Is graffiti an art? Is alcoholism a disease? Is economics a science? Is bombing cities during wartime terrorism?Who cares? Art, disease, science, terrorism are just words. How I feel about graffiti, alcoholism, economics, and bombing doesn’t depend in any way on how society labels those activities. Words are just words.I base my judgment on other factors. Do I like graffiti? How do I believe alcoholism should be addressed? Do I believe economics is useful? Do I support bombing cities during wartime? Labeling those activities one way or another does not in any way influence the way I evaluate those things. David Henderson has an excellent post on the question of whether we are subsidizing the fossil fuel industry. I agree with the post, but have a slightly different take on the final sentence: Note: There is an issue, especially for libertarians, about whether preferential tax treatment constitutes a subsidy. I’m always a little torn about this. Yes, it’s unclear whether the term “subsidy” is appropriate for a tax preference. I’d add that it is also unclear as to whether the sort of tax preference David describes is appropriate. But I don’t believe the issue for libertarians is whether the activity should be called a subsidy. As with bombing cities during wartime, the real question is whether it is a good or a bad thing.  I’m not going to let the way Webster defines “subsidy” in a dictionary determine how I feel about a particular public policy.  (Or how Webster defines art, disease, science, terrorism, etc.)Consider the following information in David’s post: The biggest single item (see his Table 5-1) is $13.9 billion over 10 years for oil drillers being able to expense, rather than depreciate, intangible drilling costs. But the 2017 tax cut permitted expensing for investments in short-lived assets such as machinery and equipment. So the preference for the oil industry suddenly fell. That would make the $13.9 billion for, say 2021, fall, possibly all the way to zero. In my view, all investment should be immediately expensed.  So in one sense the oil industry preference is a good thing; this is how the tax code should work.  But we’d also like to see each industry treated equally.  So the favoritism shown to the oil industry before 2017 distorted the flow of capital, directing it to uses less productive than in other industries.  Does the good outweigh the bad?  I don’t know, but I’d say the answer does not depend on whether we decide to apply the term “subsidy” to this sort of tax preference. [Of course there’s also the question of externalities from burning fossil fuels, which makes the issue even more complicated.  But I’ll ignore that complication, as the main point I’m making applies even if there are no externalities involved.] The Atlantic has a very good article on the problems faced by electric car companies that try to sell directly to consumers.  They point out that New York has lots of subsidies for electric cars, whereas Florida does not.  But electric car sales are far higher in Florida, partly (not entirely) because Florida’s car dealership rules are far less restrictive. Even if New York’s subsidies and restrictions in some sense were to “balance out”, neither favoring nor impeding electric car sales, the policy regime would still be quite inefficient.  It’s not a zero sum game.  Both the purchase subsidies and the dealership restrictions are costly policies, considered in isolation.  It seems crazy to spend public funds that are raised by distortionary taxes in order to promoting electric car sales, while at the same time restricting those sales with barriers to direct sales to consumers.  It’s like driving with one foot on the accelerator and one on the brake pedal.  That wastes gasoline (or electricity.) PS.  The Atlantic article is worth reading.  I especially liked this paragraph: “If you want to see more rapid market penetration of electric vehicles, then prohibitions on direct sales are a major barrier,” he said. Crane frequently testifies on Tesla, Rivian, and Lucid’s behalf, but he says that he’s never accepted money from any of them. He wants to make clear that this is a no-brainer issue. “Whether you’re free market or pro-consumer or pro-environment or pro-competition, there’s something here for everyone,” he said. One of his proudest moments was getting the Sierra Club and the Koch brothers to sign a letter opposing the same law. PPS.  Taxation is theft?  Affirmative action is discrimination?  OK, but what do you think about the policies?  Utilitarians spend more time enjoying eating tomatoes that worrying about whether they are a fruit or a vegetable. (1 COMMENTS)

Adam Tooze has a remarkably thorough Substack post on the upcoming presidential election in Italy, which complicated mechanisms will set in motion on January 24. This is not a direct election but an indirect one. Italy is a parliamentary democracy and the President is elected, on a secret ballot, by the House, the Senate and a number of regional delegates: a total of 1,009 people. In the first three rounds of votes, the President needs a two-thirds majority to be elected; after that, a bare majority is enough. This year, Covid-positivity may be a factor for attendance. As a rule, the election of the President of the Italian Republic does not attract much of international attention, but this time is. As Tooze puts it, “the question has arisen of whether Mario Draghi should remain as Prime Minister for a limited term that expires in 2023 at the latest, or gamble on his elevation to the Presidency, which would keep him in power for seven more years”. The New York Times also has a piece by Jason Horowitz on the matter. Why is this election that relevant? Italy’s debt to GDP ratio is, after the pandemic, 162.5%. The country recorded strong growth in 2021 (6.2%) after a tragic 2020 (-8.9%). Moreover, it is the major beneficiary of the “Next Generation EU” program. “Having that money in the hands of Mr. Draghi has reassured global markets and European Union leaders and given Italy its best shot at modernization in decades.”, writes Horowitz. Its international credibility is good at the moment (such things in Italy come and go), largely because of former ECB Chairman Mario Draghi, who was appointed prime minister one year ago. Draghi’s government is supported by all major political parties, with the exception of the right-wing, nationalist “Fratelli d’Italia” (Brothers of Italy). The rationale for Draghi’s appointment is so explained by Tooze: How can Italy be steered through the rapids and set on a more positive course of development? Since this is a hard task for elected politicians, five times in recent decades the job of Prime Minister has been handed to a non-parliamentary figure. The most recent parachutist is Mario Draghi, recently retired from the ECB. He took office in January 2021 to oversee the spending of the NextGen EU package. This allocates over 200 billion Euro to Italy in grants and credits. This, if you like, is Europe’s gamble on using investment to accelerate Italian growth. Tooze is referring to governments led by former Bank of Italy governor Carlo Azeglio Ciampi (1993), former Bank of Italy General Director Lamberto Dini (1995) and former European Commissioner Mario Monti (2011). I guess the fifth PM Tooze has in mind is Giuseppe Conte, who headed the last two governments before Draghi’s. But though a non-parliamentary figure, Conte, a university professor who is now the head of the Five Stars Movement, cannot be considered a technocrat. Ciampi’s, Dini’s and Monti’s cases are quite different from each other. Let’s stick with the last two. Dini was called to form a government after Silvio Berlusconi had his first stint at governing the country for six months. One of the parties supporting Berlusconi, the Northern League, left its coalition. Hence Dini was entrusted with a caretaker government, which was not supported by Berlusconi and the right. In that circumstance, he succeeded in reforming the pension system and implemented a number of less visible reforms. Likewise, Monti was appointed after a Berlusconi’s government, in 2011. Italy was in the midst of a financial storm. Berlusconi’s credibility was very low, largely because a number of the most controversial aspects of his private life had emerged. Monti was supported by everybody but the “nationalist” right: Salvini’s Northern League opposed his administration and a group of right wingers left Berlusconi’s party, to establish Brothers of Italy, to be led by Giorgia Meloni. Monti reformed again the pension system (which had been “reformed back” after the Dini reform), increased taxes to cope with the financial crisis, and attempted some liberalisation. Draghi’s circumstances are quite different: he was appointed to spend money, not to put a check on spending. In the last year there weren’t many reforms which he can claim to his credit, though he can certainly claim a very successful COVID vaccination campaign. Other than this, his management of the pandemic has been “in line” with his predecessor, the Five Stars prime minister Conte, which is hardly surprising since they both counted on the same Health Minister, Roberto Speranza. The Draghi government was certainly less eager to renationalise everything than its predecessor, but it too emphasized the importance of public investment too and did not stop any of the nationalisations which begun with Conte. Why should Draghi become Head of State? Those who support him see this move as instrumental, leveraging his reputation for the next seven years. As a prime minister, he has another year ahead of himself, before elections are due in 2023. Very broad coalitions are seldom well behaved and, particularly in election years, they tend to create trouble, as all the parties will be busy finding ways to make their constituencies happier. Is the Head of State role non-executive and, thus, a bit detached from the possibility of having an impact over policies? Tooze mentions a very good article by Carlo Fusaro, that explains the importance of the President of the Republic. Such office is hardly merely ceremonial: Italy’s President is not Queen Elizabeth. In part, because of recent constitutional reforms, the office has increased its powers over time. In part, because, as Fusaro writes: …a political system that for years has not been able to bring forth stable governments and that appears to be in permanent evolution, ends up thinking that much (if not everything) may depend on who will be its guardian. The President is supposed to be the guardian of the Constitution, but is also the guardian of the political system. Italy’s political system has experienced a number of crises in the last few years, which coincided with the appointment of non-parliamentary figures as prime ministers that Tooze refers to. These crises were in part triggered by financial problems, but were also genuinely political crises: in 1994, Berlusconi looked inadequate to govern the country but the left did not feel like they could reorganise and win elections if they were called. The Northern League (that “seceded” from the Berlusconi coalition) did not want to go to the ballot, because, as a consequence of a pre-election deal with its former coalition partner, it was over-represented in Parliament. In 2011, the left again would have been a major beneficiary of the breakdown of the Berlusconi government, but no one wanted to be responsible of governing a country which appeared on the brink of default. In the last parliamentary term, things were a bit different: the absence of a clear parliamentary majority, together with the electoral success of the populists of the left and the right, made strange bedfellows. So we got first a government that put together left and right populists and then a government supported by the moderate and the populist left (ironically, the prime minister was the same). Then, on the one hand, the pandemic weakened the social fabric and advised for a larger majority; on the other, the fact that Italy was to benefit from “European solidarity” with the Next Generation EU fund created the conditions for a wider agreement among political forces, as the social groups supporting them each wanted to get their slice. But in a much embittered political scenario (like in the US, there is no question that the political rhetoric is far more destructive now than it was in the 1990s), for harmony to be engineered you needed a highly credible prime minister. Hence, Draghi. In his piece, Tooze sees a Draghi presidency as a stabilizing factor for Italy’s EU relationships, therefore pretty much in Brussels’s interest. The idea is that if Draghi were made President, in the event of a right-wing populist electoral breakthrough, he would have the authority to resist a government that embarked on an aggressive nationalist course that put Italy’s euro membership in doubt, thus risking a devastating sovereign debt crisis that through its entanglement with the Italian banking system would spill over into a banking crisis. For Europe this doom-loop is ominous. That is true, but you can look at it from another perspective. it is almost inevitable that the right will win the next elections. I see a Draghi Presidency not as a safeguard against such an event, but somehow as a life jacket for those very right wing politicians. Those who would gain the most out of a Draghi’s presidency are the right wing leaders Salvini and Meloni: they become far more plausible (or, at least, less alarming) candidates for the prime minister office, with such a pro-Europe champion as head of state. A man who is so internationally reputed as Draghi could not so much prevent the right from forming a government, but rather help them in adjusting their agenda and convince European partners that they are not so threatening as they seem. This explains why both Salvini and Meloni do actually look favorably at a Draghi presidency, though they have problems in openly advancing the hypothesis (at least, as of today) because it clashes with their rhetoric. Isn’t Draghi, after all, the “eurocrat” par excellence? Tooze makes much of President Mattarella’s (his mandate is due to end in a few days) veto on Paolo Savona as a Treasury Minister. Savona is a senior Italian economist, not necessarily right of center, who flirted with the idea of quitting the euro. He was not appointed Treasury Minister but was appointed European Affairs Minister, and later he was made President of the Italian SEC. In 2018, the veto by President Mattarella changed the composition of the first Conte government, the one supported by the populists of the right and of the left at the same time. Tooze sees the matter in terms of protection of Italy’s euro-membership and devotes much of his article to the nature of the EU/Italy relationship. I think perhaps some more context here is needed. The 2018 elections saw the the Five Stars Movement and the Northern League emerging as the two winners. They did not campaign on the possibility of a mutual alliance and, in spite of being the two main anti-system parties, they ended up forming a majority in Parliament, in perfect accord with the system’s rules. The President had the very difficult task of exploring different majority possibilities and arranging such a marriage. While both the Five Stars Movement and the Northern League were largely euro-skeptic, they did not campaign on a program for Italy to leave the euro (the League brought some strong eurocritics in Parliament, but that’s another matter), nor their electoral alliance was predicated on such an explicit platform. The Northern League was in an electoral coalition whose other main pillar, Forza Italia, was certainly committed to defend euro-membership. The President was concerned with the financial turmoil that the appointment of Paolo Savona, since the latter played with the idea of euro-exit in books and articles, might have triggered. The President’s concerns were more immediate and they, again, had a largely political background: a euro-skeptic government was not the outcome of elections in which this issue was in any way central to the debate. The main themes of that election round were immigration, security, tax reform. So, I do not consider this reading as particularly “kind” to President Mattarella. Plus, as said, Savona was made Minister for European Affairs: certainly not a portfolio as important as Treasury, but nonetheless one which brought him in touch with the European institutions. Sure enough, Italy’s President is more of an alchemist of the political system, particularly because the latter is often in a situation of instability with an inability to produce effective government coalitions. This increases the latitude of its power. A Draghi presidency would have its main strength in the fact that Draghi is personally credible with Brussels and other EU member states. But how big should a single man’s shoulders to be, to support a three trillion euros debt? Italy is “too big to fail and too big to bail”, as Tooze writes. Plus, its political system has problems in bringing together consensus and ability to govern: the people who have votes tend not to have much of a policy agenda, nor very visible administrative skills. How much of problem the country can represent for the Eurozone, we will see in the coming years. (0 COMMENTS)

Are California taxes too high? Well, seven members of California’s Legislative Assembly and five  members of the Senate think they’re not high enough. These 12 politicians have co-authored a bill to amend the California constitution to make tax rates permanently higher and impose an excise tax, payroll taxes, and a special income tax. These are the opening paragraphs of my short piece for the Institute for Policy Innovation. The piece is titled “Will California’s Government Raise Taxes Even More?” and appeared on January 19, 2022. I then very briefly lay out the proposed permanent tax increases that would be locked into the California constitution and briefly analyze them. Read the whole thing, which is not long. (0 COMMENTS)

I often see people claim that Modern Monetary Theory is increasingly influential.  I see no evidence for that claim. One problem is that people use the term MMT is two very different ways.  In some cases, MMT refers to a theory of how the monetary system works. It’s a model. In another context, MMT refers to a bundle of policies such as combined fiscal/monetary stimulus, the belief that Congress (not the Fed) should control inflation, job guarantees, a “Green New Deal”, etc.  As an analogy, the term ‘monetarism’ originally described the views of people like Milton Friedman on monetary policy.  But during the Thatcher years, I often saw people use that term to describe a pro-free market ideology.  Those are two very different definitions. The monetary model version of MMT has virtually no support among influential economists, on either the right or the left.  The right is almost unanimously opposed, and on the left the supporters are primarily little known economists at smaller schools.  That doesn’t mean MMT is wrong (I’m a little known economist who taught at a smaller school), but it does suggest that MMT is not influential.  People like Larry Summers, Paul Krugman, Janet Yellen, Greg Mankiw, etc., tend to be highly skeptical of MMT. One problem is that the MMT theoretical model is pretty incoherent.  Unlike most economists, I spent many hours reading a major MMT textbook, and I saw almost nothing in the model that would appeal to mainstream economists.  (See here and here.) Consider the following thought experiment.  In 1998 (when the economy is booming), the Fed suddenly does a big enough open market purchases to cut interest rates from 5% to 0%.  The MMT model implies that this has almost no impact on the economy, as you are just swapping one government liability (base money) for another (T-bills). Mainstream economists will never accept a model that produces that sort of implausible claim. A slightly more plausible case can be made for MMT having boosted the case for combined fiscal/monetary stimulus.  But even here, I don’t see much support for the claim of influence.  In 1999, Ben Bernanke recommended this policy to the Japanese.  Paul Krugman has discussed this option.  Indeed, when the economy is at the zero lower bound, combined fiscal/monetary stimulus is a fairly mainstream policy recommendation. MMT is almost universally viewed as a left-wing theory.  In that case, what should we make of the policy views of Donald Trump?  He presided over what was at the time perhaps the most recklessly expansionary fiscal policy in US history, which dramatically boosted the size of the budget deficit when the economy was already booming (in 2019).  In addition, he appointed Jay Powell to be chair of the Fed, and then complained that Powell’s policies were not expansionary enough.  And yet I hardly ever see people claim that Trump was an MMTer, instead they warn of MMT influence within the Biden administration.  But if MMT is to be defined as combined fiscal/monetary stimulus, then why wasn’t President Trump an MMTer? In the end, the false perception of MMT influence comes from lazy reasoning.  Real interest rates on government debt have been trending downward for 40 years.  Not surprisingly, governments have responded by increasing their borrowing, and economists have raised their estimates of the maximum safe level of debt as a share of GDP.  That’s just an empirical judgment, it has nothing to do with the acceptance of a radically different model of monetary economics. Now that inflation has become the number one problem, MMT seems to have faded away.  All of the focus is on what the Fed will do to bring inflation back to 2%, or lower.  But in the MMT model the Fed has no ability to control inflation; only Congress can do so (with tax increases or spending cuts.)  So the renewed focus on the Fed’s need to control inflation is an indication that MMT never seriously challenged mainstream economics.  It was just a fad, like the brief mania for price controls during the 1970s. (0 COMMENTS)

Back in 2011, many futurists expected online education to give traditional four-year colleges a run for their money.  I demurred, arguing that: Education is not primarily about teaching concrete skills.  It’s a stably wasteful way to sort people according to their intelligence, conscientiousness, conformity, etc. So what happens when an innovator claims to have a cheaper, easier substitute for traditional education?  The lazy and the weird gravitate to Cheap Easy U like moths to the flame.  As a result, employers correctly infer that graduates of Cheap Easy U are sub-par – and Cheap Easy U captures, at best, a niche market.  A sustainable business model, perhaps – but no real threat to the Expensive Painful Universities that blanket the land. As usual, I was happy to bet on my forecast – and the noble David Henderson agreed.  The terms: I propose that we use the official numbers from the National Center for Education Statistics’ Table 212.  2009 is the latest available year of data.  29.6% of 18-24 year-olds were enrolled in 4-year institutions.  I bet that in 2019, that percent will be no more than 10% lower.  Rounding in your favor, I win if the number is 26.7% or more.  If the number is lower, you win.  If the data series is discontinued, the bet is canceled.  Stakes: $100 at even odds. The 2019 numbers are now in.  Result: The relevant number rose from 29.6% to 30.4%.  David has already conceded.  To be fair, if the bet was based on 2021 data, I might have lost due to Covid.  And since I re-made this bet with other partners in later years, defeat may still be in the cards.  However, since those bets depend on 2025 data, I’m probably still safe. This brings my betting record to 23 wins, 0 losses. (2 COMMENTS)

Various friends are linking to Jonathan Chait’s recent article, “School Closures Were a Catastrophic Error. Progressives Still Haven’t Reckoned With It,” New York Magazine, January 17, 2022. It really is quite good. I found the analogy in the second paragraph below faulty: Social scientists have measured the factors that drove schools to stay closed last year. One study found schools with unionized teachers, more of which were located in more Democratic-voting districts, were more likely to remain all virtual. Another likewise found “local political partisanship and union strength,” rather than the local severity of COVID, predicted school closing. It is always easier to diagnose these pathologies when they are taking place on the other side. You’ve probably seen the raft of papers showing how vaccine uptake correlates with Democratic voting and COVID deaths correlate with Republican voting. Perhaps you have marveled at the spectacle of Republican elites actively harming their own audience. But the same thing Fox News hosts were doing to their elderly supporters, progressive activists were doing to their side’s young ones. There are two claims here. The first is that Fox News hosts were encouraging their elderly viewers not to get vaccinated. I’m not sure that’s true. I haven’t seen them say that. We quit watching Tucker Carlson a few months ago. I’ve been a much happier person now that I watch fewer than 2 hours of Fox a week. Maybe Chait watches Fox more than I do. So it’s quite conceivable that he’s right about that claim. But I must say that I have seen literally no one in the minutes I watch recommend what Chait says they recommend. But let’s assume, arguendo, that Chait is right about his factual claim. Does his analogy between Fox on vaccines and the elderly on the one hand, and progressives on schools and children on the other hand, hold up? Or, as cousin Vinny would say, does Chait’s case hold water? I say, as Mona Lisa Vito, would say, Chait is wrong. But I’ll leave the reasoning for that conclusion to commenters. (0 COMMENTS)

An entry in the “unsurprising facts” department. It occurred to me that Bryan Caplan should have contacted me by now to tell me that I had lost a bet to him. The fact that he didn’t led me to consider two possibilities: (1) I won and he’s purposely not telling me, or (2) I lost but he’s too busy to notice. I immediately rejected the first possibility. Bryan is way too honorable a person to do that. And it wasn’t exactly the second. Instead, it was that Bryan had forgotten the exact end point of the bet and thought that we had to wait another year to find out. It turns out we didn’t have to wait. Here was our bet, formulated in 2011: I [Bryan] propose that we use the official numbers from the National Center for Education Statistics’ Table 212.  2009 is the latest available year of data.  29.6% of 18-24 year-olds were enrolled in 4-year institutions.  I bet that in 2019, that percent will be no more than 10% lower.  Rounding in your favor, I win if the number is 26.7% or more.  If the number is lower, you win.  If the data series is discontinued, the bet is canceled.  Stakes: $100 at even odds. I lost and I lost spectacularly. It wasn’t just that the number we bet on didn’t fall. I don’t think Bryan would have been surprised to see the number go below 29.6%. What did it do? It rose. In 2019, it was 30.4%. I commented by email that I might have had a shot if we had bet on 2021 data. But if I had won, it wouldn’t have been because of the normal factors pushing potential students to other options. Instead it would have been because of the pandemic-induced shutdowns of in-person college. As I put it to Bryan, neither of us was betting on whether thousands of college administrators would go bonkers. One thing I feel good about: I think I’m the first person to lose a bet to Bryan who contacted him to tell him that before he contacted me. Am I willing to bet on that? No.   (0 COMMENTS)

A recent study by Lydia Cox showed that the steel tariffs imposed back in 2002-03 ended up doing more harm than good: In this paper, I study the long-term effects that temporary upstream tariffs have on downstream industries. Even temporary tariffs can have cascading effects through production networks when placed on upstream products, but to date, little is known about the long-term behavior of these spillovers. Using a new method for mapping downstream industries to specific steel inputs, I estimate the effect of the steel tariffs enacted by President Bush in 2002 and 2003 on downstream industry outcomes. I find that upstream steel tariffs have highly persistent negative impacts on the competitiveness of U.S. downstream industry exports. Persistence in the response of exports is driven by a restructuring of global trade flows that does not revert once the tariffs are lifted. I use a dynamic model of trade to show that the presence of relationship-specific sunk costs of exporting can generate persistence of the magnitude that I find in the data. Finally, I show that taking both contemporaneous and persistent downstream impacts into account substantially alters the welfare implications of upstream tariffs. And the same sort of result occurred when the US imposed high tariffs on Chinese imports.  Here’s The Economist: One reason why America levied tariffs was to encourage manufacturers to relocate there. Yet trade friction has in fact depressed business investment in America, suggests research by Mary Amiti of the Federal Reserve Bank of New York and others. The share prices of companies trading with China fared especially badly after tariff announcements. This reflected lower returns to capital and, by extension, weaker incentives to invest. All told, the annual investment growth of listed American firms was likely to have shrunk by 1.9 percentage points by the end of 2020. Aaron Flaaen and Justin Pierce of the Federal Reserve Board estimate that exposure to higher tariffs was associated with a decline in American manufacturing employment of 1.4%. The burden of higher import costs and retaliatory levies outweighed the benefits of being sheltered from foreign competition. (1 COMMENTS)

I have a modest proposal.  Every large bureaucratic organization – schools, corporations, charities, and of course every level of government – should create an Office of Unreasonable Rules.  The sole power of this Office is to hear complaints about unreasonable rules elsewhere in their organizations.  Should they determine that a rule is unreasonable, they (a) Grant the complainant an exception, and (b) Tell whoever made the rule to make the rule more reasonable. For example, at a certain university I know of, the Math Department only allows students to take placement tests for the next math course.  Even if a student is clearly able to leapfrog several classes ahead – for example, because they unofficially took the harder class and earned an unofficial A – they aren’t even allowed to try the placement exam.  Almost anyone can see that this is an unreasonable rule, but under the university’s current regime, there’s nothing the student can do about it.  If an Office of Unreasonable Rules existed, they would have recourse. Notice how my proposal modifies existing incentives.  Right now, victims of bureaucratic abuse usually give up in despair.  Their only option is to quixotically persuade the system to mend its ways.  With an Office of Unreasonable Rules, the victim has a clear selfish incentive to push back against unreason.  Namely: If they win, they automatically get an exception.  In the aftermath, the rule-makers have to mend their ways, but the victim doesn’t have to wait around and hope they do a better job.  In exchange for nudging the System in a better direction, they get relief. Wouldn’t this put rule-makers in a tough spot?  Indeed.  That’s a feature, not a bug.  If you think that bureaucratic organizations tend to cavalierly impose onerous rules, wouldn’t it be a good idea to pressure them to think before they boss?  The very existence of an Office of Unreasonable Rules would hang over rule-makers’ heads.  Not like the Sword of Damocles.  More like Jiminy Cricket. (1 COMMENTS)

Many regard the US Constitution as one of the greatest successes in history. But is it time for a change? And if so, how? In this episode, EconTalk host Russ Roberts welcomes back Mike Munger (for his 40th appearance!!!) to talk about changing constitutions, doing without them altogether, writing one, and whether they’re important. The conversation begins with Munger offering a general description of the role constitutions play in public choice theory, paying particular attention to Buchanan and Tullock’s landmark work, The Calculus of Consent. The conversation between Munger and Roberts covers a lot of ground, though the focus is Munger’s insistence on the need for rules about rules. You’ll find a lot of related content in Mike’s earlier conversation with Russ about his book (co-authored with Kevin Munger), Choosing in Groups.  For all of you out there who abhorred group projects in school, I think you’ll empathize. It’s hard to come to agreement- especially unanimous agreement- in a large group. And if that “group” is the whole country… Well, you see where I’m going. So let’s hear what you have to say about this episode. Share your thoughts with us here, or use the prompts below to start you own conversation offline. Either way, thanks for helping us keep the conversation alive.     1- How did Knut Wicksell influence James Buchanan‘s early work, and what was Buchanan’s later objection to Wicksell? To borrow Russ’ characterization, when you’re making rules that will impact a group, what can you do about The Jerk, who plans to be a free-rider? (And remember, according to Munger, The Jerk may not necessarily be a jerk…)   2- Munger introduces a famous question posed by Jean-Jacques Rousseau: ‘How can it be said that a man is both free and yet bound by wills not his own?’ How does Munger suggest Buchanan and Tullock answered this question, and what does it tell us about what constitutes consent? If consent is a necessary but not sufficient condition for coercion, what else is needed to justify it? Is there really such a thing as tacit consent?   3- What are Buchanan’s Relatively Absolute Absolutes, and how do they privilege the status quo? Why does Munger regard this as the weakest part of Buchanan’s theory? What are we to do about Relatively Absolute Absolutes that are bad– like racism or patriarchy?   4- How did Buchanan and Tullock’s feelings about the US Constitution and Declaration of Independence change over the course of their careers, according to Munger? Why does Munger suggest that the Founding Fathers were lucky to have had the failure of the Articles of Confederation?   5- So… should the US have a new constitutional convention? Why or why not? Why does Munger call this “one of the terrible-est ideas,” and to what extent has he convinced you? (0 COMMENTS)