This episode is all about personal and intellectual journeys. Host Russ Roberts welcomes Bob Chitester, the man behind Milton Friedman‘s legendary Free to Choose PBS television series. Chitester describes how that project came to be, and both he and Roberts share many memories of Friedman and his compatriots. It’s a lovely invitation to their trip down memory lane. What sort of intellectual journey have you been on? How did you come to your beliefs, and have any of them changed over time? If so, what caused them to change? What journey are you inspired to undertake after listening to this episode? How can we fit into your journey?     1- Chitester talks about leverage. What was he trying to leverage with Free to Choose, and to what extent do you think he succeeded? How might this process look in 2020 as compared to that time? How do you think EconTalk might employ this concept of leverage?   2- What made Milton Freidman such an effective communicator? To what extent do you think Friedman would be an equally effective communicator today, and why?   3- Why does Roberts suggest Friedman should be considered a pragmatist in the movement for liberty? To what extent do you agree with this characterization? How successful do you think the movement for liberty has actually been? What would you suggest the liberty movement do today to promite its cause?   4- What issues did Milton Friedman change his mind on, and why? How mainstream do you think Friedman’s ideas have become? Roberts and Chitester tell us that Friedman thought his ideas had not taken hold in the mainstream. Who’s more right?   5- Chitester asserts that poetry has a unique ability to emotionalize ideas, and can at the same time make a serious point about free-market capitalism. How well does the poem he reads achieve this end?   P.S. Have you read Free to Choose and/or Capitalism and Freedom? Which do you think is the better book, and why?   Editor’s note: You can also watch Amy’s “Smith Questionnaire” interview with Chitester at AdamSmithWorks‘s Youtube channel. (Russ Roberts’s, too.) (0 COMMENTS)

with Frank Stephenson Amid the COVID pandemic, we often hear calls to “follow the science.”  Such exhortations are intended to get people to avoid large crowds, wash their hands, wear face coverings, or adopt other practices that are believed to reduce corona virus transmission. People who want to avoid contracting COVID should certainly take certain precautions that can reduce its spread.  People who want to have stores, schools, houses of worship, and other parts of society to return to normal operations as soon as possible should also support measures that minimize transmission. Of course, following the science can be more challenging than that pithy statement lets on. What constitutes “the science” has changed quickly as we have learned more about how the virus spreads, what countermeasures are most effective, and which treatments are most efficacious. This constant process of new discoveries is not unique to COVID. This is how science works when faced with the unknown. The constant change we’ve seen in the state of medical and scientific knowledge is a feature not a bug. It reflects the efforts of millions at trying to figure out how to treat and cure the virus. And it’s amplified by the ability of researchers to share their results quickly and publicly through social media. Of course the benefits of that speed do come with a risk of misinterpretation and falsification of data, as we have seen repeatedly. But those risks are worth the speed at which we have learned so much about how to respond to the contagion and treat those who it sickens, and it has also forced us to think critically about what information to rely on and what to dismiss. Sorting through all of that information in order to “follow the science” can also be challenging when political leaders and government officials send conflicting messages, promote junk science, or dismiss legitimate lines of research.  Early in the pandemic, public health officials discounted the efficacy of face coverings as a means of combating spread only to later flip flop and advocate mask mandates.  The media are replete with photos of politicians going maskless after imposing mask requirements.  In the same vein, many a politician has been seen in a gym or hair salon after ordering such establishments closed to the public. And the President has certainly not helped matters by providing a platform for a variety of questionable claims and “experts.” One of the lessons of the COVID experience is that determining what “the science” is that we are supposed to follow is never as clear as the simple exhortation to “follow the science” might suggest, especially with a new phenomenon like this virus. The science is always mediated through imperfect human social institutions, whether those associated with science, or politics, or economics. And that raises a larger problem with “follow the science”—it can forget to take social science into account sufficiently.  In particular, science may suggest that shuttering “non-essential” businesses and conducting school, work, and other activities remotely where possible are the best ways of reducing the spread of the virus, but those recommendations can easily ignore the tradeoffs involved in choosing to shut down wide swaths of society. The most obvious tradeoff is loss of income for unemployed workers and operators of closed enterprises.  Lost income can lead to harms such as inability to pay rent or make mortgage payments and difficulty providing for families. Too many have dismissed these as merely material concerns, but they have ramifications that go beyond the narrowly financial. Lockdowns have a variety of other social consequences that cannot be ignored or dismissed. Anecdotes about the “quarantine 15” suggest a society that already had many overweight people may have gotten even heavier and less healthy.  Many routine doctor visits were postponed or canceled, leading some ailments to go undetected or untreated, including cancer screening and chemotherapy.  Likewise, elective surgeries were pushed back or canceled, leading, for example, to prolonged pain and suffering for people scheduled for joint replacements. Mental health issues are another tradeoff.  Isolation, be it voluntary or government enforced, can deprive people of needed interaction with others.  Just last week, Dallas Cowboys quarterback Dak Prescott spoke about how not being able to work out with, and just be around, his teammates led to bouts of anxiety and depression.  In addition, out of work people may engage in many unhealthy behaviors.  There have been numerous news reports that COVID quarantines brought increases in suicides, drug abuse, and alcohol consumption.  In short, a significant tradeoff associated with following the science in the case of lockdowns is, in the words of economists Anne Case and Angus Deaton, an increase in “deaths of despair.” Kids are not immune from the tradeoffs associated with following the science.  Remote learning may work well for some children, but abruptly switching from face-to-face instruction to virtual schooling probably doesn’t work well for many.  For example, some kids have poor home situations or no home internet connectivity.  The same children who are mostly likely to have difficulty switching to internet-based instruction are probably the ones who most need the social mobility associated with educational attainment.  More generally, isolation deprives children of much needed interactions with other kids that are a vital part of growing up.  It’s not surprising therefore that the American Academy of Pediatricians came out strongly in favor of having children physically present in school.  Kids are also harmed by financial and mental pressures experienced by their parents. And many of these harms may not appear until much later, making them easy to overlook in an overly zealous attempt to “follow the science.” The debate over mask wearing is relevant here too. Social science can also help us to understand how mask mandates can backfire by making people feel too safe, what economists call “moral hazard,” or how they can exacerbate other social problems by increasing the power of law enforcement, especially over the poor and people of color. Social science can also illustrate the ways that masks, even when not mandated, make social communication and coordination more difficult. One can still think mask wearing is a good idea while also using social science to understand its costs and the problems with making it mandatory. When we tally the effects of “following the science,” we have to take account of Bastiat’s famous description of the economic way of thinking as “seeing the unseen.” For example, we cannot just calculate the deaths that lockdowns may have avoided – we also have to consider the deaths and other harms they may have caused. As is also often the case with looking at the world through social scientific eyes, some of that harm and those deaths may not appear until the long run, e.g., the consequences of delayed screening for various ailments or the effects on the education of children. Thinking in terms of trade-offs, the unseen, and the long run are hallmarks of good social science, and engaging in true double-entry moral and social bookkeeping requires that we follow that social science too. It is indisputable that scientific knowledge is important, and that willfully ignoring and misrepresenting scientific knowledge has caused needless illness and death.  But social science—especially our discipline, economics—is also important in identifying tradeoffs associated with “following the science.”  In a pandemic, heeding social science is necessary too. Frank Stephenson is the Henry Gund Professor of Economics and Department Chair of Accounting, Economics, and Finance at Berry College. Steven Horwitz is Distinguished Professor of Free Enterprise in the Department of Economics at Ball State University in Muncie, IN. He is also an Affiliated Senior Scholar at the Mercatus Center in Arlington, VA, and a Senior Fellow at the Fraser Institute of Canada.  (0 COMMENTS)

Josh Hendrickson has a new post that defends the use of models that might in some respects be viewed as “unrealistic”. I agree with his general point about models, and also his specific defense of models that assume perfect competition. But I have a few reservations about some of his examples: Ricardian Equivalence holds that governments should be indifferent between generating revenue from taxes or new debt issuances. This is a benchmark. The Modigliani-Miller Theorem states that the value of the firm does not depend on whether it is financing with debt or equity. Again, this is a benchmark. Regardless of what one thinks about the empirical validity of these claims, they provide useful benchmarks in the sense that they give us an understanding of when these claims are true and how to test them. By providing a benchmark for comparison, they help us to better understand the world. With all that being said, a world without “frictions” is not always the correct counterfactual. Taken as a whole, this statement is quite reasonable.  But I would slightly take issue with the first sentence, which is likely to mislead some readers.  Ricardian Equivalence doesn’t actually tell the government how it “should” feel about the issue of debt vs. taxes, even if Ricardian Equivalence is true.  Rather it says something like the following: If the government believes that debt issuance is less efficient than tax financed spending because people don’t account for future tax liabilities, that belief will not be accurate if people do account for future tax liabilities. But even if people do anticipate the future tax burden created by the national debt, heavy public borrowing may still be less efficient than tax-financed spending because taxes are distortionary, and hence tax rates should be smoothed over time. I happen to believe Ricardian Equivalence is roughly true, but I still don’t believe the government should be indifferent between taxes and borrowing.  Similarly, I believe that rational expectations is roughly true, and yet also believe that monetary shocks have real effects due to sticky wages.  I believe that the Coase Theorem is true, but also believe that the allocation of resources depends on how legal liability is assigned (due to transactions costs).  Models generally don’t tell us what we should believe about a given issue; rather they address one aspect of highly complex problems. Here’s Hendrickson on real business cycle theory: Since the RBC model has competitive and complete markets, the inefficiency of business cycles can be measured by using the RBC as a benchmark. In addition, if your model does not add much insight relative to the RBC model, how valuable can it be? [As an aside, I agree with Bennett McCallum that either the term ‘real business cycle model’ means a model where business cycles are not caused by nominal shocks interacting with sticky wages/prices, or else the term is meaningless.  There is nothing “real” about a model where nominal shocks cause business cycles.] Do RBC models provide a useful benchmark for judging inefficiency?  Consider the following analogy:  “A model where there is no gravity provides a useful benchmark for airline industry inefficiency in a world with gravity.”  It is certainly true that airlines could be more fuel efficient in a world with no gravity, but it’s equally true that they have no way to make that happen.  I don’t believe that gravity-free models tell us much of value about airline industry efficiency. In my view, the concept of efficiency is most useful at a policy counterfactual.  Thus monetary policy A is inefficient if monetary policy B or C produces a better outcome in terms of some plausible metric such as utility or GDP or consumption.  (I do understand that macro outcomes are hard to measure (especially utility), but unless we have some ability to measure outcomes then no one could claim that South Korea is more successful than North Korea.  I’m not that pessimistic about our knowledge of the world.) In my view, you don’t measure inefficiency by comparing a sticky price model featuring nominal shocks against a flexible price RBC model, rather you measure efficiency by comparing two different types of monetary policies in a realistic model with sticky prices. That’s not to say that there are not aspects of RBC models that are useful, and indeed some of those innovations might provide insights into thinking about what sort of fluctuation in GDP would be optimal.  But I don’t believe you can say anything about policy efficiency unless you first embed those RBC insights (on things like productivity shocks) into a sticky wage/price model, and then compare policy alternatives with that model.  I view sticky prices as 90% a given, much like gravity.  (The other 10% is things like minimum wage laws, which can be impacted by policy.) PS.  Just to be clear, I agree with Hendrickson on the more important issues in his post.  My support for University of Chicago-style perfect competition models definitely puts me on “team Hendrickson”, especially when I consider the direction the broader profession is moving. (1 COMMENTS)

The Decline and Rise of Democracy, a new book by David Stasavage, a political scientist at New York University, reviews the history of democracy, from “early democracy” to “modern democracy.” I review the book in the just-out Fall issue of Regulation. One short quote of my review about the plight of modern democracy in America: [Stasavage] notes the “tremendous expansion of the ability of presidents to rule by executive order.” Presidential powers, he explains, “have sometimes been expanded by presidents who cannot be accused of having authoritarian tendencies, such as Barack Obama, only to have this expanded power then used by Donald Trump.” We could, or course, as well say that the new powers grabbed by Trump will likely be used by a future Democratic president “who cannot be accused of authoritarian tendencies,” or perhaps who might legitimately be so accused. The book is a book of history and political theory, not a partisan book. But the history of democracy has implications for today. An interesting one is how bureaucracy typically helped rulers prevent the development of democracy. Another quote from  my review—Stasavage deals with imperial China and I compare with today’s America: At the apogee of the Han dynasty, at the beginning of the first millennium CE, there was one bureaucrat for every 440 subjects in the empire. … In the United States, which is at the low end of government bureaucracies in the rich world, public employees at all levels of government translate into one bureaucrat for 15 residents (about one for 79 at the federal level only). If you read my review in the paper version of Regulation, beware. I made an error in my estimate for the federal bureaucracy and the printed version says “37” instead of “79”. It is corrected in the electronic version. Mea culpa. (0 COMMENTS)

In his latest book, Raghuram Rajan, a chaired professor of finance at the University of Chicago’s Booth School of Business and former governor of the Reserve Bank of India, advocates what he calls “inclusive localism.” His basic idea is that there are three pillars of a good and productive society: the market, the state, and the community. He argues that the community, which is the third pillar, nicely balances the excesses of both the free market and the state. Although there is a strong case to be made for the importance of the community, Rajan does not make it nearly as well as he could have. The Third Pillar contains many insights and important facts, but his argument for inclusive localism is half-hearted. He concedes far too much to the current large state apparatus and, in doing so, implicitly accepts that communities will be weak. Again, and again in the book, when contemplating how to make local communities more powerful relative to federal governments, he fails to call for a massive reduction in state power. At times he accepts the state apparatus because he believes, often unjustifiably, in its goodness and effectiveness, and at times he accepts it because he seems to have a status quo bias. Moreover, although he has better than the median economist’s understanding of the free market, he misses opportunities to point out how the market would straightforwardly solve some of the dilemmas he presents. Rajan also gets some important history wrong. And he makes too weak a case for free trade and favors ending child labor even in third-world countries where children and their families desperately need them to work. This is from David R. Henderson, “An Unpersuasive Book with Some Encouraging Insights,” my review of Raghuram Rajan, The Third Pillar, Regulation, Fall 2020. Rajan’s Misunderstanding of the Term “The Dismal Science” In making his case that we can go too far in the direction of markets, Rajan writes, “Reverend Thomas Robert Malthus epitomized the heartless side of [classical] liberalism, when taken to its extreme.” Commenting on Malthus’s claim that disease, war, and famine would be natural checks on population growth, he writes, “No wonder historian Thomas Carlyle termed economics the ‘dismal science.’” But that is not why Carlyle coined the term. Instead, in noting that the dominant economists of his day strongly opposed slavery, he said economics was dismal because they opposed slavery. That is a big difference. Rajan on Child Labor One thing that is well established in economics is that child labor in very poor countries is a boon to children and their families. I made that point in Fortune in 1996 and Nobel economics prizewinner Paul Krugman made it in Slate in 1997. We both pointed out that children who work in “sweat shops” are virtually always better off than in their next best alternative. That next best alternative, if they are lucky, is a lower-paid job in agriculture or, if they are unlucky, picking through garbage or starving. Yet Rajan, who comes from a poor country, writes, “All countries should, of course, respect universal human rights, including refraining from using slave labor or child labor.” He is right on slave labor; he is horribly wrong on child labor. If he got his way, millions of poor children would suffer needlessly. Rajan Has a Way with Words One bright spot is Rajan’s refreshing way of expressing insights. For example, he sees a lot of problems with China’s unusual mixed economy and coins a beautiful phrase to describe it: “competitive cronyism.” And here is how he characterizes populism: “Populism, at its core, is a cry for help, sheathed in a demand for respect, and enveloped in the anger of those who feel they have been ignored.” Read the whole thing. (0 COMMENTS)

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)