[I wrote this last weekend, but Jason Furman beat me to it.] It’s not just the US that has high inflation; consumer price inflation in Europe is running far above the ECB’s 2% target. Does this mean the Eurozone economy is also overheating? I doubt it, although Eurozone data is so confusing that it’s hard to be certain.  I like to begin with NGDP data.  The FRED database has Eurozone NGDP data, but only up to the 4th quarter of 2021.  I went to Eurostat to find out what’s causing the delay, and discovered that 2022:Q1 NGDP data is available for 18 of the 19 Eurozone members.  What’s holding things up?  You guessed it—Greece, a country that never should have been allowed into the Eurozone.  For what it’s worth, the performance of Eurozone NGDP up until late 2021 looks almost perfect—right back on trend: Between 2019:Q4 and 2021:Q4, Eurozone NGDP growth averaged about 2.2%, with 2.1% inflation and 0.1% RGDP growth.   So what’s all this we hear about high Eurozone inflation?  At first I thought that perhaps their GDP deflator was rising much more slowly than their CPI.  Not really.  CPI inflation ran at 2.25% from November 2019 to November 2021.  The actual problem is the disgraceful delay in reporting the NGDP data.  Eurozone CPI data is available monthly, and their CPI has risen by 5 percentage points in just the 5 months since November 2021.  So the high Eurozone inflation that we read about is mostly due to very recent price increases, presumably associated with the Ukraine War and perhaps other factors such as Covid in China.  (Ukraine affects Europe more than it affects the US.) Matt Yglesias has a tweet suggesting that aggregate demand growth in the US is better than in Europe: I’d say the growth in AD has been stronger in the US, but the growth in AD has been better in Europe—indeed near perfect.  US spending growth has been too strong.  This claim might seem counterintuitive given that our economy is doing better than the Eurozone economy.  But our relative strength all comes from the supply side, where we significantly outperform Europe.  Under Bernanke, the US did a much better job of controlling AD than did the Eurozone, but in recent years the ECB has greatly outclassed the Fed.  Europe has much higher unemployment than the US, but the Eurozone unemployment rate has actually fallen to well below its pre-Covid levels, indeed to record lows.  In contrast, the US unemployment rate has merely fallen back to pre-Covid levels.  There’s plenty of demand in Europe, but not excessive demand. To further assure that the Eurozone is not suffering from any excessive demand-side inflation, I decided to confirm the NGDP data by looking at nominal wage growth (from Trading Economics).  Once again, there is no evidence of overheating in the Eurozone: The 2020:Q2 wage spike presumably represents a labor force composition issue, as low wage service workers disproportionately lost jobs.  A year later that unwound and ever since then nominal wages have been well behaved.  In contrast, US nominal wage growth has accelerated to levels inconsistent with 2% inflation: To summarize, if you just look at headline inflation then the Eurozone looks almost as bad as the US.  But on closer inspection, the US inflation problem has major contributions from both supply bottlenecks and excess demand, whereas in the Eurozone the inflation problem is almost entirely supply-side.  The ECB seems to be doing a great job.  Keep up the good work Christine Lagarde! PS.  Like me, she’s 66-years old and is much taller than average. PPS.  Steve Hanke and John Greenwood pointed out in the WSJ that not all countries suffer from high inflation: We don’t have a global inflation problem. Inflations are always and everywhere a monetary phenomenon spawned by the creation of excess money by local central banks. China, Japan and Switzerland also face elevated oil prices, supply-chain problems and fallout from the war in Ukraine, but their annual inflation rates are 2.1%, 2.5% and 2.5%, respectively. They have avoided the ravages of inflation because their central banks haven’t produced excessive quantities of money. (0 COMMENTS)

Another item from the Horror File. A friend who is an expert in blood donation and blood selling shared the following story. I’m writing it in my words. The Red Cross in the United States, a blood collector in Spain, and some Red Cross organizations in other countries refuse to allow people with hemochromatosis to donate blood. What is hemochromatosis? It’s too much iron in the blood. One’s first guess about the reason might be that such blood isn’t safe. Nope. As this friend says, it’s “perfectly good” for transfusion. So why not allow it? The reason, it turns out, is that people with hemochromatosis benefit by donating blood. They have to give blood regularly to maintain their health. So let’s see. The donors need to do it for their health and people who want blood obviously need it for their health. Sounds like a win-win, right? Ah, what you have missed that these sophisticates have not is that because the donors need to do it for their health, their actions are not “altruistic.” Oh, the horror! So what do they do with the blood? They throw it away. Who cares whether people get blood as long as we can feel good that the donors don’t benefit? Psst! Don’t remind the Red Cross of the doughnuts and/or cookies we non-iron-rich people get for donating. (0 COMMENTS)

RESIDENTS AND public officials might agree downtown is often short on parking, but that doesn’t mean the First Church of Christ Scientist on Lincoln Street can charge the public to park in its vast, underused lot. Last month, orange “Public Parking” signs appeared on the three streetside pillars in front of the lot, along with signs throughout the lot telling parkers how to pay for their spots using the Air Garage app. But no one from the church asked the city for permission to operate a paid parking lot, according to planning director Brandon Swanson. The first he learned of the operation was when a resident sent him photos of the signs. “Not allowed,” he concluded, after reading the rules for ingle-family-residential zoning, which is what the church property is. “The zoning district still does not allow commercial parking,” Swanson said May 21. “We have made contact, and they will be ceasing.” This is from Mary Schley, “City puts kibosh on Christian Scientist parking plan,” Carmel Pine Cone, Volume 108, No. 22, June 3-9, 2022. If you ever want to visit Carmel during almost any season, you’ll notice how difficult it is to find parking. This church had a partial solution but the government knows better. I remember in the 1960s when Ayn Rand, in her Objectivist Newsletter, had a section called “From the ‘Horror File’.” It often highlighted anti-human comments by various intellectuals and absurd regulations by governments that prevented people from making each other better off. The above is an example of the latter. I’ll shortly give another example, not of a regulation exactly, but of an anti-life (literally) policy. (0 COMMENTS)

What should be the response of governments to intellectuals leaving their country of origin? Should this be seen as brain drain: a problem to be solved? Detractors claim that intellectuals leaving results in large fiscal losses, reduces human capital and creates occupational distortions.  They believe that loose immigration systems facilitate human suffering. These critics are misguided. Blaming skilled emigrants for wanting to leave assumes that closed immigration systems would be beneficial for the countries of origin; this may not be the case. Brain drain is a phenomenon where individuals with technical skills or knowledge end up leaving their place of origin because of conflict, lack of opportunity, political instability, health risks, etc. This concept makes its way into discussions about economic development, as demonstrated by concern about Indian brain drain, and worries from other countries about the West poaching their best and brightest. The economic justification for being worried about brain drain is straightforward: in order to extract rents from their citizens, their home countries need to boost human capital. This is often done through state-run education to make their citizens more productive. However, if this initial investment is not likely to provide a solid return, governments may become less likely to sponsor education in the first place, resulting in lower human capital overall. When developed countries “poach” graduates by offering them advanced educational opportunities, higher salaries, or both, they in effect slow down modernization and create poorer countries. However, the argument for ‘brain drain’ relies on several dubious assumptions. First, absent immigration, countries would be able to efficiently use these graduates. Second, home countries prefer keeping talented their most talented people in unpleasant jobs or situations. Third, that this supposed ‘brain drain’ acts mostly in a vacuum. The first assumption often unspoken is that countries would be good at employing these talents. Iran’s strategy, for example, is locking up their best and brightest, rather than giving them work that would develop the country. Unfortunately, there’s little reason to think that any amount of genius would create economic growth if it is unable to be utilized. Economist Bogdan Glavan thinks that the binding constraint is not ‘human capital’ on countries’ development, but rather physical capital. In the same way that Robinson Crusoe, despite being brilliant, cannot do much on an island, neither can skilled labor in an environment without tools to make good use of it. The second dubious assumption, that the common good requires keeping people in unpleasant jobs or situations, is also wrong. This assumption is undermined by aggregation problems and feedback effects. First, problems of aggregation challenge this notion of a common good absent political freedom. It is difficult to determine how much weight political freedom deserves, but the revealed preferences of people to move away from their countries of origin suggests that its value is high. After all, if it were not, Coasian bargaining could take place to make the person stay. The other issue, feedback effects, changes the paradigm because failing to include remittances, gains to trade, and GDP paints an incomplete picture of economic development. Remittances can be an important part of an economic strategy. As more emigrants leave a country, the amount of money per person remaining increases because of the money brought into the country through money sent back home. Since physical capital can be scarce in underdeveloped countries, remittances can provide the resources to drastically increase productivity. Instead of viewing emigration as a loss to the home country, it would be better described as a substitute. Different combinations of factors of production may well increase productivity. The third and final assumption is that brain drain occurs  in a vacuum. It doesn’t. First, being able to leave one’s home country entices many to become educated in the first place, because they think education would be a worthwhile investment. Absent the ability to pursue better lives, people are less likely to invest in themselves. Increasing the barriers to immigration and emigration may tear down the interdependent relationship between education and reward. Viewing immigration over a longer period may undermine some of the supposed negative effects of a lax immigration policy. Circular migration exists to some extent, and giving people access to better-run governments can improve political norms. If people are a valuable resource, and people express that they would be willing to return if violence or corruption decreases, this becomes a powerful incentive to reform and improve governments. Frederic Docquier and Hillel Rapoport summarize their research on the development, “the conditions under which a country is gaining or losing are not a matter of fate; to a large extent, they depend on the public policies adopted in the receiving and sending countries.” The existence of migration does not mean that not-yet-developed countries will be losers. Cape Verde, as an example, is open to international migration, yet much of their human capital creation takes place because of open migration. Closing immigration to combat brain drain may end up creating the exact opposite of its intended effect. The term brain drain, often when used in conversation, assumes too much. It isn’t tenable to assume that countries that prevent emigration, or the people stuck within, would primarily benefit from restricting peoples’ options. The intellectual short-cut assumed by those against immigration imagines a tension between collective and individual good that may not exist. Instead of blaming people for leaving, one should wonder why people want to.   (0 COMMENTS)

A Liberty Classic Book Review of Discovery, Capitalism, and Distributive Justice, by Israel M. Kirzner.1 Can the distribution of income generated by the market process be regarded as just? The answer to that question depends on the extent to which economic theory accounts for the role of the entrepreneur in the market process. Israel Kirzner is best known for his explication of the entrepreneur’s role in generating social coordination in the market process. Entrepreneurship, according to Kirzner, is the propensity to discover previously unnoticed profit opportunities in an open-ended world of uncertainty. In this respect, entrepreneurship is not only an analytic tool for understanding the role of entrepreneurship in the production of material wealth, but also the defining element of action inherent to all human beings. The importance of his work is not only reflected in its policy implications, but perhaps more importantly, in its moral implications regarding the institutional basis of a market economy: the right to private property and the distributive justice of income that flows from it. The answer to the question motivating this essay is powerfully recounted in Kirzner’s masterful work, Discovery, Capitalism, and Distributive Justice. Written on the heels of the collapse of socialism in Eastern and Central Europe, Kirzner’s message was (and continues to be) particularly relevant in defending the economic and the moral superiority of the market process against the alleged superiority of socialism. However much socialism in Eastern and Central Europe may have proved to be economically unjust in terms of its moral aspirations, “the defense of capitalism against the charge of injustice does not by itself invest the system with overall moral worthiness.” Precisely “because capitalism is seen by millions as being built on injustice as one of its essential and defining characteristics”, this requires a positive analysis of the market process in order to assess its normative implications for distributive justice and the moral desert of pure entrepreneurial profits (Kirzner 1989 [2016]: 5). To appreciate the profoundness of Kirzner’s book, one must first place in context the incomplete story of the market process left behind by classical and early neoclassical economists. The genius of classical political economists, going back to Adam Smith, was to reconcile how individuals can pursue their separate, though conflicting interests, in a manner that is peaceful, productive, and therefore cooperative, but without command. This “invisible hand” of the market process is predicated on the institutional prerequisite of private property and freedom of contract under the rule of law, creating the basis for productive specialization and exchange. From such exchange, market prices emerge, guiding consumers and producers in their decision-making, creating the coordinative tendency in the market process, and explaining how “Paris gets fed,” in the words of Frédéric Bastiat, without the mayor of the city commanding the production and distribution of food by central direction. However much classical political economists and early neoclassical economists took the welfare of the poorest and least advantaged in society as the normative basis by which to assess to economic and moral superiority of an economic system, it provided no explicit account of how the market process generates a just distribution of income, as acknowledged by other economists, including George Stigler (1957) and James Buchanan (1991). From Kirzner’s standpoint, the market process, as understood by classical political economists, was not so much flawed, as it was simply incomplete in its explication of entrepreneurship and the role that pure entrepreneurial profits play in driving the market as a competitive process of discovery. Kirzner elaborates as follows: The volume of pure profit won by entrepreneurs surely refers to only a small fraction of capitalist “profits” in the broad sense of the word used by the classical economists (and especially by Marx). It is no accident, it could be conjectured, that pure profit did not loom more importantly in the classic discussions of capitalist justice; the phenomenon was simply not important enough (emphasis in original; 1989 [2016], p. 109). With this broader intellectual background in mind, Kirzner’s fundamental disagreement, and the more immediate intellectual context to which his argument is directed, is the manner in which economists have attempted to complete what was left behind by classical economists in explaining the distributive justice of the market process. Therefore, Kirzner’s disagreement with the literature on distributive justice under capitalism is not normative in nature, but how both critiques and defenses of distributive justice under capitalism have been entirely misdirected and therefore misperceived the fundamental issue. This is primarily due to the failure of mainstream economic theory to fully absorb the conceptualization of the market as an entrepreneurial process of learning and discovery, which has undermined its ability to adequately account for the moral implications of the distribution of income that is discovered as a result of pursuing pure entrepreneurial profit. Thus, Kirzner realizes that “quarrels over the morality of markets merely reflect different views concerning economic reality” (1989 [2016], p. 7). By failing to account for the economic and moral relevance of discovering pure entrepreneurial profit, economists have only been able to demonstrate, in the best-case scenario, that the distribution of income through the market mechanism is not unjust, meaning it will be unable to justify the discovery of entrepreneurial profits and the pattern of income distribution that emerges from such discovery. At worst, profits earned by capitalists are categorized as “unearned rents” extracted by exploitation. Thus, any account of the morality of the market process, and the distributive justice emergent from entrepreneurial discovery, must first begin with the notion that the distribution of income is a nexus of entrepreneurial acts, the outcome of which is a by-product of realizing pure entrepreneurial profits. It is not only the final product that is created through entrepreneurial discovery, but also the economic value of those inputs that are part of the production process are created as well. In order to explicate the normative implications that follow from his account of the entrepreneurial market process, Kirzner draws a distinction between production understood as a conversion of resources through the transformation of inputs into a final output, and production understood as the ex nihilo creation of both inputs and final outputs through entrepreneurial discovery. Clarifying this conceptual distinction explains why, according to Kirzner, economic theory has been unable to grapple adequately with questions of distributive justice. Production understood in terms of transformation follows from an equilibrium paradigm in economic theory. According to this paradigm, prices of resources reflect their full opportunity cost of production, from which their marginal contribution to final output is already known and given since such knowledge is reflected in market prices. Therefore, the value of final output is directly reducible and inherent to its inputs, such that payment to each factor of production is distributed by virtue of possessing ownership over resources, such as land, labor, and capital. The distribution of income can be said to be “baked into” the ingredients that constitute their share in the size of the pie, and income earned by each factor of production is justified according to its marginal contribution to output. However, because entrepreneurial profits (or losses) do not exist, the role of the entrepreneur in organizing production, by definition, is squeezed out of the analysis. “So long as results can be attributed to inputs,” Kirzner argues, “the idea of discovery can be dispensed with. But pure profit, by its very definition, is not attributable to inputs” (1989 [2016], p. 49). The implication that follows from such positive theorizing is that differences in wealth must be attributed to the “luck” of being in the right place and at the right time or “unearned” windfalls by possessing superior resources. In both respects, the production of output, and the distribution of income that flows automatically from its inputs, are wholly determined by external circumstances not attributable to entrepreneurial discovery (Kirzner 1989 [2016], p. 94). The moral implication that follows from this view of production is elaborated by Kirzner as follows: Here we have the ethical problem posed by the phenomenon of pure profit. It corresponds to nothing additional produced. The difference between the low price at which the speculator bought up grain, and its subsequent price, has been caused by no productive activity, by no services rendered by resources. A view on the ethical justification for incomes that insists on finding a productive counterpart to that income, must find pure speculative profit to be without justification (Kirzner 1989 [2009], pp. 50-51). “… any ethical assessment regarding the distribution of wealth under the market process that is not constructed explicitly under the premise that wealth is created by discovery will have incomplete accounts of distributive justice.” To the extent that any account of distributive justice under a market economy has taken equilibrium as its analytic point of departure, then distributive justice is seen merely as an allocation problem of distributing a given pie of wealth, rather than income distribution defined in the process of entrepreneurial discovery. Such a premise misleadingly implies that the conceptualization of distributive justice held to be appropriate for a centrally planned economy could be just as applicable to a market economy, as if prices are a set of marching orders that convey all prior knowledge and “assign” each factor’s marginal contribution to output (Kirzner 1989 [2016], p. 94). However, neither equilibrium prices nor central planners “assign” income to factors of production according to marginal productivity. Rather, the prices paid to factors of production, their marginal contributions to output, and the corresponding incomes paid to such factors, must be discovered through rivalrous competition between entrepreneurs in the market process bidding for such factors of production. However, Kirzner’s point is not to directly adjudicate any ethical disagreement regarding income redistribution. Rather, he simply highlights how assumptions built into economic theory, however implicit or explicit they may be, affect the moral implications of assessing the distributive justice of the market process. Thus, any ethical assessment regarding the distribution of wealth under the market process that is not constructed explicitly under the premise that wealth is created by discovery will have incomplete accounts of distributive justice. To be clear, Kirzner’s point is neither to suggest that economic theory has failed to account for how redistribution of wealth affects the incentives of producing output, nor to claim it has failed to account for production as a creative activity. Rather, Kirzner’s subtle, but crucially important claim is that “the creative aspect is to be found only in the discovery element” that results from entrepreneurship, and therefore, “not over whether production is or is not creative, but over how one should perceive the creative aspect of production” (emphasis added; 1989 [2016], p. 47). None of this implies that Kirzner would deny the role of luck or good fortune in explaining the distribution of income. Rather, such external circumstances, however fortunate and available they may be, do not automatically guarantee that such circumstances will be perceived and realized by a particular individual at that time and place. As Kirzner states: Luck and good fortune play an important role in the presence of these opportunities-waiting-to be noticed. Someone may be described as luckier than others because happens to be surrounded more thickly with such favorable opportunities than others are. But the perception of these opportunities depends on the alertness of the potential observer (emphasis in original; 1989 [2016], p. 34). This brings us to an alternative understanding of production unique to Kirzner, which regards production as an ex nihilo creation resulting from entrepreneurial discovery. “There is nothing automatic or predetermined about the productive efforts put forth in the market economy” (Kirzner 1989 [2016], p. 16). Rather, each and every transaction in the market process expresses an entrepreneurial element of discovery, implying that all income earned in the market process is discovered income. This is because there is a distinction between production in a physical sense and production in an economic sense of creating awareness that such a productive opportunity exists in the first place, whether that includes discovering original or nature-given resources, which are physically available for production (including raw materials), or recombining already produced resources to create an output that would not have existed without entrepreneurial discovery. The implications of regarding production as a process of ex nihilo creation are twofold. First, it does not require prior ownership of resources. Indeed, any productive activity requires that an entrepreneur must purchase and own resources to implement his or her vision. That being said, only “discovery made this purchase possible” (emphasis added; Kirzner 1989 [2016], p. 81). Thus, the “additional value now seen by all to have resided in the resource was in fact found by the innovative entrepreneur” (emphasis in original; Kirzner 1989 [2016], p. 105). Secondly, it provides scope for an important ethical principle, which Kirzner refers to as “finders-keepers,” upon which the pattern of income distribution that emerges from the market process will be justified. According to Kirzner, the “finders-keepers rule asserts that an unowned object becomes the justly owned private property of the person who, discovering its availability and potential value, takes possession of it” (1989 [2016], p. 96). Such an ethical principle complements and reinforces other theories of distributive justice based on private property, whether that be a Lockean labor-mixing theory of distributive justice (Locke 1690 [1980], or a Nozickian entitlement theory of distributive justice (Nozick 1974). From Kirzner’s standpoint, whether distributive justice is based on a theory of labor mixing with unowned resources, or an entitlement theory of income based on exchange between consenting adults with just holdings of property rights, it must be preceded by an account of how such resources are discovered in the first place. Moreover, the finders-keepers principle also clarifies how Marxist accusations of capitalist injustice have been entirely misdirected, since “the ‘profits’ of capitalists which Marxist criticism, for example, saw as exploited away from labor, were not pure profits at all, of course, but a conglomerate of analytically disparate income categories” (Kirzner 1989 [2016], p. 109), the value of which must be discovered through rivalrous competition between entrepreneurs actively bidding for land, labor and capital in the first place. Stack of cargo containers at the docks The discovery of containerization by Malcom McLean best illustrates this understanding of production in terms of discovery and its ethical implications. Though McLean is credited as the “father” of container shipping, his entrepreneurial move was not to “invent” something new. Containers, ships, trucks, trains, ports, and cranes, all of which are necessary inputs for transporting goods internationally, had already existed for decades prior to containerization. Moreover, as a North Carolina truck driver by trade, McLean’s discovery was not predicated on having any prior ownership of resources required for implementing his vision of containerization. Rather, he first perceived a method of reorganizing and linking intermodal transport by land and sea in a way that no one else had realized before, and thereafter acquired resources to implement his vision. Like any great innovation, container shipping was so obvious after the fact it is incredible that it had not been implemented earlier. With a stroke of entrepreneurial alertness, McLean was able to perceive a way to profit from reducing transportation costs by utilizing cranes that transported containers directly onto a truck trailer or a railcar, eliminating the process of loading and unloading by hand until such goods arrived at their final destination. However much McLean was entitled to the entrepreneurial profits from his discovery by virtue of having justly acquired ownership of the inputs required for containerization, Kirzner’s point, consistent with the finders-keepers principle, is that McLean’s entitlement to any income assignment, particularly entrepreneurial profit, is a consequence that follows ex post from the ex nihilo creation of both the inputs and outputs through entrepreneurial discovery. However, if the inputs and outputs required for production are created by entrepreneurial discovery, why is the entrepreneur not entitled to the whole of his or her product, including payments to land, labor, and capital? Does this imply that Kirzner’s argument is irrelevant to, as he puts it, “the problem of disentangling the separate contributions made by the various components” jointly in production? (Kirzner 1989 [2016], p. 132). Quite the opposite. Consistent with Kirzner’s theoretical framework, it is because other entrepreneurs are bidding for these same factors of production in alternative productive uses that the tendency for owners of land, labor, and capital to be compensated according to their marginal contribution to production becomes discovered. For more on these topics, see A Conversation with Israel Kirzner. Econlib Video: Liberty Fund, Intellectual Portrait Series, 2000. “Competition and Entrepreneurship: The Fountainhead of the Contemporary Austrian School,” by Steven Horwitz. Econlib, Dec. 7, 2020. Austrian School of Economics, by Peter Boettke. Concise Encyclopedia of Economics. The implications of Kirzner’s argument in Discovery, Capitalism, and Distributive Justice are as relevant as ever, not only for their positive implications in economic theory, but also their normative implications for public policy. “The more affluent the market economy becomes,” Kirzner states, “the greater the variety of its productive offerings, the richer the arrays of possible employments that might be found for given resource services, the greater the significance of discovery insights—and the greater the relevance of a finders-keepers rule, were such a rule to be accepted” (Kirzner 1989 [2016], p. 123). Moreover, because the justification for income redistribution is based upon the way in which economists conceptualize how income is generated and distributed through the market process, answers to questions of distributive justice will depend on the extent to which economic theory has provided sufficient scope to explain how pure entrepreneurial profits are realized in the first place. References Buchanan, James M. (1991). “The Potential and the Limits of Socially Organised Humankind.” Interdisciplinary Science Reviews 16(2): 168-174. Kirzner, Israel M. (1989 [2016]). The Collected Works of Israel M. Kirzner: Discovery, Capitalism and Distributive Justice (edited by Peter J. Boettke and Frédéric Sautet). Indianapolis: Liberty Fund. Locke, John. (1690 [1980]). Second Treatise of Government, edited by C.B. Macpherson. Indianapolis: Hackett Publishing. Nozick, Robert. (1974). Anarchy, State, and Utopia. New York: Basic Books. Smith, Adam. (1776 [1981]). An Inquiry into the Nature and Causes of the Wealth of Nations. Indianapolis: Liberty Fund. Stigler, George J. (1957). “Perfect Competition, Historically Contemplated.” Journal of Political Economy 65 (1): 1–17. Footnotes [1] Israel M. Kirzner, Discovery, Capitalism, and Distributive Justice. Edited by Peter J. Boettke and Frédéric Sautet. Indianapolis: Liberty Fund. Part of The Collected Works of Israel M. Kirzner. *Rosolino Candela is a Senior Fellow in the F.A. Hayek Program for Advanced Study in Philosophy, Politics, and Economics, and Program Director of Academic and Student Programs at the Mercatus Center at George Mason University. (0 COMMENTS)

A Book Review of Time For Socialism, by Thomas Piketty.1 Time For Socialism author Thomas Piketty boasts a doctorate in economics, publishes papers regularly in top economics journals, teaches economics at the Paris School of Economics, and was once on the economics faculty at M.I.T. Yet not only are the 333 pages of his 2021 book utterly empty of economic reasoning, the reasoning that does infuse those pages is painful for an economist to encounter. Reading this book—which is a collection mostly of Piketty’s columns for Le Monde—literally hurt my head. The aching caused by reading this book isn’t a result of my immense ideological distance from Piketty. Having read and reviewed2 his 2014 Capital In the Twenty-First Century, I—a Hayekian liberal—have long known that Piketty is a man of the far left, and I have no trouble dealing with even gaping ideological differences. What hurt my economist’s head was trying to make sense of a worldview that would approach plausibility only in an alternate universe in which the most basic principles of economics, as I understand them, don’t apply. In Piketty’s universe, the tools, enterprises, and economic processes that are necessary for modern prosperity just materialize, as if out of thin air. About the formation and operation of capital goods and services the reader gets no information beyond the alleged fact that, above a certain level, wealth—that is, the value of capital—”tends to grow mechanically.”3 An implication of this mysterious reality is that, because the value of capital depends upon the value of what it produces, the total output generated by capital also tends to grow mechanically. In Piketty’s universe, then, capital goods and services are neither caused by—nor affected by—entrepreneurship, risk-taking, and individuals’ private investment choices. Economic and social institutions thus have almost no impact on wealth creation. Ditto for economic and fiscal policies. Adam Smith’s 1776 inquiry into how institutions and norms cause the wealth of nations4—Smith’s investigation into how different institutions and norms cause differences in the wealth of nations—must be for Piketty a project wholly sterile and inexplicable. My best guess is that Piketty is enough of a Marxist to assume that that which “mechanically” generates businesses, factories, tools, and all other productive assets are the historical forces that form society. The toil of physically extracting from capital the outputs with which capital is pregnant is left to laborers, but Piketty’s belief that the value of capital “tends to grows mechanically” allows for only very minor variation over time in the total amount of final output that labor helps capital to birth. It follows that in Piketty’s universe, any unusually great wealth and income possessed by entrepreneurs, investors, and corporate managers is unearned and, hence, unjustified. Having done nothing to produce their outsized bounties, capitalists will not be incited by near-confiscatory taxation to change their economic behavior in ways that will injure society. How could they be so incited, given that the value of capital under their control “tends to grow mechanically”? Transferring the proceeds derived from this heavy taxation to workers and the poor will simply ensure that everyone in society obtains his and her fair share of what is overwhelmingly the result of inexorable social forces—forces that are in no way explained by bourgeois economic ‘reasoning’ of the sort popularized by the likes of Milton Friedman and F. A. Hayek, and calamitously put into public-policy practice by political rogues, most notably Margaret Thatcher, Emmanuel Macron, and Ronald Reagan. It’s no surprise, then, that not once in this book does Piketty bother to argue substantively against economists’ familiar prediction that taxing incomes at exorbitant rates discourages income-earning activity. On the few occasions when he acknowledges the existence of such concerns, he breezily dismisses them by asserting that they are unsupported by evidence. For Piketty, bothering to explain why taxing incomes or wealth will not diminish society’s flow of income or its stock of wealth is as pointless as would be bothering to explain why taxing the performance of rain dances will not diminish the amount of rain that falls from the heavens. Just as it’s foolish beyond comment to suppose that rain dancers create rain, it’s equally foolish, Piketty seems to think, to suppose that entrepreneurs and investors create wealth. You might suspect that I exaggerate or miss important nuances in Piketty’s strange vision of economic reality. I don’t think that I do. Throughout Time for Socialism, Piketty describes cuts in taxes owed by wealthy people as “gifts to the rich”5 or as “tax gifts to the most wealthy.”6 For Piketty, this language isn’t hyperbole; it’s evidence of his sincere belief that human agency plays no role in creating capital and in ensuring that capital is employed productively. Doing nothing to earn their disproportionately large shares of society’s “mechanically” produced wealth, the rich are given “gifts” if and whenever the state reduces their tax burdens. Any person who believes that the value of capital “tends to grow mechanically” is a person who is either ignorant of economics or who rejects it wholesale. For such a person (and Piketty is indeed one) an ultimate reality of economics—scarcity—applies only to consumption and not to production. Because wealth isn’t superabundant, Piketty correctly recognizes that, when it comes to consumption, trade-offs are inescapable. Goods and services consumed by Liliane and Alcide are unavailable to be consumed by Adrienne and Jacques. But in Piketty’s universe, because production is largely automatic and mechanical, it occurs independently of human choices and effort and, hence, imposes on humanity no need to make sacrifices or trade-offs. Taxing wealth away from Liliane and Alcide reduces only Liliane’s and Alcide’s ability to consume as it increases consumption opportunities for Adrienne and Jacques. Such taxation, however, has no impact on the amount of wealth that is produced. Therefore, all effort poured by economists into understanding how incentives and constraints inspire, direct, or discourage entrepreneurship and investment are pointless. Also apparently wasted are the research by the Nobel-laureate economists Ronald Coase, Herbert Simon, George Stigler, and Oliver Williamson into the determinants of the size and scope of firms and the organization of industries. Because the value of capital—and, hence, output—grow mechanically, any suspicion that changes in taxes, legal rules, or regulatory constraints affect the economy’s capital structure or its flow of output is a mere illusion, one that undoubtedly is produced by the distorted lenses worn by bourgeois economists. As far as production is concerned, its mechanical occurrence means that no trade-offs are necessary or even possible. The above describes the economic universe as understood by Piketty. Only in such a universe would the confiscatory taxation and radical wealth redistribution for which he yearns be ethically justified and economically harmless. “Given the bizarreness of Piketty’s economic vision, the reader is not surprised to find in his work fatal inconsistencies.” Given the bizarreness of Piketty’s economic vision, the reader is not surprised to find in his work fatal inconsistencies. One such inconsistency arrives when Piketty asserts that “long-term economic performance is primarily determined by investment in training.”7 Well. Now that we’re told that improving the training of workers improves the performance of capital, it’s impossible to believe that the value of capital “tends to grow mechanically.” What’s left of the asserted non-role of capitalists in affecting the value of capital once we learn that economic growth is affected “primarily” by the choices humans make regarding how much, and presumably which sorts of, human training to demand and supply? After all, prominent among those who surely have incentives to provide at least some worker training are workers’ capitalist employers. And so might the amount of worker training currently supplied by real-world employers be optimal? A strong case can be made that it is, especially given that when Piketty measures the growth over time of the value of non-human capital he finds that this growth appears to happen “mechanically.” But if, instead, privately provided worker training is suboptimal, what’s the best way to provide more and better training? Is the answer to entrust government, as Piketty predictably wishes, with more money to supply training? Or might a better way to improve training be through changes in labor law, or increases in the amount of training expenses that employers are allowed to deduct from their taxes? And how about, contrary to Piketty’s demand for a higher minimum wage, lowering or eliminating minimum wages, thus enabling more low-skilled workers to find employment—employment that gives workers valuable on-the-job experience and training? Questions such as these are naturally asked by economists. Questions such as these are never asked by Piketty. A second inconsistency is highlighted by Piketty’s insistence that worker training doesn’t merely positively affect economic performance, but that such training is the primary determinant of performance. This insistence, though, is at odds with Piketty’s exclusion of human capital from his measures of capital. Central to Piketty’s case for confiscatory taxes on the rich is his alleged empirical demonstration that, over the past 40 or so years, the rich have accumulated a steadily growing share of ownership of capital. With the increasing concentration of capital ownership comes, alleges Piketty, increasing economic power exercised by the superrich. But if worker training is really as important as Piketty asserts it to be—and, of course, it truly is important—then the non-human capital owned by the superrich is of little value without the human capital owned by workers. Because, as it now turns out, non-human capital delivers most of its rewards to its owners, not mechanically, but only by combining with human capital—and because, by Piketty’s admission, human capital is the primary determinant of economic performance—capitalists will compete as fiercely for workers as they do for any other valuable assets. Indeed, if Piketty is correct that there is now a dearth of worker training, today’s competition among capitalists for the relatively few workers who are well-trained must be especially intense, causing wages for such workers to be inordinately high and, in turn, giving heightened incentives to other workers to get more training. You’ll not be surprised to learn that Piketty is oblivious to these implications of his assertions. Whether or not the amount of human capital that exists is suboptimal, today’s high living standards imply that a great deal of such capital nevertheless does exist. This implication holds even if, contrary to fact, Piketty is correct to assert that nearly all of the fruits of economic growth over the past 40 years have been captured by the undertaxed superrich. Yet Piketty’s measure of capital ownership—and, hence, his asserted demonstration that ownership of capital is becoming dangerously more concentrated—loses most of its meaning as a result of its exclusion of human capital, the “primary” determinant of economic performance. As Deirdre McCloskey explained in her review of Capital In the Twenty-First Century,8 The only reason in the book to exclude human capital from capital appears to be to force the conclusion Piketty wants to achieve. One of the headings in Chapter 7 declares that “capital [is] always more unequally distributed than labor.” No it isn’t. If human capital is included—the ordinary factory worker’s literacy, the nurse’s educated skill, the professional manager’s command of complex systems, the economist’s understanding of supply responses—the workers themselves, in the correct accounting, own most of the nation’s capital—and Piketty’s drama falls to the ground. Piketty’s obliviousness to this major flaw and inconsistency in his work is stunning. For more on these topics, see “Piketty Fever,” by Pedro Schwartz. Econlib, Jun. 5, 2014. Thomas Piketty on Inequality and Capital in the 21st Century. EconTalk. Human Capital, by Gary Becker. Concise Encyclopedia of Economics. Even to list, let alone to substantively expose, all of the other inconsistencies that Piketty stuffed into this volume would fill a thick monograph. A not-insubstantial book would be necessary to fully document, in addition to the inconsistencies, Piketty’s historical inaccuracies, non sequiturs, and head-scratching pronouncements, including this gem of a conclusion—presented as a regrettable discovery—to a discussion of the trend of “concentration of ownership” over the past century: “The poorest 50% of the world’s population is still the poorest 50% of the world’s population.” This book isn’t the work of a serious economist. Instead, it’s a tract composed by someone who is blindingly obsessed with differences in monetary incomes and wealth yet has no earthly idea what really causes these differences or what would be the consequences that would curse humanity if his confiscatory piracy were put into practice. Footnotes [1] Thomas Piketty, Time for Socialism: Dispatches from a World on Fire, 2016-2021. Yale University Press, Oct. 26, 2021. [2] Donald J. Boudreaux, “Piketty: A Wealth of Misconceptions.” Mercatus.org. Originally published in Barron’s, May 31, 2014. [3] Piketty, p. 40. [4] I refer, of course, to Adam Smith’s An Inquiry Into the Nature and Causes of the Wealth of Nations, available online at the Library of Economics and Liberty [5] Piketty, p. 247. [6] Piketty, p. 147. [7] Piketty, p. 76. [8] Deirdre N. McCloskey, “How Piketty Misses the Point,” a CATO Policy Report, July/August 2015. *For helpful comments on an earlier draft I thank Veronique de Rugy. Donald J. Boudreaux is Professor of Economics at George Mason University and Senior Fellow with the F. A. Hayek Program for Advanced Study in Philosophy, Politics, and Economics at George Mason’s Mercatus Center. He blogs at Café Hayek (www.cafehayek.com). For more articles by Donald J. Boudreaux, see the Archive. As an Amazon Associate, Econlib earns from qualifying purchases. (0 COMMENTS)

When it comes to talent, we will try to teach you how to think past the bureaucracy. We focus on a very specific kind of talent in this book—namely, talent with a creative spark—and that is where the bureaucratic approach is most deadly. In referring to the creative spark, we mean people who generate new ideas, start new institutions, develop new methods for executing on known products, lead intellectual or charitable movements, or inspire others by their very presence, leadership, and charisma, regardless of context. —Tyler Cowen and Daniel Gross, Talent: How to Identify Energizers, Creatives, and Winners Around the World (p. 9)1 Economist and polymath Tyler Cowen teamed up with young Silicon Valley star Daniel Gross to write a book that offers ideas on how to spot and encourage talent. This is an issue that has interested me for a long time, both as a hiring manager and as an economist. In fact, shortly after I left the business world, I wrote an essay that said, In today’s economy, capital may no longer be the primary scarce resource to be allocated. … it is easier to understand the economic challenge today as one of allocating talent to solving problems.2 Cowen and Gross (CG) point to the need to be able to find talent in other cultures. In the coming decades, the proportion of young people in the world that come from Africa will be soaring, and those seeking talent will need to be able to find it there. When we think about the problem of allocating capital, we think of the stock market. The problem of allocating talent has some similarities to the problem of picking stocks, but also some differences. Success in the stock market comes not from finding the best company, but the most undervalued company. Similarly, CG write, … seeing the whole package requires a much deeper synthetic ability, a good deal of luck, and what we are calling entrepreneurial alertness—that is, the ability to spot and perceive talents that others do not see. (88) In major professional sports, notably baseball, we have seen the phenomenon described in Michael Lewis’s Moneyball. Armed with increasingly sophisticated data, statisticians have become heavily involved in the talent-evaluation process. As of now, a similar approach will not work for identifying the great entrepreneurs, business leaders, or cultural innovators. But CG allude to the possibility that at some point in the future a data-driven approach may become feasible. For now, the data that we have to work with contain too much noise. Success in the fields that CG are concerned with is not measured as definitively as it is in stock market investing or baseball. CG see talent as resulting from psychological traits, and this creates another source of noise. Measures of IQ are reliable, in that they replicate well across different testing instruments and across the same individual over time. As a result, IQ tends to work better than other measures as a predictor of success in many realms. But CG write The most measured and thoughtful study is by Ken Richardson and Sarah H. Norgate… the researchers’ conclusions are pretty sobering: “In primary studies such correlations [between IQ and job performance] have generally left over 95% of the variance unexplained.” So to put it another way, chasing high-IQ hires with few other considerations is not a good way to find talent… smart people—and maybe you are one of them—overrate the importance of smarts. (93) Yet these “other considerations” are plagued by worse noise. CG discuss the Big Five personality measures that are most respected by academic psychometricians: Openness, Conscientiousness, Extroversion, Agreeableness, and Neuroticism. My impression is that these measures are not so reliable, in that results can vary depending on the survey instrument used, and are also not necessarily stable over one’s lifetime. I also think that they may be highly context-sensitive. Someone might be an introvert in a sports bar and yet be an extrovert at a faculty lunch. “… the sort of talent they are looking for is at the very top, and they find that studies focused on extreme success sometimes show that different factors matter.” CG note that some of the research on the impact of personality on performance is focused on employees near the average. But the sort of talent they are looking for is at the very top, and they find that studies focused on extreme success sometimes show that different factors matter. Not surprisingly, given the noise inherent in the process of measuring personality, it is difficult to generalize about how one might use scores on the Big Five in assessing talent or potential. CG conclude, … personality theory—in its various guises—is a tool for mobilizing and communicating the dispersed knowledge to be found among your hiring network. … think more in terms of a useful language for your team rather than trying to reflect, replicate, or anticipate the latest academic results. (124) In organizations it helps to be able to recognize how personality traits vary across individuals, in order to facilitate cooperation and mutual respect. I believe that for that purpose, other personality systems, such as Myers-Briggs, may prove easier to understand and to use, even though they are even less sound statistically than the Big Five. In any case, I would point out that hiring managers and venture capitalists do not have candidates’ Big Five scores on personality tests to work with. Instead, they form impressions of candidates’ personality traits, gleaned from interviews and, to a lesser extent, reference checks. That introduces yet another important source of noise—the difference between how the interviewer perceives the candidate and how the candidate would score on a formal personality test. All that said, CG believe that personality matters a great deal, and I agree. They also believe that personality can be assessed on the basis of skilled interviews. I agree with this as well, and their chapter on “How to Interview and Ask Questions” provides food for thought for anyone involved in any organization in any capacity. CG especially prize people who are dedicated to self-improvement. They want to hear people explain how they go about improving themselves. “What is it you do to practice that is analogous to how a pianist practices scales?” is one of their interview questions. Some of their favorite questions, … ask the respondent to give an account of their own self-awareness. In essence, you are trying to learn how many cultural and intellectual worlds an individual is master of, and how much perspective they have on their own perspectives. That is what we mean by “meta”—that the person is considering their own thought world from a viewpoint one level higher, more general, and more distant. (49) I would say that this can be applied to conducting interviews. Practice and self-evaluation are important. Why couldn’t I get the candidate to relax and open up? Why did this person turn out to be not a good fit—what did I miss? When I meet someone new in a social setting, I will often ask many of the same sort of questions I would ask if I were interviewing them for a job. It is analogous to how a pianist practices scales. I would caution against trying to copy anyone’s hiring approach, as if one style fits all. You have to be very conscious of your own personality and how it affects what you are looking for. CG are deliberately looking for high-variance individuals. Like venture capitalists, they are willing to take a risk in order to have a high upside. That may not be your style, just as investing in start-ups may not be your style. When I hired employees, I had some tolerance for arrogance, because a really good software engineer can be so much more productive than a run-of-the-mill developer. But other managers will never put up with a prima donna. For more on these topics, see Michael Lewis on the Hidden Economics of Baseball and Football. EconTalk. Penny Lane on Loving and Loathing Kenny G. EconTalk. Jonah Lehrer on Creativity and Imagine. EconTalk. Hiring is different in different contexts. I never had a staff of more than a handful of employees, so a lot of the context consisted of dealing with me. Of the two of us in the interview, I was often the quirkier personality. I invited the respondent to ask questions, and the best indicator of fit was the amount of time this reverse question-and-answer session went. A good candidate would be trying to figure me out, deciding whether I was worth taking a chance on. Whichever side of the interview table you are on, you want to get better at assessing the other person. A good way to improve your ability to identify talent in context is to read Talent. Footnotes [1] Tyler Cowen and Daniel Gross, Talent: How to Identify Energizers, Creatives, and Winners Around the World. Nicholas Brealey Publishing, 2022. [2] Arnold Kling. “From Allocating Capital to Allocating Talent”. ArnoldKling.com, “Arguing in My Spare Time”, No. 12, April 24, 1998 *Arnold Kling has a Ph.D. in economics from the Massachusetts Institute of Technology. He is the author of several books, including Crisis of Abundance: Rethinking How We Pay for Health Care; Invisible Wealth: The Hidden Story of How Markets Work; Unchecked and Unbalanced: How the Discrepancy Between Knowledge and Power Caused the Financial Crisis and Threatens Democracy; and Specialization and Trade: A Re-introduction to Economics. He contributed to EconLog from January 2003 through August 2012. Read more of what Arnold Kling’s been reading. For more book reviews and articles by Arnold Kling, see the Archive. As an Amazon Associate, Econlib earns from qualifying purchases. (0 COMMENTS)

Review of The Progressive Environmental Prometheans: Left-wing Heralds of a “Good Anthropocene.” by William B. Meyer1 Coming out of left field for the 50th anniversary of Earth Day in 2020, the Michael Moore-backed documentary Planet of the Humans (henceforth Planet) indicted wind, solar, and biomass-generated electricity as mining intensive and carbon fuel-dependent (whether it be the manufacturing of components, their construction, and the need for back-up power generation when the sun doesn’t shine or the wind doesn’t blow), costly, dilute, intermittent (wind and solar), non-scalable and environmentally destructive. Forget “Building Back Better” through a Green New Deal, director-narrator Jeff Gibbs and producer Ozzie Zehner told their viewers that truly sustainable development ultimately mandates population control and reduced standards of living. Planet got mixed reviews from environmentalists.2 While many among the older (neo) Malthusian guard were supportive, younger academics and activists were generally apoplectic. Among other problems, the documentary challenged their faith in green modernization through ramped up, decentralized, and renewable electrification. It ignored the overconsumption and wasteful behavior of denizens of the Global North. It brushed aside the dubious intellectual history and track record of twentieth century environmentalism, from its Malthusian, eugenicist and reactionary roots to its misanthropic, nativist, classist and white supremacist leanings. As could be expected, some even accused Moore, Gibbs, and Zehner of veering into eco-fascism. Another interesting aspect of the Planet debate was that, with one notable exception,3 none of the baby boomers, Gen Xers, millennials, and zoomers involved in the controversy seemed aware that mainstream left-wing politics once stood for the enrichment of the poor and working class through the mastery of nature. This now largely forgotten aspect of past Progressive thought is the subject of Colgate University geographer William B. Meyer’s 2016 book The Progressive Environmental Prometheans: Left-wing Heralds of a “Good Anthropocene.” An author whose sympathies seem to lie with the politics and economic development outlook traditionally associated with the blue collar/hard hat/lunchbox class, Meyer’s contribution further stands apart from the typical outlook and offerings of his generation of academic geographers by the clarity of his prose and his inclusion and respectful treatment of thinkers such as Friedrich Hayek, Michael Oakeshott, and Ayn Rand. The “Promethean” in his title echoes the feats of the Titan Prometheus who—in some versions of the myth—discovers humans naked, unshod, unbedded and unarmed, pities them and introduces them to fire and several practical arts (e.g., building shelter, agriculture, calculation, writing, animal domestication, and sailing), along with a promise of future beneficial discoveries and greater material comfort. “Anthropocene” is a more recent and ideologically loaded concept that refers to the beginning of significant human impacts on our planet’s geology and ecosystems. Meyer defines Prometheanism as a “belief in the desirability of the radical reform of nature by human beings, resulting in either an infinitude or merely an increased abundance of resources” (p. 11). He then points out that “most people in the past few centuries in the Western world whose thoughts have left a trace do… seem to have held more or less Promethean presumptions, at least tacitly, and very few those of present-day environmentalism” (p. 15). Because of its past preponderance, however, Prometheanism “remained somewhat unarticulated,” a problem worsened by the fact that “exponents of green thought have been studied much more carefully (and sympathetically) than have prophets of human mastery over the earth” (p. 15). As such, while Prometheanism is “not quite terra incognita to historians of environmental thought,” its intellectual history remains a “little-known and poorly mapped territory” (p. 50). Fluent in English, French, and Russian, Meyer attempts to fill this void with a relatively concise (210 pages of text) survey of the thoughts, proposals, and actions of a wide range of American, British, French, and Russian/Soviet left-wing “technocrats,” “scientists,” and “prophets” whose advocacy of top-down bureaucratic planning and control was legitimized by the promise of much greater material abundance than could be delivered by chaotic and wasteful market processes. In this worldview, freedom from need trumped political freedom as the rule of trained experts would ultimately benefit marginalized people and communities. Meyer’s survey goes beyond the traditional domains of historians of political and economic thought as it includes discussions of the words and deeds of activists, state planners, science popularizers, and fiction writers. Despite this, his text soon becomes repetitive, for no matter their nationality, time period, gender, profession, broad school of thought (e.g., Anarchism, Utopian Socialism, Marxism, Institutionalism, Pragmatism, Conservationism, Taylorism) or narrower ideological offshoots (e.g., Stalinism, Maoism, Trotskyism), all the individuals discussed in some depth in his book ultimately shared the same universalist creed. To summarize, left-wing Prometheans exhibited a profound contempt for past ways of doing things, Malthusianism, and the randomness of natural processes. Existing landscapes were seen as nothing but the result of chaotic processes (e.g., retreating glacier, randomly created climate patterns) while most living things were deemed fundamentally inefficient in their use of scarce resources (e.g., animal and plant reproduction) and often dangerous and useless (e.g., parasites and predators). Humans were therefore granted carte blanche to conquer and master nature in order to improve their level of material comfort. This would best be achieved by freeing central planners from the constraints inherent to private property and profit-and-loss considerations. Through scientific and rational planning, they would drain marshes; build roads, railroads, canals, dikes and embankments; flatten hills; develop large-scale irrigation projects; dredge ports; and eradicate pests ranging from mosquitoes to wolves. The Progressive Prometheans’ rejection of the “Malthusian conception of finite natural resources as a limiting factor for society” (p. 84) was rooted in a belief that “natural” resources did not exist in and of themselves, but were rather the products of human minds and actions. Material scarcity was therefore a creation of capitalism that could be remedied through socialist planning. Benevolent technocrats would achieve these results even faster if they could mobilize an ever growing population, which is why orthodox Marxist intellectuals and regimes promoted pro-natalist policies until at least the 1970s.4 To give but a few illustrations from a very long list, Leon Trotsky (1879–1940) wrote in 1924 that under socialism nature would become ever more “artificial” as the … present distribution of mountains and rivers, of fields, of meadows, of steppes, of forests, and of seashores, cannot be considered final. Man has already made changes in the map of nature that are not few nor insignificant. But they are mere pupils’ practice in comparison with what is coming. Faith merely promises to move mountains; but technology, which takes nothing ‘on faith’, is actually able to cut down mountains and move them. Up to now this was done for industrial purposes (mines) or for railways (tunnels); in the future this will be done on an immeasurably larger scale, according to a general industrial and artistic plan. Man will occupy himself with re-registering mountains and rivers, and will earnestly and repeatedly make improvements in nature. In the end, he will have rebuilt the earth, if not in his own image, at least according to his own taste. We have not the slightest fear that this taste will be bad….5 Although now largely forgotten because of the Chinese Communist Party’s later policy reversal, Meyer also reminds his readers that Mao Zedong (1893–1976) declared a “war on nature,” but without expanding on the topic. Perhaps the dictator’s most famous lines on the subject were published in 1949 when he celebrated China’s large population and argued that even if the country’s “population multiplies many times, she is fully capable of finding a solution; the solution is production.” He further dismissed the “absurd argument of Western bourgeois economists like Malthus that increases in food cannot keep pace with increases in population” as both “thoroughly refuted in theory by Marxists” and exploded in practices in the Soviet Union and other centrally planned economies. Of “all things in the world,” he wrote, “people are the most precious.” Under “the leadership of the Communist Party, as long as there are people, every kind of miracle can be performed.” Revolution would change everything and before long a new China would arise “with a big population and a great wealth of products, where life will be abundant and culture will flourish. All pessimistic views are utterly groundless.”6 To this reviewer, the most satisfactory aspect of Meyer’s book is his implicit takedown of present-day eco-socialists and other academics who argue that a close reading of some scattered musings and notebooks of the likes of Karl Marx (1818–1883) and Peter Kropotkin (1842–1921) reveals them to be proto-modern environmentalists. “… shouldn’t conservatives embrace environmentalism in light of their devotion to the preservation of the existing order? Shouldn’t progressives be inherently supportive of economic growth and technological change in light of their emphasis on reason over tradition?” Although he doesn’t really dwell on the topic, Meyer is curious about the deeper intellectual roots of modern environmentalism. Like other scholars before him, he finds many of them among conservative and patrician writers and academics in the German and English-speaking world. This, in turn, leaves him wondering why support for environmentalism now “clusters on the left and resistance to it on the right” (p. 1) After all, shouldn’t conservatives embrace environmentalism in light of their devotion to the preservation of the existing order? Shouldn’t progressives be inherently supportive of economic growth and technological change in light of their emphasis on reason over tradition? If so, why and when did the old developmental narrative of the left give way to the belief that humanity should be subservient to the commands of nature in order to avoid imminent collapse? And why are people on the left and the right so selective in their fear of disturbing complex systems, with most conservatives having much less compunction to promote mega-projects that alter ecosystems while most progressives wish to profoundly transform market economies? Although he doesn’t use this concept, Meyer’s preferred explanation of these contradictions is what has sometimes been labeled “cultural cognition,” i.e., the “tendency of individuals to conform their beliefs about disputed matters of fact… to values that define their cultural identities.” As he puts it, “environmental beliefs are not merely scientific but political” (p. 3), meaning that ultimately “people’s environmental attitudes are secondary and derivative, and their political allegiances primary and determining” (p. 207). In other words, most people do not have a well articulated set of positions on various social, political, and economic matters, but rather identify with a party and eventually imbibe its positions on various matters of public policy. While there is some truth to this explanation, it is arguably incomplete. One could thus argue that rising technophobia in the nuclear age, the ever more obvious tyrannical nature and economic failure of communist regimes and the widespread promotion of the (neo) Malthusian narrative in the aftermath of the Second World War by otherwise discredited eugenicists all played a significant role in the demise of Prometheanism among the general public. Another problem is that Meyer exhibits a few significant shortcomings in his survey of intellectual history. For instance, despite a better grasp than other historians of environmental thought of some of the fundamental differences in outlook between what he labels “cultural conservatives” and “neoliberal conservatives,” Meyer fails to look into the classical liberal tradition as the source of the “mastery of nature” perspective among the political right. To clarify, many past conservative thinkers complained that market-led industrialization and urbanization obliterated local communities and landscapes, dislocated traditional lifestyles and values, and corrupted people. They further looked down upon putting a price on everything—profits above all else—and engaging in conspicuous consumption. As such, many conservatives have long shared with environmentalists a profound dislike of suburban sprawl (especially mass produced housing, big box retailing, and superhighways), unnatural foods, mass migration, and globalized supply chains. Recent representatives of this “green” conservative tradition in the English-speaking world include writers Roger Scruton (1944–2020), Rod Dreher, and political theorist Patrick J. Deneen. Classical liberals, by contrast, have historically been much more open to change, innovation, urbanization, industrialization, international migration, and the globalization of supply chains. Truth be told though, many early liberals did display strong Malthusian leanings and it is probably fair to say that this tradition was never as united and consistent in its opposition to Malthusianism as orthodox Marxists and past generations of Progressives. Perhaps the most glaring shortcoming in Meyer’s book, however, is the absence of any significant discussion of a more culturally middle-class, decentralist, and “arts and crafts” left-wing tradition whose members were often contemptuous of both the working class and Prometheanism. Although Meyer does mention its most significant representative—the English novelist, poet and designer William Morris (1834–1896)—it is in the context of other left-wing thinkers having labeled him (at least partly) traditionalist and conservative. Had Meyer looked into the writings of some of Morris’ contemporaries (e.g., John Ruskin, Edward Carpenter) and later transitory figures (e.g., Lewis Mumford, John Robinson Jeffers, Jacques Ellul, Fritz Schumacher, Murray Bookchin, Herbert Marcuse) he might have gained a better understanding of the emergence of the New Left and modern left-wing environmentalism. Perhaps the best way to convey what this tradition was about is the (in)famous description offered by George Orwell in his 1937 Road to Wigan Pier which, with minimal tweaks, describes rather well the present-day urban clerisy (e.g., academics, journalists, upper rank managers, activists and consultants) that now dominates left-wing politics: The first thing that must strike any outside observer is that Socialism, in its developed form is a theory confined entirely to the middle classes. The typical Socialist is not, as tremulous old ladies imagine, a ferocious-looking working man with greasy overalls and a raucous voice. He is either a youthful snob-Bolshevik… or, still more typically, a prim little man with a white-collar job, usually a secret teetotaller and often with vegetarian leanings, with a history of Nonconformity behind him, and, above all, with a social position which he has no intention of forfeiting. This last type is surprisingly common in Socialist parties of every shade…. In addition to this there is the horrible—the really disquieting—prevalence of cranks wherever Socialists are gathered together. One sometimes gets the impression that the mere words “Socialism” and “Communism” draw towards them with magnetic force every fruit-juice drinker, nudist, sandal-wearer, sex-maniac, Quaker, “Nature Cure” quack, pacifist, and feminist in England….7 Orwell then suggested that this list did not include the flakiest leftists of all, “those who ate no meat.” “If only the sandals and pistachio-coloured shirts could be put in a pile and burnt,” he added, and “every vegetarian, teetotaller and creeping Jesus sent home to Welwyn Garden City to do his yoga exercises quietly!” For more on these topics, see “From Prometheus to Arcadia: Human Supremacy, Carrying Capacity and Ecological Footprints,” by Pierre Desrochers. Econlib, Apr. 4, 2022. “The Secret History of the Dismal Science. Part VI. Eugenics and the Amoralization of Economics,” by David M. Levy and Sandra J. Peart. Econlib, May 13, 2002. To be fair though, Meyer’s manuscript was completed before Brexit, the Trump Presidency, and the Canadian truckers’ “Freedom Convoy” that have given increased visibility to the political divorce between the traditional working class and the new left-wing elites. In the end, the fact that one might quibble with Meyer as to the ideological, demographic, and political changes that resulted in the political left’s move from Prometheanism towards Arcadianism shouldn’t detract from the value of its main contribution. And although the author probably didn’t intend his book to be used this way, it also provides a strong cautionary tale to enthusiastic sustainability theorists who would like to change our economic and energy systems without having understood the factors that led to their emergence. Footnotes [1] William B. Meyer, The Progressive Environmental Prometheans: Left-wing Heralds of a “Good Anthropocene.” Palgrave Macmillan, 2016. [2] Pierre Desrochers, “Michael Moore Acknowledges: There Are No Alternatives to Energy Reality,” American Institute for Economic Research. May 7, 2020. Available online at https://www.aier.org/article/michael-moore-acknowledges-there-are-no-alternatives-to-energy-reality/ [3] Leigh Phillips, “Planet of the Anti-Humanists,” Jacbobin. May 4, 2020. Available online at https://jacobin.com/2020/05/planet-of-the-humans-michael-moore-documentary-climate-change [4] William Petersen, “Marxism and the Population Question: Theory and Practice,” Population and Development Review. Volume 14, 1988. [5] Leon Trotsky, Literature and Revolution. 1924. Available online at https://www.marxists.org/archive/trotsky/1924/lit_revo/ [6] Mao Tse-tung, “The Bankruptcy of the Idealist Conception of History.” Available online at https://www.marxists.org/reference/archive/mao/selected-works/volume-4/mswv4_70.htm [7] George Orwell, The Road to Wigan Pier. Mariner Books, 1972. *Pierre Desrochers is an Associate Professor in the Department of Geography, Geomatics and Environment at the University of Toronto, Mississauga. His main research interests focus primarily on economic development, technological innovation, business-environment interface, energy policy, and food policy. As an Amazon Associate, Econlib earns from qualifying purchases. (0 COMMENTS)

According to some people, large corporations must take a stance in abortion debates (“Wall Street Gets Forced Into the Abortion Debate,” Wall Street Journal, June 3, 2022): Shareholders have placed abortion-rights proposals on the proxies at three big retailers this spring: Walmart Inc. …; Lowe’s …; and TJX …, the owner of off-price chains including TJ Maxx. Many more could follow next year. Despite the present perfect in the first sentence, two of the three proposals, put forward in December, have already been rejected by a large majority of shareholders (at Walmart and Lowe’s) over the past week or so. But we can expect more pressure from activists together with large assets managers “focused on environmental, social and corporate-governance” (and not necessarily known for their deep knowledge of economics and political philosophy). To be pessimistic, only catastrophic events such as a deep recession, a nuclear war, or a sudden nine-foot rise in the oceans’ level could stop the movement. Abortion is a very complex issue because it rests on fundamental questions about which we know little and which may never be totally answerable, at least in our current universe: When does human life start? When does human life ends? What is special about human life, or are humans just animals or plants or biological slime? When is it morally justifiable to end a human life? Should abortion be forbidden to Black women because Black lives matter? This last question shows how slippery the issue is and how absurd the run-of-the mill activist’s conventional wisdom. But my question here is: What do Walmart, Lowe’s, TJX, or your heating oil delivery man have to do with all that? Why would they have a corporate opinion on these questions and advertise it to their customers? One reason that has been invoked is that their (greedy) interest in promoting political causes that will reduce their labor costs: Activist investors submitted the shareholder proposals in December. Broadly, they ask each company to compile a report evaluating the risks and costs of restricted reproductive rights, including on employee hiring and retention. (For once, apparently, greed is good. But many would not extend it any farther.) Strange idea that, instead of higher wages and benefits, companies should attract and retain employees by echoing the latter’s opinions or prejudices. But what about employees who have other opinions? Should young social activists be encouraged to think that their opinions, often irrational and identity-mob tainted, are important enough to be brandished like a scepter in the face of customers who don’t share them? Perhaps all producers, from Walmart to your oil delivery company, should be nationalized to make sure that promote the government’s official opinions only? Would racial discrimination in the Old South have been more or less widespread if all private companies had been obliged, like the railroads, to follow local majority opinion? (Besides “Jim Crow: More Racist than the Railroads,” see my post “Markets Against the Mob’s Purpose.”) Asking these questions helps see why the separation of political power and market exchange favors prosperity and prevents tyranny. (0 COMMENTS)

In October 1973, an unhappy Leonard Cohen was listening to the radio on his Greek island home when he heard that Israel was at war. He headed to Tel Aviv, exchanging a personal and creative crisis for a national one. Absent a plan and even a guitar, Cohen wound up serenading Israeli soldiers at the […] The post Matti Friedman on Leonard Cohen and the Yom Kippur War appeared first on Econlib.