior.  Imagine being told that West Virginia had 49 of the world’s 100 highest bridges.  Might you suspect a bit of pork barrel politics?     (0 COMMENTS)

On Monday, August 28, a colleague at the Naval Postgraduate School emailed a number of us retirees to tell us some unfortunate news. It turned out that our retiree passes that let us get on the base where the Naval Postgraduate School is would be cancelled effective August 31. To get a new pass, we needed to fill out a form and provide paperwork. It was really great of my colleague, Geraldo Ferrer, to get the word out. What wasn’t so great was that the Department of Defense had made this decision in February and didn’t bother to tell us retirees. So we found out with 4 days notice. I need to get on the base for four reasons: (1) I give occasional guest lectures, (2) I attend occasional lectures, (3) I meet with former colleagues, and (4) I still occasionally take books out of the library. In each of these cases, I could get a colleague to come to the gate and escort me in, but that would get very old for the handful of colleagues whom I feel comfortable asking. So I pulled down the form to fill out and noticed right away that because I’m a dual citizen, there was extra paperwork. One of the pieces of paper required was some kind of petition that somehow related to my having become a U.S. citizen. I had no what or where that was. So the next day I went to my safe deposit box in Carmel and got my required Certificate of Naturalization but could find no “petition.” I wasn’t hopeful. The part of me that feels hopeless said, “They’re going to turn down my application because it’s missing this one item.” But my brain said, “Be an empiricist. Present all the papers, don’t even mention the one missing, and see if  the person I meet with asks for it.” By Wednesday morning, I had all the documents assembled. We had been told to make an appointment because there was only one person tasked to handle the new IDs and he might be swamped. So I called to make an appointment and the very pleasant man on the other end told me to come down because there was no one waiting. By the time I got there, there were two people in front of me. I had a nice conversation with one while the other was filing his paperwork. I waited only about 20 minutes total. I went in with all my documents. The employee took the form I had filled out and eyeballed my other documents in about half a second. I already started to feel relief. He did a bunch of things, moving back and forth between his computer and a printer. Then he was done. I thought I would have to wait until someone in the police office on campus looked at my docs and I wouldn’t have been surprised if they had to be sent to the Pentagon. Why did I think that? Because of this language in the email: While every effort will be made to expedite DBIDS card issuance for eligible DoD Retired Civilians, the standard turnaround time for receiving a DBIDS card is three (3) business days. Applicants deemed unfavorable within this period will receive notification. But no. After my 8-minute wait in the office, the employee handed me my new ID. It was that simple. I told him that I appreciated how pleasant he was on the phone and how easy he was to deal with. He replied, “I try.” I answered, “You don’t just try. You succeed.” Now I’m good for 3 more years. I could have let my public choice theory of government, which often guides me well, tell me that there would be numerous screw-ups, that the one employee would feel overwhelmed and might have attitude, blah, blah, blah. But instead I was an empiricist. “Just try; be pleasant; don’t assume.” It worked. (0 COMMENTS)