Journalist and author Anne Applebaum talks about her book, Twilight of Democracy, with EconTalk host Russ Roberts. Applebaum discusses the rise of populist and nationalist movements in Eastern Europe as well as in the West, and the appeal of these movements even when they begin to erode or destroy democracy. The post Anne Applebaum on the Twilight of Democracy appeared first on Econlib.

Starting in 1996, I woke up early on an October morning and saw who won the Nobel Prize in economics. I had a deal with the Wall Street Journal that I would tell one of the editors within an hour so whether I knew enough about the winner(s) to write an op/ed that morning for the next day’s print edition. Fortunately, I’ve been able to do so for every year since then, except 1998 (when I didn’t know enough), 1999 and 2000 (when I was teaching a course in Prague), 2002 (when I was traveling in the U.K.) , 2007 (when I didn’t know enough), and 2010 (when I didn’t know enough.) Here’s the list of past winners. The web has made my job easier. One economist in an email discussion yesterday joked that I must have some pre-written pieces because I have a sense of who will win. Unfortunately, no. I haven’t yet predicted correctly. I haven’t even been in the ball park. I gave up producing about a decade ago. I did tell the people in the email discussion that I used to go the library the weekend before and check out books by 3 or 4 economists who I thought were contenders, but I quit after a few years because I never got it right. Which brings me to Jagdish Bhagwati. I used to check out 3 or 4 books by Bhagwati, starting in the early 2000s and going to late in that decade. I’ve always thought he was deserving. I still do. He did some of the most careful and important work on international trade and protectionism. In my graduate course on trade at UCLA, we studied his book 1969 book Trade, Tariffs, and Growth carefully. He was a master at showing why every argument for tariffs but one was a second-best argument: there was always a more direct, less distortionary way of achieving a goal other than tariffs. What was the one first-best argument for tariffs? If I recall correctly, it was that a tariff can help a country exploit its monopsony power against exporters. I pointed out on this blog over a year ago, that, believe it or not, that seems to be what President Trump did with some of his tariffs. Back to Bhagwati. Another strong admirer of Bhagwati was the late Paul Samuelson. Here’s an excerpt from Samuelson’s admiring note on Bhagwati: However, in closing I turn away from any vanities of career accomplishments to substance. In the struggle to improve the lot of mankind, whether located in advanced economies or in societies climbing the ladder out of poverty, Jagdish Bhagwati has been a tireless partisan of that globalization which elevates global total-factor – productivities both of richest America and poorest regions of Asia and Africa. Bhagwati, by the way, wrote “Protectionism,” in The Concise Encyclopedia of Economics. This is NOT a prediction that Bhagwati will win. I think the Nobel Committee is too into fashion. However, it sometimes uses the prize to make a statement about policy. Given how much of a beating free trade and globalization have taken in the political realm in the last few years, this would be a good time to make such a statement. (4 COMMENTS)

David Skarbek’s provocative new book The Puzzle of Prison Order could just as easily have been named Governing the Prisons after Elinor Ostrom’s classic book Governing the Commons.  In the introduction, Skarbek states that his work is based on Ostrom’s own lifelong obsession with comparative institutional analysis, and that he seeks to emulate her approach.  The book is a success on that front.  Drawing on case studies throughout the world and from the past, Skarbek presents a remarkable variety of ways in which order has been achieved within prisons.  It’s a fascinating book to read for the cases themselves, the range of alternatives in governance that exist, and how different prison orders emerge depending on the context.   Much like Ostrom, Skarbek makes a much broader case for the amazing frequency with which humans solve collective action problems.  Ostrom was interested in testing Garrett Hardin’s claim about the “tragedy of the commons” – that common pool resources would inevitably be over-exploited without central control.  She showed convincingly this didn’t have to be the case.  Skarbek’s target seems to be Thomas Hobbes who famously said in Leviathan that life without strong central authority was “cruel, nasty, brutish and short”.  Yet in this book we see several astonishing examples of self organization without central authority even among a group of individuals who have much higher costs to establish order – criminals.   To summarize Skarbek’s argument, he argues that the form of order in a prison depends first and foremost on how much oversight and administration the prison authorities provide to the inmates.  When an effective order is provided by the staff and guards, prisoners themselves have no reason to establish self-governance.  However, in prisons where the administration is either limited or incompetent/non-existent, the prisoners can develop institutions to govern themselves rather than live in the anarchy, violence, and uncertainty that Hobbes predicts.   Prisoner-run orders of self-governance emerge much more easily and effectively when there are pre-existing social networks that the prisoners can draw upon for information about their fellow inmates.  Additionally, the prisons need to be small enough to be self-governed.  Therefore, Skarbek recommends that prisons be kept smaller and they be filled with prisoners from the local area so that the “costs” of establishing trust and social networks are lower since the prisoners can more easily get information about their fellow inmates.   So what do prisons look like when the inmates run things?  Surprisingly better than the old joke suggests.  In two Brazilian prisons Skarbek studied  prisoners, selected by the staff and the inmates, helped to coordinate administration and even security.  They distributed goods to those in need and helped set rules and practices along with enforcement of those rules.  At one prison these so-called “trustees”, not prison guards, did nighttime head counts, cell checks and lock-ups.  The trustees were actually in charge of the prison when the prison director wasn’t onsite.   The most interesting example of self-governance he documents is that of San Pedro prison in Bolivia.  Here the guards only monitor the entrance to maintain a separation between the inside and outside.  The prisoners have developed an amazing variety of institutions to manage life on the inside.  First off, the prisoners “own” their cells.  There is a robust market, with a tracking system of property rights for cells.  Prices vary based on size, amenities, and location.  How do the prisoners afford cells?  There are markets in food production, retail sales, services, as well as things like illegal drugs, alcohol, and prostitutes.  The basic food provided by the prison authorities is a foul gruel that virtually none of the population eats, so there are grocery stores and various eating options, but again all require money.  Surprisingly, the population is partially composed of families.  Some of the inmates are husbands and providers, and their families can choose to live with the prisoners rather than on the streets.  This obviously creates some potential for problems, but the prison even has a self-organizing group who look after the children, albeit imperfectly, as some of the girls and boys get caught up in criminal activities and sex trafficking.   In contrast are prisons in Nordic countries, which have high levels of very competent, professionally trained staff.  In these prisons, where the staff can outnumber prisoners, inmates rarely self-organize because the authorities do it for them.  There is no need to spend time or effort self-governing.  However, even in these “efficiently” run prisons, inmates develop mechanisms for obtaining drugs.  Since developing and enforcing property rights is too costly, instead the prisoners engage in what Skarbek calls “sharing,” where those prisoners who are administered narcotics share them with others and develop a network of expectations to share back during times of scarcity.  While not as robust as property rights, the emergence of this practice is still notable.   Two other cases are worth mentioning, although more for the questions they raise.  The first is the horrendous and tragic example of the Andersonville prisoner of war camp during the American Civil War.  This is an example where only after tremendous suffering and loss of life did the prisoners self organize to ward off bands of secretive killers and thieves who were ravaging the prison population at night.  Skarbek struggles to clearly explain this lack of self organization, particularly since the prisoners were soldiers, who in theory would have been more likely than criminals to create an order.  Finally, one prisoner goes to the Confederate warden and asks permission to organize a group of inmates to catch and subdue the gangs.  The warden agrees, and the group is eliminated.  But this raises the question of entrepreneurship.  It would have been interesting if Skarbek had explored this topic in the other cases and incorporated it into his theory.   The second case  is a special wing of the Los Angeles County jail dedicated to gay and transgender prisoners.  Here Skarbek discusses how the group has a particularly strong social network because they interact in and out of prison, but also because many return to the system frequently.  Recidivism is another factor that could merit more attention.  While I find it compelling that placing prisoners in smaller prisons near their homes helps to lower the costs for self-governance, and probably makes prison life more bearable, it seems to me equally likely that high rates of recidivism also would have an impact on the ability of prisoners to organize, not only with personal ties, but also a knowledge of the rules and norms or prison life.   But these are small complaints.  Skarbek has written an elegant and interesting book about the various ways prisons are organized and self-govern.  The range of institutional diversity is very interesting, and his conclusions are useful in many areas of the social sciences.  Even for those of us who, hopefully, never spend real time in a prison, the book is an interesting addition to our understanding of incarceration specifically and political economy generally.   G. Patrick Lynch is a Senior Fellow at Liberty Fund. As an Amazon Associate, Econlib earns from qualifying purchases. (1 COMMENTS)

This Bloomberg headline caught my eye: The Most Dovish Fed in History Is on a Mission to Spur Inflation Have people already forgotten the 1970s?  From 1973 to 1981, inflation fluctuated between 6% and 13%.  Even if you (wrongly) believe that inflation was caused by supply-side factors, the ultra-dovish Fed was not even trying to reduce inflation during that period.  Both inflation and NGDP growth were quite high, and the Fed set the real fed funds rate at a negative level throughout most of 1974-81. On numerous occasions, they actually reduced interest rates sharply despite extremely high inflation rates.  At the time that the target interest rate was cut to 9% in July 1980, the inflation rate was still over 13%! The subhead is also questionable: The central bank’s new policy framework tolerates above-target price increases. Now all we need is economic growth. Economic growth does not cause inflation.  The Fed was able to create plenty of inflation throughout the 1970s, even in years without strong economic growth.  Perhaps the 11% NGDP growth rate from 1971-81 had something to do with it. (3 COMMENTS)

A sharply dressed bearded man stood up near the door of the White House meeting room and bellowed, “HHS, you need to hear the OMB loud and clear: your AKS RIA is DOA!” and exited the meeting. As several others filed out of the room behind him, I leaned toward CEA’s General Counsel Joel Zinberg and whispered, “That must be a world record for number of acronyms in one sentence. What the hell does it mean?” Joel chuckled and said, “I have no idea, except that we’re going to enjoy working with that guy.” “That guy” was Joel Grogan, a high-level Trump appointee in the Office of Management and Budget (OMB). The quote is from You’re Hired: Untold Successes and Failures of a Populist President, by University of Chicago economist Casey B. Mulligan. It’s about his time as the chief economist at President Trump’s Council of Economic Advisers (CEA) for the 2018–19 academic year. Oh, and Mulligan did enjoy working with Grogan. I’ll tell why later. I’ve respected Mulligan’s work for about a decade. He’s a first-rate economist who, by relentlessly applying economic thinking to policy issues, reaches important conclusions. But I was not a fan of his too-academic writing style. In a 2013 review, I wrote that his 2012 book, The Redistribution Recession: How Labor Market Distortions Contracted the Economy, “could have been one of the most important books of 2012.” Even I, a PhD economist, found it hard slogging. I don’t know what writing pill Mulligan took, but his latest book is profound, important, entertaining, economically solid, and easy to read. It will be one of the most important books of 2020.   The above is from David R. Henderson, “Economic Savvy in the White House,” Defining Ideas, October 8, 2020. Another excerpt: Mulligan himself realized that he needed to “think like a Democratic Congress” to help Trump deal with hostile Democrats in Congress. Here’s how Mulligan characterizes the mindset of the twenty-first-century Democratic Congress: “that big government is likely to achieve big progress, that incentives are of second-order importance, that the title of a bill need not reflect its contents, and that profits are glorified theft by private business from workers and consumers.” Mulligan also regularly read economist Paul Krugman’s tweets. Why? They “proved helpful for predicting mistakes that would be made by the president’s opponents.” Read the whole thing. HT to John Cochrane. (1 COMMENTS)

Do machines complement labor, leading to higher wages and better living standards for ordinary workers?  Or do they substitute for labor, driving down living standards for ordinary workers and concentrating wealth in the hands of the few? We are now in the midst of what many economists call the Second Industrial Revolution.  The First Industrial Revolution introduced machines with physical power.  The Second Industrial Revolution induces machines with mental power. The First Industrial Revolution began late in the 18th century.  Early on, observers such as Charles Dickens and Karl Marx focused on the harsh conditions of the working class.  But by the latter part of the 20th century, it was evident that most workers had achieved much higher living standards.  It now appears that industrial age machines turned out to be complementary with labor.  If there was a loser from the Industrial Revolution, it was the horse.   How will the Second Industrial Revolution turn out?  These five books offer differing perspectives.  In chronological order, they are:   Robert Reich, The Work of Nations, 1992.  Reich saw that the future did not bode well for America to have a large manufacturing work force.  He saw information-age technology as complementary with  workers whose skills involve manipulating symbols–words, numbers, and computer code.  But it would substitute for workers who manipulate things.  As he saw it, America needed to train its work force to be symbol analysts.   Neal Stephenson, The Diamond Age, 1995.  In this science fiction novel, Stephenson depicts a world in which nanotechnology, as described in Eric Drexler’s monograph “Engines of Creation,” has matured.  As a result, no one lives in hardship.  Any standard product can be  made cheaply by a “matter compiler,” what we would now think of as a 3D printer with superlative capabilities.  Machines have substituted for labor to the point where a lower class, called “thetes,” enjoys a coarse consumer lifestyle without having to work.  An upper class, called “Vickies,” has skills that complement the machines, and this elite indulges in a taste for old-fashioned hand-crafted goods.   Ray Kurzweil, The Age of Spiritual Machines, 1999.  This is not a novel, but to many it reads like science fiction.  Kurzweil depicted a future in which artificial intelligence would catch up with and surpass human intelligence.  At that point, computers would be a substitute for every current form of work but still complementary with the human race, as humans and computers would eventually merge.   Robert Fogel, The Escape from Hunger and Premature Death, 1700 – 2100.    Fogel, an economic historian and Nobel Laureate, points out that there is a long-term trend of a rising share of consumption devoted to education and health care and a corresponding decline in the share devoted to food and manufactured goods.  If he is correct—and I believe that he is—then the many politicians, commentators, and policy wonks who argue for trying to preserve American manufacturing jobs are engaging in a Canute-like exercise of trying to hold back the tide.   Tyler Cowen, Average is Over, 2013.  Cowen points out that modern communication technology means that star performers in business and the arts can reach any and every consumer.  This makes superfluous the merely good artist or the merely good business.  This raises the possibility of a two-class society, reminiscent of that depicted by Stephenson.     As an Amazon Associate, Econlib earns from qualifying purchases.   (0 COMMENTS)

In recent years, the US government has imposed tariffs on a number of nations, notably China. The administration argued that these policies would reduce our trade deficit. Many economists pointed out that the trade balance is basically domestic saving minus domestic investment, and that our highly expansionary fiscal policy would actually make the trade deficit larger. (Budget deficits tend to reduce domestic saving.) And this is exactly what seems to have happened since 2016: Some of the products that were formerly exported from Chinese factories are now being produced in Vietnam.  With a growing Vietnamese trade surplus, the US government has now accused Vietnam of currency manipulation.  Here’s the FT: Vietnam had been one of the rare beneficiaries of Trump’s trade war with China — until now. Last Friday, the US administration announced late in the evening that it would launch a section 301 investigation — the same process it used to place tariffs on billions of dollars of Chinese imports into the US — to examine the country’s “unfair currency practices”. Why might the trade bods of the Trump administration be interested in Vietnam? The administration’s tariffs on China have not done much to persuade companies to move their manufacturing back to the US. Plenty have moved over to Vietnam instead, where they can secure cheap labour. In the past, currency manipulation charges were based on a specific set of rules developed by the Treasury Department.  This no longer seems to be the case: The inter-agency process here has left people in Washington scratching their heads. Traditionally, the US Treasury is in charge of international financial policy, and it would be it that would decide if another country was intervening in its exchange rate or not. As Mark Sobel, former Treasury official, has pointed out, there are all sorts of reasons that an emerging market currency might be undervalued against the dollar without necessarily indicating government manipulation. Now the process of labeling a country a currency manipulator seems purely discretionary, based on whether we are annoyed by a country’s trade surplus.  In a recent Mercatus paper, I argued that “currency manipulation” is not a useful concept. Until the US addresses its saving/investment imbalance, we will continue to run large deficits.  Like a game of whack-a-mole, shutting down imports from one country will merely expand the trade deficit with other countries. (0 COMMENTS)

In the current shortage economy, why are some goods are in shortage (in the economic sense: none available at the on-going price), others are simply not produced (intensifying the shortage), and some others (I’ll consider the case of ammunition) are produced as needed and sold at higher prices in violation of the states’ “price gouging” laws or the federal Defense Production Act? To answer this question, it is necessary to understand the economic concept of shortage, as opposed to a blob intuition (I call it “smurfage”) encompassing all situations where somebody does not have something that he would like to have, but not necessarily more than something else. In another post, I mentioned many ways in which producers—incentivized by consumers who bid up prices instead of having nothing—can stealthily increase prices (see “Why Shortages Are Not More Widespread,” August 17, 2020). One way is for producers to limit the diversity of their offerings, reallocating production to higher-margin products. Another example of that was provided by the Wall Street Journal a few days ago (“Coca-Cola to Discontinue Zico, May Drop Coke Life,” October 4, 2020). Like many social planners at heart, Bernie Sanders and Donald Trump don’t understand how product diversity is efficient when it corresponds to consumer demand backed with money. Sanders declared: You don’t necessarily need a choice of 23 underarm spray deodorants or of 18 different pairs of sneakers… In the same mode but for other reasons, Trump said, in his typical baby talk: I see people buying five dolls for their daughters, maybe buy two dolls for their daughters… Ways of satisfying consumer demand when government edicts (price controls or political allocation of available supplies) interfere include the black market or, when repression is mild or irregular, the grey market. This appears to be the current situation in the retail market for ammunition. As one can easily check online, established ammo retailers charge prices close to pre-control levels but, most of the time, the products are “out of stock” and the shelves, even online shelves, are bare. This market, however, is very competitive with many online competitors who are apparently willing to risk government suits or prosecutions, don’t have a politically-correct reputation to maintain, and charge what the market will bear. Consumers who need ammo for self-defense, shooting, or hunting can thus get some at higher prices—but, needless to say, they remain free to benefit from low government-capped prices and have nothing to buy. To give an example of the phenomenon, take 9mm cartridges, the most popular caliber for semi-auto pistols. You can easily check at any large retailer that 9mm ammo is still priced at roughly (or discreetly more than) pre-control prices: around $12 for a box of 50 cartridges used mainly for target shooting and twice that price for 20 premium self-defense cartridges. You can also check that on the grey online market, these prices are now much higher—typically about five times more, when they do have the ammo in stock. It is not perfect but it’s better than to have no choice at all. Note that there is less diversity on this grey market than there used to be on the white market. One reason is that the established manufacturers of ammo are still forbidden to “price-gouge” the retailers and thus have presumably reduced the diversity of their production. One interesting question is, Why do government prosecutors close their eyes to gray-market suppliers who offer ammunition at market-clearing and illegal prices? One hypothesis would that the government loves gun owners and rednecks, on whom the electoral fortune of the current administration may hinge. By allowing ammo prices to rise up to their market-clearing level, government prosecutors at least allow gun owners (and hunters) who need ammo more urgently to bid up prices; otherwise, long and haphazard queues would be the only hope. Of course, this hypothesis does not make sense as these same governments claim that laws against “price gouging” favor the consumers! Moreover, there are more than 40 state attorney generals who are supposed to enforce “price gouging” laws, a sizeable proportion of whom don’t like private gun owners at all. The opposite hypothesis—that governments hate private ammo buyers and do not mind throwing them in the paws of price gougers—does not make more sense. One explanation of this strange government tolerance for the grey ammo market is consistent with what classical liberal and libertarian theorists have demonstrated. When a government tries to control prices and allocate goods (like in the current emergency), it cannot respect the abstract and impartial rule of law; it has to arbitrarily discriminate among people and treat them unequally. Moreover, government planners are seldom efficient because they have little incentives to be and because they lack the knowledge necessary to control a vast, diversified, and complex economy. Arbitrary interventions and prosecutions also come from the difficulty and cost of going after everybody breaking the law: the personnel of state attorney generals is not infinite and their employers are broke. We are getting a glimpse at why, in a government-controlled economy, nothing works. The less government-controlled the economy is, the better things work. (0 COMMENTS)

In the current shortage economy, why are some goods are in shortage (in the economic sense: none available at the on-going price), others are simply not produced (intensifying the shortage), and some others (I’ll consider the case of ammunition) are produced as needed and sold at higher prices in violation of the states’ “price gouging” laws or the federal Defense Production Act? To answer this question, it is necessary to understand the economic concept of shortage, as opposed to a blob intuition (I call it “smurfage”) encompassing all situations where somebody does not have something that he would like to have, but not necessarily more than something else. In another post, I mentioned many ways in which producers—incentivized by consumers who bid up prices instead of having nothing—can stealthily increase prices (see “Why Shortages Are Not More Widespread,” August 17, 2020). One way is for producers to limit the diversity of their offerings, reallocating production to higher-margin products. Another example of that was provided by the Wall Street Journal a few days ago (“Coca-Cola to Discontinue Zico, May Drop Coke Life,” October 4, 2020). Like many social planners at heart, Bernie Sanders and Donald Trump don’t understand how product diversity is efficient when it corresponds to consumer demand backed with money. Sanders declared: You don’t necessarily need a choice of 23 underarm spray deodorants or of 18 different pairs of sneakers… In the same mode but for other reasons, Trump said, in his typical baby talk: I see people buying five dolls for their daughters, maybe buy two dolls for their daughters… Ways of satisfying consumer demand when government edicts (price controls or political allocation of available supplies) interfere include the black market or, when repression is haphazard and irregular, the grey market. This appears to be the current situation in the retail market for ammunition. As one can easily check online, established ammo retailers charge prices close to pre-control levels but, most of the time, the products are “out of stock” and the shelves, even online shelves, are bare. This market, however, is very competitive with many online competitors who are apparently willing to risk government suits or prosecutions, don’t have a politically-correct reputation to maintain, and charge what the market will bear. Consumers who need ammo for self-defense, shooting, or hunting can thus get some at higher prices—but, needless to say, they remain free to benefit from low government-capped prices and have nothing to buy. To give an example of the phenomenon, take 9mm cartridges, the most popular caliber for semi-auto pistols. You can easily check at any large retailer that 9mm ammo is still priced at roughly (or discreetly more than) pre-control prices: around $12 for a box of 50 cartridges used mainly for target shooting and twice that price for 20 premium self-defense cartridges. You can also check that on the grey online market, these prices are now much higher—typically about five times more, when they do have the ammo in stock. It is not perfect but it’s better than to have no choice at all. Note that there is less diversity on this grey market than there used to be on the white market. One reason is that the established manufacturers of ammo are still forbidden to “price-gouge” the retailers and thus have presumably reduced the diversity of their production. One interesting question is, Why do government prosecutors close their eyes to gray-market suppliers who offer ammunition at market-clearing and illegal prices? One hypothesis would that the government loves gun owners and rednecks, on whom the electoral fortune of the current administration may hinge. By allowing ammo prices to rise up to their market-clearing level, government prosecutors at least allow gun owners (and hunters) who need ammo more urgently to bid up prices; otherwise, long and haphazard queues would be the only hope. Of course, this hypothesis does not make sense as these same governments claim that laws against “price gouging” favor the consumers! Moreover, there are more than 40 state attorney generals who are supposed to enforce “price gouging” laws, a sizeable proportion of whom don’t like private gun owners at all. The opposite hypothesis—that governments hate private ammo buyers and do not mind throwing them in the jaws of price gougers—does not make more sense. One explanation of this strange government tolerance for the grey ammo market is consistent with what classical liberal and libertarian theorists have demonstrated. When a government tries to control prices and allocate goods (like in the current emergency), it cannot respect the abstract and impartial rule of law; it has to arbitrarily discriminate among people and treat them unequally. Moreover, government planners are seldom efficient because they have little incentives to be and because they lack the knowledge necessary to control a vast, diversified, and complex economy. Arbitrary interventions and prosecutions also come from the difficulty and cost of going after everybody breaking the law: the personnel of state attorney generals is not infinite and their employers are broke. We are getting a glimpse at why, in a government-controlled economy, nothing works. The less government-controlled the economy is, the better things work. (7 COMMENTS)

Last week I posted Part 1 of my observations on the discussion between Kevin Hassett and Austan Goolsbee. This is Part 2. I left with the issue of the federal deficit and debt. 35:30: Goolsbee doesn’t think we’ll be Greece. We have low income tax rates, no VAT, and better demographics. He argues that tax rates on grandkids will need to he higher. He thinks we need immigration to offset the aging of the population. DRH comment: I’m disappointed that neither Hassett nor Goolsbee discussed refinancing the debt to 10 to 30-year bonds, thus saving on a potential time bomb if interest rates rise by even 2 percentage points. 38:00: Goda says that the chance of kids today outearning their parents in the long run is less than for my generation outearning our parents. 39:00: Goda follows Goolsbee’s lead and turns to inequality. 39:45: Hassett talks about Trump’s opportunity zones and also notes Trump’s efforts on prison reform. 41:30: Hassett emphasizes that charter schools should not be curtailed. 42:00: Goda links the California fires and climate change. She doesn’t justify this. 42:30: Hassett emphasizes Trump’s “regulatory budget.” He also points out that Trump’s economists finally started including the deadweight loss from raising taxes to fund enforcement of regulation. (I think he confuses it by making a claim at first that even the cost of enforcing the regulations wasn’t included as a cost. That’s hard to believe.) 45:00: Goolsbee claims that Trump’s economists did cost/benefit analysis wrong. Hard to believe, but I don’t know. 47:30: Goda asks about trade. 48:00: Hassett points out that trade deals are thousands of lines and that he learned this from Goolsbee. Hassett says that trade deals were asymmetric in the past, with the U.S. conceding more than other countries. But this seems (to DRH) like a protectionist argument. “Conceding” to other countries presumably means dropping our tariffs and quota restrictions more than they drop theirs, so that our consumers gain more than their’s do. 50:30: Goolsbee says Trump’s approach is muscular declaration of trade wars with our allies: Canada, Mexico, Japan, Korea, Germany, the EU, and Australia. And with China. 52:25: Goolsbee surprises me by saying that the USMCA is better than NAFTA. For my view see “NAFTA 0.0,” Defining Ideas, December 20, 2019. 53:00: The U.S. is putting agriculture on the welfare payroll. 53:30: Hassett goes back to the asymmetry point. 54:40: Goda asks them to share their data, based on input from listeners. 55:10: Goda asks question from the audience about immigration. What’s the appropriate policy? 56:00: Hassett says that when he was in the White House, Jared Kushner and others put together a reform that would make U.S. immigration policy like Australia’s. 56:45: Goolsbee’s best moment. Without robust immigration, we’ll have problems with safety net (presumably Social Security and Medicare) due to baby boomers. Points out how actively hostile Trump is to legal immigration also. 58:40: “This is not the American way.” I could hug Goolsbee. 59:00: Goda asks about Biden’s tax policies. To be continued in Part 3. (0 COMMENTS)