[This weekend, I am attending a conference that examines the gold standard.  Here are my thoughts going into the conference.] People occasionally ask me whether it would make sense to go back to the gold standard. Most economists think that this would be a bad idea. I agree, but not necessarily for the reasons that most other economists would cite.It’s hard to debate this issue on purely theoretical basis, as much of the debate ends up being about whether the historical record of the gold standard is superior to that of fiat money. That turns out to be an extremely difficult question to answer, for all sorts of reasons. And even if we could answer this question, we’d face another question: Would a gold standard in the 21st century perform as well as the 19th century version?And before these questions can be answered, we face an even trickier question: What do we mean by a gold standard? What is fiat money? History provides examples of both good and bad gold standards, as well as good and bad fiat money. Which systems should we compare? My preferred definition of a gold standard is one where currency can be converted into gold at a fixed nominal price, in a wide range of leading developed economies.  By that definition, the world was on a gold standard from 1879-1914, 1926-33 and (perhaps) approximately 1950-68.  That last period is especially iffy, as Americans were not allowed to freely convert dollars into gold.  I include Bretton Woods here, however, because some proponents of the gold standard cite is an example of how fixing the price of gold can prevent extreme inflation.  We all know what happened after 1968, when the gold price peg ended. Note that my preferred definition of a gold standard is not my preferred gold standard.  In my preferred gold standard, the government would merely define the unit of account as a fixed quantity of gold, and then do nothing.  For example, “The US dollar is one gram of gold”.  That’s all.  No central bank, no government currency issue, no regulation of banking, etc.  That sort of international gold standard never existed.  If that sort of system is viewed as the theoretical ideal, one might say that 1879-1914 was an 80% gold standard, 1926-33 was a 60% gold standard, and 1950-68 was a 20% gold standard. One problem I have with some gold proponents is that they cite how the $35/oz gold price peg prevented runaway inflation until it was abandoned in 1971, and then disavow any role of gold in the severe deflation of 1929-33.  Each argument has some merit considered in isolation, but when viewed together these two claims make little sense.  You can’t have it both ways, taking credit for a 20% gold standard and then saying a 60% gold standard isn’t really a gold standard.  Even worse, many gold proponents cite 1971 as the end of the fixed price of gold.  But a fixed free market price of gold is the sine qua non of a gold standard, and that ended in March 1968.  After the market price of gold started rising, the $35 official price was completely meaningless.  (I believe the official price today is $42.22/oz.)  After March 1968, central banks could “freely” convert dollars into gold in much the same sense that in the late 1980s the Japanese could “freely” sell cars in America under Reagan’s “voluntary” export restraint program.   BTW, gold proponents should prefer to use 1968 rather than 1971 as the ending date for the gold standard, as it actually makes their argument stronger.  Inflation was getting much worse during that 3 1/2 year period. So what’s the strongest argument in favor of a gold standard?  The most persuasive arguments that I have seen do roughly the following: 1. They concede that the system only works well if most important countries adopt it.  In recent decades, the purchasing power of gold has been extremely unstable.  Any single country returning to gold would only be able to modestly reduce that instability.  Thus we would have to hope for a truly international system.   2.  They do not compare the gold standard to fiat money.  They do not compare the best version of the gold standard to the best version of fiat money (which is inflation/NGDP targeting).  Rather they often compare the best version of the gold standard (1879-1914) to all of fiat money.  That includes the poorly performing unanchored system of 1968-90, and also the period of implicit or explicit 2% inflation targeting (1990-2022.)  In my view, it would be more logical to either include the poorly performing interwar gold standard, or exclude the fiat money system before inflation targeting was adopted.  I can’t speak for other economists, but when I say that I prefer that we stay on fiat money, I am not suggesting that the fiat system of 1968-1990 was better than the so-called “classical” gold standard.  I’m saying the best of fiat is better than the best of gold, and that the entire fiat system in the US is better than the entire gold standard. 3. Gold proponents tend to highlight the metrics by which gold looks good, and ignore those by which fiat money does better.  Under the international gold standard, the long run rate of inflation was roughly zero.  In addition, the price level a few decades out could be predicted with some degree of accuracy.  However, there was a great deal of year-to-year inflation volatility.  In addition, the price level followed roughly a random walk.  That means the near zero average inflation of 1879-1914 was partly (not entirely) coincidence.  Prices trended lower during 1879-1896 and trended higher from 1896-1914.  And even within those sub-periods, there was substantial year-to-year fluctuation in the rate of inflation. Now I’ll make some empirical claims that gold proponents may reject.  I believe the post-1990 regime of 2% inflation targeting produced a better outcome than even the best version of the international gold standard.  We do have more inflation (2% on average, vs. zero), but that’s because policymakers decided that 2% trend inflation was preferable.  There are good arguments both ways on that point, but to me it’s roughly a wash.  The welfare difference from 0% and 2% trend inflation are trivial (if anything, I slightly prefer 2%).  I also believe that year-to-year volatility of inflation was less under 2% inflation targeting, although the poor quality of older price indices makes that a bit debatable.  And I believe that with 2% inflation targeting people are better able to forecast where the price level will be 20 years in the future, as compared to the international gold standard.  Once again, that claim is debatable, but I think I’m right.  So in terms of the sort of nominal stability that is important for social welfare, I believe inflation targeting does a bit better.  (All my views are provisional, based on 1991-2020.  If the Fed doesn’t get this current inflation under control then I may change my mind.)  You can also compare the two systems using other criteria, such as the business cycle, but we don’t have very reliable data on real output stability from the 19th century, and in any case the economic system was so different that we have no way of knowing if any differences are due to money and not some other factor like the shift from farms to factories to services, or changes in wage flexibility, unemployment comp., etc.  It would be like saying, “Fiat money has produced better telephones than did the gold standard.” It’s better to stick to nominal stability, the one thing monetary policy can clearly affect. 4.  Gold proponents say that some of our problems under the gold standard were due to bad banking regulations.  I think that’s true, and it’s an underrated point that is overlooked by gold’s critics.  On the other hand, if we adopt an international gold standard then we’d like it to be robust enough to survive bad banking regulation. 5.  Gold proponents often point to the gold standard’s ability to constraint governments, to prevent them from engaging in policies that make the value of money unstable.  But when asked to account for the extreme instability in the value of money during 1926-33, they (correctly) point to government meddling in the monetary system.  I don’t know how you can have it both ways.  If you assume the sort of good government that would allow a theoretically pure gold standard to run without interference, wouldn’t that sort of government also be able to do effective inflation targeting, perhaps at zero percent inflation (if that’s your preference?)  Historically speaking, gold standards don’t seem to constrain bad governments.   6.  On a related point, it’s not clear how we should think about wartime.  Proponents of the gold standard cite price stability data from peacetime, excluding periods such as 1861-79 and 1914-26.  In one sense that seems fair, as key countries were not on gold during those periods.  But that raises the question of what do gold proponents favor during wartime?  If they believe the gold standard system cannot be blamed for the extreme price level instability during and after war, then presumably they favor some alternative policy.  But what is that alternative policy?  Staying on gold?  What if that causes a country to be unable to raise enough revenue to win the war?  Return to gold at a high price, in order to prevent postwar deflation?  Maybe, but that sort of policy is actually far more difficult than it looks. One big problem with the “look at history” argument for a gold standard is that we don’t have many good examples of gold standard regimes doing well during major  wars.  It’s fair to say that the gold standard shouldn’t be blamed for 1861-79 and 1914-26, but it’s also true that we have no evidence that things would have been better (in an overall welfare sense, admittedly prices would have been more stable) if countries had remained on gold and refrained from selling central bank gold reserves during wartime.  Gold proponents are excluding periods where running a successful gold standard would have been especially challenging. 7.  Gold proponents deny that a gold standard would lead to more mining of gold (which might be socially wasteful), correctly pointing to the rise in the real price of gold after 1970.  They attribute this increase to the fact that private gold demand increased as a hedge against rising inflation. 8.  The purchasing power of gold has been extremely unstable in recent decades.  Gold proponents respond by pointing to the relative stability of the purchasing power of gold during 1879-1914, and suggest that the recent instability is due to the fact that the world is not on a gold standard.  As far as the 1970s is concerned, I agree.  See point #7.  But I don’t believe that is true of more recent gold value fluctuations. During the 2000s, the relative price of gold skyrocketed (see above).  If this had occurred when the gold standard was in place, then there would have been a massive fall in the global price level, and perhaps another Great Depression.  Gold proponents sometimes suggest that the increase in gold prices reflected people buying gold as a hedge against inflation.  I do buy that argument for the 1970s, but not for the 2000s.  There was very little inflation during the 2000s, and the modest long-term nominal interest rates suggest very little fear of high future inflation.  Instead, I’d point to the rapid rise in gold demand in important developing countries such as China and India, each of which has a population comparable to the entire western world. Do I have evidence for this claim?  Yes, it wasn’t just gold.  The enormous economic boom in Asia drove up the relative prices of a wide range of commodities during the 2000s, not just gold.  In some respects, the 2000s were like the 1870s and 1920-33, when rising demand for gold caused gold’s value (purchasing power) to rise sharply.  In the 1870s and 1920s it was many countries joining the gold standard and building or rebuilding their gold stocks.  In the 2000s, the same would have occurred as China and India effectively joined the world economy.  Unlike in the 1870s and 1920s, we didn’t see a big deflation because the increase in the value of gold was accommodated by a higher nominal price.  But under a gold standard the nominal price is fixed and changes in the value of gold require a change in the overall price of goods and services. 9.  Research by Barksy and Summers suggests that the Gibson Paradox (the tendency for the price level to be positively correlated with nominal interest rates under the gold standard) was due to gold demand rising when nominal interest rates fell.  Recall that under the gold standard, the nominal interest rate is the opportunity cost of owning gold.  People demanded more gold when nominal rates fell, the value of gold rose, and the price level fell.  Given that interest rates now fall to zero during recessions, there is a greater danger of massive gold hoarding during the 21st century than during the 19th century. Can a gold standard work well in the 21st century?  Perhaps if at least most of these occur: 1. Almost all major countries agree to join. 2. There are no more China shocks (which is plausible). 3.  There are no more world wars (which is plausible). 4.  We avoid banking crises by adopting a completely laissez-faire banking system. 5.  Wage flexibility returns to 19th century levels as minimum wage laws, labor union laws, etc., are abolished. 6.  Central banks are abolished and governments don’t meddle in the system by varying their demand for gold reserves. 7.  Governments run responsible fiscal policy, as deficits could not longer be monetized. 8.  Governments credibly promise never to leave the gold standard during a recession, as fear of devaluation can trigger massive gold hoarding, turning a recession into a depression. 9.  Interest rates return to more “normal” levels, well above zero. I understand the argument against my proposal for NGDP level targeting; there’s only a 1% chance the US government would adopt the system and stick to it.  My response is that there’s less than a 1% chance that the world’s major governments would agree on an international gold standard and somehow do the various things above needed to make it work.   (0 COMMENTS)

Value is nothing inherent in goods, no property of them, nor an independent thing existing by itself. It is a judgment economizing men make about the importance of goods at their disposal for the maintenance of their lives and well-being. Hence value does not exist outside the consciousness of men. So wrote Carl Menger, one of the three economists who created the marginal revolution in the early 1870s. This is a very nice, succinct statement. I’m discussion leader of a colloquium on Menger in Las Vegas that starts Thursday evening. It’s in 6 sessions. I loved the Menger readings for the first three. The readings for the last 3, on methodology, were challenging, but I think I get it. Here is my short bio of Carl Menger for The Concise Encyclopedia of Economics.       (0 COMMENTS)

In a recent interview, SF Fed President Mary Daly listed 4 factors that caused inflation to exceed her expectations. The first three are supply issues, while the fourth relates to demand: 4. Unexpectedly high consumer demand The final factor that Daly says she underestimated was consumer demand. “The American consumer has been incredibly resilient and incredibly interested in purchasing things when they couldn’t purchase services,” she said. At some point, she believed that Americans had “purchased as many Pelotons as we can possibly use.” And yet, the demand seems insatiable.In February, overall retail sales increased 0.3% from January and were up 17.6% year-over-year, according to U.S. Census Bureau. And that’s set to continue. The National Retail Federation predicts that sales will grow between 6% and 8% this year. I have several problems with this claim.  First, it’s pretty obvious that most people have effectively “insatiable” preferences for a higher living standard.  Even if at some point people have all the Pelotons they want (and I for one do not), they would simply begin to desire other goods.  I find it a bit worrisome that a top Fed official would view consumer satiation as a reason not to worry too much about inflation. Second, it makes more sense to focus on total aggregate demand rather than just consumer demand.  In some cases, excessive aggregate demand shows up in rapid growth in investment spending, which can be just as inflationary as rapid growth in consumption. Third, there is no mention of the role of monetary policy in creating the inflation.  Fed policy was clearly too expansionary last year, and as a result aggregate demand (M*V) rose at an excessive rate.  Fast growth in nominal spending will lead to high inflation regardless of whether consumers have enough Pelotons or not.  If the consumer saving rate rises because their garages are packed with expensive toys, then fast growth in nominal spending would lead to higher investment spending.  Or perhaps government spending increases.  One way or another, a monetary policy that leads to excessive growth in nominal spending is almost certain to lead to excessive inflation.  When I hear Fed officials talk about inflation, it often seems as if they regard it as some sort of mysterious problem that befell our economy.  Excessive inflation is a product of excessively expansionary monetary policy.  Demand is a nominal concept; don’t talk about it like it’s a real concept.  Aggregate demand rose by more than 100 billion-fold in Germany during the early 1920s, and it wasn’t because Germans suddenly had an insatiable demand for exercise equipment. That does not mean that all inflation above 2% is excessive.  The Fed has a flexible average inflation target, and when there are supply shocks it is appropriate to allow above 2% inflation for a brief period in order to better achieve the Fed’s dual mandate.  But when inflation is excessive even from a dual mandate perspective (as it clearly is today), that’s a failure of monetary policy.  It’s that simple.  Fed officials are perfectly justified in talking about supply problems, which do provide justification for temporarily allowing above 2% inflation.  But instead of talking about mysterious increases in “demand”, I wish they’d simply say that monetary policy in 2021 was too expansionary.   Why is that so hard to do? Arsonists don’t need to fix the house burning problems; they need to stop burning down houses.  The Fed doesn’t need to “fix” the inflation problem; it needs to stop creating inflation. (0 COMMENTS)

People are often tempted to see social (including economic and political) phenomena in terms of a “swing of the pendulum.” In this perspective, problems such as wokism (just to give an example) will be corrected when the pendulum swings back. I suggest that this approach is easily misleading and seldom useful. The first question to ask relates to the period of the hypothesized fluctuations, that is, how much time it takes for the pendulum to come back; a short period or a long period correspond respectively to a short cycle and a long cycle. Consider regular or random fluctuations around a long-term trend. If these short-run fluctuations show some regularity—like, perhaps, the consumers’ preferred car colors—the pendulum analogy may be good, provided we keep in mind that it is just an analogy. But if the short-run fluctuations are random or irregular, that is, impossible to reliably predict, the analogy is faulty. Short-run fluctuations of stock prices, for example, cannot be likened to a pendulum swing. In social matters, many, perhaps most, short-run fluctuations seem to be random or at least irregular. If they were regular, they would be arbitraged away, which means that individual responses would dampen them: if I know that wokism is just a short-run phenomenon, I will feel less obliged to follow; if many individuals think that the price of a stock will increase tomorrow, it will not because it will have increased before. The model of short pendulum swings is thus not very useful for understanding society. Can we can identify longer pendulum swings (around which short-run fluctuations may happen)? Most likely not. For an extreme illustration, no long cycle to be found in the evolution of world GDP per capita (see the chart below from my post “Individualism and Western civilization”). Similarly, liberty and tyranny have not swung back and forth like a pendulum during the history of mankind: tyranny has been nearly universal while individual liberty has been a rare, limited, and mostly recent event. Even more modest long cycles are difficult to find: for example, the 50- or 60-year Kondratieff economic cycles have no micro-economic foundation and are not supported by empirical existence (see S.N. Solomou’s “Kondratieff Cycles” in the New Palgrave Dictionary of Economics). The beaver hat fashion of the 17th and 18th centuries may never come back. Of course, history is not finished and our descendants in thousands or millions of years may discover long cycles of commodity prices, wealth and poverty, liberty and tyranny, peace and war; but then they may not. The hypothesis of pendulum-like cycles is suspect for another reason. It goes back to the archaic myth of the eternal return: in many primitive religions and beliefs, everything moves in cycles, from the ordinary year to the renewed creation and destruction of the universe. This myth influenced some doctrines of the ancient world such as Stoicism and Neo-Pythagoricism. (See The Myth of the Eternal Return by the historian of religions Mircea Eliade—1949 for the original French version; 1965 for the second printing of the English translation.) Note that there is no eternal return in Christianity: the end of the world happens only once. A rational theory of pendulum swings in social affairs exists even less for long cycles than for short ones. Any attempt to build such a theory would get us bogged down in methodological problems. One is the unsupported hypothesis that history follows immutable laws of development that would allow predictions (see Karl Popper, “The Poverty of Historicism,” Economica 11:2-3 and 12:2 [1944-1945]). Another problem is scientism, the naïve application to social sciences of the concepts and methods of the natural sciences, as denounced by F.A. Hayek (see his The Counter-Revolution of Science [1952]). It is safe to conclude that the pendulum intuition does not help explain social phenomena. A social pendulum is a bad analogy. (0 COMMENTS)

  One issue that has come up in the confirmation hearings of Supreme Court nominee Ketanji Brown Jackson is her apparently light treatment of Wesley Hawkins, a 19-year-old who, at age 18, had uploaded to YouTube “five videos of prepubescent boys engaged in sex acts.” The record showed that Hawkins had not produced any of the videos. Instead, he himself had found them on line. Even though federal guidelines suggested a sentence of 8 to 10 years, the prosecutors themselves asked for only 2 years in light of Hawkins’ age and lack of a previous criminal record. Judge Brown took into account both Hawkins’ age and the fact that he had not produced any of the videos. She sentenced Hawkins to 3 months in prison, followed by 3 months in home detention and 6 years of supervision. Some of the Republican Senators objected that Judge Brown was too lenient. I think she was too tough because what Hawkins did shouldn’t even be a crime. Here’s my reasoning. I think that it’s worse to murder prepubescent boys than to take videos of them having sex. It’s also worse to murder adults than to take videos of prepubescent boys having sex. But as far as I know, there are no laws saying that news channels can’t show people, whether boys or adults, being murdered. Think back to that horrible day, September 11, 2001. How often did news stations show the sickening collision of the second major airplane crashing into one of the World Trade Center buildings? I probably saw that crash more than 20 times. I found it horrible but it was hard to turn away. I watched multiple murders. Also, on that day, a friend and I saw a picture in a newspaper of a man upside down falling from one of the World Trade Center buildings. Yes, it was technically suicide but really it was murder. So I viewed that murder. What if I had shared the video of the plane crash (multiple murders) or the picture of the man who had jumped out the window to his certain death (a single murder)? Should I have been charged with a crime for sharing a video or a picture? And if I shouldn’t, then why should what Hawkins did be a crime? You might argue that it has to do with incentives. If people aren’t penalized for watching child pornography, there will be more demand for child porn. And if there’s more demand, it’s likely that more will be supplied. That’s a good argument. But let’s apply it to the murder case. We have reason to think that some murderers who do very visible murders do it for the publicity, even if they won’t be around. I remember reading after the fact that a man in Sacramento murdered 5 people on September 10, 2001 and left a videotape in which he stated that he would go out in a bigger way than Tim McVeigh, the OKC bomber. Of course, it was forgotten, except by the families of the victims, for obvious reasons. But the point is that he did it in part for the publicity. So when news stations broadcast murder scenes they are adding to the incentive for potential murderers to become actual murderers. Yet the news stations do so completely legally and many of us watch completely legally. So the incentive argument isn’t enough of an argument. What is? So far I can’t find a good argument that says that there should be no law against watching and sharing videos and pictures of murder but there should be a law against watching and sharing videos and pictures of child pornography. But I’m open to being persuaded. (0 COMMENTS)

How much thought do you put into how you acquired the food you eat? I don’t mean where did you  buy it, but who grew it, found it, caught it, killed it? I admit that the answer for me is, “not much.” I have a small garden patch in the summer and forage a bit in the spring and fall, but otherwise… I buy it. Washington Post columnist Tamar Haspel, on the other hand, knows lots more about the origins of her food. A little over a decade ago, she and her husband embarked on a “first-hand food” odyssey; at one point almost 30% of their caloric intake was from food they’d grown, caught, or killed themselves! So why did she do it? That’s how this episode starts, as EconTalk host Russ Roberts welcomes Haspel back to the show. Haspel recounts that the most vociferous reactions she’s received about the project are from those outraged that she finds eggs from her backyard chickens taste no different from store-bought ones. But Haspel also tells us that her new book, To Boldly Grow, is indeed about food, but it’s also about trying new things, acquiring new skills, and testing our boundaries. So let’s hear what you took from this episode.     1- How did Haspel’s experiment with first-hand food begin, and why? Why wasn’t she interested in self-sufficiency? How did the experience change her ideas about food? Have any of your ideas about food changed since listening to this episode?   2- What were the biggest problems she encountered in her quest for first-hand food? Roberts is quick to point out that her practice was not lucrative, and may even be perceived as a “luxury.” What first-hand food practices might actually be lucrative, and why? Do you have any experience either saving or making money first-hand? Tell us about it.   3- Haspel says her book is as much about the acquisition of skills as it is about food. Which of Haspel’s new skills most struck you, and why? How did her new skills better enable her to talk with people very politically and philosophically different than her? Are there any similar skills you’ve been inspired to try? Is the idea of mastery as underrated as Roberts suggests?   4- Haspel’s experiment started by trying to eat one thing every day that they acquired first-hand. Could you do it? Where would you start? What would be off-limits for you? Explain.   5- How does our predominantly urban lifestyle affect our diets, according to Haspel? Besides focusing on first-hand foods, what other means can you suggest by which we might achieve the same ends? (0 COMMENTS)

What is real education? What can colleges provide their students? Pano Kanelos, president of the new college-to-be in Austin, UATX, talks with EconTalk host Russ Roberts about the nature of education, what the Great Books can teach us, and how we should rethink college education in today’s world. The post Pano Kanelos on Education and UATX appeared first on Econlib.

Reagan’s famous quip is a bit of a contradiction, but nonetheless gets at something important about life. We cannot live effective lives without some level of trust, but blind trust can be quite counterproductive.In a book entitled Trust, Francis Fukuyama showed that a certain type of social cohesion is associated with greater economic success. Corporations tend to do better in societies where people are willing to work with strangers, whereas the private sector in low trust societies often fails to evolve very far beyond small family-owned firms.  Governments are also more effective in high trust countries.I’ve met people who told me that they weren’t getting vaccinated because they didn’t trust the vaccines (and by implication the authorities that recommended vaccines), and were instead relying on a drug not recommended by experts—ivermectin. This got me wondering if this was a general pattern or just the people I happened to meet. In Europe, there is a vast gap between vaccination rates in the east and the west.  (This is from November 2021): While 75.6% of European Union citizens are fully vaccinated, the share in Bulgaria is 26.2% and 39.6% in Romania. In countries outside the EU, the numbers are even bleaker. Only 20.2% of Ukraine’s population, and 36.3% of Russia’s, is fully vaccinated. What is wrong with Eastern Europe? In a word: disinformation. The region is awash in it, a legacy of the breakdown of public trust in governmental institutions after communism. Feverish conspiracy theories have gripped these countries like the coronavirus’s shadow. A Ukrainian doctor recently summed up the situation in her country: “Fake stories have spread widely, making people believe in microchips and genetic mutations … Some Orthodox priests have openly and aggressively urged people not to get vaccinated, and social networks have been filled with the most absurd rumors. Ukrainians have learned to distrust any authorities’ initiatives, and vaccination isn’t an [exception].” In contrast, ivermectin is extremely popular in that region: Veterinarians have seen a rush on doses of ivermectin meant for large animals as people battle to get hold of doses meant for humans, while black markets cash in and a fervent media campaign pushes inconclusive research. The Czech Republic now allows its off-label use, while Slovakia imports tens of thousands of doses. Promising research on the drug’s potential to treat and prevent coronavirus, combined with desperation over rising case numbers and deaths and a tidal wave of disinformation, has led to use of the drug skyrocketing in Central and Eastern Europe, as well as Latin America and South Africa. . . . The bombshell arrived on December 8, when U.S. physician Pierre Kory spoke before a Senate hearing on early outpatient treatment for coronavirus. Ivermectin, alongside other medicines such as vitamin C, zinc and melatonin, could “save hundreds of thousands of people,” he testified, citing more than 20 studies. . . . Kory’s appearance reverberated across the globe. . . . Many miles away, in South Africa, a black market for ivermectin soon emerged. In Romania, stocks of ivermectin at both human and veterinary pharmacies were reported to be depleted in January.  Ivermectin has become so popular in places like Peru that it is increasing difficult to find enough non-users to do a clinical testy: [C]linical trials in Latin America have struggled to recruit participants because so many are already taking it. “Of about 10 people who come, I’d say 8 have taken ivermectin and cannot participate in the study,” says Patricia García, a global-health researcher at Cayetano Heredia University in Lima and a former health minister for Peru who is running one of the 40 clinical trials worldwide that are currently testing the drug. “This has been an odyssey.” Interestingly, Peru has the highest official rate of Covid deaths in the world, roughly 650 per 100,000.  But official death tolls can be misleading, and many believe that excess deaths are a far more accurate measure of Covid mortality.  The Economist reports that 11 of the 12 highest excess death rates are in Eastern Europe: Bulgaria’s excess death rate (nearly 1% of its population) is particularly shocking.   BTW, excess death rates in a few countries with extremely low Covid mortality were actually negative; as social distancing resulted in fewer cases of the flu than would normally occur.  So even the excess death data may undercount the true death toll for Covid itself.  Also note that while the US excess death rate (337 per 100,000 in mid-February) is below that of Eastern Europe, it is far higher than in Western Europe and Canada (and higher than the official figures).  To be clear, I do not believe Ivermectin directly causes more Covid mortality.  Most experts believe it has little effect, while a few claim that it is beneficial.  Rather, I suspect that a third factor—low social trust—explains both the high use of ivermectin and the very low vaccinations rates in Eastern Europe.   But there is also a risk that the people I met are not an exception; there’s a risk that many people around the world are avoiding vaccines because they view ivermectin as a substitute.  In other words, a risk that ivermectin is crowding out vaccination. If so, that would be very unfortunate: Derived from a compound discovered in a soil microbe in Japan, ivermectin has been called a “miracle drug” and “the penicillin of COVID” by Pierre Kory, a critical care physician in Madison, Wis. Kory is president of the Front Line COVID-19 Critical Care Alliance (FLCCC), a group of physicians and scientists who champion ivermectin, along with other drugs and vitamins with dubious efficacy against COVID. The organization, along with two others called the British Ivermectin Recommendation Development (BIRD) Group and America’s Frontline Doctors (AFLDS), have drawn criticism from many other physicians and scientists. Yet treatment protocols, links and videos from these groups are sweeping through social media, promoted by vaccine skeptics. The notion that ivermectin is a miracle medicine gives people who reject vaccines a false sense of security, says Daniel Griffin, a physician and infectious disease researcher at Columbia University and Chief of the Division of Infectious Disease at the company ProHEALTH. A recent poll by the Economist and YouGov indicated that a total of about 56 percent of people who believe ivermectin is effective against COVID either do not plan to get vaccinated or are unsure about the vaccine. But unlike the data supporting vaccines, Griffin says, the evidence behind that use of ivermectin is questionable and unclear.  [My hypothesis works better for Eastern Europe than for Peru, which has a good vaccination rate.  The vast majority of deaths in Peru occurred before vaccines were widely available. In contrast, Covid death rates in Bulgaria remained very high even after vaccines were widely available.] Back in March 2020, the experts told the public that masks were not effective. I did not believe them.  That wasn’t because I had expertise in the area; rather it was because their rationale made no sense.  We were told that the masks were desperately needed by doctors treating Covid.  I though to myself, “Well, if masks are ineffective, why do we need to reserve them for doctors?”  We were also told, “Don’t rub your nose”.  The best way to stop me from touching my nose when it itches is with a mask.  That’s what I mean by, “Trust, but verify.”  I trust that the widespread use of masks by medical personnel probably occurs for good reasons.  But I also verify the pronouncements of authorities by considering whether their recommendations make sense. Subsequent studies showed that masks are modestly effective at reducing Covid among the general public (mostly protecting others, not the mask wearer), and the experts have now come around to my view. One reason I trust the authorities on vaccines is that I’ve done my own look at the data and found that areas with low vaccination rates tend to have much higher Covid death rates, especially in the period after vaccines were available. (Obviously not in 2020.)  On average, the views of experts on a technical issue will be superior to the views on non-experts.  Thus my default position is to trust the experts more than I trust my own intuition.  But I never stop there.  Where possible, I also look at the evidence to see if it makes sense. The mistake some people make is to reflexively distrust experts and instead trust random people on the internet that are telling them what they want to hear. PS.  My read of the ivermectin data is that a lot of low quality studies say it’s effective and several high quality studies say it is not.  Given my general view of the biases in scientific research toward positive results, that’s not a very promising picture.  (This also makes me skeptical of the vast majority of published economic research.)  Overall, I am agnostic on ivermectin’s effectiveness, and believe it might or might not have a modestly positive effect. But evidence in favor of other generic drugs seems stronger than for ivermectin, so I personally would not take it without seeing further evidence of its effectiveness. PPS.  Interestingly, Uruguay seems to have the lowest Covid death rate in South America.  It also has a relatively high level of social trust by Latin American standards. (0 COMMENTS)

Why has “character” become such a polarizing word in the world of education? According to Angela Duckworth, the guest in this episode, we’re teaching character in schools no matter what. And that’s partly why she started Character Lab a decade ago. She joins host Russ Roberts to talk about her quest to unite teachers, parents, and science to make character education more intentional and less accidental. So how did the notion of character become so out-of-fashion, and what are we missing in schools today if we don’t attend to it? School remains the place where young people spend the most time, so how can we make the most of it? As always, now we’re interested in your thoughts.     1- What do you think the most compelling arguments are for keeping character education out of schools? How does what Duckworth means by character (think Aristotle and Martin Luther King) differ from the way we usually hear character [education] referred to? What should be the role of schools in young people’s character development?   2- Russ asks Duckworth what will be different about the 21st century. How does she respond, and why is she so hopeful about what’s to come? To what extent has she convinced you?   3- A question on which there may not have been as much resolution as listeners may have liked: Is character fixed? Can a person really build character? What does Duckworth have to say? What do you have to say?   4- Roberts was keen on the idea of a lab. Are schools character labs in the way he suggests? Explain.   5- Duckworth speaks at length about grit as a character trait, and her efforts at trying to “reverse-engineer” achievement and effort. How is grit different from productivity? What role does “toggling” play in achievement, and how might grit contribute to an individual’s happiness (think alignment, harmony, and/or flourishing)?   Bonus Challenge: Russ opines that it would be hard to put Duckworth’s’ message on a bumper sticker. But we bet you might be able to do it. So give it a whirl, and share your ideas. You just might get some EconTalk swag in return…   (0 COMMENTS)

In the Summer 2018 semester, I taught my first college-level course. The course was Economics for the Citizen. Economics for the Citizen is an introductory course for non-majors. My students were a mix of domestic and international students, and the international students were Chinese nationals. I began the semester’s first lecture with an allusion to the Garden of Eden and the Fall of Man, the opening story of the Biblical book of Genesis, Chapters 1-3. In that story, God creates humankind in the form of Adam and Eve. God then places them within the Garden of Eden, where they will want for nothing. The only restriction is that Adam and Eve do not eat from the Tree of Knowledge. Eve is tempted by a serpent and disobeys this restriction, and she shares the fruit with Adam. When God finds out, He kicks them both out of Eden to the barrens where they would know pain, toil, and hunger. This reference to Eden was to frame the economic problem of scarcity. There was no economic problem in Eden, where there was no want, where anything could be had without sacrifice. But since Adam and Eve were cast out, they had to struggle and toil to live. They faced the economic problem: they had indefinite wants but only limited means. They would have to make choices and face costs. In the lecture, I did not tell the story of Eden, and I referenced it without detail. After the class, I gave a quiz. On that quiz was a short-answer question to explain why Adam and Eve in Eden did not face the economic problem. When grading the quizzes, I noticed something peculiar: there was a stark contrast between the American students and the Chinese students: all the Chinese students got the question about Eden incorrect. In contrast, the American students all got the question right! The grade differential immediately set off a red flag in my mind: how could I explain this problem? I would have an answer the next day. Before class, one of the Chinese students pulled me aside. She told me my allusions in class were lost on the Chinese students. Eden is a standard reference to Americans, but it does not exist in the same way in many Asian cultures. Consequently, the Chinese students had no clue what I was talking about. Once she pointed it out to me, it became apparent: my teaching style was failing the Chinese students in my class! What was causing me to fail in my duties was a simple tacit assumption I had made; one I was not even aware I had made: Eden is a universally known story. Though a crucial assumption, it was never articulated nor even known by me to be a significant factor in my decision-making. In short, it was not a conscious choice I made, but a choice nevertheless that affected the output. Such tacit assumptions impact our thinking on ways too innumerable (and inarticulable) to list. Often, as is the case here, we may not even know we are making them. One of the merits of the concept of “checking your privilege” is to remember that our experiences shape our tacit assumptions. Everything we do or think is shaped by many factors, many of which we do not know. Another important takeaway from this story is that the dialogue between people drew such implicit assumptions to the fore. By “challenging” my expertise, the student forced me to articulate my point in a more informative manner. She (and the other students) became more informed once I explained my allusion (and altered my teaching style to accommodate their needs). Additionally, I became more informed of my decision-making process and the students’ needs. Overall, the information available to the participants increased, and everyone was made better off. Such knowledge generation could not have occurred if such dialogue was forbidden or discouraged. This story is simple but points to an essential part of Information Choice Theory. Challenges to experts incentivize them to reveal more information (in theory, the equilibrium result from such challenges is full information revelation). As more information is revealed, the experts become more aware of their tacit assumptions. Likewise, the nonexperts become more aware of their tacit assumptions. These challenges can be friendly (such as the student challenging me), or they may be adversarial (such as in a common-law courtroom). Regardless, the act of challenge, the dialogue, brings out the assumptions and increases information. Information (especially tacit) revelation does not occur without these dialogues, and we are worse off, information-wise. Experts must be meaningfully challengeable. Jon Murphy is a PhD candidate in Economics at George Mason University and Visiting Fellow at the Institute for an Entrepreneurial Society at Syracuse University. (0 COMMENTS)