This might look like a ridiculous question to ask about a soft-looking near-octogenarian who signals his virtue by repeating the inclusiveness mantra. But not so much if you define “dictator” as a political ruler who imposes on the whole population some shared preferences of the minority who brought him or keeps him in power. A more inclusive definition would replace “minority” by “majority short of unanimity.” Biden was elected by 51% of the American voters. If, to be inclusive indeed, we include the third of the electorate (that is, of Americans eligible to vote) who did not vote, Mr. Biden’s support shrinks to 34% (51% × 66%). Now, consider that many who voted for him probably did so only or mainly because they thought that his adversary, Donald Trump, was even worse—not an unrealistic hypothesis. If Biden imposes the preferences of 17% of the electorate to 83%, or even of 34% on 66%, he will be a dictator. (Note that my definition of the term is not very different from the one in Kenneth Arrow’s famous Impossibility Theorem.) An interesting article that bears on this topic is John G. Grove’s “Numerical Democracy or Constitutional Reality,” Law & Liberty (our sister website), November 12, 2020. Grove argues that the United States is a limited, compound republic, not a numerical democracy, and that the whole check and balance structure is meant to prevent a numerical majority from bulldozing the preferences of the rest. In this perspective, each side has a right to have its preferences incorporated in the winner’s legislation and an adverse electoral result is not, for the losers, a catastrophe to be corrected at any cost. By the very nature of government, however, it is not easy to prevent winner-win-all results: a law is enforced against everybody, especially against individuals who did not agree with it. It seems that, on the basis of an individualist philosophy, only a near-universal consensus could justify radical change. One disturbing implication is the following. Grove’s idea is a two-edged sword. When we start from several decades of a collectivist legislative and regulatory drift that has trammeled the minority of individuals who want to be largely left alone, even a new numerical majority may not and could not rapidly change course. Ronald Reagan, with his many good ideas (and a number of bad ones) did not bring much change and perhaps no lasting change. But for the same reason, thank God, Trump was not able to do more damage than he did. James Buchanan, the Nobel economist, understood the conundrum: How can one reverse dictatorship without being a dictator himself? The solution, Buchanan argues with Geoffrey Brennan in their book The Reason of Rules: Constitutional Political Economy (Liberty Fund, 2000[1985]), is a “constitutional revolution.” That is, we—“we” classical liberals and libertarians—need to promote radical change to which our fellow citizens can unanimously consent, at least in theory. This pedagogical and abstract task is not an easy one. (0 COMMENTS)

In a comment on co-blogger Bryan Caplan’s post this morning, I mentioned the fact that in the 1980s, star East German figure skater Katarina Witt was given a Trabant as a reward for her productivity. Many East Germans were allowed to buy Trabants but, as with most consumer items, there was a lengthy queue. Here’s a video about the Trabant. Watch it and you get some appreciation for what East Germans thought of as a reward for outstanding performance. A couple of facts: The top speed was under 6o mph. It was a 2-stroke engine that achieved 26 mph. Watch the video and you’ll learn a lot more about this Communist consumer item. Personal story In October 1999, I taught an economics course  in the MBA program in Prague run by the Rochester Institute of Technology. Wandering around Prague during my off time, I saw a handful of Trabants on the road. In October 2000, I was back to teach again and I didn’t see a single Trabant on the road. After Communism, Trabants were replaced largely by Skodas. The comparison between the two is stark.     (1 COMMENTS)

In 2018, Amity Shlaes had an impressive essay in the City Journal. I’ve read it only now because it was published on the City Journal’s website. That is quite apropos, given the controversy surrounding US history at the moment. Shlaes’s thesis is outlined in the very first lines: Free marketeers may sometimes win elections, but they are not winning U.S. history. In recent years, the consensus regarding the American past has slipped leftward, and then leftward again.” Freedom is under appreciated in academia, equality is over appreciated: this is building a narrative that emphasizes political fights for equality at the expense of the springs of economic opportunity. Shlaes focuses on top political figures. Her hero, to whom she devoted a splendid biography, is Calvin Coolidge, Coolidge is described in the article as a staunch fighter for economic freedom, who put “markets first,” understanding their power in creating prosperity. He reversed the quite inauspicious beginning of the 1920s through tax cuts which worked as they are supposed to, according to the supply-side playbook. A sort of anti-hero is Herbert Hoover (“Hoover thoroughly intimidated business and markets, blaming them for hogging too much of the money”) and an even bigger anti-hero is Lyndon Johnson, who simply “assumed growth”, thinking that free enterprise would produce its marvels whatever the incentives. The essay finishes with a plea to “fostering of new institutions that will, in turn, nurture economics thinkers who dare to acknowledge the merits of markets.” I’d be interested in Shlaes’s view, two years after her piece, about how we are doing toady. Has the pandemic weakened or strengthened those institutions? Can the intellectual movement for free enterprise flourish after Covid19? Or is it substantially more feeble and less cogent now, both in the fields of history and economics?   Editor’s Note: Shlaes recorded a podcast with Law & Liberty focused on her Coolidge biography. (0 COMMENTS)

Today our Book Club continues with Chapter 3, “War Is Peace.” Please leave your thoughts and questions in the comments and I’ll do an omnibus reply later this week. All of the disputed territories contain valuable minerals, and some of them yield important vegetable products such as rubber which in colder climates it is necessary to synthesize by comparatively expensive methods. But above all they contain a bottomless reserve of cheap labour. Whichever power controls equatorial Africa, or the countries of the Middle East, or Southern India, or the Indonesian Archipelago, disposes also of the bodies of scores or hundreds of millions of ill-paid and hard-working coolies. Ill-paid and hard-working, but with little human or physical capital. Moreover, the labour of the exploited peoples round the Equator is not really necessary to the world’s economy. They add nothing to the wealth of the world, since whatever they produce is used for purposes of war, and the object of waging a war is always to be in a better position in which to wage another war. By their labour the slave populations allow the tempo of continuous warfare to be speeded up. But if they did not exist, the structure of world society, and the process by which it maintains itself, would not be essentially different. A thoughtful concession, though even the “tempo” claim is debatable.  Counting transportation costs, do these desperate workers even produce more than they cost to manage? The primary aim of modern warfare (in accordance with the principles of doublethink, this aim is simultaneously recognized and not recognized by the directing brains of the Inner Party) is to use up the products of the machine without raising the general standard of living. Ever since the end of the nineteenth century, the problem of what to do with the surplus of consumption goods has been latent in industrial society. Orwell seems unaware of the textbook answer.  What is to be done with surplus consumption goods?  Cut their prices until people buy all you create!  What if you can’t make a profit at these reduced prices?  Then cut input costs or produce something in greater demand.  What if even that doesn’t work?  Then print more money. In the early twentieth century, the vision of a future society unbelievably rich, leisured, orderly, and efficient — a glittering antiseptic world of glass and steel and snow-white concrete — was part of the consciousness of nearly every literate person. Science and technology were developing at a prodigious speed, and it seemed natural to assume that they would go on developing. This failed to happen… This is a good time to take a break from being depressed by Orwell’s dystopia and acknowledge that in the real world, this “vision of a future society” is our present.  Or at least it was back in 2019. From the moment when the machine first made its appearance it was clear to all thinking people that the need for human drudgery, and therefore to a great extent for human inequality, had disappeared. Hardly.  The case for economic inequality in the machine age remains as strong as ever.  We need incentives for work, skill acquisition, and innovation.  And incentives aside, the repression required to greatly reduce such inequality is terrifying.  See “Harrison Bergeron” or the Khmer Rouge. If the machine were used deliberately for that end, hunger, overwork, dirt, illiteracy, and disease could be eliminated within a few generations. And in fact, without being used for any such purpose, but by a sort of automatic process — by producing wealth which it was sometimes impossible not to distribute — the machine did raise the living standards of the average human being very greatly over a period of about fifty years at the end of the nineteenth and the beginning of the twentieth centuries. A shocking concession for a socialist like Orwell.  And note that the “automatic process” to which he refers practically has to be the free-market mechanism, which “distributes wealth” by driving down the prices of abundant products.  Walmart is only the latest incarnation. But it was also clear that an all-round increase in wealth threatened the destruction — indeed, in some sense was the destruction — of a hierarchical society. In a world in which everyone worked short hours, had enough to eat, lived in a house with a bathroom and a refrigerator, and possessed a motor-car or even an aeroplane, the most obvious and perhaps the most important form of inequality would already have disappeared. If it once became general, wealth would confer no distinction. Orwell seems oblivious to the “rat race.”  Once everyone has enough to eat, having enough to eat confers no distinction.  But what you eat still does.  We can’t show off by eating big bags of rice, but we can show off by eating in fancy restaurants.  Distinctions have ye always. It was possible, no doubt, to imagine a society in which wealth, in the sense of personal possessions and luxuries, should be evenly distributed, while power remained in the hands of a small privileged caste. It is also possible to imagine a society in which the necessities of life are evenly distributed, but luxuries are not.  Nowadays, that’s basically every rich country. But in practice such a society could not long remain stable. For if leisure and security were enjoyed by all alike, the great mass of human beings who are normally stupefied by poverty would become literate and would learn to think for themselves; and when once they had done this, they would sooner or later realize that the privileged minority had no function, and they would sweep it away. In the long run, a hierarchical society was only possible on a basis of poverty and ignorance. Silly.  The mere possession of ample luxuries rarely leads anyone to “think for themselves.”  Humans don’t need poverty to “stupefy” them, because apathy and superficiality are deeply rooted in human nature.  And if humans thought for themselves competently, they would realize that the “privileged minority” serves the vital functions of (a) providing skilled labor and (b) innovating. Nor was it a satisfactory solution to keep the masses in poverty by restricting the output of goods… The problem was how to keep the wheels of industry turning without increasing the real wealth of the world. Goods must be produced, but they must not be distributed. And in practice the only way of achieving this was by continuous warfare. The essential act of war is destruction, not necessarily of human lives, but of the products of human labour. War is a way of shattering to pieces, or pouring into the stratosphere, or sinking in the depths of the sea, materials which might otherwise be used to make the masses too comfortable, and hence, in the long run, too intelligent. This ridiculous story brings a much more plausible one into focus.  Namely: War serves the function of maintaining fanatical social cohesion.  Stalin really did keep the Soviet people in constant fear of foreign invasion.  And his motive was clear: Paranoid fear of outsiders rationalizes domestic oppression.  “No one wants this suffering, least of all Comrade Stalin.  Sadly, our foreign enemies have forced these drastic measures upon us.  And anyone who questions these measures is an obvious lackey of our enemies.” It is deliberate policy to keep even the favoured groups somewhere near the brink of hardship, because a general state of scarcity increases the importance of small privileges and thus magnifies the distinction between one group and another. By the standards of the early twentieth century, even a member of the Inner Party lives an austere, laborious kind of life. Nevertheless, the few luxuries that he does enjoy his large, well-appointed flat, the better texture of his clothes, the better quality of his food and drink and tobacco, his two or three servants, his private motor-car or helicopter — set him in a different world from a member of the Outer Party, and the members of the Outer Party have a similar advantage in comparison with the submerged masses whom we call ‘the proles’. The social atmosphere is that of a besieged city, where the possession of a lump of horseflesh makes the difference between wealth and poverty. If even the elite lives poorly, what’s the motive behind all the cruelty?  Power-hunger, power-hunger, and more power-hunger. And at the same time the consciousness of being at war, and therefore in danger, makes the handing-over of all power to a small caste seem the natural, unavoidable condition of survival. Quite sensible.  There’s no need to appeal to silly stories about personal comfort somehow leading to critical thought. War, it will be seen, accomplishes the necessary destruction, but accomplishes it in a psychologically acceptable way… What is concerned here is not the morale of masses, whose attitude is unimportant so long as they are kept steadily at work, but the morale of the Party itself. Even the humblest Party member is expected to be competent, industrious, and even intelligent within narrow limits, but it is also necessary that he should be a credulous and ignorant fanatic whose prevailing moods are fear, hatred, adulation, and orgiastic triumph. In other words it is necessary that he should have the mentality appropriate to a state of war. Quite right.  Notice, moreover, that this mechanism can easily function without a diabolical mastermind at the helm.  Just say: Power-hungry leaders naturally tend to make enemies with other power-hungry leaders.  And once conflict erupts, power-hungry leaders don’t have to be geniuses to realize that conflict helps reinforce their power by promoting fanatical social cohesion. It does not matter whether the war is actually happening, and, since no decisive victory is possible, it does not matter whether the war is going well or badly. All that is needed is that a state of war should exist. In the twentieth year of the War on Terror, this sounds strangely familiar.  When you’re in the business of amassing power, numeracy is very bad for business. (1 COMMENTS)

Poet and author Dana Gioia talks about his book Studying with Miss Bishop with EconTalk host Russ Roberts. They talk about the craft of being a poet, the business world, mentorship, loss, why poetry no longer seems to matter, and how it might begin to matter again. The post Dana Gioia on Learning, Poetry, and Studying with Miss Bishop appeared first on Econlib.

My question is only partly rhetorical. Just two days after I published my post “Vaccine Adventures,” I read in the Wall Street Journal that the federal and state governments had started allocating vaccines to large pharmacy chains, including Walmart (Sharon Terlep and Jaewon Kang, “CVS and Walmart Decide Who Gets Leftover Covid-19 Vaccine Doses,” February 11). After reading this story in the wee hours of February 12, I went on Walmart’s website and, in just a few minutes, made myself an appointment for six days later. Appointments are available at 20-minute intervals during the whole day. The efficiency of Walmart is legendary despite its being a behemoth, just as the inefficiency of the government is legendary because it is a behemoth (and other reasons explored by the economics of public choice). Yesterday, another Wall Street Journal story described the rollout of Walmart’s Covid-19 vaccination (Sarah Nassauer, “Walmart’s Covid-19 Vaccine Rollout Heads to Small Town,” February 14). To get an idea of “what the weather [is] really like on earth” (le vrai temps qu’il fait sur la terre) to borrow an expression from Saint-Exupéry (in his novel Southern Mail or Courrier Sud), a few quotes from this Wall Street Journal story are useful: Skowhegan, Maine—Pat and John Thomas were watching the news one night last week when they saw that Walmart in this central Maine town of 8,000 people was taking appointments for the Covid-19 vaccination. They had signed up for shots at a hospital about a month ago but still hadn’t heard back. Ms. Thomas, a 74-year-old retiree, jumped on the computer. On Friday the couple got the Skowhegan Walmart’s first doses … Walmart Inc., the U.S.’s largest retailer and private employer, is set to become one of the biggest distributors of the Covid-19 vaccine as the federal government enlists retail pharmacies to accelerate what has been a choppy rollout. … Walmart is likely to benefit in other ways. Many of the people getting the vaccine at the Skowhegan store Friday didn’t previously have patient profiles in Walmart’s system, said [regional Walmart manager] Mr. Tozier. “We are making relationships with new patients,” he said. Ann Jackson and her husband, Norman Jackson, 73 and 76 years old respectively, arrived for their vaccine appointment midmorning after waiting for weeks to get an appointment at the local hospital, said Ms. Jackson. Later, she added chips, bananas and T-shirts to her cart. “You never want to waste the trip to Walmart,” she said. Contrary to what I implied in my previous post, there seem to be incentives enough for private pharmacies, at least those with a Walmart sort of efficient logistics, to administer Covid-19 vaccines when Big Brother releases them. Such recourse to private enterprise could partly protect us from the central planners in DC and the state capitals. But why give the vaccines to some private organizations but not others—say, to Walmart but not to Hannaford? Is it because the central planners know better where demand is most intense or where low-cost distribution is most likely? That would possibly be a first in the history of mankind. It would have been much more efficient, from the beginning, if the government had sold the vaccines to whoever was willing to buy them in order to make a profit and had given vouchers to whoever wanted to be vaccinated. After this redistribution of purchasing power, the market—that is, individual demands—would have decided where the vaccines should go. (0 COMMENTS)

Last week I posted on the lockdown debate between Phil Magness and Jeremy Horpedahl. I noted that Horpedahl and Magness were not very far apart on lockdowns. Magness opposes lockdowns and Horpedahl favors only very limited local lockdowns in response to local information about spikes in cases. Today I watched the whole discussion over in order to focus on the extent to which they agreed or disagreed on mask mandates. There was more disagreement on mask mandates, with JH (I’ll use initials from now on instead of full names) favoring mandates more than PM. What was also interesting, though, is the extent to which they agreed. I’ll note some highlights and then briefly note other interesting parts of the discussion that didn’t relate to masks. Masks JH  argued (at about 15:10) that mask mandates are a small restriction on liberty. He also stated, though (at about 17:00), his strong objection to governors like South Dakota’s Kristi Noem telling that state’s residents that if they want to wear a mask, that’s fine, and if they don’t, that’s fine also. Politicians, he argued should be pushing personal responsibility. Notice, though, that the mask messaging of politicians is different from the issue of mandating masks. Like JH, I would have preferred that Governor Noem strongly recommend masks. She could still say that it’s a personal choice but that in indoor situations with other people present, the wise choice is to wear them. PM noted (45:40) that masks work indoors and that (46:40) 80% of the public wears masks when venturing out. Given that high percentage use, PM asked (54:10), what does a mask mandate achieve? JH noted (56:10) that PM’s 80% figure is right but that in private indoor spaces (family gatherings, etc.) the percent is much lower. JH dd note that the mandate won’t get at that indoor behavior in people’s homes. He’s not quite right, by the way. Wc could have police patrolling houses to enforce a mandate. Fortunately, JH didn’t even countenance that; good for him. In short, both clearly opposed pushing enforcement into people’s homes. JH later (1:08:30) pointed out that a lot of people comply with the mask mandate because it is the law. I agree. Which means that a mask mandate, even if not enforced strongly, will cause many people to wear masks. I asked JH a question on line that they didn’t get to in Q&A. It was this: What is the extent of the mask mandate you favor. Do you favor it for indoors vs. outdoors, for example? (That wasn’t the exact wording but I don’t have the exact wording.) I was surprised that in 1.5 hours of discussion, at least 15 minutes of which were about masks, the question of indoor vs. outdoor didn’t come up. I still would like to know. I want to know for two reasons: one intellectual and the other personal. When I walk around Monterey in pretty undense situations where I can walk by people quickly and stay at least 5 feet from them and usually 6 feet or more, I often get dirty looks (I think: it’s hard to tell whether the looks are dirty when people are wearing masks) and even critical and sometimes nasty comments from mask wearers. Does JH think that, if I were a carrier, I would be putting these people at much risk? Vaccine Mandates This was probably the area in which there was the biggest difference. JH said (1:09;20) that schools already have mandates for various vaccines so having a mandate for children to be vaccinated is not a large step. He also said that it’s reasonable to have a mandate for people who want to travel internationally or even on buses. He said that you could have a rule that if you aren’t vaccinated, then you would have to follow the other rules about masking and distancing. My question: How would an official know who was vaccinated? Wouldn’t it have to be something like “Show me your vaccine card.” PM answered (1:11:00) that it’s premature even to consider a vaccine mandate when current demand vastly exceeds supply. PM also made 2 other points. First, remember the infamous Supreme Court case of Buck v. Bell in which the Court found forced sterilization constitutional and cited as precedent the existing compulsory vaccination laws. (That was the case in which Oliver Wendell Holmes, Jr., justifyng forced sterilization, stated “Three generations of imbeciles are enough” and leading me to wonder whether Mr. Holmes had grandchildren.) Second, said PM, it doesn’t make sense to require the tens of millions of Americans who have had COVID-19 to get vaccinated. Trading Off Lives and Mental Health One questioner asked how lives saved from government interventions should be traded off against mental health. Both JH and PM gave thoughtful answers. JH pointed out (1:23:00) that many people have a tendency to dismiss the value of the lives of the elderly because they have little of it left. But he noted that many of the elderly badly want to live and that one reason is to be around grandchildren. People in their 20s, on the other hand, often take big risks that suggest that they don’t necessarily value their lives very highly. He could have cited a study that I think was done by Robert Hall, Gary Becker, and another economist that found older people willing to pay a lot to live another few months. (My memory on this is vague.) PM noted (1:25:00) that the question of the tradeoff between lives and mental health assumes the efficacy of interventions, which is something that has not been established. He noted also that the very lockdowns at issue often require the elderly to wither away in nursing homes, being able to visit their loved ones only through a window. I have two personal stories that relate directly to PM’s point above. The father-in-law of a good friend of mine is about 95 years old. He was in a nursing home and was isolated by law even though he didn’t have the disease. My friend’s wife (the elderly man’s daughter) flew all the way from California to Pennsylvania so that she could take him to a doctor’s appointment. That was the only way she could actually visit him in person. This is insane. A few months ago, they decided to move him out of the nursing home and into the home of one of the elderly man’s daughters so she could take care of him. Another friend in the Monterey area who’s quite wealthy had a mother-in-law stuck in a nursing home in Pennsylvania. She was stuck there because of the regulations and not doing well. My friend hired a jet to bring her out to Monterey, where she had a good last few months before dying late last year. (0 COMMENTS)

Here is someone arguing against loosening regulations to allow more home building, unless supported by the neighborhood in question: I would only support upzoning in order to create affordable housing if the zoning changes were supported by the community that they would affect. Currently, our land use process provides inadequate opportunity for substantive community input. I oppose upzoning our City’s historic districts. We can address our city’s affordable housing needs without changing the character of our City’s neighborhoods. Here’s another example: Did you know that an advisory panel in San José has recommended the elimination of single-family home zoning on neighborhood streets away from major boulevards and transit? This betrayal of the families in those neighborhoods contravenes the Envision San José 2040 General Plan that was adopted after much civic input. This so-called “Opportunity Housing” concept also contravenes common sense. . . . [It] is a recipe for neighborhood strife around parking, noise, and privacy. It also goes against the city’s pledge to protect the character of often-historic blocks not on major boulevards or adjacent to transit. Such a move would nuke the neighborhoods that give San José charm, character, and breathing room. The first statement was made by Maya Wiley, a progressive running for mayor of New York.  The second comes from the Santa Clara California Republican Party. We are frequently told that America is polarized between liberals and conservatives, and there is clearly some truth in that claim.  But perhaps we are missing an even bigger polarization, between those who focus on the seen and those who focus on the unseen.  (BTW, the title of this post comes from Frederic Bastiat’s brilliant essay on opportunity cost.) Proponents of NIMBYism on both the left and the right are opposed by those who focus on the unseen effects of zoning restrictions, that is, all the anonymous people who will never be able to live in areas with lots of great jobs because the local residents refuse to allow new construction. There are many proponents of protectionism in both political parties.  They focus on the easily seen impact of imported goods, which is a loss of jobs in import competing industries.  They are opposed by people on both sides of the ideological spectrum who  focus on the unseen effects of protectionism, such as a loss of jobs in export industries. A few years ago, a bipartisan group of Congressmen successfully repealed the “Cadillac tax” on health insurance, which aimed to gradually phase out the heavy subsidy that the federal government currently provides to health expenditures made through company insurance plans.  They focused on the easily seen consequences on worker paychecks and health care jobs.  They were opposed by people on both sides of the ideological spectrum, who worried that the subsidy to health insurance causes costs to explode, thus reducing real wages for future generations. People on both sides of the ideological spectrum often favor fiscal stimulus.  Other people on both sides of the ideological spectrum worry about its unseen effects, such as crowding out. People on both sides of the political spectrum worry that immigration will reduce wages.  Others on both sides of the political spectrum think about future generations of people who are not now but will become American, and who will be better off because they were allowed to immigrate to America in the 2020s. People on both sides of the political spectrum favor government deposit insurance to protect savers when a bank fails.  Other people (including FDR) worried about the less visible moral hazard thereby created, the tendency of insured banks to make riskier loans than uninsured banks. People on both sides of the political spectrum have advocated that universities fire people who make offensive statements about Israel, or about minority groups.  Others worry about the chilling effects of moving away from a tradition of free speech. Yes, in America we have the Democrats and the Republicans.  But perhaps at a deeper level the actual split is between the party of the seen and the party of the unseen. (0 COMMENTS)

This caught my eye: [Arindrajit] Dube responds that “one has to be honest about not knowing what would be the impact in every place.” But he points to 2019 research by Anna Godoey and Michael Reich of the University of California at Berkeley, who found that increases in state minimums didn’t hurt employment even in low-wage counties where the new floor equaled 82% of the prevailing median wage. And even if a high minimum wage does kill some jobs—as many studies, though not Dube’s, show it would—it can still be worthwhile if it raises incomes of low-wage families overall, he says. Some experts say that as with free trade, which helps more people than it hurts, any losers could be made whole with government assistance. Yes, free trade is an excellent analogy for labor market policy, but not for the reasons cited by Peter Coy in this Bloomberg article. Economists typically evaluate issues from both an equity and efficiency perspective.  Many economists favor policies that maximize efficiency (making the pie as large as possible), combined with some redistribution to compensate the losers.  Thus they favor free trade, combined with a program to help workers that lose their jobs due to import competition. Oddly, Peter Coy seems to think this analogy points in the direction of boosting the minimum wage.  Exactly the opposite is true.  If we wanted to match the standard economic approach to international trade, we’d abolish the minimum wage and replace it with some sort of subsidy for low wage workers.  Even if that were politically impossible, you would definitely not want a $15 minimum wage.  A much superior policy would be a $10 minimum wage combined with a $5/hour wage subsidy, where the subsidy phases out at the rate of 50 cents/hour for each $1/hour pay raise, ending entirely when pay reaches $20/hour. (Teenagers could be excluded from the subsidy, if they are not living independently.) I’m not saying this would be ideal (I’d prefer no legal minimum), but it would be much more in the spirit of the “free trade plus compensating the losers” analogy that Coy uses to justify a higher minimum wage. It would be aimed at making the pie as large as possible, while compensating the less fortunate. (0 COMMENTS)

“I am convinced that if it were the result of deliberate human design, and if the people guided by the price changes understood that their decisions have significance far beyond their immediate aim, this mechanism would have been acclaimed as one of the greatest triumphs of the human mind.” ~ FA Hayek, The Use of Knowledge in Society   The price system is one of the greatest, and most understood, elements of society. Prices drive market exchange. They tell us who wants what and how much of it they want it, and they give others a reason to supply it. The ways in which prices and markets guide human interaction are endless and fascinating. Anyone who has taken Econ 101 knows – or should know – that market exchanges are based on mutual benefits. If I want a cup of coffee more than I want $2, and you want $2 more than a cup of coffee, an exchange takes place and we’re both better off. The purchase of a coffee is an example we’re all familiar with. But an interesting feature of markets is that it’s not always clear who should pay whom. How much is the old couch in you garage worth? Maybe you could get $50 for it. Maybe it would be taken if you left it by the curb with a “FREE” sign. Maybe you’d have to pay for two guys with a truck to come and haul it to the dump. Which brings us to the Super Bowl halftime show. The NFL needs a big musical artist to perform. Viewers have come to expect a big show, and many of them aren’t actually that interested in the football game. A promising up-and-comer with a niche following just won’t do. The big game needs a big star. The performer who takes the stage at halftime is guaranteed a massive audience –more than 100 million– plus lots of media coverage. Even globally known artists like Jennifer Lopez, Shakira, and Maroon 5 have seen increased sales and streams following a Super Bowl performance, enough to put millions of dollars into their pockets. So should the NFL pay an artist to perform? The singers and bands who are offered this opportunity typically earn hundreds of thousands for every show they do. Or perhaps the artist values the opportunity enough that they should pay the NFL? A 30-second advertisement during the Super Bowl goes for upwards of $5 million. At that rate a 15-minute show provides exposure worth over $150 million! In recent years the solution has been that the musical artists play for free and the NFL and its sponsors pay for the costs of producing the show – estimated to be upwards of $10 million. It’s a simple solution that avoids haggling over fees and writing checks. Some performers do turn down the opportunity, but there doesn’t seem to be a shortage of rock, pop, and rap stars for whom “nothing” is the right price. But what if someone is leaving money on the table? If 15-minutes during one of the most-watched events of the year is really worth $150 million, then musicians and their labels should be shelling out for the opportunity. But perhaps the rules of marketing soft drinks and cars don’t apply to music. The NFL spends tens of millions of dollars organizing the Super Bowl. Shouldn’t they be willing to pay a million-dollar performance fee to have just the right entertainment at halftime, rather than insisting on someone who will play for free? Wouldn’t the most popular artists in the world demand such a fee if they believed they could get it? Well, it turns out that The Weeknd paid $7 million to perform at Super Bowl LV. The singer “spent almost $7 million of his own money beyond the already generous budgets to make this halftime show be what he envisioned,” his publicist told the New York Post. Perhaps The Weeknd is just an uncompromising artist with a specific vision for what his turn on one of the world’s biggest stages should look like. But perhaps he knew that compared to the immense value of the air time he was receiving, $7 million was a relative bargain and a shrewd investment in his brand. It will be interesting to see what happens in future years. Some candidates for next year’s show might be willing to work with the NFL for free, but the ones who really want it may have to show them the money.   Matt Bufton co-founded the Institute for Liberal Studies in 2006 and has served as the Executive Director since 2010. (0 COMMENTS)