NASA is creating financial incentives for private companies to market lunar resources. This could be a first step to developing lunar mining capabilities. The biggest benefit of the program, though, is precedent. It puts the U.S. government’s imprimatur on space commerce. Given the ambiguities in public international space law, this precedent has the potential to steer space policy and commerce in a pro-market direction. This is a key paragraph in Alexander William Salter and David R. Henderson, “NASA is Paying for Moon Rocks. The Implications for Space Commerce are Huge,” AIER, September 16, 2020. Read the whole thing. It’s short. (0 COMMENTS)

A few weeks ago, I presented the following syllogism:   Issue X is complicated. Perspective Y’s position on X is not complicated. Therefore, Perspective Y is wrong about X.   Almost all of the comments were critical.  Some notable examples: Dan: As someone who used to live in San Francisco and was involved in YIMBY activism, this argument was used frustratingly often by NIMBYs: “The housing crisis is complicated and you can’t simplify it to econ 101, therefore just building more won’t help”. The NIMBYs, after criticizing YIMBYism for being econ 101, then never made an econ 102 argument. The problem with this argument is that you can make yourself sound wise about anything by claiming that it’s complicated and simple solutions won’t work. Salem: How about: Trade is complicated. Free traders’ positions on trade aren’t complicated. Therefore free traders are wrong about trade. There’s a big difference between an issue being complicated, and a position being complicated. It’s certainly possible to wisely address a complex issue in a simple way, particularly if your solution only has to satisfy one party. For example, “don’t get involved in that messy fight” is normally good advice. Rob Weir: The universe is complicated, full of cycles and epicycles, according to Ptolemaic astronomy. Copernicus has a viewpoint that is not so complicated. Ergo, Copernicus is wrong. Notice, though, that my original argument targeted not simple conclusions, but simple perspectives. A conclusion is summary; a perspective is a full story.  The point of my syllogism is not to dismiss simple answers, but simple thinking.  Let’s consider the three preceding examples in turn. 1. “Radically deregulate housing in San Francisco” is a simple conclusion with which I agree.  However, if someone added, “In a free market, everyone would live in a mansion” or “Radical deregulation will end homelessness,” I’d still say their perspective is wrong because they neglect the subtleties of the issue.  Deregulation will lead to large price declines, but not large enough to give everyone a mansion.  And highly irresponsible behavior reliably leads to noticeable levels of homelessness even in the cheapest of neighborhoods. 2. “Free international trade is, all things considered, the best trade policy,” again, is a simple conclusion with which I agree.  However, if someone went on to claim, “When countries impose trade barriers, they always lower the average living standards of their own people,” or “Free trade would make Africa as rich as the United States,” I’d say their perspective is wrong because they neglect the subtleties of the issue.  The terms-of-trade argument is valid, and Africa has a long list of economic woes unrelated to trade policy. 3. “The Copernican model is true” is another simple conclusion with which I agree.  However, if someone also claimed, “The Ptolemaic model was predictively useless” or “Ptolemy was a fool,” I’d say their perspective is wrong because they neglect the subtleties of the issue.  The Ptolemaic model worked well, and Ptolemy was a genius.   If my syllogism isn’t intended to discredit simple conclusions, what’s the point?  To discredit simple thinkers, of course.  Life is too short to listen to everyone.  Indeed, life is too short to listen to 1% of all the people eager to speak.  So when someone has a simple perspective on a complicated issue, I ignore them.  And so should you. (1 COMMENTS)

In their recent book Deaths of Despair and the Future of Capitalism, Anne Case and Nobel economics prizewinner Angus Deaton, both emeritus economists at Princeton University, show that the death rate for middle-age whites without a college degree bottomed out in 1999 and has risen since. They attribute the increase to drugs, alcohol, and suicide. Their data on deaths are impeccable. They are careful not to attribute the deaths to some of the standard but problematic reasons people might think of, such as increasing inequality, poverty, or a lousy health care system. At the same time, they claim that capitalism, pharmaceutical companies, and expensive health insurance are major contributors to this despair. The dust jacket of their book states, “Capitalism, which over two centuries lifted countless people out of poverty, is now destroying the lives of blue-collar America.” Fortunately, their argument is much more nuanced than the book jacket. But it is also, at times, contradictory. Their discussion of the health care system is particularly interesting both for its insights and for its confusions. In their last chapter, “What to Do?” the authors suggest various policies but, compared to the empirical rigor with which they established the facts about deaths by despair, their proposals are not well worked out. One particularly badly crafted policy is their proposal on the minimum wage. This is from “Blame Capitalism?“, my review of The Deaths of Despair and the Future of Capitalism,” in Regulation, Fall 2020. Another excerpt: To understand what is behind the increase in the death rate, the authors look at state data and note that death rates increased in all but six states. The largest increases in mortality were in West Virginia, Kentucky, Arkansas, and Mississippi. The only states in which midlife white mortality fell much were California, New York, New Jersey, and Illinois. All four of the latter states, they note, have high levels of formal education. That fact leads them to one of their main “aha!” findings: the huge negative correlation between having a bachelor’s degree and deaths of despair. To illustrate, they focus on Kentucky, a state with one of the lowest levels of educational attainment. Between the mid-1990s and 2015, Case and Deaton show, for white non-Hispanics age 45–54 who had a four-year college degree, deaths from suicide, drug overdose, or alcoholic liver disease stayed fairly flat at about 25–30 per 100,000. But for that same group but without a college degree, the deaths in the same categories zoomed up from about 40 in the mid-1990s to a whopping 130 by 2015, over four times the rate for those with a college degree. Why is a college degree so important? One big difference between those with and without a degree is the probability of being employed. In 2017, the U.S. unemployment rate was a low 3.6%. Of those with a bachelor’s degree or more, 84% of Americans age 25–64 were employed. By contrast, only 68% of those in the same age range who had only a high school degree were employed. That leads to two questions. First, why are those without a college degree so much less likely to have jobs? Second, how does the absence of a degree lead to more suicide and drug and alcohol consumption? On the first question, the authors note that a higher percentage of jobs than in the past require higher skills and ability. Also, they write, “some jobs that were once open to nongraduates are now reserved for those with a college degree.” I wish they had addressed this educational “rat race” in more detail. My Econlog blogging colleague Bryan Caplan, an economist at George Mason University, argues in his 2018 book The Case Against Education that a huge amount of the value of higher education is for people to signal to potential employers that they can finish a major project and be appropriately docile. To the extent he is right, government subsidies to higher education make many jobs even more off-limits to high school graduates. Yet, Case and Deaton do not cite Caplan’s work. Moreover, in their final chapter on what to do, they go the exact wrong way, writing, “Perhaps it is time to up our game to make college the norm?” That policy would further narrow the range of jobs available to nongraduates, making them even worse off. On the second question—why absence of a degree leads to more deaths of despair—they cite a Gallup poll asking Americans to rate their lives on a scale from 0 (“the worst possible life you can imagine”) to 10 (“the best possible life you can imagine”). Those with a college degree averaged 7.3, while those with just a high school diploma averaged 6.6. That is not a large difference, a fact they do not note. And note their novel argument for why improved health care, better entertainment through the internet, and more convenience don’t count in people’s real wages: So, what are the culprits behind the deaths of those without college degrees? Case and Deaton blame the job market and health insurance. Jobs for those without college degrees do not pay as much and do not generally carry much prestige. And, as noted above, Case and Deaton mistakenly think that real wages for such jobs have fallen. Some economists, by adding nonmonetary benefits provided by employers and by noting the amazing goods we can buy with our wages such as cell phones, conclude that even those without a college degree are doing better. Case and Deaton reject that argument. They do not deny that health care now is better than it was 20 years ago, but they write that a typical worker is doing better now than then “only if the improvements—in healthcare, or in better entertainment through the internet, or in more convenience from ATMs—can be turned into hard cash by buying less of the good affected, or less of something else, a possibility that, however desirable, is usually not available.” They continue, “People may be happier as a result of the innovations, but while it is often disputed whether money buys happiness, we have yet to discover a way of using happiness to buy money.” That thinking is stunning. Over many decades, economists have been accused, usually unjustly, of saying that only money counts. We have usually responded by saying, “No, what counts is utility, the satisfaction we get out of goods and services and life in general.” But now Case and Deaton dismiss major improvements in the happiness provided by goods and services by noting that happiness cannot be converted to money. That is a big step backward in economic thinking.   Read the whole thing. (0 COMMENTS)

Here’s the Financial Times: The Fed also has acknowledged it lacks the tools to solve all the problems in the economy, since it can only lend money, but not spend it to help businesses or households. And the Fed is acutely aware that its policies have done plenty to save financial markets from distress, but cannot deliver benefits as easily to low-income families and the unemployed. That’s entirely false.  The Fed doesn’t just lend money; it can and does create money and also spend the new money on assets in order to boost NGDP and help businesses and households.  This policy delivers benefits to unemployed workers by reducing the unemployment rate. The Fed is worried that the lack of a fiscal agreement will threaten the recovery and make its job harder. The US central bank does not want to be left alone in propping up the recovery. Why? This is good: Some economists have suggested the Fed might tweak that to include a reference to an average 2 per cent inflation objective “over time” — reflecting its new policy framework. Investors arguing for the new guidance to be rolled out this week say the Fed risks a loss of credibility if it does not act quickly to reinforce its monetary shift. Today’s Fed meeting will be much more important than the typical meeting.  We will get some indication as to whether the Fed plans to obey the law—fulfill its mandate from Congress—or go sit in the corner and mope about the fact that fiscal policy is not all that it would prefer. Bonus question: When the government lends money is that policy expansionary?  When the government borrows money is that policy expansionary?  Does the FT believe that the answer to both questions is yes? (0 COMMENTS)

Universities at their best are places where reading, writing, speaking, and (hopefully) listening are carried out at the highest level. The core activity here is sharing words with other people. We share words—written, verbal, and non-verbal—to meet other minds, to learn and share experiences for the sake of mutual betterment. So, as teachers and students return to campus, I thought it might be fun to take a moment to reflect on WORDS, with a little inspiration from Vincent Ostrom, F. A. Hayek, and Stephen King. Vincent Ostrom, maybe more than any other 20th century political economist, emphasized the fact that language is a powerful tool. When we name what we experience by assigning words to objects and relationships, we generate “shared communities of understanding.”(The Meaning of Deocracies and the Sahred Vulnerability of Democracies: A Response To Tocqueville’s Challenge, p. 153) These words and the understanding they enable are how people share what they learn with others, including across generations. Through words, our experiences benefit others. I interpret this as similar to Hayek’s claim from Constitution of Liberty that “civilization begins where the individual can benefit from more knowledge than he can himself acquire, and is able to cope with his ignorance by using knowledge which he does not possess.” Words—along with markets, culture, and law/rules of conduct—form the extended orders that make society possible. In Stephen King’s On Writing—an intellectual memoir from a true master of words—he equates successful writing with being able to pull off the near-supernatural act of telepathy. Language is a vehicle through which we are able to either send or receive mental images that otherwise would remain electrical impulses with nowhere to go, trapped inside our own minds. He gives the following example of “telepathy in action”: “Look, here’s a table covered with a red cloth. On it is a cage the size of a small fish aquarium. In the cage is a white rabbit, with a pink nose and pink rimmed eyes. In its front paws is a carrot stub upon which it is contentedly munching. On its back, clearly marked in blue ink, is the numeral eight. Do we see the same thing? We’d have to get together and compare notes to make absolutely sure, but I think we do.” The quote doesn’t give the chapter full justice, so I definitely recommend reading the whole thing, especially if you have an interest in writing as a craft. He goes on to explain that we might imagine very different details, but nearly everybody comes away with the same understanding about what is important about the description: the blue number eight on the rabbit’s back. This is the puzzle, the unexpected element that makes the information new and unites our attention around an idea. What I take from this is that there’s something about finding the right way to say something—precise but only to the point of usefulness, thorough yet focused, with some understanding of what the reader is bringing to the table—that makes it possible to get a message across in the way it was intended. That makes it possible for two minds to meet. King’s conclusion is that “You must not come lightly to the blank page.” To write is to transmit ideas to other people’s minds. That’s a serious responsibility that can be carried out well or poorly, put to good use or ill. I can think of no reason why the same admonition should not apply to lectures, conversations, and video presentations. Vincent Ostrom built on this idea. For Ostrom, language is created through the process of continued communication, and the language that is created then enters back into every aspect of our lives: “The learning, use, and alteration of language articulations is constitutional in character, applicable to the constitutive character of human personality, to patterns of human association, and to the aggregate structure of the conventions of language usage… the way languages are associated with institutions, goods, cultures, and personality, attributes means that we find languages permeating all aspects of human existence” (p. 171-2). In other words, by embarking on the academic’s quest to use words better, we are all taking on a particularly important constitutive role. Global markets are made up by millions of buyers and sellers scattered around the world. Languages are made up of millions of people talking, reading, writing, listening, and—to borrow King’s analogy—making telepathic connections with each other in an attempt to connect words to better ideas, and better ideas to better lives. It might be an abstract quest but it’s noble one. Getting it right can make the world better, getting it wrong can make the world worse. There are several dozen morals about the importance of the endeavor, of sticking to one’s principles, of mastering the fundamentals, etc. that can be drawn from this, and I don’t really want to moralize or pontificate more than I already have. So I’ll just end by saying that if you’re still reading, it was nice to meet your mind for a moment. I hope we’ll meet again soon.       Jayme Lemke is a Senior Research Fellow and Associate Director of Academic and Student Programs at the Mercatus Center at George Mason University and a Senior Fellow in the F.A. Hayek Program for Advanced Study in Philosophy, Politics, and Economics.   As an Amazon Associate, Econlib earns from qualifying purchases. (0 COMMENTS)

What is the best way to reconcile the results for these three polls? How good is the following heuristic? The resources you spend mitigating a problem should be directly proportional to its overall severity. — Bryan Caplan (@bryan_caplan) August 18, 2020 Medically speaking, how bad is coronavirus compared to flu? — Bryan Caplan (@bryan_caplan) August 17, 2020 How much time, inconvenience, and resources should we spend fighting coronavirus compared to flu? — Bryan Caplan (@bryan_caplan) August 17, 2020 I’m tempted to just say “cognitive dissonance.”  The initial effort heuristic makes great sense, and the medical estimate seems about right.  But that in turn implies that past and current coronavirus efforts (public and private) are grossly excessive.  Indeed, do we even spend five hours per year fighting flu?  If so, why should we spend more than twenty five hours per year fighting coronavirus?  But almost no one feels comfortable with that relaxed attitude, hence the dissonance. (0 COMMENTS)

It seems that economics and logic were not the strong fields of protectionist nationalists in college—or at least this is the case with the three lieutenant governors who published an op-ed in The Hill at the beginning of the Summer. In the just-published Fall issue of Regulation (the electrons are still hot and the paper version has not yet hit the newsstands), I write: The USMCA, the authors glowingly wrote, will “increase U.S. annual agricultural exports by $2.2 billion.” This crowing claim comes just a few lines after the statement that “agriculture is what puts food on the table, literally and metaphorically.” They better  take their “metaphorically” very literally because exported agricultural products actually take food away from American tables in order to feed foreigners. No wonder that with this sort of coherence, protectionists think they can prove anything, including that the only benefit of free trade lies in exports. For a view of the free-market view of trade, have a look at my article. One question it answers is, Why do American exporters work for foreigners? I also review recent data on the impact of the 2018 tariff on the domestic price of washing machines.   (0 COMMENTS)

A number of experts on technology have expressed concern about the national security implications of allowing Chinese companies/products like Huawei, TikTok and WeChat to have access to the US market. I’ve been skeptical of their arguments, although I concede that I am not well informed on technology issues. On the other hand, I wonder if tech experts have sufficient awareness of the “public choice” aspects of giving the government the power to run an industrial policy. Previously I noted that the US government’s original intention to protect US consumers from possible spying by Huawei has morphed into a crusade to destroy the Chinese company. Political considerations also seem to be showing up in the TikTok case. Oracle has offered to purchase a portion of TikTok and insure that user data is safe, but some Trump administration officials remain unconvinced: Several people said such a plan could satisfy career officials at Cfius. But some cautioned that the situation was not analogous to any previous case. “We have a president who is running a campaign against China and any indication of giving in to Beijing over TikTok will be seen as weakness,” said a person involved in the negotiations, who was concerned about the deal receiving approval from the Trump administration. . . . A veteran Cfius lawyer said any deal with ByteDance that let the Chinese company retain a majority ownership of the app in the US would be hard for the Trump administration to swallow. I get worried whenever I see news reports of economic policymakers wanting to avoid perceptions of “weakness”, or outcomes being “hard to swallow”.  Does this address national security issues, or doesn’t it? In the end, I expect the deal will likely go through, but I am not entirely reassured by the reasons why: Oracle was originally brought into the negotiations to provide an alternative to Microsoft Corp., MSFT +1.69% a rival bidder with Walmart as a partner, said one person familiar with the talks. The U.S. investment firms Sequoia Capital and General Atlantic, which are existing investors in ByteDance, went in search of a tech company with close ties to the administration and settled on Oracle, the person said. Oracle co-founder Larry Ellison hosted a fundraiser for Mr. Trump this year at his house, and Chief Executive Safra Catz also worked on the executive committee for the Trump transition team in 2016. It seems that the Chinese believe that US economic policy decisions are made based on personal connections with the administration.  I’m not sure if that’s true, but the perception is enough to distort the market.  Would a takeover attempt led by a Trump critic have had an equal chance of success?  I have my doubts. However you feel about this specific issue, it’s important to recognize that we are a long way from national security decisions being made by philosopher kings.  Once you grant the government the power to enact an industrial policy, don’t expect the decisions to be free of political/personal considerations.  On balance, I trust the market more than I trust any government. PS.  My wife traveled to China last week and I’ve started using WeChat.  I’m willing to accept the risk that the Chinese government is spying on my calls.  For years I’ve assumed that the NSA knows whatever they want to know about my digital communications. (0 COMMENTS)

Don Boudreaux, over at CafeHayek, has been posting about his debate with Branko Milanovic over whether middle class stagnation is a myth. I have some thoughts to add to that debate. I’ll do so at the end. But reading Milanovic’s comments reminded me of something he wrote in 1996 that I challenged in an article co-authored with my then colleague Robert McNab and my former student from Hungary Tamas Rozsas. The article is “The Hidden Inequality in Socialism,” The Independent Review, Winter 2005. Here’s that segment of the article: Referring to the effect of subsidies on essential items and to the quality of vacation homes for the top party brass, Milanovic argues that these privileges would not have altered measured income inequality to a great extent. He claims that others exaggerated the value of these privileges: “Elite privileges were exaggerated both by |the] indigenous population, because of the secrecy in which privileges were held, and by overly credulous Western analysts. In effect [as] anybody who has visited vacation homes previously kept strictly off-limits for all but the top Party brass can testify, their level of comfort and service is below that of an average Holiday Inn” (1996, 200). However, in dismissing the value of a vacation home by comparing it unfavorably to a Holiday Inn, Milanovic is, wittingly or not, implicitly appealing to Western standards. Although few middle-class Americans will regard a Holiday Inn as a luxury hotel, Americans are not the relevant group here; eastern Europeans are. In the mid-1970s, living space per person in the Soviet Union was approximately only 120 square feet (W. S. Smith 1973, 405, as cited in Pejovich 1979, 55). Every room at a Holiday Inn has its own bathroom, whereas in the early 1970s approximately half of all Soviet housing lacked running water or plumbing, and much of the other half shared bathroom facilities with other families (Pejovich 1979, 55-56). For almost anyone in the eastern European socialist countries, a Holiday Inn would have been the height of luxury. To “translate” Milanovic’s statement for Western ears, it would need to read something like this: “In effect, as anybody who has visited vacation homes previously kept strictly off-limits for all but the top Party brass can testify, their level of comfort and service is below that of an average Hyatt.” In other words, access to a vacation home of high quality by socialist standards for a couple weeks each year free of charge constituted a substantial perquisite for those with political connections, and it would have been widely envied by those without it. Milanovic might have made the following more telling and accurate criticism of the idea that vacation homes increased the inequality of incomes. Not just the politically connected had access to such vacation homes. Rather, even those not so connected could get such access if they did what the authorities wanted them to do: refrained from criticizing communism, refused to support many of the victims of communism, showed up at work, and so forth. In other words, access to vacation homes, like so many other perquisites under communism, was a means of creating loyalty to the regime and cementing workers into the system. Now to my criticism some of Milanovic’s recent claims. Don Boudreaux has handled it well but I want to add my own thought. Here’s Milanovic’s statement: But has real income of the American middle class gone down? Professor Boudreaux thinks it has not. To prove that, he engages into a doubly absurd exercise. He compares income of today’s middle-class Americans with income of the middle-class Americans 40 years ago using the goods that were inexistent 40 years ago. Indeed by that peculiar metric they are better off. It would suffice that one American out of perhaps 100 million middle-class American owns a smart phone today to obtain Professor Boudreaux’s result: since nobody had it 40 years ago, the growth rate of such income would be infinite. If we equally one-sidedly, but somewhat less absurdly, make a comparison in terms of individual goods or services that existed then and now, like health care, education, and housing, we would find the very opposite result. This is why, if we want to engage into such comparisons, we use Consumer Price Index which includes all goods and services. When we do so and compare real incomes at different percentiles of U.S. income distribution, we get the result shown below. Over the thirty-year period U.S. middle class income has cumulatively increased by between 20 and 30 percent, which on an annual basis gives a rate of growth between 0.6% and 0.9%. This is hardly satisfactory and is especially galling when we compare middle-class growth with that of the top 5 percent, or even better with the top 1-percenters, whose incomes have increased by more than 80% (cumulatively). Notice the first two sentences: But has real income of the American middle class gone down? Professor Boudreaux thinks it has not. That’s correct. That’s what Boudreaux does think. But here’s  something else interesting: Milanovic agrees with him. In the second paragraph, Milanovic writes: Over the thirty-year period U.S. middle class income has cumulatively increased by between 20 and 30 percent, which on an annual basis gives a rate of growth between 0.6% and 0.9%. In short, the real income of the middle class has risen, not fallen. What about Milanovic’s point that looking today at only smart phones gives a biased viewpoint? He’s right. And contrary to what I had thought when I first read Milanovic’s statement too quickly, he admits that having access to a smart phone now does, all other things equal, increase one’s real income, possibly by a lot. But Milanovic’s point is that all else is not equal. In particular, health care, education, and housing have all become more expensive. Of course, in each case, other than education (hmmm: which entity provides most of that?) quality has clearly gone up. So then we have to dig into details. That’s why Milanovic wants to use the CPI, because it includes a wide spectrum of goods. Don Boudreaux catches the problem, citing the Boskin Commission report of 1996. The CPI overstates inflation. But here’s something more. As the Report points out, and as Boskin has laid out in “Consumer Price Indexes,” his entry in The Concise Encyclopedia of Economics, there’s a particular problem with new items. Coincidentally, Boskin mentions the cell phone. He writes: Finally, an additional bias results from the difficulty of adjusting fully for quality change and the introduction of new products. In the U.S. CPI, for example, VCRs, microwave ovens, and personal computers were included a decade or more after they had penetrated the market, by which time their prices had already fallen 80 percent or more. Cellular telephones were not included in the U.S. CPI until 1998. In short, the introduction of new products does contribute to the CPI’s overstating of inflation. And it contributes substantially. Boskin writes: The CPI currently overstates inflation by 0.8–0.9 percentage points: 0.3–0.4 points are attributable to failing to account for substitution among goods; 0.1 for failing to account for substitution among retail outlets; and 0.4 for failing to account for new products. Thus, the first 0.8 or 0.9 percentage points of measured CPI inflation is not really inflation at all. This may seem small, but the bias, if left uncorrected for, say, twenty years, would cause the change in the cost of living to be overstated by 22 percent. Therefore, middle-class income has increased even more than Milanovic admits.   (1 COMMENTS)

The Theory of Moral Sentiments (1759) is the first book that Adam Smith wrote, and for decades it was contrasted to his most famous other book, The Wealth of Nations (1776). Most scholars today do not see the contrast anymore, but Ryan Patrick Hanley resumes this so-called Adam Smith Problem in his Our Great Purpose: Adam Smith on Living a Better Life. For Hanley, the Wealth of Nations is the book about self-interest (but not greed) and wealth accumulation, and Theory of Moral Sentiments is the book about “love” and living a good life. But there is no Problem because the two books complement each other. Wealth of Nations celebrates wealth accumulation and decreased poverty, and Theory of Moral Sentiments warns us against the moral costs of this wealth accumulation (181), helping us stay on the right path in a “capitalist” society. Hanley achieves his goal of showing that Theory of Moral Sentiments is a normative book offering prescriptions regarding how to live the good life (86), rather than a description of moral development, as it is typically considered, thanks to his usual beautiful prose and narrative. So the image of Adam Smith that we get from Hanley is the explicit opposite of “Greed is good” (13). Hanley’s Smith promotes a society in which “everyone loved each other and was loved by them in return” (90), a love of others that is so great and complete that our goal in life is “to feel much for others and little for ourselves” (132), a love that drives us to become a “wise and virtuous person, […] serving others and […] always striving for their well-being, [who] lives a life that is good for those who live with her. […] A person who ‘sacrifice[s]’ herself for others, […] for a life of active service, [who] sacrifice[s] promoting her own self-interest in order to promote the interest of others” (148). But if there is truth in this quest of “always working for others, never promoting herself, all the while knowing that nobody is ever going to recognize her for all this” (151) that for Hanley Smith asks us to have to live a good life, then the implication, which Hanley does not consider, is that Smith would also aspire to see the end of markets, as in a world of “love lover[s]” (88) markets become useless. For his reading to hold, Hanley has to ignore, and indeed does ignore, that for Smith people face binding time constraints: “In civilized society, [a person] stands at all times in need of the cooperation and assistance of great multitudes, while his whole live is scarce sufficient to gain the friendship of a few persons. […] But man has almost constant occasion for the help of his brether, and it is in vain for him to expect it from their benevolence only. He will be more likely to prevail if he can interest their self-love in his favor and shew them that it is for their own advantage to do for him what he requires if them.” WN I.ii.2 So the implication of Hanley’s reading of Theory of Moral Sentiments is that the achievement of a good life is actually not a complement, but a substitute for markets. To achieve this unconventional reading of Smith, Hanley “arranged and ordered (each chapter) in such a way as to tell a story that starts with the first chapter and ends with the last” (10). Hanley’s Smith thinks that we should not just live, we should “live a better life”, a good life, a meaningful life, a purposeful life: “living a life requires that we be actively engaged in pursuing a trajectory that we can recognize as ‘a life’—that is, a trajectory that not only has a beginning and a middle and end, but also has a unity to it that enables us to see all its different parts as fitting together in a meaningful way” (1). In this journey that is our life, we are torn “in two very different directions. On the one hand, we are naturally led to be concerned with ourselves and our own well-being. On the other hand, we are naturally led to be concerned with the well-being and happiness of others” (10). “These competing demands raise key challenges to the project of living a single and unified life” (11). So we need to battle against natural tendencies that lure us to be blindly attracted to the “trinkets and baubles” of wealth, we need to fight against our ambition that deludes us into pursing wealth when we would be better off stopping and smelling the roses more often. The story that Hanley tells us is of a Smith’s “cautionary tale” (43), where we should quest to become perfect “wise and virtuous” people. It is a story that becomes even more powerful when compared to Tyler Cowen’s TedTalk “Be suspicious of stories”. Cowen does not talk about Adam Smith at all, yet he may capture an aspect of Smith that is absent in Hanley’s story. Cowen simply warns us about stories, stories that describe our life as journeys, as battles, as quests. “A story is about intention. A story is not about spontaneous order or complex human institutions which are the product of human action, but not of human design.” Hanley claims that for Smith “living a life requires more than just the activity of living. … [We are required] to see ourselves as a self, engaged in the project of living a life of virtue and flourishing, of unity and coherence, and thus, hopefully, of purpose and meaning” (12). For Cowen our life is a mess, and it is good that it is a mess: “If I actually had to live those journeys, and quests, and battles, that would be so oppressive to me! It’s like, my goodness, can’t I just have my life in its messy, ordinary – I hesitate to use the word – glory but that it’s fun for me? Do I really have to follow some kind of narrative? Can’t I just live?” The book is not for specialists and has very limited scholarly references. But it is a challenge for the people who think in terms of spontaneous order and unintended consequences, not only at the macro level but also at the individual level. Hopefully it will induce more people to read The Theory of Moral Sentiments.   *Maria Pia Paganelli is a Professor of Economics at Trinity University. She works on Adam Smith, David Hume, 18th century theories of money, as well as the links between the Scottish Enlightenment and behavioral economics. For more articles by Maria Pia Paganelli, see the Archive. As an Amazon Associate, Econlib earns from qualifying purchases. (0 COMMENTS)