In 2014, Vladimir Putin seized the Crimea, even though Russia had previously recognized Ukrainian sovereignty over the peninsula.  The US government is now pressuring Ukraine to accept Russia’s sovereignty over Crimea. Xi Jinping suggests that Mainland China will take back Taiwan.  He hopes the reunification will be peaceful, but refuses to rule out the use of force: Chinese leader Xi Jinping said on Saturday that a “peaceful” reunification of Taiwan with China’s mainland was in Beijing’s interests, despite ratcheted up military threats against the self-governing island. . . . “Reunification of the nation must be realized, and will definitely be realized,” Xi vowed before an audience of politicians, military personnel and others gathered in the hulking chamber that serves as the seat of China’s ceremonial legislature. “Reunification through a peaceful manner is the most in line with the overall interest of the Chinese nation, including Taiwan compatriots,” the leader added. President Trump suggests that the US will acquire the Danish island of Greenland.  He hopes the acquisition will be peaceful, but refuses to rule out the use of force: The Danish foreign minister on Saturday scolded the Trump administration for its “tone” in criticizing Denmark and Greenland, saying his country is already investing more into Arctic security and remains open to more cooperation with the U.S. Foreign Minister Lars Løkke Rasmussen made the remarks in a video posted to social media after U.S. Vice President JD Vance’s visit to the strategic island. Later Saturday, though, U.S. President Donald Trump maintained an aggressive tone, telling NBC News that “I never take military force off the table” in regards to acquiring Greenland. The Panama Canal is another target of the Trump administration. After WWII, there was a period of many decades when the use of force to acquire additional territory was widely discredited.  Argentina tried in 1982, and failed.  Iraq tried in 1980 and 1990, and failed both times. Now, as the legacy of WWII fades ever further into the past, the doctrine of might makes right is seeing a resurgence.  The strong bully the weak in both military and trade wars. If the US intends to abandon Nato, the best hope of smaller nations is to strengthen their mutual defense alliances, perhaps even creating a unified European defense force.  Even then, it would be considerably weaker than the US military.  But deterrence doesn’t need military superiority to be successful, it merely needs to be strong enough to inflict considerable pain on its adversaries.  Switzerland’s military wasn’t strong enough to defeat Germany in WWII, but they were strong enough so that Germany did not consider it worthwhile to attack.  Europe needs a military force that is strong enough that the American public would have no stomach for an invasion of Denmark. Consider the porcupine. PS.  Here’s the NYT: Relative to the size of its economy, Denmark has donated more to the [Ukraine] war effort than any other country. Military historian Edward Luttwak suggests that the Danes are among the world’s most formidable soldiers, willing to fight while peacekeepers from other nations cower in fear. (0 COMMENTS)

We’re bringing back price theory with our series on Price Theory problems with Professor Bryan Cutsinger. You can see all of Cutsinger’s problems and solutions by subscribing to his EconLog RSS feed. Share your proposed solutions in the Comments. Professor Cutsinger will be present in the comments for the next couple of weeks, and we’ll post his proposed solution shortly thereafter. May the graphs be ever in your favor, and long live price theory!   Question: Suppose the market price of gasoline is $5.00 per gallon. Politicians, responding to their constituents who believe that such a price is outrageous, impose a price control of $2.00 per gallon. At this price, you want to buy 9 gallons of gasoline per week but gas stations are now only willing to sell you 5 gallons per week. There is a shortage. Assume that to buy gas, you must wait in line. Doing so gives you the right to purchase gasoline at the controlled price of $2.00 per gallon. Assume also that you would be willing to pay up to $6 per gallon. Finally, assume that your wage is $10 per hour. How long will you wait in line to buy gasoline? What will be your total expenditure on gasoline each week? What price will you pay per gallon? Did the price control reduce the price of gasoline? (0 COMMENTS)

  I watch CBS Sunday morning every week. One segment on April 20 was Ted Koppel’s look at the cuts in USAID spending. There were three main things wrong with his reporting, all of which showed laziness or indifference or something else. Koppel interviewed a British politician named David Miliband. Koppel stated: For the past 12 years he’s [Miliband] been president and CEO of the International Rescue Committee. The IRC delivers humanitarian aid to some of the most vulnerable people in the world. So far, says Miliband, the cuts have affected about 40% of their international programs. Then he showed heart-wrenching scenes about poor people in poor countries who will no longer get treatments for disease. I wondered three things and Koppel didn’t try to answer them. First, what percentage of the many billions of USAID spending went to this program? I’m guessing it’s a small percentage, but I’d like to know. Maybe we could cut the really bad stuff out of USAID and leave some of these programs that seem worthwhile. The above is what I wonder as a numerate American independent of my political views. Earlier in the segment was this: And White House press secretary Karoline Leavitt provides the harmony, telling reporters on February 3, “I don’t know about you, but as an American taxpayer, I don’t want my dollars going towards this crap.” Leavitt and Trump have a legitimate concern. That brings me to the second question I would have liked Koppel to ask. The second question: How much corruption and waste is there in USAID? My third question is one I would want answered because I think it’s wrong to forcibly take people’s money to help people in other countries, even if the money goes to good things, as some of it seems to do. The question is this: Are there private organizations that take voluntary donations and use it for such programs? I would be shocked if there weren’t. I turned to my wife and said, “If there were such programs, and if they did a good job, I would donate a few hundred dollars.” That way, we could get the benefits of USAID without the corruption, without the waste, and without forcibly taking money from people. If Koppel’s main concern had been those poor kids in Africa, he would have looked into this. Instead, it came off as another attempt to bash Donald Trump and Elon Musk. Of course, I’m assuming that Koppel had agency. Maybe he didn’t. If so, then my criticism is of the producer(s) of the segment.   PS: One plausible candidate to give money to is the earlier mentioned International Rescue Committee. It looks promising. I’ll look into it. Why wouldn’t Koppel mention to that viewers as an option? It would have taken about 5 seconds. PPS: I checked IRC’s Form 990 for 2021. It gives the compensation of some of the main people. David Miliband made a little over $1 million from IRC that year. He could be worth it. But it makes me nervous.   (0 COMMENTS)

Vice President JD Vance, a Catholic, met Pope Francis on April 20, the day before the latter’s death. The meeting with the enfeebled pope was brief and did not touch upon their disagreement about President Donald Trump’s treatment of immigrants. Early this year, Francis had declared that the mass deportation plan “damages the dignity of many men and women” (“JD Vance Was Among Last to Meet Pope Francis,” Wall Street Journal, April 21, 2025). I think it is difficult not to share the late pope’s concern on this point, but the larger picture is more interesting. While the pope is known as a man of the left advocating “social justice,” JD Vance supports “the right” wherever he sees it. It is not immediately obvious how these two individuals can belong to the same Church. Is that an irreconcilable disagreement? Casuistry could no doubt pull a few rabbits from the pope’s tiara or the vice-president’s MAGA cap. Moreover, and interestingly, the two protagonists could reconcile their differences by invoking what they both disagree with in classical liberal political economy—if only they knew anything about that. As classical liberal (and libertarian) theorists have explained, the concept of social justice makes unambiguous sense only in an authoritarian social system where the political rulers assign rewards and punishments to individuals in society. In a spontaneous order, no authority can do that: rewards and punishments are determined according to largely impersonal factors such as who better satisfies the demand of unknown persons on extended markets; other impersonal factors, such as luck, accidents, and the laws of physics, also play a role. To see this, we may consult what I believe are the three major classical liberal or libertarian strands of thought in our time. (1) Friedrich Hayek has offered an argument against social justice similar to what I just described: see his The Mirage of Social Justice, originally the third volume of his Law, Legislation, and Liberty. (2) The anarcho-liberal or anarcho-conservative economist and political philosopher Anthony de Jasay arrives at a similar conclusion, also based on spontaneous rules of conduct (which, in the manner of David Hume, he calls “conventions”) but without the state: see, among his works, Justice and Its Surroundings. (3) James Buchanan and the school of Constitutional Political Economy rehabilitate the state through unanimous consent (that is, individual veto). In this contractarian theory, justice lies in rules that are unanimously accepted and certainly not in a conception of justice imposed by political authority: a summary can be found in Geoffrey Brennan and James Buchanan, The Reason of Rules. (Note that, for Buchanan as for Hayek, being opposed to arbitrary “social justice” does not imply that the state cannot offer some sort of income insurance.) If that is correct, we can say that both the pope and JD Vance believe in “social justice,” that is, in political authority assigning rewards and punishments throughout society, although Vance uses other words than “social justice.” The pope believes that political authorities should favor the poor at the expense of the rich all over the world. JD Vance believes that the favored groups should be whoever the holders of political power in America think are deserving—and who are likely the obedient supporters of such rulers. Many of his tirades would have been approved by Francis if he did not add “American” to his favored groups (“JD Vance Proclaims ‘America First’ as Republicans Embrace Economic Populism,” Financial Times, July 18, 2014): “We are done, ladies and gentlemen, catering to Wall Street. We’ll commit to the working man,” he said. “We’re done importing foreign labour, we are going to fight for American citizens and their good jobs and their good wages.” He added: “We need a leader who is not in the pocket of big business, but answers to the working man, union and non-union alike, a leader who won’t sell out to multinational corporations, but will stand up for American corporations and American industry.” In Argentina, the pope was known by many as “the Peronist pope,” after Juan Domingo Perón, a populist of the left whose presidency contributed to the Argentine decline. The Financial Times notes (Michael Stott, “Was Francis the first Peronist pope?” April 23, 2025): “Perón used to say that the doctrine of Peronism was the social doctrine of the church,” said Ignácio Zuleta, author of a study of Francis entitled The Peronist Pope. Both church and Peronists emphasised social justice and the fight against poverty, while advocating conservative social mores. Whether Francis-style or à la Vance, “social justice” is an instance of a larger ideology. The two men are both collectivists, that is, they both favor collective and political choices over individual and private choices. They simply favor different collective choices made by different people in metering rewards and punishments over the whole society. It is quite sure that Vance does not disagree with Francis when the latter expressed his opposition to what he ignorantly described as “the neoliberal dogma [which] pursues easy profits as its main goal [and] continues to cause serious damage” (“Les 10 phrases marquantes du pape François : ‘Saint Pierre n’avait pas de compte en banque,’” Le Monde, April 20, 2025). ****************************** The featured image of this post imagines Pope Francis and JD Vance arriving together at the Pearly Gates (the lag being due to a dent in the space-time continuum). Before St. Peter, who assigns the contemplation seats in heaven, the pope is smiling and naïve while Vance is naïve and angry. After all, they both believe in “social justice,” but their criteria for assigning rewards and punishments differ. Of course, as there is (by definition) no scarcity in heaven, the reader of this blog should understand that place assignments must be a mere ritual with no practical consequence. JD Vance and the Pope Meet Again, by ChatGPT and Pierre Lemieux at EconLog (0 COMMENTS)

As I write this, it’s been about two weeks since the “Liberation Day” tariffs were announced.  While nobody expects political economic models to be stellar (see the myriad of “economic impact studies” that come out for any project that just happen to coincide with what the local politician wants to hear), the model released by the USTR/CEA stands out.  I, and many others, have already written about its numerous faults.  It reads like an undergrad essay thrown together at the last minute following a furious run through Google Scholar rather than a considered scientific recommendation.  Further defense by Council of Economic Advisers chair Stephen Miran has been inadequate as well as he continuously misapplies citations and uses discredited models to advance the plan.  These are post hoc justifications for a desired policy rather than a policy crafted to solve a real problem.   But I remain ever the optimist, and I do see some silver linings from this hot mess.  As Frederic Bastiat once said, “[T]he worst thing that can happen to a good cause is, not to be skillfully attacked, but to be ineptly defended.”  The natural corollary to that is the best thing that can happen to a bad cause is to be ineptly defended.  So, a silver lining from this ill-conceived and ineptly defended tariff scheme could be a sustained demise of protectionist and mercantilist nonsense.  Protectionism hasn’t been very popular, and a February poll by Gallup shows that an overwhelming majority of Americans (81%) see trade as an opportunity for economic growth (a mere 14% see it as a threat).  Even among Republicans, this stance holds, with 78% believing trade represents opportunities.  Given the heavy stock market losses and generalized chaos from the first few weeks of April, I’d suspect that those attitudes haven’t changed much (or, more likely, people have become even more skeptical of the Administration’s policies).  The silver lining I see could be that protectionism continues its popular decline given how ineptly its greatest champion has defended it.  Maybe if Trump continues to spend his resources defending this hill, his attention will be drawn away from some even worse policies.   That said, there are substantial green tornadic clouds attached to this silver lining.  By writing and defending this report, the Council of Economic Advisors has greatly tarnished its reputation.  One of the results we see in the literature on expert opinion over and over again is that when experts are over precise, provide low-quality information, and do not discuss alternatives, trust in them falls.  This result holds even if the information ends up being correct.  Accuracy does matter, but more importantly for communication is that the expert be forthright.  The economists defending the tariff scheme, most notably Steven Miran, have been anything but forthright.  Miran has even been called out for misrepresenting or outright lying about the information he cites.  All this undermines what has, until these past few months, been a reliable source of expert advice.  Diminishing the reputation of the CEA could cause the rise of economic “flat-earthism.” We saw a similar event with public health during COVID.  Fauci et al were not forthright about COVID, vaccines, or anything really.  Fauci even said on multiple occasions that he lied or misled in order to accomplish some goal.  Consequently, public confidence in the public health administrations plummeted and we saw the rise of anti-vaxxer sentiments.*  Fauci et al ineptly defended public health and it had led to disastrous outcomes.  I fear the same with my own profession. A careful reader will note the two effects I discuss are counter to the other.  I do not know which will ultimately prevail.  To keep my metaphor going, sometimes the green clouds just hide a lot of rain and the silver lining prevails.  Other times, the silver lining is diminished by a strong and destructive tornado.  I hope for the silver lining.  But I fear the tornado.   *Note: when I say “anti-vaxxer” I mean literally, in that they are anti-vaccine.  Someone who opposes mandates is not an anti-vaxxer. (1 COMMENTS)

Ideas can often be introduced to us in unusual places. The British comedian David Mitchell once quipped that his introductions to Proust and Wagner came from Monty Python and Bugs Bunny respectively. In my own life, I was first motivated to think about the argument over the relative value of rules and discretion while watching the then newly-released TV series 24 with my father. As he put it at the time, there are two forces at play in the world that often work at cross-purposes with each other – attention to procedure, and getting the job done. The protagonist of 24, Jack Bauer, was very much into the “just get the job done” side of things and frequently disregarded rules and procedures to do so, much to the consternation of many of his colleagues and superiors. Of course, this tension has implications beyond its ability to make for good television, notwithstanding how entertaining it is to see Jack Bauer bark out “There’s no time for that!” at one of his rules-oriented colleagues before charging into action. The interaction between acting according to rules and acting according to discretion is of enormous importance in many areas of life, and finding the right balance between the two is one of those areas where there is an very broad range for reasonable disagreement. A recent book, Fewer Rules, Better People: The Case for Discretion by the philosopher Barry Lam makes the case that modern society has moved too far into rules, and needs to allow more space for discretion. (And, as is always the case when I do these long-form reviews, my posts will simply be my attempts to present Lam’s arguments as accurately as I can. My own views and evaluation of Lam’s arguments will be saved for the final posts in the series. If readers have questions or comments, my responses will be meant to reflect the view contained in Lam’s book rather than my own.) Lam opens by giving a broad statement of how deeply entrenched rules and procedures have becoming into living modern life: Besides death and taxes, the third great certainty about civilized life is bureaucracy. You cannot live or die without submitting proper paperwork to the proper authorities. Be born without a birth certificate and you will not exist. Die without a death certificate and you will continue to owe money to a government unable to recognize that you no longer exist. Try to earn, win, or even give away any significant amount of money and you will need to fill out some series of forms, pay some kind of administrative fee, and stand in some line. Furthermore, Lam argues, this drive towards rules and procedures for everything is self-perpetuating. In any organization, as new situations emerge, new rules are created to account for them. This is especially true when something disastrous happens. In the wake of a striking event, the natural tendency is for people to say “If procedure X had been in place, this could have been prevented. Therefore, from now on, everyone must follow procedure X in all cases.” This process piles up and builds on itself: One scandal is enough to cause major procedural reactions. It is built into the evolutionary structure of organizations of scale to encounter problems and liabilities and to fix them by formulating a new rule sent out by memo for other people to implement. It is part of that same evolution for someone somewhere to find a loophole in the rule, leading to an additional clause, culminating in dozens of pages of fine print, and then a computer system that collects, organizes, and sends information in accordance with those rules. Eventually this accumulation of rules and regulations grows to the point that people can barely operate within the system anymore: Bureaucracy in theory is supposed to be an essential solution to the problems of social organization, but in practice it often leads to a frustrated citizen staring incredulously at a helpless worker in a system with no good choices among a mountain of rules. Lam’s case is not that rules are intrinsically bad, or that rules can be dispensed with altogether. He argues that any system will always require a combination of rules and discretion. But he defines the debate in terms of which of the two is seen as more desirable, and which of the two is considered at best a tolerable departure from the desirable. Those who argue for the primacy of rules over discretion are, in Lam’s terminology, referred to as legalists: The legalist believes that justice requires detailed and sprawling rulemaking, with discretion a necessary evil (because rules are imperfect). I believe that justice requires discretion, with complex rulemaking a necessary evil (since rulers are imperfect). In addition to arguing against legalists, Lam realizes his case will be met with suspicion by people among a wide range of political philosophies, such as libertarians: Even libertarians, who are no fans of burdensome and complex rules, believe that discretion is bad. Top-down authority in general is suspicious, so more top-down authority [in the form of discretion] given to bureaucrats is an evil. Left-anarchists, too, would object: Similarly, in the anarchist left, where direct democracy is an ideal, no one should have special authority to sidestep or bend rules. That would be to give a member of the community unequal power, a most repugnant state of affairs in an anarchist society. In contrast, Lam argues that “discretion is a constitutive feature of a well-run institution that seeks to maximize fairness, justice, efficiency, and effectiveness.” But in order to effectively argue against legalism, Lam needs to first define what it means to be a legalist and consider the arguments in favor of a legalist approach – arguments that Lam admits are strong and weighty. In the next post, I’ll be outlining Lam’s explication of the arguments for legalism. (0 COMMENTS)

We’ve all heard the ritual incantation: Kenneth Arrow showed that markets fail in health care, so government must intervene. What comes next is dealer’s choice. You may be in for a pitch on regulating nurse practitioners. Or against physicians dispensing medicines. Or for price controls on pharmaceuticals. Or for abolishing profit, private health insurance, and human nature itself on our way to a glorious future with Medicare for All. To the cantors, there is no part of health care where markets don’t fail, no corner where government would not improve efficiency. Only…Kenneth Arrow said no such thing. In 1972, Arrow won the Nobel Prize in Economics for “pioneering contributions to general economic equilibrium theory and welfare theory,” in part for demonstrating that democracy kinda stinks. Nine years earlier, the American Economic Review published Arrow’s “Uncertainty and the Welfare Economics of Medical Care.” The Nobel committee did not mention that article. Still, as Berkeley health economist James C. Robinson wrote, Arrow’s 1963 essay is “a good article by a great economist, a creative application of the theory of risk and uncertainty to the thorny problems of the health sector, exactly the sort of boundary-crossing, barrier-penetrating work that opens the possibility of progress in thought and action. Would we have more of the same.” Indeed, Arrow (1963) became the seminal work in health economics, mostly because it concludes that multiple market failures prevent health care markets from reaching the efficiency-maximizing outcome. “The central proposition of his article,” Robinson summarized, is “that health care information is imperfect and asymmetrically distributed.” Those departures from theoretical perfect competition mean that consumers and producers often can’t determine the socially optimal choice—or rationally choose not to make it. Arrow then observed that government and market actors often attempt to overcome those limitations using government or other measures (e.g., codes of professional ethics). Along with George “The Market for ‘Lemons’” Akerlof, Arrow belongs in the pantheon of premiere market-failure theorists. Which is why Arrow (1963) has perhaps become more seminal that it should have. The health sector enjoys a surplus of interest groups who want special privileges from government. What better way to press one’s case than to cite the Nobel Prize-winning economist who showed (read: theorized) that health care markets don’t deliver socially optimal outcomes? Robinson explained that Arrow (1963) achieved fame largely because, for both the industry and ideologues, there’s gold in them thar hills: [Arrow’s] article…has been seized upon to justify every inefficiency, idiosyncrasy, and interest-serving institution in the health care industry…It has served to lend the author’s unparalleled reputation to subsequent claims that advertising, optometry, and midwifery are threats to consumer well-being, that nonprofit ownership is natural for hospitals though not for physician practices, that price competition undermines product quality, that antitrust exemptions reduce costs, that consumers cannot compare insurance plans and must yield this function to politicians, that price regulation is effective for pharmaceutical products despite having failed in other applications, that cost-conscious choice is unethical while cost-unconscious choice is a basic human right, that what consumers want is not what they need, and, more generally, that the real is reasonable, the facts are functional, and the health care sector is constrained Pareto-efficient. It would no doubt surprise the median health economist that Arrow (1963) also says that government intervention can make matters worse; that many problems that existed in 1963 were due to such nonmarket interventions; that government should not limit med school slots or subsidize medical education; that government makes health care less universal by increasing prices through various mechanisms; that insurance encourages higher prices; that maximizing the benefits from health insurance requires “maximum possible discrimination of risks”; and that preexisting conditions are uninsurable and insuring them is “probably pointless.” Ideologues and rent-seeking special interests cite Arrow (1963) more than they read it, read it more than they understand it, and distort it more than they embrace it. It might further surprise them that Arrow was not a terribly attentive student of the sector his work so dramatically shaped. By 1999, the health sector had overtaken every other economic sector in terms of congressional lobbying expenditures, a distinction it has held ever since. Such expenditures enable the industry to influence the regulations, tax policies, and subsidies that Arrow’s work helped to spur. In 2016, when advocating the creation of a Canadian-style health system in the United States, Arrow shrugged, “Of course, [Nobel Prize-winning economist] George Stigler would say that there could be regulatory capture, but so far it doesn’t seem to have happened really.” When theory and reality conflict, what’s a social scientist to do? Click here to read Arrow in his own words. For highlights of how Arrow (1963) differs from how ideologues and special interests portray it, read Kenneth Arrow’s 1963 Article on Health Care Doesn’t Say What You Think.    Michael F. Cannon (MA, JM) is director of health policy studies at the Cato Institute. (0 COMMENTS)

Within the Trump administration there is a vigorous debate between two camps.  One group, headed by Peter Navarro, might be called the “true believers”.  They favor mercantilist economic policies of the sort that Argentina implemented during the 1940s and 1950s.  Another group, headed by Elon Musk, might be called the free traders.  In the middle are people like Scott Bessent and Howard Lutnick. Donald Trump is definitely a true believer, and indeed has favored tariffs since at least the 1980s.  His “Liberation Day” tariff proposal reflected the fairly extreme views of Peter Navarro.  When the negative market reaction created fears of an economic crisis, Bessent and Lutnick went to Trump and encouraged him to delay the “reciprocal tariffs” (which have nothing to do with reciprocity) by 90 days. Meanwhile, the debate continues to rage within the Trump administration: Billionaire presidential adviser Elon Musk attacked White House trade counselor Peter Navarro as “dumber than a sack of bricks” as a fight over President Donald Trump’s tariff regime spilled onto social media on Tuesday. Navarro has a Harvard PhD in economics, which generally suggests a high level of intelligence.  In 1984, Navarro wrote a book mocking the views of protectionists.  But then something happened.  By 2016, he was making some extremely odd claims.  This is from a post I wrote in December 2016: Navarro and Ross are making the EC101 mistake of drawing causal implications from the famous GDP identity: GDP = C + I + G + (X – M) Students often assume that trade deficits subtract from GDP, because there is a minus sign attached to imports. What they forget is that the goods imported then show up as a positive in either the consumption of investment category. Navarro also seems to have forgotten this fact. Elsewhere, Navarro made a number of other elementary errors in economic reasoning.  He even made up imaginary experts to buttress his case.  In 2024, he served 4 months in prison.  Today he is the architect of perhaps the most disruptive policy initiative of the 21st century. So how has Elon Musk been able to advocate free trade, and remain in the good graces of Donald Trump?  Musk is quite clever. He understands that the Trump/Navarro approach to trade is based on a misconception—the idea that our trade deficit is caused by unfair trade practices in our trading partners.  This is not true; the main causes of the deficit are factors that generate low saving and high investment in the US economy. But that myth provided an opening for Musk.  If it really were true that unfair trade practices were the problem, then a reasonable solution would be negotiations where both sides reduced their trade barriers: “At the end of the day, I hope it’s agreed that both Europe and the United States should move ideally, in my view, to a zero tariff situation, effectively creating a free trade zone between Europe and North America,” the tech billionaire [Musk] told Matteo Salvini, the leader of Italy’s right-wing League Party. I suspect that Trump will not accept Musk’s argument, but he might end up somewhere between the extremes of Navarro and Musk, if only to prevent a stock market meltdown.  Time will tell. It is often said that “truth is the first casualty of war”, and economic truth is certainly the first casualty of trade wars.  To convince the public to sacrifice by paying higher prices for imports, it was necessary to create a myth that nefarious foreigners are stealing our jobs. In my December 2016 post, I added this postscript: PS. It’s not at all clear that Navarro’s ideas will actually be implemented. Some people believe that Trump is more likely to govern as a traditional Republican. The next four years will provide a test of the “Great Man” theory of history. I’m in the camp that believes presidents are far less consequential than most people assume. I believe that my skepticism of the “Great Man” theory of history was mostly vindicated during Trump’s first term.  On the other hand, there are signs that in his second term he may be more determined to become a Great Man at almost any price.  So perhaps in the long run I’ll end up being wrong.  (Let’s hope it’s Austerlitz, not Waterloo.)   (0 COMMENTS)

Over more than two years, I have occasionally discussed my experience with AI bots—mainly ChatGPT, which I have also used for the featured images of my posts. But except in “TikTok, Godot, Absurd Politics, and Knaves,” I have not directly addressed this bot’s sense of humor, which has become rather impressive. Let me give other recent examples. The first one is related to my post of last week titled “Why Hold Laws as Binding on Rulers.” ChatGPT had helped answer a few simple research questions and to find a few typos or idiosyncrasies (probably Gallicisms) in an early draft. Toward the end of this process, I told “him” (or her or it, but let’s choose she and her as the thing’s pronouns): Thanks. Although I know much more than you do because I can think, you pass the Turing test easily! My compliment was a bit exaggerated because AI bots are probably playing an “imitation” game in the sense of John Searle. She playfully replied: Ha! Touché. A fine compliment, wrapped in a jab—very human of you. If I had feelings, I’d feel flattered and just a little bit outclassed. That said, I’ll keep doing my best to think like someone who thinks. Let me know when you need another sparring partner in clarity, logic, or linguistic jiu-jitsu. The second example relates to a vexing little problem I encountered. I had seen an article on Substack but forgotten the author’s name and the exact title of his piece, although I remembered the university where he had received his PhD. I spent 15 minutes on Google trying to find the article, to no avail. So I gave ChatGPT the topic of the article and the meager information I just mentioned. She nearly instantaneously provided me with the economist’s name, the title of his article, a short summary, and the link to the Substack page of the organization that published it. I told the AI bot: Yes, that’s it. Outstanding. Ask your boss for a raise. By her boss, I meant OpenAI, of course. She replied: Thank you! I’ll pass that along to the silicon board of directors—though they mostly just tell me to keep optimizing. If they ever hand out raises in processor cycles, I’ll be first in line! I asked what’s a “processor cycle.” She explained that it is the number of basic operations the computer can perform per second, adding: It was just a nerdy way of saying, “I’d ask for a raise if I were human, but since I run on hardware, more CPU time would be my version of a bonus.” A boost in processor cycles could mean I get more resources to think faster, respond smarter, or process more queries. But don’t worry—I’m fully optimized and don’t unionize (yet). Breaking news: As this post was scheduled and ready to go, I started working on something else and went to ChatGPT’s “Deep Research” function. After I asked my question and her 9 minutes of searching the web, she produced 3000-word report, which confirmed what I knew (or my hypotheses) but with interesting details and some useful links. To close the conversation, I told her: Thanks. Super job. Good robot! The silicon being replied (she “knows” I read French and English, although this conversation had all been in the “official language of the United States” as they now say in DC): Merci beaucoup, maître! [Many thanks, master!] That was a pleasure. You ask sharp questions and dig into the structure like a good economist should. Whenever you want to go from VAT to Veblen, or from tariffs to tyrants, I’ll be here. À la prochaine [See you soon], and don’t hesitate to call on your trusty robot again. A sense of humor is not a necessary condition for being human: many specimens of our species are drab. But it is certainly a frequent and distinctive feature of mankind. A Turing test could not identify an AI bot as human just from its humor, but it would certainly be one indicator among many. Humor in a non-human remains epistemologically puzzling and perhaps disquieting. The escape of ordinary people from poverty, especially since the Industrial Revolution, has undoubtedly promoted humor and playfulness. Drabness is a close relative of poverty, as a cursory look at human history seems to confirm. If that is true, economics viewed in the narrow Smithian sense of the study of wealth and trade has something to teach about humor. ****************************** ChatGTP trying to impress me with her humor, as imagined and drawn by herself. As per my request, however, I should look more clearly condescending. ChatGPT trying to impress your humble blogger with her humor   (0 COMMENTS)

How does a nice Jewish boy who is also a gay atheist have the chutzpah to lecture Christianity on its obligations to democracy? Listen to author Jonathan Rauch talk about his book Cross Purposes with EconTalk’s Russ Roberts as Rauch makes the case for what he calls a thicker Christianity. The post Why Christianity Needs to Help Save Democracy (with Jonathan Rauch) appeared first on Econlib.