Co-blogger Pierre Lemieux writes: It should be pretty obvious that the president’s power to set world prices is (fortunately) nil. It’s actually not obvious. In fact, it’s false. The reason has to do with 3 things: First, the U.S. president has a lot of power over oil exploration and drilling. Second, the U.S. produces a large percent of the world’s oil and so a substantial percentage increase or decrease in U.S. production is a significant increase or decrease in world production. Third, the world demand for oil is highly inelastic, which means that small percentage changes in world output due to shifts in supply can cause substantial changes in world prices. I’ll use the same data source that Pierre drew on for his post. In 2022, U.S. oil production was just shy of 18 million barrels per day and world oil production was just shy of 94 mbd. So imagine that if President Biden had not shut off some new sources of oil production, U.S. output would have been 20 mbd by now, an increase of about 10 percent. That extra 2 mbd would have been an increase in world output of about 2 percent. With an elasticity of world demand for oil of -0.2, a standard estimate, world oil prices would have been 10 percent lower. On a price of $80 per barrel, that would have been a reduction of about $8 per barrel. That’s significant. It’s certainly much more than “nil.”   (1 COMMENTS)

Throughout the 1990’s scientific academia was going through a civil war over the role of science in deciphering the truth of the world. Most natural scientists held that science is purely objective, while the social scientists differed, arguing that “scientists were ignoring the inherent limitations on objectivity created by human perspective and biases.” In the seminal moment of this conflict, Alan Sokal, a physicist, intentionally wrote a hoax article, published in the academic journal, Social Text, titled “Transgressing the Boundaries: Toward a Transformative Hermeneutics of Quantum Gravity.” The paper argued in favor of an array of ridiculous claims, such as gravity being a social construct, the subjectivity of physical reality, and the link between quantum physics and postmodernist theory. Sokal sought to expose the “arrogance” of certain studies in social science academia, and prove the absurdity of subjectivist analysis of science. However, Social Text was not a well known journal, and social science journals are by no means more prone than others to publishing bad research. According to Retraction Watch, a blog that monitors and reports on retractions of academic papers, as of the end of 2020, not one of the ten most cited retracted papers is in the field of social science. In fact, all ten were published in scientific and medical journals, including Andrew Wakefield’s infamous study on the correlation between vaccines and autism. Is peer review broken? Why are so many fallacious papers published in renowned journals? How often is erroneous research published? Adam Mastroianni joins EconTalk host Russ Roberts to discuss the  problems with the peer review process, how academic journals spread misinformation and misuse scholars, and why emergent order is the answer to more accessible, accurate, and comprehensive scientific research. Mastroianni is a psychologist, writer, and Postdoctoral Research Scholar in the Management Division at Columbia Business School. It’s relatively rare to see an academic hold such a low opinion of peer review. Yes, many scholars criticize peer review and wish to reform the system, but very few argue to abolish peer review entirely, as Mastroianni does. His reasoning for this radical shift is the inability of peer review to fulfill what it claims to be and do. The common perception is that peer review has always been the dominant scientific process- the backbone of most of academic research. Mastroianni asserts that peer review is a very new system, which is a problem because it leads people to believe that science can not survive without it and causes the problems of the system to be overlooked. However, the most impactful misconception revolves around the process of peer review. Mastroianni believes that the review procedure is much less rigorous than it ought to be: I think probably most people haven’t really thought about it, but if you asked them to, they would go, ‘Well, I assume that when a scientist publishes a paper, it goes out to some experts who check the paper thoroughly and make sure the paper is right…And, all of that is a totally reasonable assumption about how the system works; and it is not at all how the system works. And I think that’s part of the problem. So, what are the problems with peer review? Most notably, referees don’t check the paper in-depth, and some papers are rejected due to their lack of novelty, not their lack of truth. The focus on novelty over truth may be due to the sheer amount of work needed to adequately check the methodology and results outlined in the paper. This lack of checking and thorough reviewing leaves authors in the dark about what needs to be improved, and readers blind to the potential errors and limitations in the study. It’s a big undertaking to actually check the results of a paper, which is why it’s virtually never done. Although that is, of course, maybe the single most important thing that this process could do, rather than provide some kind of aesthetic judgment. So, all that I know is the reviewers said–they didn’t say enough disqualifying things to prevent it from being published in this journal. But, I don’t know if they said, ‘I’m really convinced by this point, but not that point.’ Or, ‘Here’s another alternative explanation that I think warrants inclusion.’ I don’t get to see any of that as a consumer, because generally the reviews disappear forever once the paper is published. Obviously, this focus on novelty over truth leads to a proliferation of errors. The referees should be catching these errors, but instead it’s left to independent scholars to verify the truth of published data. As Mastroianni says, “it’s always caught after publication.” To compound this problem, replication studies verifying or challenging published data tend to be looked down upon, once again due to them not being interesting, and when replication studies are published, they don’t often carry the same results. This further prevents the spread of truth in academic circles, and provides additional uncertainty to published data. And, again, if you’re not in the kitchen, you wouldn’t realize this: Replicating someone else’s paper is almost worthless historically in the last 50 years of this process. And, if you have suspicions and a result might be true, you think, ‘Well, I’ll go find out. I’ll do it again.’ Well, if you find out that it is true, nobody wants to publish it. There’s nothing new there. You find out it’s not true: maybe it isn’t, maybe it is, but it’s not a prestigious pursuit to verify past papers…and results have been deeply disturbing–how few results replicate.   Mastroianni goes on to explain that this misplaced trust in peer reviewed journals can be very dangerous, as when false data is published it can have an extremely harmful effect as people will place trust in that false data and use it to justify decisions or beliefs that are injurious. Some examples of this are the Estruch et al. paper which erroneously found an inverse relationship between the Mediterranean diet and cardiovascular disease, and Mastroianni’s highlighting of Andrew Wakefield’s infamously fallacious paper on the link between vaccines and autism. Both were published in prestigious medical journals, the New England Journal of Medicine and The Lancet, respectively, and had disastrous impacts. Wakefield’s paper specifically has fueled the common non-scientific concerns over the side-effects of vaccines, which reached a boiling point during the COVID-19 pandemic. And so, an example of this is this whole thing about vaccines causing autism was in large part fueled by a paper in The Lancet–which is an extremely prestigious medical journal–with an N of 18 being like, ‘Hey, there’s some kids who have autism and they also had vaccines.’ It was sort of like the standard of evidence. It’s stamped with the imprimatur of The Lancet. And so, people take it really seriously. So, why are there so many problems with peer review? Roberts thinks it’s because of the poor incentive structures baked into the institution. So, as an economist, my summary of your insight about the time it takes is that: just the incentives aren’t there. There’s a certain principle and conscientiousness that’s expected for reviewers, for referees. You don’t get paid very much. Sometimes not at all. And, there’s very little professional gain. You do ingratiate yourself sometimes with an editor, which is pleasant. They will or maybe look favorably, you might hope, on your future submissions when you’re on the other side of the fence, but there’s just not much return to it, so people don’t take it terribly seriously. How can peer review be improved for the better? Roberts says better incentive structures specifically regarding pay, time, and quality of work, and Mastroianni says get rid of it entirely. Mastroianni’s solution is to encourage more informal, public, and unfiltered research. He believes this will allow for scholars to produce more diverse and transparent research, replication of data will become easier, and data will be much more accessible to everyone.  What I’d like to do is make a historical claim, which is ‘This is new and weird,’ an empirical claim, which is ‘This doesn’t seem to do the thing that we intend for it to do,’ and then leave it to the diversity of humanity to figure out what to do about that. I have my own answer, which is I feel like I know the way that I do science the best, which is: to write it in the words that I think I should use, to write it for a general audience so anyone can understand it, to include all the data and code and materials so that the very few people who want to open up that code and data and see exactly what I did and how it worked can do that, and then put it out there for anybody to see. And to trust that if what I have to say is interesting and useful to people, that they will tell me. And, they’ll tell me how I think it could be better. Mastroianni is by no means advocating for a system he hasn’t tried himself, as his claim to fame is shifting away from the peer review system with his own research. In fact, Mastroianni doesn’t plan on submitting one of his papers to an academic journal again. With one of his latest papers, Mastroianni decided to write it in a way that a journal would never accept, but would be far more digestible and transparent to readers, and it was a raging success. That being said, many people doubt the efficacy of Mastroianni’s system, as who will be checking information without a clear system? In his words, “Other people talked about, you know, ‘If everyone did what you did, we would live in a world of chaos. This is just people saying stuff.’” But, Mastroianni responds to this claim with the simple belief that people aren’t stupid, and are able to verify claims through examining data sets and discussing the veracity of conclusions. A particularly interesting extrapolation Mastroianni and Roberts take from the discussion of the problems of peer review, and the necessary changes in academic research is how more knowledge is not always better. More information is better only if you can weigh it properly. Only if you can assess it properly. If you overreact to it, if you are overly confident in the information, the imperfect information you get, you make a different kind of error. Mastroianni believes the impetus of this feeling is the view that humanity has reached its ceiling in terms of knowledge, innovation, or development. He takes issue with the view that humans are enlightened today and primitive in the past. Yeah. I think behind this feeling of ‘I need to get more information and that’ll help me make a better decision,’ especially in science, is this idea that we are at the end of science. That, in the past these were people who were just groping around in the darkness. They had no idea what they were doing. You need to make decisions and you need to figure out what to do, but this level of certainty that I think that we want is impossible to get. So, you need to come to terms with the fact that mainly we operate in the darkness. And, I think it’s actually very exciting because there’s so much left to do and so much left to discover. To Mastroianni, liberating the production and spread of knowledge allows humanity to further pursue the significant gaps we have in the understanding of the world, and how to improve socio-economic conditions for all of humanity. Now that I’ve shared my thought, we hope you’ll share yours. We’d love to see your responses in the comments, or to receive them via email at econlib@libertyfund.org. Thanks for reading!     1- Roberts brings up Daniel Kahneman incorrectly citing poor research in his book Thinking Fast and Slow to discuss the psychological phenomenon of priming. Kahneman later expressed regret for citing “underpowered studies” that could not be replicated. Could this example be used to support the system of peer review, as he was convinced by better evidence which was also peer reviewed? Or does the fact that Kahneman’s mistake was made in the first place indict peer review regardless?   2- Mastroianni says that peer review is worse than nothing at all because it claims to be something that it actually is not. Can this be extrapolated to almost every institution? For example, take the United States Constitution. The Constitution has promised American citizens that the government will protect their rights, no matter their race, gender, sexuality, gender identity, and so on. However, these promises haven’t always been fulfilled. Does this mean that Americans have misplaced their trust in the Constitution? Would it be better to have no Constitution or legal framework for the nation? Why or why not?   3- Why is the process of peer review so long and arduous when the referees don’t significantly review the methodology of the papers they’re reviewing? Would better incentive structures for referees to conduct reviews quicker, as Roberts suggests, be effective, or would this lead to even more errors in academic papers?    4- How can ordinary people, who don’t have the time to verify which academic papers are true or not, have access to the truth? Given this difficulty in access, how can the spread of anti-intellectualism be halted? How can one verify their beliefs if academic sources can’t be trusted as much as they should be? What’s the line between skepticism and irrational denial of academic research?   5- Where does the fallacious idea that more information is better come from? How has this attitude affected the dissemination of information throughout the 2020’s, particularly regarding elections and COVID-19?   Kevin Lavery is a student at Western Carolina University studying economic analysis and political science and a 2023 Summer Scholar at Liberty Fund. (0 COMMENTS)

My favorite economist is Tyler Cowen. But this isn’t because he has a great track record at predicting things—none of the greats do. Unfortunately, our society places way too much weight on prediction. Even worse, we don’t know how to evaluate whether people have done a good job at predicting.  Bubbles are a great example of this phenomenon. Over at TheMoneyIllusion, I have a new post claiming that bubbles do not exist.  They are mythical entities, like ghosts, alien spacecraft, or fiscal multipliers.  But I’m confident that I will lose this debate, and in this post I’ll try to explain why. Consider the following thought experiment.  Once during each of the next 99 months, Tyler predicts an asset price bubble will burst.  Each time, I write a snarky post explaining that the EMH “proves” that bubbles don’t exist.  And let’s also assume that each of Tyler’s 99 predictions turn out to be spectacularly correct.  Each time, the asset he singles out quickly goes to zero.  Who wins that argument?  Who should win that argument?  (Answers:  Tyler, me.) Tyler’s track record would need to incorporate all of his bubble predictions, including this one from 10 years ago when Bitcoin was at $30: With apologies to Scott Sumner, I say Bitcoin is a bubble.  Outside of war and rebellion, do “normal” new currencies behave this way? I know what you are thinking:  “Oh, come on, you can’t seriously suggest that getting 1 out of 100 predictions correct makes you a better forecaster than someone who is completely correct 99 times out of 100?” Yes, I’m dead serious.  For a bubble claims to be meaningful, they must be in some sense useful.  A bubble claim is an implied prediction that an asset is overpriced, and is not a good long-term investment.  Maybe it will go somewhat higher, but eventually it will crash. I know what you are thinking: “Even so, in your thought experiment Tyler was correct 99 times out of 100.  So he’d be better even using your pragmatic definition of truth.” Not quite.  Investors don’t care about the number of wins and losses; they care about the total return of a portfolio.  An investor that invested $30 in Bitcoin, and also invested $30 in each of the 99 other (lousy) assets, would have ended up 10 years later with nearly $30,000, a 10-fold return.  Those that took Tyler’s advice and refrained from all 100 of those highly speculative investments would have missed out on those outsized gains. Thus despite being “wrong” about 99 out of the 100 cases, I would have been right about the broader point—bubble claims are meaningless nonsense.  In an efficient market, the vast majority of assets that have the potential to go up 1000-fold will in fact go down sharply. Now I think you can see why it’s inevitable that I’ll lose this debate.  Most people just don’t have brains that are wired to think this way.  Put me in a room with a really bright blogger (say Scott Alexander or Matt Yglesias) and I might eventually be able to convince them with my arguments.  But there’s no way I’ll ever move the needle for society as a whole.  The argument that the guy wrong in 99/100 cases was more correct than the guy who made accurate predictions in 99/100 cases is just too counterintuitive, too much against common sense.  It would be like convincing people that the 2008 financial crisis didn’t cause the Great Recession, or that rising interest rates don’t mean that money is getting tighter, or that price gouging is good.  There are some things that are just too counterintuitive to be accepted as conventional wisdom.  And yet it moves . . .  Bubbles don’t exist, but “bubbles” are never going away. And I’ve accepted that.  But I’ll keep beating my head against the wall, in the slim hope that I’m wrong to be so pessimistic. PS.  This post also has implications for reputations based on predictions.  (BTW, I’d argue that Tyler’s reputation is based on his talent as a critic and analyst, not prediction.)  Do we overrate pundits that seem to make correct predictions?  Do we sufficiently downgrade people after failed forecasts, such as the people who made lots of false financial crisis predictions before getting it right in 2008? Or who got it right in 2008, and then did poorly afterwards?  Do we have such a deep innate hunger for soothsayers that we seek Delphic oracles in areas where prediction is essentially impossible, such as the timing of business cycles? PPS.  Ten months ago, Bloomberg told us that there was a 100% chance of recession within the next 12 months.  Rest assured, I keep track of these things.  Like a dog holding onto a bone, I’ll never let them forget.   PPPS.  The title of this post reminds me of a classic pop song from 40 years ago (“99 Red Balloons” in English.).  Surprisingly dark lyrics for such a poppy earworm. (0 COMMENTS)

  And, challenges remain in ensuring equal pay for equal work. In 2022, among all salary workers in the White House, a woman made just 80 cents every dollar paid to a man. This is from a blog post written by an economist with President Biden’s Council of Economic Advisers. It takes some courage to call out “the big guy,” aka Joe Biden, for paying women less than men, but the economist who wrote it had that courage. Oops. I got it wrong. It was economist Mark J. Perry who pointed out that the median pay for female workers in the White House is only 80 percent of the median pay for male White House workers. The CEA blogger wrote this: And, challenges remain in ensuring equal pay for equal work. In 2022, among all wage and salary workers usually working full-time, a woman made just 83 cents for every dollar paid to a man. According to that blogger, this is a problem. The blogger did not address the gender pay gap in the White House. Here are the White House data. Interestingly, the blogger did not point out an even bigger gender gap in the workplace: the gap between fatalities for male workers and those for female workers. Mark J. Perry has also presented good material on this. Men suffer 91.4 percent of fatal injuries on the job, versus 8.6 precent for women. The most dangerous occupation in the United States is logging, where the fatal injury rate is 82.2 per 100,000 workers and where 96.0 percent of the people in the occupation are male. Underground mining, an occupation I had when I was 18, is the 8th most dangerous, with 26.7 deaths per 100,000 workers and with 99.0 percent of the workers being male. Should we get more women in those occupations to close that fatality gender gap? Note: In David R. Henderson, The Concise Encyclopedia of Economics, Claudia Golden of Harvard writes on the “Gender Gap.” (0 COMMENTS)

When the United States entered World War One in 1917, tax rates were increased to pay for it and remained high after the war. The federal income tax was enacted in 1913 with a starting rate of 1.0% on income under $20,000 ($621,000 in 2023 dollars) – at a time when the average income was about $600 ($18,600) – and a top rate of 7.0% on income over $500,000 ($15.5 million), and 358,000 returns were filed. At the time of President Warren G. Harding’s sudden death and succession by Calvin Coolidge in August 1923, the starting rate was 4.0% on income under $4,000, the top rate was 58.0% on income over $200,000, and 7.7 million returns were filed.   Nevertheless, spending ran significantly ahead of revenues. As a result, federal government debt leapt from $1.2 billion in 1914 to $25 billion in 1919; indeed, by 1919 the interest on the debt was as large as the debt itself had been in 1914. Part of the problem was that higher rates did not necessarily yield higher revenues. As Thomas Sowell notes: …the number of people reporting taxable incomes of more than $300,000…declined from well over a thousand in 1916 to fewer than three hundred in 1921 [and] The total amount of taxable income earned by people making over $300,000 declined by more than four-fifths…there was no reason to believe that the wealthy were suddenly suffering drastic reductions in their own incomes, but considerable reason to believe that they were receiving tax-exempt incomes that did not have to be reported under existing laws at that time. The Treasury Department estimated that investment in tax exempt securities like municipal bonds had nearly tripled in a decade. Harding blasted a federal “financial orgy” but struggled to restrain it. Coolidge set about the task with relish. With his budget director, Herbert Lord, he set targets for spending cuts, and he developed tax cuts with Treasury secretary Andrew Mellon. He announced his tax reforms in December; tax exempt securities would lose their special status and tax rates would be cut. Coolidge, who had a moral aversion to high taxes, echoed Mellon’s argument that lower rates “will not greatly reduce the revenue from that source, and may in the future actually increase it” by stimulating economic growth. Coolidge and Mellon secured a compromise tax cut in 1924, but it wasn’t until Coolidge won a mandate of his own with victory in that year’s presidential election that their tax bill passed. As they pushed the bill through Congress, Amity Shlaes writes: In desperation, the opponents of the legislation began to quantify the share of the tax break that the wealthy would claim. This, they were discovering, was an easy way to frame an opponent. General, across-the-board cuts of any progressive structure always favored the rich, since they had been paying more under the progressivity to begin with. Senator George Norris pointed out, “Mr. Mellon himself gets a larger personal reduction than the aggregate of practically all the taxpayers in the state of Nebraska.” So he did. But Mellon paid more tax than the citizens of the state as well. Coolidge was successful and by 1925 the starting rate of federal income tax was 1.5% on income under $4,000, the top rate was 25.0% on income over $100,000, and 4.2 million returns were filed. And, as rates fell, revenues rose, especially from the rich. Cutting income tax rates and ending the tax exemption of securities like municipal bonds caused people to move their capital from non-taxable but economically unproductive investments into taxable – at lower rates – but economically productive investments which generated higher rates of economic growth, widespread prosperity, and higher tax revenues. The number of people reporting incomes of over a million dollars increased from 21 in 1921 to 207 by 1925. Sowell writes that: In 1921, when the tax rate on people making over $100,000 a year was 73 percent, the federal government collected a little over $700 million in income taxes, of which 30 percent was paid by those making over $100,000. By 1929, after a series of tax rate reductions had cut the tax rate to 24 percent on those making over $100,000, the federal government collected more than a billion dollars in income taxes, of which 65 percent was collected from those making over $100,000. It isn’t true that tax cuts will always pay for themselves as Coolidge’s did, but neither is it true that cutting taxes will always reduce revenues. This was the central – correct – insight encapsulated in the famous ‘Laffer Curve’ in the 1970s. By then, however, it was at least 50 years old and might just have well been called the ‘Coolidge Curve.’   John Phelan is an Economist at Center of the American Experiment. (0 COMMENTS)

A few months ago, I noticed a trend in my Twitter feed – many of the people I follow were sending out Tweets with the title “Introduce Yourself With 10 Books,” or retweeting others who had posted the same thing. Generally, this seemed to be the ten books that had most influenced the thinking or shaped the worldview of whoever was sending out the list. Now, I’m always happy to jump on a bandwagon a few months after it’s already passed, and on top of that I tend to do it the wrong way as well. (It’s part of my charm, I tell myself.) I have a slightly different take in mind for this list. These won’t necessarily be the ten best books I’ve ever read, or the ten that most influenced my thinking, or the ten books I think everyone should read, or anything like that. Instead, these are ten books that I would say had an oversized influence on how I read, think, and understand the world, even if they aren’t necessarily top-ten tier overall. The next two posts will be listing out the books in no particular order, and describing why each book was an oversized influence for me.  The Radical and the Republican: Frederick Douglass, Abraham Lincoln, and the Triumph of Antislavery Politics by James Oakes Long before I read Mike Munger on the difference between directionalist and destinationist libertarians, this book introduced me to the basic idea. The directionalist libertarian supports policies that move in the direction of liberty, even if they are only half measures, while the destinationalist libertarian only supports policies that pass an appropriate purity test. James Oakes describes how this same divide was at play in the careers of Abraham Lincoln and Frederick Douglass. Lincoln, the Republican and directionalist, was willing to engage in compromise and accept half-measures that limited slavery in the United States, even if they fell short of full abolition. Douglass, the Radical and destinationalist, saw things differently. Slavery is an evil and abominable institution, and you simply don’t compromise or negotiate with evil. You eliminate it – end of moral analysis. Still, Douglass found himself struggling with the full implications of his destinationalism, particularly when he and his fellow thinkers found themselves opposing the Missouri Compromise, which would have preemptively banned slavery for any new states in the Union, on the grounds that it did nothing to address slavery in current slave states. The give and take between these two men and the broader movements they represent did a lot to move me more into the directionalist camp. In my younger years, I (like many, I suspect) was far more concerned with ideological purity above all else, and this book was what began to dislodge that idea in my mind.  Black Rednecks and White Liberals by Thomas Sowell I wouldn’t call this Thomas Sowell’s best work – in terms of pure intellectual achievement, I’d have to put Knowledge and Decisions at the top of that list. However, this was the book that introduced me to Thomas Sowell. I picked it up entirely on a whim, because I thought the title was interestingly provocative. Each of the six essays collected in the book, however, were eye-opening for me, due in no small part to Sowell’s clear, forceful, and jargon-free style of writing. As one example, his essay The Real History of Slavery blew my mind. Before picking up this book, all I knew about slavery was what I learned about it from the public school in the small rural town I grew up in – slavery was something that existed in America, and that it was driven by racial antipathy and a belief that whites were superior to blacks. Prior to reading this book, I had no idea that slavery was a worldwide institution, that for the vast majority of its existence it had no connection to race and that its later racial divide was simply due to historical happenstance, or that the moral opposition to slavery was largely driven by developments in Western civilization and forcefully stamped out throughout the world by Western nations, particularly the English. None of this was featured in my public-school education – and it seems even less likely to be brought up now. Insightful and interesting as this book might be, what puts it on this list is that it introduced me to Sowell.    The Great Melody: A Thematic Biography of Edmund Burke by Conner Cruise O’Brien I once heard Peter Boettke say that in order to truly understand what someone is arguing you need to understand who and what they were arguing against. This was particularly true for me regarding Edmund Burke and his most famous work, Further Reflections on the French Revolution. I tried reading that book and found myself struggling with it. A major reason for that is the very nature of the book. Unlike many political tracts from those days, Burke was conscientiously writing a commentary on current events, not a treatise on timeless political principles. After reading Connor Cruise O’Brien’s biography, I was able to revisit Burke’s Reflections and, properly understanding the context in which it was written and the people and events it references, I found it to be an engrossing and powerful book. The Great Melody also convinced me that many of Burke’s modern critics, who classify Burke as a reactionary, ultimately root their criticism in a misleadingly literal reading of the Reflections and Burke’s other works criticizing the French Revolution and its aftermath. Because Burke wrote the Reflections as a polemic about ongoing events with the aim of countering or swaying public opinion, he deliberately amped up his rhetoric, overemphasizing some ideas and downplaying others, to create an argument that was targeted to the crisis of the moment. The general lesson I took from this book was the importance of studying ideas in their proper historical context, as well as the importance of studying the biographies of major thinkers.  The Yom Kippur War: The Epic Encounter That Transformed the Middle East by Abraham Rabinovich I picked up this book shortly after it was released, because I was trying to better understand the history behind the seemingly endless conflicts in the Middle East. While the book presents a very detailed account of how the conflict played out, hour by hour, what puts it on this list for me was the lesson it taught me about the politics of war. Two key points come to mind. The first nicely connects with Scott Sumner’s recent post on why it’s important to keep strategic intentions clear. While it’s often said that Israel was caught completely off guard by the Yom Kippur war, Abraham Rabinovich shows that isn’t quite true. While the Israeli government was very slow to realize an attack was coming, they did realize it a few days in advance. This was far too late to mobilize the troops and equipment they’d need to create an effective front line against the invasion, but they did have the opportunity to launch first strikes with bombers and long-range missiles on the enemy lines. This was overruled by Golda Meir, who believed that when the invasion came Israel would need support and supplies from the United States, and if Israel pulled the trigger first, they wouldn’t receive that support. Later, Henry Kissinger confirmed to her that she was correct, and that if Israel had fired the first shot, they would not have received “so much as a nail” from the United States. The other point that stuck with me is how negotiations to end the conflict were carried out not between the countries that were fighting each other, but between the United States and the USSR. Rabinovich describes how Kissinger, when traveling to the USSR to begin the negotiations, stipulated that no negotiation would take place until after he had landed and had an opportunity to get a full 8 hours of sleep. Ostensibly this was because he didn’t want to negotiation while sleepy or jet lagged. In reality Kissinger had correctly intuited that the tide of the war was turning, that Egypt and Syria had lost their initial momentum and Israel quickly gaining the upper hand. His insistence on that extra time was to give the Israeli forces more time to further gain the advantage – at which point, just as the invading forces were about to be fully routed, he’d have the strongest hand to negotiate. While that might seem like a masterful move of negotiation, I (a lowly Lance Corporal in the Marines at the time) couldn’t stop myself from seeing this from the position of the people on the ground – the kind of person I would be as well. For those additional hours, people were continuing to experience the terror of combat, being maimed and killed, very likely seeing themselves as fighting for their respective causes, when in reality their fate was being dictated by high level politicians from other countries. These kinds of policies look very different when you’re the kind of person who would be on the ground fighting and dying.  Writings on an Ethical Life by Peter Singer I picked up this book because I had become aware of Peter Singer entirely from the controversy surrounding him and his views. I couldn’t quite believe that anyone really held the views being ascribed to Singer – ideas like failing to give away money to charity in order to save lives was morally no different from actively killing people, yet at the same time, literal infanticide was not morally wrong. This book contained a series of small essays and papers where he lays out arguments for these and other views. Yet I was forced to concede upon reading this book that Peter Singer is not some kind of madman or ogre. I believed – and still believe – that he is very wrong about many issues of great importance. Nonetheless, his arguments were stronger than I expected, and he has changed my thinking along the margins of many issues. While I disagree with Singer far more often than I agree with him, I gained respect for him as a thinker. And the lesson I took from this book that puts it on this list is the importance of seeking out and reading books and arguments written by people with whom you strongly disagree. Most importantly, you might conclude you were wrong about something, which is always a win. But even when it doesn’t change your mind, it’s important to understand where these ideas come from, to see how conclusions with which you strongly disagree can be held by people who are smart, well informed, and well intentioned. Far too many people these days act as though contrary views can only be motivated by bad intentions or sheer stupidity – and Peter Singer helped me realize that even views that were extremely contrary to my own need not be rooted in either.  (0 COMMENTS)

In recent years, Minneapolis enacted a set of reforms making it easier to build multifamily housing.  Tim Peach directed me to a blog post written by Matthew Maltman, which suggests the effects have been fairly dramatic: Scott Alexander recently suggested that building more housing might actually boost housing prices, by making cities more dense.  In a previous post, I used cross sectional evidence to cast doubt on that claim.  Maltman’s post provides time series evidence that rents in Minneapolis have risen by substantially less than in other midwestern cities: Another graph shows declining homelessness in Minneapolis, at a time homelessness was rising in comparable cities. In contrast, housing construction plunged soon after St. Paul voters enacted rent control in 2021: When it comes to construction of duplexes, triplexes and other forms of multi-family housing, St. Paul’s building permits plummeted by 48% last year [2022] compared with the year before, according to HUD, the federal department of Housing and Urban Development. Scott Alexander is correct that bigger cities are often more expensive.  (Not always; compare Houston and Austin.)  When a city grows rapidly because of a rapid increase in the number of people who wish to live there, housing costs often rise.  Austin is a good example.  But when the housing stock rises due to regulatory changes making it easier to build, housing prices tend to fall. Never reason from a quantity change. PS.  After writing this post I noticed a Bloomberg piece that makes some similar points. PPS.  Matt Yglesias has an excellent post on the politics of YIMBYism. (0 COMMENTS)

One exhibit in the trial against democratic political mythology is the idea that the incumbent president, or chief ruler, is to blame for higher gasoline prices, and the observation that voters believe in their ruler’s benevolent omnipotence. The Financial Times reports (“Rising Petrol Prices Spark New Concern in Washington,” August 6, 2023): Rising US fuel prices are triggering alarm in Washington just as President Joe Biden steps up his bid for re-election by touting lower inflation and the strength of the US economy. … “The White House is in full-blown panic mode,” said Bob McNally, head of Washington-based consultancy Rapidan Energy Group and a former adviser to president George W Bush. “Any sitting president is threatened when pump prices go up because of the impact on consumer confidence and the president’s approval rating.” It should be pretty obvious that the president’s power to set world prices is (fortunately) nil. Any influence he can have on them involves the (risky) possibility that he engages in horse trading with other, worse rulers in the world: The Biden administration has repeatedly called on Riyadh to pump more oil in the past two years, and last year accused the Opec+ cartel of “aligning with Russia” when it launched its current phase of supply cuts. Politicians’ incentives don’t push them to discourage a belief in their benevolent omnipotence. They have little incentive to explain to their people that, even with OPEC (whose member states control about 38% of the world’s crude oil production), the price of oil is determined on the world market, and that they already have their hands full protecting the individual liberty of their citizens, assuming that this is what they do. Liberal political economy suggests the following. Free individuals and their free enterprises in a free country would take the world price of oil as it is, and buy low or sell high according to their own interests. (0 COMMENTS)

Bryan Caplan did yet another commendable thing: He made two lectures by Ralph Raico available online. You can find them, together with Bryan’s recollections of Ralph, here. The lectures are splendid. In the first, to sketch an outline of classical liberalism, Raico brilliantly digs into the state’s mystique, including how support for the arts plays with the legitimization of the mercantile system. He provides a wonderful sketch of the Levellers and explains why the idea of natural, unalienable rights reversed the common thinking on men and state, putting the latter at the service of the first, plays sword with the phantom of Jean-Jacques Rousseau (a man who erupted in moral outrage for things he was doing any other day of the week). Interestingly enough, to explain the importance of history, Raico begins by quoting Thomas Szasz, a scholar he greatly admired. In the second, Raico describes a classical liberalism which was upfront, not on the defensive. The classical liberals’ emphasis on harmonious interests presupposes a society in which coercion and privileges have been seized and limited: it is not a way of justifying the status quo. Raico remembers how liberals fought against plunder, exploitation by the ruling class at the expense of the productive classes. Ralph Raico was a great scholar and a wonderfully idiosyncratic man. He was also a great teacher, as you would immediately understand listening to his lectures. Bryan complains that Raico didn’t write that much – but his archive page at Mises.org is still a treasure trove you can dig into. (0 COMMENTS)

I lost a good friend last March, Harry Watson, whom I had met at the University of Western Ontario in September 1971 and with whom I went to graduate school at UCLA, starting in September 1972. I’ve hesitated to write about him on EconLog because I’ve wanted to follow the overall rule to write about economics. But yesterday I was talking with a fellow UCLA graduate student, Tom Nagle, who had also been friends with Harry, and the stories that came up were all about economics. So here goes. At UWO, Harry and I were in a class taught by a Keynesian professor. I won’t name him because a few years ago I emailed him to ask if he remembered having said what Harry and I clearly remembered him saying, and he said he hadn’t. So I’ll call him Bob. Bob was a nice man. At the same time, he was totally sold on the Keynesian model. Harry Watson and I would often criticize the Keynesian model and propose Milton Friedman’s monetarism as an alternative. We were never nasty; hey, we were Canadian. But we were persistent. One time, Bob, frustrated at our objections, pointed to us and said to the class, “These guys are dangerous.” If you ever wanted to persuade people not to be outspoken, this was not the way to do it. I was 21 at the time and I suddenly felt taken seriously.  Harry was 23 and I’m guessing he thought the same. Every time Harry and I got together after that–and it was literally dozens of times–and there were other people around, he would tell that story and we would laugh uproariously. That’s one reason I remember it so well. It happened in the spring of 1972 and Harry started telling the story regularly from about 1976 on. I also remember one area in which we disagreed with “Bob” a lot: Milton Friedman’s permanent income hypothesis (PIH). It just made sense to us that people would base their consumption on some conception of their “permanent income” rather than on whatever their income happened to be at the time. But Bob presented empirical studies that purported to find evidence against the PIH. They were typically of cases where people got a windfall. If Friedman’s PIH was right, they would spend about 1/3 of it in the year they got the windfall. If Keynes was right, they would spend well over half of it. My recollection of some of the studies is, understandably, vague here because this happened over 51 years ago. But one study stands out. And it stands out because Harry Watson always made it part of his “routine” when he talked about our discussions in Bob’s class. The study was about conscripts in Israel’s army getting out and being given a lump sum of about $200 (in early 1960s dollars, and it might have been less: it wasn’t more.) That’s not a small sum but it’s not a large amount either. Inflation adjusted by the CPI, it’s about $2,000 today. Bob showed that the conscripts had spent almost all of it the first year. Harry challenged him, not on the data, but on the interpretation. “You’ve got guys getting out of the Israeli military, where they have been subject to a lot of discipline. They’re going to want to go out and drink and spend it on women,” said Harry. “This is not strong evidence against the PIH.” That gets to something I noticed about Harry within 2 weeks of being in the same class with him: the perspective he brought to each issue, which seemed to be of someone way older than 23. I later learned why. His dad had married late in life and when Harry was born, his dad was 56. His dad, a successful businessman in Brantford, Ontario, had a number of male friends of approximately the same age. Many of them became Harry’s friends. I remember Harry telling me that at age 14 and 15, he had been a pallbearer at a number of their funerals. So he brought a wisdom to things that I had not seen in someone so young. It was from him, for example, that I first learned that there was an alternative view to the view I had adopted that population growth was bad. Harry pointed out that in poor countries, people needed to have a lot of kids because that was their version of Social Security. I had literally never thought of that. I shared some of these reminiscences, plus others that didn’t have much to do with economics, at his memorial service in New Hampshire last month. Note: In the above pic, taken at the first Austrian economics conference in South Royalton, Vermont, in June 1974, we were standing around talking to Milton Friedman in a polite but intense discussion. We had our intellectual differences with Milton too, but I don’t remember the issue. Behind Milton is Harry Watson. Then to our right with his arms crossed, his hair long, and a beautifully coordinated outfit is me, then Jerry O’Driscoll, then Jack High, and then Richard Ebeling. (0 COMMENTS)