Just finished Hrishikesh Joshi’s Why It’s OK To Speak Your Mind.  Fun book, suitable for campus-wide adoption.  My favorite passage: Now consider a person who conducts his mental life as wildebeest or sardines conduct their lives.  He just moves with the popular opinion of the time… The thing to think now is X, the thing to get outraged about today is Y; tomorrow it might be Z that one must express outrage about.  Such an individual may not conceive of himself as a copycat (we often have flattering opinions about ourselves) but as the milieu moves, so does he.  There’s little if anything by the way of “my social group thinks X, but is X really true?”  “Does X conflict with some other belief or ideal the group holds?”  “Of all the things going on in the world, is Y the thing deserving our attention the most?”  “Do the basic values taken for granted by my social group make sense?” “Of all the things going on in the world, is Y the thing deserving our attention the most?”  That’s the thought that comes to my mind whenever people talk about the news.  I even think this thought when I sympathize with the agenda the talkers seek to advance.  My internal monologue in such cases is, “You’re preaching to the choir, but why are you trying to make me feel upset about this low-priority topic?” Yes, I too occasionally discuss trivial matters, but I do so to amuse myself and others.  Not to spread negativity.  Thus, I have been known to share celebrity gossip, but I’m not trying to make anyone angry about the misbehavior of a famous stranger.  If anything, I try to make others see scandals in a humorous light, applying the test of, “Is the celebrity’s behavior worse than adultery?”  If not, why should any stranger feel upset about it? The main omission in Joshi’s book: He ignores what I consider the strongest selfish reason to speak you mind.  Namely: Keeping your thoughts pent up often leads to the misery of obsessive thoughts.  The best way to think about X all the time is to strive never to think about X.  (“Don’t think about pink elephants.”  “Never think about pink elephants.”)  That’s one of the foundations of exposure therapy. The second-best way to think about X all the time, however, is to strive never to talk about X.  Joshi could have strengthened his thesis by emphasizing, “Even if talking about X causes conflict with the people around you, weigh that against your own peace of mind.  Bottling up your thoughts hurts you deep inside.”  Corollary: If you can’t speak freely with the people around you, you should try to make new – and more sympathetic – friends. Another angle: The “New Age” idea that you should talk about your thoughts and feelings is deeply true.  And the “hard-headed” idea that there’s no point talking about problems you can’t take action to solve is deeply false.  Though nothing can change the past, simply sharing a traumatic event that continues to weigh upon you reliably makes you feel better. That’s why I have a standing offer to listen to anyone who wants to talk about their problems, an offer I’m renewing right now.  While I enjoy “solving” people’s problems, sometimes the best solution is simply letting a person speak their mind. (0 COMMENTS)

When we teach false things to our students there’s usually an explanation. Thus, today it’s trendy to teach about the “myth of the model minority”. But that claim is itself a myth, as Asian-Americans are indeed a model minority; at least if by model minority you mean relatively successful—and what else could it mean? Presumably there’s an agenda here; perhaps we don’t want other minorities to feel bad. In economics, we teach many different myths. Here I’ll list a few and then speculate as to what sort of hidden agenda might explain these myths. 1. We teach our students that before the Fed was created, our banking system was highly unstable due to a lack of regulation. Economists such as Larry White and George Selgin have punctured this myth. Less regulated banking systems in places like Canada were far more stable than the US system, and our worst banking panics and depressions occurred after the Fed was created.  Our banking instability was caused by misguided regulations. 2. I’m told that German students are taught that the hyperinflation of 1920-23 led to the rise of the Nazis. Actually, the Nazi party was quite weak as late as 1929, and then soared in popularity during the severe deflation of 1929-33. Think about the attitude of American intellectuals toward banking regulation, and the attitude of German intellectuals toward inflation, and then think about whether these attitudes might have been shaped by the myths that we teach our students. 3.  Our students are taught that stock prices reached wildly overvalued levels in mid-1929, and that it was inevitable that the “bubble” would burst.  In fact, stock prices were quite reasonable even at the peak of the 1929 stock boom.  Then 71 years later, a similar myth would be created about the stock boom of 2000.  Then 6 years later another myth about a housing price “bubble”. 4.  Our students are taught that FDR produced a rapid recovery from the Depression with a highly expansionary fiscal policy, and that the relapse into depression in 1937 was caused by a tight fiscal policy.  Actually, both events were caused by shifts in monetary policy.  Fiscal policy was not particularly expansionary under FDR (until WWII). 5.  Our students are taught that President Johnson’s deficit spending caused inflation to rise sharply during the 1960s.  Actually, Johnson did not run large budget deficits, and it was monetary policy that drove inflation sharply higher in the late 1960s. 6.  Our students are taught that supply shocks explain the high inflation of the 1970s, even though real GDP rose at well over 3%/year during 1971-81 and it was the nominal GDP growth of 11% that caused the high inflation.  In other words, monetary policy. 7.  Our students are taught that Reagan’s budget deficits boosted aggregate demand, producing the fast growth of the 1980s, even though growth in aggregate demand actually slowed during the 1980s. 8.  Our students are taught that the 1987 stock crash didn’t produce the sort of depression that the equally bad 1929 stock crash produced, because this time the Fed aggressively cut interest rates.  Actually, the Fed cut interest rates more aggressively after the 1929 crash.  It is accurate to teach students that monetary policy was more expansionary after the 1987 crash, but monetary policy isn’t about interest rates. 9.  We teach our students that the US government can borrow at very low rates because the dollar is the international reserve currency (the “exorbitant privilege”), even though most other developed countries borrow at lower rates than the US government. 10.  We teach our students that the Great Recession was caused by the crash of the “unregulated” US housing and banking markets even though the people that proposed that theory generally expected the recession to be much milder in supposedly “regulated” Europe, and even though the recession was actually far worse in Europe.  Of course the ECB had a much tighter monetary policy.  Perhaps we don’t want our students to think that central banks might have caused the Great Recession. 11.  We teach our students that the Fed did everything it could to prevent the Great Recession, but it was out of ammunition due to the zero bound problem, even though interest rates were not cut to 0.25% until mid-December 2008, a year into the recession and a time when output was already nearing the recession lows.  And even though the Fed enacted interest on reserves in October 2008, a contractionary policy.  And the Fed refused to cut interest rates after Lehman failed in September 2008.  Excuses made for the ECB are even more absurd, as they didn’t hit the zero bound until 2013. 12.  We teach our students that a foolish policy of “fiscal austerity” slowed the recovery from the Great Recession, even though the recovery sped up after fiscal austerity was enacted in January 2013 (due to easier money). 13.  Our explanation of the 2008 banking crisis focuses on big banks and subprime mortgages, whereas the biggest problem was small and mid-sized banks with bad commercial loans. 14.  We are told that in late 2007 and early 2008 we slid into recession because velocity slowed down—the Fed was printing money.  Actually, the Fed stopped increasing the monetary base in late 2007 and early 2008, and we went into recession despite velocity increasing. I see some common themes in these myths: 1.  We want our students to believe that fiscal policy is powerful and monetary policy is weak. 2. We want our students to believe that monetary policy is about interest rates. 3.  We want our students to believe that market economies are unstable, in need of regulation.  We want them to believe that asset price bubbles are real, and can cause problems. 4.  We want them to believe that big business is the villain and the government is the hero. To summarize, we don’t teach true facts, we teach facts that we’d like to believe are true.   (0 COMMENTS)

Larry Elder, running today to replace Governor Gavin Newsom if Newsom is recalled, recently committed to appointing a Republican as a U.S. Senator if current Democratic Senator Dianne Feinstein resigns. That one statement, combined with the fact that Elder is the front-runner, will probably cinch the election for Newsome. Of millions of Democrats who might not have voted, a substantial fraction will have probably voted to prevent what they see as that awful outcome. That means that they will vote not to recall. Given the ratio of Dems to Reps, that means that the recall will almost certainly fail. So was that an error by Elder? Not necessarily. We need to distinguish between Elder’s incentive and the incentive of those who want to replace Newsom. By committing to appoint a Republican, Elder appeals to a Republican base and gives them yet another reason to vote for him. Remember that Elder has two goals: (1) recall Newsom and (2) be the top vote getter for replacing Newsom. If Elder had refrained from committing to appoint a Republican, he would have helped achieve his first goal but he would likely have reduced the probability of being the highest-vote-getting candidate to replace Newsom, thus making his second goal less achievable. If he cares way more about his becoming governor than about recalling Newsom, his action is not necessarily an error on his part. Incentives matter! (2 COMMENTS)

Daniel Reeves, co-founder of Beeminder, thinks the book Climate Shock is extraordinarily convincing.  He also apparently has a great deal of respect for my intellectual integrity.  The upshot: Reeves has bet me at 2:1 odds that reading Climate Shock will convince me to support markedly greater government action to mitigate climate change. As we discussed the bet, I warned Reeves that: I feel bad to pretend I’m more open-minded than I really am.  The honest truth is that I would probably have to spend a couple years studying climatology before I felt capable of directly reviewing the evidence. And I think Reeves knows me well enough to be aware of my libertarian presumption. But he still wants to make the bet. Here, then, are the terms we’ve worked out.  Consider this an acceptance. 1. Bryan reads Climate Shock.  But feel free to skip the parts about short-term extreme weather events — that’s probably least compelling and least relevant to the long-term cost/benefit analysis. 2. Danny puts up $500 to Bryan’s $250 on Bryan doing a 180 on some important policy question related to climate change, such as supporting carbon pricing or subsidizing clean energy or carbon capture tech.  (Merely increasing Bryan’s support for repeal of existing government policies doesn’t count). 3. Bryan automatically loses the bet if he doesn’t finish the book by January 1, 2022. I have to say, this is an extremely flattering bet, since Reeves is trusting me to adjudicate the result myself.  I’ll do my best not to disappoint him! (0 COMMENTS)

During the final two decades of the 20th century, readers of the financial press were treated to one positive news story after another. Tax reform, immigration reform, deregulation, free trade agreements, investment liberalization, the end of communism, welfare reform, etc., etc. The list goes on and on.  I didn’t know it at the time, but I was being spoiled by good news. In the 21st century, progress seems to have come to an almost complete stop, and in areas like housing regulation (NIMBYism), things have gotten far worse. However there have been two bright spots. The Obama administration enacted the so-called “Cadillac tax”, which would have gradually phased out the massive federal subsidy on health insurance plans. That subsidy dramatically boosts health care costs, lowering the standard of living of average Americans. Then the Trump administration enacted a $10,000 cap on the deductibility of state and local taxes. This helped to make our tax system more efficient, and less annoying. (I no longer had to itemize!) It also made the economy more efficient by reducing the federal subsidy for state and local spending. Alas, I should have known that this was all too good to be true. The Trump administration repealed the Cadillac tax (with support from many Democrats), one of the most disastrous policy decisions in my entire life.  And the Biden administration now seems likely to water down the SALT cap. Check out this dreary Bloomberg headline (and subheads): The Democrats say they want to raise taxes on the rich to fund social welfare programs. But do they?  The SALT changes would be a massive tax cut for the rich.  And the Democrats also seem unwilling to eliminate the outrageous “carried interest” tax loophole that benefits billionaire hedge fund managers, who end up paying a lower tax rate than your plumber.  Even some Republicans oppose that loophole.  Many of the tax increases on the “rich” that actually do occur will likely be tax increases on the middle class disguised as “business taxes”.  (As if businesses pay taxes.) Sorry if I sound so cynical.  But after the 1980s and 1990s, I’m finding this new century to be quite depressing.  Even the movies suck. (0 COMMENTS)

You’ve no doubt heard the news that millions of American live in extreme poverty, in conditions akin to those in the world’s poorest countries. But is it true? In this episode, EconTalk host Russ Roberts welcomes Bruce Meyer to explore this claim. Meyer suggests that a lot of statistical flaws are to be found in the underlying studies. He is even part of team trying to create a better measure of US poverty, the Comprehensive Income Dataset Project. But before we get to that, let’s hear what you thought about other elements of this conversation. Share your thoughts with our online community in the comments, or use the prompts below to start your own conversation offline.     1- How is extreme poverty typically defined, and what are the main issues with this calculation, according to Meyer? Do you think transfer payments should be included as a measure of income in calculating poverty levels? Why or why not?   2- Roberts and Meyer spend a good bit of time discussing consumption versus income. When is each measure appropriate when considering poverty? How does using one measure over another influence the way we see poverty in America? Which do you think is a better measure, and why?   3- Meyers says he’s especially interested in how to measure what the government has done to reduce poverty over time. What does he think is missing here, and how might the CID project resolve some of these questions? Given his acknowledgment of positive effects, why doesn’t Meyer think a Universal Basic Income is a good idea ? To what extent do you agree?   4- What might allow for the United States “to have a system that encourages people to find meaningful things to do,” as Meyer would like? Put another way, as Roberts insists, “the system” works well for many people, but how ought we to help those for whom it doesn’t work?   5- Are economists too reluctant to report “good news” as opposed to bad? If so, what do you think accounts for this? (0 COMMENTS)

Six years ago, I began homeschooling my elder sons, Aidan and Tristan.  They attended Fairfax County Public Schools for K-6, becoming more disgruntled with every passing year.  Even though they went to an alleged “honors” school for grades 4-6, they were bored out of their minds.  The academic material was too easy and moved far too slowly.  The non-academic material was humiliatingly infantile.  And non-academics – music, dance, chorus, art, poster projects – consumed a majority of their day.  As elementary school graduation approached, my sons were hungry for a change. So what did we do?  In consultation with my pupils, I prepared an ultra-academic curriculum.  Hours of math every day.  Reading serious books.  Writing serious essays.  Taking college classes.  And mastering bodies of knowledge. In 7th grade, I prepared my sons for the AP United States History exam, and had them informally attend my course in labor economics. In 8th grade, I prepared my sons for the AP exams in European History, Microeconomics, and Macroeconomics, and had them informally attend my course in public choice.   While my sons’ objective performance and subjective satisfaction in middle school were both sky-high, my wife insisted that they try regular high school.  Back in those days, the political brainwashing at FCPS was modest, but the anti-intellectual pedagogical philosophy was already overwhelming.  I never liked high school, but at least in my day teachers actually taught their subjects.  Not so at FCPS.  With the noble exception of their calculus teacher, my sons’ high school teachers just showed videos and treated teens like babies.  After three weeks, my wife gave a green light to resume homeschooling. Silver lining: Since comedy is tragedy plus time, we’ll be laughing about those three weeks of regular high school for the rest of our lives.  Yes, a kid in their Spanish class really did raise his hand and say, “Spain’s in… South America, right?” Once Aidan and Tristan returned to homeschooling, we picked up the pace. In 9th grade, I prepared them for AP Calculus AB, World History, and U.S. Government.  They audited a GMU class on Western religion.  And taking advantage of Mason’s High School Guest Matriculant Program, they started studying Spanish. Why study Spanish, especially given my dim view of foreign language education?  Simple: Virtually every college has a foreign language requirement, and my sons want to be professors.  Like Homer Simpson, I believe that weaseling is a vital life skill, but in this case, I bluntly told them, “There’s no weaseling out of this.”  They were displeased, but worked hard.  I hired an excellent Spanish tutor to give them Spanish five days a week year-round.  And I asked their tutor to use the immersion method: ¡No Inglés! The results were phenomenal.  In months, the twins started speaking exclusively Spanish to each other.  The wishful thinking of, “You hate it now, but work hard and you’ll come to love it” came true for them. In 10th grade, they prepared themselves for AP Calculus BC and Spanish Language, while I prepared them for AP English Literature.  In case you didn’t know, my first big career goal was not to be an econ professor, but an English professor.  And I do love the subject, especially when you don’t take it too seriously.  My sons continued taking Spanish classes at GMU, skipping from first semester Spanish to third semester, and then skipping again to fifth semester Spanish.  Their Spanish tutor filled in the gaps so they practiced every weekday. Around the same time, my sons also launched the History Twins Podcast, and began doing (largely) in-person interviews with top historians around the world, most notably with Kyle Harper on The Fate of Rome and the role of disease in history. In 11th grade, the twins prepared themselves for the AP tests in Spanish Literature and Physics C: Mechanics, while I prepared them for AP English Language.  Despite Covid, all three tests still happened.  (Thank you, College Board, for rising to the challenge).  They also officially took a history class on modern Russia, as well as an independent study course where they learned to write their first history paper.  Under the guidance of my good friend John Turner, author of the magisterial Brigham Young: Pioneer Prophet, Aidan and Tristan used their knowledge of Spanish to dissect the great Mexican Mormon schism of 1936-46.  By early summer, their article was ready for submission to an academic journal.  And amazingly, by the time they applied to college, they already had their first refereed journal acceptance.  Seriously. When Covid closed the schools, I began homeschooling my younger kids as well, and the twins helped out by teaching a daily Spanish class.  Due to their poor attitude, my younger kids learned little Spanish, but my older kids did discover a lot about pedagogy. In 12th grade, the college application process took over my sons’ lives.  While they still prepared themselves for AP Statistics and Physics C: Electricity and Magnetism, filling out applications consumed almost the entire first semester.  Despite everything we’d accomplished, I was nervous.  The most reliable researchers I cornered told me that discrimination against homeschoolers was now mild, but short of a major lawsuit, how can anyone really find out? To cope, I gave my sons the same advice I give everyone in this situation:  Not only is admission random; funding is random as well.  So throw a big pile of dice.  In response, my sons maxed out the Common App, which allows you to apply to up to 20 schools. (They also applied to Georgetown, which stubbornly refuses to join the Common App). The college application weighed heavily on my students.  I raised them to think clearly and speak bluntly.  They knew to pull their punches on AP essays, but the whole college admission process is simply drenched in Social Desirability Bias.  If you write a personal statement that admits, “I want to attend your school because I need a strong signal to advance my career, and you’re selling the thirteenth-best signal on the market,” you won’t be getting in.  This was the one time I had to push them to do their work.  Tristan averred that the academic refereeing process (four rounds of revisions!) was easy by comparison.  My many pep talks largely fell on deaf ears.  Still, they soldiered on, and finally resumed their actual studies.  Intellectually, the highlight of their year was probably auditing my Ph.D. Microeconomics class. Soon, college acceptances started to come in.  Once the University of Virginia admitted them to their honors program, I stopped worrying.  Johns Hopkins, by far the highest-ranked school in the DC area, took them as well.  Then in early February, Vanderbilt offered both of them full merit scholarships.  No one else came close to that deal, so that’s where they decided to go.  And that’s where they are this very day.  (Hi, sons!)  If you see Aidan or Tristan on campus, be sure to introduce yourself.  They’re not attention hogs like me, but they have much to say about anything of substance, and are hilarious once you put them at ease. My general read: I think the median school probably did discriminate against my sons for being homeschooled.  Their SATs were 99%+, their AP performance was off the charts, they ran an impressive podcast, and they had a refereed history publication.  (At many schools, five such pubs would buy an assistant professor tenure!)  Yet they were waitlisted by Harvard and Columbia, and rejected by all the lesser Ivies.  All public schools accepted them; I don’t know if this stems from lower discrimination or just lower standards.  Nevertheless, the net effect of homeschooling was almost certainly highly positive.  My sons used their immense educational freedom to go above and beyond, and several top schools were suitably impressed.  The critical factor at Vanderbilt, I suspect, was that their faculty, not their admissions committees, hand out academic merit scholarships.   In my view, homeschooling has two goals. The first is preparing students to be independent adults.  On that score, we did great.  The twins will be not only great scholars.  Before too long they will be great husbands and great fathers.  As I told my friends years ago, “You can take those two to the bank.”  Even if they change their minds about academia, they have success written all over them.  Success, and character. Homeschooling’s second goal, however, is to give students a happy childhood.  How did we score on that count? The plain fact is that my sons grew up with very few friends their own age.  Critics will definitely blame homeschooling, but the truth is that the twins had few friends their own age even when they were in regular school.  They’re old souls, who naturally have much more in common with adults.  (That said, they are the most nurturing older brothers I have ever known).  And since the twins were homeschooled, they were able to socialize with hundreds of fascinating, accomplished adults.  We lived abroad for many months, and made friends in Germany, Britain, France, Switzerland, Denmark, Norway, Sweden, Spain, Guatemala, Mexico, and all over the U.S.  Especially Texas, where we spent three months of Covid.  And with the exception of those three awful weeks of high school and three agonizing months of filling out college applications, Aidan and Tristan were pleased as punch throughout. Yes, they missed their chance to have a normal high school experience.  They had something much better instead.  At least in their own eyes. Isn’t that just because I totally brainwashed them?  Though I get the brainwashing criticism a lot, I deny the charge.  Brainwashing is what conventional schools do when they drown you in Social Desirability Bias, and use intimidation to silence criticism.  What I practice, in contrast, is candor and friendliness.  I don’t use negative emotions to blackmail people into agreeing with me.  I speak my mind, and face hard questions with a smile.  Brainwashing?  No, but I freely concede that all my kids deeply trust me.  All false modesty aside, that’s because I’ve earned that deep trust with a lifetime of unblemished honesty.  While I occasionally respond to children’s questions with, “I’ll tell you when you’re older,” I sugarcoat nothing.  Ask any of them if you doubt me. In my work on parenting, I greatly downplay the effects of upbringing.  Why then did I bother homeschooling?  At minimum, I gave my kids a much happier childhood.  They never would have “adjusted” to regular school – not in a year, not in six years, not in a century.  And while it’s hard to be sure, I’m confident that I improved their long-run prospects as well.  If you find this inconsistent, remember that I gave my sons a family environment that was literally off the charts. Coda: I never claimed that homeschooling was for everyone… at least until Covid closed the schools.  Since our local schools finally re-opened, we sent our younger kids back to FCPS on an experimental basis.  From what I’ve seen so far, the schools are worse than ever.  FCPS is basically just daycare.  They’ve combined their long-standing anti-intellectualism with novel ugly brainwashing. Still, regular school remains a great place to hang out with your friends.  After three weeks, it looks like my daughter will do 4th grade at FCPS.  That’s fine.  Let her play.  Vali can prepare for her future when she’s older.  Simon, my son in middle school, has decided to take the other path.  Starting today, he’s back in homeschool.  He’s going to need a different curriculum than his brothers; if they’re old souls, Simon’s a young soul.  Math is non-negotiable, but otherwise he and I will work things out together.  Like Bilbo at the end of Return of the King, “I think I’m quite ready for another adventure.”  Six years from now, I’ll share his homeschooling story, too. (0 COMMENTS)

We—we, economists and supporters of individual liberty—owe it to Mr. Trump to have reminded us how a powerful state and crony capitalism are dangerous. In fact, state power and cronyism are the two faces of the same Janus. A powerful state has a lot to give and much power to take, so that “capitalists” come to it for privileges (for example, subsidies or tariffs) or to avoid restrictions. Speaking of Mark Zuckerberg and other tech executives, Trump just declared on Fox News (watch the video) in his usual way of speaking: People are sick. You know, Zuckerberg … used to come to the White House to kiss my ass. (The rare politician who is also a Latinist will no doubt recall what Livius, in Ab Urbe Condita (2, 32), said of the way Menenius Agrippa addressed the revolted Plebeians: “prisco illo dicendi et horrido modo,” that is, “in the quaint and uncouth style of that age.” See also my blurb on that story in a recent Independent Review article. But let’s move on.) The last sentence quoted from Trump above is an approximate characterization of rent-seeking, which is, more exactly, the hunt for government privileges. In this case, however, the two-way bargain between the privilege giver and the crony-capitalist hopeful was not consummated, presumably because the expected price for the favor was not enough. On Fox News, Trump seemed to explain as much: And then you see what they do about me and about Republicans, and it’s just sort of crazy. The goal should be that governments have little power to grant privileges and that, therefore, rent-seekers have little incentive to chase benefits through politics (as opposed to gaining benefits through market interactions). (0 COMMENTS)

Author and Microsoft executive Glen Weyl talks about radical reforms of capitalism with EconTalk host Russ Roberts. Weyl is worried about the concentration of corporate power, especially in the tech sector. But rather than use the traditional tools of antitrust, he has a more radical strategy for reorganizing corporate governance entirely. (0 COMMENTS)