Author Ryan Holiday talks about his book, Discipline Is Destiny, with EconTalk host Russ Roberts. Holiday discusses the mentor who taught him discipline, the self-control of Queen Elizabeth, the world-champion boxer who counseled the man who defeated him in the ring, and the forgotten Roman emperor who helped make Marcus Aurelius the man he would […] The post Ryan Holiday on Discipline Is Destiny appeared first on Econlib.

    I’m as willing as many to criticize Joe Biden for his largely horrible economic policies. But we should still give credit where credit is due. And he’s due some credit for his sales of oil from the Strategic Petroleum Reserve. There are 2 justifications for his selling oil from the SPR currently. One is philosophical; the other is pragmatic. The philosophical justification is that the government shouldn’t be in the business of supplying oil. One of the strongest arguments for futures markets is that they give private actors a strong incentive to store oil when they think the price will rise in the future and to sell oil when they think it will fall in the future. The government gums up the works by being an unpredictable participant in the market for oil. So it’s best not to have the government in that market at all. The way to get to that point is to sell the oil. The pragmatic justification for selling oil right now is that the current price is unusually high and will likely be lower. The spot price of oil on October 20, reported by the Wall Street Journal on October 21, was $85.98 per barrel. The futures price for December 2023 was reported as $74.81. So this is a good time to sell. When I was the senior economist for energy policy with President Reagan’s Council of Economic Advisers, one of my two bosses, Bill Niskanen, and I knew that we wouldn’t get far advocating what we both believed in: ending the SPR. So we instead advocated a price rule: buy low, sell high. Specifically, if I recall 1983 prices correctly, we advocating buying when the price of oil drops below $20 and selling when it goes above $40. We didn’t get what we wanted, but Biden is coming close. He’s selling when it’s high and I’m guessing that he’ll buy when it’s lower. But isn’t the SPR meant to deal with crisis situations? To some extent, yes. But how do you know there’s a crisis? That’s why Bill and I came up with a price rule. If there’s an oil supply crisis, that will show up in the price. (0 COMMENTS)

John McWhorter has argued that the woke movement is a sort of religion. That seems unfair, as (at least in the US) religions don’t typically cancel people for not believing in their dogma. Perhaps he means that wokism is like a 17th century religion. Razib Khan directed me to an article in City Journal that supports this claim: It’s been an open secret for years that prestigious journals will often reject submissions that offend prevailing political orthodoxies—especially if they involve controversial aspects of human biology and behavior—no matter how scientifically sound the work might be. The leading journal Nature Human Behaviour recently made this practice official in an editorial effectively announcing that it will not publish studies that show the wrong kind of differences between human groups. . . .[T]he National Institutes of Health now withholds access to an important database if it thinks a scientist’s research may wander into forbidden territory. The source at issue, the Database of Genotypes and Phenotypes (dbGaP), is an exceptional tool, combining genome scans of several million individuals with extensive data about health, education, occupation, and income. It is indispensable for research on how genes and environments combine to affect human traits. No other widely accessible American database comes close in terms of scientific utility.My colleagues at other universities and I have run into problems involving applications to study the relationships among intelligence, education, and health outcomes. Sometimes, NIH denies access to some of the attributes that I have just mentioned, on the grounds that studying their genetic basis is “stigmatizing.” Sometimes, it demands updates about ongoing research, with the implied threat that it could withdraw usage if it doesn’t receive satisfactory answers.  When people say something is “like a religion”, they generally mean that people feel so passionately about the ideology that it trumps any other consideration, including rational inquiry.  But most people in America no longer feel that passionately about religion.  And yet, people seem to feel a need to hold passionate beliefs about something.  In the modern world, movements such as the more extreme forms of wokism and election denialism have replaced religion as the new faith-based ideologies. It’s about protecting feelings.  The feelings of people who don’t want to believe that the Bible was wrong about the shape of the Solar System, and the feelings of people who don’t like the idea of investigating whether some genetic profiles are correlated with less socio-economic success. (1 COMMENTS)

Economics is the new American religion. Disagree with the mainstream narrative surrounding it, and you’re a heathen needing quick conversion. No longer is it seen as a social science requiring unbiased scrutiny: it’s about giving people what they think they want, no matter the cost. And the cost they take in doing so is a big one: people’s prosperity. I recently sat down with Dr. Peter Boettke, professor of economics and philosophy at George Mason University, to discuss what needs to happen to reverse the problem of people turning “to politics for a sense of truth,” as he puts it. He explains the problem this way: “When my truth is not being listened to, my only recourse is to impose truth on others who are peddling in falsehood.” He’s correct. This desperate need to control is what leads to the government being placed on a pedestal as the Almighty solution rather than being viewed as a tool to preserve liberty. And there’s a need to use economics to tradeoffs of proposed solutions. When people aren’t allowed to disagree concerning economics and more policies are pushed on them as gospel, Americans are left with less opportunity for accomplishing extraordinary things. Instead of getting caught up by culture concerning economics, we need to return to the four pillars as defined by Boettke that substantiate this social science and contain the basis to achieve prosperity.   Pillar One: Truth and Light The truth is that we live in a world of scarcity. This reality sheds light on the truth that because of scarcity, we must make tradeoffs to attain our goals. For most, this looks like trading your scarce time to work and earn money for scarce goods. Many today argue that not everyone can work or should be required to do so, which leads to petitioning Capitol Hill to pass policies that reduce the need to work. Lawmakers can pass one policy after another, but that will never change the inherent “dignity of work” as Boettke puts it. And respecting people’s agency gives them dignity.   Pillar Two: Beauty and Awe We live in a world of spontaneous order. In every century, it’s beautiful and awe-inspiring to see how voluntary activity results in the spontaneous order that leads the way to the formation of global markets through which we thrive today. To achieve this phenomenon, it’s essential that individuals are empowered to work and contribute to society. Governmental policies that impose economic barriers cannot produce the same orderly result that emerge when people are permitted to achieve their hopes and dreams through a system of free markets and limited government. By latching onto the cultural ideology that the government and not the individual must work to solve all economic woes, we move further away from personal responsibility and deeper into the crippling dependency mindset. A mindset that convinces people they are powerless instead of possessing the tools required to flourish.   Pillar Three: Hope Economics gives us hope of changing our circumstances. Through capitalism and entrepreneurship, we can have hope in civil society as the first resort while the government is the last resort in reducing poverty by encouraging long-term self-sufficiency. This was one of the major downfalls of governments across the country in 2020. By shutting down the economy and deciding which businesses were essential, small business owners and entrepreneurs were sidelined, leaving them fewer opportunities and less hope of climbing out of the government-imposed economic crisis. And less hope for those locked into their road to serfdom.   Pillar Four: Compassion Economics at its core takes compassion on the impoverished and disadvantaged, seeking to lift them up. “It’s not about making the wealthy better off but about how we can lift up the poor [so that] the poor get richer even faster than the rich get richer,” Boettke explains. If people understood economics under these four pillars, rather than viewing it as a list of technicalities with which to police people, more progress would prevail. Governmental barriers imposed in our lives may be in popular demand but they are not the proposed solution among the American entrepreneurs fueling the economy. As Matt Ridley writes, “Innovation is the child of freedom and the parent of prosperity.” When seeking economic solutions for the nation, the path forward should be about how best to provide opportunities to let people prosper by removing barriers, respecting individual agency, and allowing hope and compassion to be cultivated in communities. That’s achieved by enhancing and preserving liberty through limited government and a flourishing civil society. Otherwise, we’re destined to fail the lessons of economics.   Vance Ginn, Ph.D., is founder and president of Ginn Economic Consulting, LLC. He is chief economist at Pelican Institute for Public Policy and senior fellow at Young Americans for Liberty. He previously served as the associate director for economic policy of the White House’s Office of Management and Budget, 2019-20.   (0 COMMENTS)

The title of a Wall Street Journal story of two days ago was unambiguous: “Liz Truss Brought Libertarians to Power in the U.K. and Quickly Out Again.” Even if I found Ms. Truss more interesting than any recent British prime minister (including of course the previous one), which is not difficult, the WSJ ‘s claim and its implications seemed very doubtful. The establishment’s contentment with the departure of the new prime minister could not dissipate these doubts as they usually struggle to distinguish libertarianism from a wheelbarrow. The WSJ reports: “That libertarian view is unlikely to return to the U.K. for some time,” predicted Charlie Bean, former deputy governor of the Bank of England. “That vision has been pretty comprehensively blown out of the water by the events of the last few weeks.” A general presumption for individual liberty is probably what defines libertarians better. If you include classical liberals, their tent is not a small tent. But it seems clear that nobody in the tent would want anything to do with government price controls (either floors or caps). Even Leviathan could deal with an emergency situation with less destructive means. Ms. Truss’s government had announced price caps on gas and electricity, which should be enough to deny her the libertarian label. But some people don’t seem to understand that. Since my knowledge of British politics is limited, I wanted to doublecheck my intuitions. I asked Mark Brady, a long-term libertarian who teaches economics at San Jose State University and a careful student of his former country’s affairs: Do you agree that her demission is a setback for libertarian ideas? Was she a libertarian? How could we square this with her plan to control gas and electricity prices? Mark replied concisely to my three questions: In brief, no and no.  Easily, since she’s not a libertarian. He added: Re the WSJ article, no, she didn’t bring libertarianism to power in the U.K. (0 COMMENTS)

On September 8, Scott Sumner posted about how Californians cut electricity usage in response to a request from California’s Office of Emergency Services. I commented that I thought this was wonderful. In response, my former Hoover colleague Alvin Rabushka sent the following email to Scott and me: Gentlemen, I moved into my Stanford Campus Residence on July 3, 1976 (still there). At that time, there were 604 single family residences and 82 small condos built for retirees on campus. Homes were not metered.  Homeowners paid a monthly water fee with no restrictions on consumption.  Homeowners with pools typically drained and refilled them annually. 1975-76 was a dry year.  The drought continued into the following year.  Stanford’s water reserves from the Hetch Hetchy Reservoir were falling dangerously low. In autumn 1976, Stanford requested all homeowners to reduce their water consumption, advising those with pools not to drain and refill them. What happened?  Water consumption fell 50% over the next academic year.  Monthly water charges remained unchanged. The rains return in 1977/78.  Also, Stanford installed water meters and charged for amount consumed. I recall discussing this reduced consumption with Sam Peltzman, Sherwin Rosen, and other visiting economists at Hoover that year and the next.  They were stunned that such a large reduction in consumption took place with no increase in price. Alvin     (0 COMMENTS)

David Beckworth recently interviewed Tom Graff: Graff: The other thing I would just point out is that the first quarter GDP being negative was quite spurious. The final demand numbers, which basically takes out some of the trade impact, was quite positive. So the only reason why it was negative was because import numbers were so high and having a really strong import is a sign of a strong economy, not a weak economy. But this quarter’s a little different. This quarter, the biggest negative effect was from fixed investment, which includes home building, and equipment purchased by companies and stuff like that. And that going negative is pretty notable, right? That’s probably a first order effect of the Fed tightening financial conditions, and it’s interesting that’s happened so quickly. Because remember, this GDP’s only counting April, May, and June, and a lot of those fixed investments decisions are made over an extended period, so the fact that’s turned negative so quickly is definitely notable. Beckworth: Yes, I have found that striking too. And as you mentioned, a little surprising because you think of monetary policy working with long and variable lags, as Milton Friedman said, but as my colleague Scott Sumner likes to say, monetary policy can also work with long and variable leads when it comes to financial conditions and in turn, these investments as you mentioned. So the Fed has tightened financial conditions and they are already having an impact on housing and construction. So I guess the takeaway is monetary policy works and has worked really quickly. I’ve always been critical of the long and variable lags view of monetary policy.  In my view, the impact of policy on spending and output is relatively quick, although some sticky wages and prices do respond with a lag. A more conventional economist might respond as follows:  Yes, the economy slowed at about the same time as the Fed raised rates, but late last year the Fed signaled that it would soon pivot to policy tightening, and longer-term interest rate rose on anticipation of this future tightening.  So the recent economic sluggishness is the lagged effect of a tightening of financial conditions that resulted from Fed policy signals late last year. I think that view is partly correct and partly incorrect.  It is correct that signals of future tightening do represent the tightening of monetary policy.  Indeed that’s what David and I mean by “long and variable leads”.  The effects can occur in response to these signals, before the actual implementation of “concrete steps” such as raising short-term interest rate targets or quantitative tightening.   On the other hand, in this case I don’t believe the initial signals actually had the effect of tightening policy.  While it’s true that long-term rates drifted somewhat higher in late 2021 and early 2022, the natural interest rate was rising even faster, due to rapidly accelerating inflation/NGDP growth.  Thus policy was effectively become looser, despite somewhat higher longer-term rates.  The Fed was behind the curve. The question of policy lags seems very mysterious and hard to pin down.  Ideally, we’d have a well functioning and highly liquid NGDP futures market.  In that case, changes in NGDP futures prices would represent monetary policy shocks, and you could easily derive the length of policy lags by looking at the time delay between a change in NGDP futures prices and the change in current NGDP. PS.  The Hypermind NGDP market is a first step toward this goal: (0 COMMENTS)

The first thing one learns from economics is what figured at the beginning of Paul Samuelson’s famous college textbook: society must choose between guns and butter. This allegory represents the primordial fact that resources are scarce compared with infinite human desires. It’s true even for trade union activists and social justice warriors, who are chasing money. Although the idea of scarcity looks quite obvious once formulated to anybody who can read and count and perhaps a bit more, its understanding has momentous consequences. A literal illustration of the old Samuelson allegory is provided by North Korean dictator Kim Jong Un, even if he is certainly not the most economically literate person on earth (Dasl Yoon, “While Kim Jong Un Shows World ‘Fireand Fury,’ He Projects Different Message at Home,” Wall Street Journal, October 18, 2022): Even the munitions industry has been mobilized to aid farming efforts. In late September, North Korea’s munitions industry displayed some 5,500 new farm machines, parking the green-and-red rice threshers in neat rows at a town in South Hwanghae province. … The equipment was reportedly gifted to local farms by Mr. Kim himself. It is only later that a student of human affairs may learn from economics another crucial idea, which seems so complicated to understand that even some brilliant economists don’t get to that point: it is not “society” that chooses between guns and butter, but either the government or every individual for himself. The theory that individual choices are capable of solving the fundamental economic problem of scarcity more efficiently than social choices, meaning rulers’ choices, did not develop before the 18th century. The fact that international sanctions against “North Korea” have compounded the country’s problems helps understand that society and the state are two different entities between which the distance increases as a direct function of the state’s power. The more powerful the state, the more different it is from society. In a classical-liberal regime, there exists an interface between individual demands and state activities, a reality vividly modeled by James Buchanan and Gordon Tullock, although all liberal theorists have been involved in this inquiry. In a tyrannical regime, of which Kim Jong Un is a real-world caricature, there is little interface, and international sanctions are likely to hit the despot’s subjects much harder than the despot himself and his collaborators. In such a situation, the ruler’s choice of guns over butter means starvation for many: Nearly 70% of North Korea’s people will face food shortages this year, according to estimates released by the U.S. Department of Agriculture in September. … “Fewer houses in rural areas are seeing smoke coming from their chimneys, suggesting there is nothing to cook at home,” [Lee Sang-yong of Daily NK, a news website focused on North Korea] said. … Meanwhile, the regime is dedicating much of its budget to military advances. … North Korea has conducted 27 missile launches his year, more than any other previous year. Everybody in the classical liberal tradition must feel sympathy for the poor, exploited people. In a free society, these people would have more butter and also some guns to defend their liberty. Liberty pushes up the production possibility frontier (PPF), as Samuelson’s introductory economics textbook explained. Trade-offs are still required, but their locus is mainly in each individual’s choices. (0 COMMENTS)

Last week, Chris Edwards, a budget policy analyst at the Cato Institute, and Ilana Blumsack, his research associate, issued an extensive report in which they graded the fiscal policy records of forty-six of America’s fifty governors. Why only forty-six? The authors explain that the governors of New York, Rhode Island, and Virginia had not been in office long enough to establish a record and that Alaska’s governor was excluded because of “peculiarities in that state’s budget.” When I read analyses of taxes and spending by governments in the United States, I expect mainly bad news. To be sure, there’s much of that in their report, but there’s also a large amount of good news. We often hear that there’s not much difference between the policies of Republicans and Democrats. But Edwards and Blumsack show that, at the state level, there are huge differences between the top Republicans and the bottom Democrats. Specifically, the five governors who earn an A for their tax cutting and budget restraint are Republicans: Kim Reynolds of Iowa, Chris Sununu of New Hampshire, Pete Ricketts of Nebraska, Brad Little of Idaho, and Doug Ducey of Arizona. The eight governors who earn an F are Democrats: Tim Walz of Minnesota, Tom Wolf of Pennsylvania, J. B. Pritzker of Illinois, Gretchen Whitmer of Michigan, Phil Murphy of New Jersey, Kate Brown of Oregon, Gavin Newsom of California, and Jay Inslee of Washington. These aren’t just opinions; the authors go into great detail about the governors’ accomplishments or lack of same. This is from David R. Henderson, “Good News on State Taxes,” Defining Ideas, October 20, 2022. Also notice my discussion of the flypaper effect. Read the whole thing. (0 COMMENTS)

It’s no longer news that industrial policy is making a comeback. Too bad, that. In the zombie parade of bad policies that the left and the new right are now staging, this one is particularly baffling. Industrial policy has been tried on large scales – think the Soviet Union – and on smaller scales, including in the US and many other countries. The fact that past industrial policy attempts were abandoned due to grotesque failure to achieve their goals seems to make no difference to those who are intent on reviving this practice. Indeed, we need not look as far back as the 1980s for evidence of the folly of trusting government to guide industrial development; we have a contemporary example. And this example is detailed by none other than the New York Times, which recently reported that, after years and billions of dollars, California’s effort to build a high-speed train has been a disaster.  A tidbit: Now, as the nation embarks on a historic, $1 trillion infrastructure building spree, the tortured effort to build the country’s first high-speed rail system is a case study in how ambitious public works projects can become perilously encumbered by political compromise, unrealistic cost estimates, flawed engineering and a determination to persist on projects that have become, like the crippled financial institutions of 2008, too big to fail. This effort qualifies as industrial policy because the government claims to know better than private markets what is the best means of transportation and worth high-jacking resources to produce bureaucrats’ preferred outcome. But as usual, government officials – spending other people’s money – miss the obvious. There’s a reason why trains in the U.S. trains are far less popular than planes. There’s a reason why travel by rail make more sense in small countries, and along the densely populated northeastern coast of the U.S. But politicians and intellectuals, enamored of the notion that trains are more friendly to the planet than are planes, ignore these realities in pushing for an industrial outcome that will likely never be profitable. For a walk down failed-rail-project memory lane see this piece by Phil Klein. Building a high-speed rail connecting Los Angeles and San Francisco was always going to be challenging due to California’s geography. And of course, most of you will not be surprised to learn that this large-scale government project is in fact failing, in large part because of the perverse incentives that pervade such a government project. From conception to planning to building, the incentives consistently encourage waste and error. Again, legislators aren’t funding this boondoggle with their own money. Nor will they be personally accountable for cost overruns, failure to deliver, or what are certain to be many technical problems. The cost overruns here are almost comical for something that literally hasn’t been built yet. In 2008, the train’s cost was projected to be $33 billion. Fourteen years later the final plan is projected to cost $113 billion – a mere 242 percent more than the sum used to peddle the scheme to the general public. In addition, decisions on construction are unduly – but not unsurprisingly – influenced by special interests rather than by good economic sense. As the Times writes: “political deals created serious obstacles in the project from the beginning.” Here’s more: A review of hundreds of pages of documents, engineering reports, meeting transcripts and interviews with dozens of key political leaders show that the detour through the Mojave Desert was part of a string of decisions that, in hindsight, have seriously impeded the state’s ability to deliver on its promise to create a new way of transporting people in an era of climate change. As if the project wasn’t difficult enough to deliver on, legislators decided to create costly detours to serve political friends: Political compromises, the records show, produced difficult and costly routes through the state’s farm belt. They routed the train across a geologically complex mountain pass in the Bay Area. And they dictated that construction would begin in the center of the state, in the agricultural heartland, not at either of the urban ends where tens of millions of potential riders live…. Mike Antonovich, a powerful member of the Los Angeles County Board of Supervisors, was among those who argued that the train could get more riders if it diverted through the growing desert communities of Lancaster and Palmdale in his district, north of Los Angeles. Even the SNCF engineers from France who came to work on the project eventually gave up: There were so many things that went wrong,” Mr. McNamara said. “SNCF was very angry. They told the state they were leaving for North Africa, which was less politically dysfunctional. They went to Morocco and helped them build a rail system. Morocco’s bullet train has been in service since 2018. The report is worth reading in its entirety. It is the most ridiculous and clichéd story of why industrial policy fails. Such projects are often taken over by special interest groups (remember Alaska’s bridge to nowhere) that bloat the cost, and in extreme cases lead the project to failure. This experience is commonplace. My colleague Jack Salmon told me about the plans for HS2, a high-speed rail project in the U.K., that started in 2009 to link London to Birmingham, Manchester, and Leeds. The high-speed train was promised to reduce the time of the journey by 30 minutes. Salmon sent me the following information: The first stage was predicted to be completed by 2020, and with a further connection to Scotland operating by 2030. In 2010, the new conservative-led coalition amended 50% of the planned route after rural conservative MPs made a fuss about noise pollution and property values. At the time, the cost was estimated at about £30 billion. In 2013, the cost of the project was revised up to £50 billion. In 2014, the cost was revised to £57 billion. By 2019, the Oakervee review estimated that the projected cost, in 2019 prices, had increased to £88 billion. Lord Berkley, deputy chair of the review, said that these estimates were very optimistic and could actually be as high as £170 billion. The route is now estimated to be completed by 2045, although this will likely be pushed back. By that time, this £30 billion gravy train could end up costing £1 trillion. That’s the problem with industrial policy, and such gravy train projects. Politicians can’t help themselves and these projects are always highjacked by special interests.   Veronique de Rugy is a Senior research fellow at the Mercatus Center and syndicated columnist at Creators. (0 COMMENTS)