In my most recent Defining Ideas article, “Let Freedom Rein in Big Tech,” I made a case against the kind of regulation of Big Tech that many on the right favor. In that article, I promised to lay out the problems with some of the regulations of Big Tech that many on the left favor. One such set of regulations is in the American Innovation and Choice Online Act (AICO), sponsored by Senator Amy Klobuchar (D-Minnesota). My further research surprised me. I had thought that this was a bill favored mainly by the left. But it seems to have populist anti-big-business support from both left and right. Five of the bill’s co-sponsors are Democrats and six are Republicans. That makes analyzing the bill more, not less, important. The fact that the words “innovation” and “choice” are in the bill’s title might suggest that the bill’s sponsors think those are good things. But what the bill would actually do, if implemented, is severely restrict innovation and choice when those innovations are undertaken by the Big Tech firms that are targets of the bill. Just as antitrust laws in the past seemed more designed to protect competitors rather than consumers, so with AICO. Moreover, what the proponents seem not to recognize is that innovation often occurs in unpredictable ways and that the firm with market power today is often, ten years later, the firm that has been displaced by innovative competitors. This is from David R. Henderson, “A Populist Attack on Big Tech,” Defining Ideas, March 3, 2022. I hadn’t realized until  I started to look into AICO how bipartisan it is. Another excerpt: AICO defines a “covered platform” as one that has “at least 50,000,000 United States–based monthly active users on the online platform” or “has at least 100,000 United States–based monthly active business users on the online platform.” It must also have net annual sales or a market capitalization greater than $550 billion. Why $550 billion? The answer is telling. Originally, the cutoff in the bill was $600 billion. But on February 8, 2022, the market capitalization of Meta, owner of Facebook, fell below $600 billion for the first time since May 2020. CNBC writer Lauren Feiner thought at the time that the lower market value could help Meta avoid being regulated under AICO. But no such luck. Senator Klobuchar quickly revised the bill to make the threshold $550 billion, which was below, and is still below, Meta’s market cap. If there was ever any doubt as to one of her targets, Klobuchar’s revision of the bill removed that doubt. I also dig into the “robber baron” issue. Read the whole thing. (0 COMMENTS)

Vladimir Putin, the Russian autocrat, repeats an old protectionist canard that few economists would admit in its nakedness after David Hume and Adam Smith studied the matter in the 18th-century. We have often heard remnants of the same discarded intuition from Washington, especially over the past half-dozen years. According to the Financial Times (“Russian Forces Seize Ukrainian Nuclear Plant After Fire,” March 3, 2022), Putin acknowledged that punitive sanctions imposed by Western government were harming his country, but that they (“we“) would ultimately benefit: In the end, we will only gain advantages from this, since . . . we will acquire additional skills. In other words, since protectionism, imposed by one’s friendly local government or by a foreign one, forces some degree of autarky on people would would otherwise trade, the latter benefit because they will have to eschew some division of labor and learn to do more things by themselves. This intuition is false. If it were true, individuals in any town would benefit from being forbidden to trade with individuals of other towns, and mutatis mutandis for individuals in every neighborhood, every street, and every house. Ultimately, following that logic, every individual should be banned from exchanging with any other individual. Or, to use a “revealed preference” argument (as economist say): if an individual, free to either make a trade or decline, chooses to trade, he thereby reveals that he evaluates the net benefit for him to be higher than the net benefit of not trading. This is a powerful argument that only an elitist or a paternalist can easily counter. (0 COMMENTS)

An old saying goes “Truth is the first casualty in war.” I’m not so sure. I think I’ve got a contender for the first casualty that’s either ahead of truth or tied with truth: rule of law. A basic rule of law principle is that governments don’t violate the rights of innocent people. But various governments around the world, including the U.S. government, seem to be relishing the chance to go after people in the Soviet Union who are thought to support Putin, even if they have violated no law. In his State of the Union address on Tuesday night, President Biden said: Tonight, I say to the Russian oligarchs and the corrupt leaders who bilked billions of dollars off this violent regime: no more. The United States Department of Justice is assembling a dedicated task force to go after the crimes of the Russian oligarchs. We’re joining with European allies to find and seize their yachts, their luxury apartments, their private jets. We are coming for your ill-begotten gains. Hold on. If you’re going after crimes, you should show that there is a crime before you take what you claim are the proceeds of the crime. Make your charges, take them to court, and then make your case. Until then, hands off their gains. Note 1: It looks as if the feds are going to use civil asset forfeiture to go after the assets. That’s just as contrary to rule of law, properly understood, for foreigners as it is for the fed’s many domestic victims. I give money to the Institute for Justice due, in part, to the fact that they fight back against asset forfeiture. Note 2: Calling them “oligarchs” proves nothing. The picture above is of a yacht owned by a company linked to Igor Sechin and seized by the French government. Postscript: I see that Tyler Cowen agrees with me. Good for him.   (0 COMMENTS)

I don’t remember meeting Professor Paul Cantor, but I read him voraciously, I admired him greatly, and I corresponded with him in the context of an upcoming collection of essays. I was shocked in learning that he died on February 26. Cantor was an accomplished literary scholar who, as David Gordon wrote in an obituary, “attended Ludwig von Mises’s seminar while he was in high school, and he had a lifelong interest in Austrian economics”. Such an interest in Austrian economics brought him to be that rare thing: an intellectual in the humanities, even more- a literary critic- who had some sympathy for capitalism. At one level, this sympathy emerged in the very fact that he was not a snob: together with his Shakespeare studies, he cultivated an interest in popular culture that he understood as a living thing, and sometimes a beautiful thing too. He wrote extensively on the matter, including his recent book The Invisible Hand in Popular Culture: Liberty vs. Authority in American Film and TV (2012), where you can find essays on John Ford and Martin Scorsese’s The Aviator but also on South Park and X-Files. Cantor’s essay on The Aviator (to which he had prefixed, in epigraph, a quote from Ludwig von Mises: “the first thing a genius needs is to breathe free air”) is one of my favourites. In that movie, Scorsese portrays Howard Hughes as “visionary and creative, even heroic” and celebrates his “perfectionism” as a businessman. Wrote Cantor: Precisely because the world does not satisfy him, Hughes is always out to change it and improve it. His obsessive perfectionism continually drives him to new heights of achievement. He wants the perfect motion picture, the perfect airplane, and even the perfect woman, and in each case he keeps on holding and remoulding reality to fit his vinery expectations. From the movie we take away the idea that “the thin line between madness and genius … cannot be drawn clearly,” but such a genius is clearly, and beautifully, identified with entrepreneurial activity. In Cantor’s work, it was quite evident that he had in mind the way in which Austrian economists try to understand entrepreneurship: besides the references to Mises and Hayek, it was his very description of the entrepreneurial role which smells of that tradition. Cantor’s perhaps most famous book, insofar as his work on pop culture is concerned, is perhaps Gilligan Unbound: Pop Culture in the Age of Globalization (2003). In this book he deals with four American shows (Gilligan’s Island, Star Trek, The Simpsons, and The X-Files) and reads through them an evolution of the American understanding of government and political power. I read the book ages ago (when it came out!), and I still remember the brilliant dedication; the book is dedicated to one of Cantor’s VCR players (younger readers may Google what such things were), which passed away in the attempt to record a Star Trek marathon on the sci-fi channel. In that work, if I do remember correctly, Cantor thought that the American audience was getting more skeptical toward government, as X-Files was cultivating such a skepticism. I wonder if such a trend, however broadly defined, still holds or not (I guess not). It is customary to lament, at libertarian gatherings, that we are relatively unsuccessful, as a movement, because we do not pay enough attention to pop culture and lack people who could master it. Well, such criticisms may be correct but scholars or political activists cannot turn themselves into novelists or movie makers only because they wish so, as these professions require very different talents. But scholars can take pop culture seriously and seriously analyse it. Paul Cantor did that, and I hope many will follow his example. (0 COMMENTS)

The war in Ukraine illustrates how difficult it is to be an autocrat on top of a command-and-control system. Vladimir Putin’s control-and-command apparatus is not as pure as that of the former USSR, if only because of the presence of oligarchs who have pecuniary incentives to run money-making businesses; yet, their main incentive is to stay in the good grace of the dictator. (I take “autocrat” and “dictator” as synonyms.) The cost of communications with the rest of the world has dramatically decreased for ordinary people, although Putin is trying hard to compensate for this with internal propaganda through state media. Putin’s regime illustrates the well-known flaws of a command-and-control system. The lack of a free press dramatically limits the autocrat’s knowledge of what is really happening in society (and in the military too). But he has little choice because a free press would directly endanger his tenure in the job, if not his life. His minions are often afraid to tell him the truth as they can be held responsible for the bad news. The dictator is “isolated and out of touch,” as Putin is said to be more and more. (On the economics of dictatorship, see Gordon Tullock, Autocracy [Springer, 1987]; see also my Econlog post “The Autocrat and the Free Press: A Model,” October 15, 2019.) The autocrat also obtains poor intelligence in military matters. His army is much less capable than he thinks; but an efficient one would of course represent a higher danger of coup against him. The military’s morale is low, in part because it is not easy to motivate a 20-year-old conscript to service missiles fired on women and children and to shoot foreigners whose lifestyles he probably envies. (“Some Russian Troops Are Surrendering or Sabotaging Vehicles Rather Than Fighting, a Pentagon Official Says,” New York Times, March 1, 2022) As Gordon Tullock put it, the life of a dictator is not an easy one, but there is no reason we should feel particularly sympathetic. No one is compelled by law to be a dictator. Despite the myth or dream of the benevolent despot, anyone who (like Tullock) shares classical-liberal or libertarian values is happy that a dictator’s life is difficult, and hopes these difficulties more than cancel the benefits he may gain from power and stolen money. The lower the net benefits an autocrat can obtain, the lower his incentives to get the job or create the job for himself. This is not denying that a cornered dictator may be a public danger for his subjects and, especially if he is armed with nuclear weapons, for foreigners. But this in turn does not mean that his violence should not be countered: resistance increases the cost to dictators, and the more so as if it affects their personal security. Opponents to a dictator, however, should make sure that they are not, in the process, moving themselves toward dictatorial power. The difficult life of the dictator makes everybody else’s life more difficult—except, at least for a time, for their minions and most important supporters and political clienteles. The current thinking about the war in Ukraine seems to be that, by intensifying its aggression, the Russian tyrant will win. But, suggests the Wall Street Journal (“As Russian Invasion of Ukraine Widens, the West’s Options Shrink,” March 2, 2022), this would likely not be the end of the story: The early fighting by Ukrainian forces and citizens portends an insurgency even if Russia were to take control of population centers and stand up its own government. “I think [Putin] will have an insurgency on his hand that is going to be extremely wearing and degrading to him, to his military and to his economy,” the European diplomat said. “Ordinary Russians will be paying the price of this hubris and this aggression.” (0 COMMENTS)

Are tradition and rigid social norms out of touch? Not according to Israeli author and computer scientist Moshe Koppel, the guest in this episode. On the other hand, warns Koppel, when you don’t like a particular tradition, you shouldn’t try to get rid of it so fast. Good social norms must evolve slowly. This conversation with EconTalk host Russ Roberts centers on Koppel’s notion of  “a Hayekian bottom-up evolution of morality versus alternatives.” The two discuss whether there should be a role for tradition in thinking about how to live. Koppel  insists that tribal norms can be a good thing; he tells a compelling story about Jewish refugees in a camp in Casablanca. Roberts allows they may play a role on solving collective action problems. So why do so many seem to bristle at them? And shouldn’t we worry about in- versus out-group effects? Parochialism? Insularity? Let’s hear your perspective on these questions. Use the prompts below and share your thoughts in the comments, or to start your own conversation offline. We love to keep the conversation going.     1- Koppel says there are four sorts of norms that are inherently tribal- norms with regard to food, sex, rituals, and transactions). Why do we need these rules like that, and what are they good for? Can you points to any such norms that are not doing what Koppel suggests they ought? Explain.   2- Roberts asks why we privilege reason over tradition, or have a tendency to see tradition as an actively bad thing? How would you answer this question? How does Koppel reply? With regard to having children, Koppel bets that the next generation of people are going to be those who got their genes from people who thought that you should have children. What do you think?   3- Robert points to the “new norm” of wokism to ask, what’s wrong with a fast-changing norm? Isn’t wokism just the next step in the cultural evolution Koppel speaks of?   4- Koppel points to four aspects of evolving norms. What are they? Do you believe each to be as significant as Koppel? Why? How does moral intuitionism work in tandem with codification to create new norms? Can traditionalism ever not be “conservative”?   5- What makes communities more adaptive than states, according to Koppel? To what extent have you found this to be true?   (0 COMMENTS)

In a previous post, I discussed the paradox that while certain cultural traits tend to be associated with the north and others with the south, when you cross from the northern part of a warm country to the southern part of its neighbor to the north, the pattern reverses. Thus, despite being further north, southern France has southern cultural features whereas northern Italy has northern cultural features. The same is true of Vietnam and China.  I provided a couple possible explanations: One hypothesis is that cultural change is gradual and continuous, and that those in northern Spain and Italy are not really like the dour and business-like northern Europeans, they only seem that way relative to their compatriots in the south. Another hypothesis is that people sort within each country, and that those who feel more comfortable with the culture of Milan or Barcelona migrate up there from the south. Tyler Cowen recently linked to a new study by Hoang-Anh Ho, Peter Martinsson and Ola Olsson that suggests my second explanation may be part of the story.  Here is the abstract (and note the final sentence): Cultural norms diverge substantially across societies, often within the same country. We propose and investigate a self-domestication/selective migration hypothesis, proposing that cultural differences along the individualism–collectivism dimension are driven by the out-migration of individualistic people from collectivist core regions of states to peripheral frontier areas, and that such patterns of historical migration are reflected even in the current distribution of cultural norms. Gaining independence in 939 CE after about a thousand years of Chinese colonization, historical Vietnam emerged in the region that is now north Vietnam with a collectivist social organization. From the eleventh to the eighteenth centuries, historical Vietnam gradually expanded its territory southward to the Mekong River Delta through repeated waves of conquest and migration. Using a nationwide household survey, a population census, and a lab-in-the-field experiment, we demonstrate that areas annexed earlier to historical Vietnam are currently more prone to collectivist norms, and that these cultural norms are embodied in individual beliefs. Relying on many historical accounts, together with various robustness checks, we argue that the southward out-migration of individualistic people during the eight centuries of the territorial expansion is an important driver, among many others, of these cultural differences. In the US, we may have sorted into “New York type people” and “California type people” in the post-WWII decades.  Indeed a new sorting may be occurring, with liberal New York types in NYC and conservative New York types in Miami.  Or liberal California types in California and conservative California types in Texas. (0 COMMENTS)

Building a bridge is costly: It takes labor and machinery and raw materials that have alternative uses. Does it follow that building it is a waste? No. Waste occurs when the cost incurred exceeds the benefit attained. Cost greater than zero does not imply cost greater than benefit. Does it follow that the bridge is worth building? No again. A bridge to nowhere might be built even though it is wasteful, if the few beneficiaries don’t bear the costs themselves. To know whether a particular bridge is worth building we need to compare benefit to cost. To count benefits and costs, we observe market prices and transaction quantities. None of us has access to a god-like perspective. Consequently, for normal private goods where costs and benefits fall on producers and consumers, economists normally defer to the judgments of the market participants who actually bear the costs about whether the benefits of an activity exceed its costs. Buyers presumably value a good more than the price they pay, or they wouldn’t buy, and producers incur average costs that are less than that price, or they would exit the industry. In the case of Bitcoin, the electricity bills for proof of work are ultimately paid by Bitcoin users, just as costs of production for bread and milk are borne by buyers of bread and milk. Bitcoin users pay directly when they pay blockchain fees, and indirectly when new Bitcoin is awarded to miners, enlarging the stock of Bitcoin and diluting the purchasing power per unit compared to what it would have been with a constant stock. These are the opening paragraphs of Lawrence H. White, “How to Think Straight about Bitcoin’s Social Costs and Benefits,” Alt-M, March 1, 2022. Larry does a beautiful job of applying basic tools of Cost/Benefit Analysis to Bitcoin. Almost everything we talk about in teaching Cost/Benefit Analysis is present in his succinct post: the role of market prices, the importance of benefits exceeding costs, irrelevant externalities (pecuniary externalities) versus relevant externalities, and deferring to consumers of goods rather than to government agencies. I recommend this article as a reading on any syllabus that does Cost/Benefit Analysis because it’s such a beautiful application of the basic tools. (0 COMMENTS)

At private, religious schools like mine, students have to get a certain number of credits for attending chapel or convocation or similar events in order to register and ultimately in order to graduate. It is a credible threat: we have had students complete all their degree requirements except for convocation and have to come back the following semester to complete convocation. Their degree is deferred by a semester. One way students can get a bunch of convocation credits is by participating in a cadre, which is a faculty-led student reading group. With the generous support of the Charles Koch Foundation, I offer a cadre every semester.  My student reading groups have probably been too ambitious in terms of the amount of reading I expect. From this point forward, I’m toning it down a little bit and asking students to read fewer pages more deeply. Cadres meet for eight weeks, and I have decided that I can get three distinct cadres from Paul Heyne’s Are Economists Basically Immoral? Are Economists Basically Immoral? is one of my favorite books (I wrote an essay about it for AIER here; Russ McCullough discusses it in a Liberty Classic essay here). First, Heyne writes with crystal clarity. Second, it’s available as a $0 PDF from Liberty Fund. Third, it approaches economics, justice, and Christianity with equal seriousness.   Here is how I have chosen to split things up. Economics, Ethics, and The Idea of the University I proposed this one for Spring 2022, and it looks like I will have about a dozen students. The cadre will ask broad questions about the purpose of a liberal education and how we can use its tools and insights (like the principles of economics) to evaluate and appraise our world. We will discuss the relationships between students and faculty under ideal circumstances and under actual circumstances, and I plan to bring in some of the insights offered by Jason Brennan and Phillip W. Magness’s Cracks in the Ivory Tower: The Moral Mess of Higher Education (that’s a book I’d love to use for a faculty reading group). Here is the reading schedule; where I have assigned two chapters per meeting in the past, the cadres I plan to lead going forward will only have one chapter per meeting.   Cadre 1: The Social Responsibility of Economists Does economics assume people are horrible? Does it teach that people should be horrible? How do the assumptions we make in economic analysis and the assumptions people make in different evaluations of the nature of humanity interact, sometimes complementing one another and sometimes appearing to exist in irreconcilable tension? Chapter 1—Are Economists Basically Immoral? Chapter 2—Economics and Ethics: The Problem of Dialogue Chapter 3: Income and Ethics in the Market System Chapter 4: Can Homo Economicus Be Christian? Chapter 16: Economics Is a Way of Thinking Chapter 21: Measures of Wealth and Assumptions of Right: An Inquiry Chapter 23: What is the Responsibility of Business Under Democratic Capitalism? Chapter 26: Economics, Ethics, and Ecology   Cadre 2: Economics, Theology, and Justice This cadre gives pride of place to the theologians, albeit as read by economists. The goal in this cadre is to listen carefully both to what, for example, the US Catholic Bishops in chapter 10 are saying and how Heyne is replying. Chapter 5: Economic Scientists and Skeptical Theologians Chapter 6: Christian Theological Perspectives on the Economy Chapter 7: Controlling Stories: On the Mutual Influence of Religious Narratives and Economic Explanations Chapter 8: Justice, Natural Law, and Reformation Theology Chapter 9: The Concept of Economic Justice in Religious Discussion Chapter 10: The US Catholic Bishops and the Pursuit of Justice Chapter 12: Christian Social Thought and the Origination of Economic Order Chapter 13: Clerical Laissez-Faire: A Case Study in Theological Ethics   (0 COMMENTS)

  Don’t Just Sit There: Undo Something I’ve been trying to think about what the days after Putin’s invasion of Ukraine remind me of. And I have. They remind me of the days after 9/11. Like over 90 percent of Americans, I was angry at the terrorists who murdered almost 3,000 people in one day. And like some similarly high percent of Americans, I’m upset at an evil man, Putin, who attacked another country. In the days after 9/11, though, I didn’t agree with what so many people were advocating: the USA PATRIOT Act, which took away a lot of our financial privacy and some of our liberties, and the invasion of Afghanistan, to name two. I wanted to keep our civil liberties and our already diminished financial privacy intact and I thought that U.S. Special Forces could get Osama bin Laden without the U.S. government overthrowing the Afghan government. And, of course, it turned out that it was U.S. Special Forces who got Osama bin Laden, not in Afghanistan but in Pakistan. While I’ve been loving watching brave Ukrainians take to the street with guns, make fun of Russian tank drivers, and show fellow Ukrainians how to operate a Russian tank, I’m against hurting millions of innocent Russians by taking down Russian banks’ ability to use SWIFT and I’m against the U.S. government getting in another war. The foreign policy analyst I’ve paid most attention to for the last few decades, one reason being that he never gets stampeded or bullied into favoring wars that the U.S. can easily stay out of, is Doug Bandow. He has a great article at antiwar.com today laying out why the U.S. government should stay out of this one. Now, if I could contribute $1,000 to someone in Ukraine to help fight the Russians, I would. Of course, I would want to make sure it gets to the right cause. But my understanding is that long-standing U.S. law has made this illegal. No way do I want the U.S. government to get into another war in Europe. There are three things I would like the U.S. government to do: lay off Iran, as co-blogger Scott Sumner has argued well and succinctly, so that the Iranians could increase oil output, bringing down the price; sell some oil from the Strategic Petroleum Reserve, bringing down the price and doing a little to reduce the huge federal budget deficit; and deregulate oil exploration and production. The first two would have an immediate impact on the output and price of oil, and the last would have a long-term impact. These previous 3 are instances of an approach I’ve taken for a long time. Given how much governments in the United States meddle in people’s lives, I’ve had a saying since about 1990: Don’t Just Sit There: Undo Something. In other words, look for the regulations, taxes, and spending programs that the government can eliminate or reduce where doing so would help the situation at hand. Postscript: Even the Swiss are getting into the act. And check out this statement from the same NY Times news story: Switzerland said it was departing from its usual policy of neutrality because of “the unprecedented military attack by Russia on a sovereign European state,” Unprecedented? Has this government official heard of Stalin and his 1939 invasion of Poland?   (0 COMMENTS)