A December 28 report in the Wall Street Journal illustrates (again) how a wish for free enterprise in America is not like carrying coals to Newcastle (see Charles Passy, “New York to Penalize Health-Care Providers $1 Million for Covid-19 Vaccine Fraud“). For Mr. Cuomo, who drinks at the zeitgeist of our times, “fraud” simply means what the government does not like. A few excerpts: New York Gov. Andrew Cuomo said Monday he will sign an executive order to penalize health-care providers that administer the Covid-19 vaccine without following state prioritization protocols. … Mr. Cuomo, a Democrat, said that providers that ignore this will face fines of up to $1 million and a revocation of all state licenses. … State Health Commissioner Dr. Howard Zucker said over the weekend that ParCare was being investigated by the state police for possibly obtaining the vaccine fraudulently and then transferring it to other parts of the state and administering it to the public without paying heed to the prioritization rules. … Mr. Cuomo said he wasn’t surprised that issues are already arising with health-care providers potentially violating state mandates with vaccine prioritization. “You’re going to see more and more of this. The vaccine is a valuable commodity,” he said. The first two paragraphs cannot but remind us of the old USSR government, the mother of all persecut0rs of those who don’t respect “state prioritazition protocols.” Why shouldn’t groceries, say, be allowed to ignore  “state prioritazition protocols” on food allocation? But fascism may be a more relevant reference than communism since the former allowed more tightly-controlled private businesses than the latter, as Lawrence Dennis argued. The last two paragraphs remind us that, indeed, any commodity that many people consider valuable and which the state tries to control is going soon be the object of smuggling—what statocrats call “fraud”—for the benefit of individuals who want it and are willing to pay for it. Should vaccines first go to cops or to teachers? To the old or to the young? There is no way for a government planner to make an efficient decision on this if only because there are some among individual teachers and some among the old who would be willing to sacrifice more to be vaccinated than other members of the groups to which the state arbitrarily identifies them. What if Google wants to buy vaccines for all its employees? What if a charitable organization wants to purchase some for its poor clientèle? As my co-blogger Scott Sumner just argued, the price mechanism is more efficient and even more just (if we want to jump in the undecided philosophical debates that have been raging for 25 centuries) than decisions made by politicians and bureaucrats. Moreover, if the available vaccines were sold to the highest bidders (like beef, cars, or shoes) noting would (or, in the current emergency, should) prohibit the government from bidding in the same market, but without prohibiting others to do the same. The market exclusion that the governor of New York advocates seems alas natural to most people. It always strikes me how inclusion-obsessed activists work to exclude so many people. The current situation is economically inefficient, morally questionable if not absurd, and dangerous for social peace. The federal government distributes the vaccines to the state governments, with all the vagaries of state distribution systems. State governments then add another layer, albeit variable, of inefficiency and authoritarianism by deciding who among their citizens will get the vaccine and who will, in the best case, have to wait their turn. (See Dan Frosch, Elizabeth Findell, and Peter Loftus, “As Covid-19 Vaccins Roll Out, States to Determine Who Gets Shots First,” December 9, 2020.) Yet, isn’t an emergency situation like a pandemic different? A long (classical) liberal tradition from Adam Smith to Friedrich Hayek or Milton Friedman would answer yes. But—and here lies the big difference—liberals would not forbid free markets and voluntary cooperation to coexist with justifiable government intervention. A free market will insure, through the profit motive, that more vaccines are available, while not banning the free expression of individual preferences according to different personal circumstances. As I just argued, the government could bid against its own citizens, as when it buys anything (including labor services) on the market, but without prohibiting them from outbidding it. Classical liberals and many more radical libertarians share a common ideal: the presumption of liberty, which can only be overcome when restrictions are necessary to protect liberty itself, or something to that effect. In a major crisis (and Covid-19 is probably one), such restrictions may be warranted if they don’t seriously undermine liberty—for now or for the future. This being said, there is room for disagreement in the liberal-libertarian tent. (In a Café Hayek post of yesterday, Don Boudreaux articulates a libertarian position on the conditions of the presumption of liberty.) Everybody in the tent must wish that economic freedom and free enterprise will not continue to be so tightly shackled in 2021. (0 COMMENTS)

They implicitly threw away markets in favor of central planning. An advance market commitment for Covid-19 should combine “push” and “pull” incentives. The “pull” incentive is the commitment to buy 300 million courses of vaccine at a per-person price of $100, for vaccines produced within a specified time frame. If multiple vaccines are developed, the A.M.C. fund will have authority to choose products to purchase based on efficacy, the availability of sufficient vaccine for timely vaccination or suitability for different population groups. So firms compete to serve the first 300 million people with the most attractive vaccines, and the “pull” component provides strong incentives for both speed and quality. This is from Susan Athey, Michael Kremer, Christopher Snyder and Alex Tabarrok, “In the Race for a Coronavirus Vaccine, We Must Go Big: Really, Really Big,” New York Times, May 4, 2020. Here’s the problem: Once the companies produce the vaccine and sell it to the government, what assures that the vaccine will be distributed well and quickly? I wrote about this earlier this month in David R. Henderson, “Vaccines’ Last Hurdle: Central Planners,” Defining Ideas, December 4, 2020. Essentially what we have is government as monopsonist: monopoly buyer buying something valuable and then distributing this valuable item at a zero price. From what I can gather from reading about Pfizer, it has done its job admirably. But central planning, rather than markets and pricing, is being used to distribute the vaccine. This isn’t the fault of Athey et al. And it’s conceivable that they had zero impact on Operation Warp Speed so the mess-up might not be their fault. But they hoped to affect the outcome. So, given the huge stakes, it would have been nice, in a longer than usual NY Times op/ed, for the authors, all talented economists, to spend at least a paragraph making clear that the drug companies should be free to sell the drug. They might have wanted to advocate a price cap of, say, $100, but a price of $100 gives better incentives than a price of $0.   (0 COMMENTS)

This July-September, I ran a book club on Rizzo and Whitman’s magisterial Escaping Paternalism.  Now I’m pleased to announce that Rizzo and Whitman have won a much-deserved Szasz Prize for Outstanding Contributions to the Cause of Civil Liberties.  From the prize announcement: The professional Szasz award goes to Mario J. Rizzo, a professor of economics at New York University, and Glen Whitman, a professor of economics at California State University, Northridge. Their book Escaping Paternalism: Rationality, Behavioral Economics, and Public Policy was described by economist-blogger Bryan Caplan as “an unbelievably learned, thoughtful, fair, wise, and inspired critique of applied behavioral economics in general and libertarian paternalism (a.k.a. “nudge”) in particular.” Casual readers may wonder, “What on Earth does Escaping Paternalism have to do with civil liberties?” The answer: Paternalism is a top – possibly the top – argument for violating civil liberties.  Do you really want to let people go to hell in their own way?  Left to their own devices, lots of people will.  So what should we do about the rest?  Force them to do the right thing for their own good, of course. This is a classic Christian argument against religious toleration: Coercion can save heretics from hellfire.  And the same goes for the metaphorical hells of drug addiction, obesity, alcoholism, impulsivity, etc.  By exposing the deep intellectual flaws of paternalism, Rizzo and Whitman ipso facto stand up for individuals’ freedom to live their own lives in their own way. As a former Szasz prize winner myself, I’m delighted to welcome Rizzo and Whitman to the club.  Bravo. P.S. If you’re unfamiliar with Szasz’s mind-bending work, start here. (0 COMMENTS)

In “Has Bitcoin Succeeded?,” Alt-M, December 23, 2020, Larry White of George Mason University has a nicely nuanced piece on, as will not surprise you if you read the title, whether Bitcoin has succeeded. As Larry says, the answer depends on the goal. As a widely used private alternative to government fiat money, it has not succeeded yet. As an asset that has gained in value, it has succeeded wildly. Larry nicely walks the reader through the ins and outs of Bitcoin and does so mainly by taking on Bitcoin critic Edward Hadas. Larry writes: Starting from an (overstated) argument, to the effect that Bitcoin would not become a commonly accepted medium of exchange, Hadas leapt to the prediction that Bitcoin would have zero use and zero market value.  Bitcoin today in fact occupies an intermediate position: it is an uncommon or niche medium of exchange. It is better than other media for making some payments that, even if for legitimate purposes, might be censored if routed through payment systems controlled by national governments and central banks. Human rights activist Alex Gladstein recently tweeted an annotated list of Bitcoin use cases, beginning with: “BYSOL, a grassroots Belarusian human rights org, has moved more than $500k of value peer-to-peer to striking workers inside Belarus, in a way the regime can’t stop. Activists or protestors normally get their bank accounts frozen.” His other examples include fundraising by activists in Nigeria, Hong Kong, and Russia; savings expatriation by people fleeing Venezuela; remittances into Iran; and peer-to-peer transfers within China among people seeking to avoid state financial surveillance. Such uses (together with forecasts of wider future use) are enough to sustain Bitcoin’s positive market value. Larry concludes: People can indeed be excused for thinking that central banks have done poorly at preserving the purchasing power of money, and at preserving financial privacy. And people can be excused for thinking that Bitcoin is potentially a more viable money than a non-governmental commodity standard in a world where governments have been allowed to suppress commodity-money payment systems. Bitcoin is vulnerable to government surveillance and prohibitions that could quash crypto exchanges and drive trades underground. But it arguably could survive underground better than could a banking system based on commodity redeemability that must be openly accessible to be trustworthy. If Bitcoin will continue to thrive as an investment and medium-of-exchange-in-waiting “until the authorities do better” at managing fiat money (and at allowing financial privacy), then Bitcoin may thrive for a long time to come. One commenter on Larry’s piece writes: Is it not legally suppressed (like all alternatives to fiat money) by capital gains/losses calculation requirements for tax on each transaction? A huge detriment worthy of mention for something seeking to be a medium of exchange. Good question. And the answer: Yes. Indeed, Larry points that out in the article he links to in the paragraph quoted just above. In that 2014 article, he writes: The legal barriers to open currency competition in the United States are not only (1) the legal tender laws to the extent that they render it doubtful that a U.S. court would compel specific perform- ance of a nondollar contract, (2) capital gains taxes and state sales taxes on precious metals, and (3) the statute(s) banning private coinage.       (0 COMMENTS)

Many people are horrified by the prospects of introducing the profit motive into health care. Thus they oppose paying kidney donors, even though it would save tens of thousands of lives. They oppose price gouging on masks or vaccines, even though it would save many lives. They oppose challenge studies for vaccines, even though it would have brought us a vaccine much sooner, thus saving many lives. Instead, we end up with a government controlled health care regime, where decisions are made by slow and cumbersome bureaucracies. In a libertarian society, the pandemic might already be essentially over. That’s not to say that libertarianism is necessarily precisely “optimal”, as indeed there is a market failure aspect to pandemics, due to the external effects of infection. Yet despite the theoretical case for government intervention, in reality it does much more harm than good. Critics of libertarianism make the following errors: 1. Ignoring the Lucas Critique: They assume that behavior in a highly regulated society is similar to what it would be in a libertarian society.  When interviewed, several Swedes indicated that they didn’t see any need for masks because the Swedish government told them they were not needed. People don’t behave like sheep in a libertarian society; they learn to be responsible for their own decisions. Before FDIC, people took an active interest in the safety of the banks where they deposited their hard earned money. Now nobody cares how recklessly their bank lends out their money—it’s all insured. And yet I see opponents of abolishing FDIC argue that people are not able to ascertain whether banks are safe. 2. People underestimate the pervasiveness of government regulation: Occasionally one encounters progressives describing America’s socialist health care system as a free market system, which is absurd.  Or they’ll say “There was nothing to prevent health care firm X from doing what you suggest.”  Yes there was; health care providers are so enmeshed in our over-regulated system that they have almost no ability to engage in creative problem solving.  Suppose a vaccine company pursues an ambitious plan to speed vaccine development.  They ask participants to sign as waver promising not to sue if things go bad.  How would that contract hold up in court? 3.  Externalities cut both ways: Progressives like to talk about externalities as a market failure. They also like to suggest that selling vaccines to the highest bidder is an abhorrent idea.  But you can’t have it both ways.  The externality aspect of pandemics means that a program that vaccinates people more rapidly also helps those who are not yet vaccinated.  In other words, when it comes to pandemics, “externality” is just another word for “trickle-down theory”.  A free market regime that uses the profit motive to vaccinate 20 million people in December is superior to a bureaucratic regime that vaccinates 5 million people in December, even if the free market allocation is in some sense “unfair”. 4.  Cultural norms also matter in a libertarian society: Just as people put up phony arguments against utilitarianism by positing abhorrent policies that supposedly increase aggregate utility but actually make society more unhappy, progressives make phony arguments against libertarianism by ignoring the fact that our ethical instincts would still exist in a libertarian society.  Bill Gates doesn’t stop donating tens of billions of dollars for the provision of health care to the world’s poor just because we deregulate.  Catholic hospitals don’t suddenly ignore ethical considerations just because we deregulate.  Society is still there, with all its instincts and norms.  We don’t all become Gordon Gekko; indeed people are “nicer” in capitalist countries than in communist countries.  What we get through deregulation is competition; if some of our institutions are creating roadblocks then other institutions (or even foreign countries) will provide services to those willing to pay. To attract progressives, maybe we should start calling competition “diversity”. 5. Bureaucrats use cost/benefit analysis, for themselves: Yes, bureaucrats weigh costs and benefits.  They consider the cost to their career in letting a bad product our prematurely and the cost to their career of a “better safe than sorry” long delay in testing a new product.  Unfortunately the outcome that is best for the individual bureaucrat is almost never the outcome that is optimal for society as a whole. This twitter thread discusses how the US government botched the vaccine rollout.  And this Alex Tabarrok post discusses how the Canadians do it better.  (Tyler Cowen makes a similar point.)  Our government also botched testing, masks, challenge studies, etc.  And now tens of thousands are dying as a result.  Socialism kills. HT:  Matt Yglesias (1 COMMENTS)

The anonymous author of the satirical “Homeless Camping in Austin: A Modest Proposal” has also sent me this more serious guest post.  The title is mine.  “Democratic centralism,” you may recall, is the Leninist practice of demanding strict loyalty to a party line after a (usually perfunctory) debate.  Printed with the author’s permission. Well-read readers will note the parallels to Robin Hanson’s job market paper, “Warning Labels as Cheap Talk: Why Regulators Ban Drugs.” Enjoy! Since very early in the pandemic, there has been a somewhat novel approach to information flow in the media and particularly on social media sites, at least compared to the baseline in the western world.  Very quickly, there seems to have been a consensus that information gatekeepers should determine which opinions about the nature of the coronavirus and the appropriate policy response should be allowed to be widely disseminated.  One of the notable early examples was when Medium, which is basically a website host, took down a piece written by Aaron Ginn arguing that the costs of lockdowns should be considered.  There was no basis to argue that he was providing disinformation; his post was removed because it argued for a different position than what was being promoted. While biased journalism is hardly new in the US or anywhere, the movement to close down the ability to distribute alternative opinions seems to have been novel at least within the United States.  This was not like the New York Times refusing to publish opinion pieces that disagreed with its editorial stand; this was more like if the people in the olden days who sold bulk newsprint paper refused to allow anyone who dissented from the views of the newsprint providers to even obtain raw materials for printing. This new attitude is puzzling given the novelty of the virus and the nearly intractable nature of the optimal policy decision, which must take into account the likely spread of the virus under various policies and the overall effect of the policies on the enormously complex and interconnected global economy.  It is frankly absurd to think that by March or April all reasonable people had converged to the consensus view that the world economy should be locked down, but major press outlets and information platforms proceeded as if this was established fact.  Given the extraordinarily poor performance of even the relatively simple virus models that were applied to the consensus view and the total inability to even begin to estimate the economic and human costs of the lockdowns, in retrospect this rapid convergence on consensus appears to be one of the single greatest acts of hubris in the history of mankind. But, crucially, even at the time and without the benefit of hindsight this rapid collapse onto a single acceptable viewpoint by those who control the flow of information should have been seen as a colossal error.  Modern information economics makes it abundantly clear that in the presence of biased experts whose objectives do not perfectly align with the people receiving advice, having multiple experts, each with their own different biases and preferences, is much better than having a single biased expert.  This is true even if you could chose the least biased expert as your one expert.  Adding another, highly biased, expert, will greatly improve the quality of information available to the person being advised in the richer versions of these “persuasion” models. The idea is that a single expert, even if he cannot directly deceive, will choose to report information in such a way as to influence the people being advised to act in the interests of the expert, rather than their own.  Those being advised will know that the expert is engaged in such behavior, but even though they do their best to compensate for his manipulations the fact that he is the sole arbiter of what information does or does not flow gives the expert great power to influence the ultimate decision.  Bringing in another expert with different biases improves the situation immensely (as shown by Gentzkow and Kamacia, Bayesian Persuasion with Multiple Senders and Rich Signal Spaces), as this other expert will release information to undermine the persuasion attempts of first expert when the two experts’ objectives disagree.  Knowing this, the first expert will release even more information to undermine the persuasion attempts of the second expert, and this process can, in appropriate circumstances, leave the person being advised (us) with all the information we need to make the best judgements for ourselves. Certainly no one could argue that the experts designated as the arbiters of truth by the information platforms were free of bias; the WHO and those who work for the WHO must constantly consider the risk of offending powerful countries, particularly China, and the US health bureaucracies are shot through from top to bottom with political biases.  Notably, US public health authorities barely hid their political biases as they opposed lockdown protests and endorsed “racial justice” protests.  So, there is no reasonable claim that Facebook and Google had magically found an unbiased expert.  As such, the logic of information design should have pushed them to open their platforms to many different perspectives on the available data, if, as certainly appears not to be the case, their true interest was in promoting public health. Even in our own school, a business school at a university that should be dedicated to the relentless pursuit and dissemination of knowledge, administrators pressured faculty to not present ideas contrary to the universities official views on coronavirus policy.  This pressure was particularly interesting as there is no real sense in which the University should take an official position on coronavirus policy, and it is unclear that the university has done so.  But, faculty are pressured not to contradict this view, and such pressure is acceptable at the highest level of the business school.  Our school thus rejects the idea that there should be a competitive marketplace of ideas and instead embraces the much more totalitarian idea that once a consensus is reached by a designated inside group, all others should fall in line and not question these thought leaders. As distressing as this move away from allowing ideas to freely compete is, the situation gets worse.  It is essential to recognize the precise nature of the filtering that was undertaken by information platforms.  The decision was made to designate certain opinions produced by certain authorities as the only acceptable opinions.  This filter was not based on expertise; one could imagine a filter where only “qualified” individuals were allowed to opine on the coronavirus on certain platforms.  But, Dr. Scott Altas was censored, despite being a medical doctor and a health policy expert. A more defensible filter than even one based on expertise would be a filter based on historic predictive ability; perhaps the platforms could have prevented those who made the worst predictions about previous pandemics and about the current coronavirus from further pontificating.  But, Neil Ferguson, who made order of magnitude errors about virtually every recent pandemic including SARS-CoV-2, was never censored. So, it appears certain platforms simply selected certain central authorities to fully back, regardless of actual expertise or a history of successful predictions.  It is thus impossible to conclude that these platforms sought to filter information in order to promote better knowledge among the general public, which as discussed above would already have been a dubious proposition.  Instead, it appears that the purpose of the information filters must have been control of information for the sake of control of information.  The implications of this objective are disturbing. (0 COMMENTS)

Consider political wars of religion, which I define as confrontations about whose preferences and values will be imposed on other individuals. They are not what any friend would wish you for 2021! President-elect Joe Biden does not seem to understand this as he declared (quoted by Deanna Paul, “Republican Electors Cast Unofficial Ballots, Setting Up Congressional Clash,” Wall Street Journal, January 28, 2020): Respecting the will of the people is at the heart of our democracy, even if we find those results hard to accept. First, the United States (or perhaps more exactly, the US government) is not a democracy, but a republic, as John Grove argued in his article “Numerical Democracy or Constitutional Reality?” (Law and Liberty, November 12, 2020).  Indeed, the Founders were not influenced by Jean-Jacques Rousseau’s conception of democracy, where the “will of the people” or “general will” is paramount. Second, and contrary to what populists of the right or of the left believe, the “will of the people” has no rational, ascertainable meaning. It is not without reason that Rousseau has been called the “prophet of national populism.” It is remarkable that populists of the left (such as Elizabeth Warren) and populists of the right (such as Donald Trump) both claim to represent or incarnate the will of the people. The reader interested to go a bit further on this topic may have a look at my recent review of Carlos de la Torre’s latest book (“The Standard Populist Playbook,” Regulation, Winter 2020-2021), my forthcoming Regulation review of  Willian Riker’s Liberalism Against Populism, my forthcoming article on populism in The Independent Review, as well as my Econlog post, “What is Populism? The People V. the People” (September 11, 2020). The “will of the people” does not exist or, at the very least, is totally unknowable. A methodological reason is that “the people” does not exist as a superindividual with a will of its own. There are only individuals with their several different preferences and values. A more practical reason is that, as economist Kenneth Arrow demonstrated, any voting method will give results that are either logically incoherent or dictatorial. What passes for the will of the people is, at best, the result of a numerical plurality within the electorate or, at worst, the clamor of a mob. In a classical liberal perspective, the purpose of voting is only to allow a peaceful change of the rulers when a large proportion of the electorate have had enough of them. It is not to impose some individuals’ preferences, values, and lifestyles on other individuals. Political wars of religion, on the contrary, are led by politicians (the ultimate altruists, as we know) who are fighting each other to incarnate the will of the people. And since the will of the people is unknowable, any politician can claim to represent it and is as right as any other politician who so claims (such a claim is the main feature of populism), just as leaders of wars of religion on both or many sides can claim to follow the will of God. As Grove writes, And from that expectation [that a single national vote should decide everything] springs partisan bitterness, fanatical political loyalty, and the sense that we must do whatever it takes to defeat our domestic “enemies” at the ballot box. … Samuel Adams wrote to Richard Henry Lee that such a government could not adequately craft laws suited to the great variety of peoples and interests within it, and would bring us only “Discontent, Mistrust, Disaffection to government and frequent Insurrections.” We most certainly have the first three. If we clamor for still more centralized democracy, we may get the fourth. The problem is not extremism, it’s the desire to impose one’s own brand of extremism on others. Instead, live and let live! That’s my wish for the New Year.   (0 COMMENTS)

Every person who comes into the media’s crosshairs should understand this. Nothing you say or do is going to change the story they are going to write. Indeed, the story was written before they even contacted you. They will falsify quotes and leave out facts. This is from Mark Judge, “‘They Were Relentless’: How I Learned Respect for Our Communist Media,” The Stream, December 28, 2020. The title of my post is one of the subtitles in his piece. You don’t have to agree with the title, especially the attribution of Communist beliefs, to get a lot out of Judge’s article. I’ve written here a few times about some of my negative experiences with mainstream media. Many of my experiences have not been similar to those of co-blogger Bryan Caplan, who has had mainly positive experiences. Fortunately, I am learning. Back in September, I received the following email from Bloomberg reporter, and fellow Canadian, Josh Wingrove: Hey there David, My name is Josh Wingrove, and I’m a White House reporter with Bloomberg. I’m writing a story about Dr. Scott Atlas’s prominence as of late as an adviser to the president on the pandemic, as well as the corresponding low profile of other health advisers, including Dr. Fauci and Dr. Birx. I’m writing to see if you have any views about Dr. Atlas or his work at the White House that you’d be willing to share, either on record or on background. Is his presence on the task force helpful? What’s his reputation at Hoover? xxx-xxx-xxxx is my cell, any help is sincerely appreciated. Warm regards. Josh Wingrove White House Correspondent Bloomberg News Everything about this letter was a red flag that caused me to sniff “set up.” Start with the overly friendly “Hey there David.” Then “What’s his reputation at Hoover?” Then “Warm regards.” Warm regards? Really? And we haven’t met or even talked. But I realized I could be wrong. He might be offering to let me speak on background in case I wanted to say nice things about Scott (which, by the way, I would have) and feared that various faculty at Stanford would target me. So I did due diligence. I looked at his recent Bloomberg pieces. To the extent they discussed Trump or Trump appointees, they were all one-sided attacks. I thought, “Ok, but maybe there’s a paragraph in there, put in to satisfy an editor seeking ‘balance,’ saying that not all the people he talked to agreed, that one interviewee was quite positive on the person in question.” Nope. Finally, I looked at Wingrove’s recent tweets. Oh my word. I saw no upside and only breakeven or downside in emailing him or calling him. (0 COMMENTS)

In the Yucatan, we stayed at several all-inclusive resorts.  These resorts were a good fit for my family: When you’re travelling in a Third World country with four kids during a pandemic, you want a convenient supply of abundant and tasty food – and enough variety to please each and every picky eater.  (Me included).  Since portions were smallish, we routinely ordered 12-15 dinners for dinner, all at zero marginal cost.  At least in Mexican resorts, tips are appreciated but not expected. Economically speaking, there’s a straightforward win-win case for these Mexican resorts: Not only do they make the tourists happier; they make the Mexicans happier by providing them with better opportunities than they have elsewhere in the Mexican economy. If you reconsider this verdict through the distorted lens of Social Desirability Bias, though, a radically different picture appears before your eyes.  Once you forget economics, you could easily describe the resort experience in the following sordid way: A bunch of rich foreigners show up in a poor country and take advantage of the locals’ desperate poverty.  The foreigners relax in the sun and stuff themselves on fried fish and castacan (mmm… castacan) while the poor Mexicans wait on them hand and foot.  The Mexicans toil long hours for low pay while the rich foreigners cavalierly order margarita after margarita, tequila after tequila.  The rich foreigners don’t even bother to pick up after their fat, lazy selves: Every day, poor women of color clean their rooms and make their beds.  Most of the foreigners treat the workers like inferiors, with a typical attitude somewhere between demanding and rude.  Yet no matter how rude the guests may be, the impoverished workers are required to kiss up to the guests.  Expressing warmest regards for foreigners who have never spent a single day in poverty is in the job description.  And at the end of each meal, the workers can’t even count on a tip. Now suppose Mexican law prohibited such resorts, and you wanted to end the ban.  Just imagine how easily the defenders of the status quo could demagogue!  These resorts allow rich foreigners to exploit poor Mexicans!  They are an affront to decency!  To dignity!  Why should we let rich foreigners gorge themselves while innocent Mexican children go to bed hungry?  Mexicans deserve good jobs, not this basura! The result of this demagoguery, naturally, would be to prevent Mexicans from bettering their condition.  “Bettering” – what a great concept!  It captures the idea of improvement without falsely promising that the end result will be good in absolute terms. The key economic point: Banning resorts saves no Mexican children from hunger.  Banning resorts would rather cause Mexican children to be hungry, by depriving their parents of the best jobs they can get.  The reason why Mexicans toil in all-inclusive resorts despite all the obvious drawbacks is that their other prospects are worse.  Often much worse.  Just talk to the guy desperately peddling straw hats on the beach. At this point, it’s tempting to enthuse, “Let’s just have a dialogue about this.”  The demagogues have their view; economists have theirs; let’s try to reach a consensus.  To this, I once again say: “Dialogue?  We don’t need no stinkin’ dialogue!”  Dialogue hands Social Desirability Bias has a massive home-field advantage.  Far better to let observed choices prevail over mere words. Still, how can rich foreign tourists be happy at their resorts?  Truth be told, the vast majority are, like almost all human beings, selfish and oblivious.  And that’s largely for the best.  If the tourists’ consciences pained them, their main reaction would be to stay home, not come and tip generously.  What about me?  I may be just as selfish as the rest of the tourists, but since social science is my life, I can’t be oblivious to any social world around me.  What keeps me feeling comfortable, honestly, is the faces of the workers.  Even when they’re off-the-job, most of them seem quite content.  While I wouldn’t want to have their jobs, the magic of hedonic adaptation allows even humble resort employees to feel pretty good about their lives.  That’s not just psychological theory; it’s observed fact. The broader lesson: As I tell my kids at a young age, many things in life sound bad but are good.  Rich foreigners living it up in the Third World is one of those things. And the list goes on and on and on. (1 COMMENTS)

According to that nursery rhyme we all grew up with: “Rain, rain, go away. Come again another day.” This goes in spades for hurricanes, which have devastated the economy, and tens of thousands of lives. But our complaints about the weather do not end there. Sometimes, on the day of an annual parade, we just don’t want it to rain. We’re not against a little precipitation; oh no. We would just like it to pour down when we want it to, not when “it” decides to do so. Who does “it” think he is anyway? He has a lot of nerve. Raining when he wants it to, not when we want him to? Not as much as with hurricanes, of course, but, still, a lot of economic welfare hangs in the balance. If we can rearrange the timing, then outdoor concerts cannot get rained out, nor can baseball games, nor can any of the marathon races held be ruined. These only sometimes get cancelled due to unwanted showers, but even when not cancelled, they can get pretty yucky. There are plenty of statistics about the economic harm from flooding. Badly timed deluges are undoubtedly a fraction of that (anyone remember Katrina?), but, still, not to be underestimated. And not only do we want it to rain, or not, on certain days, this goes for hours of the day or night, too. If we had our druthers, it could rain every night if “it” felt like so doing, provided this occurred, only, say, between four and five AM. Not only when, but where, too! Some cities, truth to tell, sometimes get quite a bit too much of it, on any day of the week or hour of the day. They would be quite happy to send some of it to our brothers and sisters in Arizona, Nevada, New Mexico or the parched parts of Texas and California. Why am I blithering on about this? Isn’t this sort of thing totally out of human control? Am I advocating a return of the rain dances, which shaman and medicine men overseeing? No. I’m talking about cloud seeding.   It is one thing to advocate that government give up the hundred and one ways it wastes money, and instead allocate some resources to this nagging problem. A greater challenge would be to figure out how private enterprise could do so. Here is one possibility, at least for the time when the costs of this technology fall below the benefits of such weather control. A consortium of hotels, restaurants, shopping malls, supermarkets, universities throughout the city, those who put on or benefit from parades, outdoor concerts, marathons, and other such gigantic events (hey, the COVID pandemic will end one of these months, hopefully; let’s look ahead), would put up the funds necessary to do the job. This would overcome what some economists think of as the market failure of external economies. (We would all benefit from weather control outlined herein; each potential donor would have an incentive to hold back on supporting each, but to reap the benefit thereof). But contributions would be publicized. Any group or organization that didn’t shoulder a reasonable proportion of the effort would be humiliated. It would suffer negative customer repercussions. In the extreme it would be forced into bankruptcy, as a “free rider.” This includes civic organizations, churches, wealthy individuals, etc. Is this speculation too far-fetched to consider? Ok, it will not be on the agenda for the next week, month or year. However, we want not only bread, but roses too. If we cannot look past the woes that now betide us, we are not the people I think we are. Then, there is the issue of confronting the more serious weather issues: the storms, hurricanes, typhoons, cyclones, lightening, etc. According to some studies they are becoming more and more destructive. These are not mere inconveniences, coupled, only with economic losses. We must add to the debit side actual loss of human life, and in serious numbers, reaching into the tens of thousands. If we as a human race do not blow ourselves up by then, we may reasonably expect that in 500 years, there will be smooth sailing in this regard. No inclement weather will dare cross our bows. But what about in two centuries in the future, or even one? Can we hasten the solution to a matter of decades? It is unlikely that all of these threats to humanity will end in one fell swoop. Probably, we will take these on one at a time, and, as intermediate steps, gradually reduce their severity. All the reason to put this challenge on the agenda, and at least begin some more serious research on them. Yes, we’ve got to wrestle the corona virus down the mat and pin it, and space exploration too, beckons us. But let’s not forget about this threat to humanity. Walter E. Block is Harold E. Wirth Eminent Scholar Endowed Chair and Professor of Economics at Loyola University New Orleans (0 COMMENTS)