If you were black, and thus a victim of racial oppression, this new morality of social justice meant you could not be expected to carry the same responsibility as others. The point was that the American society no longer had the moral authority to enforce a single standard of responsibility for everyone because—by its own admission—it had not treated everyone the same. … now I was the one—as a victim—who possessed an almost reckless moral authority. Now I could shame and silence whites at will. With this moral authority there was the power to better defend myself against racism, but there was also a new, abusive power very similar to the abusive power that had been wielded against me—a power of racial privilege deriving solely from the color of my skin. Shelby Steele, White Guilt: How Blacks and Whites Together Destroyed the Promise of the Civil Rights Era.1 In 2020, race relations in the United States became particularly tense and roiled. Protests erupted whenever a young African American died at the hands of police. Many progressive whites became fervent supporters of the Black Lives Matter movement. On college campuses, new protest movements sprang up, making demands on institutions accused of racism.2 Critical Race Theory, which re-interprets norms such as the scientific method and freedom of speech as tools of white oppression, spread out of its academic strongholds into American institutional life as a whole.3 Schools, corporations, and other organizations hastened to institutionalize and bolster “diversity and inclusion” training, even as President Trump signed an executive order that attempted to ban the use of Critical Race Theory in government training programs.4 (This order was rescinded by President Biden on his first day in office.) Shelby Steele, writing in 2006, offered a theory to explain how racial dynamics evolved in the wake of the Civil Rights era. White guilt: the vacuum of moral authority that comes from simply knowing that one’s race is associated with racism. Whites (and American institutions) must acknowledge historical racism to show themselves redeemed of it, but once they acknowledge it, they lose moral authority over everything having to do with race equality, social justice, poverty, and so on… The authority they lose transfers to the “victims” of historical racism and becomes their great power in society. In the United States, whites abused blacks for many decades. Legally, this abuse ended with the Civil Rights legislation of 1964 and 1965. But those acts did not erase the sordid history. Steele’s thesis is that sensitivity to this history produces white guilt and fuels black anger. The result is that blacks have become the abusers, and whites—liberal whites, especially—have become the abused. Steele’s analysis is based on introspection regarding his own experience. Born in 1946, he grew up in Chicago in the era of segregation. While segregation carried the force of law in the South, in the North it was enforced by social norms. Steele tells a poignant story that as a youngster he insinuated himself into a position as batboy for a white YMCA baseball team, only to be told that he could not accompany the team to any games, because they were going to play in white neighborhoods. The Saint Louis area had the same sort of segregation when I was growing up. There were certain communities where no whites lived because they wouldn’t. And there were other communities where no blacks lived because they couldn’t. Mortgage lenders and real estate agents enforced this segregation. In my neighborhood, the first black families did not appear until 1965 (as it happened, my family had moved by then). The Fair Housing Act which prohibited racial discrimination in housing was the last piece of major Civil Rights legislation, and it was only passed in 1968, finally achieved in the wake of the outpouring of emotion following the assassination of Dr. Martin Luther King, Jr. The Civil Rights laws changed the central focus of the racial justice movement. Before 1964, the goal was achieving institutional change to end discrimination. Subsequently, the emphasis shifted to remediating the effects of past discrimination. Steele sees the focus on past discrimination as fostering a dynamic between white guilt and black anger. For example, on college campuses a group of black students would confront liberal white administrators with a list of demands. Even if the demands were unreasonable and the students employed coercion, the administrators felt too guilty to resist. This tended to reinforce and reward black anger, rather than appease it. Steele himself was one of those black student militants. He led a group of demonstrators into the office of his college President. He emphasizes his memory of deliberately allowing his cigarette ashes to fall on the plush carpet as illustrating the ability and desire to abuse that gentleman. He argues that anger can be inversely related to the level of injustice. Anger is acted out by the oppressed only when real weakness is perceived in the oppressor. So anger is never automatic or even inevitable for the oppressed; it is chosen when weakness in the oppressor means it will be effective in winning freedom or justice or spoils of some kind. Anger in the oppressed is a response to perceived opportunity, not to injustice. And expressions of anger escalate not with more injustice but with less injustice. This black anger was enabled by and reinforced white guilt. In fact, if there is a white racial identity today it would have to be white guilt—a shared, even unifying, lack of racial moral authority. As other group identities derived from a shared fate, white guilt is a shared white fate rendered up by history. Whites can no more escape white guilt than blacks can reject being black. Steele sees this interaction between black anger and white guilt as driving race relations since the late 1960s. His thesis seems pertinent today. Steele’s son, Eli, recently wrote, The battle over how to move forward was roughly divided into two camps: those who believed in individual development as the best way to improve the lives of blacks, and those who believed that racial preferences and quotas could be used to re-engineer our society. I chose the path of individual development. My grandparents and my father had grown up under the unrelenting accusation that they were inferior people so why would I perpetuate that stigma by demanding special dispensations on account of my race that were denied to my fellow citizens on account of theirs? I also chose the path of development because I believe that the stronger an individual is, the more he or she is an asset to society. Sadly, America’s institutional powers opted to take the path of racial engineering instead.5 “Both Shelby and Eli Steele believe that the power that African Americans obtain from white guilt comes with a price. African Americans sacrificed agency.” Both Shelby and Eli Steele believe that the power that African Americans obtain from white guilt comes with a price. African Americans sacrificed agency. They attribute their life outcomes to external forces in general and to whites in particular. Agency is a person’s subjective belief in one’s ability to affect one’s life. A person with agency feels responsible for what happens to them. The stronger one’s sense of agency, the happier a person is likely to be. A person can be very well off materially and still feel oppressed and victimized by others. At the other extreme, a person can be incarcerated and yet work on self-improvement and planning for the future. Anwar Sadat and Malcolm X are two historical figures who felt that their experience in prison gave them insight and strength. Before 1964, African Americans were very constrained in terms of power. But within those constraints, they could and did struggle to achieve on their own, individually and through political movements. But by 1967, Shelby Steele writes, the goal of the civil rights movement had escalated from a simple demand for equal rights to a demand for the redistribution of responsibility for black advancement from black to white America, from the “victims” to the “guilty.” This marked a profound—and I believe tragic—turning point in the long struggle of black Americans for a better life. The irony is that as the objective power of whites over blacks gave way to Civil Rights legislation, this was undercut by black leaders who sacrificed agency. They shifted the focus away from individual or collective achievement to extracting concessions from whites. By the mid-sixties white guilt was eliciting an entirely new kind of black leadership, not selfless men like King [Reverend Dr. Martin Luther King, Jr.] who appealed to the nation’s moral character but smaller men, bargainers, bluffers, and haranguers—not moralists but specialists in moral indignation—who could set up a trade with white guilt. For more on these topics, see the EconTalk episodes Dwayne Betts on Reading, Prison, and the Million Book Project and Glenn Loury on Race, Inequality, and America. See also “Voting with Ballots versus Voting with Your Feet,” by Dwight R. Lee. Library of Economics and Liberty, February 5, 2018. When he led his college protest, Steele might have continued on the path of becoming one of these “smaller men.” But gradually he came to hold a different point of view. He justifies this transformation in some powerful passages, with which I will conclude: By the mid-eighties the schizophrenia imposed on me as a black who was identified with the left had become unbearable. I had no interest in becoming a conservative. I just instinctively disliked the left’s disregard for principles that had always been important to me. … the left has effectively ceded its old territory—compassionate Jeffersonian liberalism—to the right, thereby ceding to it precisely the democratic principles and values of individual freedom and responsibility that have made America a great nation despite its many betrayals of these principles… In fact, most of today’s conservatives sound like Martin Luther King in 1963… Is there, on the right, a covert, unspoken loyalty to racial hierarchy, a quiet atavistic commitment to white supremacy? In the hearts of some there must be. There are fools and devils everywhere. But today’s right has made itself accountable to the democratic and moral vision of the early Martin Luther King. Footnotes [1] Shelby Steele, White Guilt: How Blacks and Whites Together Destroyed the Promise of the Civil Rights Era. HarperCollins, 2006. [2] See, for example, “Faculty Members Propose an Anti-Racism Agenda.” Princeton Alumni Weekly, July 13, 2020. [3] See, for example, “Smithsonian museum apologizes for saying hard work, rational thought is ‘white culture’,” by Chacour Koop. Miami Herald, July 17, 2020. [4] See “President Issues Contractor ‘Critical Race Theory’ Executive Order,” by Eric Crusius. Holland and Knight Government Contracts Blog, September 23, 2020. [5] Eli Steele, “The Battle for Moral Authority,” by Eli Steele. Quillette, January 23, 2021. *Arnold Kling has a Ph.D. in economics from the Massachusetts Institute of Technology. He is the author of several books, including Crisis of Abundance: Rethinking How We Pay for Health Care; Invisible Wealth: The Hidden Story of How Markets Work; Unchecked and Unbalanced: How the Discrepancy Between Knowledge and Power Caused the Financial Crisis and Threatens Democracy; and Specialization and Trade: A Re-introduction to Economics. He contributed to EconLog from January 2003 through August 2012. Read more of what Arnold Kling’s been reading. For more book reviews and articles by Arnold Kling, see the Archive. As an Amazon Associate, Econlib earns from qualifying purchases. (0 COMMENTS)

Now more than one year since the onset of COVID-19, empty grocery store shelves and panicked shoppers have become the sine qua non of the pandemic’s disruptions. Eggs, a common staple food, experienced some of the most dramatic price increases. From February to April 2020, the price of a dozen Grade A eggs at the grocery store jumped 60%. A year later, pandemic disruptions have not subsided. As of mid-March 2021, Americans were still spending 15% more on food through grocery outlets and 14% less on restaurants and hotels than they were in January 2020.1 A common conclusion is that America’s food supply chain is “broken” and in need of radical restructuring to become resilient. This view is almost completely at odds with the facts and misunderstands the nature of the disruptions and the speed at which the food system responded. Why did prices climb so quickly in the wake of the pandemic? The suddenness and size of two large demand shocks are largely to blame. Prior to the pandemic, Americans consumed about 52% of their food away from home through restaurants and cafeterias and the remaining 48% through grocery stores and supermarkets. Government shutdown-orders and consumer fears led to a spike in demand at groceries and a near total collapse in demand for food from restaurants. Year-over-year expenditures at restaurants, school cafeterias, sports venues, and other eating-out places dropped 50% in April 2021,2 with most Americans spending most of their food dollars at grocery stores, supercenters, convenience stores, and other food-at-home retailers. Food supply chains are optimized and specialized to sell to either of those two locations. For example, even bananas are packaged and sold by the bunch at a grocery store but are packaged and sold by the box for cafeterias. Our research in the journal Food Policy elucidates the challenges for the case of eggs. Although grocery stores sell so-called table eggs by the carton, restaurants often purchase liquid or powered eggs—often referred to ask “breaker” eggs.3 Companies have barns of egg-laying hens specialized to deliver table eggs to groceries or breaker eggs to restaurants. COVID-19 caused a drastic shift in food spending from restaurant to grocery; the naïve view was that the eggs would follow. After all, at the same time the grocery price of eggs was skyrocketing, liquid egg prices plummeted. Given these massive price discrepancies, one would expect the market to reallocate supply. Eggs that would have gone to restaurants could have been easily diverted to grocery stores—right? Yet, sellers of breaker eggs don’t have cardboard or Styrofoam cartons in stock. Thus, one problem was that there was insufficient packaging material available to deliver eggs to grocery stores in the form customers are accustomed to buying. Are we to believe that a more local or regional food supply that was more fragmented would have the right packing materials laying around when the demand disruptions occurred? The challenges went beyond packaging shortages. U.S. Food and Drug Administration (FDA) regulations prevented a smooth transition, prolonging the grocery store egg price spike. Liquid eggs are pasteurized, and as such, fall under a different set of regulatory guidelines than table eggs. Thus, federal rules prevented eggs from flowing from areas of low demand to areas of high demand. Some liquid egg producers found it more advantageous to depopulate their flocks than to continue losing money with the uncertainty of demand and the regulatory environment. Ultimately, the FDA relaxed their regulatory requirements, and the table and breaker egg markets again reached an equilibrium with table egg prices coming down from their highs. Regulatory burdens were not limited to disruptions of the egg supply chain during the pandemic. This is perhaps not surprising—beer, for example, confronts more than 125,000 regulatory burdens from the hopyard to the six pack.4 Across the country, regulations and ordinances prevented bars and restaurants from selling their excess food stocks to paying customers. This is especially important as crucial moneymaking social events such as March Madness and St. Patrick’s Day occur in early spring. Food supply chains are fundamentally constrained by biology, and production systems across the nation had spent months brewing the green beer and raising the chickens for buffalo wings for these events. Because food safety ordinances often restrict the sale of raw food products from restaurants, much of this food remained unsold, and the beer ultimately spoiled. In some cases, city and state governments intervened, creating temporary concessions for sales directly to consumers in communities like Bristol, Tennessee and New York, but these concessions were not universally adopted. In other cases, some state governments opted to compensate restaurant owners for their lost sales. For example, the State of Michigan issued “buybacks” of unsold beer, wine, and liquor in April. For more on these topics, see “The Use of Knowledge in Society,” by Friedrich A. Hayek. See also the EconTalk podcast episode John Cochrane on the Pandemic and “The Locavore’s Dilemma: Why Pineapples Shouldn’t Be Grown in North Dakota,” by Jayson L. Lusk and F. Bailey Norwood. Library of Economics and Liberty, January 3, 2011. Regulatory uncertainty also played a role in disrupting food access during the pandemic. Distinctions between “essential” and “non-essential” employment varied significantly, creating confusion for consumers and for enforcement.5 By not allowing market interactions to occur naturally and instead determining which businesses needed to stay open based on a taxonomy of “essentialness,” policymakers were forced to make calculations regarding the acceptable risk for different types of workers. These decisions required an overlap in expertise regarding institutional arrangements, public health, and economics, invoking F. A. Hayek’s famous knowledge problem. That is, rational economic planning requires such a wide distribution of information that a central authority is unlikely to respond to market incentives as efficiently as individualized participants in the economy. For example, stay-at-home orders reduced demand for gasoline as many workers opted to telecommute. That decrease in gasoline demand led to a decrease in demand for ethanol and forced many ethanol plants to temporarily idle production, which significantly depressed corn prices. Because the ethanol plants were shut down, the spent grains created as a byproduct of ethanol production as a quality source of animal feed became less available, increasing the price of feed for livestock producers at an already difficult financial point. Those connections are often hard to identify in advance and even harder to define in a simple taxonomy of “needs.” Indeed, even labeling labor as “essential” and “non-essential” misses the important fact of any job— it’s “essential” to the person employed! As an example, “essential” workers at meatpacking plants in South Dakota were ordered to report to work even after indicating some illness. At the same time, “non-essential” workers at an apple orchard in Michigan refused to cease their business operation. The height of the absurdity was that supercenters in states like Michigan could not sell seeds and garden supplies in the spring of 2020 because they fell in the category of “nonessential”, at precisely the same time many consumers were worried about food supplies. By mid-April 2020, another set of disruptions hit the food supply chain. This time it was a massive supply shock caused by the shutdown and slowdown of the beef and pork packing sectors as workers in those industries contracted COVID-19. On May 1, 2020, the number of cattle and hogs slaughtered was only 60% of the levels one year prior.6 With processing capacity shuttered, demand for livestock fell, depressing farm prices for animals. At the same time, less meat was being produced. Grocers were left bidding against each other for a smaller quantity of meat, pulling up wholesale and retail prices. The result was that the farm-to-retail price spread reached unprecedented levels, a phenomenon that prompted multiple lawsuits, a U.S. Department of Justice investigation, and numerous proposed federal regulations. The implicit assumption was that large packers must be raking in windfall profits at the same time livestock producers and consumers were being harmed. This presumption misses the fact that packers were incurring higher costs to retrofit packing plants to protect, test, and socially distance workers. Recent research shows that, when facing risks of a shutdown, it is expected that packer profits would fall even as price spreads rise. Indeed, the stock prices of major packing firms such as Tyson and JBS significantly under-performed the entire market over the year 2020. The lesson is that COVID-19 created few winners and many losers. One of the pre-pandemic criticisms associated with the food system was that it generated “too much” food waste. A host of federal, state, and local policies incentivized firms to cut food waste, and a number of private efforts were also aimed at the same end. The result was that food processors and retailers were pushed to optimize supply chains and move toward just-in-time inventory management. Grocery stores bought only as much produce and meat as they thought they needed. As we’ve learned however, a focus on waste-reduction and efficiency has costs. A system working on just-in-time inventory management is not one well designed to respond to a large, unexpected increase in demand. The result was empty shelves. Seen in this light, food waste may be a cost we might need to pay to as a form of insurance against unexpected demand or supply shocks. Consumers intuitively grasp this need, as stocking up behavior and pantry loading was a rational response to the uncertainty around future food supplies and high food prices experienced at the onset of COVID-19. “If one silver lining has emerged for food supply chains from the pandemic, Americans have become even more appreciative of the people who get food to their plates.” If one silver lining has emerged for food supply chains from the pandemic, Americans have become even more appreciative of the people who get food to their plates. This might perhaps be due to the entrepreneurial spirit of producers. When regulations were relaxed, both distilleries and ethanol plants pivoted their production systems to create highly sought after hand sanitizer. This flexibility has been particularly evident for local food systems, as the pandemic has created opportunities for policymakers to rethink the way they regulate innovative local food systems. For example, small-scale meatpackers across the country pivoted to providing butchering services for ranchers in their local area, creating local meat supply chains and spurring renewed bipartisan interest in relaxed small-scale meatpacking regulations. Ultimately, actors throughout the U.S. food supply chain innovated and responded rapidly to an unprecedented change in the American marketplace. Though government policy facilitated some novel developments such as incentivizing small and medium-sized processing facilities, the most resilient strategies occurred when governments allowed actors within the marketplace to adjust to the changing dynamics of COVID-19. Consider the case of the Pig and the Plow in Northern Colorado. Thanks to adjustments in local “cottage” food laws in the state, this bread company could pivot to an online delivery platform instead of its traditional restaurant and farmers market accounts.7 Similarly, some local governments changed open container laws to allow restaurant and brewery patrons to consume their beverages in designated outdoor areas. Developing a more resilient food system is likely to confront a series of unavoidable factors. Even without any regulations, those factors are likely to remain critical. Labor constraints exist all along the agri-food value chains, but each step along that chain is likely to confront other unique issues. At the farmer/grower level, biological production constraints, automation, and storage capacity have to be considered. Processors and intermediaries would have to consider issues such as logistical constraints, automation, capacity constraints, worker protection, and storage capacity issues. Finally, food service and retail would have to consider delivery/distribution issues as well as the potential for a more fluid transition between the two institutional arrangements. Some lessons are likely to remain for the long term. First, support for the agricultural and food community is likely to remain strong for some time. U.S. consumers have become acutely invested in understanding where their food comes from. Second, it is likely that future policy will incentivize smaller scale producers, emphasizing decentralization as a strategy for resilience. Whether such a strategy will, in fact, produce a system that is more resilient remains to be seen; after all, large scale concentrated processing is associated with efficiency and economies of scale.8 Third, consumers are likely to continue their march toward ordering their restaurants and groceries via new technology. Indeed, some forecasts estimate that web-based grocery sales will reach 55% of U.S. consumers within the next three years. Finally, it is likely that lessons from the pandemic are likely to facilitate more regulatory burdens even though many issues in the food supply chain were fostered by constraining resilience via regulation. Footnotes [1] More data available at Opportunity Insights: Economic Tracker. Tracktherecovery.org. [2] U.S. Department of Agriculture, “Eating-out expenditures in May 2020 were 37 percent lower than May 2019 expenditures”. USDA Economic Research Service. [3] Trey Malone, K. Aleks Schaefer, and Jason L. Lusk, “Unscrambling U.S. egg supply chains amid COVID-19.” Food Policy, March 16, 2021. [4] See the Center for Growth and Opportunity’s website at “The Economic Geography of Beer Regulations” by Aaron Staples, Dustin Chambers, Trey Malone. Working paper, Sep. 26, 2020. [5] Trey Malone, K. Aleks Schaefer, and Felicia Wu, “The Razor’s Edge of ‘Essential’ Labor in Food and Agriculture.” Applied Economic Perspectives and Policy. Submitted 26 April 2020: (2021) volume 43, number 1, pp. 368–381. [6] Jayson L. Lusk, Glynn T. Tonsor and Lee LK. Schulz, “Beef and Pork Marketing Margins and Price Spreads during COVID-19.” Applied Economic Perspectives and Policy, October 2, 2020. [7] Dawn Thilmany and Trey Malone, “COVID-19 Gives Chance to Take a Fresh Look at How Innovative Local Food Systems are Regulated.” Food Logistics, May 11, 2020. [8] Jayson Lusk, “Concentration and Resiliency in the U.S. Meat Supply Chains.” JaysonLusk.com, March 11, 2021. * Trey Malone is an Assistant Professor and Extension Economist at Michigan State University’s Department of Agricultural, Food, and Resource Economics. Jason L. Lusk is Professor and Willard Sparks Endowed Chair of Agribusiness in the Department of Agricultural Economics at Oklahoma State University. (0 COMMENTS)

I recently read an interesting book about octopus consciousness, written by Peter Godfrey-Smith.  This caught my eye: Some philosophers have always disliked this obsession with sensory input, with receptivity, seen in theories of the mind. . . . In everyday experience there are two causal arcs.  There is a sensory-motor arc, linking our senses to our actions, and a motor-to-sensory arc as well.  Why turn the page?  Because doing so will influence what you see next. . . .Philosophers often use the metaphor of a stream of experience.  Experience, they say, is something like a river in which we are immersed.  This image is quite misleading, though, as the flow in a river is almost entirely outside our control. Exactly!  And this is my problem with mainstream macro. The standard view is that the Fed observes the nominal economy, and then reacts to “fix” problems that develop on occasion.  Economists ask themselves, “What can the Fed do to end a demand-side recession?”  Or how can it stop an inflationary spiral?  I see the Fed as causing changes in the nominal economy, and ask myself, “What can it do to stop causing demand-side recessions?”  What can it do to stop causing inflation? The mainstream view is that a “shock” hit the US in late 2007, tipping the economy into recession.  In my view, the Fed’s tight money policy pushed us into recession.  Then the Fed eased aggressively in January 2008, and the economy expanded in the second quarter of 2008.  But the Fed began to worry about inflation in the spring and summer of 2008, and sharply tightened policy again in the second half of the year. Godfrey-Smith suggests that philosophers focus too much on how we see the environment, as if we are passive observers, and not enough on how our actions shape the environment that we perceive.  In my view, the Fed is too quick to discount the possibility that the “shocks” it perceives are actually the effects of its previous actions, or inaction. (A distinction that is essentially meaningless. What does it mean to not do monetary policy?  Barter?) Godfrey-Smith points out that the (relatively intelligent) octopus has its brain distributed throughout its body, and that each arm can make its own decisions: The octopus’s loss of almost all hard parts compounded both the challenge and the opportunities.  A vast range of movements became possible, but they had to be organized, had to be made coherent.  Octopuses have not dealt with this challenge by imposing centralized government on the body; rather, they have fashioned a mixture of local and central control. One might say the octopus has turned each arm into an intermediate-scale actor, But it also imposes order, top-down, on the huge and complex system that is the octopus body. The Fed should control the price of NGDP futures contracts, while allowing the banking system to determine the money supply and the bond market to determine interest rates. PS.  Of course I’m not the first to compare the Fed to an octopus:     (0 COMMENTS)

I hate Communism.  I consider Communists to be the moral approximates of Nazis.  I might talk to a youthful Communist, but after the excuse of youth passes, I deem Communists beyond redemption. Even so, if George Mason University adopted an official Anti-Communist policy, I would oppose it. Why?  All of the following reasons. 1. George Mason University is part of the government, and as such ought to scrupulously respect freedom of speech, thought, and association.  And in practice, an official Anti-Communist policy is almost certain to trample these freedoms.  Once you officially declare that Communists are utterly unwelcome on campus, the impulse to officially crush them without mercy is strong.  And the willingness to shield them from unofficial persecution practically vanishes. 2. The total number of bona fide Communists at GMU is tiny.  So if you identify Communists accurately, a big Anti-Communist crusade would be an absurd overreaction.  Not only would it whip up hysteria over a minor problem.  It would distract scarce attention from serious problems. 3. Given the near-absence of bona fide Communists, a big Anti-Communist crusade would swiftly broaden the definition of “Communism” to include a wide swath of the Left.  And most people on the Left are not morally in the same league as Nazis.  Not even close.  So the Anti-Communist policy would end up persecuting vast numbers of flawed but tolerably decent human beings. 4. Once the re-definition of “Communism” starts to snowball, people will self-censor to avoid becoming victims of semantic inflation.  So the policy doesn’t merely persecute people for leftist leaning; it stifles the creation and evaluation of any idea that a paranoid fanatic might interpret as “Communist.”*  Universities should be especially horrified by this consequence, because universities are supposed to be centers for the creation and objective evaluation of ideas.   So why bring this up?  Like many institutions of higher education, George Mason University has adopted an official Anti-Racist policy.  And I firmly oppose it. Why?  All of the following reasons. 1. George Mason University is part of the government, and as such ought to scrupulously respect freedom of speech, thought, and association.  And in practice, an official Anti-Racist policy is almost certain to trample these freedoms.  Once you officially declare that racists are utterly unwelcome on campus, the impulse to officially crush them without mercy is strong.  And the willingness to shield them from unofficial persecution practically vanishes. 2. The total number of bona fide racists at GMU is tiny.  So if you identify racists accurately, a big Anti-Racist crusade would be an absurd overreaction.  Not only would it whip up hysteria over a minor problem.  It would distract scarce attention from serious problems. 3. Given the near-absence of bona fide racists, a big Anti-Racist crusade would swiftly broaden the definition of “racism” to include a wide swath of the non-Left.  And most people on the non-Left are not morally in the same league as Nazis.  Not even close.  So the Anti-Racist policy would end up persecuting vast numbers of flawed but tolerably decent human beings. 4. Once the re-definition of “racism” starts to snowball, people will self-censor to avoid becoming victims of semantic inflation.  So the policy doesn’t merely persecute people for non-leftist leaning; it stifles the creation and evaluation of any idea that a paranoid fanatic might interpret as “racist.”  Universities should be especially horrified by this consequence, because universities are supposed to be centers for the creation and objective evaluation of ideas. Are there any crucial disanalogies between Anti-Communism and Anti-Racism?  Indeed.  Most obviously: Communism is a bloodthirsty totalitarian creed.  Only an extreme tail of racists (Nazis, most famously) have been comparably bloodthirsty and totalitarian.  The typical racist is morally comparable to a socialist who dislikes businesspeople and the rich.  Both are unfair and unreasonable, but – unlike Communists and Nazis – neither is beyond redemption.   Final question: Would I still have have opposed a GMU Anti-Communist policy even in the depths of the Cold War?  Yes.  Reasons #1, #3, and #4 would still clearly apply, and #2 was at least debatable.  That suffices.   * An insider once told me that a critic told him that I was a “Communist.”  And vainly tried to get me disinvited from talk.  Because I wrote this.  No joke! (1 COMMENTS)

Yesterday, I pointed out the flimsiness of President Joe Biden’s economics as expressed in his speech of last week before Congress. What he said in the same speech comparing the First and the Second Amendments does not make more sense. It confirms one conclusion of the economics of politics: for a politician, the cost of saying just about anything or of plain lying is low. In arguing for still more gun controls, he explicitly invited a comparison between the limits of the First Amendment with those he wishes for the Second Amendment: This [gun control reform] shouldn’t be a red or blue issue. And no amendment to the Constitution is absolute. You can’t yell “Fire!” in a crowded theater. If there is no fire in a theater, one does not have a First Amendment right to yell “Fire!” more than one has the right to start shooting around if nobody is shooting at the patrons. But if there is a fire, somebody certainly has a right to shout a warning, just as an armed patron is or should be at liberty to engage and shoot anybody who starts shooting around. Imagine that the First Amendment were submitted to the same limitations as the Second Amendment in the most liberal (in the sense of permissive) states. Such restrictions would mean the following: Before getting a tool to use his First Amendment rights—say buying a speaker, a pen, or a computer—an individual would have to pass the National Instant Criminal Background Check with the FBI. In fact, purchasing any new such tool would require another similar permission. (Whether the use of one’s own voice would be possible without FBI permission remains an open question.) An individual once convicted of whatever sort of felony would be barred for life from purchasing any free-speech tool (and perhaps using his voice or his writing hand too?). Being “in possession of” such a tool, meaning being in immediate control of it (in his girlfriend’s unlocked closet, for example), would constitute a new felony. An individual convicted of a misdemeanor of domestic violence, even just for the “attempted use of physical force,” or against whom a protective order has been obtained, would also lose his free-speech rights, sometimes forever. In more restrictive states and in DC, the following restrictions on the First Amendment would be added: To be allowed to purchase free-speech tools or just to keep a tool he already owns, a person would be legally required to first obtain a personal free-speech license. A free-speech tool would have to remain in one’s own home and never be carried outside. The only exception would be to travel back and forth to a local “speaking range.” The capacity of your speech would be limited to a certain number of decibels or pages (as gun magazines are limited to 10 cartridges in some restrictive states) as well as by the prohibition of scary, government-style free-speech tools (say, a top-of-the-line photocopier painted in camo). Politicians would still have “mindguards” who would not be subject to these restrictions: the First Amendment would just be limited for ordinary people. Biden would want, at least now, to further add three new national limits on the First Amendment: The capacity and military-style limits mentioned in #3 of the preceding list would apply nationally. It would be forbidden to buy any used free-speech tool in a private transaction or at a Speech Show without passing the Instant Background Check. Any violator of the new federal restrictions would naturally be committing felony speech, and be forever forbidden to speak, write, or otherwise express his opinions. The three lists above are illustrative and only mention the most obvious restrictions that would apply to the First Amendment if it were as restricted as Second Amendment currently is. (0 COMMENTS)

Behavioral scientist Katy Milkman of the Wharton School at the University of Pennsylvania talks about her book How to Change with EconTalk host Russ Roberts. What can we learn from research in psychology and behavioral economics about breaking the habits we want to change? Is that research reliable? And should Russ Roberts accept being overweight or […] The post Katy Milkman on How to Change appeared first on Econlib.

Behavioral scientist Katy Milkman of the Wharton School at the University of Pennsylvania talks about her book How to Change with EconTalk host Russ Roberts. What can we learn from research in psychology and behavioral economics about breaking the habits we want to change? Is that research reliable? And should Russ Roberts accept being overweight or […] The post Katy Milkman on How to Change appeared first on Econlib.

Behavioral scientist Katy Milkman of the Wharton School at the University of Pennsylvania talks about her book How to Change with EconTalk host Russ Roberts. What can we learn from research in psychology and behavioral economics about breaking the habits we want to change? Is that research reliable? And should Russ Roberts accept being overweight or […] The post Katy Milkman on How to Change appeared first on Econlib.

A good exercise for economics students is to find instances of economic nonsense in a politician’s speech. In his speech of last Wednesday before Congress, President Joe Biden provided good course material. The proverbial Martian landing on Earth would have thought that Biden’s goal was to emulate his immediate predecessor. Even some elements of style—the interrupted and hanging sentences, and the repeated words, for example—look like an imitation. By the way, render unto Caesar what is Caesar’s: it’s all to the honor of the White House to have reproduced multiple misspeaking events in the official transcript; refreshing honesty, it seems! But this is not what I want to focus on; I will give instead three substantive illustrations of Biden’s “economics.” On free trade, he comes close to 17th-century protectionism and to his immediate predecessor. Among other anti-economic statements, he said: There is simply no reason why the blades for wind turbines can’t be built in Pittsburgh instead of Beijing. No reason. None. No reason. What about the following reasons? Because the blades are cheaper in China so that “we” can use the savings to give money to the poor. Or because they are cheaper in China so that “we” can use “our” national resources to produce something else to export in exchange for more blades—which is, ignoring the collective “we,” the essence of the law of comparative advantage. Another big problem lies in what used to be called “equal pay for equal work.” As proposed by the Paycheck Fairness Act adopted in April by the House and sent to the Senate, it is not only about the fair sex but about any other sex too: the bill redefines sex as including “gender identity” (“regardless of the individual’s designated sex at birth”) as well as “sex characteristics, including intersex traits.” But let’s ignore these refinements and think of women’s remuneration compared to men’s. In his speech, Biden declared: We need to ensure greater equity and opportunity for women. And while we’re doing this, let’s get the Paycheck Fairness Act to my desk as well — equal pay. I assume Biden means “equal pay” for equal work by any person. The problem is, what is equal work? Politicians and bureaucrats don’t know that and cannot calculate it; they can only define it in any way they want (like they do when, for example, they redefine “sex”). Only the market—that is, the free interactions among 160 million individuals in the American labor force plus those with and among the owners of American companies—can compute what a specific job is worth. So “equal work” means nothing but work having the same value on the market or alternatively work with equal pay. Thus “equal pay for equal work” reduces to “equal pay for equal pay”—which goes without saying in classical logic. It is true that if employers or their employees or customers have what Nobel laureate Gary Becker called “a taste for discrimination,” some pay discrimination can survive competition, although Biden did not mention this argument. But the market has built-in mechanisms against discrimination. It is in an employer’s interest to increase his profits by poaching with a slightly higher wage somebody who, because of discrimination, is not paid the value of his productivity. Any employer not doing so is leaving money on the table. So those who discriminate will automatically pay a price for their discriminatory preferences. This is why free markets usually minimize discrimination better than governments, as was shown by Jim Crow laws. Ultimately, if women are still paid less than their actual productivity, why don’t women entrepreneurs start companies hiring only women? Investors would be excited to invest in such obvious money-making ventures. If one replies that current anti-discrimination laws would forbid that, one has just confirmed my argument about the inefficiency of the government in fighting discrimination. If you are not persuaded by this argument, replace “women” by “Caucasians” (Whites excluding Hispanics) and “men” by “Asian Americans,” and ask yourself whether Caucasian households earn less (on average) than Asian American households because they are discriminated against (at equal productivity). Source: Maddison Project. Reproduced from my book review “From the Republic of Letters to the Great Enrichment,” Regulation, Summer 2018, p. 59. Last but not least, Biden declared that trickle-down economics has never worked and it’s time to grow the economy from the bottom and the middle out. This big ideological statement flies in the face of economic history. The Industrial Revolution and the two centuries that followed showed that capitalism, at least if not too regulated and controlled by the government, benefits nearly everybody in society. The three charts I reproduce illustrate how “trickle-down economics” has worked extraordinarily well for ordinary people. It would be a mistake to think that the main cause for this incredible growth was technological progress, which could not have developed without 19th-century capitalism and even the constrained capitalism of the 20th century. Observe the meteoric growth in world GDP per capita (that is, production per capita) since the early 19th century, first starting in England and then spreading to the rest of the world. In constant dollars, world GDP per capita went from less than $1,000 in the early 19th century—roughly where it had been since the beginning of our era—to nearly $8,000 in 2010. Many observations and estimates show how ordinary people benefited from this increase in production and consumption; how, not surprisingly, it “trickled down.” One instance, related to many consequences of economic growth (such as better nutrition, health conditions, housing, etc.), is life expectancy. With the Industrial Revolution in England, life expectancy increased from about 40 years to today’s 81 years. The whole world followed, with an average increase of life expectancy from 30 to 73 years. (Click on the figure to see a larger image.) In most countries, the most humble person lives longer than most privileged individuals in times past. Reproduced from Johan Norberg, Progress: The Reasons to Look Forward to the Future (London UK: Oneworld, 2016) Just over the last 70 years, world undernourishment has decreased from half the world population in 1945 to barely more than 10% in 2015. Despite technical progress around them, under-developed countries took off economically only after abandoning the straightjacket of communist-inspired central planning. (In China and India, the return of authoritarian central planning could reverse the trend.) A final point, more normative: in a speech that wanted to look historical and representative of “the American idea,” Biden did not once mention the word “liberty”; he did not once mention the word “individual” either. This level of Newspeak is a feat that even his predecessor did not manage to accomplish. (0 COMMENTS)

One of the most important things economists can do in a pandemic is not forget what we know. We know that central planners don’t have enough information and insight about the lives and activities of 330 million people to plan those lives in a thoughtful way. We know the problems that emerge when you distribute something valuable by giving it away. We know that government officials face bad incentives. We know that externalities pose problems for the straightforward “leave it to the market” viewpoint, but that large government interventions create new problems. In the rush to make pandemic policy, too many of these lessons were cast aside. This is the opening paragraph of David R. Henderson, “Economic Lessons from COVID-19,” Reason, June 2021. Another excerpt: By the end of the Cold War, most economists—even some socialists—were acknowledging that Mises and Hayek had won the debate: The Soviet planners had failed because they had embarked on a task that could not succeed. But in the COVID-19 era, a lot of policy makers have let this lesson slip their minds. While few have advocated full-blown state socialism, many have forgotten the more general truth that officials don’t have enough information to make detailed plans about people’s lives. Take Gavin Newsom, the first governor to impose a statewide lockdown. The California Democrat listed 16 infrastructure sectors deemed so essential that they would not have to lock down. Restaurants, hairdressers, gymnasiums, and schools, not being among them, were compelled to close. So were large swaths of the retail economy. But Newsom did not base these regulations on a sophisticated understanding of what is essential and what is not. He couldn’t. No one has that understanding, for the reasons Hayek laid out long ago. The list of essential industries came from an old script; it was not highly correlated with the relative value of various industries and was not closely based on risks of spread. On the externality issue: To the extent there is an externality, we should also remember a point made by Nobel-winning economist Ronald Coase: The person who suffers from pollution downwind from a factory would not suffer if he weren’t there. That observation has led economists in Coase’s tradition to the concept of “least-cost avoider.” Economists tend to focus on the efficient outcome, and the efficient outcome requires looking at who has the lower cost of reducing or eliminating the externality. When people live near an airport, for example, the cheaper solution might be to have airplanes produce less noise. But it might instead be for homeowners to install double-pane or triple-pane windows. In this pandemic, governments have chosen to prevent a huge number of interactions among people who are at low risk of suffering from the disease. Given that the risk of death by COVID-19 for older people with comorbidities is orders of magnitude higher than the risk for the general population, the lower-cost solution would probably have been for the elderly to isolate themselves. Read the whole thing. (0 COMMENTS)