Summarizing recent research, Bryan Caplan estimates, “It is very plausible that U.S. housing would be 50% cheaper under laissez-faire.” Why do we not live in that less expensive, freer world? “Because regulation is strangling housing supply, especially in desirable locations.” “Yes!” I hear myself saying, no doubt in unison with more than a few readers. Over the past year, mostly as a matter of curiosity and interest, I have kept tabs on a few housing markets across the country, including my local market. I am 23 and interested in buying a house in the next few years, so I want to have a sense of what is on offer in various areas, including but also beyond my own. If nothing else, it’s good to keep an accurate accounting of opportunity costs and available alternatives. Moreover, since housing is a major public policy issue, it’s good to be aware of what’s going on in markets outside our own immediate area. In central Indiana, there are houses to be had, for sure. We’re still building new homes, and have been for years, mostly in suburban subdivisions. And people come. Good schools and jobs in the area fuel demand. It is true that for some the dominant style of these suburban developments is an issue. Even the custom homes in these parts tend to look like simply larger riffs on the familiar planned neighborhood “McMansion”—a design hodgepodge of different architectural styles and elements. But obviously, for many people, the aesthetic tradeoff (if in their mind there is one at all) is more than worth it, as evidenced by people continuing to flock to suburbs like Fishers, Westfield, Zionsville, and Carmel. Exterior style aside, a new or recently built house around here tends to be a very nice and comfortable house on the inside. High ceilings, lots of high-efficiency windows and insulation, bedrooms for each of the kids, granite countertops and spacious modern kitchens, ample grassy backyards, finished basements, two-to-four car garages. These features are all quite common in this market. For even less money, one can find older ranch style homes that often have been updated with the latest appliances, durable floors, and sleek kitchens and bathrooms. Sometimes these have the added benefit of being situated on larger lots, in older and more-established neighborhoods closer to legacy businesses, restaurants, and entertainment. They tend not to have the square footage or open layout of newer homes, but for the childless family or budget-conscious buyer these refurbished single-story homes can be attractive. I say all of this just to paint a picture of some of the main options available to someone looking to buy a home on the north side of Indianapolis for less than half a million dollars. A quick visit to a site like Zillow would help the interested reader understand the situation even better. Of course, many people have no interest in residing in central Indiana and would prefer to live in a place like coastal California instead. This being another market I have followed out of curiosity with some regularity, I will paint another picture, and one that gets more to the core of the issues Caplan is talking about. In coastal California, between Los Angeles and San Francisco, there are fewer houses to be had, and they are rather significantly more expensive and typically quite a bit older than the houses in central Indiana. Dollar for dollar, they also tend to be smaller, with older fixtures, floors, and appliances. Usually they do not have basements, and large garages are less common. However, these California homes have one thing that the nice new dwellings of central Indiana do not have, and that is a location near the ocean, in a mild climate, and near coastal towns and cities. So far, so good. If this were the situation and California was simply out of feasible places to build new houses within, say, an hour of the coast, that would be the end of that—a basic supply and demand story. The market price of a widely demanded fixed-supply good would go up. And it can appear that this is what’s happening. But as Caplan is passionate to show—and as I find worth echoing—this is not a basic, “natural” market outcome. That imagined band of coastal California I speak of is not some kind of island or isthmus that has become full and reached developmental capacity (there is always the possibility of re-development anyway). Rather, it is a space in which governmental forces and personal prejudices—as well as self-interests—have aligned to make it incredibly difficult to build new homes. Here are a few of the main issues as I understand them. (Commenters, please do let me know if I have missed anything important.) Zoning restrictions severely limit the available uses of private property in non-urban coastal California. I am familiar with one area where the minimum lot size to build a residence is 40 acres—and I am quite confident that this is an area that more people would want to live in, if they could. Imagine the benefits of reducing the minimum lot size to one acre, or half an acre, in a place like this. Environmental regulation compliance costs and building fees and permits alone, even for a small single-family home, can approach $75,000 in a non-coastal designated area within an hour of the ocean. (My understanding is that a coastal designated area can be difficult to build in at all.) This atop the price of land and construction itself—and combined with the time-consuming nature of working with regulators and planners on a building project—all but prohibits middle-income people from settling new areas of the coastal land band. Then there are the attitudes and outlooks that sustain the current regulatory and zoning status quo. Some current California property owners do not want new homes built for reasons of pure self-interest. Nice new homes close to the ocean (and coastal towns and cities) will make the older homes in those areas less valuable (and probably also depress rents). Though again, opportunities to spruce up and profit from older homes do exist. Wanting to live in a place that has “character” (or some other characteristic less common in new houses) is a rational preference that some people might pay a premium for, especially in a world with a lot of new development. But at present, voting property owners seem to fear new development more than they anticipate it creating niche market opportunities. There is also a relatively common sentiment among coastal Californians—perhaps a product of coastal history and culture—that the areas in which they live have become “too crowded” and that there are “too many people and cars.” Some might add an environmentalist twist to this argument, but from the “build, baby, build” perspective, the basic problem remains. Lots of people have convinced themselves that more housing and more development will be bad for their regions and towns, no matter how it’s done. Current policy reflects their preferences. The dynamism a place like coastal central California could enjoy—that new construction and development have brought to central Indiana—keeps getting deferred. These are broad-brush pictures, I grant. But looking at the two side by side, a couple things become clear. We can build nice, comfortable homes in America—just look at a place like suburban Indiana, or Cleveland, or Austin. But there are completely unnecessary restrictions on building in places where more people want to live, like coastal California, that actively get in the way of people being able to live the lives they want to lead there. And that is one silly—but also seriously frustrating—situation. Fixing it will require both opening and changing quite a few minds. (0 COMMENTS)

Since Milton Friedman’s passing in 2006, his legacy has drawn considerable fire for all the usual reasons of political expediency and ideology. Both have come into play recently with special force over his ideas in the area of school choice. In the highly polarized politics of the present, it was perhaps to be expected that the charge of racism would be added to the list of particulars. On August 16, Jon Hale – a professor of education history at the University of Illinois – wrote what appears to be just such a piece in the Chicago Tribune  with the assertion that the history of school choice was “grounded in racism from the start,” and is “deeply connected to racial segregation.”[1] The situating of ideas with particular persons and their motives in time and place has a role in historical understanding. It is part of establishing context. In doing so, however, the historian has an obligation to understand an individual thinker in his or her own terms, giving a fair and full treatment of the views in question. What sets political propaganda apart from an authentic historical account is the degree to which the narrative abjures such an understanding of content and attempts to draw conclusions solely on the basis of the alleged opinions and motives of others. Known to philosophers and lawyers as the “association fallacy,” or “guilt by association,” juries and students alike are liable to be taken unawares if they are not paying close attention. For the real historian, the test of any narrative is to be found in how the content of thoughts and motives is handled. In the case of a scholar like Friedman, any serious account of his policy proposals must begin with an understanding of basic economic principles and an appreciation for the working out of market processes through time. Most especially, historians who treat with economics must plumb deeper than mere surface impressions. They need to have an awareness of the unintended consequences that follow from innumerable intentional acts. Mr. Hale evinces none of this in his short piece. He speaks of families “choosing the best schools” and the “reign of market forces,” but never tries to clarify what these might mean or how choice and market forces might work in time. And that is too bad, because Friedman made it abundantly clear what he was arguing for. A proper representation of his arguments by Hale would have required hardly more than one or two additional paragraphs. Friedman’s argument had nothing whatever to do with the particular aims of particular persons, but with the processes that arise from the freedom of individuals to choose, whatever their particular reasons might be. “The preserves of discrimination in any society,” Friedman took pains to show, “are the areas that are most monopolistic in character, whereas discrimination against groups of particular color or religion is least in those areas where there is the greatest freedom of competition.” And he went on to illustrate how that process actually works: “A businessman or an entrepreneur who expresses preferences in his business activities that are not related to productive efficiency is at a disadvantage compared to other individuals who do not.” (Capitalism and Freedom originally 1962, reprint 2002, p. 109). As the better sort of historian knows, these choices do not operate instantaneously but through time and are very much impacted by what governments actually do. In the case of school choice, Friedman’s model program is as sound today in its basic principles as it was then, with exactly the same powerful anti-discriminatory implications. Acceding that in the short run, some individuals might be willing to pay for discrimination, Friedman explicitly noted that discrimination “under a voucher plan can be prevented at least as easily as in public schools by redeeming vouchers only from schools that do not discriminate.” It also matters a great deal to the functioning of markets how much freedom of competition government is willing to allow between schools. And that is very clear in education markets. As imperfect as Hale thinks the municipal approach to education in Chicago is (For more information on Chicago’s voucher system and on school choice in general, see here and here), he nonetheless concedes that magnet schools have in fact contributed to desegregation, even though he regards this as only a “token” outcome. While one can accept that magnet schools have increased choice, it has to be pointed out, that these schools are not the equivalent of Friedman’s ideal of choice nor is the current voucher system currently in place, with its various limitations, the fullest expression of competitive market forces. So, what then does Hale’s example really tell us? To the extent that magnet schools have given greater choice to families, and that such choice has actually achieved desegregation, however Hale may wish to characterize it, that outcome rather undercuts Hale’s judgement—not Friedman’s. Certainly, where Friedman’s ideas are at issue, Hale is playing fast and loose with the facts when he asserts that school choice is “deeply connected to racism.” Hale then states the obvious: “How we choose to engage school choice in Chicago and across the nation will determine how our schools will serve communities disrupted and disenfranchised by the pandemic. The choice we face is ours to make.” Indeed, and I hope people will consider more freedom, not less, for right here is where the problem rests. The more the processes of choice are constrained, however well-intentioned the interventions might be, the less efficiently will those forces operate in the service of families and students. The willingness to associate a great thinker with policies and motives unrelated to his actual ideas indicates a lack of seriousness in the treatment of his work and the narrative that results becomes more innuendo than history. I hope that is not the case in Hale’s larger work, but if this short introduction is any indication, the implications are not promising.     [1] My thanks to Joseph A. Morris of the Heartland Institute for alerting me to this article. My thanks also to Don Boudreaux for his helpful comments.   Hans Eicholz is a historian and Liberty Fund Senior Fellow. He is the author of Harmonizing Sentiments: The Declaration of Independence and the Jeffersonian Idea of Self-Government (2001), and more recently a contributor to The Constitutionalism of American States (2008). (1 COMMENTS)

There have been lots of books written on the Great Recession.  So why do we need a new one at this late date? Because in my view the other books are wrong. And note that Friedman and Schwartz’s book on the Great Contraction came out 30 years after the event, whereas my new book (entitled The Money Illusion) was delayed by a mere decade. Furthermore, the recent Covid recession has few lessons for monetary policy going forward, whereas the Great Recession has lots of important lessons. Future recessions are likely to be more like the (demand side) Great Recession than the (supply-side) Covid recession. Nonetheless, there’s no question that my new book is poorly timed. I wrote hundreds of pages arguing that American recessions are almost always caused by tight money, right after we experience a once in a hundred year recession that was caused by a real shock—Covid-19. (The book was written years ago, long before Covid.  For reasons that I fail to understand there is a long lag in publishing new books.) My book would have greatly benefited from either of the following two scenarios: 1. Continued stable growth in NGDP after 2020, leading to a soft landing and proving that stable NGDP growth is best. 2. Another recession caused by a sharp drop in NGDP growth (or high inflation caused by excessive NGDP growth), proving that stable NGDP growth is best. I was 99% likely to get one of those two outcomes, but got neither. Oh well . . . And yet I prefer to focus on the bright side. Lots of claims that I made in the early drafts look much better today than in the late 2010s.  For instance: 1. I argued that bubbles don’t exist, pointing to the fact that what was once viewed as a tech bubble (in 2000) and a housing bubble (in 2006), now look much less like bubbles. Over the past few years both tech stocks and housing prices have skyrocketed, so my bubble skepticism looks far more persuasive today that in 2018. Can anyone with a straight face still claim that house prices were obviously overvalued in 2006? Or the NASDAQ in 2000? 2. I called myself a “supply and demand side economist”, viewing both sides of the AS/AD model as being important. I argued that the Great Recession was primarily caused by a negative demand shock, but bad supply side policies contributed to the slow recovery.  I specifically pointed to the fact that the removal of the extended unemployment benefits at the beginning of 2014 spurred rapid growth in employment. Today, the impact of bad labor market policies is even more obvious, as we have both a labor shortage and high unemployment.  Both sides of the economy are important. 3. I argued that the Fed should have tried to get NGDP (or prices) back up to the original trend line after the 2008 recession, and that doing so would have made the recession much milder. In 2020, the Fed adopted a watered down version of that idea (average inflation targeting), and did succeed in getting both prices and NGDP back pretty close to the pre-recession trend line. And low and behold, the recession was much milder than the previous recession, despite forecasts in the spring of 2020 that we faced a major depression. So I still feel pretty good about what I wrote before Covid, despite the abysmal timing of the publication. (0 COMMENTS)

The ethical issues [in equality of outcome] involved are subtle and complex. They are not to be resolved by such simplistic formulas as “fair shares for all.” Indeed, if we took that seriously, youngsters with less musical skill should be given the greatest amount of musical training in order to compensate for their inherited disadvantage, and those with greater musical aptitude should be prevented from having access to good musical training; and similarly with all other categories of inherited personal qualities. That might be “fair” to the youngsters lacking in talent, but would it be “fair” to the talented, let alone to those who had to work to pay for training the youngsters lacking talent, or to the persons deprived of the benefits that might have come from the cultivation of the talents of the gifted? This is from Milton and Rose Friedman, Free to Choose, p. 136. When I read that, I was reminded of Kurt Vonnegut, Jr.’s “Harrison Bergeron,” his short story that is a reductio ad absurdum of equality of outcome. (0 COMMENTS)

Let’s get two points out of the way.  First, I believe that a few conspiracy theories are true.  Second, Covid-19 might have escaped from a Chinese lab. Nonetheless, you should be very skeptical of most conspiracy theories, including one discussed recently by The Economist: A recent study of blood samples from 9,144 adults in 12 different regions of France found seven which contained antibodies against sars-cov-2, all of them taken in November 2019. An Italian lung-cancer screening trial has found samples taken in September 2019 which seem to contain anti-sars-cov-2 antibodies. Another antibody study suggests the virus was circulating at a low level in northern Italy at the same time, notably in Lombardy, a region which has close connections to Wuhan through the garment trade, and saw Europe’s first major outbreak of covid-19 in March 2020. . . . An early origin would fit with the timeline that lab-leak proponents tend to favour. Early this August, the minority Republican staff on the House foreign-affairs committee released an 84-page report arguing this case. It makes much of a small but deadly disease outbreak which took place at an abandoned copper mine in Yunnan in 2012. As drastic showed last year, a virus studied at wiv which had been taken from that mine is the closest known relative to sars–cov-2. The report sees importance in the removal, on September 12th 2019, of a database containing details of sequences and samples from the wiv. This is read as the beginning of a cover-up, and thus as the point when the authorities first knew something had gone amiss, arguing for a leak in late August or early September. The wiv says it was a response to cyber-attacks. There’s a tendency to view the construction of conspiracy theories as a process of adding up unrelated evidence, like scoring seven points on a passing touchdown in football, and then seven more on an interception return.  In fact, it’s not like that at all.  If this new theory is to be believed, then it suggests that Covid conspiracy theorists are not to be trusted, as it directly contradicts important points that they had previously been making. Until recently, conspiracy theories had a timeline that suggest the virus crossed into humans in late October 2019.  A big part of the conspiracy theory was based on the “fact” that three workers from the Wuhan Institute of Virology were hospitalized with flu-like symptoms in November 2019.  We were told that this was strong evidence that they had become infected with Covid, and that they were a likely conduit through which it infected the broader population. Obviously, if the virus were already circulating in Italy in September 2019, then the November 2019 Wuhan illnesses had absolutely no bearing on the origin of Covid-19.  By putting forth this new Covid conspiracy theory, they are unwittingly arguing that the previous arguments made by Covid conspiracy theorists are not to be trusted, not reliable.  Those November 2019 lab worker illnesses were not suspicious at all, not evidence of anything. [As an aside, I still think the original Covid conspiracy theory is more plausible, for reasons I’ll explain below.  My point is not that the November illnesses for lab workers is meaningless (although it is, for reasons I explained here), rather my point is that this new theory developed by GOP Congressional staff directly contradicts previous lab leak theories.] So what’s wrong with the claim that a Covid-19 cover-up began on September 12, 2019?  The answer is simple; it’s much too early to be consistent with the other information that we have about the progress of the pandemic. Just think about the implications of this claim.  We are told that September 12 was “the point when the authorities first knew something had gone amiss”.  So what did “the authorities” do about this disaster?  Apparently nothing.  They sat back and just watched as more and more Covid cases spread all through Wuhan’s population, even though due to China’s previous experience with SARS, and also because of their totalitarian government, the Chinese are more fanatical than any other country on Earth in terms of controlling epidemics.   Their zero Covid policies make even places like Australia, New Zealand and Taiwan seem lax by comparison.  And yet we are to believe that they purposely let Covid run wild until many thousands of Wuhan residents were infected, and then suddenly clamped down on things in mid-January, four months after the cover-up began. I hope it’s obvious to readers that this timeline makes no sense at all.  It’s not that Covid could not have begun in August or September without the authorities’ knowledge.  But if a Covid outbreak was already viewed as such a major problem that a cover-up was required, it hardly seems plausible that the Chinese would have just sat back for many months as the virus ran rampant through the Chinese population.  That makes no sense. I would add that if the virus really were spreading in Northern Italy in September 2019 (something I doubt), then we don’t even know if it began in China. Later on, The Economist gives a much more plausible explanation: China clearly does not want lab-leaks investigated; but that does not mean it knows one happened. It is also being misleading about Huanan market, denying access to early-case data and obfuscating in various other non-lab-leak-specific ways. The most obvious explanation is that it does not really want any definitive answer to the question. An unsanitary market, a reckless bat-catcher or a hapless spelunker would not be as bad in terms of blame as a source in a government laboratory. But any definite answer to the origin question probably leaves China looking bad, unless it can find a way to blame someone else. To that end China has called for an investigation of Fort Detrick in Maryland, historically the home of American bioweapons research; state media regularly publish speculations about its involvement. The Chinese government also resisted investigation of the first SARS epidemic, now generally accepted to be of natural origin.  Indeed Chinese government cover-ups are standard operating procedure, also occurring after disasters like earthquakes and train wrecks, and thus tell us nothing about the cause of the pandemic. As an aside, while I agree that the Chinese would be blamed more for a lab leak than an animal market source, in my view exactly the opposite should be true.  America has similar labs where leaks occur on occasion, but we don’t have Chinese-style live animal markets.  In an ethical sense, an animal market would be worse for China if we lived in a rational world.  But of course . . . (0 COMMENTS)

The Scene: A mandatory sexual harassment training seminar for college freshmen. Training Officer: … So to recap, No always means No, but Yes does not always mean Yes.  Someone who feels pressured will often say Yes when they don’t really mean it.  Be careful not to apply pressure, or else you could be guilty of sexual assault without realizing it. Anxious Student: [Reacts with horrified look, then collapses.] Training Officer: Oh my God, what’s happened? Anxious Student: [Silent, crumpled into a fetal position.] Training Officer: Students, this is what sexual assault does to students! Anxious Student: [Whispering.]  No… that’s not it at all. Training Officer: [Baffled.]  Then what? Anxious Student: [Even quieter.]  You did this to me. Training Officer: [Puts microphone up to Anxious Student’s mouth.] Tech support, maximum volume!  Who’s the “you” you’re talking about? Anxious Student: [Student keeps whispering, but amplification makes the sound audible to all.]  “You” means you, Training Officer! Training Officer: [Incredulous yet defensive.]  Me?!  We’ve never even met. Anxious Student: You have to understand, I have severe social anxiety. Training Officer: And? Anxious Student: Talking to strangers has always been a struggle for me.  Talking to girls is almost impossible. Training Officer: [With self-righteous anger]  Women. Anxious Student: [Sudden scream, maximally amplified.]  Aaaaaaaaaaaaaaaah!  Aaaaaaaaaaaaah! Training Officer: [Freaked out, clutching ears in pain.]  OK, OK, calm down. Anxious Student: [Resumes whispering into mic.]  How can I calm down when you keep saying these frightful things? Training Officer: What are you talking about? Anxious Student: I’m already petrified that I might say the wrong thing to another person.  And what do you do?  Warn me that anything I say could be a heinous “microaggression.” Training Officer: Easy for a privileged straight white male like you do say. Anxious Student: [Sudden scream, maximally amplified.]  Aaaaaaaaaaaaaaaah!  Aaaaaaaaaaaaah!  Aaaaaaaaaaaaaaaaaaaaaaah! Training Officer: [Doubly freaked out, clutching ears in agony.]  OK, OK, calm down.  Maybe I should be more sensitive about your social anxiety. Anxious Student: Do you think?! Training Officer: You’re right.  You’re right.  But what exactly was it that… set you off… I mean…  What did I say that made you… feel… the way that you feel… now? Anxious Student: Look, over the years I’ve gotten used to talking to other guys.  It’s hard to make friends, but at least I have some. Training Officer: [Suppressing knee-jerk self-righteousness.]  And women can’t be fr…  Oh, I mean, good for you! Anxious Student: [Controlling urge to scream.] … Training Officer: [Forced.]  Please go on, I really want to learn about your lived experience. Anxious Student: I’m still mortally afraid of talking to women, much less asking one out on a date. Training Officer: [Judgmental, then solicitous.]  I don’t know why you… Well, please continue. Anxious Student: I dream of working up the courage to ask out a [shudder] woman… and having her say Yes. Training Officer: A fine dream. Anxious Student: Apparently not!  How am I supposed to know if I’m “pressuring” her? Training Officer: Oh, that’s what’s on your mind.  Don’t worry about it. Anxious Student: [Incredulous.]  Don’t worry about it?  Don’t worry about it?! Training Officer: It’s not like you’re going to pressure a woman by accident. Anxious Student: No?  Please tell me: What doesn’t count as “pressure”? Training Officer: [Nervous.]  Lots of things… Anxious Student: What if I look like I’d be really disappointed if she said No? Training Officer: Well, yes, I suppose that could be pressure. Anxious Student: Uh huh.  Or what if I avoided her after rejecting me, and word got around that I avoided women who rejected me? Training Officer: Well yea, that could make every woman who hears about your likely reaction feel pressured to say Yes. Anxious Student: I didn’t win the Oscar for Best Actor. Training Officer: Huh? Anxious Student: If a woman rejects me, I feel bad.  And I’m not a good enough actor to disguise that fact. Training Officer: No one’s asking you to. Anxious Student: Oh yes you are.  To be more precise, you’re giving me two choices.  I can either subject women to heinous “pressure,” or never ask a woman out. Training Officer: Simplistic. [Self-correcting.]  What I mean is, you’re misunderstanding me. Anxious Student: Am I?  Great.  Give me a zero-pressure recipe for asking women out. Training Officer: I can’t, that depends on the woman. Anxious Student: So anything can be pressure? Training Officer: [Defensively.]  Well, most women wouldn’t regard a polite request for a date as pressure. Anxious Student: I’m often accidentally impolite; that’s partly why I feel so much social anxiety.  And in any case, do the women who would regard a polite request for a date as “pressure” wear a badge declaring their hypersensitivity? Training Officer: No, that would be stigmatizing. Anxious Student: So I’m right.  The only way to know I’m not pressuring a woman is to avoid women entirely. Training Officer: That is so s… Well, the best thing is to arrange some counseling for you. Anxious Student: Counseling might help me get over unreasonable fears.  But according to you, my fears are reasonable. Training Officer: No.  No, no. Anxious Student: Yes.  Yes, yes.  I’m afraid that anything I say to a woman could constitute “pressure,” and you confirmed it. Training Officer:  Well, I didn’t confirm that it’s likely.  Most women are reasonable about these things. Anxious Student: So I only have to worry about the unreasonable women. Training Officer: [Uncomfortable.] Well, I don’t like that phrase.  Society has been stigmatizing women as “unreasonable”… Anxious Student: Your double-talk confirms my worst fears.  I don’t know if I can go on like this. Training Officer: Given what I’m hearing, I’m afraid I’m going to have to refer you for mandatory suicide prevention training. Anxious Student: [Shrugs.]  I have a better idea. Training Officer: Wonderful.  What is it? Anxious Student: You admit that your position is absurd.  And change your official policies.  Now. Training Officer: What? Anxious Student: You heard me. Training Officer: We can’t do that. Anxious Student: We can’t just go back to bright-line rules? Training Officer: What bright-line rules? Anxious Student: Here’s a classic bright-line rule: In the absence of violence or threat thereof, consent is valid.  End of story. Training Officer: We changed that rule because it was unfair to people who consented to things they weren’t comfortable with. Anxious Student: You changed it to a rule that is unfair to people who are socially anxious. Training Officer: [Finding courage.] The whole world can’t revolve around them. Anxious Student: Your rule is also unfair to people who can’t read minds. Training Officer: The whole world can’t revolve around them, either. Anxious Student: That’s all humans, actually. Training Officer: [Impatient] So all humans are Aspies?! Anxious Student: [Taken aback.]  Classy. Training Officer: [Chagrined.] What I mean is, Neurotypicals are pretty good at figuring out these kinds of these.  People on the spectrum are another story. Anxious Student: So people are “pretty good” at being able to follow your absurd rules?  Again, why does everything have to revolve around unreasonable women? Training Officer: [Enraged.] Unreasonable people!  Unreasonable people! Anxious Student: You’re right.  Unreasonable people.  OK, so why does everything have to revolve around unreasonable people? Training Officer: [Stumped.] Anxious Student: This is college, right?  Isn’t this supposed to be a place where reasonable people are in charge, and “pressure” students to emulate them? Training Officer: [Grabs mic.] Aaaaaaah!  Aaaaaaaaaaaaaah!  Aaaaaaaaaaaaaaaaaaaaah!   [Training Officer wakes up in a cold sweat.]   Training Officer: [Spends a full minute catching breath.] Thank God that in the real world, socially anxious people keep their mouths shut during training.  Thank God! (0 COMMENTS)

Many people think that the state is benevolent and wise or, if not, that it would be if it were run by people like them or, more exactly, like the person expressing this opinion. This is “politics with romance,” to paraphrase economist James Buchanan. Although a government sometimes succeeds in doing something with apparent efficiency, it usually fails by its own standards and, irrespective of its success, creates as much discontent as contentment. One problem is that the state is made of, and influenced by, many persons with different interests, opinions, preferences, and values. Another problem is that an electorate is demonstrably irrational. Still another problem is that the state suffers from built-in inefficiencies due to the politicians’ and bureaucrats’ misaligned incentives, a phenomenon well analyzed by public-choice economics. The result is that government failures are usually worse than market failures. In short, the real state is necessarily very different from what virtually any of its worshippers thinks it should be. Philosopher Michael Huemer’s 2013 book, The Problem of Political Authority (Palgrave Macmillan, pp. 196-197; a Kindle version can be rented from Amazon) contains a host of related ideas: It is widely recognized that anarchists face a significant challenge of avoiding utopianism. It is widely recognized, as well, that some nonanarchist theories, such as certain forms of socialism, face charges of utopianism. What is less well recognized is that even very conventional, moderate political theories can be utopian. … Advocates of liberal democracy face the same strictures against utopianism as advocates of more radical positions, such as anarchism or socialism. … The state is treated as if it stood above the empirical human world, transcending not only the moral constraints but also the psychological forces that apply to individual human beings. This book is well worth reading. I plan a review in the Winter issue of Regulation, together with a short presentation of his most recent book, Knowledge, Reality, and Value (reviewed here in five parts by co-blogger Bryan Caplan). (0 COMMENTS)

I’m giving a talk in southern California later this month on the importance of Milton Friedman’s 1962 book Capitalism and Freedom and of Milton and Rose Friedman’s 1980 book Free to Choose. There are so many pithy passages in both books. Here are two from Free to Choose that I particularly like: The Tight Connection Between Incentives, Information, and Outcomes However we might wish it otherwise, it simply is not possible to use prices to transmit information and provide an incentive to act on that information without using prices also to affect, even if not completely determine, the distribution of income. If what a person gets does not depend on the price he receives for the services of his resources, what incentive does he have to seek out information on prices or to act on the basis of that information? –Free to Choose, p. 23 On the Effects of Economic Growth on the Difficulty of Work You can travel from one end of the industrialized world to the other and almost the only people you will find engaging in backbreaking toil are people who are doing it for sport. –Free to Choose, p. 148   (0 COMMENTS)

It is irksome to read pieces like the recent one in the Wall Street Journal by Alan Blinder – who was on President Bill Clinton‘s Council of Economic Advisers from January 1993 to June 1994 –  lecturing proponents of using the debt ceiling, i.e., Republicans, as a means of slowing the growth of government spending and indebtedness. Their action, Blinder claims, puts us at risk of a US government default. I think the risk is dramatically overstated, even though it goes without saying that no one wants the federal government to default on its debt obligations. The consequences would indeed be nasty and, as always, those who would suffer the greatest pains would be America’s most vulnerable. If pushed to an extreme, the strategy of using the debt ceiling to extract some budget reform can carry some costs, for sure, but so is letting President Biden and Congress pass another $3.5 trillion through reconciliation. Now I will grant that Republicans aren’t credible when it comes to fiscal responsibility. For one thing, protesting one $3.5 trillion spending bill (as worthwhile as such a protest might be to advance the battle of ideas) doesn’t seem very noble or genuine in light of the explosion of spending Republicans allowed during the Trump years (or Bush years for that matter). It is also a fact that this strategy hasn’t been that effective overall. For instance, we have seen how it played out over the last 10 years with Republicans and Democrats repeatedly removing the spending caps put in place in exchange for raising the debt ceiling in 2011 and spending going up unrestrained. I still believed that in 2011 this was a fight worth waging because 1) we hadn’t tried this tactic before, and 2) most Republicans at the time seemed on board with the idea that some fiscal responsibility was prudent. I should have known, of course, that this GOP support for reducing government spending and deficits at the time mostly boiled down to political expediency. Today, the cultural and political landscape is radically different, and only a few in Congress and around the country care about spending and deficits, thus making this strategy probably dead-on-arrival. That said, Blinder isn’t any more credible than are the Republicans he criticizes. He wants to bring back the Gephardt rule, which he describes as a requirement that “When Congress passes a budget, it shall be deemed to have authorized whatever borrowing is implied by that budget,” in order to return to an era where there were no battles over raising the debt ceiling. This concerned citizen is, however, entirely silent on the problems caused by the Democrats’ $3.5 trillion bill now making its way through Congress. He’s also silent on the potential impact (other than a default linked to a debt ceiling fight) of our actual debt trajectory on the U.S economy. I understand the idea behind the Gephardt rule. Yes, Congress shouldn’t be allowed to pass a budget without being sure that the U.S. government will honor its commitment to repay its resulting debt. However, it is also wrong to allow that so much of the burden of government spending be put on future generations thorough borrowing, especially since it isn’t hard to figure out that all that spending will not create high return for those future taxpayers. (The proof that government indebtedness is borne by future taxpayers is among the earliest contributions of Nobel Laureate James Buchanan.) Moreover, if people today had to pay, through taxation, for all the government programs they currently consume, they would temper, at least at the margin, their demands for bigger government. For instance, some of the middle class and upper middle class families receiving monthly payments from Uncle Sam because they have kids may be slightly less enthusiastic about the payments. The bottom line is that I would be more willing to listen to elites’ outrages over using the debt ceiling as a pressure point in the fight against spending if it came from those whose concern about the fiscal health of this country wasn’t limited to the risk of default during a debt ceiling debate.   (0 COMMENTS)

Suppose we fully deregulated the housing market.  What would happen?  A common YIMBY trope is that cities would dramatically expand; the endless millions of people who have been priced out of New York, San Francisco, and LA would rush to enjoy affordable, spacious urban living.  A common doubt, however, protests, “Most people don’t want to live in cities!” What’s the real story?   To answer, consider the following scenario.  X and Y are substitutes.  For decades, there has been a 100% tax on X and a 1000% tax on Y. What happens to consumption of X and Y if you suddenly abolish both taxes? Theoretically, of course, it all depends on elasticities.  The reasonable prediction, however, is: 1. Consumption of Y will almost surely rise massively. 2. Consumption of X will probably rise by a lot, but maybe not.   This scenario closely fits actually-existing housing regulation.  Current regulation strangles urban construction, and heavily restricts suburban construction.  If you got rid of this regulation, skyscrapers really would start going up all over high-priced cities – and millions of urban commuters would swiftly relocate to occupy these new buildings.  Families with children would naturally be less-eager to go urban, but even they might be tempted by large, cheap apartments across the street from their jobs. Plenty of other folks would respond by moving into all of the newly vacant – and suddenly cheap – suburban homes.  This could conceivably fully satisfy suburban demand, but the more likely result is that developers would also take advantage of deregulation to subdivide existing lots and build lots more single-family homes.  And of course other developers would buy up neighborhoods of old single-family homes, bulldoze them, and replace them with massive cheap apartment complexes. “People don’t want to live like that”?  That depends on the price.  Deregulation doesn’t just make dream homes affordable.  It also allows people to settle for ultra-cheap, so-so housing and spend the savings on their higher priorities.  Whatever they may be. (2 COMMENTS)