I think the main interest of the third volume of Friedrich Hayek’s 1973-1978 trilogy Law, Legislation, and Liberty, titled The Political Order of a Free People, resides in its strong liberal critique of democracy as we know it. My review of this third volume is just out on Econlib. A few excerpts of my review (the quotes are of course from the book): The first broad argument of the book is that democracy has diverged from its original ideal and degenerated into an unlimited and totalitarian democracy. Unlimited democratic power can be traced back to the decline of Athenian democracy at the end of the 5th century BC when, as Aristotle noticed, “the emancipated people became a tyrant.” In a similar way, the British Parliament became sovereign, that is, theoretically omnipotent, in 1766, when it “explicitly rejected the idea that in its particular decisions it was bound to observe any general rules not of its own making.” Liberal democracy originally referred simply to “a method of procedure for determining government decisions” or, more practically, for getting rid of governments without bloodshed. Democracy was a protection against tyranny. It is an error to view democracy not as “a procedure for arriving at agreement on common action,” but instead “to give it a substantive content prescribing what the aim of those activities ought to be.” The current, unlimited democracy leads to rent-seeking (competition for government privileges), the triumph of special interest groups, and legal corruption. The cause is that a government with unlimited powers “cannot refuse to exercise them,” so everybody will rush to the public trough. I previously reviewed on Econlib the two previous volumes, respectively Rules and Order, and The Mirage of Social Justice. As the reader of my reviews will realize, I try to provide a summary of Hayek’s theory, but I also draw a few parallels with other theories, and raise some questions or doubts. For those who are not already familiar with Hayek’s thought, I would recommend reading my reviews in the same order as the books. (0 COMMENTS)

Scott Alexander pushes back against the argument that building more housing in a city will reduce housing prices in that city.He begins by noting that housing costs tend to be higher in places that are relatively dense, such as New York and San Francisco. He is aware that this argument is subject to the “reverse causality” issue, which I call “reasoning from a price change”. Consider the graph that he provides: He is aware that the pattern above may show an upward sloping supply curve, not an upward sloping demand curve.  But he nonetheless suggests that it’s probably an upward sloping demand curve, and that building more housing in Oakland would make Oakland so much more desirable that prices actually rise, despite the greater supply of housing.  I have two problems with this sort of argument. First, I doubt that it’s true.  It is certainly the case that building more housing can make a city more desirable, and that this effect could be so strong that it overwhelms the price depressing impact of a greater quantity supplied.  But studies suggest that this is not generally the case. Texas provides a nice case study.  Among Texas’s big metro areas, Austin has the tightest restrictions on building and Houston is the most willing to allow dense infill development.  Even though Houston is the larger city, house prices are far higher in Austin: Houston pretty much describes the “Oakland with more housing” outcome that Alexander views as somewhat far-fetched.  Only in this case, it’s Austin with more housing.  Alexander seems too quick to accept the, “If you build it they will come” idea—that you can build more housing and thereby boost demand so much that prices actually rise. Alexander relies on the following intuition: Matt Yglesias tries to debunk the claim that building more houses raises local house prices. He presents several studies showing that, at least on the marginal street-by-street level, this isn’t true. I’m nervous disagreeing with him, and his studies seem good. But I find looking for tiny effects on the margin less convincing than looking for gigantic effects at the tails. When you do that, he has to be wrong, right? Here’s the problem with this argument.  It mixes up population change due to economic effects such as the benefits of agglomeration, with population changes due to regulatory changes such as less strict zoning.  If you look at things this way, then the stylized facts work against Alexander’s argument.  Over the past 50 years, increasingly strict zoning has reduced housing construction on big cities like New York and San Francisco.  As a result, their populations have increased by less than in cities with less strict zoning, such as Houston.  If Alexander were correct, then the price gap between the tightly controlled cities on the coast and the more laissez-faire cities of Middle America should have shrunk over time.  Instead, the price gap has widened.  New York and San Francisco were always more expensive than other cites, but with tighter zoning and less new construction the gap has become far wider.  Nonetheless, I suspect that there are at least a few cases where Alexander’s argument would be correct, especially in the case where the new housing was luxury homes that replaced slums.  For instance, if 100,000 homes in the (poorer) eastern half of Washington DC were replaced with 120,000 luxury townhouses, then prices might rise (due to a lower crime rate).  But even in that case, I believe Alexander would be drawing the wrong conclusion: And it doesn’t violate laws of supply and demand; if Oakland built more houses, this would lower the price of housing everywhere except Oakland: people who previously planned to move to NYC or SF would move to Oakland instead, lowering NYC/SF demand (and therefore prices). The overall effect would be that nationwide housing prices would go down, just like you would expect. But the decline would be uneven, and one way it would be uneven would be that housing prices in Oakland would go up. This isn’t an argument against YIMBYism. The effect of building more houses everywhere would be that prices would go down everywhere. But the effect of only building new houses in one city might not be that prices go down in that city. This is a coordination problem: if every city upzones together, they can all get lower house prices, but each city can minimize its own prices by refusing to cooperate and hoping everyone else does the hard work. This theory is a good match for higher-level management like Gavin Newsom’s gubernatorial interventions in California. Tell me why I’m wrong! Alexander is implicitly viewing this outcome as a “problem” for the city that builds more housing.  They must sacrifice so that the rest of the country can gain.  But in his scenario, Oakland is better off.  Indeed if it were not better off, then why would more people choose to live in Oakland?  In order for it to be true that building more housing boosts housing prices, it must also be true that the quality of existing houses (including neighborhood effects) rises by more than enough to offset the increase in supply.  That means the new housing construction must make Oakland such a desirable place to live that the amenity effect overwhelms the quantity effect. You see the same fallacy with criticism of highway expansion projects.  People will complain, “They added two more lanes to the freeway, but the traffic is worse than ever.”  But that’s a wonderful result!  If the traffic is worse than ever, despite many more people driving on the highway due to the extra lanes, then the welfare of commuters has increased for two reasons.  First, more people benefit from using the highway.  Second, the fact that they are willing to use it despite a higher time cost means that they value the service much more than before the expansion.  Otherwise, the traffic would not be worse. Of course, economic change always has winners and losers.  Here’s how I would describe the impact of allowing more housing construction in Oakland, in the unlikely event that this did raise housing prices: 1. America would benefit. 2.  Oakland would benefit. 3.  Poor people in America would benefit, in aggregate. 4.  Affluent people in America would benefit, in aggregate. 5.  Homeowners in Oakland would benefit. 6.  Some renters in Oakland would benefit (from a more economically dynamic city.) 7.  Some renters in Oakland would suffer from higher rents. In the much more likely case where new housing construction would lower prices, the impact described in #5 and #7 might reverse.  Either way, there is no defensible argument for not building more housing in Oakland, regardless of the impact on price.  If building more housing reduces its price, then there is a strong argument for allowing more housing construction.  If building more housing raises its price, then the argument for more construction is even stronger.   (2 COMMENTS)

I recently had occasion to read (for the first time) John Locke’s “Some Considerations of the Consequences of the Lowering of Interest, and Raising the Value of Money.” [SC]1 Among other things, this got me thinking about the common claim that Locke was a mercantilist.2 I think the correct assessment of this claim is that it all depends on what one understands mercantilism to be. Is mercantilism at its core the view that a nation should export more than it imports to build up its stock of money—in particular, its stock of silver and gold? Or is mercantilism at its core the view that the wealth of a nation consists in the size of its stock of silver and gold? “Locke was a mercantilist in the sense of favoring an excess of exports of consumable commodities over imports of consumable commodities. But he was not a mercantilist in the sense of taking a nation’s wealth to consist in the magnitude of its stock of silver and good.” Let’s look at some passages from “Some Considerations” [SC] that most support the claim that Locke was a mercantilist and then some passages in which Locke seems to distance himself from mercantilism. My suggestion is that the first group of passages show that Locke subscribed to the view that exports of consumable goods should exceed imports while the second group of passages show that Locke subscribed to the view that ultimately the riches of a nation does not consist in its stock of silver or gold. Rather, the wealth of a nation consists in the amount of the conveniences that are enjoyed by its inhabitants. Locke was a mercantilist in the sense of favoring an excess of exports of consumable commodities over imports of consumable commodities. But he was not a mercantilist in the sense of taking a nation’s wealth to consist in the magnitude of its stock of silver and good.3 In addition, we will see that Locke’s mercantilist view that international trade is a zero-sum game contravenes his own general recognition of the positive-sum character of all voluntary economic exchange.’ Locke writes that “… our growing rich or poor depends… only [on] which is greater or less, our importation or exportation of consumable commodities.” (SC 15) He contrasts two cases in which England annually exports two million pounds of consumable goods. In one case, England imports one million pounds of goods which it consumes and one million pounds of silver or gold coins. In the other case, England imports two million pounds of goods all of which it consumes. Locke says that England prospers in the first case, but not in the second. If more consumable goods are imported than are exported, “our money must go out to pay them, and we grow poorer.” (SC 15) Locke contrasts three scenarios involving a farmer who sells 1000 pounds of commodities a year. In one case, the farmer spends only 900 pounds per year on consumable goods and “he grows every year a hundred pounds richer.” (SC 19) In another case, the farmer only spends 500 pounds per year. In this case, “the owner[is] a better husband” and will be “so much richer.” (SC 19-20) In the third case, the prudent farmer dies and leaves the farm to his spendthrift son who spends 1100 pounds per year and, hence, his household becomes poorer (and more debauched, idle, and quarrelsome) every year. (SC 20) The lesson is that, if England is to prosper, it must spend only a portion of what it earns in trade. “[M]oney is brought into England by nothing but spending here less of foreign commodities, than what we carry to market can pay for.” (SC 20) Locke tells us that, “We have seen how riches and money are got, kept or lost, in any country” and that is, by consuming less of foreign commodities, than what by commodities, or labour, is paid for.” (SC 21) Locke criticizes legislation that caps interest payments below their “natural” level. He says that such legislation may affect “the distribution of the money we have amongst us Englishmen here at home.” But such legislation “would be of no advantage to the kingdom.” In contrast, sensible legislation “brings in more [money] from abroad” (SC 62) and, hence, advances the kingdom’s wealth. Indeed, legislation should facilitate foreigners purchasing land held by English proprietors. For, … whatever a foreigner who purchases land here, gives for it is so much every farthing clear gain to the nation: for that money comes clear in, without carrying out any thing for it, and is every farthing of it as perfect a gain to the nation, as if it dropped down from the clouds. (SC 63) Still, despite these passages, it is not at all clear that Locke holds to the mercantilist view that wealth (or riches) consists in the possession of money. Indeed, Locke tells us that, “Gold and silver, though they serve for a few, yet they command all the conveniences of life, and therefore in a plenty of them consist riches.” (SC 12) Indeed, Riches do not consist in having more gold and silver, but in having more in proportion than the rest of the world, or than our neighbors, whereby we are enabled to procure to ourselves a greater plenty of the conveniences of life, than comes within the reach of neighboring kingdoms, and states… (SC 13) Although each nation should seek a disproportionate quantity of silver and gold, the reason for doing this is that a disproportionately large share will “procure… a greater plenty of the conveniences of life” for the nation. Locke endorses legislation that “draw[s] more money into England.” (SC 62) However, Locke’s case for such legislation is that this increase of money will enable landholders to “sell better, and yield a higher price” for agricultural products and this benefit will compensate landholders for bearing through taxes on land “the greatest part of the burden of the kingdom.” (SC 62) How can England acquire such a surplus of silver and gold? According to Locke, In a country not furnished with [silver or gold] mines, there are but two ways of growing rich, either conquest or commerce. By the first the Romans made themselves master of the riches of the world; but I think that, in our present circumstances, nobody is vain enough to entertain a thought of our reaping profits of the world with our swords, and making the spoil and tribute of vanquished nations the fund for the supply of the charges of the government, with an overplus for the wants, and equally-craving luxury, and fashionable vanity of the people. (SC 13) The only reliable route to England having silver and gold in greater proportion than the rest of the world is commerce. Here Locke at least comes close to disavowing the common mercantilist view that a major reason for governments maintaining “a sufficient quantity of hard currency” was “to support a military that would deter attacks by other countries and aid its own territorial expansion.”5 How does such an addition to a nation’s stock of money yield a greater quantity of the conveniences of life for inhabitants of that nation? Locke holds that a nation having a large stock of money has value for that nation because of the propensity of that stock to support and extend trade within that nation and, in that way, to enhance the conveniences of life in that nation. He tells us that, while “it matters not, so it be here amongst us, whether the money be in Thomas, or Richard’s hands,” that money will serve the wealth of the nation, “provided it be so ordered, that whoever has it may be encouraged to let it go into the current of trade, for the improvement of the general stock and wealth of the nation.” (SC 62, emphasis added) Here Locke is relying upon his idea that a certain amount of money needs to be in circulation (at a certain velocity) within a nation for a certain level of mutually beneficial domestic trade to be sustained or exceeded. Locke also seems to presume that a sufficiency of money to maintain or extend domestic trade requires a surplus of money accruing to the nation from its international trade. According to Locke, it had been through “this over-balance of trade” with Spain” that “the greatest part of [England’s] money hath been brought to England, out of Spain. (SC 18) It is crucial to note that England could not move toward a disproportionately large share of the world’s money without moving Spain toward a disproportionately small share. On Locke’s mercantilist view about what counts as a gain and what counts as a loss in international trade, viz., increases and decreases of silver or gold, international trade is a zero-sum game. England’s enrichment requires Spain’s impoverishment. In fact, Locke feels a need to justify England’s imposing this loss on Spain. He tells us that “riches are only for the industrious and frugal” and the Spanish are “lazy and indigent people.” (SC 72) In contrast, Locke clearly thinks that the domestic trade is positive-sum. In “Some Considerations,” Locke is especially concerned to vindicate a borrower’s payment of interest to lenders in voluntary exchange for the borrower’s use of the lender’s money. This vindication underwrites Locke’s case against state-mandated interest rates. Locke’s specific strategy for vindicating interest payments to owners of money in exchange for the borrower’s right to use the owner’s money is to show that such exchanges are entirely parallel to rental payments to owners of land in exchange for the renter’s use of that land. On one level, Locke simply presumes that his readers will favor landowners and renters being allowed to enter into leasing arrangements and will reject out of hand rents being set by legislation. Showing the parallels between renting land and borrowing money should convince these readers to favor allowing the rental of money and to disfavor legislative setting of rates of interest. Nevertheless, Locke reinforces this argument by explaining why both the voluntary rental of land and the voluntary borrowing of money will be mutually advantageous to the parties involved. The essential—albeit, not quite explicit—explanation is that renters will rent, and borrowers will borrow if and only if they can put the land or money in question to sufficiently more productive use than the land or money would be put to by its owner. The land or the money will be sufficiently more productively used by the renter or the borrower if and only if the use of the land under the lease or the money under the loan yields enough income to the renter or the borrower both to pay for the lease or loan—thus, benefiting the owner of the land or the money—and to provide a sufficiently attractive net gain to the renter or the borrower. In effect, each sort of economic interaction moves a resource to a more productive use and because the interaction is voluntary the economic gains from this move are divided between the resource owner and the resource user in a way that leaves each a net beneficiary. (SC 36-37) Part of my reason for explicating this argument from “Some Considerations” is to point to a tension between this Lockean gains-from-trade argument and Locke’s own mercantilist commitment to the zero-sum character of international trade. Central to Locke’s discussion of the mutual advantages that accrue to landowners and leasers and to money owners and borrowers is the idea that voluntary exchanges strongly tend to be mutually advantageous. These interactions would not take place except for each party’s belief that he or she will on net gain. Similarly, if we think of international trade, as Locke tends to, as trade between nations, rather than as trade between private parties from different nations, we should expect voluntary commercial interaction between nations to be mutually advantageous. If each party to any given international exchange did not judge the interaction to be on net beneficial to it, the exchange would not take place. Suppose, as Locke and mercantilists in general, did that sometimes a nation needs to increase the quantity of hard currency in circulation within it. If the need for such an increase in hard currency is to be met through commerce, this nation will have to export more consumable goods to other nations than it imports from them. But no other nation will voluntarily agree to any commercial interaction that will diminish its stock of hard currency unless it sees that interaction as being on net advantageous to it—presumably by adding enough to its supply of consumable commodities to compensate for its loss of hard currency. For more on these topics, see Mercantilisim, by Laura LaHaye. Concise Encyclopedia of Economics. “Mercantilism Lives,” by Charles L. Hooper. Library of Economics and Liberty, Apr. 4, 2011. Peter Berkowitz on Locke, Liberty, and Liberalism. EconTalk. So, Locke should conclude that in the ordinary course of affairs, any voluntary international exchange that advantages one trading nation will also, contrary to mercantilist doctrine, benefit its trading partner. Were Locke to apply his insights about voluntary domestic trade to international trade, he would have been even less of a mercantilist than he was. Footnotes [1] The Collected Works of John Locke, volume 8; henceforth SC. [2] See David Henderson’s Concise Encyclopedia biography of John Locke. [3] In her John Locke: Economist and Social Scientist, Karen Vaughn maintains that it is the systematic character of Locke’s economic thought that distinguishes him from the mercantilists. [4] Laura LaHaye, “Mercantilism.” Concise Encyclopedia of Economics. * Eric Mack is a professor of philosophy at Tulane University. You can find more of his writing in the Online Library of Liberty. (0 COMMENTS)

The July 2021 issue of Nature Aging—one of the prestigious Nature periodicals’ group—published “The Economic Value of Targeting Aging.”1 It begins by asserting that changes in U.S. life expectancy and attention to “healthy aging” raise questions that biomedical scientists and economists alike must tackle. What kinds of questions? Is it preferable for biomedical research to aim at extending life? Or should its goal be to “compress morbidity” to make the same lifespan healthier? What is the economic value of each emphasis? The article, although it appends several pages summarizing the mathematics of its methodology, states its conclusions in reader-friendly terms: “[C]ompression of morbidity that improves health is more valuable than further increases in life expectancy… [and] targeting aging offers potentially larger economic gains than eradicating individual diseases.” (616) Of course, these conclusions are intended to “inform” government policy—and government policy is cast always and everywhere in terms of the collective and not the individual. For example, the authors write, “We show that a slowdown in aging that increases life expectancy by 1 year is worth US$38 trillion, and by 10 years, US$367 trillion. Ultimately, the more progress that is made in improving how we age [versus how long we live], the greater the [economic] value….” (616) As a 78 year-old man still blessed with good health, it occurred to me while reading this that research that extended life expectancy (mine is 10 years) might serve me, as an individual, better than research to keep the U.S. population at large on the job longer. Just one man’s perspective. If my taxes over approximately 62 years (since I turned 16) have gone to support the world’s largest, most expensive biomedical research enterprise, to what extent will my interests be represented? My interests are those of any individual fortunate enough to enter older age healthy and with a relatively greater stake in living longer. “Longer life with no greater proportion lived in good health equals more years in poor health—statistically, for the population at large.” But that is not the focus of the economic analysis, which reports Global Burden of Disease data indicating that for the last 150 years, life expectancy has soared in the United States and other developed countries, but the proportion of life in good health has not increased. Longer life with no greater proportion lived in good health equals more years in poor health—statistically, for the population at large. Certainly, there are economic issues raised by an aging population with proportionately more years lived in ill health. In a few years (2030), one-fifth of Americans will be over the age of 65, a doubling over the past 60 years. The retirement age remains 65, and that standard is affirmed by Social Security and Medicare.2 • Economic growth, as measured by GDP, reduces in basic terms to growth in the working age population multiplied by productivity. Neoclassical economics identifies productivity chiefly with capital invested per worker, especially in technology. And, despite some Luddite sentiment, technology is our strong suit. • The downside is that technology displaces workers at least temporarily, and among OECD nations, the United States is second only to Great Britain in worker displacement. • On the other hand, our population is not only getting older but also more diverse. Between now and 2037, the U. S. population will increase by 35 million from births that exceed deaths. More than half of that increase will be thanks to a burgeoning Hispanic population. • Millennials (now ages 23 to 38) are viewed as having the greatest potential to sustain U. S. economic growth, but they are struggling. On average, they are underemployed, have too much debt, and save little. A factor still very much in play is the role of the gig economy, which does not fit smoothly into existing systems for paying and saving for healthcare and retirement. Today, U.S. households under 35 years old earn less (inflation-adjusted) than comparable households a decade ago ($40,500 versus $43,300). • Finally, of course, an older, sicker population keeps increasing the cost to government of retirement, healthcare, and safety net programs, which takes us right back to the point that collectively if we live longer, and are sick longer, we hasten the often-predicted fiscal crisis of Medicare and Social Security. The United States does face the challenges of sustaining economic growth as its population on average becomes older and sicker and labor force participation declines. Yes, one element of the problem is a population living longer with more years of chronic illness. But that is only one factor in an equation that involves—just for example—immigration policy, investment in technology and worker training, a workforce (millennials) with potential but also problems, and government’s funding of healthcare and aspects of retirement. Mentioned far less often are factors such as the impact of regulation on productivity, the proportion of potential investment capital taxed away, welfare state disincentives to work, failing public education, and inefficiencies of partially socialized health care and retirement investment. (My search turned up dozens of policy statements addressing how an aging population will make capitalism “unworkable” for every article on free market prescriptions such as privatizing healthcare insurance.) For interventionist-welfare statists, of course, the least painful course is to continue all the above programs and policies. And instead, declare a grand strategy of using government’s dominant position in funding research—relentlessly aggrandized since WWII—to steer the national biomedical research enterprise toward the goal of shorter but proportionately healthier (i.e., more productive, cheaper for the welfare state) lives. Really? Is this an emerging policy bias? More research would be required to prove that, but there are suggestive indications. Most notable is an outpouring of policy papers on the theme “Living Too Long.” A few examples: • “Living Too Long” (“The current focus of medical research on increasing the quantity rather than the quality of life is damaging our health and harming the economy…”)3 • “Great Desire for Extended Life and Health amongst the American Public” (but very limited desire for longer life spans per se).4 • “Who wants to live forever? Three arguments against extending the human lifespan” (“… research with the explicit aim of extending the human lifespan is both undesirable and morally unacceptable.”)5 Examples could be multiplied without end. The message is that longevity per se is not a desirable national objective. The intensive focus on morbidity compression versus longevity seems evident to the healthcare policy world. If you are like me, past 75 and in good health, your interest in extending longevity is not relevant to the national interest, which is economic growth. To expect research on longevity is a personal, not to say “anti-social,” perspective. The focus of research will never satisfy everyone. A story on “billionaires who race to fund anti-aging projects” reports that “Earlier this year [2022], Altos Labs, a partial cellular reprogramming company, drew billions of dollars of investment, including from Jeff Bezos and Yuri Milner. Google founders Sergey Brin and Larry Page have put billions into Calico. Peter Thiel was an early backer of Unity Biotechnology. Peter Diamandis is placing bets on young blood and stem cells.” This private, individual support for biomedical and clinical research, as for all market-driven investments, is motivated by personal value priorities (such as cures for certain diseases) and one such priority, among those fortunate to age in good health, is longevity. Of course, the discoveries of the scientists supported by these private investments potentially will benefit everyone. But funding of biomedical research responsive to priorities of individuals and private organizations is little more than a rounding error of the research budget driven by national policy prescriptions. The Lancet points out: “Public funding of biomedical research in the USA is dominated by one funding agency to an almost absurd degree. The National Institutes of Health (NIH) has an annual budget of more than US$30 billion—no other source of research funding in the world even comes close to that figure.”6 For more on these topics, see “On Old Age (De Senectute),” by Marcus Tullius Cicero. Online Library of Liberty. Empirics of Economic Growth, by Kevin Grier. Concise Encyclopedia of Economics. Jacob Stegenga on Medical Nihilism. EconTalk. No one bothers anymore to dispute that politics drives the allocation of government grants. “We investigated… congressional appropriations bills and appropriations committee meeting reports covering the 20 fiscal years between 1984 and 2003. During every year of this period, the director of the NIH negotiated with the Department of Health and Human Services and the Office of Management and Budget within the Executive Office of the President to craft a budget request for the NIH that was consistent with White House priorities.” If the “national interest” has become identified (as I hypothesize) with putting the brakes on lifespan increases (thus relieving pressure on the welfare state) and prioritizing the extension of years worked (thus sustaining American economic leadership), then that is how the billions will be spent. Footnotes [1] Andrew J. Scott, Martin Ellison, and David A. Sinclair, “The Economic Value of Targeting Aging,” Nature Aging 1 (July 2021), pp. 616–23. [2] Paula Campbell Roberts, “What Does an Aging Population Mean for Economic Growth and Investing?” CRI Blog, Center for Retirement Initiatives, McCourt School of Public Policy, Georgetown University, September 2018, 18-07. [3] Guy C. Brown, “Living Too Long,” EMBO reports 16, no. 2 (February 2015), pp. 137–41, at 137. [EMBO is an acronym for the European Molecular Biology Organization.] [4] Yoni Donner et al., “Great Desire for Extended Life and Health amongst the American Public,” Frontiers in Genetics 6, article 353 (January 20, 2016), pp. 1–2. [5] Martien A. M. Pijnenburg and Carlo Leget, “Who Wants to Live Forever? Three Arguments against Extending the Human Lifespan,” Journal of Medical Ethics 33, no. 10 (October 2007), pp. 585–87, at 585. [6] Brian Owens, “Mapping Biomedical Research in the USA,” The Lancet 384, issue 9937 (July 5, 2014), pp. 11–14, at 11. *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)

People believe many myths, but I suspect few are as pernicious as the zero-sum fallacy. It sees the world as a story of an unending struggle over a fixed prize such that someone who has something only has it because someone else does not. It’s an understandable thing to believe throughout most of history when the way to enrich yourself was to make other people poorer. But, unfortunately, it’s an inadequate description of the Bourgeois Era, where for about two-and-a-half centuries, people had been enriching themselves by enriching others. Karl Marx thought exchange was mutual swindling. It is not; an exchange means both parties are better off. Competition means more and more of the gains from innovation have gone not to the innovators themselves or to grasping producers but to consumers. Exchanges hurt no one—at least, as Paul Heyne points out, no one with a right to be consulted.1 You have as much right to stop someone from spending the wrong way as you have to stop them from kissing or praying the wrong way. And, of course, some people will point with at least some justice to the problems of inequality. However, inequality is not morally important. The propagandist Danilov was right in the 2001 movie Enemy at the Gates. There will always be someone with something we want but don’t have. Envy we will always have with us. The beauty of exchange, again, is that it makes both people better off. If it improves their position relative to you, then the right response is congratulations rather than resentment. “Repeat after me: the right response to another’s good fortune is congratulations, not grief.” Aleksandr Solzhenitsyn said that the line dividing good from evil runs through the heart of every man. It’s on the evil side of the line from which we get the impulse to resent the colleague who has published two articles when we have only published one, or the colleague who has more citations than we have, particularly when we want to tell some sort of story about how that could have been us had things only been different. First, I can’t imagine that the object of my resentment’s life has been perfect by any stretch of the imagination. Second, we need to own the consequences of our choices. For just about every “if only…” I can point to when I want to be upset about what I don’t have, I can point to deliberate choices I made in the past, many of which recognized and explicitly considered the trade-offs. The ones that didn’t were either exercises in immaturity or ignorance. Repeat after me: the right response to another’s good fortune is congratulations, not grief. We need to learn to say, “I’m happy for you” and mean it instead of saying “I’m happy for you” out loud and then muttering “you blackguard” under our breath. In Leave Me Alone and I’ll Make You Rich,2 Deirdre McCloskey and I explain that the Bourgeois Deal is the appropriate deal for a society of adults. It is a deal that respects and honors others as people bearing the image of God, or at any rate as people who are blessed with dignity and liberty simply because they are people. It is not the Blue Blood Deal governing a society of masters and slaves. It is the deal fit for C.S. Lewis, for example, who notes that he has seen people fit only to be slaves but no one fit to be master. Envy has been defined as “grieving the good of others,” and in an excellent analysis,3 Jordan Ballor and Victor Claar explain its pernicious effects. It is easy to default to the idea that someone who has more or better than we do has made some kind of deal with the devil. It’s a natural human impulse, and it’s common not only in humans but in all other primates, as well. It’s an impulse to be resisted. In Speaker of the Dead, the second book of Orson Scott Card’s Ender Quartet, a peculiar group of creatures called the pequeninos have a fundamentally zero-sum view of the world. One asks what he has gained if he and another get the same benefit without noticing that the relevant comparison is with oneself the day before, not with another who (again) might have something we don’t. Where we are now is, in a lot of respects, the result of having won the historical and geographic lottery as well as the accretion of a lifetime’s worth of decisions—some good, some bad, some evil, some virtuous. Importantly, we don’t lift ourselves up by pulling one another down, and as Booker T. Washington has pointed out, you cannot keep someone down in a ditch without climbing down to lay on top of him. There are a lot of candidates for the most powerful force in the universe. There’s love. There’s the strong nuclear force. There’s compound interest. Perhaps a better candidate is division of labor, which makes us more productive by giving us opportunities to specialize and exchange—and to thereby get more with the sweat of our brow. In a famous example in The Wealth of Nations, Adam Smith tells us that we get our dinner from the butcher, the baker, and the brewer not by appealing to their humanity or to our need—they are, after all, surrounded by people with unlimited need, and if “compassion fatigue” exists, then we are limited in our ability to be purely and perfectly altruistic all the time. We appeal to others’ interests, and to their self-love—to the fact that we are willing to help them achieve their goals if they are willing to help us achieve ours. By specializing in butchering, the butcher can get more beef, more bread, and more beer. By specializing in baking, the baker can get more bread, more beef, and more beer. By specializing in brewing, the brewer can get more beer, more bread, and more beef. Their gains come in addition to the gains they create for others and not “instead of” or “at the expense of.” As Thomas Sowell put it: people live on real income, not on income shares. With respect to the ability to get the necessaries—food, clothing, and our daily bread—it is better to have a small fraction of a large sum than a large fraction of a small sum. It is curious that for all its emphasis on making people better off by their own preferences and correcting cognitive biases, behavioral economists and psychologists have paid so little attention to envy. Indeed, they haven’t so much ignored it as they have sanctified it even though it is agreed to be the kind of thing that corrodes the soul. When I feel those twinges of resentment at people who have what I don’t—a nicer car, a bigger house, a higher salary—I have to check myself and note that I’m making more than enough to meet my needs and to to lead a flourishing life. It’s vicious, not virtuous, for me to think myself cheated just because someone else has a little more than I do. It’s true that the people around me who have more might have it because of horrible things they’ve done. However, we’ve all done horrible things (“well, maybe not that horrible,” I say, and I hear you saying) that have us better positioned than we otherwise would have been had we started from Year Zero and all lived lives of perfect virtue. We and our ancestors have also been the perpetrators and victims of innumerable outrages. Preoccupation with those outrages leads to a moral dead end, though. First, it encourages us to think of people as abstractions, with one group having wronged another group and with the wrong being compressed in space-time to a perpetual now. I cannot help but wonder if this is popular in part because it relieves people of the burden of thinking. Second, it encourages the Intersectional Oppression Olympics where everyone is fighting to claim the mantle of Most Oppressed. Not only is such an argument costly—we could actually be making things and creating beauty instead of arguing—it’s morally corrosive. It might be attractive, though, because it relieves us of the obligation to treat one another as moral equals. If the world sorts semi-neatly into oppressors and oppressed, then “equity” demands political inequality where moral exemplars like ourselves are created equal but are more equal than the people around us. For more on these topics, see Stephen Kotkin on Solzhenitsyn. EconTalk. “Wanting the Worst,” by Peter W. Wood. Law and Liberty, Oct. 16, 2019. “Behavioral Versus Free Market Economics,” by Leonidas Zelmanovitz. Library of Economics and Liberty, Jan. 2, 2023. The zero-sum fallacy has deep psychological roots. So does its offspring, envy. As societies have slowly, reluctantly, and incompletely embraced the Bourgeois Deal, it has become less relevant to, and less descriptive of, our day-to-day affairs. To the extent that we have resisted our envious impulses and left other people alone, even when they have enjoyed things we don’t have, we have freed them up to make the rest of us rich. Footnotes [1] Carden, Art. “Are Economists Basically Immoral?” AIER, October 26, 2019. [2] McCloskey, Deirdre Nansen and Art Carden. Leave Me Alone and I’ll Make You Rich. Chicago: The University of Chicago Press, 2020. See also Peter J. Boettke’s Liberty Fund Economics Book Club: Discussion with Art Carden about Leave Me Alone and I’ll Make You Rich. EconLog, March 24, 2022. [3] Ballor, Jordan J. and Claar, Victor V., “Envy in the Market Economy: Sin, Fairness, and Spontaneous (Dis)Order” (November 4, 2013). Faith & Economics 61/62 (Spring/Fall 2013): 33-53. *Art Carden is Assistant Professor of Economics at Samford University in Birmingham, AL, a Senior Research Fellow with the Institute for Faith, Work, and Economics in McLean, VA, a Research Fellow with the Independent Institute in Oakland, CA, and a Senior Fellow with the Beacon Center of Tennessee. For more articles by Art Carden, see the Archive. (0 COMMENTS)

A Book Review of Law, Legislation, and Liberty, by Friedrich A. Hayek. Jeremy Shearmur, editor.1 Friedrich Hayek’s trilogy Law, Legislation, and Liberty, published in three separate volumes in 1973, 1976, and 1979, was recently republished in a single book under the careful editorship of Jeremy Shearmur. The last volume of the original trilogy2 covers Chapters 12 to 18 of the Shearmur edition. This last part is what I review here.” Hayek tells us that the book is concerned with “the limits that a free society must place upon the coercive powers of government.” The political order of a free people consists in a system of government limited by law in order to protect a self-regulated (or “spontaneous”) order in which each individual can use his own information to pursue his own purposes or goals. As I indicated in my review of volume 1, Hayek saw the freedom to use one’s information for one’s own purposes as the very definition of individual liberty.) Unlimited Democracy, Totalitarian Democracy The first broad argument of the book is that democracy has diverged from its original ideal and degenerated into an unlimited and totalitarian democracy. Unlimited democratic power can be traced back to the decline of Athenian democracy at the end of the 5th century BC when, as Aristotle noticed, “the emancipated people became a tyrant.” In a similar way, the British Parliament became sovereign, that is, theoretically omnipotent, in 1766, when it “explicitly rejected the idea that in its particular decisions it was bound to observe any general rules not of its own making.” Liberal democracy originally referred simply to “a method of procedure for determining government decisions” or, more practically, for getting rid of governments without bloodshed. Democracy was a protection against tyranny. It is an error to view democracy not as “a procedure for arriving at agreement on common action,” but instead “to give it a substantive content prescribing what the aim of those activities ought to be.” The current, unlimited democracy leads to rent-seeking (competition for government privileges), the triumph of special interest groups, and legal corruption. The cause is that a government with unlimited powers “cannot refuse to exercise them,” so everybody will rush to the public trough. As we know from Mancur Olson,3 the most concentrated interests, which are more efficient at organizing to lobby governments, will usually win the competition in the tilted political field. Given their own interests in winning elections, political parties become mere “coalitions of organized interests,” horse-trading favors and privileges for their respective electoral clientèles. Any group left behind and powerful enough will, in turn, ask for compensating favors. An unlimited democratic government is thus constantly blackmailed and corrupted by special interests. The resulting bundle of interventions and privileges will correspond “to nobody’s opinion of what is right, and to no principles.” And no particular voter may find the whole package in his own interests. Interestingly, Hayek’s ideas here are close to anarcho-liberal Anthony de Jasay’s theory of the self-destructive but unavoidable attempts by the democratic state to satisfy conflicting interests, which cannot all be satisfied because everyone is politically trying to get ahead and on top of others.4 (Chronologically, of course, it is more likely that de Jasay was influenced by Hayek than the other way around.) Hayek argues that social conflict can be avoided not through many interests vying to capture the majority, but “only by agreement on general rules.” Here, Hayek resembles more Nobel laureate economist James Buchanan, whose contractarian theory is based on unanimous consent to general rules. 5 In Hayek, however, it is not always clear whose consent is required. Legislating Vs. Governing The essential division of power in a liberal democracy is between legislation and government (taking the latter term in the narrow sense of deciding and enacting public policy) or, we may say, between legislating and governing. Laws are the general and uniform rules necessary to delimit the boundaries of the equally protected domain of individuals in an autoregulated order. They equally apply to everybody, including the state and its agents. The only exception is the right of governments to raise uniform taxes under the law. Such is Hayek’s demanding interpretation of rule of law. The current division of power between the executive and the legislative is ineffectual. The fact is that “our supposedly constitutional democracies” have acquired an arbitrary power not bound by laws. Legislative and executive bodies impose collective goals to individuals, while each should be free to pursue his own purposes limited only by negative laws limiting the means used. The government “ought to be conducted according to principles approved by the majority of the people,” but that does not mean “government by the unrestricted will of the majority.” Legislating is the adoption or recognition of general laws that constrain everybody including the government. Governing is “the administration of the resources and machinery placed at the disposal of government.” The two functions are so different that they cannot be filled by the same elected assembly. A distinct Legislative Assembly should represent “pre-existing opinions” of “what is right and wrong.” “A society of free men presupposes that all power is limited by the common beliefs which made them join,” writes Hayek in a contractarian-like manner that the reader may not expect under his pen. Legislation must aim at “helping unknown people for their equally unknown purposes.” A separate Governmental Assembly would play the current role of parliaments or houses of Congress as we know them. Hayek believed that the tasks of governing “cannot be strictly tied to rules,” which is why its powers “ought always be limited in extent and scope, namely confined to the administration of a sharply circumscribed range of means entrusted to its care.” These limits are established by legislation (and, we must suppose, by court decisions based on the common law6). Still a Lot of Government The second broad argument of the book is that the public sector must not be restricted to certain functions but must be seen as covering anything that the government is asked to do, provided again that it remains subject to the same general laws that apply to ordinary individuals. The only special power of the government is to levy taxes approved by voters. Hayek seems to favor an equal proportional burden for all citizens, all taxes being considered. The taxpayer will know in advance his share in the cost of any new expenditure and will not be able to get something at somebody else’s expense.” Hayek warns us that he is “far from advocating” a minimal state. Government activities can be categorized as (1) the enforcement of laws; (2) national security; and (3) the provision of “a number of services which for various reasons cannot be provided, or cannot be provided adequately, by the market.” That covers a wide domain of intervention. Hayek believes that national security activities “cannot be strictly bound by general rules” and that “the executive must be given far-reaching discretionary powers.” Worryingly, Hayek includes in security “possibly internal insurrection” and such things as “natural disasters” and “epidemics.” During the recent epidemic, we have seen how elastic is that sort of mission. Hayek even suggests that a “national service,” that is, temporary conscription in peacetime, could be imposed. Doesn’t it seem that even a strictly conceived rule of law could be bent to serve Leviathan? Like other classical liberals including Milton Friedman and James Buchanan, Hayek favored “a certain minimum income for everyone, or a sort of floor below which nobody need fall.” He sees such a measure as compensating a common risk in the Great Society, where ” the individual no longer has specific claims on the members of the particular small group into which he was born.” This sort of program cannot realistically be offered to everyone on earth and implies a limit on immigration. Some “facts of the present world,” Hayek argues, constrain the liberal ideal of non-discrimination. He does not see this as a failure of liberal principles, but part of a more general exception: “like tolerance in particular, liberal principles can be consistently applied only to those who themselves obey liberal principles, and cannot always be extended to those who do not.” James Buchanan argued along the same lines, perhaps more forcefully.7 I might add that the problem is not simple. Government services cover the provision, or at least the financing, of “collective goods” (public goods) and the control of externalities. Collective goods, Hayek tells us, must be “wanted by all or at least by a considerable majority” or perhaps “a large majority” or just a local majority, or “a section of the population sufficiently numerous to make its weight felt politically.” One may wonder if this majoritarian fuzziness, especially in the last characterization, would not reproduce the illiberal attributes of the current democracy. Hayek tells us that the provision of public goods can be considered “a sort of exchange” in which some individuals finance the public goods that others want in exchange for having their preferred ones financed by the others. He recognizes that each individual must feel that the whole package is worth to him more than his total tax contributions. Another question: Don’t we risk falling again in the democratic horse-trading blamed before? A strong requirement of Hayek’s theory is that a government may not claim a monopoly on any of its services, whether it be postal services or the issuance of money. Hayek was especially interested in the latter topic, arguing for the individual freedom to use any currency, including private moneys.8 This is the only way to prevent one’s own government from devaluating the money people rely on. A government may intervene in any other field, subject to general laws and to never claiming a monopoly. Hayek’s theory allows for much potential regulation. He does not object to “certain requirements of safety and health” and “the restrictions on the sale of certain dangerous goods (such as arms, explosives, poisons and drugs).” I suspect that Hayek did not seriously reflect on the old “right of the Englishman to keep arms for his own defence” 9 and the benefits, practical and symbolic, of the Second Amendment. Hayek also suggests that eminent domain is acceptable if defined by “general rules of law,” but he recognizes there a conflict with the “the basic principles of a libertarian order”: “[W]e still lack adequate theoretical principles for a satisfactory solution of some of the problems in this field.” All that seems to leave much leeway to Leviathan. The Case of Competition and Antitrust A whole chapter of The Political Order of a Free People is devoted to the nature of competition and to a critique of antitrust regulation. “Competition,” Hayek argues, “is a discovery procedure”—for finding how to produce goods and services at the lowest possible cost. If we could predict the outcome of competition, we would not need it. Competition does need to be “perfect,” that is, to produce a situation where no producer can affect the market price. An omniscient and perfectly benevolent dictator could not do better than ordinary market competition even if not perfect. On a free market, the size of businesses, the degree of concentration of an industry, and even a monopoly do not matter. Forcing businesses to behave as if they were perfectly competitive is impossible because nobody has the information necessary to determine the lowest cost. Moreover, curbing the size of larger business organizations “cannot be achieved without conferring a discretionary and arbitrary power on some authority.” Unchallengeable monopolies are usually those established or protected by government. The solution is of course to deprive government of the power to claim or grant such privileges. Hayek believes that all agreements in restraint of trade should simply be legally unenforceable. But he also thought that monopoly becomes harmful when it is allowed to price discriminate in order to maintain its market power. The only example he gives is a monopoly “offering specially favorable terms to customers only in that limited region in which a newcomer at first will be able to compete.” This sort of behavior would be prohibited, preferably through allowing harmed competitors to sue for multiple damages. But wouldn’t the fear of being sued prevent a monopoly from charging differential prices, which is often efficient? A Model Constitution? The penultimate chapter of the book suggests what a modal constitution would look like. Perhaps to avoid the charge of constructivism, Hayek explained that he did not want his model to replace any “established constitutional tradition,” but thought it could be of use to newly democratic countries and to international organizations—even if “it is doubtful whether we can, or even whether we should, create a supra-national government beyond some pure service agencies.” Moreover, the government being an organization, not a spontaneous order, is “of necessity the product of intellectual design.” Is this so obvious? For Hayek, anyway, a constitution is chiefly concerned with the internal organization of the state. The basic clause of the constitution would state that government coercion can be used “only in accordance with the recognized rules of just conduct designed to define and protect the individual domain of each” and “intended to be applied to an unknown number of future instances.” The constitution would also contain a definition of law along these lines. Hayek also favored a “special clause” to forbid a government monopoly on the issuance of money. The rest of the constitution would deal with the internal structure of the state. As we already saw, Hayek believes that the problem of effectively limiting the powers of government can be solved “only by dividing the supreme power between two distinct democratically elected assemblies.” Adding a semi-permanent body for drawing the constitution and amending it when needed, we have “a three-tiered system of elected bodies.” An independent constitutional court would resolve jurisdictional disputes. Where does sovereignty resides? “[N]owhere,” Hayek answers, “unless it temporally resides in the hands of the constitutional-making or constitution-amending body.” Hayek goes into much detail about how the two assemblies would be constituted and elected. We don’t need to get into this here, except to note that the Legislative Assembly would be composed of mature men and women between 45 and 60 years of age and elected for terms of 15 years. Legislation is a serious matter. Hayek’s constitution would incorporate vast emergency powers—even if he admits that emergencies have always been a good excuse to erode individual liberty! The constitution could be “temporarily suspended” by the Legislative Assembly when the long-run preservation of the free society is threatened. Liberalism is a worthy ideal. “The only moral principle which has ever made the growth of an advanced civilization possible,” Hayek reminds us, “was the principle of individual freedom, which means that the individual is guided in his decisions by rules of just conduct and not by specific commands.” The question is whether Hayek’s proposed implementation of the rule of law is sufficient to protect individuals against tyranny. But one cannot seriously ponder this question without reading him. Footnotes [1] F.A. Hayek, Law, Legislation, and Liberty: A New Statement of the Liberal Principles of Justice and Political Economy, edited by Jeremy Shearmur (Chicago: University of Chicago Press, 2022). [2] The Political Order of a Free People (University of Chicago Press, 1979). [3] Mancur Olson, The Logic of Collective Action: Public Goods and the Theory of Groups (Harvard University Press, 1965, 1971). [4] Anthony de Jasay, The State (1985) (Liberty Fund, 1997). Printed copy available through the Liberty Fund book catalog. See also my review “An Unavoidable Theory of the State,” Library of Economics and Liberty, June 4, 2018. [5] See James M. Buchanan and Gordon Tullock, The Calculus of Consent: Logical Foundations of Constitutional Democracy (Liberty Fund, 1999; University of Michigan Press, 1962), and my review, “The State Is Us (Perhaps), But Beware of It!” Econlib, January 3, 2022; James M. Buchanan, The Limits of Liberty: Between Anarchy and Leviathan (University of Chicago Press, 1975; Liberty Fund, 2000), and my review, “Lessons and Challenges in The Limits of Liberty,” Library of Economics and Liberty, November 5, 2018; and Geoffrey Brennan and James Buchanan, The Reason of Rules: Constitutional Political Economy (Cambridge University Press, 1985; Liberty Fund, 2000), and my review, “Constitutional Democracy: Is Democracy Limited by Constitutional Rules?” Econlib, January 2, 2023. [6] On the common law, see the first Volume 1 of the trilogy, that is, the first part of the Shearmur edition. [7] James M. Buchanan, Why I, Too, Am Not a Conservative: The Normative Vision of Classical Liberalism (Edward Elgar Publishers, 2006). [8] See also Hayek’s Denationalization of Money, 2nd Edition (Institute of Economic Affairs, 1978). [9] Colin Greenwood, Firearms Control: A Study of Armed Crime and Firearms Control in England and Wales (Routledge & Kegan Paul, 1972). Joyce Malcolm, To Keep and Bear Arms: The Origins of an Anglo-American Right (Harvard University Press, 1994). *Pierre Lemieux is an economist affiliated with the Department of Management Sciences of the Université du Québec en Outaouais. He blogs on EconLog. He lives in Maine. E-mail: PL@pierrelemieux.com. For more articles by Pierre Lemieux, see the Archive. As an Amazon Associate, Econlib earns from qualifying purchases. (0 COMMENTS)

  Today, May 1, is May Day. It is celebrated by communists in many countries. So I thought it would be a good idea to take stock and see where we are on the road to the communist ideal. In The Communist Manifesto, Karl Marx and Friedrich Engels laid out 10 interim measures on the way to communism. They wrote: The proletariat will use its political supremacy to wrest, by degree, all capital from the bourgeoisie, to centralise all instruments of production in the hands of the State, i.e., of the proletariat organised as the ruling class; and to increase the total productive forces as rapidly as possible. Of course, in the beginning, this cannot be effected except by means of despotic inroads on the rights of property, and on the conditions of bourgeois production; by means of measures, therefore, which appear economically insufficient and untenable, but which, in the course of the movement, outstrip themselves, necessitate further inroads upon the old social order, and are unavoidable as a means of entirely revolutionising the mode of production. These measures will, of course, be different in different countries. Nevertheless, in most advanced countries, the following will be pretty generally applicable. 1. Abolition of property in land and application of all rents of land to public purposes. 2. A heavy progressive or graduated income tax. 3. Abolition of all rights of inheritance. 4. Confiscation of the property of all emigrants and rebels. 5. Centralisation of credit in the hands of the state, by means of a national bank with State capital and an exclusive monopoly. 6. Centralisation of the means of communication and transport in the hands of the State. 7. Extension of factories and instruments of production owned by the State; the bringing into cultivation of waste-lands, and the improvement of the soil generally in accordance with a common plan. 8. Equal liability of all to work. Establishment of industrial armies, especially for agriculture. 9. Combination of agriculture with manufacturing industries; gradual abolition of all the distinction between town and country by a more equable distribution of the populace over the country. 10. Free education for all children in public schools. Abolition of children’s factory labour in its present form. Combination of education with industrial production, &c, &c. Where are we on these measures in the United States? Although we are not close to abolition of property in land, governments at various levels prevent people from using their land for many peaceful purposes, e.g., housing, often prevent owners from evicting tenants, and sometimes use eminent domain to take people’s land forcibly. At the federal level and in many states such as New York and California, we do have a very heavy progressive, or graduated, tax. As a result, tax rates on income from work range from 0 percent to over 50 percent. We still have strong rights on inheritance although the federal government does take a big chunk of inheritances that exceed $12.92 million. The tax rate for amounts above that threshold start at 18% and rise to 40%. We seem to have mainly dodged a bullet on this one. Although there is still lots of private credit, much of it is in the hands of the state and much of private credit is regulated heavily by the state. Much of communication and much of transportation is decentralized, but much of it is centrally regulated. Think FCC for communication and FAA, TSA, Amtrak, and government roads for transportation. We have avoided most of this. Fortunately there are no industrial armies and there is no conscription, except for juries. Indeed, people often get financially penalized with lower welfare payments and zero unemployment benefits when they do work. We have pretty much avoided this. Marx and Engels would be pretty happy about this one because there are universal government schools for which people pay zero in tuition but heavily in taxes, the size of which has nothing to do with whether one has kids in these government schools. (0 COMMENTS)

While operating on a 16-year-old girl who suffered from severe seizures, neurosurgeon Itzhak Fried stumbled on the region of the brain that makes us laugh. To neuroscientist Patrick House, Fried’s ability to produce laughter surgically raises deep and disconcerting questions about how the brain works. Join Fried, House, and EconTalk’s Russ Roberts for a live broadcast […] The post Patrick House and Itzhak Fried on the Brain’s Mysteries appeared first on Econlib.

The price of flying from the US to China has risen very sharply in recent years. The primary cause is economic nationalism. Here’s the Financial Times: The US has offered to grant Chinese airlines the same number of weekly flights between both countries as American carriers — but only if they agree not to fly over Russia, according to six people familiar with the talks. Moscow banned US carriers from flying over the country after Washington prohibited Russian airlines from flying to the US in the wake of Russia’s full-scale invasion of Ukraine. Chinese airlines are not banned from Russian airspace. US carriers have 12 weekly flights to China, while Chinese airlines have eight to the US. The American carriers face higher fuel costs than their Chinese rivals whose routes over Russia to the US are much shorter. Some pundits defend economic nationalism on “national security” grounds.  And yet that argument obviously does not apply to commercial airline flights.  Nor is this about a mythical “level playing field”, as the punitive action is aimed at Chinese airlines, not those of other countries that fly over Russia: The Chinese official said another reason not to accept the US condition about circumventing Russia was that airlines from other countries, such as India and the UAE, flew over Russia without facing repercussions in the US. Russia’s ban on US airlines flying over their territory does give China a comparative advantage—but so what?  A warm climate gives Honduran banana producers a comparative advantage over Minnesota banana producers.  Consumers benefit when they can buy from the cheapest producers.  So does society as a whole. If the US government got its way, large quantities of jet fuel would be consumed for no good reason.  What happened to climate change as a goal of the Biden administration?  Is protecting the profits of US airlines more important than climate change? And what happened to this mutually agreed upon goal? The Chinese diplomat added that Xi and Biden had agreed on the need for more people-to-people exchanges between the countries when the leaders met at the G20 summit in Bali in November and stressed that more flights were needed to meet that goal. Is discouraging interaction between the people of the world’s two greatest powers the best way to promote world peace? I am frustrated by the frequent references to “national security”.  Very little of US protectionism relates to sensitive areas.  For instance, the Trump/Biden tariffs on Chinese goods were imposed with the expressed aim of reducing the US current account deficit.  They failed miserably, because the deficit is caused by saving/investment imbalances, not a lack of tariffs. PS.  Larry Summers has a good twitter thread on how we are overdoing economic nationalism.  Here’s an excerpt: PPS.  I hope to visit China later this year—if I can afford a ticket.  As of now, I’d probably have to first fly to a third country, such as Japan. (0 COMMENTS)

In the zeitgeist, “marginalized” seems to mean any group that a mainstram speaker must love. A loved group is typically a set of individuals who deserve some privileges required by “social justice” as understood in the chattering classes, who complain of “micro-aggressions,” and who are not sufficiently empowered to boss others around. By a strange reversal of their root meaning (“at the margin”), “marginal” and “marginalized” now often refer to those who are the current bien-pensants. For example, I read an apparently innocuous explanation in a Wall Street Journal report (“Tucker Carlson’s Vulgar, Offensive Messages About Colleagues Helped Seal His Fate at Fox News,” April 26, 2023—my): On air, Mr. Carlson had turned up the volume on commentary that had expanded beyond a conservative viewpoint on politics into more of an attack on marginalized groups. From what I know about him, I don’t share Mr. Carlson’s contempt of truth nor most of his intuitions. Nor would I want to be associated with leftwing or rightwing bigotry, ignorance, and authoritarianism. But although I grant that many nuances are involved, I suggest that we should stick with the standard definition of “marginal.” In that perspective, marginal is neither necessarily bad nor necessarily good. And the most “marginalized” group is certainly the set of individuals who are not part of any politically influential faction and who have a strong preference to be left alone when they want to, who are happy to live and let live. Moreover, “marginalized,” from the verb “marginalize,” implies some actor and some action against the marginalized. Despite John Stuart Mill’s idea that “society” can be oppressive, collective action through the state is the most effective marginalizer. Government dictats are to social pressure what aggressions are to micro-aggressions. In an interesting conversation with Hartmut Kliemt, Anthony de Jasay said, “What economics does for you is it teaches you to think.” He had a point, even if we should admit that other disciplines, if well taught, also help learning how to think, although not necessarily about social matters. A necessary, but obviously not sufficient, condition of rational thinking requires to use words that have a clear meaning. (0 COMMENTS)