How do you hone your craft on an everyday basis? It could be writing, meeting with experts, even listening to podcasts, just so long, argues economist and blogger Tyler Cowen, as it makes you better at what you already do. Perhaps more than anything else, he believes, it’s practice that divides middle managers from founders, […] The post Tyler Cowen on Talent appeared first on Econlib.

I am interested in writing a critique of libertarian monetary ideas.  (I already have one criticizing MMT.) But first I’d like to have a better sense of what those ideas actually are. Thus I’d appreciate any comments that you might have on the best places to find a summary of these ideas.Let’s start with “abolish the Fed”, an idea I see mentioned in various settings. In some cases, it’s not hard to imagine what people mean by the term “abolish”. Thus if people were to say abolish FDIC, I believe that I would know exactly what they mean. But abolish the Fed? That could mean one of many different things. The devil is in the details, especially the transition from here to there.Much of the uncertainty relates to the status of base money (especially currency), as well as debt instruments that promise to pay $X dollars of base money at a specified future period of time. Does abolish the Fed mean abolish the US dollar? That seems unlikely; how would all of our dollar denominated debt be repaid?Perhaps the proposal is to peg the US dollar to a fixed rate of gold, and then allow private entities to issue banknotes. To me, that seems the most feasible way of abolishing the Fed. In that case, it would make more sense to describe the proposal in a positive sense—say define the dollar as X grains of gold—rather than in the negative way (abolish the Fed.) A libertarian might say they are not wedded to the gold standard, and that the market should decide what system works best.  OK, but then in the meantime what do we do with all of the US currency and dollar denominated debt?  Am I missing something?What are some other libertarian monetary ideas? I’ve seen the following ideas kicked around in various places:1. Inflation targeting is a bad idea, because it’s a form of price control.2. NGDP targeting is a bad idea, as it’s a sort of central planning.3. The effects of monetary policy depend very much on who gets the money first.4. The Fed has been artificially controlling interest rates in recent decades, usually holding them below equilibrium.5. Fed policy artificially raises asset prices, often creating asset price bubbles.6. In a free market, private currencies would displace the US dollar. I’m in a rather odd position. I view these ideas as being mostly or entirely wrong. And yet I view myself as a libertarian and view my own approach to monetary policy as being relatively libertarian. So please help me. What libertarian ideas am I overlooking? Which ones did I get wrong? And exactly how is the abolition of the Fed to be carried out? (0 COMMENTS)

I often disagree with The Economist, but I read the venerable British magazine because their opinions are generally well argued and supported by credible studies and documented facts. There is one area, though, where they become as irrational as a bull in front of a red rag: guns in the hand of ordinary individuals instead of government agents. I was reminded of this by their article “More Americans Are Trying to Take Their Weapons on Planes: Loose Gun Laws Lead to More Interceptions at Airports,” August 11, 2022. Consider two polar models of the state. On one side, you have a Hobbesian-like state, which needs to be all powerful to control its subjects, perhaps for their own good. The latter are disarmed and Leviathan comes as close to a practical monopoly of force as humanly possible. My late friend George Jonas went to visit Hungary as a tourist two decades after fleeing the country. One night, as he was walking with his woman companion in the pitch-black Grand Boulevard of Budapest (pitch-black was the color of the night in Eastern European capitals), she became apprehensive. George recalled in his memoirs (Beethoven Mask: Notes on My Life and Times [Key Porter Books, 2005], pp. 263-264): She reached for my hand and huddled closer to me. “Relax,” I said. “You’re in Hungary. Here you’ve nothing to worry about, until you see a policeman. On the other side, consider a model similar to what Anthony de Jasay calls the “capitalist state.” It does not interfere in the activities of its citizens except to prevent illegitimate violence among them, protect their property, and enforce their contracts. It does not “govern” but only prevents any takeover, foreign or domestic, by a more invasive state. It does not have all the guns. Indeed, the existence of “private force” enforces the limits of the capitalist state. As far as guns are concerned, this state might vaguely remind us of New York City in the mid-19th century, with no restriction on private individuals carrying guns. Professor Frank Morn wrote about the 1944 professional reorganization of the New York City police somewhat along the London model (“Firearms Use and the Police: A Historical Evolution of American Values,” in Don B. Kates, Ed., Firearms and Violence: Issues of Public Policy [Ballinger/Harper & Row, 1984], p. 500): At one party in 1845, it was reported that four fifths of the gentlemen present were armed with pistols for protection against thieves, yet for nearly a decade of its formative years the New York police was neither uniformed nor armed. In 1853 the officers were officially uniformed, but gun carrying was still forbidden. The truncheon was the official weapon. In the article cited above, the Economist‘s underlying theory is, perhaps unconsciously, much closer to the first than to the second model of the state. It reports with alarm on the number of Americans caught at airports with guns they mistakenly brought in their hand luggage. These errors, it is suggested, happen more in the South because of “loose gun laws”: They crop up far more often in states with loose gun laws. People in Georgia or Texas often carry a gun as others carry their keys. In April Brian Kemp, Georgia’s governor, signed a “constitutional carry” law, allowing people in the state to carry a concealed weapon without a permit. The magazine fears that someday, a gun will get on a airplane and accidentally discharge because (can you imagine?) people usually carry their pistols loaded (instead of, I suppose, carrying them in little bundles of disassembled parts). I suspect it did not cross our usually imaginative journalists’ minds that, if people could board planes armed, the terrorists on the 9/11 highjacked flights might have been stopped at low or lower cost. And note that air marshals do carry loaded pistols on flights, for a purpose. The Economist ignores that the right of ordinary citizens to carry guns is not an eccentricity of the American South. I would recommend that its senior editors and its American correspondent read about their own home country where, until about a hundred years ago, ordinary individuals could carry concealed handguns without a permit. They could start with Colin Greenwood’s Firearms Control: A Study of Armed Crime and Firearms Control in England and Wales (Routledge & Kegan Paul, 1972), and Joyce Lee Malcolm, To Keep and Bear Guns—The Origins of an Anglo-American Right (Harvard University Press, 1994). It is interesting that, for part of the 19th century until the early 20th century, the freedom to own and carry guns was generally better protected in the UK than in the US. That violent crime was already lower than in the UK suggests that Americans are more violent, with or without guns. For all their critical spirit and investigative prowess, the journalists at The Economist are also unaware of some important differences between southern states and other more liberal places in America. One of these is that significant handgun controls appeared first in southern states after the Civil War and were largely meant to prevent freed blacks from being armed. Many tricks were used so that whites or Klansmen could themselves remain armed—the police deputizing them was one way. (See Don B. Kates, Restricting Handguns: The Liberal Skeptics Speak Out [North River Press, 1979], pp. 12-20.) In fact, constitutional carry for all, also called “permitless carry,” came very late in the South (as defined by the federal government), when it came at all. Here are the dates: Alabama, in force in 2023; Arkansas, 2013; Delaware: no constitutional carry; Florida: no constitutional carry; Georgia, 2022; Kentucky, 2019; Louisiana, no constitutional carry; Maryland, no constitutional carry; Mississippi, 2015; North Carolina, no constitutional carry; Oklahoma, 2019; South Carolina, no constitutional carry; Tennessee, 2021; Texas, 2021; Virginia, no constitutional carry; West Virginia, 2016. Compare with more liberal states—for example: Vermont, 1791; Alaska, 2003; Maine, 2015; New Hampshire (2017). In Maine, where I live, like in many liberal states, obtaining a carry permit was easy before constitutional carry. There are here very few exceptions where an American resident older than 21 may carry a handgun, openly or concealed, in Maine: federal government buildings, schools and universities, state parks strangely (but the federal equivalents are not restricted), and private property where the owner visibly posts that guns are not allowed. These privately restricted places are very rare. For example, I visit my bank armed. (I just made a quick calculation, obviously too simple to provide a reliable proof of anything: in Maine, in 2020, there were 12 bank robberies per 100,000 inhabitants; in California, the number is 113, nearly 10 times more.) Perhaps the journalists of The Economist should revisit America (and their own country) after reading the books recommended above, especially those of Greenwood and Malcolm? It would at least help them ask the right questions. ******************** P.S.: Warning about the featured image of this post: Don’t hold your pistol like the person on the image except if our are ready to shoot immediately. If this is not meant to describe the situation of the pictured woman, she should keep her index finger off the trigger. The apparent position of her other index finger is also questionable. (1 COMMENTS)

  It is now almost an axiom of the theory of economic development that the route to affluence lies by way of an industrial revolution. –Phyllis Deane   The world can be divided into rich and poor areas due to the cumulative differences in their rates of economic growth. In 1980, the Independent Commission for International Developmental Issues of the World Bank, led by former Chancellor of West Germany Willy Brandt, established a visual depiction between strong and poor economies now called the “Brandt Line”. These differences have their roots in the processes of modern industrial capitalism, which began in England in the second half of the 18th century. Before that time, most nations shared a slow degree of economic growth, which manifested itself in the lack of adequate living standards. But then, the Industrial Revolution began. And some specific regions of the world started developing themselves at a faster rate than others, which were economically left behind. This economic improvement was the result of the foundation of large-scale businesses in the manufacturing sector. On the socio-economic side, a man’s future born before this period was determined by the cradle he rested on while he was a child: it was an inheritance from his ancestors. If he was born poor, he was probably going to remain poor, and if he was born into nobility, the title and the associated properties remained with him and passed onto his descendants. A  question worth reflecting is: why did this remarkable phenomena happen in England, and not in a more advanced country such as France, which had at the time a higher degree of culture and economic prosperity? One factor that might be considered is religion. The Protestant religion played a favourable role in the perception of wealth and trade, while the Catholic countries had a tendency to suppress the will to acquire money. As evidence, in places like France, a tradesman was not as well perceived as a bourgeois professional, such as a lawyer or a physician. The presence of a power class of merchants (who had acquired knowledge of this skill because of their experiences in overseas trading) was a powerful element to develop the capitalist system into England. Besides this, the presence of new commercial partners in the new American colonies and the deposition of the Catholic King James II in favour of his daughter Mary II during the Glorious Revolution of 1688 created a shift in the general perception of society towards the use of capital and the enlargement of  competitive markets. The British Agricultural Revolution, which began in the 18th century and progressively made changes to the agricultural techniques used (like crop rotations, fallow grounds and new methods to improve the breed of animals), also provided a connection to the discovery of new important techniques which constituted the base of this nascent capitalism. On the political side, due to special Acts emitted by the Parliament of Great Britain, a new class of landowners emerged when they were granted possession of lands,  used by them to raise crops. These lands were massively cultivated with the help of the new agricultural methods and were also leased to tenant farmers. This brought two particular consequences: first, it led to a surplus of food. Second, a great number of peasants lost their capacity to support themselves with their traditional use of land and therefore, had to seek outlets for their labour in places that could be away from their native environment. Another phenomenon worth remarking on was the introduction of the factory system during this period. The merchant-capitalists equipped them and hired capable workers, This increased division of labor prompted a process of permanent technological change which has deep consequences still today. Factory production in turn created a powerful incentive to design and create improved machines, which allowed the further saving of labour while increasing the capacity to produce a major quantity of goods. This also allowed for new merchandise, new processes, and new specialisations in turn. The introduction of this factory-based production allowed capitalists to create new fortunes while making cheaper products. This was the gateway to a new phase of production, where an individual enterprise grew their operations by saving capital, while still providing employment to more and more workers, and where the profits were redirected back into the business to increase its rate of growth.   Edgar Pereira works at the Elite Digital Marketing and is a Writing Fellow with Fellowship for Freedom in India. (0 COMMENTS)

1)Could you please explain what feminist economics is? I suspect many people haven’t heard of the field. What are its principles? How did it develop? Feminist Economics is a new paradigm in Economics that takes women and gender (including race, class, age, and other identities) into account. The economics discipline and mainstream economics were developed during a period of Western history in which women (and other people) did not have access to higher education, universities, and other places where economic debates and theory building took place. Those who did have access were mainly if not exclusively white European upper-middle class men. So, it was their experiences, interests, ideas, and questions that defined economics as a field of study and later as a science. Including the experience and insights of women and people formerly excluded from economics appears to have a fundamental impact on what questions are being asked, what answers are being considered satisfactory, what methods are considered appropriate, which topics and issues are being addressed. Simply put: who makes the decision in Economics what quality research entails, determines the direction in which the field develops. Feminist Economics studies and aims to explain the experience of women, men, and other people. Feminist economists do not exclusively focus on women, but simply also include and explain the behavior of women, children, older people, gay and trans people, etc. in their research. This makes that Feminist Economics aims not only to build new theories but also more broadly to transform the economics discipline as a whole. Feminist Economics has a long history, but the field under this name started to take off in the late 1980s, early 1990s. At that point there were enough women economists (including economics students) who were engaged in economics to form groups, organize conferences, and conduct economic research in a critical mass. A lot of these people started to ask questions about women and gathered data that had not been available before. In the early 1990s economists moved to critiquing mainstream economics and other theories like Marxist and Institutionalist theories from a gender perspective. This happened along the development of critiques on economic methods used in mainstream economic research (mostly quantitative), the way the history of economics was told (by focusing exclusively on white middle class European and American men) and traditional economic policy making. During these years feminist economists started the International Association for Feminist Economics (IAFFE) in 1992 and the Journal Feminist Economics in 1995.   2) What is the stand of feminist economists in the profession, how do mainstream economists treat you and your colleagues? Feminist economists are working in practically all subfields of economics, from macroeconomics, labor economics, finance, history of economics, to development economics. In the early years, it was very difficult to be engaged in feminist economic research while untenured as there was a substantial risk you could lose your job over doing that. There was, and to some extend still is, quite a bit discrimination of women going on. You can only imagine how things were for women of color. When women economists in addition, also studied women’s economic behavior, it was very difficult to make a career in economics. This has improved over the years, although the field of feminist economics is not yet fully recognized. For a lot of economists, it requires time and retraining that not everyone is willing to do. Feminist economic research has received full recognition, though, in development economics and by international institutions such as the World Bank and the IMF. The field of history of economic thought is now welcoming research on women in the history of the field. There are a lot of relevant and new issues to research. It is an exciting and inspiring field.   3) What do you think draws most people to study of feminist economics? Why feminist economics and not international trade or monetary theory for example? Feminist economics is different from subfields like macroeconomics and monetary theory and from other economic theories like Keynesianism or monetarism because it is a new paradigm, meaning a full alternative to the mainstream economic research program. It is doing economics, while taking women and gender (and race, class, ablism, etc.) into account. So feminist economists are active in many fields such as international trade, macroeconomics, international finance, etc. etc.  This means that you can be both a feminist economist and do research on international trade or monetary theory. I am a feminist economics and a philosopher and historian of economics, for example.   4) In the introductory essay to the Routledge Handbook of Feminist Economics it is said that the sub discipline has been influenced heavily by the social thought of Veblen and Marx. Would it be possible to have feminist economics along a more conservative framework like von Mises or von Hayek? This has been the case, but Feminist Economics has also been heavily influenced by neoclassical economics and Keynesian economics. There have been a range of attempts to reframe Feminist Economics into a particular already existing economic theory. That never worked. There are feminist economists like Deirdre McCloskey, who considers herself a feminist economist and who is an enthusiastic pro-capitalist and free-market economist. So yes, that would be possible. Not all feminist economists agree on which economic theory to use, but they do agree that women’s interests and behavior should be included, explained, and addressed by economists and that gender (and race, class, age, and heteronormativity) plays an important role in the economy as well as in the thinking about the economy.   5) In your latest book, A Herstory of Economics you bring attention to a number of female economists that have been neglected in the history of the development of Economics. Can you mention some such names? Mary Collier (c. 1688-1762), for instance and one of my favorites, was a washer woman who wrote a beautiful long poem about the double burden of working women, The Woman’s Labour (1739). Harriet Martineau (1802-1876) had to provide for herself and wrote short stories applying economic concepts from Adam Smith and Thomas Malthus to the daily lives of people. She did this to show what these concepts and theories meant and to teach them the importance of, for instance, saving and family planning. She made a good income doing that, by the way. Barbara Leigh Smith Bodichon (1827-1891) led a group of women in London, who did research on women’s education and work. They also fought for getting bills accepted by Parliament, one that would give women the right to a divorce (which became the Divorce Act of 1857) and another that would improve women’s property rights (which was accepted in the British Parliament as the Married Women Property Act of 1870). These acts changed the lives of many women. Another example is the American Sadie Tanner Mossell Alexander (1898-1989) who was the first African American woman to obtain a PhD in economics in 1921, and who did research on the poverty under 100 migrant black families in Philadelphia. The women mentioned in my book brought the economic experience, issues, and interests of women into the public debate, but the very large majority of them have lacked acknowledgement by the economists of their time and the historians of economics, thus far.   6) What are some books, journals, and essays you suggest for someone interested to learn more? I suggest reading some of these books to learn more about feminist economics: Barker, Drucilla K., Bergeron, Suzanne, and Feiner, Susan F. (2021) Liberating Economics. Feminist Perspectives on Families, Work and Globalization. 2nd ed., Ann Arbor, MI: University of Michigan Press. Folbre, Nancy (2021) The Rise and Decline of Patriarchal Systems. An Intersectional Political Economy, London and New York: Verso. Badgett, Lee (2020) The Economics Case for LGBT Equality. Why Fair and Equal Treatment Benefits us All, Boston, MA: Beacon Press.   On the history of Feminist Economics:  Becchio, Giandomenica (2020) A History of Feminist Economics and Gender Economics, New York: Routledge Ferber, Marianne A. and Nelson, Julie A. (2003) Feminist Economics Today. Beyond Economic Man, Chicago: The University of Chicago Press.   On the history of women in economics: Folbre, Nancy (2009) Greed, Lust and Gender. A History of Economic Ideas. Oxford, UK: Oxford University Press. Kuiper, Edith (2014) Women Economists’ Thought in the Eighteenth Century, New York: Francis and Taylor, Routledge. Madden, Kristen and Dimand, Robert (2019) Routledge Handbook of the History of Women’s Economic Thought, New York: Routledge. May, Ann Mari (2022) Women in the Dismal Science. Women in the Early Year of the Economics Profession. New York: Columbia University Press. Rostek, Joanna (2021) Women’s Economic Thought in the Romantic Age. Towards a Transdisciplinary Herstory of Economic Thought, London: Routledge.   Chris Loukas was born in Greece and is an economic journalist and recipient of a bronze medal in the 2022 International Economics Olympiad. His articles have been featured by the Foundation for Economic Education, the Mises Institute and Adam Smith Works. (0 COMMENTS)

The title given the act is a masterpiece of duplicity. It’s not about inflation at all, but instead is about raising taxes and spending more money on ObamaCare and green projects. It’s important, therefore, to consider the provisions of the act and their likely effects and not get fixated on inflation. The act will raise marginal tax rates on labor and capital, making the economy smaller than otherwise. It will do little to offset global warming. Moreover, it is a tragically missed opportunity to do something meaningful to reduce the growth of carbon dioxide emissions. This is the second paragraph of David R. Henderson, “The ‘Shrink the Economy’ Act,” Defining Ideas, August 11, 2022. It’s about the misnamed Inflation Reduction Act. Another excerpt: One tax provision that has received the most attention is the minimum 15 percent tax on corporations. Why should companies in the current 21 percent tax bracket worry about the 15 percent minimum? Aren’t they already paying at least 15 percent? No. The reason is that the 21 percent tax is on corporate income after deductions. But the 15 percent tax is on corporate income without some of those deductions. One major such deduction is for corporate investment. Under the tax law, companies can “expense” investments, taking a deduction for purchase of capital in the year that they made the purchase. But in their financial statements, they must depreciate the asset they purchased over the life of the asset. The 15 percent tax is applied to their income as reported on their financial statements rather than on their income minus completely legal deductions. Ironically, this provision will hurt manufacturers. Democrats in recent years have claimed that they want to encourage manufacturing in the United States. But those tears for lost manufacturing have now shown themselves to be crocodile tears. And, on carbon taxes, electric vehicles, and the hated N-word: That’s a shame, because if their real concern had been global warming, the Senate Democrats could have had a bigger effect with a smaller cost. A basic principle in economics is that if you want to reduce a negative externality and you can’t get all the parties together, you tax the externality. I’m skeptical of carbon taxes because I’m not convinced that taxing carbon is the least-cost way to address global warming. It might be better to wait until the world is warmer and use improved technology either to engage in geoengineering to reduce the world’s temperature or to adjust to higher temperatures. But if politicians are dead set on reducing carbon, the best way to do it is with a carbon tax. That way, they don’t put themselves in the position of central planners trying to decide which particular technologies to subsidize. Consider one example: the subsidies to electric vehicles. Ignore the ironic fact that because of the domestic-content constraints the senators put on for those producers to qualify, few EVs would qualify for the subsidies. Even if all EVs did qualify, what are the odds that EVs are the way to go? Have the senators been outside lately where they would see electric bicycles whizzing by, bicycles that can be powered with a fraction of the coal or natural gas used to produce electricity for electric cars and trucks? Yet those bicycles will not get the subsidies. Nor should they. No one should get the subsidies. And what about the hated N-word: nuclear? Nuclear power produces zero carbon emissions and is incredibly safe as well as being relatively expensive. But improved lower-cost technologies that are starting to appear in some states, combined with a tax on carbon production, might just make nuclear power the least-cost way of producing electricity in at least some parts of the country where non-nuclear electric power is relatively expensive. Read the whole thing. (0 COMMENTS)

The Fed often explains the monetary policy transmission mechanism as follows: Tighter money results in more restrictive financial conditions. This reduces the growth rate of aggregate demand, and eventually slows inflation. Now let’s suppose that the Fed is expected to achieve its goal of slowing demand at exactly the right pace to achieve a soft landing. They are seen as “threading the needle”. Markets respond with a burst of optimism. Stocks rise on expectations of no deep recession, and long-term interest rates fall on expectations of inflation falling back to 2%. Does this sort of optimistic market reaction undo the “restrictive market conditions” required to achieve the necessary slowdown in demand? In other words, can good news be bad news, and vice versa? Long time readers know that I will invoke “never reason from a price change” in this post. We need to be very careful in drawing conclusions from any change in asset prices. But here are some general principles: 1. Some asset markets, such as stocks and industrial commodities, are more closely linked to movements in the real economy. 2. Other asset markets, such as long-term bonds and TIPS spreads, are more closely linked to movements in the nominal economy. 3. Short-term interest rates are especially unreliable. Ideally, the Fed would like to see NGDP-oriented indicators slowing, while RGDP-oriented indicators continue to do OK. Thus a rising stock market does not, by itself, mean that monetary policy is becoming too expansionary to slow demand. It might mean that, but you’d have to look at other indicators to have confidence in that conclusion. My read on the last month or two of data is that most of the increased market optimism relates to the real economy. (I’m not convinced we’ll avoid a sizable recession, I’m just saying that the market seems increasingly optimistic on that score.) Inflation indicators continue to suggest that the rate of PCE inflation will fall back to about 2% in a few years. Don’t view this post as a forecast. View it as a way of interpreting co-movements in a variety of markets. I expect we will see plenty more ups and downs in the markets over the next 12 months, and I’m suggesting that this is the best framework for interpreting the various data. Policy may end up overshooting in one direction or another, but right now it seems roughly on track. (As of today, I’d recommend 75 basis points in September, but I might change my mind before the meeting.) So don’t be swayed by pundits that tell you the recent stock market rally makes the Fed’s job that much harder. The recent rally is an indication that the Fed’s job might not be quite as difficult as we assumed in June. Or the markets might be wrong . . . again. PS. Here’s an article in The Economist that seems to rely on a definition of restrictive financial conditions that conflates real and nominal growth indicators: Concerns about inflation only add to the market’s importance. When share prices rise, consumers, feeling flush, tend to spend more money and companies, feeling confident, tend to hire more workers. A paper in 2019 by Gabriel Chodorow-Reich of Harvard University and colleagues concluded that each dollar of increased stockmarket wealth lifted consumer spending by about three cents annually, while also boosting employment and wages. For a central bank fighting inflation, a large rise in share prices would therefore cut against its efforts. This makes for borderline hypocrisy in Fedspeak. Sober central bankers can explain that they want “appropriate firming of monetary policy and associated tighter financial conditions” to help rectify the supply-and-demand imbalances that are fuelling inflation (as the Fed did indeed say in the minutes of its rate-setting meeting in June). Yet it would be beyond the pale for them to declare that they want “appropriate firming of monetary policy and associated weakness in the stockmarket”—even if their meanings are closely aligned. Actually, they are not always closely aligned. (0 COMMENTS)

  In my short note that I inserted into Kevin Corcoran’s recent thoughts on the political system, I pointed out that although there is strong overlap between the rich and the politically powerful, they are not the same. This requires elaboration. The best way to do it is to come up with counterexamples. Here’s an example of someone who had enormous wealth in the late 1990s but little political power: Bill Gates. I wrote about it at the time in the now-defunct Silicon Valley magazine Red Herring. Microsoft, which Gates owned a large share of, had no substantial presence in Washington, D.C. at the time the Justice Department went after Microsoft. Microsoft’s main presence was in a different Washington, Washington state. That meant that he could count on only 2 out of 100 U.S. Senators to run interference for him with the Clinton Justice Department. Gates and Microsoft had great wealth but little political power. And they paid for it. By the way, he didn’t make that mistake again. An example of someone with a fair amount of political power but relatively little wealth is U.S. Senator Kyrsten Sinema. She is the swing vote in an equally divided Senate and she can use her power to extract important concessions in legislation. Her net worth is estimated to be about $1 million. That’s wealthy in the grand scheme of things, especially given her relative youth, but it’s not great wealth. Consider another example: Martin Luther King, Jr. When his political influence was at its peak, from about 1963 to his murder in 1968, his wealth was relatively modest. Of course, there’s a huge overlap between wealth and political power. Picture a Venn diagram with a large intersection. But there are many counterexamples in both directions. (0 COMMENTS)

I often wonder how much our view of political institutions is shaped by Hollywood films. For instance, when you look at various times that President Trump got into hot water, they were often occasions when he seemed to assume that things in government are done the way they are portrayed in the movies.  He didn’t seem to understand that the President is not a king, and that certain procedures must be followed.Spying is an almost perfect subject for a Hollywood film. Alfred Hitchcock liked The 39 Steps so much that he directed three versions of the same basic story (most famously, North By Northwest.)  But spying is usually much more boring than the way it’s portrayed in films.Is spying actually important? And is spying something we should be worried about? (Those are two different questions.) I don’t know enough about the subject to have a firm opinion, but I suspect that spying is overrated as a problem, at least during peacetime. David Beckworth has a podcast with Gerard DiPippo discussing a recent story about Chinese spying on the Fed.  Beckworth: I got a kick out of the one part where they said the modeling techniques were shared with a Chinese and as anyone who follows the Fed knows, the Federal Reserve – US model, FRB/US, is kind of an old school model with thousands of equations. If that’s the model they shared, and the thing is, you can actually get that model yourself. You can download it from the Fed’s website. Beckworth: And there are lots of places that have modeling techniques. I mean, there’s a great place in Germany at the Institute for Monitoring Financial Stability, and they have a macro-economic model database. They literally go out and collect all these different DSGE models from all around, from papers, and they put them together and you can run simulations there. The Chinese could go to this website and run the simulations for themselves. I found it humorous that they got a model, but overall, again, just not a big sense of, “Wow, they got this information. Now we’re in trouble.” It was more of a, “it’s unfortunate, we need to do a better job to prevent it,” but it’s not like they’ve sold our secrets to nuclear weapons or stealth technology or something like that. DiPippo: Yeah. I think that’s right. I mean, the Fed again is really transparent. A lot of their research is published. Internal deliberations are sensitive and you’re right that, in theory, if you had access to that, you could essentially front run the Fed and make some money in the markets. I honestly would be surprised if that’s the Chinese motivation here. I don’t think the PBOC or generally the Chinese government is all that sophisticated of an investor, and that’s not what they’re looking for. And the report doesn’t really even suggest that. It seems like they just want more general information on what the US is thinking. And the broad mandate for all Chinese collectors is just figuring out what is the US going to do next, right? And especially with China, but not limited to that. So again, not surprising they’re doing this, but my worries are in no way higher today than they were yesterday, from reading this report. Beckworth: Yeah. I just listened to a podcast today with Bill English and he was a former head of the monetary affairs division. And he talked about how over time, if you look at the members of the FOMC, how their information gathering processes change, it used to be they would just read staff reports from the Fed staff at the Federal Reserve. But now they go lots of places. They go to Twitter, they go to blogs, they read investment notes. And so, in a sense, they’re also searching for information. And if the Chinese really wanted to know what they’re thinking, just go through the open access, public data at the FedWatch, all the stuff out there that you and I follow on a regular basis. It’s not as if there’s some secret knowledge that’s hidden at the Fed that is just earth-shattering and is going to change the world. So it seems like a big non-story.  The theft of macro computer models seems almost comical—maybe we are tricking the Chinese into repeating our mistakes.  🙂 Of course the Chinese do lots of other types of spying as well.  They undoubtedly steal quite a few trade secrets from the US and other developed countries, which is much more important than the spying on the Fed.  But in my view it’s still not something we should be worried about.  (By “we” I mean the public as a whole—if I were the company losing the secrets I’d certainly be upset.) If I were the Chinese or the Russians, I’d be much more worried about US spying than I am about Chinese or Russian spying on us.  That’s because the US is already something of an open book.  Here’s DiPippo: DiPippo: I mean, look, in general, as someone said earlier, it’s a case of a fairly closed system trying to spy on an open system as we are. And in an open system, it’s just much easier to get information. And I think it’s harder to actually interfere with policy because there are so many others trying to do so as well. And we know what those vectors are.  Ukraine’s government should have been putting more effort into spying on Putin, so that it wasn’t caught off guard by the Russian invasion. PS.  I’d like the opinion of commenters on this question: If there were a release of all of the millions of pages of documents labeled “top secret” by the US government, what proportion would lead to a genuine loss in our national security, and what proportion would merely be embarrassing to our government? I suspect that the two answers would probably involve figures like “less than 1%” and “more than 99%”.   (1 COMMENTS)

If you ask a good freshman student in Economics 101 what is the cause of a shortage, you will get a quick answer, almost but not quite by rote: demand is greater than supply and for some reason, price has not risen so as to stop the shortage. That is it. That is it in a nutshell. Not much more need be said: shortages are caused by prices being too low. End of story. This semi-automatic answer emanating from basic economics, however, has eluded a bunch of economists who really ought to know better. They ought to know better since they have advanced degrees in this subject. What is the question they were facing? It was: why is there a labor shortage? They correctly rejected COVID as a causal agent, but instead have resorted to demographics as an explanation: the baby boomers are retiring en masse, and leaving job slots unfulfilled. For example, according to a CBC analysis of the problem: “Boomers are exiting the workforce in droves, leaving more job vacancies than there are people to fill them.” Instead of pointing to wages (the price of hiring workers) not rising, these economists are looking at demographics. Here is the CBC’s summary of its survey of Canadian economists: “The reason isn’t that there are fewer jobs opening up — remember the help wanted signs? It’s that there are fewer workers available to fill them. And the reason for that, economists say, can be traced back to the post-war baby boom.” But this has been predicted for years. It has been widely recognized. For example, according to Armine Yalnizyan, an economist and Atkinson Fellow on the Future of Workers, “It’s the slowest-moving train on the planet. It was predictable 60 to 65 years ago, and we have done nothing about it. We knew this transition was going to happen.” Well, if so, why have not wages risen sufficiently or even approximately, so as to obviate this shortage? Just as nature abhors a vacuum, the market abjures shortages. No, we have to dig a little bit deeper to approach an answer. What, then, is the answer? And, how did government intervention become involved in the story? This can only be speculative, but we must address the issue of why wages did not already rise sufficiently to obviate the obvious demographic contribution to the help wanted ads? One possibility, and this is only a guess, is that not only is the massive boomer retirement easily predictable and thus well known, but so is the fact that it cannot last forever. Soon enough, its effects will lessen. Suppose wages had indeed risen to levels that would have obviated the labor shortage. When the demographic effect started to dissipate, those temporarily high levels of worker compensation would decrease, lest we be presented with the opposite difficulty, a surplus of labor and unemployment. But which employer wants to lower wages? In our hyper interventionistic economy, that would be deemed exploitative. The many merry Marxists in the country would have a field day lambasting evil profiteering employers. The government would penalize such heartless capitalists. Food for thought.   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). (1 COMMENTS)