As the US government’s enervation and economically illiterate interventionism fuel trade wars and dreams of autarky, it is worth looking at the long historical experience of economic isolation that started under the late Chinese emperors at the time of our High and Late Middle Ages. Three books help us understand the world in that regard. The autarky episode is summarized in Water Schiedel, Escape from Rome: The Failure of the Empire and the Road to Prosperity (Princeton University Press, 2019, pp. 400 ff.), which I reviewed in Regulation under the title “Let’s Travel That Road Again” (Spring 2020). Schiedel wrote: In the late fourteenth century, the [Ming] dynasty’s founder, the Hongwu emperor, embarked on ambitious antimarket reforms that sought to restore autarkic village economies … The [previous] Mongol [1271-1368] regime first set up a state monopoly on overseas trade and then banned private merchants from dealing with foreign parties altogether. The Ming followed suit: in the late fourteenth century, coastal residents were forbidden to venture overseas. Only state-run “tribute missions” were allowed to do so. Further bans of private maritime commerce were issued in the fifteenth century and sometimes even extended to coastal shipping. It is interesting here to open a parenthesis and reflect on the fact that, in the United States, coastal shipping is, since the 1920 Jones Act, limited to American-flagged, American-built, and American-crewed vessels, which has greatly increased shipping costs and made American maritime shipping (and shipwards) a puny competitor of its equivalent in contemporary China, South Korea, and Japan. (See the work of Colin Grabow.) Schiedel continues with Chinese autarky and economic isolationism that have strangled the country’s development until the late 20th century: At various points in the sixteenth century, the [Chinese imperial] government prohibited the construction and operation of large oceangoing ships and authorized coastal authorities to destroy such vessels and arrest any merchants on them. … Guangzhou was designated as the only legitimate port for foreign trade in 1757. … Bans did not stop trade but slowed it down, most notably from the fourteenth through the sixteenth centuries, when European overseas commerce embarked on its great expansion. Yet even if state fiat could not hope to put an end to private ventures, it did create antagonism between the authorities and merchants, deprive government of revenue, limit the scale of exchange, and promote corruption. The criminalization of commercial activities imposed additional costs, as merchants were forced to evade detection and bribe state agents to turn a blind eye. The experience of Chinese autarky must be compared with the openness to trade and to new ideas and products that characterized many Western countries or city-states at the time. Another important book in that regard is Joel Mokyr’s A Culture of Growth: The Origin of the Modern Economy (Princeton University Press, 2017), which I reviewed in Regulation under the title “From the Republic of Letters to the Great Enrichment.” Mokyr writes (p. 315): The importance of the Enlightenment for Europe’s subsequent economic development goes beyond its impact on the exploitation of useful knowledge for material progress, the essence of the Industrial Enlightenment. It also codified and formalized the kind of institutions any society needed to maintain its technological momentum: the rule of law, checks and balances on the executive, and severe sanctions on more blatant and harmful forms of rent-seeking. … After it discovered China, the West eagerly borrowed Eastern ideas and imported goods. For example, “chinaware” was exotic and much in demand, and did not disguise its foreign origins. On their side, the Chinese elite were not interested in “cultural appropriation” from the West, so the country remained insular and mired in the past. It was soon lagging far behind the West in economic growth. Finally, I have often recommended A Theory of Economic History (Clarendon Press, 1969) by John Hicks, who won a Nobel prize in economics a few years later. I think it is the most delicious economics book I have read. It is also very relevant to understanding the benefits of exchange and international trade. (I am not far from thinking that when one arrives at the Pearly Gates, St. Peter’s first question is, “Have you read A Theory of Economic History?”) In a Regulation review (“John Hicks and the Beauty of Logic,” Winter 2014-2015), I wrote: A Theory of Economic History is a continuous celebration of exchange and its liberating power. “So long as trade is voluntary, it must confer an All-round Advantage,” wrote Hicks. Exchange leads to economic growth, which is what people generally want. Merchants and other middlemen and financiers created modern trade and foreshadowed the Industrial Revolution, also called the “Great Enrichment.” A Theory of Economic History also warns against the danger of the state for trade and prosperity. Hicks notes (p. 162): The name “mercantilist” is only appropriate when we are looking at history the other way, from the standpoint of the State, from the standpoint of the rulers. They become “mercantilist” when they begin to realize that the merchants can be used as an instrument for their primary non-mercantile purposes. ****************************** Make China great: maritime navigation forbidden   (0 COMMENTS)

On his blog yesterday, Harvard economics professor Greg Mankiw stated that the idea of excluding government spending from GDP is “amazingly stupid.” Unfortunately, he didn’t say why. It would be nice to know why. I’m not sure if Greg is aware of this: a Harvard University professor who won the Nobel Prize in economics in 1971, Simon Kuznets thought it was a good idea. As I wrote in my biography of Kuznets in David R. Henderson, ed., The Concise Encyclopedia of Economics: Simon Kuznets is best known for his studies of national income and its components. Prior to World War I, measures of GNP were rough guesses, at best. No government agency collected data to compute GNP, and no private economic researcher did so systematically, either. Kuznets changed all that. With work that began in the 1930s and stretched over decades, Kuznets computed national income back to 1869. He broke it down by industry, by final product, and by use. I added: Although Kuznets was not the first economist to try this, his work was so comprehensive and meticulous that it set the standard in the field. His work was funded by the nonprofit National Bureau of Economic Research, which had been started in 1920. Kuznets later helped the U.S. Department of Commerce to standardize the measurement of GNP. In the late 1940s, however, he broke with the Commerce Department over its refusal to use GNP as a measure of economic well-being. He had wanted the department to measure the value of unpaid housework because this is an important component of production. The department refused, and still does. Now, it’s true that what earned Kuznets the Nobel Prize was not his work on GNP but his work on economic growth. But clearly he was an expert on GNP and, by extension, GDP. So why did Kuznets want to exclude government spending from GNP? Here’s how Onur Ozgode, put it in “The Invention of Economic Growth: The Forgotten Origins of Gross  Domestic Product in American Institutionalist Economics,” Promarket, October 31, 2021: Operationalization of national income statistics as a macroeconomic interface required a final and yet controversial modification in Kuznets’s GNP: the inclusion of the state as an economic sector in national income estimates. Kuznets excluded the state in these calculations because he believed public services were an input for private production. Since businesses factored in the taxes they paid for these services in pricing their products, their inclusion would cause double counting. Yet, an emerging group of economists, calling themselves “Keynesians,” argued against Kuznets, pointing to the inconvenient fact that his justification did not account for a state that ran large deficits. Because they believed deficit spending was the only effective policy for economic recovery, policymakers needed a measure of the state’s contribution to economic activity to fine tune economic stimulus. Who’s right: Kuznets or Mankiw? I don’t know. Whose idea is “amazingly stupid”? Neither Kuznets’s nor Mankiw’s. Whose idea is just stupid? Neither again.   The accompanying picture is of Simon Kuznets. (0 COMMENTS)

New Harmony, Indiana This year is the 200th anniversary of British industrialist Robert Owen’s social experiments at New Harmony, Indiana—a utopian commune on 20,000 acres along the Wabash River near Evansville. Much has been written about Robert Owen and the community at New Harmony. Owen has been described as a forerunner of socialism and the cooperative movement. He is also credited as a founder of utopian socialism. Benjamin Rogge devotes a whole chapter of his classic book, Can Capitalism Survive (Rogge 1979), to the experiments along the Wabash, arguing that their stories offer “three morality tales” for historical guidance.1 Rogge’s morality tales also illustrate some of the classic economic arguments against socialism—namely, why knowledge and incentive problems cause failure, especially at large scales, and why well-intentioned people find socialism so alluring despite its many failures. For these reasons, Owen’s utopian socialism took just two years to fail at New Harmony. But the story begins a decade beforehand. Beginnings The town of Harmony was founded in 1814 by a religious group of German immigrants called the “Harmonists” or “Rappites” (after their leader, George Rapp). As with many 19th-century religious Americans, they believed that the Second Coming of Christ was imminent. For the Harmonists, this manifested as a desire to strive for temporal perfection in communal living, while anticipating His return to govern the Earth. Through Rapp’s leadership and a drive to live in Christian community, their enterprise is widely viewed to have been quite successful. The original Harmonists initially established their first settlement in Pennsylvania, but a rising population and trouble with the locals encouraged them to move westward toward the frontier. A decade later, again perturbed by worldly neighbors, they made plans to return east toward Pittsburgh to settle along the Ohio River, establishing a new community called Economy. The Harmonists sold their land and buildings to Robert Owen for $150,000 in early 1825. He renamed it New Harmony, hoping to establish a model community for social reform and communal living not based on religious beliefs. In a word, instead of the Harmonists’ biblical vision of the Millennium, Owen envisioned a secular paradise on Earth. Owen had been a successful industrialist in New Lanark, Scotland—both as an entrepreneur and in managing an ongoing business. He amassed considerable wealth and was devoted to social progress, putting his principles into practice. For example, at New Lanark he offered housing and education to his workers and their families; he banned corporal punishment in his schools; and he refused to hire child labor under 10 years old. At New Harmony, Owen looked to extend these principles into a utopian effort at building and maintaining community. For example, New Harmony had the first co-ed public school and one of the nation’s first trade schools. In his 1813 collection of essays, A New View of Society, Owen presented his “science of society”: highly planned communities of 2,000 people with deistic religion (an impersonal Creator God), a focus on reason and rationality, the abolition of private property, and far less emphasis on the nuclear family (Owen 1813). Owen’s vision attracted many talented people—and thus, New Harmony was initially home to some impressive productivity. In particular, a number of natural scientists settled there—most notably, in geology. His family was especially prolific. Oldest son Robert Dale Owen published the first argument for birth control in America. Separately, as a member of Congress, he also introduced the bill that established the Smithsonian Institutions. Owen’s third son David was responsible for choosing the stone for the Smithsonian building in D.C. and was the first person to be a state geologist in three different states. Youngest son Richard taught at Indiana University and became the first president of Purdue. Governance in New Harmony was entrusted to a town council of seven—three elected and four appointed by Owen, allowing him to maintain putative control. After a rough and somewhat anarchic start, Owen established a constitution that allowed private property for personal belongings but reserved communal rights for other property while giving residents opportunities to investment in the town’s capital and to work for credit at the town store. A year later, a replacement constitution arranged residents’ duties according to age. However well-intentioned, these efforts and adjustments would not be enough to fulfill the vision because not enough attention was given to motivating production—and the incentives to produce were minimal. Another likely problem: Owen did not spend much time at New Harmony. As a brand ambassador, he was busy trying to recruit new residents and capital. Owen was effective at getting an audience for his ideas with the most powerful people in American society. He addressed the U.S. Congress and five presidents—in what may have been the first prominent discussions of socialism in America. In 1839, he became one of the first to use the term in print. (Some consider him the father of British socialism.) In other words: although Owen was an eloquent visionary, he didn’t persist in enunciating the vision at New Harmony. Assuming he was reasonably competent as an administrator, his active leadership may have been helpful if not decisive. Instead, the effort quickly floundered without sufficient leadership—or ultimately, sufficient followership. Owen (and a key partner, William Maclure) heavily subsidized the endeavor at New Harmony. The experiment seemed to have the key variables: smart people, robust idealism, significant resources, a good start, and visionary leadership. But aside from marshaling resources and attracting talented people to follow socialist ideals, it’s difficult to imagine how the structure and incentives of New Harmony’s society and governance deserve any merit. Owen’s vision obscured the hard reality that reallocating wealth and subsidizing production are quite different from motivating the creation of new wealth. Too little production and disagreement about inequities quickly led to internal strife and then failure, with the dismantling of the project starting in early 1827. Owen sold the property and businesses to various individuals—and in June returned to Europe hoping to find more fertile soil for his ideas and social experiments. People continued to live in New Harmony, but the social experiment phase was over. The stories at Harmony, New Harmony, and New Lanark—Rogge’s “three morality tales” (Rogge 1979)—hold intriguing similarities but also wild disparities. From Owen’s view, the old Harmony had been run by ignorant and superstitious peasants; his New Harmony was inhabited and run by brilliant men. With the best minds and intentions, what could go wrong? On the surface, old Harmony’s success should have been extended by New Harmony’s infusion of genius and wealth. But by comparison the original Harmony settlement lasted ten years and was prosperous; the New Harmony experiment lasted just two years and was a social and financial disaster. “Owen’s voluntary work as a compassionate business owner on a small scale was far more effective than his efforts at communal living.” Rogge’s conclusion: “The Robert Owen who showed the world the way to a better life for all was not the Owen of New Harmony but the Owen of New Lanark, the hardheaded businessman who proved that the humane treatment of others works… it serves the purposes of both employer and employee.” Owen’s voluntary work as a compassionate business owner on a small scale was far more effective than his efforts at communal living. Further along the spectrum, socialism turns out to be much more complicated—ethically and practically—especially on a large scale. As a result, Owen’s legacy, rooted in the textile mills of New Lanark, Scotland, is an ironic testament to freedom, markets, and mutually beneficial trade in business and society. Christian Socialism? Communal living (a social system) is a cousin of socialism (a political and economic system). Advocacy of socialism requires faith in government—that politicians and bureaucrats have sufficient knowledge and incentives to run society effectively, and also sufficient morality (e.g., selflessness, integrity) to pursue those ends. Without meeting both criteria, the results will be well-intentioned incompetence (good motives without corresponding good knowledge) or effective corruption (knowledge without motives). Socialism puts more value on society than the human person. It also requires sufficient drive within followers to work despite its inherent economic disincentives. As such, proponents of government activism in general—and socialism in particular—tend to be a.) confident that ruling elites have good knowledge; b.) ignorant about the need to motivate economic production; c.) naive about human nature including economics trade-offs; and d.) more interested in the welfare of communities than individuals. Owen met all four. Often, faith in government is explicitly secular but implicitly religious toward the State. For some Christians, their interest in socialism is connected to beliefs on what the Scriptures say about communal living. And then, by way of analogy, socialism has some similarities with the way in which (effective) churches and families routinely function. We’re raised in families, which can be wonderful examples of communal living. And Christians attend churches, which can be impressive examples of shared resources achieving laudable goals. As such, church goers and leaders may be especially prone to believe that socialism can routinely work well—or even, that it is the most desirable form of government. On the surface, this might appear to be correct. “The people of Israel” and “the Early Church” lived under something of a self-imposed socialistic system. From the Old Testament, Deuteronomy 15:7-9 says: “If there is a poor man among your brothers… be openhanded and freely lend him whatever he needs. Be careful not to harbor this wicked thought: ‘the seventh year, the year for canceling debts, is near’, so that you do not show ill will toward your brother and give him nothing…. Give generously to him and do so without a grudging heart.” While this Scripture speaks primarily of lending, it also implies outright gifts, given the command to retire unpaid debts every seven years. Leviticus 19:10 is even more explicit, while maintaining a work ethic for indigents: “Do not go over your vineyard a second time or pick up the grapes that have fallen. Leave them for the poor and the alien.” From the New Testament’s description of the Early Church, Acts 2:44-45 reports that “all the believers were together and had everything in common. Selling their possessions and goods, they gave to anyone as he had need… ” Acts 4:32-35 is similar: “All the believers were one in heart and mind. No one claimed that any of his possessions was his own, but they shared everything they had…. There were no needy persons among them. For from time to time those who owned lands or houses sold them, brought the money from the sales and put it at the apostles’ feet, and it was distributed to anyone as he had need.” This sounds similar to Karl Marx’ dictum: “from each according to his ability, to each according to his need.” In a word, the Early Church lived out socialism of a type: all income and wealth went into a common pool to be distributed by their leaders as necessary. Acts 2:47 reports that “the Lord added to their number daily those who were being saved.” Clearly, God was happy with this system. It is easy to understand why some have interpreted these verses as calling on believers to put faith in governments to redistribute wealth and uphold socialism as a national economic system. But there are two key differences between the Biblical call for individual Christians and what the Bible has to say about the optimal role of government. First, Israel and the Early Church are examples of relatively voluntary behavior. In stark contrast, government activity is coercive. (While the dictates of biblical community might be enforced within the group, people always have the option to leave.) Second, Israelite society and the Early Church were governed at local levels and on relatively smaller scales where socialism tends to be more effective. Government activity is often non-local and conducted on a large scale—both of which introduce an array of knowledge and incentive problems. With any form of wealth redistribution based on need, there are incentive problems for recipients—those in need. Textbook issues including the free rider problem and Prisoners’ Dilemmas are exacerbated when moving away from local and small scale to more writ large arrangements. For instance, it is easier to discern true need and monitor the behavior of recipients in a smaller local setting; fraud and long-term dependency are less likely. Further, to the extent that guilt is a factor, people are more likely to abuse a system run by a distant and impersonal government rather than people in their own communities. This is not to say all people will reduce effort in large-scale settings. But at the margin, shirking becomes more likely for each individual. Certainly, there are those who will work despite receiving little directly from the fruits of their labor. Historically, the Early Church, various communes, and Israeli kibbutzes have largely avoided shirking. But these people are driven by something in addition to economic incentives—a devotion to religious teachings and a form of work ethic.2 Objective standards for productivity allow for easier monitoring. And of course, having intrinsically motivated people can be quite helpful. When I’m teaching economics for business students, we frequently talk about incentives in the workplace. This leads to the takeaway that collective arrangements work better and easier when people are internally driven to “do the right thing”, underlining the crucial importance of the Humna Resources function in firms. About 1,000 people joined the experiment at New Harmony. Owen cast a wide net in his invitation to join the community. Not surprisingly, he attracted a mixture of true believers, eccentrics, and free riders. One of his sons described the residents as “a heterogeneous collection of radicals, enthusiastic devotees to principle, honest latitudinarians, and lazy theorists, with a sprinkling of unprincipled sharpers thrown in.” More homogeneity in participants allows them to be “on the same page”—as well as to monitor and enforce standards with people they understand better. Because Owen was hostile to “organized religion”, his community may have had more homogeneity in this regard. The bad news is that he reduced or eliminated a helpful motive for people who might have been called to be productive for higher purposes. If Owen had been more selective, success would have been more likely. But in the end, the diligent grew to resent those who responded to the incentives at hand. Even in special cases where communal living has been relatively effective, incentive problems are still present. Again, the example of the Early Church is instructive. Acts 5 relates the story of Ananias and Sapphira, a married couple who voluntarily sold a piece of property and claimed to give the entire proceeds to the church. Instead, they kept part of the money for themselves. By lying to the leaders, they responded to the economic disincentives at the expense of their supposed moral beliefs. The same tension is evident throughout Paul’s letters to churches. He frequently encourages work, condemns laziness, and discourages financial dependency on others. He was teaching against the incentive problems inherent in any socialistic system. Implicitly, he was encouraging an increase in monitoring and discipline to stem the tendency to “free ride” against the efforts of others. Other lessons By two metrics, Owen clearly deserves immense credit. First, in business and in his efforts at social reform, he put his money where his mouth was. He was willing to sacrifice profit to do business by his principles and he devoted much of his wealth to his ideals for communal living. Second, his vision was based on charity from philanthropists and cooperation from community members, rather than advocating socialism per se or agitating the working classes to rebel and establish it by force. Too often, people conflate their personal convictions with a need to press those convictions on others, especially through the use of government’s coercive powers. This is a mistake. Even if something is a good idea, it doesn’t follow that government is an ethical and practical means to the desired ends, forcing conformity to those beliefs. Owen didn’t commit this particular mistake and instead relied on voluntary behavior—both for financing these communities and, largely, in governing them. In this way, Rogge’s three moralities mirrors some of the most classic economic arguments against socialism. In their 2019 book, Socialism Sucks: Two Economists Drink Their Way Through the Unfree World, Robert Lawson and Benjamin Powell offer a breezy take on socialism (Lawson and Powell 2019). Its casual tone is rooted in their use of beer as a metaphor and a key prop to describe different types of socialism in various countries. Lawson and Powell’s punchline: many people advocate socialism without knowing what it is. (Not many people understand capitalism either, but that’s another story.) Socialism is defined as government owning all means of production. But few people really want that, including most self-styled socialists. Instead, they imagine “socialism” as a dog’s breakfast of leftist and liberal policy proposals. They see it as a vague call to increase government activism, justice, and ironically, “democracy.” For more on these topics, see “Camping-Trip Economics vs. Woolen-Coat Economics,” by Arnold Kling. Econlib, Feb. 2, 2015. James Otteson on the End of Socialism. EconTalk. “Can Capitalism Survive? Ben Rogge on Capitalism’s Future,” by Dwight R. Lee. Econlib, February 4, 2019. So, for readers worried about people advocating (real) socialism today, you can rest easy. They’re not advocating political oppression and the abolition of private property. They’re usually fans of watered-down versions of socialism: government interventions fraught with inefficiencies, inequities, and a mix of good intentions, cronyism, and ignorance of economics and/or Scripture. Although the ideas may look good on paper, they rarely work out, either ethically or practically. In this, naive utopians such as Robert Owen are actually fine examples. The world would be a far better place if socialist wannabes considered how their good intentions might be better achieved through voluntary efforts in business, politics, and society. References Lawson, R. and B. Powell. 2019. Socialism Sucks: Two Economists Drink Their Way Through the Unfree World. Regnery. Owen, R. (1813). A New View of Society. Schansberg, D. (1996). Poor Policy: How Government Harms the Poor. Westview. Footnotes [1] Available online at the Library of Economics and Liberty: “Paradise in Posey County,” in Can Capitalism Survive? by Benjamin Rogge. [2] I develop this case in greater detail in Schansberg (1996). *D. Eric Schansberg is Professor of Economics at Indiana University Southeast and the author of Turn Neither to the Right nor to the Left: A Thinking Christian’s Guide to Politics and Public Policy. This article was edited by Features Editor Ed Lopez. (0 COMMENTS)

Polities and Economics In the first article of this series, I outlined what an economic approach to reading Homer’s epic, The Odyssey,1 might look like. I then turned to Homer’s treatment of comparative political regimes in the second article. In this final essay, I return briefly to The Odyssey’s polities, and then consider the lessons the heroic tale has to tell us about politics and economics today. The Polities in Brief Below is a brief and simplified catalog of the major polities described in The Odyssey: • Pylos and Sparta: Visited by Telemachus, superficially seem normal but they seem sadder on reflection and Sparta relies on intoxication to support public order. • Ogygia, or Calypso: An unbearable paradise, there is no utopia. • Phaeacia: Relatively well-run, inward-looking, passive-aggressive, “control freak” syndrome. • The Lotus Eaters: Another unbearable “utopia.” • The Cyclopes: Anarchistic, brutish, and the community is ineffective and unable to defend itself. • Aeolus: A closed society, based on incest, hostile to outsiders, a more extreme and dysfunctional version of Phaeacia. • Laestrygonia: Giants, they throw boulders and murder, and in some ways resemble the Cyclopes. Tendencies toward anarchy are widespread, and not confined to the Cyclopes. • Aeaea (Circe): There is the bed of tyrannical but beautiful Circe, or life as a well-fed pig. Again, utopias are impossible and immortality would bore us. • Cimmeria: Dark, bleak, and unloved by God. Possibly the default setting. • The Underworld: Everyone is sad (and dead), yet they talk like actual humans and also tell the truth. Lesson: the living cannot escape artifice and deception. • Ithaca: Usually wrapped up in war and revenge-taking, chaotic and lacking in trust and lacking in clarity about sovereignty. This is another one of the default options. • Syria: Initially prosperous but wrecked by the arrival of avaricious merchants. Unstable. • Crete: A diverse society of perfect trust, within a narrative of Odysseus-in-disguise, but it has no chance of existing. So, which are the actual options here? To pare down the possibilities, it is necessary to consider which of these polities are presented as actually existing or not. Under one reading of the book, the stress is on Odysseus as narrator. If you add up chapters six through thirteen, a major centerpiece of the book, the stranger and more exotic tales, such as those of Circe and the Cyclopes and the Underworld, are narrated by Odysseus to King Alcinous and the Phaeacians. There are a bunch of weird polities, probably unrealistic, and many of those probably were figments of the narrative imagination in the first place. In the parts of the book that are presented more directly by Homer without the intermediation of Odysseus’s tales, the creatures and the action aren’t nearly so unusual. The world of the stories within a story seems different from the story itself. The imaginary polities may teach us lessons, but if we rule them out as actual options, we have the following as the actual real-world polities in the story: Pylos and Sparta; Ogygia, or Calypso; Phaeacia; and Ithaca. In my reading, Pylos and Sparta, the polities visited by Telemachus, is what the world looks like when you do not have the critical faculties acquired by traveling. Pylos is the world prior to an understanding of options, as only Odysseus has seen war, anarchy, orderly kingship, and various polities based on intoxication. Sparta represents post-traumatic tragedy and intoxication as a substitute for ongoing conflict. Ogygia is the rejected and intolerable utopia. Sparta vs. Ithaca is one meaningful contrast, but most of all The Odyssey is a comparison between Phaeacia and Ithaca, so to that contrast I shall now turn. Ithaca vs. Phaeacia It is well-known that Homer put many parallel events into his tales of Ithaca and Phaeacia. Bruce Louden (1993, p.6) offered one of the more compelling takes: Much useful scholarship has focused on the parallels between Odysseus’ stay on Skheria and his arrival on Ithaca… I argue that one extended narrative pattern accounts for much of the structure and shape of the Odyssey’s plot… Stated most simply, the narrative pattern is as follows: Odysseus, as earlier prophesied, arrives at an island, disoriented and ignorant of his location. A divine helper appears, advising him on how to approach a powerful female figure who controls access to the next phase of his homecoming, and points out potential difficulties regarding a band of young men. His identity a secret, as approach to the female is perilous, Odysseus reaches her, discovering a figure who is initially suspicious, distant, or even hostile towards him. She imposes a test on him, whereupon Odysseus, having successfully passed the test, wins her sympathy and help, obtaining access to the next phrase of his homecoming. Their understanding is made manifest in her hospitable offer of a bath. Furthermore, Odysseus is now offered sexual union and/or marriage with the female. Conflict arises, however, between Odysseus and the band of young men. The young men abuse Odysseus in various ways and violate a divine interdiction. The leader of each band has the parallel name of Eury-. Their consequent death, earlier prophesied, is brought about by a divine avenger. A divine consultation limits the extent of the death and destruction. There is an obvious question of how we are to compare Phaeacia and Ithaca. Under one view, Ithaca is plagued by recurrent internecine warfare, held only at bay by the intervention of the gods. Phaeacia seems to have reached a more stable solution, even though that polity also is rooted in violence in its deeper history, as discussed further above. Once Odysseus leaves, it seems King Alcinous will continue to reign, even if the society is more passive-aggressively dysfunctional and also more isolated than it lets on at first. The Odyssey could then be a critique of the particular kind of heroism exemplified by Odysseus, his men, and the general Achaean attack on the Trojans. It is thus possible to see both The Odyssey and The Iliad as anti-war books of a sort, though they may also see war as inevitable. The comparison embedded in The Odyssey would then be something like, “live out what it means to be human, experience everything, and be wracked by war” (Odysseus and Ithaca) or “go neurotic, be uninteresting, and opt for some measure of highly imperfect but ultimately workable stability” (Alcinous and the Phaeacians). We also should ask how real the alternative of Phaeacia is. The polities in The Odyssey are characterized by varying degrees of imaginariness. Circe and the Cyclopes and the Sirens would be among the imaginary polities, existing only within tales told by Odysseus. Ithaca is what really exists, Pylos and Sparta, too. So how about the land of the Phaeacians? For Helène Whittaker (1999, p.144) it “… is to be interpreted as an intermediate area, a borderland between the real world and the fairy tale world.” Whittaker describes Scheria [the island of Phaeacia] as the “last temptation” which Odysseus must overcome before he can return to the real world, for him Ithaca. Unlike the other fantasy worlds, however, Scherie is not built on implausible principles or obvious absurdities. Nonetheless Scheria is described as located very far away, at the extremes of the earth, and the Phaeacians are described as having no contact with other peoples. Those are common features of other unreal, fairy tale worlds. Furthermore, the journey from Scheria back to Ithaca is quite mysterious, almost as if Odysseus is waking from a dream. Supposedly he falls asleep and a Phaeacian boat whisks him back home, even though just earlier he had been very far away. The Phaeacians also have a common origin with the Cyclopes, namely through Poseidon (Aronen 2002). Something about that whole tale does not add up (Whittaker 1999, pp.144-145), and arguably the reader is supposed to doubt just how real the Phaeacians are. At the same time, many features of Phaeacia are quite normal. There is a king and palace and the people who live there are mortal. They have a politics, city walls, a harbor and temples to the gods, and they are both sailors and farmers. It is not hard to mistake Phaeacia for a real polity, whether or not it is. Under this interpretation, The Odyssey is asking whether anything better than Ithaca (or, implicitly, the pillaged Troy) is possible. The answer isn’t “no” for sure, because it is difficult to argue that the Phaeacians are a phony tale for certain. Homer is seeding doubt whether there is really an alternative to perpetual warfare, stopped only intermittently by the intervention of the gods. This is a relatively pessimistic reading of The Odyssey. Power and the Narrative Discontents in Homer There is yet another reading of Homer’s Odyssey, a take far from the central image of the book in western popular culture. Contemporary readers tend to stress the journey of Odysseus, his return home, the leaving of Penelope, the battle against the suitors, and the exotic adventures of Odysseus along the way. But so much of the book is actually the conversation of Odysseus with King Alcinous, with other elite Phaeacians listening in. This conversation is in turn bracketed by an initial tale of the loss of Odysseus, and his later return and revenge on the suitors. King Alcinous, in turn, is secure and prosperous throughout the narration. “The juxtaposition is thus one of art contrasted with power, or in economic terms art as a substitute for power and comfort. You can think of much of The Odyssey as, in its simplest form, a story about the best way to talk to a king.” Perhaps we should read the tale in its most literal terms, namely what it is like when a heroic man—broke, exiled, and down on his luck—has a chance to talk with a successful King? Odysseus does not seem to be the cognitive inferior of King Alcinous, but he has none of the accoutrements of power or prosperity. How then should such a conversation proceed? Odysseus has to use all of his ingenuity and narrative ability to hold the interest of the King, and he succeeds. The juxtaposition is thus one of art contrasted with power, or in economic terms art as a substitute for power and comfort. You can think of much of The Odyssey as, in its simplest form, a story about the best way to talk to a king.2 When the King himself is called upon to speak, he is in fact remarkably uninteresting. For instance, when Odysseus is telling his spellbinding tale of his trip to the Underworld, the Phaeacian veteran Echenus calls upon Alcinous to speak [11: 347]. Alcinous has little to say beyond platitudes, and he concludes by noting and reaffirming his power: “You men will all help him, but I will help the most, since I hold power here.” [11: 352-355]. One political model of The Odyssey is thus the contrast between the curiosity-seeker and storyteller and the successful King. Social norms typically would hold the King to be of higher status and importance, and Homer certainly does recognize the gains from political stability. Still, Alcinous, while effective in his own community, simply is not that sympathetic or interesting a figure. There is much more to life than political rule, but Alcinous cannot channel or reflect those deeper and more varied sides of life. Nonetheless, Homer does not come out in favor of the curiosity-seeking narrator over the life of the King. The final books of The Odyssey are all about Odysseus seeking to reestablish himself as “king” in his home, although that is a modest kingship compared to that of the kingdom of Alcinous. So even Odysseus, the greatest of narrators in the story, prefers a bit of modest rule and power to the storytelling art, at least temporarily. But again, as discussed above, once Odysseus re-establishes himself in Ithaca, he immediately starts discussing the possibility that he will have to leave again. As to whether men prefer power to storytelling, The Odyssey does not serve up a simple answer but rather recognizes the power of each and the inability of some people to be satisfied with either for very long. Homer of course is himself a storyteller, but he sees that the storytelling of Odysseus to King Alcinous, is ultimately in the service of their attainment or reattainment of power, as was the case of Odysseus returning to Ithaca. That said, the power of curiosity and further storytelling reasserts itself at the end. For more on these topics, see “Teaching The Odyssey in Economics,” by Zachary Gouchenour. Econlib, February 7, 2022. Claudia Hauer on War, Education, and Strategic Humanism. EconTalk. Monica Guzman on Curiosity and Conversation in Contentious Times. EconTalk. Under this reading, there is a new way of fitting together the differences between The Iliad and The Odyssey. Both are about power and political leadership, and how much men desire that power. Both are about the contrast between power and narration, and finally both suggest unsentimental conclusions about what really matters. The Odyssey, however, innovates by showing an alternative way of life, that of Odysseus, where intransitivity reigns, variety-seeking is supreme, and power does not have the final say. In The Iliad, power is the final word from start to finish. As Robin Osborne pointed out (2004, p.213): “The provisional nature of authority is a fundamental feature of both Homeric poems.” But the all-important roles for power and conflict shine through in both. In short, if you approach Homer as an economist, even in The Odyssey your attention ends up being directed back to war. References Ahrensdorf, Peter J. Homer on the Gods & Human Virtue: Creating the Foundations of Classical Civilization. Cambridge: Cambridge University Press, 2014. Alvis, John. Divine Purpose and Heroic Response in Homer and Virgil: The Political Plan of Zeus. Lanham, Maryland: Rowman & Littlefield Publishers, 1995. Aronen, Jaakko. “Genealogy as a Form of Mythic Discourse. The Case of the Phaeacians.” 2002, 89-110. Bresson, Alain. The Making of the Ancient Greek Economy: Institutions, Markets, and Growth in the City-States. Cowen, Tyler. “Is a Novel a Model?” In The Street Porter and the Philosopher: Conversations on Analytical Egalitarianism, edited by Sandra Peart and David M. Levy. Ann Arbor: University of Michigan Press, 2008, 319-337. Dobbs, Darrell. “Reckless Rationalism and Heroic Reverence in Homer’s Odyssey.” American Political Science Review, June 1987, 81, 2, 491-508. Dodds, E.R. The Greeks and the Irrational. Berkeley: University of California Press, 1971. Dougherty, Carol. The Raft of Odysseus: The Ethnographic Imagination of Homer’s Odyssey. Oxford: Oxford University Press, 2001. Germain, Gabriel. “The Sirens and the Temptation of Knowledge.” In Homer: A Collection of Critical Essays, edited by George Steiner and Robert Fagles. Englewood Cliffs, New Jersey: Prentice-Hall, 1962, 91-97. Kearns, Emily. “The Gods in the Homeric Epics.” In The Cambridge Companion to Homer, edited by Robert Fowler. Cambridge: Cambridge University Press, 2004, 59-73. Levy, David. The Economic Ideas of Ordinary People: From Preferences to Trade. London: Routledge, 2011. Louden, Bruce. “An Extended Narrative Pattern in the Odyssey.” Greek, Roman, and Byzantine Studies, 1993. Osborne, Robin. “Homer’s Society.” In The Cambridge Companion to Homer, edited by Robert Fowler. Cambridge: Cambridge University Press, 2004, 206-219. Raaflaub, Kurt A. “Poets, lawgivers, and the beginnings of political reflection in Archaic Greece.” In The Cambridge History of Greek and Roman Political Thought, edited by Christopher Rowe and Malcolm Schofield. Cambridge: Cambridge University Press, 2000, pp.23-59. Redfield, James M. “The Economic Man.” In Oxford Readings in Classical Studies: Homer’s Odyssey, edited by Lillian E. Doherty. Oxford: Oxford University Press, pp.265-287. Rinella, Michael A. Pharmakon: Plato, Drug Culture, and Identity in Ancient Athens. Lanham: Rowman & Littlefield, 2010. Rose, Gilbert P. “The Unfriendly Phaeacians.” Transactions and Proceedings of the American Philological Society, 1969, 100, 387-406. Schmiel, Robert. “Telemachus in Sparta.” Transactions and Proceedings of the American Philological Association.” 1972, 103, 463-472. Scully, Stephen. Homer and the Sacred City. Ithaca, New York: Cornell University Press, 1990. Seaford, Richard. Money and the Early Greek Mind: Homer, Philosophy, Tragedy. Cambridge: Cambridge University Press, 2004. Segal, Charles. Singers, Heroes, and Gods in The Odyssey. Ithaca, New York: Cornell University Press, 1994. Whittaker, Helène. “The Status of Arete in the Phaeacian Episode of The Odyssey.” Symbolae Osloenses, 1999, 74, 140-150. Footnotes [1] Available at the Online Library of Liberty: The Iliad and the Odyssey by Homer, translated by Thomas Hobbes. Available for purchase: The Odyssey, by Homer, translated by Robert Fagles at Amazon.com. [2] Finally, consider the deployment of narrative in Phaecia. The main tale told is a poet Demodocus singing of Aphrodite’s love for Ares, and how Ares had adultery with her, which “shamed the bed of Lord Hephaestus” [8: 265-269]. Nonetheless, the magic chains of Hephaestus trap them and hold them tight. That sounds like a horrible fate, but Hermes suggests he would be willing to be bound by chains three times as strong to have the same chance to sleep with Aphrodite. Poseidon, however, intervenes and asks Hephaestus to release Ares, which eventually he does. Ares and Aphrodite separate, and the story appears to end on a happy note. What is the meaning of this interlude? Could it be that the Phaeacians envy those who achieve something they really desire—sleeping with Aphrodite?—even if it means some time of servitude? Is it the Phaeacians longing for something they do not have, namely true passion? *Tyler Cowen is the Holbert L. Harris Chair of Economics at George Mason University and serves as chairman and faculty director of the Mercatus Center at George Mason University. With colleague Alex Tabarrok, Cowen is co-author of the popular economics blog Marginal Revolution and co-founder of the online educational platform Marginal Revolution University. As an Amazon Associate, Econlib earns from qualifying purchases. (0 COMMENTS)

Experiments consistently reveal that our moral judgments are driven by perceptions of harm. We condemn acts based on how much they seem to victimize someone vulnerable. —Kurt Gray, Outraged: Why We Fight About Morality and Politics and How to Find Common Ground1 (page 8) In his book, Outraged, Kurt Gray studies the psychology of moral attitudes. He argues that humans all share the same basic idea of morality. We take the side of the victim of intentional harm and wish to see the perpetrator punished. Our moral disagreements come from different perceptions of the severity of harm and whether a particular claim of victim status is valid. Gray’s view of morality can be contrasted with Friedrich Nietzsche’s distinction between master morality and slave morality. As described by Gregg Henriques,2 Master morality is: Focused on those who are strong, powerful, or above the herd; concerned with ethical codes that emphasize excellence, virtue, strength, merit, and toughness; legitimizes power differentials; and orients towards hierarchical or authoritarian political systems Slave morality is: Focused on those who are abused, oppressed, weak, or suffering; concerned with justice, equality, and fairness; works to delegitimize power imbalances; orients towards socialist or communal political systems In Gray’s view, humans are naturally inclined toward something closer to slave morality. He attributes this to the prehistoric environment in which we once lived in fear of powerful predators, including large wild beasts. We evolved to form groups that could increase our ability to survive, and these groups in turn evolved a moral outlook that was focused on protecting individuals from harm. As history unfolded, humans have been able to reduce the risks posed by nature and drive many of the ancient wild beasts to extinction. By now, the biggest threats to humans come from other humans. But the moral drive to protect individuals from harm has stuck with us. Gray writes, Moral outrage is the psychological tool that motivates people to punish wrongdoers, even at cost or risk to themselves. It is a “commitment device,” something that commits people to punishment, even though trying to punish someone can be dangerous. When we witness unjust harm, whether someone committing interpersonal violence or blatant cheating, we have an embodied physical reaction. We get angry, our blood pressure spikes, our heart beats faster; we thirst for retribution. p. 81 Gray suggests that nowadays, moral outrage is often excessive and inappropriate. We are much safer than we were hundreds of years ago, and much, much safer than we were in prehistoric times, when our brains evolved. But we consume media that is saturated with threats and divisiveness. “Given the universal drive to be outraged by intentional interpersonal harm, what can account for our disagreements over morality and politics?” Given the universal drive to be outraged by intentional interpersonal harm, what can account for our disagreements over morality and politics? Gray argues that these disagreements reflect different perceptions of the nature of harm, and especially differences concerning victim status. Gray writes, Moral divisions arise because liberals and conservatives have different assumptions of vulnerability (AoVs). They disagree about who is especially vulnerable to mistreatment and victimization… Much political disagreement is driven by liberals and conservatives having different assumptions of vulnerability about four entities: the Environment (for example, Planet Earth), the Divine (for instance, God), the Powerful (for example, state troopers), and the Othered (such as undocumented immigrants). Compared with conservatives, liberals tend to view the Environment and the Othered as more vulnerable to victimization and the Powerful and the Divine as less vulnerable. … Committed liberals amplify differences in vulnerability, splitting the world into the very vulnerable (the oppressed) and the very invulnerable (oppressors). Committed conservatives dampen differences in vulnerability, seeing all people as relatively similar in their vulnerability… p. 193 The concept of differences in AoVs seems useful. For example, consider how different AoVs were apparent in the reactions in December of 2024 to the assassination of health insurance executive Brian Thompson by Luigi Mangioni, a young man who suffered from back pain. The AoV concept relates to an earlier book co-authored by Gray and Daniel Wegner.3 They found that people have two clusters of beliefs about other humans. One is that those humans have rational agency; the other is that humans can feel suffering. When focusing on a single individual in an emotionally fraught situation, we become tempted to view one person as the villain and the other as the victim, rather than take a more nuanced perspective. Based on his framework, Gray suggests that political differences can be bridged if people can come to empathize with the other side’s assumptions of vulnerability. For example, if a gun rights activist can appreciate the story of a gun control advocate whose close friend or relative was killed by a gun, the activist might at least acknowledge the humanity of the gun control advocate. Some Unanswered Questions When I finished Outraged, I had questions that I thought remained unanswered. Gray devotes considerable effort to trying to establish that harm prevention is the single factor that is involved in moral psychology. He takes particular pains to criticize the multifactor “moral foundations” model of Jonathan Haidt. But reducing moral psychology to a desire to deter interpersonal harm leaves us with a tautology, not a theory. In any sentence, we can replace “takes a moral stand against” with “wants to reduce interpersonal intentional harm caused by,” every time. But doing so leaves us without any explanatory power over how the moral stand arose. All of the explanatory work that is attempted by moral foundations theory, or Nietzsche’s model, instead gets done in Gray’s framework by assumptions of vulnerability. We now want to ask, what causes people to have different AoVs? Why do liberals amplify differences in vulnerability? Why do they see the Environment and the Othered as especially vulnerable, and the Divine and the Powerful less so? For that matter, why does the Environment or the Divine have standing as an entity that can feel harm? And is Othered a fixed identity group? Whether Jews are Othered or by whom seems to vary over history. And Trump supporters seem to be Othered by many Democrats. Gray points out that a soccer fan will see a fallen player on his favorite team as an injured victim, while viewing a fallen player from another team as faking injury. This suggests to me that group loyalty is an important factor in moral psychology. For more on these topics, see “The Role of ‘We’ Versus the Role of ‘I’,” by Arnold Kling. Econlib, September 6, 2021. Jonathan Haidt on the Righteous Mind. EconTalk. Joshua Greene on Moral Tribes, Moral Dilemmas, and Utilitarianism. EconTalk. Implicitly, Gray is promising to tell us why we are outraged. The answer seems to be that we have different assumptions of vulnerability. Fair enough. Supporters of Israel see that country as vulnerable to Muslim Arab militancy, and they are outraged. Opponents of Israel see Arabs as vulnerable to Israel’s “settler colonialism,” and they are outraged. What can be done to reduce outrage? Perhaps understanding one another’s stories is the solution. But perhaps not. The conflicts that America had with Imperial Japan, Nazi Germany, and the Communist Soviet Union were not solved by mutual understanding. Footnotes [1] Kurt Gray, Outraged: Why We Fight About Morality and Politics and How to Find Common Ground. Pantheon, 2025. [2] Gregg Henriquez, “Political Correctness is all about Slave Morality,” Psychology Today, April 26, 2016. [3] The Mind Club, by Daniel M. Wegner and Kurt Gray, which I reviewed in my article “Two Theories of Mind.” Library of Economics and Liberty, Oct. 3, 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)

Leo Tolstoy. Productivity is a measure of efficiency, tending to focus on the relationship between inputs (number of workers or hours worked) and outputs (units of product or service produced). Boosting productivity can raise wages and profits, lower prices, and generate more tax revenue for governments. It can also improve living standards for a worker, a firm, or a nation. On this account, taking steps to boost productivity seems to approximate a moral and political imperative. Yet productivity is only one way of assessing and enhancing work. In fact, there are ways of enriching our labor that are not only not captured by productivity but positively obscured or even undermined by focusing on it. To see how and why this is so, we need to look beyond the textbooks and journals of professional economists to another resource, one that dwells less on efficiency and more on meaning. Specifically, we to turn to the novel—in fact, one of the greatest novels ever composed, Leo Tolstoy’s Anna Karenina.1 In this text, we find a very different account of work. A large part of the novel centers on a landowner, Konstantin Levin, a man with a deep interest in the productivity of his land, yet who discovers—and through whom we discover—dimensions of work of which productivity measures take no account. Consider one of the book’s most-beloved scenes, that of Levin mowing with the peasants. Levin has just been arguing with his older half-brother, the well-known public intellectual Sergei Koznyshev. Koznyshev is cross with Levin for having withdrawn from the local district council. He maintains that his brother is duty-bound to serve there, so that he can see that the best interests of the people are protected and promoted. Levin, however, feels that he understands nothing about the world of politics and is unable to accomplish anything. In short, Levin questions whether such political activity is truly important. Koznyshev is horrified. “How can you find it unimportant that the common people you love, as you assure me, are dying without aid, that ignorant peasant women are letting their children starve to death, and the people are stagnating in ignorance and held in thrall by the village scribe, while you have been handed the means to remedy this, and you are not helping because in your opinion it is not important?” Levin, disgusted, says that he does not believe in medicine. What he really means is that he does not know how to refute his brother, who in any case always comes out on top in any reasoned argument. Yet he question of whether policies intended to address such matters at the level of whole population could possibly succeed remains. Levin believes that the good of the people can be served only at a local level, where people know one another. “I am prepared to discuss what concerns me, but to judge where to distribute the forty thousand of the district’s money… that I do not and cannot understand.” Koznyshev dismisses his brother’s reasoning for its lack of rigor, supposing that he is merely using philosophy in the service of his own inclinations, accusing him of failing to consider the connection between the individual and the common interest out of “Russian laziness and arrogance,” and assuring him that his “temporary delusion” will soon pass. Throughout their conversation, something else, a “personal matter,” has been weighing on Levin’s heart. The previous year, he discovered that he could calm himself by mowing, and several times he has taken up his scythe and mowed with the peasants, once even mowing the entire meadow in front of his house himself. The mowing season has now come, and even though he feels guilty about leaving his brother alone for the day, he longs to go out and mow with the peasants again. When he tells his brother of his plans, Koznyshev replies, “I like that work very much,” which is true, at a theoretical level. The difference, however, is that Koznyshev has never gone mowing, while his brother has, and he is eager to get back to it. Later, Koznyshev thinks of coming to watch but finds the day too hot. By contrast, Levin wants to work, though not in the way that economists commonly suppose. He cherishes not the wages the work will produce but the work itself. When Levin gets back from his lunch, he finds himself mowing next to an old, unnamed man; it is from this anonymous peasant that Levin, and we the readers, stand to glean some of the deepest and most transformative insights about work. The old man, holding himself erect, walked ahead, moving his outturned feet evenly and widely, and with a precise and even movement that did not seem to cost him more effort than swinging his arms as he walked, as if he were playing, turned down a tall, identical row. It was not exactly he but rather his sharp scythe itself that cut a swath through the succulent grass. It is in the person of this old man that we see work elevated to its highest level, one in which talk of productivity in the conventional sense could only be deemed misdirected. To be sure, he is quite productive, but productivity is neither the end he has in view nor any part of the way he understands his work. Levin is working hard, under conditions that many workers might reasonably choose to avoid. In the worst heat of the day, the sweat is pouring down, yet it is also cooling him, and the sun, which is burning his back, head, and arms, is also energizing his work. “More and more often he experienced those moments of that unconscious state when you do not have to think about what you are doing. The scythe cut by itself. These were happy moments. Even more joyous were the moments when, as they neared the stream where the rows ended, the old man wiped his scythe with thick wet grass, rinsed its steel in fresh stream water, dipped his tin cup, and offered some to Levin.” “Not bad, eh?” says the old man. And he is right—nothing could be so refreshing. “Levin never drank a beverage like this warm water with the floating bits of greenery and the rust taste from the tin cup.” “Neither Tolstoy nor his alter ego, Levin, can refute the purely rational account of work in economic terms, but he can also experience labor in a quite different way that brings meaning to both work and life, something that presumably even his hyper-intellectual brother is capable of experiencing, if only he would allow himself a chance.” Levin is working both efficiently and effectively. Without the need to think about it, he is also gaining a new awareness that eluded him in the debate with his brother. As soon he is done drinking, he is back at the “slow, blissful walk with his hand on his scythe when he could wipe away the steaming heat, fill his lungs with air, and look around at the whole extended string of mowers and at what was happening around him, in the woods and in the field.” Neither Tolstoy nor his alter ego, Levin, can refute the purely rational account of work in economic terms, but he can also experience labor in a quite different way that brings meaning to both work and life, something that presumably even his hyper-intellectual brother is capable of experiencing, if only he would allow himself a chance. The old man is the key. When he comes to a hummock or unweeded sorrel, he handles it easily. “As a hummock approached, he would alter his motion, and using either his heel or the end of his scythe, crop the hummock on either side with short strokes.” He knows what he is doing so well, he has done it so many times before, that he responds to obstacles effortlessly, without even thinking consciously about them. He is not formulating or drawing on philosophical principles. He is not plugging values into an equation to see which among a range of alternative courses of action would produce the greatest return on investment. In a sense, he is not thinking at all, at least not in the sense that Levin and Koznyshev were reasoning during their sometimes-heated conversation. Instead, the old man is simply completely present in the activity at hand and able, by virtue of his practical wisdom born of decades of experience, to respond effortlessly as the situation calls for. And yet he is most emphatically not self-absorbed. If anything, he is more aware of others than anyone else. He was constantly examining and observing what was coming up ahead; or else he was picking a stalk of sorrel, eating it or offering it to Levin, or else he was flinging a twig aside with the tip of his scythe, or examining a quail’s nest after the hen had flown out right from under the scythe, or catching a snake that had landed in his path, and lifting it with his scythe as if on a fork, he would show Levin and toss it aside. The old man is not only working but showing Levin what work at its very best can open up to us. He is aware, and he is showing Levin what is worth noticing. He is taking not only for himself but sharing what he finds with his companion. If only Levin could learn to see through the old man’s eyes, a more bountiful world would emerge into view. If someone had asked Levin how much time passed, he would have said half an hour. Yet it was already approaching dinner time, and the old man draws his attention to “the little girls and boys, barely visible, coming toward the mowers from different directions through the tall grass and along the road, carrying bundles of bread that dragged down their little arms and pitchers of kvass stoppered with rags.” The beauty of this sight can hardly be overstated. It is through the good graces of small children that the mowers will be refreshed. Their repast will be humble in the extreme—loaves of bread and barely stoppered pitchers of drink. It can in no way compare to the rich feasts Levin’s friends attempt to share with him in cities such as Petersburg. And yet, never will he enjoy a more profound sense of communion in breaking bread with others. Levin had planned on returning home for dinner. Yet he cannot bear to leave the peasants. “Some were washing; the young men were bathing in the stream; others were setting up a place to rest, untying their bundles of bread and unstopping their pitchers of kvass. The old man crumbled some bread in his mug, crushed it with the handle of his spoon, added water from the dipper, broke up some bread, and after sprinkling it with salt, said a prayer, facing east.” “Here you go, master, some of my tyurka,” he said. The tyurka is so tasty that Levin changes his mind about going home for dinner, and he and the old man begin talking about domestic affairs, Levin taking the liveliest interest in them. “He felt closer to the old man than to his brother and could not help but smile at the affection he felt for this man.” After the old man says another payer, he lays down under the bush, and Levin does the same. When Levin awakens, he does not recognize the place, “so much had everything changed.” The huge expanse of the meadow had been mown and gleamed with a special, new gleam, its rows now fragrant, in the slanted evening rays of the sun. The bushes cut down by the river, and the river itself, which had not been visible before but now gleamed like steel in its bends, and the moving and rising people, the steep wall of grass where the meadow had not been mown, and the hawks circling over the bared meadow—all this was completely new. Tolstoy is too much of a realist to transform Levin into some kind of shaman. It is not long before Levin begins calculating how much had been mown and how much could yet be done in the day. He realizes that they have been tremendously productive, and that still more could be done, and he wants only to finish as much and as quickly as possible. He asks the old man if they could still mow the Mashkin upland, and soon all, young and old, are trying to outdo one another in the mowing. Eventually, they reach the upland, with the sun setting behind the woods, the dew already falling, and a mist rising. Yet on they go, the mowers “clattering their boxes and making noise with the clashing of scythes or the whistle of the whetstone on a scythe as it was sharpened, or chasing each other with cheerful shouts.” Although this is the most ordinary and even tiresome work, one to which man has been condemned since the expulsion from the Garden, it is also just about as good as it gets. The old man is still at it, “just as cheerful, jocular, and free in his movements,” despite the long day. In the woods, where they are constantly coming across brown mushrooms, which have swelled in the succulent grass and which they cut with their scythes, the old man stops, bends over, picks up a mushroom, and puts it in his shirt, saying “Another treat for my old woman.” In the midst of the work, the old man is thinking of others. He takes not for himself. Instead, he takes so that he might give. He puts things in his shirt not to protect them from others’ covetous gaze but to share. His is a harvest that cannot be measured in numbers of bushels or bushels per acre. He is teaching Levin how to live, and to have more of what is good in life. Levin has not merely heard it from a teacher or read it in a learned book. He has experienced it firsthand in the company of an unnamed master. He has lived it, and these lessons will abide with him and enable him in going forth to serve as a sharer in his own right. For more on these topics, see Productivity, by Alexander J. Field. Concise Encyclopedia of Economics. Richard Gunderman on Greed, Adam Smith, and Tolstoy. EconTalk. “The Division of Labor and the Diminution of Man,” by Richard Gunderman. Econlib, October 3, 2022. When Levin returns home, his brother is disgruntled at his appearance, and chides him for standing at the doorway, where he might let in flies. Yet Levin takes it all in stride, for now, instead of longing for an excuse to leave his brother, he feels cheerful and wishes not to be parted from him. After he freshens up, the brothers join at the dinner table, where, though Levin thought he was not hungry, he finds the meal exceptionally delicious. Having previously said he did not believe in medicine, he now wants to enrich it with a new term, the work-cure. It is not in theorizing about the population of his district or the Russian people in general but in working side-by-side with the peasants that he has found the means to live, to come fully alive, and to savor life to the fullest extent possible. No tuition has been collected and no course credit or progress toward a degree has occurred, but Levin has learned, through work, the worthiest of life lessons—where true abundance lies. Footnotes [1] Should have link/reference to Tolstoy’s Anna Karenina, and probably also to some OLL Virtual Reading Group that gave rise to this piece? *Richard Gunderman is Chancellor’s Professor of Radiology, Pediatrics, Medical Education, Philosophy, Liberal Arts, Philanthropy, and Medical Humanities and Health Studies at Indiana University. He is also John A Campbell Professor of Radiology and in 2019-21 serves as Bicentennial Professor. He received his AB Summa Cum Laude from Wabash College; MD and PhD (Committee on Social Thought) with honors from the University of Chicago; and MPH from Indiana University. For more articles by Richard Gunderman, see the Archive. As an Amazon Associate, Econlib earns from qualifying purchases. (0 COMMENTS)

Here are some housing articles that caught my eye: 1.  A recent paper by Sven Damen, Matthijs Korevaar & Stijn Van Nieuwerburgh has the following abstract: Residential properties with the lowest rent levels provide the highest investment returns to their owners. Using detailed rent, cost, and price data from the United States, Belgium, and The Netherlands, we show that this phenomenon holds across housing markets and time. If anything, low-rent units hedge business cycle risk. We also find no evidence for differential regulatory risk exposure. We document segmentation of investors, with large corporate landlords shying away from the low-tier segment possibly for reputational reasons. Financial constraints prevent renters from purchasing their property and medium-sized landlords from scaling up, sustaining excess risk-adjusted returns. Low-income tenants ultimately pay the price for this segmentation in the form of a high rent burden. I have not read the paper, so I have no evidence against any of the claims made in the abstract.  Nonetheless, it’s worth noting that this is exactly the result I would have expected based on my experience being a landlord back in Boston.  I think of that experience as being one of the two biggest mistakes in my life (along with writing a textbook.)  I found that the return from being a landlord is not worth the aggravation, at least for me.  I would expect potential landlords to insist on a higher rate of return—a “compensating differential”—before being willing to invest in property in a low-income area where the problem tenants are especially common. 2.  In a recent post, I argued that the so-called “housing bubble” was a myth, it never happened.  I cited the fact that real housing prices had fully recovered to 2005-06 levels, and thus if prices were obviously too high back at that time, then they must also be too high today.  Some commenters argued that real housing prices are not the correct metric, and that housing really was overvalued in 2005-06.  But Kevin Erdmann has a post that suggests other measures of housing affordability are also back at 2005-06 levels: If this ratio is again much too high, are we about to have another 2008-style crash? 3.  There’s an ongoing debate about the cause of the recent migration from blue states to red states.  Matt Yglesias has a tweet that suggests the problem is housing prices: To avoid reasoning from a price change, it’s best to look at the relationship between prices and quantities.  Yglesias implicitly does this and correctly claims that the migration to red states is primarily caused by building restrictions in blue states that raise housing prices and push people to places where housing is cheaper.  The high housing prices in blue states suggest that these are very desirable places to live, at the margin.  Here’s Bloomberg: A 1,100-square-foot (102-square-meter) house on a cul-de-sac in the city of Santa Clara recently sold for $2.2 million, drawing 11 offers, said Vinicius Brasil, an agent with Keller Williams. It was an average home in a spot that’s not necessarily the most prestigious, but conveniently close to companies like Apple and Nvidia, he said. But the story is a bit more complicated than the generalization that people are moving from expensive blue states to cheap red states.  Illinois is an inexpensive blue state than continues to lose population, even relative to purple states like Wisconsin and red states like Indiana.  Colorado and Washington are expensive blue states that are gaining population.  This suggests that housing costs are not the only factor driving interstate migration.  The “revealed preference” that can be inferred from price and migration data strongly suggests that the public regards Colorado and Washington as better than average blue states, while Illinois is regarded as a worse than average blue state.  Some of that may reflect things like weather, but not all.  South Dakota has a growing population despite worse weather than Illinois and more expensive housing.  One thing South Dakota does not have is a state income tax, which is also true of fast-growing Texas, Florida, Nevada, Tennessee and Washington.  (That’s not to deny that weather is a big factor in Florida’s rapid growth.) 4.  In the past, I pointed to Austin as an example of how housing construction could reduce rents.  New data suggests the gains were even larger than I had imagined, far larger: Nowhere in the country have rents declined as much as they have in Austin — now 22% off the peak reached in August 2023, according to Redfin. The median asking rent is $1,399 per month, down $400 in less than three years. . . .  In 2021 — which Reed calls “the year of extreme” — developers poured into Austin as pandemic-era corporate relocations surged and remote workers flocked to the city seeking lower taxes, sunny weather, a plethora of tech startups and a robust social scene. Builders typically take two years to go from buying land to welcoming tenants, and as their cranes climbed into the sky, the new arrivals crammed in to the existing apartment stock. . . .  Then came the flood of new apartments. Developers dumped almost 50,000 rental units on the city in 2023 and 2024, according to Fannie Mae data. That represented a 14% increase in the supply, the biggest on a percentage basis for any major US metro area. (0 COMMENTS)

Israel is the only democracy in the Middle East but it seems a lot more alien and chaotic than many of the older democracies of the West. Hear Rachel Gur of Reichman University explain to EconTalk’s Russ Roberts how the Israeli political system works and sometimes, doesn’t work. The conversation brings into relief the challenges […] The post The Unusual World of Israeli Democracy (with Rachel Gur) appeared first on Econlib.

  Matt Taibbi: The Collapse of the Censorship Regime Interview by Zach Weissmueller and Liz Wolfe, “Just Asking Questions,” Reason, February 27, 2025. Excerpt: The Department of Homeland Security…has this concept, you know, they call it building resilience on the one hand, or pre-bunking on the other, which is this idea of introducing a potentially controversial or difficult idea to an audience early so that they’ll be more accepting of it later. So, for instance, if it’s usually it’s done in a way that’s supposed to be prophylactic, like you warn somebody five months ahead of time that there could be, you know, Russians might interfere with the election, and that will make people more receptive to the idea that there is when you do that story later on. But sometimes they also like to introduce an idea. And this is all about how do we protect people against certain kinds of ideas and how do we conditioned them to accept others, like about the vaccine. And either they talk about building resilience, which is we want the the population to and sort of on their own reject psychologically certain ideas before they’re even posed to them. So there’s a lot of signaling that goes on in media…the 60 Minutes [German hate speech] thing felt to me like a classic seeding of a of an idea. There’s so much more there, including how Google and most other search engines became much less useful for people who want to know what was actually said and not just read some “trusted” reporter’s view. I rarely watch a 1-hour plus interview. This was the exception, partly because I had a bad headache that day and had trouble writing. But I’m glad I made the exception. I recommend 1.25 time. YMMV.   British PM Is Wrong, There Is No Free Speech In The UK by Beth Brelje, The Federalist, February 28, 2025. Excerpts: Despite draconian laws that punish people for expressing themselves, United Kingdom Prime Minister Keir Starmer lied about his country’s terrible free speech record during a White House meeting with President Donald Trump on Thursday. And: Father Sean Gough, a Catholic priest, was arrested in 2023 for standing silently at a closed abortion business with a sign reading “praying for free speech.” He also had an “offensive” bumper sticker, “Unborn lives matter.” He was interrogated by police and criminally charged, according to the Standing for Freedom Center. UK pro-life activist Isabel Vaughan-Spruce has been arrested twice for silent prayer outside an abortion business.   Distribution Tables Distort the Tax Policy Debate by Adam N. Michel, Cato at Liberty, February 28, 2025. Excerpts: As Republicans work to extend and expand the 2017 Tax Cuts and Jobs Act (TCJA) before it expires, politicians will relitigatethe deceptive distributional statistics that purport to show who benefits most from tax cuts. These distribution tables are inherently limited, often grossly misleading, result in distorted policy outcomes, and make fundamental tax reform all but impossible. And: The first two columns in Table 1 report the Tax Policy Center and the Tax Foundation’s estimates of the TCJA’s effect on after-tax income from the time of passage. This measure tells policymakers if particular groups are made better off after the changes. The two sets of results from the TJCA tell a broadly similar story: all income groups saw higher after-tax incomes in 2018 following the tax cuts. The first two measures are not identical because the underlying models use different definitions of annual income and different methodologies for distributing some tax changes, like the corporate income tax.   The accompanying pic is of Weissmueller, Taibbi, and Wolfe. (0 COMMENTS)

Question: Uber offers a membership option that entitles members to a percentage reduction in the price of Uber rides. Evaluate the following two statements: 1- Suppose an Uber customer is indifferent between becoming an Uber member or paying the standard Uber ride price. This customer will never spend less, and, in general, will spend more on Uber rides if the customer becomes a member. (Assume that Uber rides are a homogenous good.) 2- Introducing the membership option can never reduce the number of Uber rides this customer takes.     Answer: If the Uber customer is indifferent between the two options, his utility must be the same regardless of which option he chooses. In other words, the two budget constraints the customer faces under either option must be tangent to the same indifference curve. Once we recognize this, then answering the first part of the question becomes straightforward. The figure below illustrates the two options. The vertical axis measures the customer’s expenditures on all other goods. The horizontal axis measures the number of Uber rides the customer purchases.  Given an income of 0A, the customer faces a budget constraint of AF if he does not purchase the membership option. Given his preferences and the budget constraint, he will spend 0B on all other goods and AB on Uber rides.  If the customer purchases the membership option, he gives up spending AC on all other goods, even if he doesn’t purchase a single Uber ride. However, doing so reduces the price per Uber ride, so the budget constraint becomes flatter than before. Now, his budget constraint is ACE. In this case, he will spend OD on all other goods and AD on Uber rides.  Hence, total expenditure on Uber rides with the pass will rise by the amount BD, so the first statement is true. As for the second statement, the short answer is that it’s false. For example, suppose Uber rides were an inferior good. In this case, the membership option may reduce the number of Uber rides the customer purchases even though the membership reduces the price per ride. (0 COMMENTS)