I read 2 non-fiction books at my cottage in Canada last month, which is 1 below my average. (The weather was nicer than average.) One was The Nazi Officer’s Wife: How One Jewish Woman Survived the Holocaust. The author is Edith Hahn Beer with Susan Dworkin. I’ll post at least twice on the content that caught my economist’s eye. I see economics everywhere. Here’s an interesting discussion about how the Nazis propagandized against wealth that relatively prosperous Jews in Austria had acquired: The Nazi radio blamed us for every filthy evil thing in the world. The Nazis called us subhuman and, in the next breath, superhuman; accused us of plotting to murder them, to rob them blind; declared that they had to conquer the world to prevent us from conquering the world. The radio said that we must be dispossessed of all we owned; that my father, who had dropped dead while working, had not really worked for our pleasant flat—the leather chairs in the dining room, the earrings in my mother’s ears—that we had somehow stolen them from Christian Austria, which now had every right to take them back. Did our friends and our neighbors really believe this? Of course they didn’t believe it. They were not stupid. But they had suffered depression, inflation, and joblessness. They wanted to be well-to-do again, and the fastest way to accomplish that was to steal. Cultivating a belief in the greed of Jews gave them an excuse to steal everything the Jews possessed. (pp. 56-57)   (0 COMMENTS)

In a recent post, I took what might be viewed as an “elitist” view of monetary policy. Decisions should be made by people with expertise in the subject area. Today, I’ll take what might be viewed as an anti-elitist view. Central bankers should explore the views of a variety of monetary economists, including those with heterodox views.  Am I contradicting myself?  Not at all.   Here’s the Financial Times, in an opinion piece that can only be described as snarky: Since 1997, members of the Institute of Economic Affairs’ “shadow monetary policy committee” have gathered once per quarter somewhere off Tufton Street, Westminster, to cosplay as their favourite Bank of England rate-setters. Much as scientists still puzzle over the mysteries of bird migration, no one knows exactly why they go to all the trouble. SMPC meetings nevertheless follow a familiar pattern. After a summary of global economic conditions, members discuss the outlook for inflation and growth in the UK before pouring forth on the appropriate level of borrowing costs. Votes are tallied, a policy rate is recommended and the world keeps on spinning. . . . Eclectic members include former Invesco chief economist John Greenwood (who thinks “interest rates are irrelevant”), Capital Economics non-executive director Roger Bootle (who thinks “interest rates are fundamental”) and several card-carrying monetarists. (Ever the cynic, Louis wonders whether maybe the SMPC purely exists “just so every ten years they can slap each other on the back when the M4 and inflation charts overlay nicely”.) The SMPC skews male — all 14 members are guys — and towards Wales — four, including “Brexit economist” professor Patrick Minford, work at Cardiff Business School. Juan Castañeda and Tim Congdon both divide their time between the Institute of International Monetary Research and the University of Buckingham while Lilico shares the chairmanship with professor Trevor Williams of Derby University and TW Consultancy when he himself isn’t moonlighting at consultancy Europe Economics. Apparently, the author thinks it’s a big joke that these sorts of people would have the temerity to offer advice on monetary policy to the infallible experts at the BoE. If I wanted to be snarky in reply, I might point to the UK’s inflation rate over the past 3 years.  In case that price surge was due to supply shocks such as the Ukraine War, let’s look at wage inflation, a variable much more closely tied to demand conditions: That doesn’t look like sound monetary policy.  Money was clearly too tight in 2008 and it was too easy in 2021.  I don’t always agree with Tim Congdon, but as I recall he made both of those criticisms in real time.  In contrast to the FT, The Economist does recognize the value in a having a diversity of views when setting policy: In the 2000s researchers conducted experiments with economics students at the London School of Economics, Princeton University and the University of California. These used a simple computer-run economic model, which was subjected to random shocks. Students had to respond by moving interest rates, and were scored on how well they kept unemployment at 5% and inflation at 2% over the course of 20 financial quarters. In every case committees outperformed individuals. Indeed, a large body of empirical work suggests that well-run committees help smooth extreme perspectives, drive out poor judgment and provide more insulation from both political and personal pressure. I’ve suggested (in chapter 5) expanding the FOMC from 12 members to 8.2 billion (potential) members.  Allow anyone to bet that NGDP will rise by less than 3% or more than 5%, and have the Fed take the other side of the bet.   (0 COMMENTS)

  In my very positive 2019 review of Bryan Caplan’s book Open Borders: The Science and Ethics of Immigration, I wrote: While few people would accuse Caplan of understating the benefits from immigration, I am one of those few. Immigrants start businesses at a rate that is twice that of native-born Americans. Among the main beneficiaries of such immigrant employees, therefore, are American workers. Yet nowhere in his book did I find mention of that fact. It’s possible, of course, that this overstates the benefits to native Americans; think of the Korean dry cleaner that largely employs other family members. Still, the odds are high that most of these employers employ some non-family and non-immigrant workers. It turns out that even I understated the case for immigration. I say that because of this interview by my Hoover colleague and fellow economist Steven Davis. He interviewed Rebecca Diamond, an economics professor at Stanford University. Here’s the takeaway: Immigrants directly account for one-quarter of the economic value generated by U.S. patents. They account for more than one-third of that value after factoring in the collaboration benefits that immigrant inventors bring to native American inventors. Immigrant inventors also play a major role in the two-way flow of scientific and technical knowledge between the United States and other countries. Choking off the flow of immigrant inventors would hamstring the American innovation enterprise and slow the development and diffusion of scientific knowledge. Now, you might say, “But if the U.S. government hadn’t let in a lot of those people, wouldn’t they have patented them elsewhere? In which case, we still would have gained.” (Remember that according to Nobel Prize winning economist Willam D. Nordhaus, 97.8 percent of the gains from innovation go to consumers, not the innovators.) The answer is “No.” Some of them would have patented them elsewhere. But some of them wouldn’t have. With all its imperfections and government barriers, America still has one of the most vital dynamic economies in the world. Potential inventors here have others near them to work with: think Silicon Valley. So if the government had prevented a substantial number of them from immigrating, it would have prevented a substantial amount of innovation, and American consumers, along with other consumers, would have been deprived of gains from innovation. Here’s the link to the underlying study. (0 COMMENTS)

On a recent blog post by Don Boudreaux at Cafe Hayek pointing out (for the millionth time) that America is not deindustrializing, a Jayson Ramos responded to a comment from me saying: “So whom [sic] is Mr. Korol supposed to believe? You and Dr. Boudreaux—or his “lying eyes”?” This is a common “gotcha” style question meant to imply that the experts on a matter are out of touch and/or making things up.  However, the good scientist knows that the eyes are not lying, but rather they are simply one tool of understanding.  Our eyes provide us with valuable (seen) information.  But what is unseen is of vital importance, too. A simple example to make my point: my eyes looking out my office window show a beautiful sunny day. A thunderstorm is forming off in the distance, but it’ll likely go south. A good day for a walk, no? But my weather app, pulling data from the National Weather Service in New Orleans, says otherwise. Although it is barely 9am, we have a real feel temperature of 104°. It says the air is heavily humid and breathing may be difficult, especially for folks like me with asthma.  They also say we could get a thunderstorm later.  So, who am I to believe? My lying eyes or some meteorological nerds in New Orleans? It turns out: the nerds were right.  As soon as I stepped outside to take out the garbage, I was hit by the heat and humidity.  Although the garbage compactor is about 100 yards away, I got in my car and drove to it.  And, as it gets darker as I write this, they’re likely to be right about the storm, too. Did my eyes lie to me?  No: they told me the truth.  The sun was out.  The storm I saw did go south.  But another storm is coming from the north (I have no north-facing windows).  My eyes saw the truth, but just one part of it.  The NWS saw much more and provided me with additional information.  What was unseen to me was just as important as what was seen. With US manufacturing, it is the same.  It is easy to see the Rust Belt- to see many once great towns laid low.  When I lived in Syracuse, New York, it was heartbreaking to see such beautiful façades fallen to disrepair, to see such grim poverty in a once-shining city.  No one denies that similar stories play out in cities around the US.  But there are also cities being transformed by new construction in Tennessee, Massachusetts, Alabama, Mississippi, and the Carolinas.  In fact, US manufacturing construction spending is at the highest level since data has been recorded (2002).  The recent jump is due to subsidies and incentives from the Inflation Reduction Act, but note that spending has been generally trending upward since 2011.  Even within those old Rust Belt cities, new life is being born: art halls, breweries, museums, and all sorts of other development are moving into old factories. Science teaches us to search for the unseen.  Science teaches us to use all our senses in conjunction with sense and reason to make conclusions and inferences. Sight is an important sense, but it is obscured by a veil.  The goal of education is to help sharpen our other senses so that we can pierce that veil.  It is the poor scientist who relies only on what is seen; as we see with Mr. Korol, it leads to incorrect conclusions about the state of the US economy and US manufacturing.    Jon Murphy is an assistant professor of economics at Nicholls State University.   (0 COMMENTS)

Ian Leslie’s work focuses on human behavior. He has appeared on two earlier episodes of EconTalk (Ian Leslie on Curiosity and Ian Leslie on Conflicted). In this episode, host Russ Roberts and Leslie continue the discussion of human behavior, discussing Leslie’s thesis that AI is already changing how we think. It isn’t just the matches who are imitating us, rather, we have begun to imitate the machine in profound ways that are changing what and how we create.  Roberts and Leslie spend some time discussing how students are actually taught writing using a very simple algorithm, the five paragraph essay. As a former teacher, I’m glad I left the classroom before the emergence of Chat-GPT and similar tools. Yet some of the cultural and technological forces Leslie pinpoints could already be seen in students’ writing and thinking long before the introduction of generative AI technology to the public. Certainly we have been living for many years in a world shaped by algorithms: social media and search algorithms have shaped our information stream and social circles for years. The ubiquity of autocorrect and  the digital organization of information affect the way adults and children learn. The simple isolation that personal devices enable also change how we come into contact with information, process, and share it. If Ian Leslie’s argument is correct, algorithmic transmission of knowledge is even older than these technologies. As a product of late-20th-early-21st century schools and a teacher, I’m tempted to agree). As Leslie points out: …essentially we’ve taught them–we taught many of them–that good writing means following a series of rules and that an essay should have five-part structure. So, instead of helping them to understand the importance of structure and the many ways you can approach structure and the subtleties of that question, now, we tend to say, ‘Five points.’ That’s what you want to make in an essay. The student goes, ‘Okay, I can follow that rule.’ Instead of helping them to understand what it means to really nail or at least give your writing depth and originality and interest, we say, ‘Here are the five principles you need to follow. Here’s how long a paragraph should be. Here’s how your sentence should be. Here’s where the prepositions go or don’t go.’ And, we’re basically programming them. We’re giving them very simple programs, simple algorithms to follow. And, the result is we often get very bland, quite shallow responses back. So, it isn’t actually any wonder that ChatGPT can then produce these essays because they’re basically kind of following a similar process. That ChatGPT has a huge amount of training data to go on, so it does much more quickly. And so, we should be alarmed by it, but not because it’s on the verge of being a kind of super-intelligent consciousness, but because of the way that we’ve trained ourselves to write algorithmic essays. Small wonder that the modern school set-up has relied on these “simple programs, simple algorithms”. Quality education at scale is not a simple proposition,  and the five paragraph simplistic view does reliably produce a mediocre but acceptable product. Certainly this goes a long way in explaining the mediocrity common to an average student essay before common access to generative AI. Now the problem is more direct: essays actually compiled  by generative AI. I do not envy teachers these days who are trying to teach around this, but the problem already existed before the latest, most powerful tool came to be. Now it has accelerated. Of course, the applications of AI in education extends far beyond the classroom. Most of us use Google or other search engines as a quick way to look  up information or images. Now, much of that content is influenced or created by AI, our perception of reality is filtered through the machine.  One strange example:  I was browsing my Reddit feed and saw several complaints that wedding floral images are being generated by AI and posted on sites like Pinterest, which many people use for design and planning inspiration. Why was the poster complaining? Because the bouquets of wildflowers in some very realistic looking images were physically impossible: the species of flowers pictured do not have strong enough stems to be incorporated in a bridal bouquet. What are you noticing in your environment  that is changing because of AI? Has it changed how you interact with others professionally or personally? Does this, on the whole, make your life better or worse? What counts as AI? Autocorrect and autofill are much simpler than ChatGPT but even more ubiquitous in our digital world, but they have potential to change the words we use when communicating with each other. Do they make our communication better, or simply more algorithmic? Regardless of the level of technology, some part of learning is algorithmic, repetitive, and not particularly creative. Beginning piano students learn scales, math students memorize formulas, and writers and artists learn by imitation. Where does imitation stop and creativity begin? And when should that happen?  What makes creativity human? What is it about machine output, even very complex output, that is lacking, or inauthentic?   Additional links:  Ian Leslie on why curiosity is like a muscle Quercus Books Ian Leslie on Why We Must Continue to Learn and be Curious The Royal Society of Arts   Nancy Vander Veer has a BA in Classics from Samford University. She taught high school Latin in the US and held programs and fundraising roles at the Paideia Institute. Based in Rome, Italy, she is currently completing a masters in European Social and Economic History at the Philipps-Universität Marburg. (0 COMMENTS)

In his 1869 book on The Subjection of Women, the economist and political philosopher John Stuart Mill wrote that he had “repudiated the notion of its being yet certainly known that there is any natural difference at all in the average strength or direction of the mental capacities of the two sexes, much less what that difference is.” Whatever the differences, the political implications should still be what Mill thought. An article in The Economist suggests that perhaps women make for better physicians than men. It cites a number of recent medical studies concluding that female doctors have better medical outcomes in terms of patient survival and hospital readmissions (“Do Women Make Better Doctors than Men? Research Suggests Yes,” August 7, 2024). The data comprised hundreds of thousands of medical records in Canada and the United States. The Economist notes that they were retrospective studies, which are less reliable than the controlled-randomized sort. It could be, for example, that women doctors covered by the studies were, for whatever reason, assigned the least serious cases, which would be controlled in a study that randomly assigned doctors to patients. But why is it important to know whether women or men are better physicians? The question looks strange, except perhaps for hospitals, clinics, and medical groups who, if discrimination were legally allowed, would be interested in hiring the most efficient doctors—pushing the salaries of women doctors above their less efficient male counterparts’. Since sex discrimination is illegal in hiring (we would now say “gender discrimination,” which has the advantage of avoiding a culturally hated three-letter word, but I’ll stick with Mill’s terminology), there must be another reason why the question has become a research agenda. In a free society, whether males or females are better doctors would have no philosophical or political implications, regardless of genetic or social causes. (Once the hypothesized difference in productivity has been priced into salaries, it would have little business interest either as the prices would provide sufficient information.) The question would be no more important than whether left-handed or right-handed doctors are better. Now, it does seem rather obvious, doesn’t it, that women are genetically more empathetic and caring than men. The Economist suggests that information on the relative competence of men and women as physicians would help male doctors change what they don’t do right. But then, one would think that the same sort of study for other social groups—say, white doctors vs. black doctors or left-handed doctors vs. right-handed ones—would be as useful. Why is that not the case? Certainly, such studies further reinforce the cage of group identities, but this should not be an objection for our group-loving intellectual establishment, except for the fact that some groups are more loved than others. I agree, of course, that whatever research question somebody wants to investigate is his own business, although there is an issue as to whether the researcher should force others to finance his research. I have discussed this issue in a few previous EconLog posts–for example, about how spurious scholarly journals are helped by government financing of higher education. Freedom of research is the only way to know, as best as possible, that no important question has been neglected. Given the zeitgeist of our time, we may wonder if the studies on the relative efficiency of male and female doctors would have been published if they had found that male doctors are better. Or perhaps such studies were buried by professional and academic journals? Imagine the headline in the press, “A Government-Subsidized Study Claims that Men Are Better Doctors than Women”! Mrs. Grundy (whose opinions have moved along with the times) would turn in her grave. In this area like in others, a free market in ideas is essential to the search for truth. Let’s return to John Stuart Mill and how he justified the formal freedom of women to compete with men in all occupations, a more enlightened approach than the coercive one we are now used to. In The Subjection of Women, as I previously wrote on this blog, Mill argued that the emancipation of women would benefit everybody in society (or, should we say, would satisfy general rules beneficial to everybody) by allowing each person to contribute to the activities in which he or she perform best. Mill viewed discrimination against women as either harmful or superfluous. It was harmful if it prevented women from competing and proving themselves better than, or as good as, their male counterparts. It was superfluous if women could not or would not compete in certain jobs or tasks–garbage collectors, say. Mill saw no reason to prevent women, especially with discriminatory laws, from competing in any field of activity, but no reason for the government to help them either. What’s important is the formal liberty to compete, whatever the result is, whoever proves better at responding to market preferences. ****************************** Those who have struggled with DALL-E will understand my frustration. The image was supposed to show male and female doctors on each side of a wall. But the bot did not understand. For more than an hour (for example), I tried to have him replace the woman standing up on the men’s side with a male doctor, or at least replace the head of the woman with the head of a man. I tried to teach the robot the secrets of life and the basics of anatomy. I finally gave up. Here is the image, in all its robotic imperfection. (1 COMMENTS)

People on the far left tend to overstate the extent to which all of the world’s problems are caused by nefarious US policies. On the other hand, I suspect that average Americans have no idea as to the extent to which the US bullies smaller nations. For instance, I hear people saying that foreign nations “take advantage” of the US in trade agreements, whereas exactly the opposite is true. We use our economic power to force trade concessions from smaller nations. And with respect to GDP at market prices, all nations are “smaller nations”. Over the past several decades, Switzerland has repeatedly slipped into deflation, partly as a result of a very strong currency.   Here is Switzerland’s inflation rate from Trading Economics: Because Switzerland has a relatively flexible economy, these brief periods of mild deflation have not caused great macroeconomic damage.  Nonetheless, in order to prevent a slide into even deeper deflation, the Swiss National Bank has often been forced to cut interest rates to ultra-low levels, and do asset purchases (QE) that are many times larger than anything done in the US or EU. Here’s the Financial Times: Serial central bank interventions persisted with the sale of freshly minted electronic Swiss francs in an effort to avoid the deflationary implications of steadfast currency strength. These interventions inflated the SNB’s balance sheet to a peak of around 140 per cent of GDP. Back in 2022, the SNB suffered a loss equal to 17% of GDP when interest rates rose and bond prices fell.  So why doesn’t the SNB adopt a monetary policy that would lead to a weaker currency, in order to avoid being forced to have ultra-low interest rates and an extremely bloated balance sheet?  Part of the problem seems to be that the SNB misunderstands the fundamental cause of their dilemma (an issue I discuss in detail in my most recent book.)  But one contributing factor is US government bullying, pressing Switzerland to strengthen the franc even further: With rate cuts unlikely to move the dial, and capital controls unthinkable, the choice is between further intervention and genuine free float. In 2020 the US Treasury — rightly — labelled Switzerland a currency manipulator, putting diplomatic pressure on the SNB to desist. Stop to think for a moment about the bizarre nature of this state of affairs.  Over the past 50 years, no currency has been stronger than the Swiss franc.  None.  And how does the US government respond to this situation?  By bullying Switzerland to make its currency even stronger. When you’ve done something to an extent greater than any other country on Earth, and you are told that your problem is that you aren’t doing enough of that thing, that’s a telltale sign that you are receiving advice from people with a highly flawed model of the economy. I frequently argue that low interest rates and big QE programs do not represent easy money, and that many conventional economists confuse cause and effect.  But why should anyone believe my contrarian take? Back in January 2015, I said Switzerland made a mistake when it allowed its currency to appreciate sharply, after successfully pegging it to the euro for more than three years.  I suggested that this could push Switzerland back into deflation.   Conventional economists suggested that this action was required in order to avoid a big increase in the SNB balance sheet.  All of my fears proved true.  Switzerland immediately slipped back into deflation, which led to a policy of negative interest rates.  As investors perceived that the Swiss franc would likely appreciate against the euro, the demand for Swiss currency soared much higher.  The SNB responded by expanding its balance sheet to 140% of GDP.   Switzerland is not the only country that the US has bullied into deflation.  Our government also pressured the Japanese to strengthen the yen, with similar results.  PS.  It’s interesting to look at some current account surpluses (for 2024), as a share of GDP (from The Economist magazine): Singapore:  19.7% of GDP Taiwan:  14.2% of GDP Netherlands:  8.6% of GDP Switzerland:  7.3% of GDP Germany:  6.6% of GDP Japan:  3.2% of GDP Euro area:  3.1% of GDP China:  1.2% of GDP Which country has the smallest trade surplus of this group, as a share of GDP?  Which country’s trade surplus is obsessed over by the US media? Which country has both political parties and much of the media labeled an enemy of the US?  Notice a pattern?   (The actual Chinese surplus may be somewhat larger than 1.2% of GDP due to measurement errors, but it’s still far below many other nations.) (0 COMMENTS)

  In response to my latest EconLog post, “Competition Works, Even in Health Care,” August 17, 2024, a number of you commented or sent emails or Facebook messages expressing your concern. I appreciate all of you who did. Yesterday, I got some pretty great news. Then biopsy had yielded 12 tissue samples. 10 showed no sign of cancer. 2 showed evidence of cancer but the Gleason score on each was 3 plus 3. That’s apparently what one hopes for from a Gleason score. The Gleason score, as you might guess, is named that famous comedian Jackie Gleason. No, seriously, it’s named after Dr. Donald Gleason. By the way, I am not planning to make EconLog the place where I post about my health. I will do that only on my davidrhenderson Substack, “I Blog to Differ” and/or on my Facebook page. The only reason I mentioned my health on my Sunday post was to tell my competition story. So the only posts in the future where I talk about my health on EconLog will be ones in which there’s an economic component. Thanks again for all the good wishes. The accompany picture is of comedian, and noted medical researcher, Jackie Gleason. (0 COMMENTS)

A while back, I posted about a few different things I think are true, with a request for people to offer up what might change my mind. Unfortunately, the responses I got were generally what I specifically said I was not looking for. I was hoping to get some recommended reading, where people identified books, essays, etc. that made what they consider the best, most comprehensive case for a contrary view, rather than simply identifying a point they disagree with, followed by a three sentence explanation about why.  However, there is a consolation prize – one of the quintessential bleeding-heart libertarian philosophers, Matt Zwolinski, recently and coincidentally posted some thoughts critiquing one of the ideas I listed – the moral parity thesis. This is the idea that, as Zwolinski phrases it, “if something is wrong for individuals to do, then it’s wrong for governments to do as well.” Or, as Dan Moller phrased it in his book Governing Least, “it should at the very least give us pause if we are advocating social institutions that enshrine a moral logic we reject in face-to-face encounters.”  Zwolinski raises two concerns regarding the moral parity thesis. One, the moral parity thesis has radical implications, in that “it implies that almost everything that governments do – from drug criminalization to social welfare to taxation itself – is morally illegitimate.” It also has troubling implications regarding the case of children – or at least it seems to have little useful to suggest.  The second objection is the idea that we can’t “extrapolate social morality from the morality of individual behavior.” That is, social morality might be an emergent phenomenon, “which is grounded but not manifested in the behavior that gives rise to it.” If this is the case, rules about how we should behave in individual, face-to-face encounters might very well be a poor guide to understanding rules that govern large scale social interactions. If social morality “is a fundamentally evolutionary phenomenon that emerges from our collective attempt to solve the problems inherent in social co-existence”, we can’t expect to answer those questions entirely by reference to individual encounters any more than you could derive properties about the ocean from the study of individual H2O molecules.   These are interesting thoughts, but I don’t find them successful in undercutting the moral parity thesis. I’ll have one post upcoming dedicated to each objection, and explain why Zwolinski’s concerns haven’t persuaded me. But to give a preview – I disagree with Zwolinski’s claim that the moral parity thesis implies the illegitimacy of things like social welfare programs. One can accept moral parity, and still conclude that taxation and welfare programs are permissible. My next post will be providing an argument in favor of the welfare state that assumes the legitimacy of moral parity.  After that, I’ll follow up with another post talking about the emergence objection, and why I don’t think it undercuts moral parity either.      (0 COMMENTS)

Why should one believe something to be true? It is disquieting how otherwise intelligent people believe implausible interpretations of events or grandstanding pronouncements on religion or society from the gurus of the day. Elon Musk is known for his impulsive one-liner philosophy, and his theological and political musings mentioned by Wall Street Journal columnist Tim Higgins (“Elon Musk’s Walk With Jesus,” August 17, 2024) seem to be in the same vein: Elon Musk is publicly offering his own interpretation of Jesus’ teachings with an Old Testament twist. … We are increasingly seeing Musk invoke religion as he discusses his worldviews on topics ranging from parenthood to freedom of speech. … “There’s a lack of empathy for the victims of the criminals and too much empathy for the criminals,” Musk said. “That’s why you want to have deep empathy for society as a whole, not shallow empathy for criminals.” Why should anybody attach any importance to what Mr. Musk thinks about the unicorn of “society as a whole”? What should lead one to believe something? Scientific proof must be at the top of the justifications for beliefs. If a coherent theory forecasts a result and empirical evidence confirms it, it should be believed—until contrary empirical evidence provides a falsification. In the field of social science—that is, economics or economic methodology—one example is the law of demand. There is no logically coherent theory implying that people will buy more of something only because its price has increased. On the contrary, economic theory proves the opposite, like a theorem in Euclidean geometry. (When a luxury good is purchased as a status symbol, it is status that is purchased, and the quantity demanded of status symbols will decrease as they become more expensive. This explains why not everybody buys Louis Vuitton baseball caps at 500€ a piece.) Casual observation and econometric evidence show that, ceteris paribus, the quantity demanded decreases when the price increases, and mutatis mutandis. Given free will, it is not impossible that an eccentric would once in a blue moon buy one more piece of bubble gum just because its price has increased, but that will not shift the market demand curve in a detectable way. A related implication of economic theory is that an explanation must be compatible with incentives of individuals, who maximize their utility—that is, who try to improve their situations as each evaluates it according to his own preferences. For example, it would have been very surprising if the Sandy Hook massacre had been staged by the deep state because such an operation would not be incentive-compatible for individual government agents in an open society with some rule of law. (Note that Elon Musk did not believe that particular conspiracy theory.) I have mentioned logical coherence, which is a basic condition for believing that something is true. The ancient Greek philosophers made that discovery. If a belief implies both A and non-A, it must be rejected. In the whole wide universe, there is much that we don’t understand and that we cannot hope to understand; Gödel’s incompleteness theorem is only one indication. Perhaps we must keep a little window open for subjective faith along with music and poetry. Ten years before being awarded the 2912 Nobel Prize in medicine, French physician Alexis Carrel, an atheist, converted to Catholicism after witnessing what he could only explain as a miracle at the Lourdes pilgrimage center. (It did not help his career in France and, by 1912, he was living in the United States.) We should still maintain a dose of rational skepticism: in his book The Impossibility Principle (Farrar, Straus and Giroux, 2014), statistician David Hand shows how miracles and “miraculous” coincidences can often (he would say always) be explained with probability theory. In the realm of social behavior, as F.A. Hayek showed, we must also leave room for the meta-rationality of following social rules that have demonstrated their usefulness as an adaptation to our ignorance. Only the gullible believe social gurus or philosopher-kings who have not demonstrated any structured knowledge and understanding of how society (including politics and the economy) works, and who pretend to know the “public good” and to dictate how others should live. Gullibility seems to seems to have the wind in its sails. We may relate these reflections to three recent thinkers who have much advanced our knowledge of social affairs and debunked the pretensions of would-be philosopher-kings. Anthony de Jasay argued that a social convention of “live and let live,” when it involves no harm to others, “demands far less of our moral credulity” than other political principles. In their seminal book, The Calculus of Consent, James Buchanan and Gordon Tullock offer an interesting remark: Christian idealism, to be effective in leading to a more harmonious social order, must be tempered by an acceptance of the moral imperative of individualism, the rule of equal freedom. The acceptance of the right of the individual to do as he desires so long as his action does not infringe on the freedom of other individuals to do likewise must be a characteristic trait in any “good” society. The precept “Love thy neighbor, but also let him alone when he desires to be let alone” may, in one sense, be said to be the overriding ethical principle for Western liberal society. In Why I, Too, Am Not a Conservative (Edward Elgar, 2006), James Buchanan, who was far from an elitist, strongly defended structured knowledge. Reviewing this book in Regulation, I paraphrased what he saw as one requirement of a free society: Individuals must understand “simple principles of social interaction,” and that entails “a generalized understanding of basic economics.” Or else, Buchanan claims, they must show “a widespread willingness” to defer to others who do understand. As far as I can see, Mr. Musk is far from any sort of structured social or philosophical knowledge. That he has demonstrated entrepreneurial intuition and talents (see Israel Kirzner, Competition and Entrepreneurship [University of Chicago Press, 1973]) gives him no special intellectual authority to pronounce on matters of theology and politics. We don’t even have to note that he seems to be also (or mainly?) an efficient rent-seeker. The most dangerous gurus are political gurus—“political” in the sense of wanting to force others to live in certain ways or pay for others’ privileges. Certainly, there is no reason to believe something only because Musk says so. (0 COMMENTS)