Regular readers here know that myself and my co-bloggers (both present and former) spend a lot of time talking about the problems of central planning.[1]  There are many, many problems with central planning: the Hayek-Lavoie knowledge problem, issues revealed by public choice analysis, and so on.  In this post, I want to highlight a big one: creativity. Human beings are insanely creative.  Seemingly unique in the world, we are abstract thinkers and often find ways around what appear at first to be insurmountable problems.  Every day, new inventions, innovations, music, and art come about to solve some problem and/or make our lives better.  When we want something, we can make it happen.  Indeed, Ball State University economics professor James McClure places that creativity as the core of economics: The economic problem of society is rapid adaptation, in the face of resource scarcity, to changes in the particular circumstances of time and place. This creativity is a problem for central planners.  Central planners tend to think of the economy not as a complex system of relationships among people, but as a system that’s more like water flowing through a pipe.  If you don’t like the course, simply pull some lever and change it.[2]  What central planners fail to appreciate is that the economy is not like water in a pipe, but rather the result of billions of people pursuing their goals, given their constraints and alternatives.  These goals are chosen by the people themselves.  And when barriers toward those goals are thrown up, say by some central planner who wants the people’s goals to be different, people find creative ways around those barriers.  Those creations may be illegal in nature (e.g., smuggling) or may become a whole new way of doing things. Of course, not all forms of creativity are equal.  People may get creative in gaming the system to get what they want out of it at the expense of others (e.g., rent-seeking). Regardless, creativity poses a problem for central planners when their plans do not come to fruition.  The central planner must then devote more resources to their plan to check these new behaviors not aligned with the plan.  And again, more resources are then consumed by people to be creative in getting around these new barriers.  Consequently, we have a sort of arms race.  More and more resources are spent, but there is no relative gain by either side.  Even assuming the central planner’s plans aren’t frustrated, the resource cost is significantly higher than expected.  Consequently, other plans by the planner are necessarily frustrated.  Even if the central planner didn’t suffer from the knowledge problem or face public choice constraints and had perfect information about outcomes that could be improved, this arms race tells us that it is quite unlikely that central planning can improve upon market outcomes. Long story short, central planning gets frustrated because people are people.   —— [1] Note: Historically, “central planning” has referred to total government control of the economy.  I am using the term more broadly to include all sorts of government interventions and schemes including (but not limited to): industrial planning, wartime planning, social-justice interventions like income inequality measures, “leveling the playing field,” and so on. [2] This metaphor is deliberate.  Economists borrow heavily from fluid dynamics. (0 COMMENTS)

Some 500 economists work for the Federal Reserve System. This is probably more than the entire dismal science faculty at all eight Ivy League Universities, perhaps with Chicago and Berkeley thrown in for good measure. If the Fed were disbanded, they would all have to seek other work, perhaps leading to prosperity. Under the present institutional arrangements, they undermine the economy. On the other hand, this is an empirical issue. Presumably, many of them would obtain faculty positions, on the basis of which they would be inculcating their charges with the same voodoo economics with which they ruin the economy. Why? How so? That is because one of their present roles is to determine, among other things, the interest rate. Thus, this job of theirs is “beneath contempt.” From whence did this phrase spring? It comes to us courtesy of an economist who has been accurately characterized as a “national treasure.” Here is the quote from Thomas Sowell (from Sowell’s textbook, Basic Economics) to which he refers: “Another reason for public support for protectionism is that many economists do not bother to answer either the special interests or those who oppose free trade for ideological reasons. The arguments of both have essentially been refuted centuries ago and are now regarded by the economics profession as beneath contempt.” Well, so it is for price controls, and, as interest rates are a price, just like that of imports, so too is controlling them via the Fed’s central planning “beneath contempt.” Moreover, if there is anything we have learned both from theory and practice, it is that price controls create economic disarray. Have we learned nothing from the almost perfectly controlled experiments of East and West Germany, North and South Korea, a true rarity not only in economics, but in all of social science? Presumably not, otherwise the Fed would never have lasted as long as it so far has. Central planning never works and never will work. Prices, market prices, free market prices, are the eyes and ears of the economy. Without them, we would not know whether it is economically better to use platinum or steel for railroad lines. The former can do a better job. But its market price is so high we may do no such thing, if we want to allocated resources productively. Its relatively high price indicated that this metal should be used for more important purposes elsewhere in the economy, and lower-priced steel for this use. Ditto for interest rate prices. Should we build a tunnel through the solid rock mountain, or a far longer road all around it? The former will cost far more right now and will take many years to come online, maybe decades. But it will save money for centuries, most likely in terms of reduced travel outlays. The circular road will cost less and will be available for motorists much sooner. It will last longer, and be in less need of repair, given that the danger of cave-ins will be comparatively minimal. If the interest rate is high, we will veer in the direction of the road. We will heavily discount the roundabout process of the tunnel. If low, the shortcut in terms of vehicle mileage will be more attractive. But this assumes a market rate of interest, not one concocted out of whole cloth by a bunch of central planners scattered all around the country, who pay no price, none at all, for being wrong. We have not yet said anything about the second job of the Fed: maintaining the value of the dollar. It has lost some 97% of its value from the time of its inception in 1913 to the present time. On that ground alone, it ought to be disbanded, forthwith, and salt sowed where it once stood.   Walter E. Block is Harold E. Wirth Eminent Scholar Endowed Chair and Professor of Economics at Loyola University New Orleans. (0 COMMENTS)

Occasionally, I use a grocery delivery service—not always, and not for every item. In a vacuum, one might think that having someone else take the time to gather grocery items for me and bring those items to my house seems clearly advantageous. So why don’t I always use this service? A few ideas from economics help explain why. For one, it’s not always the case that the time spent grocery shopping is purely a cost. While I know this isn’t true of everyone, I actually rather enjoy grocery shopping. Walking up and down the aisles of the store, chatting with my kids—that’s something I look forward to doing every weekend. Having all my groceries delivered would mean losing those outings, and I don’t particularly want that. Whether the time and effort of going out shopping is a cost or a benefit is subjective—it depends on the person doing it. Given my preferences, why do I ever use grocery delivery? Most of my grocery and general household supply shopping is done with a weekend Target run. However, there is a handful of grocery items I like that aren’t typically carried by Target but are usually available from Whole Foods. The nearest Whole Foods locations aren’t particularly convenient to where I live, and especially not relative to the Target where my weekly shopping runs occur. Tacking on an additional stop at Whole Foods (or finding some other time to insert a Whole Foods run) for a relatively small selection of items is too high a transaction cost in terms of time and effort. There is a delivery fee, but that is well worth saving the time and effort of a secondary stop. I’ve found that most produce items from Whole Foods are better than they are from Target. Despite this, I usually get my produce from Target rather than including them in my Whole Foods delivery. If I’m going to place a Whole Foods order anyway, and if produce from Whole Foods is generally better in my estimation, why don’t I just get those items from the grocery delivery service? There are two reasons: information asymmetries, and a principal-agent problem. Information asymmetries prevent potential gains from trade from being made when both parties don’t have the same information. For example, when I buy bananas, I try to get a small bunch of bananas that are yellow (to be eaten over the next few days) and a small bunch that are green (which will be ready to eat by the time the first bunch is done). A store employee picking out items for me doesn’t have access to that information, so the bananas I’d get wouldn’t line up with what I actually want. The same is true for an item like avocados. Another example: when I’m in the store, I try to get a sense of how far away the avocados are from ripening before I buy them based on how firm they are. The window between an avocado that’s a bit too underripe and one that’s overripe to the point of being a disgusting mess is fairly narrow (by my estimate, the window for an avocado to be “just right” lasts approximately thirty-seven seconds). Someone at the store doesn’t know that I’m buying an avocado for a recipe I intend to try out on Thursday, so they don’t know which kind of avocado would be best for me to get. When the store shopper doesn’t know my preferences, I don’t get what I want for the price I pay, and potential economic value isn’t realized. The principal-agent problem occurs when I have someone ostensibly working on my behalf, but their incentives don’t align with what would best serve my interests. When I’m getting, say, raspberries from the store, I often take a bit of extra time to sort through the selection available. Often, there will be at least some cases of berries where the fruit inside has gotten squished, or some of the berries are already starting to look a bit wilted. For me, it’s worth it to take the extra time to sort through the available selection and find a batch that looks good. But someone packing groceries for a home delivery order has different incentives. Their goal is to pack up this order as quickly as possible and move on to the next one. They don’t have any particular incentive to stop and spend extra time sorting through the produce to find the best-looking available batch. None of what I’ve just described is especially cutting edge—but that’s part of the point. As I’ve argued before, many ideas in economics can be easily recognized in how we make choices in everyday life. Economics is rooted in human behavior. The lessons and ideas of economics are like the water in which fish swim—it surrounds us so thoroughly that it becomes almost invisible from its own ubiquity. (0 COMMENTS)

Why are some people cruel? Why are some governments cruel? Do cruel governments require cruel citizens? I take cruelty to refer to Merriam-Webster’s definition of cruel as “disposed to inflict pain or suffering: devoid of humane feeling.” An individual is cruel who has a taste for cruelty, i.e. cruelty is an argument of his utility function. He will satisfy this preference when he can do it at a price that he considers acceptable. This is the standard price theory model, which remains useful despite all its critiques: the individual maximizes his utility given his preferences and the constraints he faces. Why are some governments cruel, whether we are speaking of the Russian government intentionally attacking Ukrainian civilians and torturing prisoners of war, or the American government inflicting pain or distress on immigrants? (Of course, there is a difference in degree between these two cases of cruelty.) It is a matter of incentives: if those who disobey government decrees risk not only punishments but cruel punishments, disobedience is reduced. In short, governments use cruelty when it contributes to the realization of their policies, and no constitutional or other binding constraints exist. A government (or “the state”) is not a supernatural being or a biological organism, but an organization of individuals who determine policies or enforce them. Cruelty in public policy depends on the costs and benefits of the individual rulers, their agents, and their supporters (at least their important supporters). A cruel government is made of, or supported by, cruel individuals, but the process of public choice may increase the extent of cruelty. For one thing, the cruelty of a government will increase through selection. Individuals with a taste for cruelty will self-select for government roles: politicians, prosecutors, security personnel, torturers, etc. A government known for its cruelty will attract more cruel rulers and servants—which is related to Friedrich Hayek fear of the rule of the worst (see his 1944 book The Road to Selfdom; see also my review of this book). Cruelty will likely increase as political rulers discover that hatred can be used to further their ambitions. Scapegoats, preferably unarmed and defenseless, are useful for a politician to both explain away his failures and enflame his supporters. Propaganda can present hated or to-be-hated minorities as “the worst of the worst” or “animals.” The more the rule of law has been compromised (at the limit, up to the aphorism attributed to Lavrentiy Beria, Stalin’s secret police chief, “Show me the man and I’ll find you the crime”), the more we would expect cruelty to follow hatred. Economist Edward Glaezer modeled the supply of hatred by politicians and the demand for it by voters. In his model, the supply of hatred depends on the existence of minority groups or “out-groups” that can be turned into scapegoats (the Blacks not so long ago, the immigrants today) and thus help “entrepreneurs of hate” in political competition. Other things being equal (including the individuals’ taste for cruelty), the demand for hatred is favored by “citizens’ willingness to accept false hate-creating stories [as] determined by the costs and returns to acquiring information” (Edward L. Glaezer, “The Political Economy of Hatred,” Quarterly Journal of Economics, Vol. 120, No. 1 [February 2005], pp. 45-86). Since the typical citizen’s probability of changing the result of an election is infinitesimally small and the cost of political information remains very high—despite or because of social media—the voter will remain rationally ignorant and tend to hate the people his political tribe hates. Constitutions, norms (morals), religion (or at least certain forms of religion), trade, and other soft habits of civilization (les mœurs douces) can act as constraints to cruelty. They decrease the demand for it or limit its supply. In his book The Problem of Political Authority (see my review), philosopher Michael Huemer observes that, over a certain period of time, mores have become softer, more respectful of individual dignity, and less cruel. Political authorities may have helped but, past a certain point, the constraints on them can collapse, perhaps suddenly like an avalanche. Totalitarian regimes illustrate this. The North Korean or Russian states are not less cruel than political authorities in the High Middle Ages. Past a certain point, the state may contribute not to civilizing mores but, on the contrary, to fueling cruelty. Cruel governments don’t require cruel people or at least not a majority of them, and perhaps only a small faction. Many factors explain that. First, a government can contribute to making its subjects cruel through political hatred, propaganda, and selection (pulling the cruel to the top), as suggested above. Second, it appears easy to be cruel only toward foreigners or domestic minorities whose support the government doesn’t need. Professor Rudolph Rummel of the University of Hawaii estimated that, during the 20th century, states killed millions, if not hundreds of millions, of their own citizens, excluding interstate wars. Third, let’s not forget the Condorcet paradox: in a democratic society, an electoral majority can very well “prefer” the rule of law to despotism, despotism to poverty, poverty to cruel government, but then cruel government to the rule of law—as revealed if and when the latter alternative is the one put to the vote. Finally, note that political cruelty is a boomerang. Nothing guarantees the demanders of cruelty that the cruel enforcers of their demand will always only target others. The brutes live among the people. The Roman legions are stationed in Rome. ****************************** The Roman legions in Rome, as viewed by ChatGPT (0 COMMENTS)

Who defines and enforces property rights? If you are the average person, an undergraduate student, or even a mainstream economics professor, that answer is easy: the government. Look it up! Municipal and county governments determine the deeds to your property and various usage rights including wetland setbacks and easements. State governments create regulations that affect residential and commercial property and how businesses may go about their business. And the federal government controls patent and copyright protections, sets environmental policies, and enacts many other rules determining how one can use real estate and intangible assets. Sometimes property rights are not well defined, particularly when some new “thing” arises from technological innovation. The explosion of the internet in the 1990s posed a challenge to the ownership of information. Artificial intelligence is doing something similar today. But even when such novel situations arise that require defining ownership and usage, we still reflexively defer to government as the primary (if not sole) source for defining property rights. But what if I told you that there was a bigger and more amorphous entity that determines who owns and how we use all the stuff and junk in our daily lives? And what if I called that entity “civil society,” the spontaneous order of social norms, values, conventions, and rituals that coordinate human interaction without centralized direction? Would you want to know how that works? If yes, allow me a rather trivial example to illustrate the importance that civil society plays in defining property rights. Who Can Take the Shampoo? “Everyone knows” that hotel guests are allowed to take home the small bottles of shampoo and conditioner provided for individual use, not to mention lotion and mouthwash at fancier resorts. Admittedly, I love collecting them and possess several bins of diminutive aromatic toiletries. But recently, major hotel chains have moved away from individualized-use shampoo, substituting large dispensers attached to shower walls. This is ostensibly to minimize the waste and environmental damage that single-use bottles cause. But here is a question that I posed to several very smart political economists at a recent workshop I attended at Wabash College: Is it permissible for hotel guests to take the large dispenser bottles of shampoo and conditioner home? The immediate answer was “no!” But I prodded them, “Why not?” The initial answer was that the bottles were attached to the wall. I quickly volunteered to teach them how to dismantle these wall mounts; it isn’t hard. (Don’t ask how I know this.) The next answer from a prominent scholar proves my point above about our reflexive deference to government. “It is against the law to do that,” he claimed. I challenged him to show me the exact code stating “thou shalt not take thine hotel’s large bottles of shampoo.” While there are indeed laws against theft, there are no laws that specifically refer to hotel shampoo. No hotel that I know of calls the police on customers for taking the small bottles, which are as much the hotel’s initial property as the large bottles. So why is it a matter of just size? Taking small toiletries is fine, but snatching larger ones is felonious? Who says?!? What is and is not theft (i.e., what are the property rights) is what is under contention here. I pushed the matter further by asking if it was acceptable for me to bring small empty bottles on business trips and fill them up with shampoo from the wall dispensers. Here, I would only be taking the amount of soap that I would have taken if the hotel still provided the six-ounce tubes. The reaction of the intellectuals gathered was one of… well… bemused horror? What kind of ne’er-do-well brings empty bottles to pilfer hotel shampoo?! (I invoked the Fifth Amendment.) It didn’t stop there. I asked if anybody took home the half-used roll of toilet paper (a valuable commodity back in the pandemic spring of 2020). How about the towels? “Wait, you can’t take the towels because those can be washed and reused!” Fair point, but can’t small bottles of shampoo be washed out and refilled? “Gill, you’re being ridiculous.” While my questions over breakfast may have seemed silly, it so happens that those same examples became the empirical fodder of discussion for one of the papers being presented at the workshop. The trivial nature of toiletries became the focus of a broader intellectual debate. (For those interested in great debate, I encourage you to toss these questions to your friends and family to see their reactions.) Political Economic Explanations of Property Rights All the questions regarding hotel amenities above are about property rights. As I have yet to fully define the term, property rights are the socially agreed-upon rules about who owns a particular asset and how that asset can be used. Sometimes social agreement comes via government decree. Having paid off my mortgage, I legally own the title to my house and acreage, although my county government has specified that I cannot construct any building within 500 feet of the stream near the back of the property. My rights are not absolute, and I must conform my behavior to a government regulation. That’s the easy political economy explanation—I own and can use what the government tells me I can. But what about those hotel shampoo bottles? The scholar who suggested that one cannot take large bottles of shampoo because it is the illegal also noted that we cannot take the hotel mattresses home. Good point; I had never thought about doing that because most mattresses are hard to fit into a suitcase. Moreover, mattresses are expensive and time consuming to replace; a hotel would likely track the guest down and either force them pay for the mattress or call the authorities to report a dastardly bedding theft. “A claim on the use of an asset is only as good as one’s ability to monitor and enforce any misuse of that thing.” Here we have an economic explanation for defining property rights that conforms to the thinking of eminent scholars such as Harold Demsetz or Armen Alchian. Property rights are defined by the costs and benefits of communicating, monitoring, and enforcing rules. A claim on the use of an asset is only as good as one’s ability to monitor and enforce any misuse of that thing. As such, it is not just a matter of creating a formal rule, but of communicating that rule to others and somehow ensuring everybody obeys. To that end, the costs of creation, communication, monitoring, and enforcement all affect the actual nature of a property right. No hotel manager will find it cost effective to track down someone taking six ounces of hair conditioner. However, they will go after you if you take the mattress or television as those assets are costly to replace. Understanding the costs and benefits of enforcement, we can see why the property rights over small bottles of shampoo shift de facto to the hotel guest. Likewise, there is a regulation in my state that homeowners cannot capture and store the rainwater falling on their land (as it seeps into a underground watershed considered to be communally owned and managed by the government). However, I know that bureaucrats will not be policing my small 10-gallon rain barrel used to store water for my plants in the summer (and they openly acknowledge that). It is not worth the cost of policing such de minimus transgression, thus I de facto own ten gallons of rainwater each year despite the official policy against it. But what about that murky middle ground befuddling my academic colleagues? Will a hotel chase after you if you take the large shampoo dispensers? Or pump the shampoo into a half dozen smaller bottles? Or grab a half-roll of toilet paper for home use? Probably not. Some fancy hotels provide fluffy robes for room use but place a notice that they are not to be removed (or that they can be purchased upon departure). As the asset in question becomes more expensive to replace, the benefits of policing also increase shifting the de facto ownership clearly to the hotel. Clear communication about who owns what is important in this murky zone. (Note: There are websites informing travelers that they can take “complimentary” items provided in hotels, but they don’t define what “complimentary” is, which is a statement of a property right. It is best to ignore those pages and just refer to what you learn below.) A Civil Society Explanation While government regulation and the costs and benefits of enforcement over an asset help explain how property rights are inevitably defined, there is yet another explanation. And this gets to the issue of the toilet tissue. While I stumped my colleagues about whether it was acceptable to fill my own bottles with dispenser shampoo, there was a universal revulsion that anyone would think of taking the toilet paper home. They all thought I was weird for even suggesting it! And therein lies the other answer for who decides property rights—civil society. As it turns out, everybody (and nobody in particular) really decides how we allocate and use different pieces of property encountered in our daily lives. Despite our first reaction that governments define property rights, it would be impossible for any government to do so completely; there are just too many things used in so many different ways that formally codifying rules would be overwhelming. Moreover, how many officially promulgated by government property rules do you know? Not many, I’m guessing. Few people (including lawmakers) read the Federal Register where such rules are defined at the national level. States, counties, and municipalities have their own code books that are also duly ignored by the public. But without knowing the formal government-defined property rights, we all somehow manage to get by because we rely upon a set of social norms and conventions to guide our actions. Consider a city sidewalk. While technically “public property” owned by the government (or “the people”), citizens make private temporary claims on portions of the walkway all the time and in changing ways. When walking in large groups, we yield the right of way to anyone in a wheelchair who needs extra maneuvering space. Shopkeepers keep sidewalks clear to foster foot traffic and shoo away loiterers or buskers. Of course, there are formal regulations that may govern the use of sidewalks (e.g., laws against loitering or begging), but for the most part our use of this important asset is governed by common sense and an appeal to what is “normally” expected (emphasis on the “norm”). There are other examples I provide my students with. Choosing seats in a lecture hall on the first day of class is usually determined by the convention of first come, first served, the most common cultural rule for allocating open access (public) resources. Nonetheless, students will cede specific seats to left-handers or those with a disability needing a front row seat. These are the norms of civil society, and they define how important assets are used. Enter the Impartial Spectator The beauty about property rights being defined by civil society norms is how they are enforced. Sometimes, we resort to shaming individuals for violating common norms of property use. A side glance or a “tsk tsk” is sometimes all we need to get a group of people to walk single file in a crowded hallway or not take two chairs for themselves and their jacket in a crowded conference room. Continued violations may result in ostracism. Punishment isn’t necessarily pre-determined as in a formal legal code but is usually adjusted to meet the circumstances. Flexible justice prevails. But property rights are also self-enforced. As Adam Smith noted in The Theory of Moral Sentiments, humans want to be loved and be lovely; we want others to think well of us by conforming to reasonable social expectations. And when it becomes difficult to know who might own a particular piece of property or how it should be used, we often resort to what Smith calls the impartial spectator. Here, we look at the situation from the outside and ponder how other individuals would be perceived if they made various choices. Hopefully, after performing this assessment, an individual chooses the most socially-acceptable course of action, gaining the esteem of others. This works quite well. Knowing that my colleagues think it strange to take toilet paper from the hotel, I choose not to do so. Social norms dictate such action would bring disapproval upon myself. Notice how strongly this works. While it is unlikely that any colleague of mine would ever know that I put toilet paper in my suitcase, I nonetheless abstain from this action (de facto making the hotel the ultimate owner of the unused tissue, even though it is “complimentary”). If we perform a thorough accounting of our daily choices with respect to different things (i.e., property), it is astounding how much social norms, not formal law, guide our daily decisions. The other beautiful aspect of social norms is that we are all part of the process of contributing to and communicating those norms, as well as monitoring and enforcing them. It is anarchy in action;1 the good kind of anarchy and not the “burn down Portland” kind. The impartial spectator operates in this arena and sensitizes individuals to how their choices impact the broader society. To channel Ronald Coase, we voluntarily internalize our externalities by way of Adam Smith’s “man within the breast”2 and not via “the man of system.” For more on these topics, see “How Property Rights Solve Problems,” by David Henderson. Library of Economics and Liberty, April 2, 2012. “What Arnold Schwarzenegger Can Teach You About the Economics of Property Rights,” by Rosolino Candela. Library of Economics and Liberty, February 6, 2023. “Conscience and Moral Rules in Adam Smith,” by Edward J. Harpham. AdamSmithWorks, August 11, 2021. Anthony Gill’s EconTalk Archive. Norms do slowly change through an uncountable number of tiny negotiations (involving social approval and disapproval) of human action over time. (See Friedrich Hayek’s discussion of this in his epilogue to Law, Legislation, and Liberty.3) It is how we define and redefine “the common good,” even though all may not agree. But this is truly democratic (more so than voting) in that we all become involved in crafting, recrafting, promulgating, and enforcing the property rights that ensure free markets work and that society prospers. For those seeking to promote human flourishing, it is worthwhile to consider not only how to draft formal rules, but to think deeply about how our civic culture determines prosperity. That is something to think about next time you’re shampooing your hair at the Sheraton. Footnotes [1] Anarchy in action is the idea that a viable, stateless society is possible—not through impersonal markets or state enforcement—but through the cohesive, egalitarian bonds of small-scale community relations. This comes from Michael Taylor’s book, Community, Anarchy, and Liberty. (Cambridge University Press, 1982.) [2] Daniel B. Klein, Erik W. Matson, and Colin Doran, “The man within the breast, the supreme impartial spectator, and other impartial spectators in Adam Smith’s The Theory of Moral Sentiments.” History of European Ideas. Volume 44, 2018. [3] F.A. Hayek, Law, Legislation, and Liberty. University of Chicago Press, 2024. *Anthony Gill is Professor of Political Science  at the University of Washington, as well as a Distinguished Senior Fellow at Baylor University’s Institute for Studies of Religion. He is the author of Rendering unto Caesar: The Catholic Church and the State in Latin America and The Political Origins of Religious Liberty, the latter earning the American Sociological Association’s Distinguished Book Award. His research spans political economy, public choice, and the role of social norms. A recipient of UW’s Distinguished Teaching Award, Gill is also known for creating the Research on Religion podcast. (0 COMMENTS)

A central argument of this book is that episodes involving mass violence that contribute to an atmosphere of social unrest and political instability are likely to increase national elites’ willingness to invest in primary education in order to prevent future threats against the state… they lead elites to conclude that repression and redistributive concessions alone are insufficient to prevent social disorder. –Agustina S. Paglayan, Raised to Obey: The Rise and Spread of Mass Education.1 (page 108) In her book Raised to Obey, Agustina S. Paglayan presents the thesis that governments introduced mass education not to empower their citizens, but to control them by indoctrinating them as children. She argues that this thesis is supported by evidence concerning the timing of when states introduced mass education, the arguments that persuaded governments to provide mass education, and the training and direction that governments provided to teachers. By the 1800s, ruling elites were finding that conventional tools of social control, such as a national church, were not sufficient to quiet their populations. Revolutionary fervor emerged as a threat. Rulers became attracted to the theory that primary education could be used to train subjects to obey. Mass education is a relatively recent phenomenon. Paglayan writes, While in the 1850s only one in ten children were enrolled in primary schools worldwide, by 1940 a majority of children had access to schooling, and today, almost all countries provide universal or near-universal primary education. (page 12) She argues that in Europe the spread of primary education preceded industrialization and democracy. The leader was Prussia, which established comprehensive education regulations in 1763… while still maintaining an absolutist regime and an agrarian economy. By around 1850, a majority of children in Europe were already enrolled in primary school. (page 13) In the world as a whole, she summarizes data from more than one hundred countries: … governments began to systematically monitor primary schools on average sixty-five years before democratization. (page 48) Mass education also was not closely tied to industrialization. England was an industrialization leader and education laggard, whereas Prussia was the opposite…. In the early 1850s, many decades after England had begun to industrialize, less than 9 percent of English children were enrolled in primary school. (page 62) The United States was not a leader in primary education, either (although when enrollment began to rise, it did so rapidly). Teacher training was done by so-called Normal Schools. The first one to be established in the United States was in 1839. By that date, “there were already 264 Normal Schools throughout Europe.” (page 59) “Influential philosophers, including Thomas Hobbes, John Locke, and Jean-Jacques Rousseau, were confident that human behavior could be shaped by education.” Influential philosophers, including Thomas Hobbes, John Locke, and Jean-Jacques Rousseau, were confident that human behavior could be shaped by education. Hobbes and Rousseau, in particular, emphasized the need to train children to be obedient. Hobbes argues that education is what makes man fit for society and what ensures social order…. The “instruction of the people in the essential rights of sovereignty” by the sovereign is therefore “not only his duty, but his benefit also,” because this education provides “security against the danger that may arrive to himself in his natural person from rebellion.” (page 95) She quotes Rousseau in his Discourse on Political Economy, writing that “there should be laws for childhood that teach obedience to others” and that, “Public education under rules prescribed by the government, and under magistrates prescribed by the sovereign is, then, one of the fundamental maxims of popular or legitimate government.” Rousseau’s work illustrates the different types of education that Enlightenment philosophers envisioned for elites versus the rest…. Emile, however, is not a book about mass schooling; it focuses on the upbringing of a rich man’s son by his private tutor. The pedagogy… differs from the idea he advances in other works that the state should educate all children for the sake of cultivating obedience. (page 99) The Prussian model for schooling, which was admired and adopted elsewhere, was explicitly authoritarian. One of its primary theoreticians was Johann Felbiger. A school manual for teachers written by Felbiger in 1768 instructs teachers that every student must memorize the following answers: Q: Who is subject to the power of the ruler? A: Everyone… Q: From whence comes the power held by the ruler? A: This power comes from God. Q: Whom does God ordain? A: Everyone who holds authority. Because all who exercise authority are ordained by God, subjects must be submissive, loyal, and obedient, even to a ruler not of our religion… Q: What does it mean to resist authority? A: To resist authority is to rebel against the divine order. (page 104) Also in Prussia, … the king himself expressed the concern that if peasants learned too much, they might reject their place in society and migrate to the cities in search of better opportunities. The solution, according to his policy advisers, was to establish separate mandatory curriculums for rural and urban schools so that what children learned in rural schools would prove worthless in getting a city job—an approach that was adopted by other countries. (page 197) Paglayan carefully reviews the historical development of state-run mass education. She claims that, … the main goal driving the creation of national primary education systems was to shape the moral character of the lower classes to eradicate their “barbaric,” “violent,” “anarchic” predisposition and thus prevent future episodes of mass violence. (page 123) Because rulers saw education as a critical tool for maintaining order, they took a strong interest in how schooling should be undertaken. To successfully expand primary education in accordance with the state’s goals, states also needed a large number of teachers who had both the willingness and ability to implement the state’s educational agenda—an “army of teachers.” What was to be done to ensure that teachers would be loyal agents of the state inside the classroom? Here, central governments became directly involved in training aspiring teachers through state-controlled institutions often called Normal Schools, a name that alluded to their goal of normalizing or standardizing every aspect of teaching. In addition, most national laws of the nineteenth century established teacher certification requirements, including the requirement for aspiring teachers to show proof of their moral uprightness. (page 184) For me, Paglayan’s thesis raises a number of questions. • Did the state-sponsored primary schools achieve their intended goal of indoctrinating the masses? • If so, did they achieve this goal too well? Does this explain the otherwise puzzling fact that by 1914 the masses were enthusiastic supporters and willing participants in the brutality of the First World War? • To what extent do ruling elites continue to control primary schools today? • To what ends do today’s elites try to shape schooling? • How significant is it that schools of education in America (the contemporary equivalent of Normal Schools) are far to the left? • Is state control of schooling still necessary to ensure social order? • What would society look like without heavy state involvement in primary schooling? For more on these topics, see “Is State Education Justified? An Appreciation of E. G. West’s Education and the State,” by Kevin Currie-Knight. Library of Economics and Liberty, April 6, 2020. Diane Ravitch on Education. EconTalk. “Educational Despotism,” by Richard Gunderman. AdamSmithWorks, September 1, 2021. Her thesis is that government’s interest in primary schooling was to indoctrinate children to obey. Other histories of schooling tend to tell a much more benign story. If Paglayan is correct, then libertarians ought to be even more inclined to make the case for separation of school and state. Footnotes [1] Agustina Paglayan, Raised to Obey: The Rise and Spread of Mass Education. Princeton University Press, 2024. *Arnold Kling has a Ph.D. in economics from the Massachusetts Institute of Technology. He is the author of several books, including Crisis of Abundance: Rethinking How We Pay for Health Care; Invisible Wealth: The Hidden Story of How Markets Work; Unchecked and Unbalanced: How the Discrepancy Between Knowledge and Power Caused the Financial Crisis and Threatens Democracy; and Specialization and Trade: A Re-introduction to Economics. He contributed to EconLog from January 2003 through August 2012. Read more of what Arnold Kling’s been reading. For more book reviews and articles by Arnold Kling, see the Archive. As an Amazon Associate, Econlib earns from qualifying purchases. 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One common criticism of capitalism is that it has sparked an epidemic of loneliness. This is often attributed to the individualistic nature of capitalism, and to the fact that markets have replaced a variety of more personal and communal connections with commercial activities. Karl Marx indeed expected that this trend will go as far as replacing even family relations and friendships with commercial interactions. How could that not make people more lonely? And yet, the reason why markets have been expanding into personal life is that markets provide a certain convenience. Instead of having to deal with a community, which will often have somewhat inconvenient (or downright oppressive) rules, you can now try to do things on your own, increasingly in virtual space, by finding willing partners who share your views and preferred terms of interaction. In the process, however, you as an individual may be losing something important, a sense of meaning that only genuine community can bring. The cost of choosing this market convenience is loneliness and losing a more profound sense of happiness that can only come from belonging. And because so many people get temped by this convenience, the argument goes, we are now experiencing an “epidemic of loneliness”. This sounds plausible, but I want to offer a different, simpler and, I think, better, explanation for this kind of phenomenon. The explanation that I have in mind is better equipped to understand how far reaching the issue is, and to explain the problem without abandoning the value of individualism, and without undermining our ability to be critical of the oppressiveness of many communities. This explanation is based on how improvements in our technologies for search lead to an over-optimistic increase in our standards of quality. Better search can, paradoxically, lead to the subjective perception that the search results are worse. How Do People Find Partners? Consider the problem of finding a partner in the 1950s. You would search for a partner within a very small group, your immediate geographical and cultural community. Undoubtedly, there would be many substantially better partners for you even in the slightly larger surrounding area, but your ability to search for them was severely limited. The technology of search, and by “technology” here I mean the entire social environment that facilitates the search, was just not very capable. The technology of search was limited to word of mouth and very short chains (1-2 people) of in-person interactions. Maybe your gregarious sister played matchmaker and found you a wife or husband, but surely there was a wider selection of partners out there that she just didn’t know about. Nonetheless, despite this bad search process, it would often work out just fine. You would choose a partner and have a family. You would be less likely to be lonely than you are today—or at least less likely to admit it in a survey. And yet, you would choose that partner because your field of selection and quality standards would be very low (by our contemporary standards). And often it wouldn’t work out so well at all. Many women in the 1950s would end up with bad husbands and yet not divorce them. Husbands who would get drunk and rape them, occasionally beating them and their children. Husbands who would not do much to help around the house or help raising the children. In the even earlier years of the 20th century the problem of drunken and deadbeat husbands was so widely recognized that factories like Ford adopted heavily paternalistic policies and established a “Sociological Department” which monitored workers’ alcohol consumption and required abstinence as a condition for receiving the famous $5-per-day wage (Snow 2017). This included unannounced visits to evaluate workers’ home conditions. adopted the practice of refusing to give the paychecks to the men working in the factory, and instead handed the money to their wives. When they were handing the money to the husbands, too many of them would immediately drink it away, with severe consequences for their families — and, even more importantly from Ford’s perspective, causing disruptions to the factory production. This is just one example of the paternalistic efforts of early capitalist enterprises. The factory sirenssignals (whistles and bells), calling the workers to show up to work, are a more famous example. The sirenfactory signals wereas needed because the men, previously used to working in agriculture, which did not have such strict time requirements, had to be taught the importance of showing up on time (Thompson 1967). As Thompson (1967) notes, the introduction of public clocks, designed to create a shared concept of exact time, as well as public schooling, operating under a strict schedule, were similarly designed to instill the importance of a precise schedule. By the mid-20th century such severe paternalism waned, as the capitalist enterprises had succeeded in domesticating the men to some extent. Today, most people find their partners online, using dating websites or apps. (See Figure 1.) In many regards, these tools have the exact opposite issues compared to dating in the 1950s. These apps show you a huge pool of potential partners, and, while very far from perfect, they do a better job at matching compared to picking up a random stranger in a bar. These apps are also substantially cheaper than a bar, both in terms of money and time. Going to a bar to pick up someone is not cheap. It takes up a lot of time and has low guarantees of a relevant match. By contrast, with an online dating app, you might spend an hour a day sending messages, which results in many more dates, with higher probability of relevance. In my own case, I found my wife in about one year, during which time I’ve had many more dates than without the app. Figure 1. How Couples Meet in the United States: 1950-2020Source: “How Couples Meet and Stay Together,” by M.J. Rosenfeld, Reuben J. Thomas, and Sonia Hausen. Analysis of original survey data cleaned to not double count couples who first met online. The opportunity cost of going to a bar is also much larger today than in the past—going to a bar means giving up on playing video games or enjoying a personalized service like Netflix. The only exception where the social environment of a bar is still (perhaps) better than private home entertaining is watching sports. The bottom line here is that modern search technology is far better than in the past (although far from perfect) and better adapted to the opportunity costs raised by modern home entertainment. Now, here is where the Marxist critique omits something important. One key consequence of this better search technology is that people’s quality standards go up. Few women today would take the kind of abuse that 1950s women regularly experienced. Why not? Because women have better search and better exit options. It’s not just a change in culture occurring due to persuasion and argument, due to feminism and liberalism. It’s also the result of better technology and of women starting working—in markets! Surely many people in the 1950s already understood that marital and child abuse were bad, but the ability to actually do something meaningful about it was lacking. It was the better search and better exit options that capitalism has brought that truly made a difference. The fact that women became more financially independent thanks to their more widespread participation in the labor market did more for women’s liberation than anything else. Husbands who would’ve been abusive in the past think twice today, because they know their wives have realistic exit options. “The ‘epidemic of loneliness’ can be understood as being caused by standards increasing faster than the actual capabilities of our search technologies.” And here is where my alternative explanation comes in. The “epidemic of loneliness” can be understood as being caused by standards increasing faster than the actual capabilities of our search technologies. The following is a common observation about the problems associated with dating apps: These apps give people, and especially women, the illusion that they have far more options than they actually have. These days, dating apps can feel like an avalanche of options and overtures, much of which is garbage, but people also receive a fair number of legitimate messages. All this can create the impression of an abundance of potential partners. This perceived, but partially illusory, abundance causes many partner seekers to raise their standards to unrealistic levels. This leads to a failure to actually find someone in a reasonable period of time, and to a disillusion with the existing search technologies themselves. When standards outpace search, the lost trust in the existing search technologies understandably leads to a sense of despair and the belief that loneliness is inescapable. Can Search and Standards Be Sync’d? This is a very far-reaching idea: Better search, and, consequently, better exit options, lead to higher standards, but what is the mechanism that makes sure that the standards increase perfectly in-sync with the actual capabilities of the improved search? If better search creates an illusion of abundance, standards will increase too much, and, hence, matching will actually often fail. Paradoxically, better search can lead to worse search results, because people who think the search result is never good enough will continue searching indefinitely, and never settle. The same logic applies to job searches. Online job postings create the illusion of a huge pool of potential workers. As a consequence, the standards have increased. As the joke goes, job ads today look like they want to hire an entire department, not just a single person. Similarly, seeing hundreds of opportunities on LinkedIn creates the illusion of an abundance of available jobs. The disillusion with the results of this search process leads some to drop off entirely off the job market or leads people to be highly dissatisfied with the jobs they have, because they (wrongly) imagine that much better opportunities exist right behind the corner, although they somehow never get them. This kind of divergence between expectations and reality can be very frustrating. It’s not surprising that many employees think they have meaningless jobs. Is Traditional Community Overrated Anyway? It is not an accident that when people are given the choice between individualism and market relations on one hand, and community, on the other hand, most people choose individualism and privacy. We should take revealed preferences seriously. The replacement of traditional communities with opportunistic, fleeting, and overlapping communities based on common interests is good. I don’t want my search options to be restricted to “my community.” I want them as broad as possible, and I want to be able to be part of many different groups at the same time, each group organized based on its own independent reasons. We tend to romanticize traditional communities. But maybe the sense of belonging they provided was a type of Stockholm syndrome, in which you were supposed to love the random community you happened to be born in, although no such community could possibly do a good job satisfying all individuals. Instead, these communities asked for and required their members to downplay and abandon their individual preferences in the name of stability and communal cohesion. This problem with traditional communities should not be downplayed. Furthermore, the fact that all attempts to design “intentional communities” have ended in dismal failures, often characterized by abuse and cult-like problems, is not an accident (Clay 2017). Individualism wins because it is genuinely better, and nostalgia for communitarianism should be viewed with suspicion. To summarize, the argument I’m making here is twofold: (1) The modern search technologies are in fact superior to past communal methods. The nostalgia for the past communities is misguided, and ignores the huge problems those past communities have always had, and the problems that new communities would have today. Whatever one thinks of the claim that capitalism has made people more lonely, the classic individualist critique of traditional communities still stands strong and needs to be grappled with. (2) Modern search technologies are so good that they create the illusion they are far better than they actually are. This illusion induces many people to increase their standards to unrealistic levels, for everything from romantic partners to jobs, which is the actual cause of the “loneliness epidemic” and of people’s discontent with “capitalism” and with otherwise fine jobs. The more readily available information about successful people showing off on social media, and not mentioning their failures, makes the problem worse, increasing the illusion that unusual success is readily available. What Is the Solution to This Problem? On one hand, people will eventually adjust to more realistic expectations. Illusion cannot last indefinitely, although it may last far longer than we would like. As the apocryphal quote from John Maynard Keynes goesput it, “markets can stay irrational longer than you can stay solvent” (Zweig 2011). Dating apps may improve slower than you will lower your expectations to more realistic levels. Moreover, even if error is corrected on average, the distribution of error will always be somewhat spread out, with some people being overly pessimistic (settling too early for too little) while others being overly optimistic (waiting too long to find the ideal partner and job). The nature of this distribution of errors is also unknown, and it need not be a bell curve. If the distribution of errors is a power law, with a long tail of people thinking search is better than it actually is, the social problem we’re facing is even more serious. On the other hand, the other type of solution is to actually make search better. If we’re putting our economists’ hats on, this is the main reason to be optimistic about the future: Economists are usually worried when no one can make money by solving a problem, but, in this case, there are enormous potential profits to be had by inventing better search-and-match algorithms. This means we should expect search to get even better. The profit incentive is actually in place here to mitigate rather than accentuate this problem. So, as people’s expectations temper somewhat, because of their experiences with the downsides of today’s search technologies (in areas like dating, job hunting, etc.), new search will improve. This should bring expectations and reality closer together, diminishing both the loneliness epidemic and the job dissatisfaction problems. Again, the time frame over which this will happen may be disappointingly long, but the trend is still here. For more on these topics, see Noreena Hertz on the Lonely Century. EconTalk. “Tolstoy, Smith, and the Perils of Loneliness,” by Richard Gunderman. AdamSmithWorks, October 20, 2021. “Capitalism and the Common Good,” by Erik Matson. Library of Economics and Liberty, December 7, 2020. We can see this far-reaching issue unfolding before our eyes. In my view, one of the reasons why AI companies have such high market valuations is that search problems are pervasive, and AI is expected to significantly improve search across many domains. People worry about the fake solutions AI might provide to the loneliness epidemic and the labor market issues, i.e., AI partners substituting real people and real relationships, and AI taking over all our jobs. The more optimistic alternative is that AI will greatly improve the available search algorithms, greatly improving both dating and job hunting. References Clay, Alexa. 2017. “Utopia Inc”, Aeon Magazine (Feb 28). https://aeon.co/essays/like-start-ups-most-intentional-communities-fail-why. Rosenfeld, Michael J., Reuben J. Thomas, and Maja Falcon. 2018. How Couples Meet and Stay Together, Waves 1, 2, and 3: Public version 3.04, plus wave 4 supplement version 1.02 and wave 5 supplement version 1.0 and wave 6 supplement ver 1.0 [Computer files]. Stanford, CA: Stanford University Libraries. Available online at: https://data.stanford.edu/hcmst  Snow, Richard. 2017. I Invented the Modern Age: The Rise of Henry Ford. Scribner. Thompson, E.P. “Time, Work-Discipline, and Industrial Capitalism.” Past & Present, No. 38 (Dec. 1967), pp. 56-97 Zweig, Jason. 2011. “Keynes: He Didn’t Say Half of What He Said. Or Did He?” Wall Street Journal (Feb 11, 2011.) *Vlad Tarko is Associate Professor of Political Economy at University of Arizona. This essay is based on the author’s forthcoming chapter in Polycentric Governance from a Philosophical and Political Perspective, edited by Pablo Paniagua and David Thunder (Rowman and Littlefield). For more articles by Vlad Tarko, see the Archive. This article was edited by Features Editor Ed Lopez. (0 COMMENTS)

Book Review of Poverty, By America, by Matthew Desmond.1 I had not planned to read this book. I found the author’s essay on the history of American capitalism for the New York Times Magazine‘s 1619 Project badly wanting, so I passed over Poverty, By America, until one of my students (a sociology major) asked me about it because he was reading it for his Sociology of Poverty course. Matthew Desmond is a passionate writer, but verve and fervor are poor substitutes for sound arguments backed by carefully interpreted data. Desmond’s conviction and moral certitude are clear on every page—a reviewer for The New Yorker writes, “Its moral force is a gut punch”—but his argument is ultimately unconvincing. He comes out swinging, beginning his prologue for Poverty, By America with “Why is there so much poverty in America? I wrote this book because I needed an answer to that question.” The word “By” in his title suggests that poverty isn’t just something in America. It’s in America because of America. But as John F. Early explained in his review for the Cato Institute’s Regulation,2 Desmond is never clear on what he means by “so much,” particularly given that the Organization for Economic Cooperation and Development’s reported poverty line changes by country. Its “poverty rate” is the fraction of the country’s population at or below half that country’s median income, which means comparing countries’ poverty rates using the OECD’s headline measure compares apples to oranges. If we measure every country by the same standard, either the U.S. Federal Poverty Line or half of the U.S. median income, the United States goes from having one of the highest poverty rates in the OECD to having one of the lowest. I doubt, however, that a book titled Poverty, By Scandinavia would have been one of the New York Times’ Notable Books of the Year. Nonetheless, I found myself nodding my head in agreement regularly. Desmond rightly draws attention to where we have earned blame. We pay far too little attention to policies and programs that redistribute income and wealth upward. We don’t think of economically and morally suspect tax breaks and credits (like the mortgage interest deduction) as government benefits, even though there might not be an economic difference between a tax break and a subsidy, despite the linguistic difference. And so, he points to a way Americans “spend” a lot on welfare for the well-off without it looking like we’re doing so. As scholars have pointed out, Americans run many of our social and redistributive policies through special provisions in the tax code. If, for example, you pay $50,000 in taxes and then get a check from the government for $10,000, you’re out $40,000. If you calculate a $50,000 tax bill and then get a $10,000 tax credit, you’re still out $40,000. The money is the same, but the language is different. I think we might be able to agree on welfare reform because the system we have right now is pathological in terms of the incentives it creates, and what’s more, it is more upwardly redistributive than we are inclined to think. Replacing the dog’s breakfast of sometimes self-contradictory welfare programs with an expanded Earned Income Tax Credit would win the hearty applause of most economists. Even if we couldn’t do that, there are plenty of places where we can remove clogs and chokepoints in a dysfunctional system. We part ways on the economic incidence of the Earned Income Tax Credit, which Desmond thinks is subsidizing employers and allowing them to pay lower wages. He’s right, to a point, but if this source is correct and the pass-through is at most 36% of each EITC dollar,3 then workers are still getting the lion’s share of the benefit. And besides, it’s a staple of introductory economics classes that the economic incidence of a tax or subsidy depends on the elasticities of the supply and demand curves, so it’s not clear we can subsidize work without at least some of it going into employers’ pockets. That brings us to the minimum wage, which Desmond thinks should be raised but is at best a very poorly targeted antipoverty program. In a 2015 paper, Thomas MaCurdy shows how higher minimum wages are, if anything, regressive insofar as they transfer income from low-income consumers to low-income workers.4 Desmond repeats the old trope that economists believed the minimum wage caused unemployment because the theory said so before David Card and Alan Krueger blew up the profession by looking at the data. However, empirical studies of minimum wage predate Card and Krueger by decades. Desmond seems to believe the minimum wage is a free lunch, at least for workers. While he cites work by David Neumark and William Wascher, he doesn’t give the criticisms of the minimum wage their due. I don’t expect him to get into the weeds of debates about identification strategies and the like. However, I’m still confident enough that labor demand curves slope downward. Labor supply curves slope upward, meaning higher minimum wages reduce employment and induce people to waste resources searching harder for jobs that are harder to come by. I don’t lose sleep over teaching this. Economists Jonathan Meer, Jeffrey Clemens, and many others have shown that, for example, higher minimum wages mean fewer non-wage benefits and more effort expended searching for work. Desmond rightly takes his fellow progressives to task for displaying Black Lives Matter flags and those “In this house, we believe…” signs while also fighting tooth and nail to maintain exclusionary zoning in the name of protecting the “character of the neighborhood.” Having written an earlier book called Evicted about the trials and travails of getting kicked out of an apartment for not paying your bills, it’s no surprise that Desmond finds housing policy so important. He should be able, I hope, to make common cause with libertarians like Bryan Caplan, who are working to identify and reduce the regulatory burden on new housing construction. Unfortunately, he endorses “inclusionary zoning,” which requires new projects to include a set-aside for “affordable housing”—a nebulous term, to say the least–that acts as a tax on any new construction and that requires builders to gravitate toward units that will generate enough revenue to pay for the below-market “affordable” units. Desmond is also correct about the folly of scapegoating immigrants for all that ails us. Growing empirical research shows that foreigners (whether over here or over there) aren’t taking our jobs. Foreigners over here aren’t bankrupting the welfare state or turning our cities into criminal wastelands. Indeed, the data suggest that even illegal immigrants have lower crime rates than natives. Blaming immigrants is a venerable American (indeed, human) tradition with ugly manifestations during the Progressive Era, where eugenicists and racists thought it necessary to control immigration lest the immigrants pollute the gene pool. “The familiar scapegoats are well-represented, as is the usual hero: government, but this time, a government that does the Will of the People.” Unfortunately, however, Desmond blames the usual list of suspects: corporations, speculators. Republicans, Ronald Reagan. The familiar scapegoats are well-represented, as is the usual hero: government, but this time, a government that does the Will of the People. First, Desmond asks why the richest country in the world has “so much poverty.” It’s a fair question, but it’s unclear exactly what would no longer be “so much poverty.” He doesn’t contextualize some of his numbers and slips back and forth between incommensurate definitions when he wants to make international comparisons. Domestically, he uses the federal poverty line and is aghast that there were some 38 million people in the United States who lived below the federal poverty line as of 2021. It’s a “country” larger than Venezuela and Australia (and, I would add, richer than Venezuela). Any decent person, I suspect, would say that’s 38 million too many, but it’s about 11% of the population–and over the long run, it’s headed in the right direction. Crucially, the story you can tell depends on which endpoints you pick. In Desmond’s book, Ronald Reagan gets a lot of blame, but what is Reagan’s record on poverty? When Reagan took office in 1981, 14% of the population lived in poverty. It had fallen to 12.8% by the time he left in 1989. Should Reagan get credit for this? It increased to 15.1% in 1993 (when Bill Clinton took office) before falling to 11.7% in 2001, when Clinton left office. It was 14.3% when George W. Bush left office in 2009 and then went back down to 12.3% after Obama left in 2017. By the end of Donald Trump’s first term, it was 11.6%. The fraction of the population in poverty has remained stubbornly stuck in the 11-15% range since the late 1960s. Desmond is eager to credit the Great Society with falling poverty; these lower poverty rates reflect the continuation of trends that started earlier. As Early explains, “Had poverty merely maintained its pre-1964 trend, it would have been 9.2 percent in 1974, not 11.2 percent.” Desmond reports many facts, but as Steven Landsburg has explained, nothing is less interesting than a fact unilluminated by a theory. And Desmond’s theory doesn’t go beyond “employers/corporations/landlords/Republicans are mean.” Maybe so. Mr. Potter in It’s A Wonderful Life and pre-conversion Ebenezer Scrooge in A Christmas Carol had rotten souls. But at the risk of sounding condescending, incentives matter much more than intentions, and too often, Desmond makes claims that, if true, imply that the profit-obsessed sociopaths he excoriates are systematically overlooking opportunities to make gobs of money by hiring armies of “underpaid” workers. It’s Schrodinger’s Corporation: simultaneously blinded by the profit motive and blind to the enormous profits they could enjoy by offering better pay and benefits to other firms’ “underpaid” workers and pocketing the still-enormous difference between this slightly higher pay and what the workers produce. We can say something similar about Desmond’s poverty victims suffering “exploitation,” a word he uses loosely. Desmond claims that housing is more expensive in low-income neighborhoods than in higher-income neighborhoods, which means landlords are exploiting the poor. But why don’t the poor who are overpaying for housing in the bad part of town lower their housing costs by moving to the nice part? Desmond’s explanations for why they don’t, which include poor credit histories and episodes of non-payment that mean they get turned down for apartments in the nice parts of town, suggest that what he has identified is a risk premium and not “exploitation.” As he explains, landlords take home profits for many years because bad things don’t happen every year, but all it takes is one large enough riot or natural disaster to turn years of profits into a single year of catastrophic losses. Desmond illustrates his argument with tragic and frustrating anecdotes that raise obvious but unanswered questions his “exploitation” argument can’t answer satisfactorily. He tells the story of Julio (not his real name, obviously), who worked two full-time jobs to support his family and collapsed from exhaustion in a grocery store. Later, he doesn’t have to work as hard due to the higher minimum wage in Julio’s California town. Good for Julio. What we don’t see, however, is the people who can’t supply the hours they want to supply (or get a job at all) because they aren’t productive enough to be employable at the minimum wage. Furthermore, Desmond explains that Julio wouldn’t have the problem of low wages and a porous social safety net if he lived in Denmark. So why doesn’t Julio move his family to Denmark, where he would have higher wages and greater security? The answer is that Denmark wouldn’t have him. Denmark is a lovely place where I’ve spent more time than I’ve spent in any other country save the United States, but it’s also a difficult place to move to legally. The Scandinavian welfare states “work” in part by keeping non-Scandinavians out and maintaining a homogeneous culture of “we’re all Danes (or Swedes, or Norwegians), and we don’t cheat our fellow Danes (or Swedes, or Norwegians).” The Danes are lovely people, Denmark is lovely, and I wear my FC København jersey proudly. However, if the entire world were a large American city, the Scandinavian countries would be the exclusive, highly regulated suburbs with rules written to keep the riffraff out. Some of Desmond’s anecdotes seem calculated for minimum sympathy. There’s the story of a father snorting speedballs at work that doesn’t lead to the obvious conclusion, “don’t snort speedballs at work.” He tells the tragic story of Crystal, who bounced around in the foster care system. It’s a tragic origin story, of course, but it seems like it was at least possible for her to have avoided homelessness and prostitution. She quit high school at 16. She “met a woman at a homeless shelter and secured another apartment with her new friend” (page 12). Great! But then we read the next sentence: “Then Crystal put that new friend’s friend through a window, and the landlord told Crystal to leave” (page 13). So, Crystal lost her apartment for throwing her roommate’s friend through a window. Unless it was a first-floor apartment, this seems like a pretty credible case for an attempted murder charge, not just eviction. Are we to be surprised that this isn’t the sort of tenant a landlord wants? But fortunately, Crystal had a network to fall back on as she “spent nights in shelters, with friends, and with members of her church” (page 13). Great! But a bit later, we learn that she “burned through the remaining ties she had from church and her foster families” (page 13). How, exactly? Poverty, By America is a short book for a general audience, but these seem like obvious questions a general audience would want answered. Desmond at least concedes (perhaps inadvertently) that Crystal isn’t wholly bereft of agency, noting that “Crystal had never been an early riser, but she learned that mornings were the best time to turn tricks, catching men on their way to work” (page 13). That raises another question about the economics and sociology of poverty: how many of her clients would suffer less if they weren’t in the habit of paying for sex en route to work? Desmond criticizes the “success sequence,” touted by conservative think tanks and which says that your probability of living in poverty is very low if you simply finish high school, work full time (at any job, not just a “good job,” as Desmond suggests), and don’t have children out of wedlock. Desmond says, “we might as well be asking that person to just get a different life” (page 40), but presumably, we study poverty and make policy to alleviate it because poor people want different lives. It’s not clear what to do about people like Crystal, who have, it seems, exacerbated poor choices by burning bridges, but it seems like a can’t-miss message for young people who still have time to make “success sequence” choices. And one has to wonder: would Crystal herself advise teenage girls to drop out of school at 16, get evicted for throwing someone through a window, and burn through the remaining ties they might have from church, family, and other relationships, no matter how tenuous? Would she look back and say, “This was inevitable? There is literally nothing I could have done to avoid this?” I doubt it. But here, Desmond’s message to the rock-ribbed and presumably hard-hearted conservative should resonate, at least slightly. If we’re all honest with ourselves, we can all look back at times when something random could have led to very different life outcomes. Think back to when you either made or barely avoided a poor choice. How different would things be had that gone the other way? A sober assessment of our lives should show us that things could be much better, but could also be much worse. But what do we do with that? I walk our dog in Birmingham’s Avondale Park every morning and most evenings. We live in a checkered-but-gentrifying neighborhood where many buildings are empty thanks to city rules and permitting processes making it hard to do anything with them (which helps explain Desmond’s invocation of Birmingham’s apartment vacancies on page 65). Several homeless people live in the park and on the streets surrounding it, and when I want to get annoyed, I just tell myself, “There but by the grace of God go I.” But what do I do about it? I don’t have a good answer. Service and outreach organizations (government and private sector) that provide health care, job training, food, and other services are within easy reach of Avondale Park. Why aren’t they using these services? I don’t know. At the beginning of the book, Desmond writes that “some lives are made small so that others may grow” (page 8). He’s correct, up to a point, and for most of history, the way to get rich was to steal, kill, and destroy. High real estate values are a product of exclusionary zoning and rules that make it difficult and costly to build new housing, but that doesn’t mean Jeff Bezos earns a lot because Amazon workers don’t. As Deirdre McCloskey and I argued in our 2020 book Leave Me Alone and I’ll Make You Rich, the best thing we can do for people is to get out of their way. Stop expecting them to ask permission to try new things, innovate, buy low, and sell high. Desmond wants to outlaw low wages, but while this might mean some people like Julio feel better off, he is silent on the people who will not be able to work if the jobs they can actually do are outlawed. He wants people to boycott companies that offer low wages and lousy working conditions, but would he suggest boycotting U.S. women’s soccer because the U.S. women’s team doesn’t earn what the U.S. men’s team earns? I doubt it. Should we have a more generous welfare state? Once you account for private and government welfare spending, U.S. and Nordic welfare institutions are comparable, and we didn’t get European-style welfare states not because of some sinister conspiracy but because mutual aid societies and industrial sickness funds worked well (Davie Beito’s book From Mutal Aid to the Welfare State and John Murray’s Origins of American Health Insurance make these points clear). He also wants to strengthen labor cartels, known as unions, but unions increase their incomes by shutting out competitors. Unions are great for insiders and not so great for outsiders. It’s not clear that the distributional consequences are desirable. Desmond is right that we would make things much better by eliminating exclusionary zoning and making it possible to build housing more densely, but he doesn’t devote a lot of attention to licensing laws that severely restrict the flexibility of the labor market. I would have been encouraged to see Desmond draw on economics’ work on housing markets, occupational licensing, and immigration to propose radical economic liberalization, but he doesn’t. For more on these topics, see Why Housing Is Artificially Expensive and What Can Be Done About It (with Bryan Caplan). EconTalk. Thomas Leonard on Race, Eugenics, and Illiberal Reformers. EconTalk. “Americans Are Still Thriving,” by Jeremy Horpedahl. Library of Economics and Liberty, October 2, 2023. Poverty, By America is an interesting but ultimately unnecessary and fundamentally flawed book. You can it skip safely if you want to understand poverty and prosperity. To borrow a cliche, what is original in the book is incorrect, and what is correct is not original. Poverty bothers Matthew Desmond to his core; this is commendable. However, anyone who picked up this book and used it as a manual for poverty abolition would be sorely disappointed. Footnotes [1] Matthew Desmond, Poverty, By America. Crown, 2024. [2] John F. Early, “Feeling Poverty But Not Understanding It.” Regulation. Winter, 2023-24. Available online at: https://www.cato.org/sites/cato.org/files/2024-01/regulation-v46n4-in-review.pdf  [3] Natalie Holmes and Adam Berube, “The Earned Income Tax Credit and Community Economic Stability.” Brookings, November 2015. Available online at: https://www.brookings.edu/articles/the-earned-income-tax-credit-and-community-economic-stability/ [4] Thomas MaCurdy, “How Effective is the Minimum Wage at Supporting the Poor?” Journal of Political Economy, Vol. 123, No. 2, April 2015. *Art Carden is Margaret Gage Bush Distinguished Professor of Economics and Medical Properties Trust Fellow at Samford University in Birmingham, AL and a Research Fellow with numerous organizations. I thank ChatGPT 4o and o3 as well as Google Gemini and Grammarly Pro for valuable research and editorial assistance. For more articles by Art Carden, see the Archive. As an Amazon Associate, Econlib earns from qualifying purchases. (0 COMMENTS)

Are humans the most intelligent species, or just the most arrogant? NYU primatologist Christine Webb, author of The Arrogant Ape, believes that human exceptionalism is a myth that does more harm than good. Listen as she speaks with EconTalk’s Russ Roberts about how research has skewed our understanding of animals’ capabilities, the surprising inner lives of animals, and how a shift from dominance toward connection with the larger living […] The post Humans Are Overrated (with Christine Webb) appeared first on Econlib.

(This post is part of a series that began with this post.) The overarching theme of Musa al-Gharbi’s book is examining the gap between the ideas most supported by those who are woke and the actions of those same people. While al-Gharbi isn’t overtly hostile to woke ideas as such, he is troubled by how people who are most aggressive advocates of those ideas don’t live in a way that reflects them. This is why his book is entitled We Have Never Been Woke, and not something like “Why Wokeness is Bad.” Given how al-Gharbi argues that wokeness has been used to justify policies that enrich and support members of the symbolic capitalist class, often at the expense of the poor and vulnerable populations the woke claim to want to help, it might be tempting to conclude that the woke simply use wokeness as a cynical ploy to cover up their own greedy desire to keep the plebs in their place. But, al-Gharbi says, this need not be the case. He does not think that the woke are generally insincere in their beliefs: Critically, none of this entails that symbolic capitalists are cynical or insincere in their professed commitments to social justice. We tend to be true believers. This sincerity makes it difficult for the woke to understand why various marginalized groups have increasingly been turning away from progressive politics and instead moving toward embracing the Republican Party: Growing numbers of poor, working-class, and nonwhite voters are growing alienated from the Democratic Party and have been migrating to the GOP. It is difficult for symbolic capitalists to understand these trends because, again, we believe that we represent the will and interests of the marginalized and disadvantaged, while our opponents serve elite interests (and are driven by racism, sexism, authoritarianism, and ignorance). This is not to say the woke elites haven’t noticed the fact that woke progressivism is largely the ideology supported by wealthy white elites while the Republican Party has become much more of a multiracial party of the working class. But this fact tends to be interpreted in a self-serving way – and one that reverses the logic that progressives used to employ when the relative makeup of the parties went in the other direction: As the partisan and ideological alignment of symbolic capitalists has shifted, so has the narrative about what the partisan diploma divide “means.” When professionals and highly educated Americans skewed Republican, Democrats held this up as proof that the GOP was controlled by elites while they were the party of “the people.” Now that the pendulum has swung the other direction, the narrative is that the Democratic Party appeals to the educated and professionals because their policies are simply more rational, informed, and effective. As Stephen Colbert put it, “Reality has a well-known liberal bias.” The GOP, meanwhile, is depicted as the party of ignorant and regressive zealots. Still, that puts the woke in the uncomfortable position of trying to explain why, increasingly, working-class nonwhites prefer the GOP, and have little regard for the policy preferences espoused by the (mostly white) woke elites: In principle, this state of affairs could be defended on the grounds that relatively well-off and highly educated liberal whites—precisely in virtue of their college education and higher rates of consumption of “woke” content in the media, online, and so on—perhaps understand the reality and dynamics of racism better than the average Black or Hispanic person. However, given that many of their preferred approaches to “antiracism” are not just demonstrably ineffective but outright counterproductive, I wouldn’t recommend that anyone try to take a stand on that hill. How do we square this circle? How can it be that the woke are both sincerely committed to bringing about social justice, while also advocating for policies that enrich themselves at the expense of the poor and vulnerable, and that are often contrary to the expressed views of those same people? According to Musa al-Gharbi, the fundamental problem is that woke progressives sincerely desire two different things that are fundamentally incompatible with each other: Members of the symbolic capitalist class want to bring about social justice and support egalitarianism, but they also want to be social elites. They want to hold positions of high prestige (high paying, high status), and they want to climb the ladder and to take steps to ensure their own children will be at least as successful as themselves. But al-Gharbi sees an incompatibility between wanting to bring about egalitarian outcomes and also wanting to be upwardly mobile: Symbolic capitalists simultaneously desire to be social climbers and egalitarians. We want to mitigate inequalities while also preserving or enhancing our elite position (and ensuring our children can reproduce or exceed our position). These drives are in fundamental tension. This tension has defined the symbolic professions from the outset. Both commitments are sincere. Here’s an example of a different form of this dynamic that many people will find relatable. John Q. Hypothetical has a sincere desire to lose thirty pounds. At the same time, he also has a sincere desire to eat lots of really tasty foods. In practice, these desires conflict with each other, but that doesn’t make either desire insincere. If Mr. Hypothetical ends up eating lots of tasty food rather than losing weight, this does not show that he doesn’t really want to lose weight or that his desire to trim down is insincere. But it shows that, if forced to make a choice between a smaller waistline and abandoning tasty food, he prefers tasty food more. In the same way, al-Gharbi argues that while the woke sincerely value both egalitarian ideas as well as being social climbers, that does not mean these ideas are equally important to the woke. To see which of these is more important, you have to observe how the woke behave when the incompatibility between them forces a choice of how to behave: Throughout this text I have insisted that symbolic capitalists are likely being sincere when they espouse social justice commitments. However, just because an expressed conviction is sincere doesn’t mean it’s particularly important. One advantage of drawing this distinction is that determining whether something is important (or a priority) for someone does not require scholars to take anyone’s word. One’s priorities are manifested through action…Put another way, you don’t observe what is important to someone by what they say but rather by what they do, and by how they structure their lives. If something is valuable to a person, truly central to their being, they make room for it. They make sacrifices for it. It reshapes one’s other (more peripheral) commitments, and one’s behaviors, relationships, and life plans. This is why the woke have never truly been woke, al-Gharbi says. When faced with a policy choice that would make things better for the poor and vulnerable but would be costly for the symbolic capitalist class, they are faced with a choice about whether to make a sacrifice to support egalitarianism or protect their elite status. More often than not — almost always, in fact — they end up choosing the option that preserves their elite status. To use a tangible example, al-Gharbi extensively documents how licensing and certification regulations were created with the explicit purpose of shutting out the “wrong” kind of people, and have had the effect of artificially boosting the wealth of the symbolic capitalist class. These barriers to entry are disproportionately harmful to racial minorities and serve as structural restrictions that make it far more difficult for members of those communities to improve their situation. However, given the choice between removing these restrictions (thus opening up their own livelihoods to increased competition) in the pursuit of egalitarian goals or preserving these barriers and protecting their own status, the woke consistently pick the latter over the former. Promoting egalitarianism is a sincerely held desire, but it is ultimately less important to the woke than their desire to preserve and enhance their social status. Rather than go through the painful experience of confronting the inconsistency between their behavior and their professed values, they instead reinterpret their behavior as though it reflected those values. There are four key methods al-Gharbi identifies that can be used to justify how one might behave in ways contrary to their moral commitments: “moral credentialing, moral licensing, moral cleansing, and moral disengagement.” Of the first, al-Gharbi says: Moral credentialing is a phenomenon where people become more likely to act in inegalitarian ways, and (critically) become convinced that their actions are nonbiased, after affirming their commitment to egalitarianism or engaging in behaviors they interpret as egalitarian. For instance, studies have shown that when white people publicly affirm their commitment to antiracism, they often become more likely to subsequently favor other whites in decision like hiring and promotion, even as they grow more confident that race played no role in their decision-making. When men identify with feminism, they regularly grow more likely to favor other men in their decision-making, but also grow more confident that their judgments were non-biased. Sometimes, however, people do things they recognize were wrong to do, but they use moral licensing to get around the problem: They can exempt themselves from the moral standards they apply to everyone else, confident that the good actions they have performed, or will perform (or other bad actions they have taken or will refrain from taking), will basically “even things out” ethically, result in a net positive, or at least fail to harm their reputation. If these two strategies don’t work, one can employ moral cleansing: In situations like these, where our self-image and reputation are compromised or at risk, we often engage in rituals of moral cleansing—behaviors that help restore the sense that we’re “on the side of the angels.” And it turns out that one of the most effective ways we can come to feel good about ourselves in the aftermath of a moral failing is to point out bad behaviors in others. Research shows that condemning and (especially) sanctioning others for wrongdoing can reduce one’s guilt over committing the same offense and helps assure oneself and others that they are different from “those people” being condemned (even if one is, in fact, engaged in similar or worse behaviors). When these three strategies fall short, the woke tend to pivot towards moral disengagement: However, should moral credentialing, licensing, and cleansing collectively fail at preserving our sense self-image and reputation, we often resort to moral disengagement instead: redefining situations in ways that neutralize their moral stakes. Sometimes we do this by downplaying the risks or costs imposed on others by our actions or by insisting that any negative eventualities were caused by circumstances beyond our own control, thereby minimizing our own perceived role in others’ misfortune. Other times, we tell ourselves that difficulties imposed on others serve some worthy goal or “greater good.”…For instance, this chapter highlighted how symbolic capitalists often define minorities who espouse inconvenient views as “compromised” in some way, allowing us to simply disregard their perspectives despite our expressed commitments to epistemic and moral deference toward people from historically marginalized and disadvantaged groups. This is moral disengagement in action. These strategies don’t only allow the woke to feel secure about the virtue of their own behavior. They also allow them to find ways to believe that those who are beneath them in social status are less deserving: In other cases, guilt over harm caused by people “like us” fuels moral outrage against third-party scapegoats; subsequent retributive actions against these scapegoats tends to cleanse our own guilt or shame. Or, all else failing, we find ways to collectively write off concern about those harmed by the pursuit of our own group interests. For instance, symbolic capitalists regularly portray the “losers” in the symbolic economy as unworthy of moral consideration because they’re racist, or sexist, or transphobic, or ignorant, or support “fascists” like Donald Trump. If “those people” are marginalized, good. They should be. If they’re suffering, who cares? All of these modes of behavior have the unfortunate effect of actually making the problems the woke want to eliminate even more pronounced within organizations that are controlled by the woke themselves. The more woke values are upheld and promoted, the more it creates the very behavior the woke oppose: That is, in environments where antiracism, feminism, and other egalitarian frameworks are widely and very publicly embraced, it can become easier for people to act in racist, sexist, or otherwise discriminatory ways while convinced that their behaviors are fair—and to have those actions actually perceived as fair by others who share the same ideological and political leanings, or who belong to the same social or institutional groups. Further, al-Gharbi points out that these forms of motivated rationalization are something woke symbolic capitalists are particularly prone to employ, compared to others: Critically, although moral credentialing, licensing, cleansing, and disengagement are general cognitive and behavioral tendencies, symbolic capitalists may be especially susceptible to these forms of self-serving moral reasoning. As discussed throughout this text, the kinds of people who become symbolic capitalists (those who are highly educated, cognitively sophisticated, etc.) tend to be particularly prone to, and effective at, motivated reasoning in general…Taken together, symbolic capitalists have especially powerful means, far more frequent opportunities, and a pronounced need to produce moral credentials and more licenses or engage in moral cleansing rituals or moral disengagement. On top of all of this, because the values espoused by woke progressives are generally antithetical, if not outright hostile, to the values held by most (nonelite) members of minority communities, woke culture itself becomes a sort of hostile environment for these vulnerable populations: Similar realities hold for other forms of social sanction for insufficiently “woke” views. In general, immigrants and racial and ethnic minorities tend to be more religious and more culturally and symbolically conservative than whites—as are people of more modest socioeconomic backgrounds compared to social elites. Consequently, inculcating an environment that is hostile to more “traditional” values and worldviews, although typically carried out in the name of diversity and inclusion, will often have the perverse effect of excluding, alienating, or creating a more precarious situation for those who are already underrepresented and marginalized in elite spaces. When we try to understand why it is that so many “people of color,” or people from low-income, immigrant backgrounds or otherwise “nontraditional” backgrounds, feel as though they don’t “belong” in symbolic capitalist spaces—whether we’re talking about elite K–12 schools, or colleges and universities, or professional settings—this is likely a big, and underexplored, part of the story. But after all this, there is one final question to be explored. As I pointed out at the start of this post, there is a reason al-Gharbi’s book is titled We Have Never Been Woke, and not something like Why Being Woke is Bad or Why We Shouldn’t Be Woke. If the problem is that we’ve never been woke, that leaves open that the solution is that we should be woke. Is there anything in the ideology of wokeness, properly understood, that ought to be preserved and practiced in a different way from how the woke currently behave? That question will be the subject of part 10 of this series.   As an Amazon Associate, Econlib earns from qualifying purchases. (0 COMMENTS)