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)

Mixing politics and science Freddie Sayers, at UnHerd, has an excellent 30-minute podcast with Cyrille Cohen, head of immunology at Bar Ilan University and an advisor to the Israeli government on vaccines. Cohen is so unlike Anthony Fauci. Fauci talks like a politician; Cohen talks like a truth-seeking scientist, maybe because he is. At the link, Sayers gives a summary of the main points. I was so pleased to see Cohen not only admit that closing schools was a mistake but also apologize for having recommended it. My favorite line comes at about the 14:35 point in response to Sayers’s question about whether it was strange to see the tremendous attacks on people who talked positively about mainstream concepts like herd immunity. Cohen replied, “If you mix politics and immunology or health sciences, at the end of the day you get politics.”   HT2 Todd Zywicki. (1 COMMENTS)

A Communist representative in the French National Assembly, André Chassaigne, probably expresses what many if not most people believe, in America as in France—that the role of politics is to respond to the needs of people. Is there anything wrong with that? Mr. Chassaigne just declared in an interview (Le Point, January 17, 2022): The rejection of political discourse … comes from the fact that politics has lost part of its ethics. … It ignores the fundamentals, which are to respond to the needs of people. Le rejet de la parole politique […] vient du fait que la politique a perdu de son éthique. […] Elle ignore les fondamentaux qui consistent à répondre aux besoins des gens. Along the same lines, George Bush famously declared, “when somebody hurts, government has got to move.” This is a fundamental point. The error lies in the failure to realize that the way government responds to the needs of people is, most of the times, by catering to some needs of some individuals to the detriment of other needs of other individuals. In order to give to some, the state must take from others. In order to help some satisfy their needs, the state must prevent others from satisfying theirs. The harmed individuals bring up their grievances and, in their turn, demand some privileges that will hurt somebody else. And so forth, up to the point where everybody is both assisted and harmed, a phenomenon called “churning.” An individual balance sheet is generally impossible to calculate except for some long-term government favorites. Dissension within le peuple de gauche (“the people of the left”), as they say in France, made more visible by the upcoming presidential election, illustrates a fact too seldom emphasized: every socialist (or, for that matter, every statist of the right) thinks that it is his own preferences that would be catered to under his preferred regime. But if they understandably don’t agree among themselves, how can they hope to satisfy “the needs of people”? Friedrich Hayek believed that the difference between socialists and classical liberals did not consist in conflicting values but in intellectual error over how society works and how it is impossible for the state to bring everybody to nirvana; he dedicated his The Road to Serfdom [University of Chicago Press, 1947], “to the socialists of all parties,” and it was not sarcastic. Mr. Chassaigne falls into the error or errors that Hayek was trying to correct. Economic illiteracy is deeper in France than in America. The “needs of people” in an ad-hoc policy sense has no ascertainable meaning except to the extent that political authority—politicians and bureaucrats or, at best, a numerical majority—determines what they are. In a free society, each individual decides what trade-offs he will make among all the things he “needs,” and brings his demand on the market, where is it in most cases better satisfied there than at a government window. (The featured image of this post is from a Venezuelan grocery store in 2015: socialism for the 21st century…). The invocation of ethics by Mr. Chassaigne may be sincere, although “ethics” is not a Marxist concept. However, invoking ethics in the political world is generally an indirect way to stake a claim on resources, affirm the priority of the speaker’s preferences, signal virtue, or move voters. Distinguishing between the positive analysis of the consequences of individual or collective choices on the one hand and, on the other hand, ethical values is not an easy task. It helps to be cognizant of the reflections of classical-liberal political economists over the past three centuries. Given a theoretically realistic view of how society works, one can ask whether some individual demands can be better satisfied by politics than by voluntary trade and interindividual cooperation. This is the million-dollar question among classical liberals and libertarians. With a few exceptions (including Anthony de Jasay), they have answered positively but with the condition that government power and action be strictly constrained (James Buchanan is especially interesting in this regard). In this perspective, the question is not how government policies can cater to people’s needs, but whether and how it can help maintain an autoregulated order where individuals and private groups can peacefully pursue their different goals. (1 COMMENTS)

People’s behavior shows that they place immense value on convenience.  Think about how much you dread calling technical support.  Doing your taxes.  Filling out medical forms.  Yet politicians almost never name “convenience” as an important value.  It just doesn’t sound good to say, “Sorry, we could save your life, but that would be awfully inconvenient for the rest of society.”  No politician has ever ended a speech with a resounding, “Give me convenience or give me death!” As a result, politics largely ignores convenience.  To repeat one of my favorite slogans: In daily life, actions speak louder than words.  But in politics, words speak louder than actions. The most blatant example in recent politics: school closures.  Given how little students actually learn in school, its only clear-cut benefit is daycare.  Yet during Covid, many schools across the country were closed for over a year.  Extraordinarily inconvenient for parents, especially moms.  Yet virtually no one publicly stated the ugly-yet-obvious fact that great convenience for tens of millions of parents vastly outweighs a few extra Covid deaths. By now, of course, lots of people are arguing for keeping schools open.  Yet even today, almost no one argues in the name of massive convenience.  Instead, they present arguments that are emotionally strong but intellectually weak.  Take a look at Naomi Riley’s piece in the City Journal.  Why shouldn’t we close the schools for Omicron?  Because there is largely anecdotal evidence that doing so increases child abuse.  The only relevant numbers she offers: And now the results are in. According to “Impact of ‘Stay-at-Home’ Orders on Non-Accidental Trauma: A Multi-Institutional Study,” presented last fall at the virtual American Academy of Pediatrics National Conference, the number of children experiencing severe abuse tripled during lockdowns. The report looked at data from nine pediatric trauma centers from March 2020 to September 2020 and compared it with data from the same span in the three years prior. Among children aged five and older, the number of abuse victims reached 103, up from an average of 36 before the pandemic. These may seem like small numbers, but they represent only the most extreme cases that led to hospital visits. Why talk about 67 extra cases of severe child abuse, which perhaps have other causes, instead of undeniable inconvenience for tens of millions of parents?  Because even a single case of child abuse curdles the blood.  And is therefore vastly more persuasive. David Leonhardt marshals a longer list of arguments against school closures: learning loss, mental health problems, suicide, gun violence, behavior problems.  The learning loss evidence is reasonable strong, but it is easy to believe that students will eventually catch-up once they return to school.  The rest of his case, however, is anecdotal.  And strikingly, Leonhardt never mentions parental inconvenience. The effect of school closures on convenience is both massive and bulletproof.  I’m almost sure that Riley and Leonhardt would strongly agree in person.  Yet they also instinctively know that the best argument against school closures will persuade next to no one.  In politics, even people with reasonable conclusions have to make unreasonable arguments if they want to win. Which speaks very poorly of politics.  Very poorly indeed. (0 COMMENTS)

In this episode of EconTalk, guest Lorne Buchman and host Russ Roberts discuss emergent orders in creative processes with a focus on Buchman’s book, Make to Know: From Spaces of Uncertainty to Creative Discovery. Buchman contrasts the “Make to Know” process in opposition to fully-formed epiphanies. Buchman is the president of ArtCenter College of Design in Pasadena, California and the host of his own biweekly podcast, the Change Lab Podcast where he has interviewed over 50 artists and designers about their ideas and careers. A recent interview from December with Google’s Ivy Ross is a great illustration of a leader with curiosity and drive who is successful both as an artist and as a businesswoman.   Two memorable arts focused case studies from the talk are about Keith Jarrett’s Köln Concert, and Elizabeth Bishop’s continual redrafting of one of her most famous poems, “One Art.” For the less artistically inclined the podcast is bookended with fascinating discussions of the creation of the Apple store by Tim Kobe and Steve Jobs and Hans Monderman’s transformative creation of traffic roundabouts. The color and variety of stories would make this book (and podcast) a rich resource for teachers and students.      1- Buchman uses the example of the difference between having a “North Star” (a goal) and a “vision” (a completed idea). How are those different? What is the experience like for individuals pursuing their projects in these different ways?    2- Buchman says he wants to explore alternatives to common conceptions of artistic creations as the result of genius, madness, or divine inspiration (things outside of an individual that are too limiting). Genius does exist, according to Buchman, but beautiful and creative works do come from people that aren’t geniuses too. Could knowledgeable observers distinguish between a work by a genius and the work of a non-genius using the “make to know” process? If so, how?   3- Constraints are often thought of as impediments to creation. However, many of Buchman’s stories involve creativity being heightened by working within constraints. Are some constraints actually freeing? If so, how so?   4- Creating great art and engaging in profitable businesses are often presented as very different kinds of activities. Buchman and Robert’s think they are more similar than they might be popularly understood. Are they right? If so, in what ways?     Want to explore more? Megan McArdle on Failure, Success, and the Up Side of Down – Econlib (econtalk.org) Angela Duckworth on Grit – Econlib (econtalk.org) Margaret Heffernan on Uncharted – Econlib (econtalk.org) (0 COMMENTS)

Devon Zuegel writes: Inflation hits some parts of the economy harder and faster than others. It’s obvious once you say it, and yet the way pundits and academics talk about inflation glosses over this reality. As a result, most people who haven’t had direct experience with high inflation have a flawed view of how it affects daily life. He then adds: Popular use of the term “inflation” makes it sound like the inflation rate is a single indisputable number that you can plug into a formula to make decisions. [Bold is his.] A pen pal recently made the following (paraphrased) comment in an email to me: Inflation isn’t actually a problem, since all it’s doing is changing the measuring stick. Businesses can just price it into what they charge, workers can just price it into their wage negotiations, and banks can just price it into the interest rates on their loans. Nominal prices go up, but on a relative basis, real prices are essentially the same. Unfortunately it’s not that simple. That model doesn’t factor in information asymmetry, time delays, or structural differences between economic actors. It can take years for an inflation shock to propagate through the economy and reach a stable equilibrium, and it only does so after wreaking havoc on people’s expectations about money and commerce. This is from Devon Zuegel, “Inflation propagates unevenly,” January 2, 2022. Zuegel is right. In fact, economists have a term for the uneven propagation of inflation: Cantillon effects. The term is named after late 17th century and early 18th century Irish economist Richard Cantillon, who studied the phenomenon. Then Zuegel goes on to give an example, writing: Current prices in the US illustrate the effect as well. The NYT writes that “prices have soared for physical products but have risen only modestly for services. The cost of gasoline is up 58% in the last year, while health insurance prices have fallen almost 4%. Meat prices are up 13%, dairy 1.6%. Boys’ apparel is up 8.4%, while girls’ apparel is down 0.4%.” Here’s the problem, and the problem is partly with Zuegel’s analysis and partly with inflation. The problem with Zuegel’s analysis is that he can’t say confidently, as he does above, that those very different rates of price change reflect the uneven propagation of inflation. In an economy with much lower inflation, there would still be changes in relative prices. Are Cantillon effects present in the prices he quotes in the above paragraph? Possibly. But it could also be mainly changes in relative prices that would have occurred without inflation. The problem with inflation is that we don’t know. Here’s more on Richard Cantillon, who is pictured above. (0 COMMENTS)