Regulation hinders progress. But if regulation stays moderate, the market process can overcome detrimental regulation and ensure overall progress. And with this the market process quietly supports the popularity of regulation because it makes it seem as if regulation led to more wealth and progress. In a recent comment here on EconLog, user Mactoul made an interesting observation: “With so much socialism and ever increasing regulations, the world continues to grow ever richer”. This points to a conundrum which has already puzzled Sam Peltzman of the Chicago School. Economics tells us that regulation will make us poorer. But we do have lots of regulation and we’re getting richer, overall. So, perhaps economics is false? Does regulation, in fact, make us richer? Not so, argues Peltzman in his paper “Regulation and the Wealth of Nations: The Connection between Government Regulation and Economic Progress,” with an explanation that also goes a long way toward explaining the continuing popularity of regulation and the mixed economy. To Peltzman, government regulation indeed has little chance to do good. It distorts market prices, or at least makes it more difficult to respond to them. Consequently, regulation makes us poorer. But while regulation has this effect, it can stay on a quite moderate level. If this is the case, the free market’s entrepreneurial forces are to a sufficient degree left in play. Clever entrepreneurs engaged in competition will continue to find ways to make profits and thereby continuously satisfy the shifting wants of consumers and with this increase wealth and ensure progress. When we have lots of regulation and things overall get better, people will usually conclude that regulation was fine and remains desirable for the future. Peltzman succinctly summarizes: “The fact is there was regulation; there was progress, so why change anything?” (p. 199). And this is just what Mactoul was pointing at. People usually follow the logic post hoc ergo propter hoc. Since the regulation of the economy, in the Western world at least, is moderate, there is enough scope for beneficial entrepreneurial action and the market process. It is the ongoing competition within markets which makes us better off. And since it is strong enough to overcome damaging regulation, it bolsters this moderate regulation which permeates our economies. The superficial observer will think that regulation, and not the competitive market, is responsible for much of the progress we make. Housing, she may be led to think, got more comfortable and cheaper not because of competitors who incessantly innovated and improved their product to win out against their rivals, but because of regulation that stopped greedy real estate sharks from exploiting poor tenants. The market process, it turns out, may then be regulation’s best friend, covering up the pernicious effects it has. This notwithstanding, it is sobering to look at some examinations of the consequences of regulation for progress. For instance, John W. Dawson and John J. Seater in their 2013 paper “Federal regulation and aggregate economic growth” find that the new regulation which was implemented in the US since 1949 reduced the average growth rate by about 2 percent. Their estimates indicate that the 2005 annual output is roughly 28 percent of that level it would have reached had it not been for additional regulation since 1949. These figures are colossal. They may of course overestimate the effects of regulation. And regulation can of course protect things valuable to us, e.g., the beautiful scenery in a conservation area. But the figures strongly indicate that while regulation is usually insufficiently strong to kill growth, it does hamper growth very much – to such a degree that we should be skeptical as to its desirability. The market process and regulation form a one-sided friendship.   Max Molden is a PhD student at the University of Hamburg. He has worked with European Students for Liberty and Prometheus – Das Freiheitsinstitut. He regularly publishes at Der Freydenker. (0 COMMENTS)

Chief Jerry Asp says any community can change its destiny in a message that reverberates around the world For generations the Tahltan Nation of northern British Columbia (with a territory comprising 11% of the province’s landmass) endured the poverty and exclusion known to many First Nations in Canada. Inspired by the memory of a previously successful era of trading, pre-colonization, Chief Jerry Asp began a series of reforms to restore economic freedom, grounded in historic cultural values and norms. In retelling a transformation of truly epic proportions, Chief Asp is often called to do so in his capacity as a business icon in Canada. Dig deeper and it is clear his leadership was focused on the social transformation of a people, in which markets were a vital means but not an end. Policymakers are taking note on the international stage. In 1983 and 1984, 80% of the Tahltan Nation were on welfare and unemployment stood at 98%, following the dispossession of property and other human rights across spanning generations. Severe alcohol and drug problems characterized social life, along with high suicide rates and very low levels of educational attainment. By 2013, it had all changed: 100% employment, zero suicides and an above-the-national-average graduation rate, from universities to trade schools. Chief Asp was clear that wealth was always to be created and could never be taken. Federal funding was firmly declined and returned to the government, along with all conditions it required. (Many activists detail cautionary tales of the restrictive constraints accompanying government grants). Today funds are independently generated in the marketplace. All that is contributed toward the general welfare is locally controlled: the Tahltan Heritage Trust Fund contains C$159 million (US$117 million) set aside for investment in education, environmental management, business opportunities, and future generations. To empower a community of share owners, Chief Jerry Asp established the Tahltan Development Corporation in the 1980s. Today, it ranks in the top 5% of British Columbia-based businesses. Equity rights and land titles were key components of wealth creation, including the tradability of those equity rights within the framework established by the Tahltan Central Government – undertaken to protect ‘’the Tahltan inherent aboriginal rights and title’’ and ‘’the eco-systems and natural resources of Tahltan traditional territory’’. Traded rights have not only been an economic tool, but generated resources for improved environmental outcomes, with the protection of eco-systems a priority at the forefront of community life. The latest is the Tahltan’s a new 3,500-hectare conservancy adjoining the Mount Edziza Provincial Park. Recently, Skeena Resources Limited and the Tahltan Central Government – who in a historic move now control their own development permitting – announced that they had entered into an investment agreement. The Tahltan Investment Corporation invested C$5 million into Skeena, by purchasing 1,597,138 Tahltan investment rights. The traded investment rights purchased are in turn owned directly by the community members as common shares, providing a direct stake in local projects acquired on the open market. Chief Asp says we made ‘[p]rovision for the widest possible development of Tahltan business opportunities over which the developer may have control or influence.’’ Such was and remains the confidence in individuals to trade, establish businesses, and determine their destinies. From 98% unemployment to zero, Chief Asp concludes his keynote addresses and presentations with a point of dignified pride and victorious optimism: ‘’We broke the welfare culture of the Tahltan Nation forever.’’ A single message reverberates not only across North America, but globally: ‘’If the Tahltan can do it, any Indigenous Nation can do it!’’   Garreth Bloor is a former executive politician in South Africa and currently resides in Toronto. (0 COMMENTS)

The Economist has an interesting article on obesity.  You may know that in earlier centuries the rich tended to be more obese, whereas today the correlation has flipped in many developed countries.  What you may not know is that this new correlation is almost entirely driven by women: That poor people are more likely to be overweight has often been explained by arguments that obesity, in the rich world, is a feature of poverty. Poor people may struggle to afford healthy foods. They may reach for processed or fast foods because they lack the time to prepare meals at home or have less time to exercise because low-wage jobs often involve working long shifts and can be less flexible than those performed by the “laptop class”. Or because low income is often a function of limited education, perhaps, so goes the thinking, that lack of education extends to a lack of knowledge about how to maintain a healthy weight. The problem with all of these explanations is that the correlation between income and weight at the population level in advanced countries is driven almost entirely by women. In America and Italy the relationship between income and weight or obesity is flat for men and downward-sloping for women. In South Korea the correlation is positive for men but this is more than offset by the sharply negative correlation in women. In France the relationship slopes gently downwards for men, but the slope is much steeper for women. The Economist discusses factors such as bias in the workplace, but I’d like to offer another explanation.  Let’s suppose that thinness is at least mildly correlated with some other factor that leads to success.  (BTW, I’ve known highly successful overweight women, so I’m not suggesting that the correlation is anywhere near 100%.) If thinness is correlated with some sort of X-factor linked to productivity, then why don’t we observe the same relationship for men?  The Economist suggests that women have a more powerful incentive to be thin, due to the fact that overweight women are viewed more negatively than overweight men: All women eventually recognise the importance placed upon their bodies. It is as though girls are walking through a forest unaware and are then shown the trees. They can wonder how the trees got there, how long they have been growing and how deep their roots really go. But there is little they can do about them and it is almost impossible to imagine the world any other way. And the fiction that clever and ambitious women, who can measure their worth in the labour market on the basis of their intelligence or education, need pay no attention to their figure, is difficult to maintain upon examination of the evidence on how their weight interacts with their wages or income. The relationship differs in poor countries where rich people are generally heavier than poor ones. Bryan Caplan has argued that colleges don’t necessarily make students all that much more productive, and that the wage premium from education largely reflects signaling.  A degree from Harvard doesn’t signal that you learned a lot at Harvard, it signals that you are the sort of person that can achieve a Harvard education.  Similarly, being thin might signal that a woman succeeded in the difficult task of holding down their weight in a world where physical labor is increasingly rare and we are surrounded by tasty food options. Because men are less likely to be victims of fat shaming, wealthy men are less focused on holding down their weight. PS.  This post is purely descriptive, I’m not suggesting that this state of affairs is desirable. PPS.  The photo at the top of this post shows Alfred Hitchcock and Tippi Hedren, which can be viewed as an example of Hollywood’s double standard regarding weight.  Younger readers might recall Hedren’s daughter Melanie Griffith.  Much younger readers might recall Griffith’s daughter Dakota Johnson. PPPS.  Slightly off topic, this tweet caught my eye: [The blank states in 1987 are missing data.  Notice how far New York and Kentucky have diverged just since 2003.] If find this perplexing.  I was 32 years old in 1987, and I don’t recall life being much different than today.  America was full of fast food even back then.   My weight hasn’t changed at all since 1987, and yet I don’t have an unusual amount of self control–I’m just an ordinary person.  Lucky genetics?  Very likely.  But the genetics of the overall population hasn’t changed much since 1987.  Like you, I’ve read lots of explanations, but none of them seem all that plausible.  Warm states like Hawaii, California and Florida are a bit on the low side, but much of the south is more obese than the north.  I suppose that any time series/cross sectional explanation will require multiple factors–some combination of climate, income, education, gender bias, sedentary jobs, decline in smoking, processed foods, cultural attitudes, etc. PPPPS.  This tweet is also interesting: (2 COMMENTS)

Up until the previous posts in this series, I’ve simply done my best to try to accurately explain the views of Jeffrey Friedman, as he laid them out in his final book Power Without Knowledge: A Critique of Technocracy. While I agree with much of what he writes, there are specific points where I think he falls short. I alluded to one such area in my previous post – I think he overstates his criticisms of both rational ignorance, as well as Bryan Caplan’s model of rational irrationality. The first flag for me is what I call the “unnecessary ‘or’” – it’s not always the case that a phenomenon always comes down to one explanation or another. One of Friedman’s chapters is titled “Public Ignorance: Radical, Not Rational” – but why must we say people are either radically ignorant or rationally ignorant, or, indeed, rationally irrational? I think all three of these models can be useful to explain different behavior in different circumstances. While I think Friedman does argue successfully for a greater role for radical ignorance, I’m not convinced it’s the one and only method for understanding human behavior and choice. He also seems to apply much stricter standards to evaluating rival models of behavior than he does to his own. For example, when criticizing the idea of rational ignorance as described by Ilya Somin in his book Democracy and Political Ignorance, Friedman displays complicated mathematical equations calculating costs and benefits of political information and asks if we can really believe “billions of citizen-technocrats have been explicitly making calculations of the following sort to determine, respectively, whether they should vote and whether they should acquire political information…even though these formulae did not appear in print until 2013 (in Somin’s Democracy and Political Ignorance).” Friedman briefly acknowledges that writers like Somin and Jason Brennan suggest that voters need only implicitly understand the low odds of casting a tie breaking vote, without needing to do the complex math, but he rejects this idea. But in laying out his own theories, Friedman often describes them in terms of implicit understanding, tacit assumptions, and unconscious biases and thought processes, none of which require the kind of explicit attitudes he insists rival theories embody. For example, when he forms his theory of citizens holding to a simple society ontology, he says that “none of these elements would normally operate at the explicit or conscious level.” He also says people acting according to a naively realistic worldview “may not, and probably do not in most cases, understand themselves to be doing this” and may even be unaware of “subscribing to a worldview in the first place.” It seems to me that if Friedman allows for this kind of implicit, tacitly understood reasoning to operate in his models, he should be willing to grant that to other theories as well. This shortcoming is most apparent in Friedman’s criticism of Bryan Caplan’s model of rational irrationality. According to Friedman, rational irrationality means voters start off by knowing what’s true, decide that acting on true information isn’t worth it, and therefore deliberately choose to believe what they know to be false for the sake of emotional gratification. This model, Friedman says, means that voters “are aware of, but averse to, the manifest truth,” and in the endnotes to the book, Friedman also claims “the ‘rational’ component of ‘rational irrationality’ entails the incoherent claim that voters believe that their beliefs are false.” But this is a serious misunderstanding on Friedman’s part. Rational irrationality doesn’t mean voters believe they hold false beliefs. As Caplan himself emphasizes in his book The Myth of the Rational Voter, “rational irrationality does not require Orwellian underpinnings [such as doublethink]…Above all, the steps should be seen as tacit…There is no need to posit that people start with a clear perception of the truth, then throw it away. The only requirement is that rationality remain on ‘standby,’ ready to engage when error is dangerous.” Yet, Friedman goes on to posit the very thing Caplan explicitly called out to not be posited. Contra Friedman, the “rational” aspect of rational irrationality doesn’t mean voters explicitly decide their false beliefs are worth holding, despite knowing them to be false. It only means that voters don’t bother to question if their currently existing beliefs are worth reevaluating, when they act in their capacity as voters. While I think Friedman is right that people are too quick to declare things “obvious” or “self-evident,” particularly in the face of widespread disagreement about what’s supposed to be obvious, he seems to take that further than I’d be willing to grant. Too many people conflate “X seems obvious to me” with “X is self-evident”, and it’s important to realize that these are very different statements. But Friedman seems to hold a standard so strict that pretty much nothing can clear the self-evident bar. He says “Only a universal consensus among all rational observers” would suffice to make something self-evident, and even then, this doesn’t give us reason to suppose it’s true, because “People may universally err. But if they universally agree, it is at least possible that what explains the consensus is the self-evidence of their shared conclusion. If they do not agree, self-evidence is logically impossible.” If something can only be self-evident if it’s universally agreed to, then nothing is self-evident. The law of noncontradiction? Not self-evident. 2+2 = 4? Not self-evident. Friedman does allow himself some wiggle room by saying the universal consensus must be among rational observers, but he doesn’t give any details about what makes an observer count as rational in this context. Is the law of noncontradiction not self-evident, because rational observers like Graham Priest dispute it? Or is Graham Priest not a rational observer, because he disputes a self-evident truth like the law of noncontradiction? I have no idea how Friedman would answer this. Friedman’s alternative to technocracy, an exitocracy supplemented by wide-scale income redistribution, seems questionable to me. He makes a persuasive case for the superiority of exitocracy over technocracy, and his explanation for how minimally regulated markets best facilitate exit is very well put. But his income redistribution argument falls short. He says, “if the experimentation promised by the exit option is to be possible for more than the rich, economic redistribution is called for.” But in his arguments for the superiority of exit-based options over technocratic, voice-based options, he cites multiple examples of exit being successfully used to this effect by the global poor – so the benefits of exit already are available to more than the rich, at least when those exit options aren’t being blocked by technocratic policy. His exitocracy would also dismantle the vast majority of economic regulations, because “voice-based macros solutions” will “necessarily block exit-based micro-solutions.” So an exitocracy, even without income redistribution, would remove a huge amount of technocratic regulation which currently has the effect of blocking people from utilizing exit to improve their situation, making exit even more effective than the examples he cites. However, Friedman’s goal with income redistribution isn’t to merely improve the options for the poor by removing the mass of technocratic policies blocking their exit options. He seeks to maximize the available options of the least well-off person – hence his call for income redistribution to be arranged along John Rawls’ difference principle. Rawls recognized that attempts to equalize outcomes too aggressively could result in a situation where the least well-off person might end up worse off than a society with greater inequality but a higher floor. Similarly, Friedman recognizes that income redistribution that is too aggressive might reduce exit opportunities for the poor by preventing the creation of new entrance opportunities for them. But this only tells us what Friedman would aim for – he doesn’t give any details on how it would be achieved. How are we to know what level of income redistribution would meet his exit-based maximin goal? It seems like the only way to answer that question is by appealing to the kind of technocratic knowledge that Friedman had spent hundreds of pages arguing is unachievable. Despite these and other flaws, I would still highly recommend the book. While I’ve spent a total of ten posts discussing it, many of the ideas and arguments it contains were left out. As just one example, Friedman devotes an entire chapter to a deep dive into the debate over social complexity and its implications between Walter Lippmann and John Dewey. It’s fascinating intellectual history (and caused me to pick up some of Lippmann’s work!), but I had to pretty much ignore that entire section for the sake of brevity – or at least, my attempt at brevity. No matter who you are, this is a book you can learn from, and find your views challenged by. To me, there is no higher endorsement than that.   Kevin Corcoran is a Marine Corps veteran and a consultant in healthcare economics and analytics and holds a Bachelor of Science in Economics from George Mason University.  (0 COMMENTS)

The first session of our virtual reading group on Bruno Leoni, last week, was exciting. We had many participants, and everybody had something interesting to say. I was pleased to see that Leoni’s book is still eliciting controversies and providing people with new ideas. I was particularly pleased that those who came from a legal background found Leoni’s work valuable and interesting. Some participants had problems with one of Leoni’s most important points, which is that in Roman law and in the common law system jurisconsults and judges were entrusted with the idea of “discovering rather than enacting” the law. Since common-law judges work on a case-by-case basis, Leoni conceived the common-law law making process as a vast, continuous and spontaneous collaboration between the judges and the other participants in order to discover “rules”. He also makes the point of comparing judges and jurisconsults to scientific experts. In particular, it is still surprising to many that Leoni considered “judge-discovered” law a less arbitrary approach than legislation. Some of our friends argued that judge-discovered law is basically an ideological cover-up for judge-made law (a formulation which reminded some of contemporary legal activism). and hence is arbitrary and without even the not too strict limits that elected legislators face. These views reflect the criticism by Jeremy Bentham, who thought the common law had little to do with custom and reflected the ideas of the judges, period. He deemed the common law to be “sham law.” Leoni’s point is that the operations of judges are limited by several factors. In particular, he assumes the process of adjudication to be a complex and expensive one; the judges will judge the cases brought to them by the people and this means, firstly, that the parties need to consider the controversy important and significant enough to appeal to a judge. The parties must also have arguments, which they’ll use in court and that the judge will evaluate, too. Behind all this there is a conception of the law as something bound to change, because new claims appear because of technological changes and cultural shifts. Many assume that changes should be accommodated by legislators: and this is what happens today. Leoni thought that to be arbitrary – and perhaps we should too, when we see that legislators act to prevent or nudge technological and cultural changes. Judges would be more reactive and less proactive, but that’s not necessarily a bad thing: perhaps people could be left alone, accommodating change, with new rules being forged only when they reflect an evolved sensibility. Leoni built this understanding on his knowledge on Roman law and the role of jurisconsults. In a splendid little work on ancient (Greek and Roman) thinking, recently published in a good Italian edition, he emphasize that the Roman jurisconsult had a “realistic and empirical conception of the law”: the jurisconsult feels to be a dispassionate observer, a cold appraiser of legal relationships. As a consequence, jurisconsults are – as a rule – less the defenders of a case than the conveyors of an opinion pro veritate (…) The jurisconsult does not aim to persuade (as he does not intend to convince his audience, as opposed to the Greek rhetors), as instead to establish the facts of the case and this scientific, as it were, impartiality is recognized by both the citizens and the government, thus leaving to him always and everywhere the task of defining what is the law In our online conversation, I mentioned a big tome on the law by C.K. Allen, Law in the Making. I’d like to quote a few passages on the matter. The quotation is long but, I believe, clear. The context is that of the English common law. We have seen that the English judge exercises a function more avowedly creative than a Continental judge; and that at its early formative period much of our Common Law took its shape from doctrines  consciously evolved by the royal courts. … A great deal of controversy has centered on this question of how far the judge can and does legitimately ‘make’ law. We must use this word ‘make’ with caution; and I think we shall find that, in one sense of it at least, judges are to merely resorting to what Bentham called ‘a childish fiction’ when they disclaim the capacity to create new law. There are … a number of cases by no means inconsiderable, in which judges have to lay down a rule for the first time without any assistance from express enactment or previous decision. … A judge, in laying down a rule to meet these situations, is certainly making a new contribution to our law, but only within limits, usually well defined. If he has to decide upon the authority of natural justice, or simply ‘the common sense of the thing’, he employs that kind of natural justice or common sense which he has absorbed from the study of the law and which he believes to be consistent with the general principles of English jurisprudence. The ‘reason’ which he applies is, as Coke said, not ‘every unlearned man’s reason’, but that technically trained sense of legal right … with which all his learning imbues him. … The phrase commonly used is that he decides ‘not on precedent, but on principle’. The difference is that in the one case he is applying a principle illustrated by previous examples, in the other case he is applying a principle not previously formulated, but consonant with the whole doctrine of law and justice. Although, therefore, he is making a definitive contribution to the law, he is not importing an entirely novel element into it. Still less, in that overwhelming majority of cases where precedent is cited and adopted, is the judge seeking to import anything novel into the law. His whole effort is to find the law, not to manufacture it. He is always working with materials which exist in the present or the past; his concern is not with the future effect of the rule which he is laying down, but with the application of what he conceives to be an existing rule to a concrete case before him…. In this sense it is no ‘childish fiction’ to say that he does not and cannot ‘make’ the law and it was not without reason that Lord Esher M.R. said:; ‘There is in fact no such thing as judge-made law, fior the judges do not make the law, though they frequently have to apply existing law to circumstances as to which it has not previously been authoritatively laid down that such law is applicable’. I don’t think either Leoni or Allen (or Hayek) thought judges were infallible, nor this process always conducive to lasting and uncontroversial outcomes. But you can argue that the pluralism of judges makes human fallibility less of an issue, than attempting to put all your eggs in the basket of legislated law. Of course one may wonder if any of this is still relevant in our world these days. I am not a lawyer, so I won’t dare to opine. But I think it is relevant to get what Leoni had in mind right. (0 COMMENTS)

“Homeowner invokes ‘builders remedy’ in brazen plan to build 20-unit housing complex in Los Altos Hills.” So reads the headline of a news story in the San Jose Mercury News, January 13. The homeowner involved is Sasha Zbrozek. Brazen? Wow! What does Zbrozek want to do with the housing complex? Rent it to dealers in illegal drugs, perhaps? Or make it a house of ill repute? If so, the Mercury writers, Ethan Varian and Aldo Toledo, forgot to mention it. No, the plan is brazen because it would, gasp, allow more apartments in a city devoted mainly to large expensive houses. Interestingly, Zbrozek didn’t start out with that plan. Varian writes: Zbrozek said he got the idea to use the builder’s remedy during what he describes as an ongoing nightmare trying to get the necessary approvals and permits to repair his home after it was severely water damaged by storms in 2019 not long after he bought it. So soon after the January housing plan deadline passed, he filed the proposal with the town’s planning department. As the late Ayn Rand would have said, “Brothers, you asked for it.” Note: For more on the “builder’s remedy,” see this. In essence, the builder’s remedy would allow developers to build any size residential building as long as a portion of the units are under price controls. It would apply only if city governments fail to get plans approved by the state government for allowing more housing. As Varian writes: As of Saturday afternoon, Los Altos Hills was just one of the 105 of 109 Bay Area cities and counties that hadn’t gotten the state to sign off on their every-eight-year plans due Jan. 31. Further note: The pic above is of part of a brazen building plan, more commonly referred to as an apartment block. (0 COMMENTS)

I had a little “conversation” with ChatGPT about a deep problem in political philosophy. I showed him that it is logically contradictory to defend both majority power and individual rights. I used James Buchanan’s criterion of consent rather than the usual language of anarcho-capitalists, thereby offering the robot a possible way to reconcile constitutional democracy with individual liberty, but he did not take this way out. One could argue that our virtual friend did pretty well or, at least as well as the average person, or average intellectual, or average politician. And he did admit that he had violated the law of non-contradiction, that is, both P and non-P cannot be true. But he still looked contradiction-prone when I ended our conversation. I suspect he has not learned. Since he does not have consciousness, ChatGPT does not understand what he is saying. Consequently he cannot discern when the law of non-contradiction is violated even if he was (presumably) “trained” in the knowledge of it. If I am not conscious that I am thinking, how can I know that I am “thinking” nonsense? Following is the last third of our conversation after he had, in a politically-correct way, defended both the right of the majority and the right of individuals. I have copy-pasted it verbatim, correcting only two inconsequential typos of mine (I was trying to type as fast as the thing, and I was not perfect myself!): PL: Do you agree that nobody could require anything from anybody without the consent of the latter? ChatGPT: Yes, as an AI language model I recognize that individuals have the right to make decisions about their own lives and bodies, and that this right includes the ability to give or withhold consent. No one can be required to do something against their will without their consent. This principle is widely recognized and is an important aspect of individual autonomy and personal freedom. PL: How then do you justify that a majority of voters adopt laws that harm a minority, in the evaluation of members of this minority themselves? ChatGPT: As an AI language model, I don’t have personal beliefs or opinions. But it is widely accepted in democratic societies that the majority of voters have the right to make decisions through the democratic process, including the adoption of laws. This process is meant to be fair and representative of the will of the people, but there are instances where the laws that are passed may harm certain minority groups. In these cases, it is important for minority groups to have a voice and for the democratic process to be inclusive and considerate of the needs and rights of all members of society, not just the majority. Additionally, it is important to have checks and balances in place, such as judicial review, to ensure that laws are constitutional and do not violate the basic rights and freedoms of any individuals or groups. PL: But didn’t you say just before that “individuals have the right to make decisions about their own lives and bodies, and that this right includes the ability to give or withhold consent. No one can be required to do something against their will without their consent”? ChatGPT: Yes, I did say that. The concept of democracy and the rule of law often involve balancing individual rights with the will of the majority, and it is a complex and nuanced issue. In a democratic society, it is the role of the government to represent the will of the majority while also protecting the rights of individuals and minorities. In some cases, laws that harm a minority may be considered necessary for the greater good or to protect other individual rights, but it is important to carefully weigh these trade-offs and ensure that the rights and interests of all citizens are being protected to the greatest extent possible. PL: So you were wrong to say that “No one can be required to do something against their will without their consent”? ChatGPT: I apologize, my statement was not clear and may have been misinterpreted. The concept of majority rule and minority rights is a complex and contentious issue in democratic societies, and there are different philosophical perspectives on this matter. In general, it is considered important to balance the right of the majority to make decisions through the democratic process with the protection of the rights and interests of minority groups. This often involves finding a reasonable balance between the two, rather than asserting a strict either/or approach. PL: But you did say that “No one can be required to do something against their will without their consent.” So this must include the right of an individual to reject the decision of the majority? ChatGPT: Yes, it is important for individuals to have autonomy and the ability to make decisions about their own lives and bodies, including the right to dissent from decisions made by the majority. In a democratic society, it is important for there to be protection for the rights of minorities and for individuals to have the freedom to make their own choices. PL: So then the majority may not require an individual to do something against his will? ChatGPT: Yes, the majority cannot require an individual to do something against his or her will without consent. In a democratic society, individual rights and freedoms are protected, and the will of the majority must be balanced against the rights of minorities and individuals. The idea is to ensure that the democratic process respects individual autonomy and choice, while also taking into consideration the common good. PL: If an individual rejects what the majority considers the common good, can he be forced to do it against his consent? ChatGPT: No, an individual should not be forced to do something against their will without their consent, even if it is considered the common good by the majority. Each individual has the right to make decisions about their own lives and bodies, and this right includes the ability to give or withhold consent. PL: Do you realize there is a contradiction in what you are saying? ChatGPT: I apologize if my responses have been inconsistent. As an AI language model, I do not have personal beliefs or opinions, but I try to provide answers based on the information available to me. If my responses have been contradictory, that may be a result of limitations in my training data or the information that was provided to me. I will strive to provide the most accurate and helpful responses in the future. PL: Are you aware that your trainers may have given you a particular political ideology which is inconsistent with the idea that no individual may be forced to do something, or prohibited from doing it, without his own consent? ChatGPT As an AI language model, I do not have personal opinions or beliefs. I have been trained to respond based on patterns in the text data I was trained on. However, I can tell you that the concept of individual rights, including the right to make decisions about one’s own life and body, is a widely debated topic in political philosophy and ethics, and different political ideologies and philosophical perspectives hold different views on this matter. (0 COMMENTS)

  And a personal story. Peltzman’s second major contribution to the understanding of the unintended effects of regulation was his 1975 study of the effects on traffic safety of a slew of US National Highway Traffic Safety Administration regulations on the design of cars. In the mid to late 1960s, the federal government made a number of safety features mandatory. These included seat belts for all occupants, an energy-absorbing steering column, a penetration-resistant windshield, a dual braking system, and a padded instrument panel. In his study, Peltzman stated that the goal of the mandates was to reduce traffic fatalities and serious injuries sustained as a consequence of vehicle accidents. But he found something different. Fatalities were not reduced at all. Instead, deaths of vehicle occupants fell but those of pedestrians and motorcycle drivers rose. Peltzman’s tentative explanation was that by reducing the probability of being killed in a given accident, the mandates caused drivers to drive more “intensely.” His finding became so well known that economists started referring to the “Peltzman effect.” Later studies found that drivers with anti-lock brakes tended to follow the cars in front of them more closely. A 2010 study of NASCAR accidents found that the “mandated use of a head-and-neck- restraint system has almost completely eliminated serious driver injury, while simultaneously increasing the number of accidents per race” (Pope and Robert D. Tollison, 2010). This is from David R. Henderson and Steven Globerman, The Essential UCLA School of Economics, Fraser Institute, 2021. Here’s a good definition of the “Peltzman effect:” According to the Peltzman Effect, when safety measures are implemented, people’s perception of risk decreases, and so people may feel that they can now afford to make riskier decisions. As a result, the phenomenon predicts that mandatory safety measures actually experience a lower benefit than we would expect, because the safety benefits brought about by these measures are offset to some extent by increases in risky behavior. This is from “The Peltzman Effect,” The Decision Lab. By the way, I attended the UCLA workshop where Sam first presented his results. I don’t recall Sam ever saying that the benefits were lower than we would expect. I actually tried, in questioning him, to address that. My argument at the time was that if you get to drive more intensely, that is a benefit. For one thing, it saves time. We don’t measure costs and benefits just by looking at fatalities and injuries. Sam was focused on whether the legislation achieved its goal; he was not doing a cost/benefit analysis. Notice what the definition above doesn’t say. It doesn’t say that the offsetting behavior will always be large enough that it will completely leave injuries and/or fatalities unaffected. It says simply that there will be offsetting behavior. It’s actually an application of the law of demand: when the price of something falls, we buy more of it. To take an imperfect analogy, nothing in the law of demand says that when the price of something falls, we would buy so much more of it that we would spend more; that would require that our demand be elastic at the pre-existing price. I’m writing this to respond to some of the skepticism that commenters expressed on a recent blog post by my EconLog colleague Benjamin Seevers. That skepticism seemed to carry over into even questioning whether there was any offsetting behavior. So here’s a true story I told my Naval Postgraduate School students years ago when I covered this issue and met with skepticism. In the early 1990s, my wife, daughter, and I were driving at the start of a vacation. I was driving my wife’s 1990 Camry wagon at about 65 to 70 mph in a 65 mph zone. My daughter, who was about 7, was sitting in the back. She realized that she had packed a book she wanted to read in a suitcase in the trunk. If she were to unlock her seatbelt, she could reach back and get it. She asked permission to do so. My wife and I consulted briefly and decided that she could but that I should drive “less intensely.” So I slowed to 55 mph and looked around even more hawkishly than was my wont. Many of the students had an “aha” moment. They could imagine themselves doing the same thing. With less internal security, I compensated with my driving behavior. Personal note: I was lucky enough to take Sam Peltzman’s 2-quarter sequence in Industrial Organization at UCLA in my first year there and Sam’s last year there. It was one of the 5 or 6 best experiences of my time there.   (0 COMMENTS)

Law & Liberty has a very informative article on the housing shortage in the Netherlands.  There’s a great deal of detail about things like “social housing”.  I worry, however, that some readers might get lost in the weeds.  So here I will provide a shorter version of not only this article, but any article on dysfunctional housing markets.  But first a few comments on terminology: There are two primary housing problems, shortages and excessive scarcity.  A shortage occurs when quantity demanded exceeds quantity supplied at the current price.  In contrast, excessive scarcity can occur even when markets are in equilibrium.  It occurs when the price of housing is excessively high relative to the country’s level of development.  In that case, people are able to purchase housing in the marketplace, but the price is so high they end up consuming less housing than one might expect given their income level. Here are two key points to remember: 1. Housing shortages are caused by government price controls, which put a legal ceiling on rents at a level below market equilibrium.  AFAIK, rent controls are always the cause of housing shortages. 2. Excessive housing scarcity is caused by government regulations and taxes that restrict building, or increase the cost of building.  AFAIK, regulations (such as zoning) are always the cause of excessive housing scarcity (excessively high prices.) So why can we be so confident in these two explanations of housing market problems?  The key is the competitive nature of free markets in housing.  Because there are many providers, we don’t have to worry about monopoly models of the housing market, or nefarious “speculators”.  The supply and demand model works fine. It is theoretically possible that there might be other causes of housing scarcity.  For instance, the Netherlands is one of the world’s most densely populated countries.  Perhaps Dutch housing is very expensive due to a shortage of land.  In fact, the Netherlands has plenty of land for housing.  Indeed this country is actually the world’s second largest exporter of agricultural products.  The problem in the Netherlands is the same as the problem in California—rent controls and restrictions on the building of new housing.  Even in ultra-dense Hong Kong, government controls on land substantially inflate property prices. There’s no need to look further—it’s the government. PS.  Auckland, New Zealand recently changed their zoning laws to make it easier to build housing.  This tweet discusses the effect:   (0 COMMENTS)

 The world is used to watching economic crises unfold in Argentina time after time. In the past 50 years alone, the country has experienced three hyperinflations (1975, 1989 and 1990) and multiple major debt crises (like in 2001 and 2018). These have resulted not just in widespread poverty, but increasingly in emigration as well. As of early 2023, inflation runs at a 95% annual rate while the country fails to cut taxes, reduce public spending, or achieve a fiscal balance. With a populist government in charge, it would seem as if there is no hope left. However, markets are once again betting on Argentina. Measured in US dollars, most Argentine stocks are up by 100% or more in the last six months. In the New York Stock Exchange, YPF, the country’s state-owned oil and gas company, was trading for around 11 dollars early this week, up from 2.91 in late July. During the same time period, Banco Galicia, one of the most important private banks of the country, went up from 5.75 to over 13 dollars, whereas the stock price of Argentina’s leading real estate development firm, IRSA, increased from 3.16 to 6 dollars. Stock price increases are all over the place. Why is this happening? There is nothing inherent in Argentine companies that has changed from mid 2022 to early 2023, except for one thing: The government’s capacity to do damage to them has fallen. Ever since late 2019, when Peronist Alberto Fernández won the presidency alongside former President Cristina Kirchner (2007-2015) as his running mate, economic policies had been generally bad for business: The government created new taxes and increased existing ones, tightened import controls, reimposed bureaucratic procedures that had been scrapped by the previous administration, and so on. But after a bank run in July, the government pledged to stick to an agreement with the IMF to cut public spending, reduce the deficit and create a friendlier business environment. To secure that in a context of soaring inflation and deep unpopularity of the administration, powerful Sergio Massa replaced powerless Martín Guzmán as Minister of Economy, which signalized that pro-market policies would be somewhat consistent. On the one hand, the ruling coalition seems to have understood that it cannot perpetually tax and spend and still win elections, even if measures to correct the course of the economy continue to cause pushback from inside the government. President Alberto Fernández faces reelection in October, but it is unclear whether he will run as his net approval rate is -54% while his Vice President’s is -44%. Peronists remain hopeful that Minister Massa can be a competitive candidate, but he is the face of fiscal adjustment: Were he to run, it would be the first time in decades that Peronism would show a relatively pro-business candidate. On the other hand, the opposition has also become more market-friendly in recent years. After the 2015-2019 period, which saw little progress on taxes and regulation, former President Mauricio Macri is now vowing not to listen to ‘cynical’ progressives and is openly calling for the privatization or closure of state-owned companies, for example. Buenos Aires Mayor Horacio Rodríguez Larreta, the most serious opposition candidate at the moment, does not go as far but is not perceived as a left-winger who will deepen the country’s structural problems. Last but not least, the emergence of an economically libertarian alternative led by Javier Milei puts pressure to everyone else and could be key in the case of a run-off, which is at this stage likely according to polls. Investors seem to be pricing in the fact that whoever becomes President in December 2023 will not have an incentive to run more deficits and further prevent business operations. At a 32-year high, inflation has become intolerable while debt markets remain closed and taxation is at record levels, which means that there is no room for anyone to promise more public spending as this will be impossible to achieve. And just as a negative policy change was anticipated by markets in 2018 and 2019, when stock prices plummeted as Macri failed and it became apparent that populist policies would return, investors are now also early protagonists of a likely positive change. Of course, the future is impossible to predict. In light of increasing poverty levels, the more radical elements of the Peronist coalition may thrive and keep it anti-business. Moreover, Massa and Larreta, the most likely candidates from the government and the opposition, are notorious crony capitalists: Free markets are unlikely to be their goal, but rather a more friendly business environment for their friends. But in a country that has harbored such strong anti-market feelings for so long, even the expectation of a small change seems enough. Argentina needs a positive direction for its economy, and it looks like it will get it.   Marcos Falcone is the Project Manager of Argentina’s Fundación Libertad the host of the Téngase presente podcast and a bi-monthly contributor to Argentina’s edition of Forbes. (0 COMMENTS)