Public Choice, the economist James M. Buchanan explained, is built on the “homely” proposition that politicians are just like the rest of us. We call this “behavioral symmetry.” They have their own interests, and they try to satisfy those interests. Furthermore, we can understand people’s behavior in the voting booth and the bureau using the same tools we use to understand their behavior in the supermarket and the boardroom. When I lived in Memphis, I would regularly see signs for a local congressional representative proudly announcing that he was “fighting for Memphis.” Fighting who, I wondered, and for what? The answers were pretty obvious. He was fighting the rest of the country for as much as he could get from the public till. To the best of my knowledge, politicians do not generally say “no, we don’t need to spend this money in my district” or “we already have too much; let’s use these resources somewhere else.” But most importantly, assuming people are “self-interested” does not mean they are evil, selfish, or venal. It just means they have interests other people may not share, and they do things to make them better off however they choose to define that. Public choice applies even when people are perfectly selfless as long as they disagree about what will do the most good for the world. One wholly selfless humanitarian might think education is sorely underfunded. Another wholly selfless humanitarian might think health care is sorely underfunded. How will they vote? How will politicians who seek to curry favor with them act? Economics does not build on assumptions about the worst kind of selfishness, nor does it endorse them. It builds, rather, on the simple fact that people disagree about what is the good, the true, and the beautiful. Indeed, standard economic models saying people “maximize consumption” work just as well if we define “consumption” in wholly other-interested ways. The “consumption” comes from the fact that resources are consumed in the process of satisfying our wants. The economic problem doesn’t change fundamentally if we assume people want to maximize everyone else’s consumption of food, clothing, and shelter rather than their own. Economics predicts, however, that people will be less careful with others’ money than their own, and experimental evidence from my Samford colleague Joy A. Buchanan and Weber State’s Gavin Roberts suggests they are. No two people can eat the same kernel of grain, so even if you are wholly selfless there will, at any point in time, only be so much that can go around. And people who have different ideas about what is best for the poor—eat the grain now versus plant the grain and have more later—will run into the same conflicts plaguing even the most selfish among us. Economics does not tell you anything about what your preferences should be. It develops insights based on the conviction that people have different ideas about what is good and the fact that resources are scarce. Economics per se doesn’t offer a theory of the good, the true, and the beautiful because it can’t. For that, we look to the humanities and natural sciences. Good places to enter into the Great Conversation with gratis texts include Project Gutenberg, the Online Library of Liberty, and (for audiobooks) LibriVox. Economics is an analytical framework, not a set of propositions about what is good and right. It’s a much more powerful analytical framework than we might think at first, as well: even Mother Teresa and Albert Schweitzer faced scarcity and had to allocate the resources at their disposal among competing ends. When public choice economists invoke “behavioral symmetry,” they aren’t saying that we should assume people are evil. Rather, we should simply assume that people have different ideas about the contents of the good, the true, and the beautiful, and just as we try to maximize these in the market, we try to maximize them in the political sphere, as well. (0 COMMENTS)

An interesting reflection by The Economist‘s US editor John Prideaux in a subscriber-only newsletter is worth quoting at some length (“How to Cover Trump 2.0,” Checks and Balances, January 10, 2025): Perhaps the least important thing about the awful fires in and around Los Angeles is Donald Trump’s response to them. And yet he’s about to be the president again, so his hot take can’t be ignored either. “Gavin Newsom should resign. This is all his fault!!!” he wrote on Truth Social. An underrated part of Mr Trump’s political method, and his appeal, is that he doesn’t say what he is supposed to. Any normal person, or any politician taking advice from a communications pro, would lead with sympathy for those who lost loved ones and whose houses have burned down and say something comforting about how, when he takes office, he will help LA to come back stronger. Mr Trump doesn’t bother with that. He knows his voters don’t like Mr Newsom. Blaming an appalling natural disaster on him is therefore a thrill. Henry Adams wrote that, “politics, as a practice, whatever its professions, has always been the systematic organisation of hatreds.” Mr Trump’s success makes me think he was right. One may relate Henry Adam’s striking aphorism to Anthony de Jasay’s theory of the state. Since, for de Jasay, any action of the state amounts to discriminating against somebody to help somebody else (“maximizing aggregate utility” is a convenient rationalization), it can understandably generate hatred from the discriminated against. However, de Jasay’s theory (or part of his theory) is different: in a democratic state, the victims of discrimination will instead demand some discriminatory privilege in their own favor, which will in turn generate discontent from other individuals discriminated against, and so forth up to the “Plantation State” (see his 1985 book The State). On this road, Donald Trump and Joe Biden, to take two recent examples, will just have been small milestones among others. Under the Plantation State, everybody will be more or less equal, except for the equalizers. Will all the equalized hate the state? Perhaps, but they will have to hide their hatred. (0 COMMENTS)

An interesting reflection by The Economist‘s US editor, John Prideaux, in a subscriber-only newsletter is worth quoting at some length (“How to Cover Trump 2.0,” Checks and Balances, January 10, 2025): Perhaps the least important thing about the awful fires in and around Los Angeles is Donald Trump’s response to them. And yet he’s about to be the president again, so his hot take can’t be ignored either. “Gavin Newsom should resign. This is all his fault!!!” he wrote on Truth Social. An underrated part of Mr Trump’s political method, and his appeal, is that he doesn’t say what he is supposed to. Any normal person, or any politician taking advice from a communications pro, would lead with sympathy for those who lost loved ones and whose houses have burned down and say something comforting about how, when he takes office, he will help LA to come back stronger. Mr Trump doesn’t bother with that. He knows his voters don’t like Mr Newsom. Blaming an appalling natural disaster on him is therefore a thrill. Henry Adams wrote that, “politics, as a practice, whatever its professions, has always been the systematic organisation of hatreds.” Mr Trump’s success makes me think he was right. One may relate Henry Adam’s striking aphorism to Anthony de Jasay’s theory of the state. Since, for de Jasay, any action of the state amounts to discriminating against somebody to help somebody else (“maximizing aggregate utility” is a convenient rationalization), it can understandably generate hatred from the discriminated against. However, de Jasay’s theory (or part of his theory) is different: in a democratic state, the victims of discrimination will instead demand some discriminatory privilege in their own favor, which will in turn generate discontent from other individuals discriminated against, and so forth up to the “Plantation State” (see his 1985 book The State). On this road, Donald Trump and Joe Biden, to take two recent examples, will just have been milestones among others. Under the Plantation State, everybody would be more or less equal, except for the equalizers. Will all the equalized hate the state? Perhaps, but they would have to hide their hatred. (0 COMMENTS)

Our cat Theo has a heart disease. We found that out from a cat cardiologist. A cat cardiologist? Really? Yes, really. Why do I mention this on a site called EconLog? Because the fact that there are cardiologists for cats is a sign of economic growth. I’m pretty sure that fifty years ago we didn’t have cat cardiologists. There wasn’t much demand for them because Americans, on average, were substantially poorer than they are now. You might argue that there wasn’t much supply either, and you would be right. But why wasn’t there much of a supply? It was due to the fact that technology had not evolved to the point where cardiologists could diagnose cats, but that was also due, in part, to the fact that Americans were poorer and weren’t willing to demand such cardiology for cats. There are so many indicators of economic growth and how wealthy it has made the average American. Consider movies. In a blog post titled “Howard Hughes Would Envy You,” EconLog, September 19, 2024, co-blogger Kevin Corcoran told a fascinating story, which I had not known about, of Howard Hughes and his use of his own television station to play movies. Kevin points out that in the 1960s, Hughes was very wealthy, wealthy enough to own his own TV station, KLAS, in Las Vegas, where Hughes lived. Kevin writes: Now in control of his own private TV station, he could ensure movies would be broadcast at all hours. And apparently, it wasn’t uncommon for him to decide he didn’t like what was being shown and simply call the station to tell them to play something else instead. As a result, anyone else who was watching the station would suddenly find themselves confused as the movie they were in the middle of watching was suddenly switched to something else. Imagine that: wanting to watch a movie when you want to, changing your mind, and then watching another movie. To do that, Hughes had to buy a TV station for $3.6 million, which, translated to today’s dollars is about $34 million. Of course, we don’t have to imagine that. Most of us do it by subscribing to Netflix or other services and paying annually less than 0.0001 percent of the price Hughes paid. (Of course, I should price Netflix over 10 or more years, but you get the point.) Boy, are we wealthy!   And now compare our situation to that of kings and queens just 2 centuries ago. Even a king could not play a song when he wanted to. If he wanted it late at night, he would have to assemble an orchestra. Maybe it could be done but maybe it couldn’t. Now we all “assemble” our own orchestras and can do so by touching a couple of things on our portable phones. And the artists get it note perfect every time.   I would not trade my life for that of Howard Hughes. I especially would not trade my life for that of George IV, the king of England 200 years ago.   (0 COMMENTS)

Long-time readers know that I believe that people underrate the importance of procedural issues. Too many people focus on “outcomes”, not the structure of decision-making.To take a recent example, consider the case of TikTok. At first glance, it may appear that I have the same view as President Trump. In fact, our views are radically different. AFAIK, Trump’s view can be described roughly as follows:  TikTok should be shut down when it’s in Trump’s interest to shut it down, and should be allowed to operate when it’s in Trump’s interest to let it operate.And here’s my view: The government should not arbitrarily shut down social media apps.Those seem like radically different policy views, not the same view.Consider the recent case of wind energy regulation: Given the high costs associated with building a wind project, and the likelihood of tariffs making that situation worse, the uncertainty produced by a potential halt to permits may also be enough to cause developers to pull the plug on projects – because even if the order itself winds up tossed out in court, that could take years. . . . But the idea that you would have a pro-business administration trying to stop private companies from taking economically appropriate action on private land is just so out of step with the role of government that we’re expecting they’re going to clarify their intent.” Trump’s executive order is so far-reaching because wind projects regularly need federal permits and other authorizations, even if they’re sited on private or state lands. A commonly cited federal nexus is endangered species. Opponents of wind energy have long criticized turbines for being a potential threat to birds, but it is the case that many wind projects are collocated within or near areas for rare bird migration. Cultural heritage impacts can often also be a difficulty. At first glance, it might seem like President Trump’s view of regulation is very different from President Biden’s view.  Trump likes coal and Biden likes wind energy.  But from a procedural perspective, I see lots of similarities.  Both presidents could be described as having the following view: The construction of new energy projects should be hampered by tariffs that boost the cost of construction.  Furthermore, any project that the president does not like should be tied up by costly regulation involving things like endangered species and cultural preservation.   The most important ideological difference in public policy is not which particular industry is favored; rather it is whether government has any legitimate in role favoring one industry over another. (0 COMMENTS)

The idea that the only thing missing in a project is “political will” is a cliché representative of our times. We find it again in a Financial Times article about regulating social media ( “The Coming Battle Between Social Media and the State,” January 21, 2025): But there are two problems with regulating social media platforms. … The second is that to impose effective regulation against unwilling platforms will require determined, unflinching governmental action and political will The first meaning of political will is apparent in the vocabulary: “determined” and “unflinching” “governmental action.” Severe laws and regulations must be imposed to control those who don’t want to be controlled. If they don’t submit, their property will be confiscated and they will be fined, jailed, or worse. Ultimately, political will is state violence, threatened or actual. We may call this the raw definition of political will. A second conception of political will is sugarcoated and more procedural: it is what some politicians or rulers want strongly enough to persuade their colleagues to accept or not reject it as laws or regulations (or extra-legal actions). It does not matter for this understanding of the expression whether the main motivations of state agents are self-interested, as public choice theory safely assumes, or represent an attempt to realize “the social good” or to help or punish this or that group of individuals. Political will in this sense is simply what the rulers can agree on—the output of the rulers’ horse-trading. An attempt at defining political will was made by Lori Ann Post (a sociologist), Amber N.W. Raile (an expert in “social influence”), and Eric D. Raile (a political scientist), “Defining Political Will,” Policy and Politics 38-4 (2010), pp. 652-676. They quote another researcher observing that political will is “the slippiest concept in the policy lexicon,” and it doesn’t seem they went much further than that, or at least not farther than the horse-trading definition. Many people seem to explicitly or implicitly distinguish and elevate a third meaning of the expression, which is focused on the will of the people, as Jean-Jacques Rousseau would call it (The Social Contract, 1762). Except in a mob, the will of the people, if there is such a thing, will not be automatically realized for a host of reasons explained by economics, which may be summarized under the heading of the problem of collective action (see Mancur Olson, The Logic of Collective Action, 1966): everybody wants something but would free-ride if not forced to contribute for his own good. In reality, the will of the people does not exist because there is no homogeneous people—individuals are not identical—and numerical majorities are incoherent (Condorcet paradox and such); it’s a unicorn (see William Riker, Liberalism Against Populism, 1982). The will of the people means nothing but the imposition by state force of the preferences and values of some group, or attributed to some group, on the rest of “the people” and the “enemies of the people,” foreign or domestic (I develop these ideas in my “The Impossibility of Populism,” The Independent Review, 26-1 [Summer 2021], pp. 15-25). Liberal social contract theories are attempts to reconcile democracy with the fact that “the people” as a distinct being, organic or collective, does not exist. The most sophisticated and economically realistic of such contractarian theories is, I believe, that of James Buchanan and his fellow theorists. In a nutshell, they argue that all individuals agree on a virtual contract establishing minimal rules to govern social life and limit violence and state force in the common interest of all.  “The people” in the singular and collective form is not only unnecessary but illusory. The supposed will of the people is replaced by the consent of each and every individual at the “constitutional stage.” The political will, if there is any remaining room for this concept, might be the (suspicious) maneuvering of state agents (politicians and bureaucrats) to help individuals enforce the unanimous rules they agree on or, ominously, to benefit some individuals at the cost of others. It is safer to avoid the expression. Note that “people” in its plural and usually indefinite form—say, “the weather was nice and people were playing golf”–is not contentious, but these individuals don’t have a political will in the sense the expression is commonly used. Another definition of political will would be the state’s capacity to provide what I want, which is related to the Princess-Mathilde conception of the state. The concept points to one side of a conflict over resources, and we are not far from the first definition above. ****************************** The People and Its Will (0 COMMENTS)

In a recent post, I described a thought experiment where someone is stranded on deserted island, where resources are abundant but their ability to make productive use of those resources is very limited. In this situation, what happens if a new castaway washes ashore? With two people working together, things can improve. They can specialize and begin a division of labor, and collect more resources together than either could do alone. This would also be true if a third castaway washed ashore, and a fourth, and so on. There’s another point this kind of thought experiment can help clarify. When envisioning this scenario, we’re just thinking about what would improve the castaways’ standard of living. With more people working together, their standard of living can increase. They can gather more food, build better shelters, and store more supplies. In this scenario, there are no “wages” being considered. We aren’t thinking about how many seashells they can gather to trade with each other as a primitive form of currency. The only way their standard of living can increase is if they can increase the amount of goods and services they can produce. As long as more people working together with an ever more extensive division of labor can produce more than before, their standard of living will continue to rise. This fundamental idea is not changed in a modern economy with currency and wages. For people who are concerned about the American worker and want to ensure the wages of the American worker continue to rise, there is no way for that to happen unless productivity is also rising. Without an increase in the amount of goods and services available to Americans, wages cannot rise in any real sense, just as our castaways’ standard of living cannot rise unless they can make more productive use of their resources. I’ve written before about Harold Daggett, the head of the a labor union known as the International Longshoremen’s Association. Daggett recently made many headlines with his simultaneous demands for massive wage increases for unionized dock workers along with insisting that American docks not implement modern automation – and his threats to shut down docks and cripple the American economy if he doesn’t get his way. As John Stossel has recently noted, of all the world’s ports, not a single American port is in the top 50. This is because American ports, at the behest of the unions, have refused to implement the kind of productivity and efficiency enhancing automation that other nations use – at the added cost of making port work significantly more dangerous that it needs to be, leading to workers being needlessly killed and maimed on the job. Daggett and the ILA, along with so many other union leaders and organizations, are demanding their workers get higher wages while also preventing the kind of advancements that would increase worker productivity. So if the port workers get a wage increase without increasing the productivity of what they do (and in fact keeping that productivity artificially low), their wage increase can only happen by means of making other Americans worse off. It is a naked and open demand to enrich one’s self at the expense one’s fellow citizens. And this is the kind of behavior we would expect to see from people whose mindset is built upon a zero-sum fallacy. Just as this thinking can lead you to believe that an increase in the number of workers harms existing workers because more labor must mean cheaper labor, if you believe one person’s gain must be another person’s loss then of course you won’t hesitate to demand others be made worse off for your situation to improve. Because, in your mind, that’s all anyone can ever do anyway, in a zero sum world. Economics teaches us that we have opportunities to work together and make each other better off in the process. Protectionist populism teaches people that if they ever want to rise up they have to step on the necks of their neighbors to do it. Perhaps we should update Thomas Carlyle’s (widely misunderstood) declaration that economics is a “dismal science” and apply that moniker to the zer0-sum thinking of populists and protectionists. But then again, it might be too generous to such a mindset to call it a “science,” dismal or otherwise. (0 COMMENTS)

Given the news that the U.S. Postal Service could be privatized, it’s a good time to explore why privatizing mail delivery and opening it up to market competition is a wise idea. To start, it’s helpful to consider cases where privatization might be unwise and why mail delivery is different. In particular, many economists and political philosophers are skeptical about privatizing public goods—that is, goods that are characterized by nonexcludability and nonrivalrous consumption. National defense is a classic example: when a military protects a nation from attack say, via nuclear deterrence, all individual citizens enjoy that protection (nonexcludability) and one person’s protection doesn’t diminish the protection enjoyed by others (nonrivalrous consumption).  Yet because individuals cannot be excluded from national defense once it’s provided, they have little incentive to pay for it; instead, they prefer to free ride on the contributions made by others. Since everyone (or nearly everyone) prefers to free ride, the good won’t get provided by voluntarily market transactions. So there’s a case to be made that national defense should be provided by the state. Notice, though, that this argument doesn’t speak against the privatization of the post office. Mail delivery isn’t a public good. Critically, mail delivery is excludable—delivery companies can restrict their service to paying customers. If you don’t buy a DoorDash subscription, DoorDash won’t deliver your food. If you don’t pay FedEx to deliver your parcel, it won’t deliver your parcel. Indeed, if you don’t put a stamp on your letter, the United States Postal Service won’t deliver it. From here, the positive case for privatizing mail delivery is straightforward. Competing private delivery providers have a strong incentive to supply fast, cheap, and reliable service. After all, if their service is slow, expensive, or unreliable, customers can simply vote with their dollars and give their business to a competitor that does a better job. This option is not available when the delivery provider is a government-run monopoly and thus the monopoly has a much weaker incentive to provide good service. Why, then, do so many people resist the idea of privatizing mail delivery given that it’s a private good that can be efficiently provided by a free market like other delivery services such as DoorDash? Robert Reich, for instance, says that privatizing the USPS is “a terrible idea that would sacrifice the public interest to private profits.” Here’s one possibility: status quo bias. We often irrationally prefer the status quo, not because it is better than a change, but simply because it’s the status quo. So perhaps people are uncomfortable with postal service privatization simply because it disrupts the current state of affairs even though a disruption would be better. To guard against status quo bias, we can use the reversal test. That is, imagine that the status quo were reversed such that private, competing mail delivery companies were the norm. We’d have DoorDash for mail, Uber Mail, and so on. Would we want to switch this arrangement back to the actual status quo of a government-run, monopolistic mail delivery service? Surely not. Think of it this way: if you wouldn’t support nationalizing DoorDash and banning Uber Eats, Grubhub, and the rest of its competition in the food delivery business, why would you support a similar model for mail delivery? Now, you might worry that, just as Uber Eats won’t deliver buffalo wings to a customer when it’s unprofitable for them to do so, Uber Mail wouldn’t deliver mail to a customer when it’s unprofitable for them to do so. As the American Postal Workers Union notes, unlike private delivery companies, “The USPS can’t walk away from unprofitable neighborhoods.” But the claim that everyone is entitled to mail delivery regardless of its profitability doesn’t justify the nationalization of mail delivery. Consider that the most effective way to ensure that everyone has access to groceries is not to nationalize grocery stores, but rather to provide those in poverty with SNAP benefits to shop at the grocery store of their choice. Similarly, the state could issue mail vouchers to those in poverty or living in particularly hard-to-reach areas. This system would maintain the advantages that result from market competition as well as ensure universal access to mail delivery.   Christopher Freiman is a Professor of General Business in the John Chambers College of Business and Economics at West Virginia University. (1 COMMENTS)

January 20th, 2025 was an unusual day. It’s not often that two different presidents engage in highly controversial acts on the very same day. I am referring to the flurry of pardons at the end of the Biden administration and the beginning of the Trump administration.America has become so polarized that it is hard to imagine any proposed constitutional amendment gaining the needed 38 states required for ratification. But I wonder if pardons might be an exception.In Republican dominated states, one would think that the Biden pardons would provide a strong argument for an amendment restricting presidential pardons. That could take the form of an outright ban on pardons, or a requirement that they first clear a special court appointed to consider potential pardons.  In Democratic dominated states, proponents could point to the recent Trump pardons of the J6 group, as well as some politically motivated pardons from the end of his first term in office. I’m not sure I know a single person that is not outraged by at least some of the pardons issued over the past few days, regardless of their party affiliation.  If this isn’t enough to trigger a constitutional amendment, then I question whether any more amendments will ever be able to attract the necessary support.   Ironically, one of the best arguments for ending the pardon power of the presidency was inadvertently made by Donald Trump, in perhaps his finest moment during his first term.  In a brief speech lasting less than 3 minutes, he made a passionate argument for the necessity of punishing those responsible for what he called the “violent” attack on the law enforcement officers that were trying to protect the Capitol building and its occupants. Trump was right, they should “pay” for their crimes.  If presidents did not have power to pardon, they would have paid. (0 COMMENTS)

Tariffs are (still) in the air, and don’t show any sign of retreating from our newsfeeds. Will they help or hurt? In this recent episode, Scott Sumner makes the case against tariffs and various other forms of government intervention that go by the name of industrial policy. EconTalk host Russ Roberts notes the difficulty in defining industrial policy, which Sumner says encompasses “policies that are directed at reshaping the economy in a different way than a free market would produce to achieve some important national goal.” Why do such anti-market policies persist, and indeed gain in political popularity? We’d love to hear your thoughts to the prompts below. Let’s keep the conversation going!     1- Roberts points to Sumner’s phrase, “vulgar mercantilism, “which helps to describe people who advocate generally protectionist trade policies for reasons that reflect a lack of understanding of basic trade theory.” Both Roberts and Sumner assert that free trade is of course best… So why is the economist’s case so unpersuasive? How is trade theory counterintuitive, according to Roberts? To what extent do you think non-economic reasons- such as xenophobia or cultural bias- account for opposition to free trade?   2- Roberts reminds us there are only two ways to get more from less- innovation and trade. What’s wrong with running a trade surplus, Roberts asks? Why do trade deficits worry so many people? Sumner reminds us that every nation does some kind of protection/industrial policy. He also says that many of the tales of terrible effects are primarily regional, not national or international problems. (He mentions the West Virginia mining and Michigan auto industries in this context.) What does he mean? What about the human side of trade, as Roberts wants to remind us? For example, what don’t you notice when the tide of imports is slowed or stopped?   3- What are the reasons use to justify industrial policy in the name of national security, and to what extent do you find each convincing? Sumner does allow some room for concern here; what does he point to? On the other hand, how credible do you find Sumner’s assertion that many previous warnings about national security were exaggerated? What does Sumner offer as evidence to support this claim, and how convincing is he? To what extent should the potential confrontation in foreign policy between China and the United States affect the way we trade with China? Why does Sumner harbor more suspicion against China than Russia, and again, to what extent do you agree?   4- The conversation ends with Sumner bemoaning that there was so little discussion of economics in 2024 presidential election, and in particular why there seems to be so little concern over the level of government debt. To what extent do you find Sumner’s fear of the United States becoming more like a banana republic justified? According to Sumner, what is the best indication that our current level of debt is unsustainable?     (0 COMMENTS)