I was very busy this weekend trying to make enough soup so I can afford to hire another cat to shuck corn for me. I should probably explain. A few days ago, my high school freshman introduced me to a  game called Cats and Soup wherein tiny, adorable, animated cats make soup, juice, and stir fry to sell. When the game begins, your woodland clearing is inhabited by one cat who is able to make one kind of soup fairly slowly. As you play, however, that cat’s earnings can be used to hire more cats to act as sous chefs.  Each cat has its own special skills. Some cats chop carrots, others slice cabbage. The frustratingly expensive cat that I am currently saving up for shucks corn. As each new cat joins the team, the cats are able to produce more soup, more varieties of soup, and even broaden out to produce other kinds of food.  Some cats even have skills listed that–so far–have not come into play in the game. But I suspect that Lord Puffington’s ability to squeeze grapes is going to pay off for me before long! And, as the woodland clearing expands, if a grape juice making area opens, Lord Puffington can relocate to that area, leaving his current job as cabbage chopper open to a cat more suited to that task. Each type of food item is priced differently, so as the cats increase their ability to specialize their jobs by adding new cats to the team they are also able to diversify their output by combining their specialized tasks in new ways or by repurposing them. (The carrot chopping cat, for example, not only makes carrot soup, but can help make stir fry, and also make carrot juice!).  The market for the foods produced by the cats is somewhat unclear. We never see the woodland customers. However, a special order board with an ever-changing set of requests suggests that demand is variable and very subjective. And if the cats over-produce and the player is unable to click on the food items quickly enough to claim the gold that each item is worth, the food begins to go stale and is sold for a substantial markdown. So far, so Smithian. But Cats and Soup is also aware of Adam Smith’s cautions about the division of labor as well as his appreciation of its benefits. Smith warns that: The man whose whole life is spent in performing a few simple operations, of which the effects are perhaps always the same, or very nearly the same, has no occasion to exert his understanding or to exercise his invention in finding out expedients for removing difficulties which never occur. He naturally loses, therefore, the habit of such exertion, and generally becomes as stupid and ignorant as it is possible for a human creature to become. This is self-evidently true for soup-making cats as well. Thus, the game allows the cats to purchase and build recreational and rest facilities like shady trees, trampolines, and fishing ponds, where they can refresh themselves from their labors. And as the woodland clearing becomes more productive, the cats can buy hats, clothing, furniture, and accessories with the gold they make. Each new accessory increases their productivity. Happy cats work harder. Our cats, in other words, demonstrate that as societies become wealthier they are able to become more productive. Cats and Soup isn’t quite a full Principles of Economics textbook, but it’s certainly a cute and fuzzy version of some of the key early chapters.  I’ve long been a fan of the ways that economics can delight, entertain, and amuse as well as instruct. Cats and Soup seems like an ideal combination of pretty solid economics and adorable animation. I’d be interested to know what students would make of it, or of an essay prompt asking them to outline the economic principles illustrated by the game.  Meanwhile, I have to go check in on Lord Puffington and his friends. I think they’re about to learn how to fish.    P.S. And when you’re done with the cooking cats, here’s own-admittedly not nearly as cute- division of labor animation. (0 COMMENTS)

How Government Control Can Lead to Censorship in All But Name In the December 11 episode of “CBS Sunday Morning” was a segment on the Smothers Brothers. The show, which was wildly popular and one of my favorites, lasted from 1967 to 1969, when it was abruptly canceled. But nothing in the segment made it clear why it was canceled. You might have got the impression from the way they told the story and from Jane Pauley’s intro, that it was because of the Smothers Brothers’ edgy treatment of the Vietnam war. But that wasn’t it. Here’s what Thomas Hazlett writes in his 2017 book, The Political Spectrum. Licensees [radio or television] tend to comply not only with the explicit rules of the license but also with policy makers’ implicit demands–“regulation by raised eyebrow.” This has allowed officials to sidestep even the weak form of the First Amendment applied to broadcasting–and be happy to do so, as it enhances their clout. When, in 1969, The Smothers Brothers Comedy Hour joked about drug use and criticized U.S. military involvement in Vietnam, it drew criticism. But when the comics singled out for mockery Senator John O. Pastore (D-RI), the powerful head of the Senate Commerce Committees (overseeing the FCC)–he was awarded a “Flying Fickle Finger of Fate” by special guest Dan Rowan–the show never aired. Despite the series’ popularity, CBS abruptly canceled it. No government ruling ended the program. It did not have to. Basically, when you give government officials discretionary power, you can expect that many of them will use it. My guess is that Lee Cowan, the person doing the interview, either doesn’t know the history or wanted to maintain a narrative in which President Nixon, the president at the time, was the villain. (One part of the segment showed Tommy Smothers making fun of Nixon.) Arguably, Pastore had way more power over CBS than Nixon had.   (0 COMMENTS)

Economist and author Arnold Kling talks with EconTalk host Russ Roberts about the recent drama in the tech world–Elon Musk’s acquisition of Twitter, the collapse of FTX, and the appearance of ChatGPT. Underlying topics discussed include the potential for price discrimination to make social media profitable, whether you could tell Jeff Bezos from Sam Bankman-Fried […] The post Arnold Kling on Twitter, FTX, and ChatGPT appeared first on Econlib.

I’m sure there are more provocative titles than this one: “Louisiana Votes to Keep Slavery.” The trouble is, I can’t think of any, even after cogitating on this matter for quite a while! What’s going on? Did Louisianans really vote to bring back slavery? Of course not. Don’t be silly. Rather, the issue was prison labor. Should inmates be forced to work while incarcerated? Well, the rest of us, pretty much all of us work. (Ok, ok, children and the very elderly don’t). Why shouldn’t convicted criminals join the remainder of the human race in this regard? What is the alternative if they do not engage in labor? Working out, pardon the expression, in the gym? Watching television? Hanging out with each other and plotting future crimes? If prisons were put on a market place basis, they most certainly would work, and the proceeds of their labor would go to at least partially compensate their victims. No, no, no. There are two good reasons why convicts should engage in labor, whether they want to do so or not. First, deontology. They violated rights, or wouldn’t be in jail in the first place (apart from those wrongfully found guilty). Ideally, they should work so that the amount they produce, over and above the costs of incarcerating them, should be sent to their victims. The latter can never be made “whole” again, but, at least, if there were monies forthcoming to them from their abusers, that would be a vast improvement vis a vis the present system. Right now, these victims suffer two-fold. Once, from having the crime perpetrated upon them. Second, from being forced, via taxes, to keep these criminals in jails with comfortable air-conditioning, gyms, basketball courts, televisions, etc. Second, pragmatism. One of the functions of imprisonment should be to reduce recidivism. If the inmates have a skill which will enable them to earn a living when on the outside, they will be less likely to commit crimes, and end up back in the hoosegow. Well, how to do obtain such skills? By sitting on your backside all the live long day? You do not. You learn via on the job training. And, how can you avail yourself of those benefits while still being locked up? If you said “prison labor,” go to the head of the class. At this level, except for a very few white-collar criminals, we are not talking about being a doctor, or a lawyer or an accountant or a computer expert or a professor of physics. We are discussing jobs which require far less training. What is needed at this lower level of the job pyramid is the ability to show up for work on time, and not leave until the shift is over; the ability to follow all reasonable orders from the foreman; and the ability to refrain from getting into hassles with customers- this doesn’t mean that that customer is always right, they can be abusive at times. But it does mean taking the problem to the foreman and not “getting into it” with the customer. All of these things can be learned while still in prison. Those opposed to prison labor are consigning inmates to lives of boredom. According to folk wisdom “idleness is the devil’s workshop.” If they do not lead working lives while incarcerated, well, habits are habitual. The only way to finance joblessness on the outside is with more criminal behavior. Neither they, nor the rest of us, need any more of that, thank you very much. Yet, opponents of prison labor “virtue signal” all over the place. They pose as the friends of inmates. They besmirch those of us who advocate allowing them to work as favoring “slavery” of all things. No, no, no, the very opposite is true. Not compelling prisoners to work actually enslaves them: to a continued life of crime. Traditionally, it was labor unions who most opposed prison labor. They claimed such arrangements were taking jobs away from honest men. But there is no limit to how much work needs to be done. There is no fixed pie. Allowing inmates to work deprives no honest man of a job. Walter E. Block is Harold E. Wirth Eminent Scholar Endowed Chair and Professor of Economics at Loyola University New Orleans and is co-author of An Austro-Libertarian Critique of Public Choice (with Thomas DiLorenzo). (0 COMMENTS)

Last week, I pointed out that while price inflation has recently slowed, the real problem is wage inflation—and always has been. Fluctuations in nominal wage inflation are a primary cause of the business cycle. As long as the equilibrium level of nominal wages grows at a slow and steady pace, any residual price inflation (or deflation) will be transitory. Indeed any residual price inflation or deflation will be highly appropriate, helping to keep the economy at equilibrium.  (I encourage people who want a deeper understanding of why stable inflation is not ideal to take a look at George Selgin’s Less Than Zero.) This Bloomberg article makes the same point: The Bank of Japan in the coming week is widely expected to stick with the negative interest rates that set it apart from the world’s other major central banks. At the decision due on Tuesday, Governor Haruhiko Kuroda will reiterate his out-of-sync stance that monetary stimulus must stay in place to secure lasting inflation. . . . Inflation in Japan is at a four-decade high, but more subdued than in the US and Europe. Figures due Friday are expected to show core inflation inching up toward 4%, but Kuroda is waiting for signs of wage growth to reinforce a price trend he says is still driven by higher commodity prices and a weak yen. In Japan, the real problem is also wages.  But whereas the US has excessively high nominal wage inflation, in Japan the rate of wage inflation is too low.  Even though Japan currently has about 4% inflation (due to commodity price shocks and a weaker yen), that inflation will soon fall back below the BOJ’s 2% target unless nominal wages also begin rising.  Good to see that the BOJ now understands this problem; in both 2000 and 2006 they inappropriately tightened monetary policy before escaping from deflation, and plunged Japan ever deeper into a liquidity trap. [Most Western economists don’t seem to know about these earlier contractionary moves by the BOJ, as they frequently claim that Japan was trying and failing to achieve inflation, a claim that is almost laughably wrong.  The BOJ was not trying to create inflation during the early 2000s; they were trying to prevent inflation.]   (0 COMMENTS)

  U.S. spending on health care grew by 2.7 percent to reach a total of $4.3 trillion in 2021, or around $12,900 per person, according to new figures from the Centers for Medicare & Medicaid Services (CMS). Although this growth was slower than the increase of 10.3 percent in 2020, out-of-pocket health care spending accounted for 10 percent of the overall share last year and increased by 10.4 percent — a rate not seen since 1985. This is from Gianna Melillo, “Out-of-pocket health spending rises at highest rate since 1985,” The Hill, December 15, 2022. If we had had anything like “normal” years from 2020 to 2021, I would have said that this was potentially good news. Many health economists, including me, have advocated having patients have more skin in the game. We have argued that if they bear a higher percent of the cost, they are more likely to be careful in buying health care. In that case, high out-of-pocket spending could have been what led to a low increase in overall health care spending. But these have been such unusual years for health care and health care spending that it’s hard to say that that’s what’s going on. The link in the first quoted paragraph above takes you to the CMS page and on that page you can click and drill down into the data. I haven’t done so yet. (0 COMMENTS)

What sort of economic or political theory could justify the state (the apparatus of political and bureaucratic government) to forbid an adult to do something that can only harm himself (or hypothetically those who choose to associate with him)? A Wall Street Journal story alerts us to a current illustration (Jennifer Maloney, “New Zealand Bans Cigarette Sales for Everyone Born After 2008,” December 14, 2022): The law passed Tuesday bans the sale of tobacco products in New Zealand to anyone born on or after Jan. 1, 2009, so those who are age 13 or younger today will never be able to legally purchase tobacco in their lifetimes. It would have to be a theory claiming or assuming that: an adult (even in a country where he has the right to vote and is supposed to be capable of politically ruling others) is not capable of judging what has for himself more benefits than costs; and some individuals, whether majorities, minorities, philosopher-kings, or despots, are better capable of making this evaluation and decision for others, and in these others’ interests, and impose it on them by force, as well as on any other voluntary traders (such as smugglers) who interfere. The objection that public health insurance and subsidy systems harm those who adopt less risky lifestyles because it forces them to pay taxes to support individuals who make risky choices is not valid. This sort of compulsory systems have been sold to voters (assuming that this is indeed what voters, in some meaningful sense, voted for) under the official reason that this sharing of risk was a matter of “social solidarity” if not of compulsory love. At any rate, individuals who die younger cost less to the collective because the net drain on the public finances, through public pensions and probably health care too, increases with an individual’s age. The “externality” of smoking is typically either manufactured by the state or reducible to what moral busybodies don’t like other people to do. They hate the very idea that some people do something they don’t approve of. Moreover, the public discrimination against the smoking part of the citizenry (largely made of “deplorables”) will contribute to more polarization and eventually violence. I don’t think we can, over the past four centuries, find any classical liberal theory of politics or economics that supports this sort of systemic infantilization of so-called “citizens.” Liberal theories don’t view individuals as either children of the state or coercive majorities. (0 COMMENTS)

Yesterday, I published retired doctor Ted Levy’s critique of the Hippocratic Oath and the University of Minnesota Woke Oath. As promised, here is his suggested replacement, one that is much more consistent with freedom. A Libertarian Medical Oath We stand at the beginning of an important professional journey that for most of us will last a lifetime. We will, as physicians, daily face a sad professional truism: We typically see people at their worst. Few people want to be ill or suffer. Yet virtually every patient we see is ill or suffering. We accept our role, as physicians, to heal when we can, relieve pain as much as possible, and advise our patients on how to improve their situation as they see it. Medical study involves the function and structure of human organ systems, and all that can go wrong with them. But such knowledge does not allow us to tell others not trained in this art what they should do. Life intrinsically involves risk, and even when we share our knowledge, others may make choices that we would not. We can guide people to make the best health choices consistent with their life goals, but we do not and cannot choose those life goals for them. Ours is a life of service and we are proud, as are many people in other fields, to earn a living by charging for our services. We would prefer that the government not interfere in the financial relationship between doctor and patient, because we learned “he who pays the piper calls the tune” and prefer to listen to our patients’ maladies rather than our political leaders’ squalls when it comes to peoples’ health and choices. We have learned about the amazing power of pharmaceuticals in relieving pain and condemn efforts by politicians and regulators to distort the doctor-patient relationship by preventing us from helping relieve our patients of unrelenting, joy-destroying pain. We have learned about the potential benefits of mind-altering drugs in treating depression, anxiety, or the simple drudgeries of life and implore the government to stop arresting people who choose to find solace and bliss with them. The War on Drugs has harmed both patients and doctors since its inception. We ask that every effort be made to list as many medications as possible as “over-the-counter.” This will lower costs, improve competition, and increase availability. Recent decades have greatly expanded mankind’s knowledge of human health. But we recognize that improved knowledge does not justify mandates or prohibitions and it most certainly does not justify “noble lies.” Any physician who uses a public platform to engage in such lies is to be condemned. We demand that the FDA and the CDC be restricted to making recommendations, not legally enforced demands. The enormous costs and significant delays in introducing life-saving medicines to market caused by FDA regulations have caused more deaths than they have saved. As physicians, we are proud of the many skills and the large body of knowledge we have mastered. But we are also aware that much of what physicians are asked to do can be done well without having to master all of that. Onerous restrictions on the use of physician assistants, nurse practitioners, and other healthcare assistants should end. Artificial restrictions on their extent of practice should be minimized. Patients benefit from a greater supply of healthcare providers. Economists have long recognized that the main benefit of medical licensure is to restrict physician supply and increase doctors’ incomes. This harms patients and must end. If not for supply restrictions demanded by special interests, methods to increase the supply of healthcare providers could be easily achieved. These methods include automatic reciprocity of medical licensure as well as the increased use of telemedicine. Competent physicians in Maine should not be forced to spend months filling out paperwork to be allowed to practice medicine in Montana. The best surgeon in London should not be required to repeat a residency to practice in Los Angeles. A physician in Phoenix needs only an Arizona medical license to see a patient visiting from Fremont. He shouldn’t also need a California medical license if the patient instead sees him on a computer screen rather than face to face. Although medicine and medical results improve yearly, there are no cure-alls, no panaceas. But history shows and economic theory confirms that virtually all government interventions preventing patient and doctor from defining mutually agreeable terms of service are the cause of virtually all healthcare difficulties, and that eliminating such interventions is as close to a silver bullet as we can achieve in this world. Ted notes that the last sentence is an exaggeration but it is an oath, and so he thought he could take liberties, so to speak. (0 COMMENTS)

The Chinese government engages in all sorts of conspiracies. They conspire to deny the reality of the Uyghur concentration camps. They conspire to deny the crimes of Mao. They conspire to cast doubt on the fact that Covid likely originated in China (probably in an animal market, but perhaps a lab leak.)  But China’s government cannot hide the truth.  These conspiracies are almost laughably ineffective in affecting world opinion. Here’s another example of a Chinese cover-up: Evidence of a wave of Covid-19 deaths is beginning to emerge in Beijing despite official tallies showing no fatalities since an uncontrolled outbreak began sweeping through China’s capital this week. Staff at one crematorium in Beijing said they cremated the bodies of at least 30 Covid victims on Wednesday and Financial Times reporters saw two body bags at a special hospital designated for coronavirus patients. “We cremated 150 bodies [on Wednesday], many times more than a typical day last winter,” said an employee at the state-owned Beijing Dongjiao Funeral Home who asked not to be named. “Thirty or 40 had Covid.” I didn’t need to read the Financial Times to learn this fact, as my wife often chats on the phone with people in Beijing and it’s common knowledge that China’s capital is in the midst of a big Covid outbreak.  So should we accept all theories about Chinese cover-ups?  No, only those supported by the evidence. During late 2020 and 2021, China reported an extremely low number of Covid cases.  I do NOT believe that those reports were precisely accurate, but do I believe they were roughly accurate.  Oddly, while the FT story shows that the Chinese government is not to be trusted, it also shows that they cannot succeed in covering up major Covid outbreaks.  Of course the information will leak out. During late 2020 and 2021, the Chinese government reacted to small Covid outbreaks with the most draconian policies in the world.  The conservative media in America argued that this zero Covid policy could not possibly be succeeding as advertised.  I believe it did succeed for almost two years (although I strongly oppose the policy in any case.) The truth is that zero Covid policies can work fairly effectively in some cases.  Australia reported one death from Covid in the first half of 2021, a time during which the US reported 1/4 million Covid deaths.  I also believe the Australian claim to be roughly true.  There are other examples of successful zero Covid policies in various countries in the period before the virus mutated to become so infectious that it became almost impossible to control.  While I don’t believe those policies passed the cost-benefit test, especially after vaccines were available, they worked to a limited extent.  In October 2020, my wife visited Beijing and saw a city free of Covid, where life went on as normal.  Major Covid outbreaks cannot be hidden. There’s also a conspiracy theory that China’s GDP is far lower than what is shown by official figures.  I tend to doubt that claim.  China’s reported GDP/person ($12,970) is much lower than the US figure ($75,180).  Even in PPP terms, China has a relatively low GDP per capita, comparable to a Latin American country.  I’ve been to China many times (including western and rural regions), and it always seems at least as rich as the official figures suggest. Conspiracy theories should be accepted or rejected on the evidence, not based on whether one is predisposed to like or dislike the entity accused of a cover-up. Conspiracy theories are seductive for the same reason that we like Hollywood thrillers.  It’s fascinating to contemplate a vast government conspiracy to murder JFK or to fake a moon landing.  Reality is more boring.  Most of the conspiracy theories that are true are the ones out there in plain view—such as the Chinese government cover-up of concentration camps or their current cover-up of Beijing’s Covid outbreak.  Be skeptical of claims of conspiracies so vast that they are not even known to the media.  It’s not that they never happen, but they are far less likely to be true.   (0 COMMENTS)

As I mentioned in a recent Econlog post, I have been asking ChatGPT to write song lyrics, including lyrics about a variety of economics topics. One commenter asked me to share the songs ChatGPT wrote me about public choice. Here are a couple of those songs. I asked “Write a song about public choice theory in the style of Fishbone” and ChatGPT responded: Verse 1: Public choice theory, it’s a way of thinkin’ About how people act when they’re votin’ They seek their own self-interest Not always for the common good, that’s for sure Chorus: Public choice, public choice It’s a theory that’s not so nice It’s about how we’re all driven By our own selfish desires   Verse 2: Public choice theory, it’s a concept so bold It says that politicians, they’re just like us all They’re not always noble, they’re not always fair They’re just tryin’ to get what they want, like anyone else out there Chorus: Public choice, public choice It’s a theory that’s not so nice It’s about how we’re all driven By our own selfish desires   Bridge: But we can’t let our selfishness win We gotta work together, for the greater good We gotta use our votes wisely, not just for ourselves We gotta think about the future, and how our choices will affect it all   Chorus: Public choice, public choice It’s a theory that’s not so nice But if we work together, we can make it right We can use our power for the common good Public choice, public choice Let’s make the right choice.   I then said, “Write a song about public choice theory in the style of Tower of Power.” The AI responded: Verse 1: There’s a theory that’s been floating around Explaining why people act the way they do It’s called public choice, and it’s a big deal It’s changing how we think about democracy too Chorus: Public choice, public choice It’s a game changer for the people’s voice Public choice, public choice It’s a new way to understand what we do   Verse 2: We all have our own self-interest And that shapes our decisions every day But when we’re voting or making laws It’s not always easy to see the way Chorus: Public choice, public choice It’s a game changer for the people’s voice Public choice, public choice It’s a new way to understand what we do   Bridge: We can’t just assume that we’re doing what’s best For the common good, we need to be aware Public choice is a tool to help us see The consequences of our choices, loud and clear   Chorus: Public choice, public choice It’s a game changer for the people’s voice Public choice, public choice It’s a new way to understand what we do. I’ll note, by the way, that Tower of Power does have at least one real song that I think covers public choice quite well. That’s “Taxed to the Max” off of their 1995 album Souled Out.  The song covers vote seeking politicians (“Politicians promise all they can to get elected”), information asymmetries and opportunism (“In the smoke-filled rooms, they’re making all their plans. But when the smoke gets cleared, you know it’s just a scam.”), the military-industrial complex (“Weapons systems, national defense, vested interests. It doesn’t make no sense!”), and more. So far, I think humans have an edge over AI when it comes to writing catchy songs that illustrate public choice theory. At least, humans who specialize in songwriting do. But technology is changing rapidly. Who knows what the future holds?   Nathan P. Goodman is a Postdoctoral Fellow in the Department of Economics at New York University. His research interests include defense and peace economics, self-governance, public choice, institutional analysis, and Austrian economics. (0 COMMENTS)