A new paper by Jane Ihrig and Scott Wolla makes some recommendations for changing the way we teach monetary policy in intro economics courses. These include: 1. Dropping coverage of the money multiplier. 2. De-emphasizing open market operations (OMOs), and focusing most heavily on the Fed’s interest on reserves (IOR) policy tool. I have long favored dropping coverage of the money multiplier, but I’d be opposed to de-emphasizing OMOs. Control of the monetary base has been an important part of Fed policy over the past 100 years, and is likely to remain so for the foreseeable future. It is not even clear that IOR will be the Fed’s primary policy tool going forward.  During periods of zero interest rates, the Fed uses open market operations to control the size of the monetary base and influence the price level.  Interest rates have been near zero for most of the past decade, and are likely to remain there for years to come.  OMOs will remain an important policy tool, perhaps the dominant tool. But even if we operated in a positive rate environment I’d still be opposed to de-emphasizing OMOs, for several reasons. First, Peter Ireland has shown that open market operations continue to have a long run impact on the price level, even when the Fed pays IOR. Second, students need to understand the process of inflation in many different contexts.  It’s important to cover IOR, but that won’t explain why inflation rose dramatically when the US switched from a gold standard to fiat money, nor does it explain why inflation rates in some countries are much higher than in other countries. When we teach a topic to students, we need to provide a framework that will remain useful in a wide variety of settings.  During the 1980s, my students probably thought I was wasting their time with coverage of episodes of deflation and zero interest rates.  They probably thought, “We’ll never see that again!”  I hope that years later at least a few of them remembered what I had taught them, after they got out and started working on Wall Street. We should also try to use a framework with which they are already somewhat familiar, such as supply and demand. And the framework should also directly connect with the goals of monetary policy, such as 2% inflation. The most general and robust framework for discussing monetary policy is a supply and demand diagram for base money, with the value of money (1/price level) on the vertical axis.  In this framework, monetary policy can either shift the supply of base money (OMOs) or the demand for base money (IOR). We can then explain to students that the Fed adjusts both the supply of money (OMOs, aka “QE”) and the demand for money (IOR) with the goal of keeping inflation near 2%. The danger of focusing mostly on IOR is that students might begin to engage in the fallacy of reasoning from a price change, assuming that a low interest rate policy is a easy money policy and a high interest rate policy is a tight money policy.  The NeoFisherians are not correct in arguing the exact opposite, but they are surely correct in criticizing the naive view that holding nominal interest rates at zero for many decades is an expansionary monetary policy. One of the most important goals of teaching supply and demand is to stop students from reasoning from a price change.  If we start equating interest rates and monetary policy, then students might also assume that a change in the exchange rate will have a predictable effect on the trade balance, or that a change in oil prices will have a predictable effect on oil output.  In fact, the impact of high oil prices on oil output depends on whether high oil prices are caused by less supply or more demand, and the impact of a strong currency on the trade balance depends on whether a strong currency is caused by more demand for our exports or more demand for our financial assets.  Similarly, the impact of higher interest rates depends on whether the interest rate increase is caused by an expansionary monetary policy or a contractionary monetary policy. Whenever I present this argument for using the supply and demand for base money, someone will invariably say, “But look, we did all this QE and inflation barely rose.”  I could just as well retort, “Look, we cut interest rates to zero and inflation hardly rose.”  Or I could respond “Look, we ran trillions of dollars in budget deficits and inflation hardly rose.” Yes, policy changes are often partly endogenous, responding to shifts in the demand for money, credit and other variables.  In that case they seem to have little effect. But that doesn’t mean that a permanent and exogenous change in the monetary base will not increase the price level by the same proportion in the long run, even in a world with IOR. (0 COMMENTS)

Say what you want; I think he’s great. I’m the discussion leader next week of a colloquium on the writings of late 18th and early 19th-century French economist Jean-Baptiste Say. I hadn’t read much by or about him since 1992, when I researched and wrote his bio for the then Fortune Encyclopedia of Economics (and later Concise Encyclopedia of Economics.) Even then I read only little snippets of his work. So it has been a real treat to work my way through over 200 pages of his writing. Here’s a highlight where Say takes on the view that exchange is a zero-sum game: The English writer, Stewart, who may be looked up as the leading advocate of the exclusive system, the system founded on the maxim, that the wealth of one set of men is derived from the impoverishment of another, is himself no less mistaken in asserting, that, “when one a stop is put to external commerce, the stock of internal wealth cannot be augmented.” Wealth, it seems, can come only from abroad; but abroad, where does it come from? from abroad also. So that in tracing it from abroad to abroad, we must necessarily, in the end, exhaust every source, till at last we are compelled to look for it beyond the limits of our own planet, which is absurd. Forbonnais, too, builds his prohibitory system on this glaring fallacy; and to speak freely, on this fallacy are founded the exclusive systems of all the short-sighted merchants, and all the governments of Europe and of the world. They all take it for granted, that what one individual gains must needs be lost to another; that what is gained by one country is inevitably lost to another: as if the possessions of abundance of individuals and of communities could not be multiplied, without the robbery of somebody or other. If one man or set of men, could only be enriched at others’ expense, how could the whole number of individuals, of whom a state is composed, be richer at one period than at another, as they now confessedly are in France, England, Holland, and Germany, compared with what they were formerly? How is it, that nations are in our days more opulent, and their wants more supplied in every respect, than they were in the seventeenth century? Whence can they have derived that portion of their present wealth, which then had no existence? Is it from the mines of the new continent? They had already advanced in wealth before the discovery of America.   (0 COMMENTS)

What’s a remembrance of Sean Connery doing on a site devoted to economics? Here’s what. When I was between the ages of 12 and 14, my family–all 5 of us–would sometimes drive from Carman to Winnipeg (50 miles) on a cold Saturday morning. We would get there at about 11 a.m. and then split and go our separate ways. Then we would meet for dinner at a designated restaurant at about 5:30 p.m. and drive home. In 1964, when I was 13, the thing I liked to do, besides going to Hudson’s Bay or Eaton’s and seeing things I couldn’t buy (not literally couldn’t, but if I bought one thing, I couldn’t buy anything else for a few months–I hadn’t heard of credit markets), was going to movies. Enter Goldfinger. For my 60 cents (if I remember correctly), I entered a wonderful world that was total fantasy. I don’t mean just the plot, which was absurd. What person invites all his partners in crime to show his next big scheme and then kills them all? Why do that? No, the fantasy was the world of luxury: fast cars, great gadgets, travel around the world even by private jet, and beautiful women. Contrast that with what I had. We lived in a house built in 1880 and bought by my father with cash for $9,300 in 1960. (When I sold the house in 1997, a neighbor commented that the curtains in the living room were the same ones that had been up when we bought it from the Doyles 37 years earlier.) It had 3 small bedrooms and one bathroom with a bathtub and no shower. The temperature on the day I saw the movie was probably somewhere between -15 degrees F and 20 degrees F. (Back then we didn’t use the metric system: curse you, Pierre Trudeau.) The furthest I had ever traveled was 20 miles into Ontario and 20 miles into North Dakota. And gadgets? Fuhgetaboutit. It was a big deal when we got an electric toaster and my mother finally got an electric egg-beater. So seeing an Alfa Romeo with an ejection seat? Wonderful. Seeing in the opening scene the wonderful weather in Florida? Beautiful. That 2-hour fantasy world was unforgettable. And it kept me going through the LONG Canadian winter. (0 COMMENTS)

Rob Wiblin, host of the 80,000 Hours podcast, interviews EconTalk host Russ Roberts about charity, the reliability of data to inform decision-making, and utilitarianism. The post Rob Wiblin and Russ Roberts on Charity, Science, and Utilitarianism appeared first on Econlib.

This short piece by Vaclav Smil asks why we do talk so much about the Spanish flu, as a benchmark for Covid19, whereas we do not compare it with influenza pandemics after WWII. Smil’s crucial argument is that, if we do not have good numbers for the Spanish flu, we do have very good numbers for more recent pandemics. He points out that: these more virulent pandemics had such evanescent economic consequences. The United Nations’ World Economic and Social Surveys from the late 1950s contain no references to a pandemic or a virus. Nor did the pandemics leave any deep, traumatic traces in memories. Even if one very conservatively assumes that lasting memories start only at 10 years of age, then 350 million of the people who are alive today ought to remember the three previous pandemics, and a billion people ought to remember the last two. But I have yet to come across anybody who has vivid memories of the pandemics of 1957 or 1968. Countries did not resort to any mass-scale economic lockdowns, enforce any long-lasting school closures, ban sports events, or cut flight schedules deeply. Today’s pandemic has led to a deep (50 to 90 percent) reduction in flights, but during the earlier pandemics, aviation was marked by notable advances. On 17 October 1958, half a year after the end of the second pandemic wave in the West and about a year before the pandemic ended (in Chile, the last holdout), PanAm inaugurated its Boeing 707 jet service to Europe. And the Boeing 747, the first wide-body jetliner, entered scheduled service months before the last wave of the contemporary pandemic ended, in March 1970. Why were things so different back then? Was it because we had no ­fear-reinforcing 24/7 cable news, no Twitter, and no incessant and instant case-and-death tickers on all our electronic screens? Or is it we ourselves who have changed, by valuing recurrent but infrequent risks differently? I am afraid that  24/7 cable news, Twitter and incessant case-and-death tickers on all our electronic screens will not only twist memory, but they are also having a strong impact over political decision making. Take the Italian case. After a very severe lockdown (schools were kept closed for six months), we had more or less a good summer, with progressive reopening and small numbers of contagions, grave hospitalizations, and deaths. With the fall, we have been hit by the much-awaited “second wave”. The government’s preparations have been lacking if not altogether paradoxical: school hours have not been changed, and the supply of public transport has not been varied (in spite of the fact private bus companies are being kept idle, whereas they could have been contracted to help cope with the rush hour traffic). Swab tests were strictly monopolized by hospitals and pharmacists; doctors and private healthcare structures have not been mobilized in order to increase test capacity. Now, the numbers of contagions are rising sharply and doubling once every seven days. They will be around 30,000 a day by the end of the month. Alas, deaths seem to double every week, too. What has the government done? At first, it went for a dripping of closures, with new measures coming up once a week: a couple of weeks ago it made wearing facemasks mandatory, then we introduced curfews. Now gyms and swimming pools and ski resorts have been closed and restaurants won’t be free to serve dinner. The country is entering a lockdown, though softer than the first one. “There are no libertarians in a pandemic;” but somehow that is a problem. One of the key insights of modern libertarianism is that a complex society is a tangle of knowledge problems, which central authorities are not very good at unraveling. This has been lost on decision-makers, who think they can win the “war against the virus” with top-down decisions, irrespective of continuous and abrupt change. They are always lagging a step behind. A few days ago Federico Giugliano has written that somehow, in this second wave, Europe has quietly “turned Swedish”: “Governments are happy to impose more stringent measures on cities and regions with bad outbreaks (as Sweden itself is starting to do) but they’re extremely reluctant to crack down too heavily on social interactions, as they did in the spring.” That was hardly sustainable, politically speaking, with, as Smil put it, “24/7 cable news, Twitter and incessant case-and-death tickers on all our electronic screens”. With cases quickly rising, we see stronger pressure for a new lockdown: the media are breeding anxiety and anxiety elicits a call for political resolve. When it comes to Italy, the numbers are way above Italy’s test and tracing capacity. The lockdown is an implicit admission of the inability of doing anything else. In an article on Politico.eu, I asked “Why did the Italian government, after navigating one of the first and fiercest coronavirus outbreaks earlier this year, not learn from the experience?” My answer is: ideology. The government spent lots of energy and political capital in negotiating European aid and has planned great advancement in its building of an “entrepreneurial state”. I do hope that these new measures will be able to flatten the curve and reduce stress on the national health care service. But if the government is capable only of using the hammer, how can we expect it to be able to “dance” with the virus? (0 COMMENTS)

In the US, more than 800 people a day die of Covid-19, and the curve is beginning to trend upward again. Clearly there would be a substantial benefit from having a vaccine, just in terms of lives saved. In addition, Covid-19 imposes an enormous cost on the economy, especially sectors such as travel and entertainment. Many pundits have suggested that “challenge studies” would speed up vaccine development. In the past, when I’ve advocated this approach some have argued that it wouldn’t make much difference.  But a recent article suggests that vaccine development is indeed being slowed by a lack of infections: On Tuesday, front-runner Pfizer revealed in an earnings call that the first interim analysis in its Phase 3 clinical trial has not yet occurred. That means there hadn’t yet been enough Covid infections among the trial participants to take a first stab at analyzing whether the people randomly assigned to receive vaccine were infected at a lower rate than people who were assigned to get a placebo injection. So the Pfizer vaccine is being held up by a lack of infections, something that could be addressed with challenge studies. Some medical ethicists oppose the idea. A vaccine is not the only possible way to get our economy back on track; an effective treatment for Covid would also make people more willing to go out engage in economic activities. Another article in the same journal suggests that policy mistakes also played a role in slowing the availability of treatments. Here Scott Gottlieb discusses the shortage of monoclonal antibodies, a highly promising new set of drugs: “It is deeply unfortunate that we head into fall without enough doses of this drug,” Scott Gottlieb, the former commissioner of the Food and Drug Administration, tweeted after Regeneron released its news. “Many of us were talking about this as early as March. Regeneron did extraordinary work to secure their own manufacturing, but we needed a concerted industrial effort to get the supply we needed.” Indeed, Gottlieb penned op-eds in the spring and summer calling for a government-backed effort to manufacture the antibodies in large volumes — akin to the massive effort to develop experimental, and still unproven, Covid-19 vaccines. He reiterated that action needs to be taken now to accumulate sufficient supply to treat high-risk patients. In the spring, I criticized the program that gave $1200 to almost all middle class families, even those with jobs.  Some people argued that budget deficits are almost costless at near-zero interest rates.  But even in the unlikely event that interest rates stay at zero forever, any given government program has an opportunity cost—the money could have been spent elsewhere.  If these funds had instead been used to fund a crash program in drug manufacturing, we’d likely be much closer to a solution to the Covid recession. [Sure you can argue, “do everything”.  But politicians are not willing to spend unlimited amounts of money, nor should they.] In mainstream economic textbooks, there are actually relatively few industries where there is a strong theoretical argument for government intervention.  Most of those cases involve some sort of “externality” or “public good”.  And yet we see real world governments spend literally trillions of dollars on programs where there is little theoretical justification, and still fail to fund the one area where there seems to be a very strong “public good” argument.  Based on what I’ve read, this problem is even worse in many other countries, including places like Italy, where the government spends over 50% of GDP and yet provides substandard services in many areas. I worry when I hear pundits suggest that government spending is not costly in a world of near-zero interest rates.  That’s a recipe for waste, and for misallocation of resources. PS.  The benefits from solving the Covid-19 problem goes beyond lives saved and an improved economy, there is also evidence that the disease causes brain damage: Researchers at the Baylor College of Medicine reviewed 84 studies involving more than 600 patients who had been diagnosed with COVID-19. The median age was 61, and two-thirds of the patients were men, while one-third were women. The study’s authors examined the results of patients’ electroencephalograms — known as EEGs, the tests detect abnormalities in brain waves, according to Johns Hopkins Medicine — and found that brain abnormalities in COVID-19 patients were “common.” HT: Tyler Cowen (0 COMMENTS)

And the recovery is well under way. Real gross domestic product (GDP) increased at an annual rate of 33.1 percent in the third quarter of 2020 (table 1), according to the “advance” estimate released by the Bureau of Economic Analysis. In the second quarter, real GDP decreased 31.4 percent. This is from a news release from the U.S. Department of Commerce’s Bureau of Economic Analysis, October 29, 2020. A 33.1 percent annual rate of increase means that that would be the rate if the rate of increase of the summer quarter continued for 3 more quarters. Of course, that won’t happen. To put it in perspective, a 33.1 percent annual increase implies that real GDP in the summer quarter increased by 7.4 percent. That’s a record increase for a quarter. Of course it comes after the huge decline of 31.4 percent (annual) in the spring quarter, which happened due to Covid-19 and the lockdowns. That doesn’t make it even. If a number falls by 31.4 percent, then to get back to where we where, we need an increase of 45.8 percent. To help with the math on the second point a little, here’s how I put it after a tutorial during which I watched myself on video in prepping for my first distance-learning class way back in 2002: “The camera loses 1/4 of my energy; therefore I need to increase my energy by 1/3.”   Here’s the math on both if you’re interested and, for that matter, even if you aren’t interested. Let x be the quarterly rate of growth. Then (1+x)^4 = 1.331. 4 ln(1+x) = ln(1.331) = 0.2859 ln(1+x) – 0.2859/4 = 0.07148 1+x = e(0.07148) = 1.074 Therefore x = 0.074. Growth rate = 7.4 percent.   On the second one. If a number falls by 31.4 percent, it falls to 68.6 percent of what it was. To get from 68.6 percent to 100 percent, it must rise by 1/0.686 = 45.8 percent.   (0 COMMENTS)

Television’s finest half-hour reminded America of the values of classical liberalism. This fall, LIFE magazine has published a special issue commemorating the 50th anniversary of the movie M*A*S*H. Despite the hook, the issue focuses on the ensuing TV series, which ran from 1972 to 1983. Though the show has often been characterized as being politically left-wing, it actually is heavily classically liberal, celebrating the individual, civil liberties, and the market, and harshly criticizing anti-individualism, government compulsion, and government decision-making. In a series of essays, I examine the classical liberalism of M*A*S*H. This is Part 1. CBS Television, Public domain, via Wikimedia Commons   The TV series M*A*S*H premiered on September 17, 1972 — a bad time to debut an anti-war, anti-establishment dark comedy. America’s mood was on the rebound from the social upheaval of the late-1960s: Operation Linebacker was pushing back the North Vietnamese forces with few U.S. casualties, easing public frustration over the Vietnam War. The nation’s economy was booming, growing 5.25 percent in 1972 and would grow 5.6 percent in 1973. Prosperity and military success produced strong approval numbers for President Richard Nixon, who would be reelected in November with more than 60 percent of the popular vote and winning 49 states. All that good news was bad for the early weeks of the impertinent if not subversive M*A*S*H. The pilot finished 45th in the week’s ratings, a miserable showing in the three-network era. Subsequent episodes fell into the 50s, raising the specter of cancellation. But national moods can change quickly when the news changes. Three months before M*A*S*H debuted, the Washington Post reported that five men had been arrested in connection with a break-in at the Democratic National Committee headquarters. As the show’s first season played out, Watergate mushroomed from an offbeat news item into a full-blown scandal. Halfway through the TV season, a humbled United States signed the Paris Peace Accords, ending America’s involvement in Vietnam; the last U.S. troops left the country on March 29, 1973, four days after M*A*S*H’s first-season finale. That fall, with the show’s second season underway, the OPEC oil cartel cut production in retaliation for western nations’ support of Israel. The resulting energy crisis sent the U.S. stock market reeling and the economy into recession. With inflation already surging, the United States got its first dose of “stagflation.” Finally, on August 9, 1974 — a month before M*A*S*H’s season-three premiere — a disgraced Nixon resigned the presidency. Those events may have helped Americans embrace the sitcom that treated the inhumanity of war and the inanity of government with a cathartic mix of laughter and tugged heartstrings. M*A*S*H’s ratings rose in the final weeks of its first season, as more viewers began following the goings-on at the fictional 4077th Mobile Army Surgical Hospital, located near the front lines of the Korean War. That prefaced regular top-10 finishes for the rest of the show’s 11-year run. M*A*S*H’s cast, crew, and writers would carry off a slew of Emmys and Golden Globes over the next decade. The series finale is television legend; even current Super Bowls struggle to top the nearly 106 million viewers who watched “Goodbye, Farewell and Amen” on February 28, 1983. Following the program’s end, its decommissioned sets, costumes, and props became wildly popular exhibit at the Smithsonian Institution. Today, M*A*S*H continues to draw audiences in syndication, nearly a half-century after it debuted. What made it so successful? Public reaction to Vietnam and Watergate may explain its first few years, but M*A*S*H was a TV juggernaut for the rest of its run, despite the departure of most of its original cast, change in show runners, and turnover of writers. Even the series’ shift in tenor from situation comedy to dramedy (sometimes heavy on drama) did not weaken its audience. An academic thesis has argued that the show’s success came in part from its following changing public values and outlooks as the United States moved from leftish libertinism of the early 1970s, to malaise-induced cynicism of the late ‘70s, to the conservative Reagan Revolution of the early 1980s. Yet, libertarians and other classical liberals — who often find political similarities where others see left–right differences — may perceive something else: that throughout its run, M*A*S*H consistently promoted the ideals of classical liberalism. People unfamiliar with classical liberalism may be unsurprised by the idea that M*A*S*H was a “liberal” show. Several of its cast members are vocal supporters of political causes on the left side of the U.S. political spectrum, and critics (and even some fans) of the series criticize it for being too “lefty” in its later seasons. But this is not the liberalism I mean. The philosophy of classical liberalism acknowledged that government has an important role to play in addressing truly public problems, but that individual liberty and private, consensual relationships are of paramount importance. Classical liberalism is skeptical of government power, appreciates the incentives and benefits of the marketplace, and defends civil liberties. As such, classical liberalism encompassed a broad swath of the American political spectrum as it existed in the latter part of the 20th century, from ACLU civil libertarians, to Jimmy Carter/Bill Clinton centrists, to Ronald Reagan’s small-government conservatives. To be clear, M*A*S*H’s chief protagonist, surgeon Benjamin Franklin “Hawkeye” Pierce (played by Alan Alda), may not have been an avowed libertarian who leafed through The Road to Serfdom along with his beloved nudie magazines. But he and his comrades embraced and advocated principles and institutions that acknowledged classical liberals hold dear, as did many Americans (including both Democrats and Republicans) of that era. And today, amidst a surge in illiberalism in both the United States and abroad, the show continues to offer classical liberals both comic relief and hope. (1 COMMENTS)

As I noted earlier this week, Tyler Cowen wrote a blog post, “David Henderson needs a reboot,” October 27, in which he responded to my three critical pieces on his two Bloomberg articles. My pieces are, from earliest to latest, here, here, and here. Cowen’s articles (gated unless you look at only a few on Bloomberg) are here and here. Here’s the problem: Other than on one issue where he did point to a serious problem in my argument, as I noted here, Cowen didn’t join the debate about lockdowns. Instead, he made the following statements: David is repeatedly writing critiques of my writings on Covid-19.  (Google to them if you wish, they are so off base and misrepresentative I don’t think they deserve a link, and furthermore I find it almost impossible to track down EconLog archives under their new system.) Making it hard for your readers to even know what the person you’re arguing with is saying is not really a good way to carry on a debate. Fortunately, raja_r, one of Cowen’s commenters, was able, with apparently much less difficulty than Cowen had, to post the links in the comments section on Cowen’s site. Virtually all of his points revolve around simple or it seems even willful misunderstandings. Virtually all? Really? If it’s “virtually all,” then surely we’re going to see a few examples, right? I’ll save you the suspense: he names one (other than the Russian vaccine point, which I discuss later.) Then he goes to the one in which, I did misunderstand him. I’ve noted that already. I have no idea why he thinks it might be willful. I will grant him good faith even though he doesn’t reciprocate. That’s it. We don’t get more examples. Later he writes: I could point to numerous misunderstandings in David’s recent posts, pretty much in every paragraph. Maybe he could. He’s a smart guy. Here’s the problem. He doesn’t. He writes: I also think he is quite wrong on substance, allying himself with a few eccentric thinkers that hardly anyone agrees with, and who have not acquitted themselves well in debate, or made good predictions as of late, but that is another matter for a different time. He says I’m wrong on substance. Ok. Which substance? He says I’m allying myself with “a few eccentric thinkers that hardly anyone agrees with.” He doesn’t name them. But hardly anyone agrees with them? The horror. Is iconoclast Tyler Cowen really saying we should go with majority opinion? Is that how we get to the truth? He should pay greater heed to say Scott Gottlieb, who knows what he is talking about. I’ve read Gottlieb’s stuff. As my Hoover colleague George Shultz once said to me after telling me he had been reading my work (I had criticized him here), “I like some of it.” It would be nice to know which parts Cowen thinks are good. I hope he would agree with me that Gottlieb’s support, while at the Food and Drug Administration, for regulating e-cigarettes, making it harder for people to quit smoking real cigarettes, was a cruel and destructive move. I’m sure his co-blogger, Alex Tabarrok, could tell him about that. I will grant him one more point. He writes: David’s Russian vaccine post does not misunderstand me, but I don’t think it shows a very full grasp of the issue.  I very much favor regulatory reciprocity for pharmaceuticals, vaccines, and more, but I strongly believe adding Russia to the reciprocal list would “poison the well” and doom the whole idea.  In the meantime, they are not nearly as far along for a major vaccine rollout as they claim, so probably we are not missing out on very much, even if the quality were fine.  The slightest problem with the vaccine would be blown out of proportion, most of all with DT as president and Russian conspiracy theories circulating.  If your goal is to nudge and push the FDA to move more quickly across the board, starting them off with the approval of a Russian vaccine is bad tactics and is risking the entire apple cart.  Maybe try for Mother England first?  So I think David here is quite wrong, and applying market liberalization ideas in a knee-jerk rather than a sophisticated fashion.  He called the post “Tyler Cowen’s shocking post on the Russian vaccine,” but I wonder who he thinks is really supposed to be shocked by that one.  If you read David’s comment on his own post you will see he is genuinely unable to imagine that such an argument as I present above might exist. I didn’t think of that and I do see his point. Score one for Cowen. I do object, though, to the statement, “he is genuinely unable to imagine that such an argument as I present above might exist.” I’m quite able. By the way, if you want to see an even better argument than Cowen’s, check the numerate discussion of the Russian vaccine that my sometimes co-author Charley Hooper has posted on EconLog. Back to whether I’m able to understand Cowen’s argument, here’s the problem. Tyler Cowen’s writing style is cryptic. He often writes conclusions without the reasons that lead to them and also writes things that leave readers wondering what he means. Read his post that I linked to in my critique of his view on the Russian vaccine and you will find no statement of the argument he gives above. Which brings me to my second last point. In the comment section of his post criticizing me, Cowen writes: David, if you can’t convince a very experienced author that you have come even close to his meaning, probably you haven’t. There has been a lot of other discussion of those pieces, and the other readers do seem to have understood them. You have not. The test of whether I’ve come close to his meaning is whether I’ve convinced “a very experienced author” that I’ve come close to his meaning? But that depends on two things: (1) how good I am at understanding his meaning and (2) how open he is to being convinced that I understand his meaning. He focuses only on the first. Then he adds: I should also note that Bloomberg has a truly crack, first-rate team of editors, making sure that what goes out is clear. They failed. Take a look at this paragraph from his second Bloomberg article: Consider 9/11, when some 3,000 Americans died. The U.S. mounted a very activist response that included new security procedures at airports, crackdowns on money laundering, increased surveillance and two wars. Not all of those choices were prudent, but nonetheless they qualify as a very vigorous response. Any editor worth his salt would have asked “which of those choices were prudent?” It would actually be nice to have a debate about lockdowns without getting into 9/11 and other tangential issues. The debate should be about the costs and benefits of lockdowns and among the big costs is our huge loss of freedom. That’s a debate worth having. So far, Tyler Cowen has not joined. I wish he would.     (1 COMMENTS)

Tenure is terrible.  Well, it’s awesome for those of us who have it.  The tenure system, however, is nonsense on stilts.  Economists’ rationalizations for tenure are flimsy indeed.  Just consider: Virtually all semi-prestigious professors have tenure, yet virtually no one in the for-profit sector has anything close.  I know, we can construct fanciful scenarios where this chasm makes sublime economic sense, such as: “Professors are willing to sacrifice vastly more in salary than normal humans to eliminate the last vestiges of job insecurity” plus “Giving professors enormous job security has far less effect on their productivity than it would on normal humans.”  But neither claim is remotely plausible.  Lots of non-professors intensely value job security, and lots of professors heavily slack off once they get tenure. Still, no individual professor is responsible for this corrupt system.  And it’s hardly reasonable (or even useful) for an individual professor to renounce his tenure, whatever that might mean.  It is reasonable, however, to ask: “How can my tenure be redeemed?” The obvious starting point is: Don’t shortchange your students merely because you have tenure.  Take pride in your teaching.  Strive to edify and inspire even though the career rewards are trivial. Next: Produce excellent research even though you totally don’t have to.  Take pride in your contributions to human knowledge.  Push yourself on both quantity and quality. When you ponder these norms, however, they’re more rigorous than they look. Suppose you’re teaching labor economics.  Can you “strive to edify and inspire” if you gloss over intensely controversial subjects like the economics of discrimination?  Absolutely not.  You can’t take pride in your teaching while muttering, “Students can’t handle the truth.”   The forthright yet friendly exploration of vital yet sensitive topics is part and parcel of great teaching.  And while untenured teachers can plausibly protest, “I’ve got to think about my family’s security,” those of us with tenure know where our next paycheck is coming from.  While there’s a small chance the administration hassles you, that’s a minor cost in the broad scheme of things.  If tenured professors won’t voice awkward truths, who will? Much the same hold for research.  Slightly extending human knowledge on a topic no one cares about is rarely a worthwhile intellectual contribution.  In a world of anxious conformists, most of the best research opportunities are mired in controversy – especially in the humanities and social sciences.  If you want to create research that really matters, you should boldly proceed.  Tenure takes care of your family, but who will put food on the table of ugly truths?  Most of the time, the answer is: You or no one. So make it you. If you use your tenure to teach and research with integrity, you’re well above the bar.  Yet if you’re earnest about redeeming tenure, you should also deploy it to defend the integrity of teaching and research in general.  Untenured faculty can forgivably keep their mouths shut and their heads down.  Those of us with tenure, however, are the obvious candidates to “give back”: To aggressively defend the rights of faculty and students to explore controversial ideas without fear.  And bear in mind: for we professors, the only “controversial ideas” worthy of the name are ideas that are controversial on university campuses.  Noam Chomsky may be more controversial than Milton Friedman in the broader world, but in academia almost no one needs to look over their shoulder before praising Chomsky. Admittedly, the duty to stand up for the right to explore controversial ideas without fear is an imperfect duty; no one has time to stand up for everyone.  Nevertheless, you have ample time to at least stand up for your own friends, your own colleagues, and your own students.  Some anti-intellectual university functionary might get mad at you for doing so.  If even a dream job for life doesn’t give you a backbone, though, what will?   (1 COMMENTS)