Last month, the House of Representatives voted to pass H.R. 2, the “Secure the Border Act.” 219 Republicans in the House of Representatives voted in favor; 211 Democrats and 2 Republicans voted against. One of its provisions, as noted by the Congressional Budget Office, is that it would “Require all U.S. employers to use E-Verify, the federal web-based system for confirming eligibility to work.” That one provision would hobble one of the best features of the U.S. economy, the relatively free market in labor. If this bill passes in the Senate and is signed by the President, then when employers want to hire someone not currently working for them, they must make sure that the person is eligible to work. That would mean, presumably, that the worker is a U.S. citizen or a permanent resident. When I met with my Congressman, Sam Farr, a few years ago (he’s now retired), he said he opposed such a provision but his opposition was based on how it would hurt Latinos in his and other Congressmen’s districts. I pointed out to him that it would hurt everyone. The employer who wants to hire anyone, Latino or not, would have to check with the federal government first. You might say that this is no big deal because if you have a green card or are an American citizen, you’ll pass the test. But to that, I have two answers, one short run and one long run. In the short run, a relevant question is: Does the federal government ever make mistakes? Can we be sure that every green card holder or U.S. citizen will be in the data base? The answer is no. There will be people in those categories who won’t be able to get the job. How many? Admittedly, not many. So it would slow the labor market a little. The bigger problem is in the long run. Governments often promise to keep a program small and rarely keep their promises. To take one example, when the USA PATRIOT act was passed, the federal government was given tools to go after terrorists. Does it ever use those powers against people who are clearly not terrorists? Yes. Here’s how my Hoover colleague John Cochrane put it in a 2013 op/ed in the Wall Street Journal: E-Verify might seem harmless now, but missions always creep and bureaucracies expand. Suppose that someone convicted of viewing child pornography is found teaching. There’s a media hoopla. The government has this pre-employment check system. Surely we should link E-Verify to the criminal records of pedophiles? And why not all criminal records? We don’t want alcoholic airline pilots, disbarred doctors, fraudster bankers and so on sneaking through. Next, E-Verify will be attractive as a way to enforce hundreds of other employment laws and regulations. In the age of big data, the government can easily E-Verify age, union membership, education, employment history, and whether you’ve paid income taxes and signed up for health insurance. How about this idea? Let’s allow more legal immigrants. We gain and they gain. And, as a side benefit, we especially need them now that the Social Security Trust Fund will likely be out of money in 2033. Remember that the vast majority of immigrants are young. Letting them in would buy us a few years.   (0 COMMENTS)

Some economists worry that minimum wage laws will lead to higher unemployment. But there are many other pernicious side effects when governments intervene in the labor market. Here’s one example: Targeted grazing is part of California’s strategy to reduce wildfire risk because goats can eat a wide variety of vegetation and graze in steep, rocky terrain that’s hard to access. Backers say they’re an eco-friendly alternative to chemical herbicides or weed-whacking machines that are make noise and pollution. So what does this have to do with minimum wage laws?  Consider the following: Companies have historically been allowed to pay goat and sheepherders a monthly minimum salary rather than an hourly minimum wage, because their jobs require them to be on-call 24 hours a day, seven days a week. But legislation signed in 2016 also entitles them to overtime pay. It effectively boosted the herders’ minimum monthly pay from $1,955 in 2019 to $3,730 this year. . . . But in January, those labor costs are set to jump sharply again. Goatherders and sheepherders have always followed the same set of labor rules last year. But a state agency has ruled that’s no longer allowed, meaning goatherders would be subject to the same labor laws as other farmworkers. That would mean goatherders would be entitled to ever higher pay — up to $14,000 a month. . . . Arrowsmith employs seven goatherders from Peru under the H-2A visa program for temporary farmworkers. He said the herders are paid about $4,000 a month and don’t have to pay for food, housing or phones. “I can’t pay $14,000 a month to an employee starting Jan. 1. . . . “What’s at stake for the public is your house could burn up because we can’t fire-mitigate.” A wage of $3730/month probably doesn’t sound very generous to the average reader of Econlog.  But it’s worth keeping in mind that many of these goatherders are from low or middle income countries.  Because employers pay their living expenses, they can save a sum of money that would give them some upward mobility (perhaps opening their own business) when they return to their home country.  The state labor regulators in California are working to deny them this opportunity. This is not a zero sum game.  Minimum wage laws have all sorts of negative side effects, such as worsening working conditions.  Were this law to take effect, many workers would probably lose jobs.  But that’s just the beginning: 1. More California homeowners would lose their homes to wildfires. 2. For the few remaining jobs, Peruvians would engage in fierce non-price competition as a way of securing a position paying $140,000.  This might involve massive bribes to those who control the process, perhaps funded by loans that will be repaid out of the high salary.  Or perhaps higher queuing costs.  One way or another, much of the potential welfare gain to Peruvian workers will be dissipated in non-price competition for the now highly lucrative jobs. Again, it’s not a zero sum game.  Regulations that make society less efficient generally make most people worse off. (0 COMMENTS)

Public goods is one of many terms in economics where the term’s intended meaning is not all intuitive. Most people hear it and think it means either something like “good produced by the public sector” or “something that is good for the public to have.” Thus, if an economist points out that education is not a public good, many people react with bewilderment, because they think this means either you’re saying education is bad, or denying that education systems are provided publicly. But public goods are simply goods that are non-rival and non-excludable. For a good to be rival means it can’t be used simultaneously by multiple people. Being excludable means that the producers can withhold the good from someone who doesn’t pay for it. Pizza is a private good – if I don’t pay for pizza, the pizza shop won’t give me any, so it’s excludable, and a piece of pizza that I eat can’t also be eaten by you, so it’s rival. Deterring a foreign army from invading is a public good – you and I can both benefit from that deterrence simultaneously, so it’s non-rival, and I can still benefit from that deterrence even if I make no financial contribution to maintaining it, so it’s non-excludable. Education is both rival and excludable – if I don’t pay tuition, I won’t be given a degree, so it’s excludable, and every seat I occupy in a classroom is one that can’t be used by another student, so it’s rival. Therefore, education isn’t a public good, by definition. Here’s another seemingly unusual case of the public goods concept – digital media. Readers may be aware of the controversy that surrounded so-called “peer-to-peer file sharing” facilitated by websites like Napster. Websites like these allowed people to share media files with each other, so if I wanted to listen to the new Metallica album, I could just duplicate someone else’s digital copy through Napster rather than buying it. Video games, too, could be shared across devices in this way. This threatened to turn digital media into a public good. Digital music and video games would be non-excludable, because people could acquire them without payment, and the ability to duplicate files across devices made these files non-rival as well. Video game developers have found ways to try to correct for this. One way was requiring an activation key for a game to be fully installed, with those activation keys only being made available with games that were bought and paid for. This is one example of what is known as digital rights management, or DRM for short. In other cases, game developers have deliberately built games with game-breaking bugs. These bugs were automatically fixed in first-day patches that legitimately downloaded copies could access but couldn’t be installed on pirated copies. This made it so pirates could download the game but couldn’t effectively play it due to the intentional glitches and bugs. But my favorite example of a video game developer using this strategy comes from a game called Game Dev Tycoon. It beautifully demonstrates what happens when digital piracy threatens to move video games from a private good to a public good – and in a way that was hilariously lost on the pirates themselves. As you might imagine from the title, Game Dev Tycoon is a sim game about running a video game company and developing video games. What the developers did was make it so pirated copies of the game, but not legitimate copies, would experience video game piracy with the games they developed, preventing them from recouping their investments and discouraging them from producing high quality games. After publishing games, players would start getting messages like this: Boss, it seems that while many players play our new game, they steal it by downloading a cracked version rather than buying it legally. If players don’t buy the games they like, we will sooner or later go bankrupt. The more effort was made to produce a better game, the more likely the game was to be pirated, while producing mediocre games resulted in less piracy. People playing pirated copies of the game soon began posting confused comments on message boards like this: Guys I reached some point where if I make a decent game with a score 9-10 it gets pirated and I can’t make any profit. It barely sells 100k units…I am during the Xbox 1 and PS2 gen. Back in the 80s and 90s I could easily make 1m sales with a 9-10 game but now it’s not possible due to the piracy. It says bla bla our game got pirated stuff like that. Is there some way to avoid that? I mean I can research a DRM or something… So far I am going nowhere. My profit is little to none. If I make an average game 5-7 I get some cash which is understandable but then if I make a 9-10 game I earn the same cash because I get the message for piracy… For the past 6-7 games I ended up with the same amount of money or a few grand less. So what do I do now? There’s no point in inventing a new engine because the revolutionary game made out of it will get pirated and I will not be able to cover my expenses.   Keep in mind, this is a comment coming from someone who is himself playing a pirated version of the game! One more lesson to take away from this is that entrepreneurs in competitive markets are very good at finding ways to turn public goods into private goods – when regulation doesn’t block them from doing so. At first glance, lighthouses were considered to be quintessentially public goods, because the light they emit can be seen regardless of payment and can be equally seen by multiple users simultaneously. Yet, market solutions were found, and the majority of lighthouses were privately provided on the market. As economist and historian Vincent Geloso has noted, “There was nothing inherent to the lighthouse that made it a public good. It was a public good because government regulation made it so.” (1 COMMENTS)

Matt Damon as Sonny Vaccaro in AIR The 30 days since publication have more than passed and so I’m posting my joint op/ed with Don Boudreaux here. ‘Air’ Is a Cautionary Tale About ESG Michael Jordan’s lesson for investors: Avoid uncertainty.  By Donald J. Boudreaux and David R. Henderson April 13, 2023 at 6:34 pm ET Some movies not only entertain and inspire but convey broader lessons. “Air” is one of them. The film is about Nike’s efforts in 1984 to secure Michael Jordan’s endorsement of its basketball shoes, which soon after became the iconic Air Jordans. But it also tells anyone who will listen that ESG investing—environmental, social and governance—is a trap. When the company begins its quest for Mr. Jordan (played by Damian Young), Nike is an underdog. He and his parents are leaning toward a Converse or Adidas sponsorship, as these companies are more established in basketball. Adidas is a front-runner until Nike alerts Mr. Jordan to a problem with that company. Nike’s determined employee, Sonny Vaccaro (Matt Damon) tells Mr. Jordan’s mother, Deloris (Viola Davis), that because the head of Adidas has just died, there will be turmoil at the top of the company that would hurt her son’s interests by creating uncertainty about his sponsorship. The Jordan family’s meeting with Adidas makes it apparent that the company has no clear leader or vision on how it would deal with Mr. Jordan in the future. This sense of confusion helps persuade the Jordans to sign with Nike, where leader Phil Knight is securely ensconced, ensuring against any radical change of direction in Nike’s relationship with Mr. Jordan. The Jordans’ decision conveys an important message about investing in companies, especially when it comes to ESG. With uncertainty about who will be a company’s next CEO comes uncertainty about the company’s strategies. Michael Jordan wasn’t willing to invest his personal brand in a fluctuating operation. Investors should be even more wary when considering companies that pursue ESG. At the time of Mr. Jordan’s sponsorship decision, everyone at least agreed that the lone goal of a company was to maximize value for shareholders. Under ESG investing, by contrast, conflicts arise not only over how best to pursue company goals but over what the goals are. In his 2022 testimony before the U.S. Joint Economic Committee, Hoover Institution economist Joshua Rauh noted that ESG investment “is plagued by inconsistent and changing definitions that ultimately have reduced managerial accountability to shareholders.” Because maximum shareholder value is no longer management’s exclusive aim, managers will wrangle endlessly over which goals to pursue and how to trade them off against one another and against shareholder value. That’s bad for both investors and the economy. If you watch “Air” for the entertainment value, you’ll enjoy a great story and some inspiration. If you watch as an investor, don’t be surprised if you pass up the next pro-ESG investment opportunity. Mr. Boudreaux is an economics professor at George Mason University. Mr. Henderson is a research fellow with Stanford University’s Hoover Institution and editor of the Concise Encyclopedia of Economics. By the way, I saw the movie after we wrote our piece, relying on Don to have gotten it right. He did. It’s a great movie and only the second one I’ve seen in a movie theatre since Newsom locked down. It’s good old-fashioned drama and they didn’t feel the need to put in a romance when there wasn’t one. Here’s the trailer, which gave me goose bumps. Nell Minow, on Twitter, called our thinking “idiotic.” Then she went further, using that oldest of arguments, the ad hominem that doesn’t even fit the facts, suggesting that our research was funded by Koch. I wish. Minow might not know this, but the Wall Street Journal actually pays. Twitter, at least in the use of some tweeters such as Nell, is a vast wasteland. (0 COMMENTS)

Michael Lewis is an American author and financial journalist; he wrote two of the greatest sports novels our generation has seen in Moneyball and The Blindside. Lewis is also known for his work on behavioral finance and forecasting of financial crises. In this episode from 2007, Lewis and EconTalk host Russ Roberts discuss the improbability common in each of his best-selling sports books, with Billy Beane’s innovations and Michael Oher’s rise being more alike than you would think. The podcast is particularly interesting to look back on now with the introduction of NIL in college sports, and the evolution of the use of statistics in baseball. We hope you’ll share your thoughts with us based on the prompts below. Play ball!     1- Michael Lewis alludes to the tie between “Moneyball” and “The Blindside” as stories of social class. Furthermore, both markets of baseball and football have market inefficiencies in terms of player acquisition which relate to barriers of entry. What similarities do Scott Hatteberg and Michael Oher share  in Lewis’ books? How are market inefficiencies different in football and baseball?    2- Lewis and Roberts discuss the  hypocrisy in the façade of education for high-level athletes in college. Athletes from underprivileged circumstances face a barrier to entering the market for college football at the highest level, even when their lack of education should not be a problem considering the lack of education players receive at college. Is the system still hypocritical? How does the quality of public education affect the potential for high-level athletes to get to college today? How do new NIL laws allowing players to earn money from their name, image, and likeness change the issue?    3- As MLB teams caught on to Billy Beane’s strategy of exploiting a market inefficiency, it was inevitable that further innovations in player evaluation would result. Beane’s focus on on-base-percentage (OBP) has evolved into a focus on on-base-percentage-plus-slugging (OPS) which can be used to measure efficiencies of both hitters and pitchers (OPS against). With the amount of statistical evaluation prevalent in player evaluation, is the objective quality of analysis taking too much priority over the subjective evaluation of the past? What is the current value of computing statistics versus passing the eye-test of a scout, and how does this problem relate to others we see developing outside of sports?    4- “The Blindside” offers an inspiring yet concerning story of Michael Oher and his rise to both stable living and the NFL. Following Lewis’ thoughts, how many “hidden gems” like Oher slip through the cracks because they do not have someone like the Tuohy’s to pull them out of intensely impoverished circumstances? How can public education be improved to provide an out for kids whose circumstances are hindering their progress and life quality? Are underprivileged kids who do not have athletic gifts suffering from even more barriers to a good life?   5- Lewis and Roberts allude to the questioning done by the NCAA regarding the legality of the Tuohy’s assisting Oher, given that the family had deep ties to Ole Miss and that Michael ended up going there. Even if the Tuohy’s were helping Oher out of pure kindness and concern, other well-off families could exploit talented yet underprivileged athletes to earn money from them or nudge them toward their favorite school. What flaws are there in the structure of recruiting which continue to breed corruption and violations? How can the NCAA more properly incentivize ethical recruiting while looking out for kids who are vulnerable to having their talents exploited?    6- Lewis and Roberts discuss the possibility of a remedial program for college athletes who are lacking in areas such as reading. How would more transparency in the structure of education for student-athletes affect the landscape of the NCAA? Would big-time student-athletes benefit more from an adjusted curriculum as opposed to an utter lack of educational value? What questions have NIL and compensatory recruiting competition raised in the student-athlete discussion?    Brennan Beausir is a student at Wabash College studying Philosophy, Politics, and Economics and is a 2023 Summer Scholar at Liberty Fund. (0 COMMENTS)

Over at Bloomberg, Clive Crook suggests that monetary policy does not deserve all of the blame for the inflation overshoot: The Fed’s fragile independence precludes it from challenging Congress and the administration over appropriate fiscal policy. For the same reason, it can’t be seen as directly countermanding fiscal policy with interest-rate changes, much as it might sometimes wish to. Tweak the monetary-policy framework by all means — but it isn’t the main problem. In my view, the “same reason” suggests that the Fed must engage in “countermanding fiscal policy”.  Indeed, Congress has given the Fed a mandate to countermand bad fiscal policy.  They are breaking the law if they refuse to do so.   The Fed’s mandate includes stable prices, high employment and moderate long term interest rates.  That’s the job that Congress has instructed the Fed to do.  There is nothing in the Fed’s mandate about assisting fiscal policy.  If the Fed believes that fiscal stimulus is likely to lead to a level of spending in excess of what is required for stable prices and high employment, then it must tighten monetary policy to offset the effects of the fiscal stimulus.  When asked, numerous Fed officials have suggested that this is exactly how they approach their job. If it really were true that Congress and the Fed worked together to produce stable prices and high employment, then the Fed would be well advised to challenge Congressional decisions on fiscal policy.  Crook is right that it is not appropriate for the Fed to challenge Congress on fiscal policy—these are completely independent policymakers.  And for exactly the same reason the Fed must do whatever it takes to achieve its Congressional mandate of stable prices and high employment, even if doing so requires a rise in interest rates during a period of fiscal stimulus. I would also challenge the implicit assumption that the Congressional moves were primarily motivated by macroeconomic considerations. By 2021, the economy was recovering very rapidly from Covid, much faster than during 2009.   The motivation for the large stimulus was mostly a mixture of three factors: 1. A desire to provide relief for people hurt by Covid. 2. The age-old desire of politicians to curry favor with the public. 3. The (incorrect) perception that interest rates would stay low for an extended period. Notice that raising rates doesn’t prevent the stimulus from providing relief to the public; indeed the assistance goes a bit further if there is less inflation.  On the third point, keep in mind that an expansionary monetary policy tends to raise interest rates in the long run.  I’ve been saying that for years, and lots of people refused to believe me.  Now we see the effects. (0 COMMENTS)

There are loose ways of speaking, which are literally incorrect, and precise ways of speaking, meant to convey exact information. As an example of loose speaking, I read in yesterday’s Wall Street Journal (“Why You’re Losing More to Casinos on the Las Vegas Strip,” May 29, 2023): In addition to smaller winnings, visitors are also paying more to visit Las Vegas. Prices for everything from hotel rooms to concerts to restaurants have surged in recent years. So far, tourists haven’t been deterred. The last sentence is confusing at best. It means either (1) that no visitors have been deterred by higher prices, or (2) that some visitors haven’t been deterred by these prices. The first interpretation cannot be true. For zero visitor to have been deterred by the price increase, it would mean that there was no marginal tourist who was close to the point of not gaining net utility (or “consumer surplus”) at the previous prices, and who would thus have been brought into negative utility by the higner prices. It would also mean that no visitor would decrease his visits to, or time in, Vegas. In other words, the implication is a perfectly inelastic market demand curve, meaning that quantity demanded of casino services and other tourist attractions does not change with their prices. This could only happen if there were no other good or service on which these consumers would want to spend their money. If more than one good or service are available, economic theory gives a formal proof of the law of demand, which states that there is a negative relationship between the price of a good and its quantity demanded. Virtually all empirical (econometric) study confirm the law of demand: the higher the price, the lower the quantity demanded. If  some visitors haven’t been deterred by Las Vegas higher prices—the second interpretation of the incriminated sentence—we cannot of course conclude that no visitor has been, and the suggestion that higher prices don’t deter tourists is baseless. (Much less can it be argued that a few eccentrics with contrarian free will would have purchased more because the prices were higher.) It is true that other factors than prices could have pushed up the whole relation between prices and quantity demanded of Las Vegas services, thus compensating for the increase in the latter’s prices. For example, leisure travel in general may have jumped after the end of the pandemic. But saying that visitors haven’t been deterred by higher prices implies that no one has reduced his quantity demanded relative to what it would have been if prices had not increased. Otherwise, we are confusing many possible causes. Counterfactual such as “relative to what it would have been” constitute an essential part of any causality argument. It corresponds to the ceteris paribus condition: one may only affirm that A caused B if that happens when other things are kept equal. Examples are endless. When, in January 2016, the CEO of McDonald’s declared that the profit “momentum continued into the fourth quarter with the launch of breakfast all day in October,” he meant that this part of the profit increase would not have materialized if the breakfast menu had only remained available until 10:30. (McDonald’s observers may object that conditions have since changed, but this is not relevant to the company’s analysis at that time.) You may say that your wine glass broke because you dropped it on the floor only if you know that it would not have broken otherwise; for example, you don’t think that a tiny time bomb had been imbedded in the stem and set to go off, coincidentally, at the precise moment when you clumsily tripped in the carpet. The Wall Street Journal could seriously suggest that higher prices caused no change in quantity demanded (“tourists have not been deterred”) only by tacitly assuming that no other potential causes changed demand (as opposed to quantity demanded as a function of price). On the distinction between demand and quantity demanded, see also a previous post of mine on this, “A Frequent Confusion and the Yo-Yo Economic Model.” (0 COMMENTS)

The second general class or type of opinions to which I have referred is distinguished, not by a special emphasis upon some particular view of the nature and purposes of the aggressive activities of states, but by a very definite thesis with respect to the wisdom and the consequences of such activities. If wars are waged for economic advantage, it is held, they defeat their own purposes. So too, in general, with all national policies designed to advance the economic interests of one state at the expense of other states. The truth is, it is alleged, that a nation gains by the prosperity of other nations, not by their poverty. This general thesis, if stated with some necessary qualifications, would be subscribed to, I think, by most economists. It was brilliantly expounded in Mr. Norman Angell’s book, The Great Illusion. If, in the days of its first vogue, that book seemed to be given little attention by the economists, it was not, I imagine, because they disagreed with it conclusions, but rather because most of those conclusions seemed to them to be fairly commonplace economic doctrines. Doubtless Mr. Angell weakened a good case by pushing it a little too far. He gave too little weight to the special interests (not necessarily or even generally class interests) that may be served by a belligerent or imperialistic policy, even when other interests, larger but more diffused, are injured. He did not adequately distinguish between immediate and ultimate gains and losses. But taking his argument in the large, and leaving details aside, it would command, I believe, the general assent of economists. Some of the policies he finds unwise are, in fact, policies we are accustomed to disparage by lumping them together and calling them neo-mercantilism. This is from Allyn Young, “Economics and War: A Presidential Address,” American Economic Review, Volume 16, No. 1, March 1926. It’s Harvard professor Allyn Young’s presidential address to the American Economics Association. Normal Angell’s book, The Great Illusion, which Young refers, to makes the case that trade between countries makes war less likely. I think Young’s critique is apt. The Great Illusion was published in 1909. The war between England and France on the one hand and Germany on the other was a war in which both sides had substantial trade with each other. But don’t overstate Angell’s naivete. As Wikipedia puts it: Angell said that arms build-up, for example the naval race between England and Germany that was happening as he wrote the book in the 1900s, was not going to secure peace. Instead, it would lead to increased insecurity and thus ratchet up the likelihood of war. The only viable route to peace would be respect for international law, implemented in a world court, in which issues would be dealt with rationally and peacefully. Postscript: I don’t think I would have heard of Allyn Young if not for some of the reading I did, very early in my career, of George Stigler’s work on the the history of economic thought. Incidentally, the great Frank Knight was one of Young’s students. (0 COMMENTS)

The Financial Times has an article by Gideon Rachman entitled: How to stop a war between America and China Unfortunately, the article doesn’t tell us how to stop a war between the US and China.  It does mention the possibility of setting up the sort of “hot line” that existed between the US and the Soviet Union, but it’s hard to see how that would be decisive.  There was no hot line 1962, when the US and Russia pulled back from the brink of nuclear war.   Rachman says that policymakers view the risk of war as being quite high: Visiting Washington last week, it was striking how commonplace talk of war between the US and China has become. That discussion has been fed by loose-lipped statements from American generals musing about potential dates for the opening of hostilities. Those comments, while unwise, did not spring from nowhere. They are a reflection of the broader discussion on China taking place in Washington — inside and outside government. Many influential people seem to think that a US-China war is not only possible but probable. The rhetoric coming out of Beijing is also bellicose. Last month, Qin Gang, China’s foreign minister, said that “if the US side does not put on the brakes and continues down the wrong path . . . confrontation and conflict” between the two nations is inevitable. I am also worried about the risk of war between the US and China.  When thinking about this risk, it might be worth reviewing the situation in Europe, which seems equally dangerous.  As far as I can tell, the US policy in Europe is roughly the following: 1. If Russia invades Estonia, we go to war with Russia. 2. If Russia invades Latvia, we go to war with Russia. 3. If Russia invades Lithuania, we go to war with Russia. 4. If Russian invades Ukraine, we supply Ukraine with weapons and intelligence. A major war between two nuclear armed nations is a massive negative sum outcome.  That sort of outcome is most likely to occur due to miscalculation.  One way to reduce the risk of war is by making one’s intentions crystal clear, so that our adversaries know how we will respond if they act.  Russia knows that we will defend Nato countries if they are attacked, and that’s why it doesn’t attack Nato countries. It’s somewhat odd that the risk of war with China is currently seen as being higher than the risk of war with Russia, especially given the fact that Russia has a more powerful nuclear force than China and is led by a more reckless and militaristic leader.  One possible factor is that our foreign policy in Asia is far more ambiguous than in Europe.  Ambiguity can lead to miscalculation, which can have very negative effects.  In my view, clarity along the following lines would make war between the US and China much less likely than it is today, and much less likely than war between the US and Russia: 1. If China invades Japan, we go to war with China. 2. If China invades South Korea, we go to war with China. 3. If Russia invades the Philippines (their main islands), we go to war with China. 4. If Russia invades Taiwan, we supply Taiwan with weapons and intelligence. In other words, replicate our successful European policy approach to avoiding a US war with Russia, as a way of avoiding war with China. Of course there are other possible options, such as extending our defense umbrella to Taiwan.  But whatever we decide to do, our policy must be crystal clear.  The worst of all possible outcomes would be if the US intends to go to war with China over Taiwan, while China doesn’t believe the US intends to go to war over Taiwan. Remember the Gulf War of 1991?  Alternatively, suppose China believes that we’d go to war over Taiwan, but we have no intention of actually doing so.  China might accompany an attack on Taiwan with a Pearl Harbor-type strike against US bases in Japan and Guam, triggering WWIII.  All due to a misunderstanding.  Not a likely outcome, but possible. I don’t expect the US to follow my advice, and hence I see a non-trivial risk that miscalculation could lead to a nuclear war between the US and China during the late 2020s, which would be in no one’s interest.  I hope I’m wrong. (0 COMMENTS)

If Victor Frankl can have a good life in Auschwitz, then I can have a good life in the United States in 2023 and beyond. I was talking to a good friend yesterday morning about our and other people’s attitudes to the world around us. We were both noting that some libertarian friends of ours, observing the various reductions in freedom in the United States and in the world generally, focused on these negatives and seemed in almost a perpetual state of despondency. I said that my view is that enough good things are happening, both on the freedom side and in life generally, that most of the time I’m the opposite of despondent. Also, I said, I don’t know if the world will go from 40% crap to 60% crap or 80% crap. I also mentioned a mid-forties economist friend to whom I had said that and this young friend responded that it might even go to less crap, a distinct possibility. But whichever of those things happen, I said, I want to be around. That reminded me of a book I finally read a few years ago after many people had recommended it to me over the years: Victor E. Frankl’s Man’s Search for Meaning. Frankl survived Auschwitz by, in part, maintaining a positive attitude. Yes, really. One excerpt: We who lived in concentration camps can remember the men who walked through the huts comforting others, giving away their last piece of bread. They may have been few in number, but they offer sufficient proof that everything can be taken from a man but one thing: the last of the human freedoms–to choose one’s attitude in any given set of circumstances, to choose one’s way. (pp. 65-66) I highly recommend Man’s Search for Meaning. It’s not quite as good as people over the years had led me to believe, but it’s 90% as good. Addendum: I have another libertarian friend who’s about 10 years younger than me who sometimes says that he’s glad he won’t be around to see the mess 50 years from now. I’m the opposite: I would love to be around.   (0 COMMENTS)