The following two tweets caught my eye: On one level, these are both sort of “gotcha” tweets, implicitly arguing that JD Vance has accidentally made the case for more immigration.   But I’m more interested in something else—what motivated Vance to make this claim?   Political statements can be evaluated in many different ways.  One might view them as expressing the opinion of the politician.  But it’s also worth thinking about why the statement was made.  Politicians have many different views—but what determines which views get expressed in a political campaign?   It seems plausible that successful politicians tend to express views that they believe will be persuasive to voters.  Note that I am not commenting on the sincerity of the politician.  Regardless of whether they believe “X is true”, or do not believe X is true, they would not be inclined to campaign on “X is true” unless they thought the message was effective. In this particular case, I’m not particularly interested in what Vance believes.  But I am very interested in what Vance believes that the public believes.  The fact that Vance is advancing this argument in a campaign suggests that he believes the public does not see America as being among the world’s richest countries.   It would be interesting for a pollster to ask the public whether the US or China is the richer country.  I suspect that a significant share of respondents would say “China” (albeit not a majority.)  Of course, the US is many times richer. Here’s another good question.  “Does the US adhere to international trade laws while other countries cheat?”  Again, I’d expect many wrong answers.  (Yes, we often cheat.) It seems to me that when the public is optimistic about the state of the country, the ideology of nationalism has less appeal.  If you go back to a period when the US was clearly number one, say 1965, the mood of the public was pretty supportive of global institutions.  When the public believes that other countries are getting ahead of the US, especially if they believe other countries are cheating to get ahead, then the public is likely to become much more nationalistic. A few months ago, I did a post pointing to the odd fact that the US was the country that had accepted the most immigrants and was also the richest country.  Taken literally, Vance’s statement could be viewed as essentially identical to my post.   Despite using the term “if”, however, it is the clear implication of his statement that the US is not the richest country.  But at least Vance and I agree on one thing—one fact implies the other.  We agree that the correlation between America’s high rate of immigration and America’s position on the world’s richest country list is probably causal.  Now we just need to figure out if America is indeed a very rich country, or not.  (0 COMMENTS)

  Another nugget from Jonathan Lipow’s book Public Policy for Progressives. I’ve posted three times now on Lipow’s book (here, here, and here). One thing I like a lot about Jonathan is that although he’s a progressive, he’s also an economist. And he doesn’t leave his economics at the policy door. Here’s an interesting insight about Medicare for All as a solution to health care spending. He writes: One hint that Medicare is part of the problem and not the solution is that no American below the age of 65 is on Medicare, and the US spends only moderately more per person on healthcare for these people than other OECD countries. Meanwhile, all Americans above the age of 65 are on Medicare, [DRH note: not quite true. My wife and I are on Medicare Part A but not on the rest of Medicare. As a federal retiree, I retained my employer-provided health insurance] and America’s healthcare spending per person for this group far exceeds that [of] other OECD countries. Formally, that doesn’t prove anything, but where there is smoke there just might be a fire–and Medicare is shrouded by a huge plume of dense smoke. Later he points out: The first change that the “Medicare for All” proposal would make to traditional Medicare is to eliminate all co-pays, deductibles, and premiums. That would convert Medicare into a program very similar to the extravagant “all expenses paid” FFS [fee for service] insurance policy studied in the RAND experiment. Recall that the experiment found that “free FFS” insurance ran up bills by 30%, while achieving only negligible benefits in terms of health. Would something similar happen if we adopted “Medicare for All?”     (0 COMMENTS)

Johns Hopkins surgeon Dr. Marty Makary talks about his book Blind Spots with EconTalk’s Russ Roberts. Makary argues that the medical establishment too often makes unsupported recommendations for treatment while condemning treatments and approaches that can make us healthier. This is a sobering and informative exploration of a number of key findings in medicine that […] The post What Modern Medicine Gets Wrong (with Marty Makary) appeared first on Econlib.

  Pro-War Lobby Attacks Russian Influencers by Ted Galen Carpenter, antiwar.com, September 10, 2024. Excerpt: But even in the unlikely event that the charges are accurate, other more fundamental issues should concern all Americans. The statutes that he is accused of violating are sufficiently vague as to pose a threat to freedom of speech and to badly needed debates on numerous international issues, especially the tense relations between Russia and the United States. Could, for example, publishing an article in the National Interest or participating in a discussion sponsored by the Center inadvertently violate pertinent statutes? What about a paid interview? How could an author or participant be confident one way or the other? The mere existence of the Foreign Agents Registration Act and various sanctions laws directed against specific countries pose an intolerable threat to the 1st Amendment.   Surface Transportation News: Questions about the Key Bridge replacement by Robert Poole, Reason, September 10, 2024. Excerpt: In a recent release, the International Bridge, Tunnel and Turnpike Association (IBTTA), said: “The formal designation of the I-695 corridor as an Interstate highway…federalized the bridge replacement project, extending all the limitations on revenue uses contained in Section 129 of Title 23 of the U.S. Code.” This statement implies that there would be a federal problem with using toll financing to replace the Key Bridge. That’s false. Congress explicitly revised that section of the statute in 1991 to make clear that toll financing can be used to replace bridges on the Interstate system, regardless of whether they were tolled or not. That is how Louisiana is underway replacing the aging Calcasieu River Bridge with a toll-financed new bridge. (italics in original)   The Islamic Moses: The Key to the Judeo-Islamic Tradition by Mustafa Akyol, Cato at Liberty, September 10, 2024. Excerpt: It is, in a sense, a sequel to my earlier book, The Islamic Jesus (2017), which examined the Qur’anic depiction of Jesus Christ, revealing the intricate connections between Christianity and Islam. This time, I examine the Quranic depiction of Moses, who, curiously, is the most dominant human figure in the Islamic scripture, eclipsing even the latter’s own prophet, Muhammad. The Quranic Moses is just the key to a much larger story, though. The Jewish prophet was so central to Islam’s founding text because he was the role model for Islam’s own prophet. Muhammad embraced the core ideals of Judaism — a staunch monotheism with a comprehensive religious law — only to proclaim them to his people, the Arabs. The theological continuation between two faiths was so strong that modern Jewish historian Shelomo Dov Goitein (d. 1985) defined Islam as “from the very flesh and bone of Judaism.” This new religion, Goitein added, was “a recast, an enlargement” of its Jewish precursor. For many people in the West today, all this may be surprising to hear, because they are used to hearing about the “Judeo-Christian tradition,” while Islam is often considered, at best, a distant cousin. But the Judeo-Christian tradition is a modern concept popularized only in the twentieth century, when Western civilization finally began to question its dark history of antisemitism, while parts of the Muslim world sadly began to absorb it.   The Supreme Court Reined in Federal Regulators. What Happens Now? by Peter Suderman, Reason, October 2024. In 1984, the Supreme Court issued a unanimous ruling in favor of an Environmental Protection Agency (EPA) rule stemming from the Clean Air Act. The EPA rule allowed states to treat all pollution from a unified industrial group as a singular pollution source for regulatory purposes. A cohort of environmental groups challenged the rule, arguing that it allowed pollution-emitting devices to operate that would not have passed regulatory muster considered on their own. It was a technical exercise in statutory interpretation—but the case’s long-term impact had little to do with pollution or the intricacies of the Clean Air Act. Embedded in that decision, Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., was a small revolution in administrative law. DRH comment: When I taught a public policy class, one of the examples I gave of how we could get a lower cost of reducing pollution was the Chevron case. I liked what the EPA did, but I now understand that it went beyond its mandate. The EPA allowed an industrial polluter to hit the targeted reduction by reducing pollution more from the source for which the cost was lowest. That meant that it hit the target at least cost. You can see why, I, an economist, liked it. I wasn’t familiar with the law. We Still Live in the Physical World by Virginia Postrel, Reason, September 10, 2024. Excerpt: Unfortunately, the book fails to meet an author’s obligations to the audience. It is riddled with contradictions, cherry-picked examples, and question begging. It is bereft of historical context. And contrary to the promise of the subtitle, it never reveals how Rosen imagines “being human.” That ideal seems to involve writing handwritten letters to distant loved ones—but not texts! never texts!—and embracing the boredom of long lines at Disney World. Rosen gives some of her most promising evidence short shrift. She accords pandemic Zoom classes about a page. She doesn’t explore why online schooling is ineffective, nor does she consider when instructional videos—such as the how-tos found on YouTube—do work. Letting the abysmal effects of Zoom schooling stand in for all online instruction, she simply ignores the value of digital convenience for teaching such real-world skills as making a sewing pattern, fixing a garbage disposal, improving your passing game, or tying a tie. Perhaps she simply doesn’t know that how-to videos are common on YouTube. (Khan Academy also gets no mention either.) From Rosen’s viewpoint, if something is online it has nothing to do with the real world except to undermine it. Virginia is at her best in laying out the huge benefits to virtually everyone of much technological change. BTW, when I saw the title of her review, I thought of Madonna and I wanted to add, “And I am a physical boy.” (0 COMMENTS)

The federal government is in the process of auctioning off a famous office building in Laguna Niguel, California. The Chet Holifield Federal Building, sometimes referred to as the Ziggurat, was designed by William Pereira, a well regarded architect. It’s an interesting building, done in a sort of Mesopotamian style, but to my eye not particularly successful: The OC Register has had a series of news stories on the auction, where feverish bidding has pushed the price to a much higher than expected level.  This is presumably because the property includes not just the office building, but also 89 acres of land in one of California’s most desirable communities, just a few miles from Laguna Beach.  The article contains this graph: Note that the original asking price was only $70 million.  One reason why people were caught off guard is that this is actually the GSA’s second attempt to sell the building: By the way, this is the second auction for the 53-year-old Ziggurat, The first, which required the buyer to preserve the Ziggurat structure, drew no bids. The lengthy response to the latest auction – without that restriction on development – suggests the buyer will likely demolish the structure designed by the late famed architect William Pereira. Not a single developer was willing to bid even $70 million for this highly desirable property at a time when there was requirement that the building be saved.  Once that restriction was lifted, at least two developers were willing to pay more than $150 million (and the auction is still ongoing.) From this information, we can infer that the economic cost of this particular regulatory barrier was at least $84 million, the difference between the current auction price and the previous auction’s reserve price. But even that figure is a gross underestimate of the cost of regulation for this property.  Although the new owner will be allowed to remove this eyesore, they will continue to face a Byzantine thicket of regulations and lawsuits, from all sorts of interest groups that hope to minimize the amount of development.  After all, this is California. While I cannot be certain, I suspect that a developer would be willing to pay many hundreds of millions of dollars for this property if given a completely free hand to develop it any way they wished.  I also suspect that the resulting development would be extremely impressive—the sort of grand project that the US used to be good at doing, but that has somehow become beyond our ability. (0 COMMENTS)

Most people and even many serious analysts seem to assume that the concept of “national interest” or “the interests of the United States” has an obviously ascertainable meaning. (“The United States” can be replaced by the name of any country.”) This concept is central to the arguments of foreign policy “realists”—for example political scientist William Ruger in his article “Ideals or Interests?” in Law and Liberty (July 26, 2024). Dr. Ruger argues for the importance of the national interest as a realistic guide, as opposed to philosophical ideals, in foreign policy and matters of war and peace. The meaning of “national interest” may seem obvious. It is the public interest where the public is made of the citizens of a nation. It is the interests of all the citizens. If these interests don’t exactly coincide, the national interest is assumed to be, in some way, their sum. The concept is similar to the interests of two individual partners in a business or an association: it is the sum of their respective interests—in making a profit or (say) advancing some charitable purpose. If the national interest is not a straight sum, addition and subtraction, of all individual interests, it consists in some other form of aggregation. On second thought, problems become rapidly obvious. How is it possible to add and subtract, or otherwise aggregate, even just conceptually, the interests of two non-identical individuals? In a private cooperative venture, the partners pursue together some common interests. Indeed, this is why they cooperate. If we exclude tribes and “organizations” (in the Hakekian sense), society is the framework into which private individuals and organizations act. Since each individual (or voluntary partnership) has his own interests, speaking of social, public, or national interests is problematic and confusing. Suppose an Appalachian redneck has “three interests” in national security, and a cosmopolitan New Yorker has “two interests,” or vice versa. If these are the only two nationals, is the national interest 2+3=5? Multiply the problem in a nation of 300 million. And of course, it is not the national interest if the interests of each member of the nation do not count equally. There is much theory behind the impossibility of aggregating the interests of several individuals. Let’s define the interests of an individual as his utility, meaning how high he judges his condition on the scale of his subjective preferences. Economists have known for more than a century that an external observer cannot simply add and subtract subjective preferences, which are only known to, or experienced by, only their individual possessor. There is no way to say that “social utility” is increased if the individual utility of some goes down while the utility of others is increased. Any observer or philosopher king à la Plato who claims he can do this balancing is just expressing a personal opinions or his personal power. Mainstream welfare economists have proven as much (see, for example, Francis M. Bator, “The Simple Analytics of Welfare Maximization,” American Economic Review [1957]). A democratic majority does not solve the problem. It cannot determine what the national interest is, even under the sophisticated form of what welfare economists called a “social welfare function.” Furthermore, individuals in the minority are also part of the nation. Who is the majority anyway, given that different voting systems can produce different electoral outcomes (see Gordon Tullock, Government Failure: A Primer in Public Choice])? Discovered by Nicolas de Condorcet in the 18th century and mathematician Charles Dodgson (a.k.a. Lewis Carroll) in the 19th, the difficulty of aggregating preferences through voting was recognized and formalized by economists in the mid-20th century. Kenneth Arrow’s Impossibility Theorem mathematically demonstrated that, under realistic conditions, there is no voting procedure that can both reproduce voters’ rationality (notably the transitivity or coherence of preferences) and be non-dictatorial (see Arrow’s 1951 book Social Choice and Individual Values). Arrow was awarded the 1972 Nobel prize in economics for his work in this field, launching the whole school of “social choice.” In his 1982 book Liberalism Against Populism, political scientist William Riker brought these discoveries and their implications to the attention of political scientists. In terms of our interrogation here, a majoritarian vote cannot express a national interest that is both logically coherent and non-dictatorial (“non-dictatorial” refers to the situation where no dictator or dictator group can overrule the preferences of other individuals). This conclusion seems to leave us in a dead end. If the public interest does not exist, what is the criterion for public policy? If the national interest does not exist, what is the criterion for deciding how a national state will deal with other national states—or force its citizens to behave, for example by regulating their trades or other voluntary relations with individuals of other countries? There are not many escapes from this cul-de-sac. Two are represented by two great economists and political philosophers of our time. One is to deny that the state has any economic and moral justification, to view it as a mere instrument for political rulers and their clientèles to impose their choices on the rest of society or nation. Anthony de Jasay, who defined himself as a classical liberal and an anarchist, took this exit and defended the ideal of a stateless society with no public policy at all. He did however express some doubts on the possibility that such a society could resist invasion by nation-states or other international armed groups. Another way of escape was formalized by Nobel economist James Buchanan and his colleagues. If there is no such thing as a social organism that has its own utility and its own interests, the only justification and function of the state is to protect a set of rules that represent the common interest of all society’s members. This common denominator is necessarily thin as it represents the preferences or values that all members of a society (such as a nation) unanimously agree on. At this level of abstraction, values can easily be added to preferences in an individual’s utility function. The rules consented to by all individuals can only aim at the maintenance of a free society where every individual has an equal liberty to pursue his own interests–his own happiness, as it were. This novel approach is more revolutionary than it appears. It is rather abstract—as indeed the rule of law is itself—but a coherent abstraction is better than an incoherent and unrealistic recipe such as the “national interest.” In my view, the foreign policy “realists” are rather unrealistic. The idea of a common interest offers very different guidance in matters of foreign policy and defense—for example, regarding conscription, negating liberty to protect it, or bullying individuals in the name of the “national interest.” One could object that the expression “national interest” is merely a shortcut for a common interest that all individuals presumably share. But it is a dangerous shortcut that personifies “the nation,” that is, a collective. History as well as theory strongly suggests that the “national interest” creates a fictitious “we” that is bound to bulldoze the interests of real individuals. The “common interest” means what it says: the common preferences—including ideals in the sense of common minimum values à la James Buchanan—of all individual members of a free society. This assumes, of course, that the individuals live in a free society or at least one that is becoming so. ****************************** The philosopher king embodies his people and their interests (0 COMMENTS)

  Back in July, I did two posts (here and here) on Public Policy for Progressives by my friend and former colleague Jonathan Lipow. Occasionally I’ll hit highlights from the later parts of the book. This one caught my attention. It turns out that countries with high rates of home ownership suffer from serious social pathologies. And of these, the most important is that high rates of home ownership are associated with high rates of unemployment. Lipow gives the credit for this discovery to British economist Andrew Oswald. The idea is that the right job for you might be somewhere far from where you live. If you lose or quit your job and you’re a renter, it’s relatively easy to give notice to your landlord and move to that new job. However, if you’re an owner, the transaction costs are much higher. Most people won’t have the spare wealth to simply rent out the house or condo and then move; they’ll need to sell, and anyone who has sold a house can tell you how lumpy a transaction that typically is: high realtors’ fees, waiting for the right buyer, etc. So you’ll look longer for a new job and might find a job that’s inferior to the one you could have moved to. Why is this a problem? Won’t people take account of this in their decision to own or rent. Yes. But Jonathan’s point is that the government puts its finger on the scales by subsiding home ownership. So Jonathan advocates having the government shift away from promoting and subsidizing home ownership. I agree. He advocates going further by building millions of units of student housing, making available millions of rental properties now being rented by students. I wouldn’t do that. I was disappointed that Jonathan didn’t simply advocate deregulating the supply of housing, as former co-blogger Bryan Caplan has done in Build, Baby, Build. But maybe that’s one of many reasons that I’m not a progressive. (0 COMMENTS)

Responding to two blog posts by myself and Kevin Corcoran on skepticism about Pigouvian taxes, Scott Sumner gives an example of a congestion tax in Orange County that has been a huge success.  Scott writes: This example shows that not all Pigovian taxes are a failure.  Other successes include congestion charges in cities like Singapore, London and Stockholm.    Scott could have added Fairfax County, Virginia, to his list.  I-66 runs from Washington DC through Fairfax County and out toward West Virginia.  66 was a restricted highway: during rush hour, only people in carpools could use it (and there were huge fines for violators).  Yet, 66 was always backed up.  In 2017, the Department of Transportation removed the HOV restriction and opted to switch to dynamic tolling during rush hour.  The tolls would go up or down depending on the volume with the goal of keeping the average speed on I-66 at 55 (the speed limit).  This has been a huge success.  The implementation of dynamic tolling virtually eliminated traffic jams.  This dynamic tolling is a form of tolling is a Pigouvian tax. It is a Pigouvian tax and one I celebrate wholeheartedly.  In grad school, I traveled 66 a lot. I wasted God knows how many hours sitting in traffic.  When the dynamic tolling was implemented, I could easily decide if the value of my time was worth the toll.   In our posts, Kevin and I talk about skepticism.  I am skeptical of market failure corrections, but I am not categorically opposed to them.  There are instances where they can work.  As usual, the devil is in the details. One of the reasons I am skeptical of Pigouvian taxes is that governments can be slow to adjust the tax (either up or down).  There are numerous political factors that get in the way, special interests start to get involved, and just the political process in general is slow.  Thus, a tax may be too high or too low for too long, resulting in suboptimal outcomes.  One of the great things about congestion taxes, especially like the I-66 toll, is that they can be easily adjusted.  The I-66 toll is entirely automated.  It goes up and down fairly quickly to adjust the level of traffic.  No need for votes, lobbying, or other costly procedures.  The adjustment costs are low. Furthermore, the negative (or positive) effects of the congestion tax are quite quickly realized.  One can instantly see traffic rise or fall with the level of the tax.  The analytical costs of the tax are low.  Conversely, a carbon tax has effects that are very slow to manifest.  Negative (or positive) effects of carbon emissions can take years to emerge.  The analytical costs of a carbon tax are quite high. Finally, at least in the I-66 case, the tax is collected via a transponder that many vehicles have (or a bill is mailed according to the registration linked to the license plate of the car if no transponder is present).  The tax is instantly collected; there is no need for measurements or audits.  The administrative costs of the tax are low. I do support congestion taxes.  Having spent many hours sitting in Boston traffic (as I am sure Scott did, too), I wish my home state would do something similar on those highways.  A congestion tax is able to overcome my skepticism. The point of my posts on market failure corrections is not that such actions should never, ever be done.  It’s not that they are doomed to failure.  Rather, it’s to remind economists and readers of our most basic lessons: there ain’t no such thing as a free lunch.  Market interventions are not costless.  Yet most economists treat them as if they are.  Your standard econ textbook will give just a glib overview of market failure along the lines of: “Markets work great.  But once transaction costs get high, markets fail and government can/should intervene.”  I am trying to inject the natural skepticism of the economist into these decidedly non-economic lines of thinking.  We have to compare real-world alternatives.  Most market interventionists fail to do so: they just see a market failure and assume government intervention will make it better.  We, as economists and scientists, must be skeptical of all plans.  We must look at them realistically.  We must examine the details, for that is where the devil lies.  That skepticism can be overcome.  But it needs to exist. Interestingly, this is where public choice analysis comes into play.  Without public choice, the advantages of dynamic or automatic tolling isn’t obvious.  But public choice teaches us to examine politics without romance, that the incentives faced by politicians are not the same as incentives faced by people interacting directly in the market with prices guiding them.  To the standard economist, if all else is held equal, having a tax set by a committee or a tax set by automatic dynamic tolling would be equally preferable.  A public choice economist realizes those two methods are not equally preferable.  One would lead to a much worse outcome than the other.   Jon Murphy is an assistant professor of economics at Nicholls State University. (0 COMMENTS)

In our previous post, we introduced EconLog readers to the possibility of using The Mummy and The Mummy Returns. This post continues that discussion. As another important lesson in economics, the iconic team-up of siblings Evelyn and Jonathan Carnahan with Rick O’Connell illustrate the value of specialization and comparative advantage. Evelyn brings her scholarly knowledge as a librarian to the team and explains important information about the Book of the Dead and the Book of the Living, the mirrors that light underground caverns, and the sah-netjer mummification room. Rick brings a gunslinger adventurer skillset to the team, as well as key knowledge about the location of Hamunaptra (“Relax, I’m the map, it’s all up here”). Jonathan is, above all, a pickpocket, which is an important skill when unearthing treasure and fighting off mummies. Gains from trade are only possible if the parties work together through cooperative exchange.  The characters also demonstrate how the gains from cooperation can overcome conflict between groups, and how the failure to share knowledge leads to social losses. At first, during the race to Hamunaptra, the Americans compete with our iconic trio of Evy, Rick, and Jonathan to arrive first at Hamunaptra. The race ends with one guide trampled underfoot (a dangerous prospect with the camels’ top speed of nearly 40 miles per hour), and no health care in sight. Similarly, during the early days of the dig, the groups worked separately, and competition over resources, from dig locations to tools, continually threatens violence, including the Egyptian diggers working for the American team. However, after the Medjai’s first attack on the camp, including an ominous warning of additional danger, the two groups set aside their differences for the social gain of cooperative survival.  Specialized skills also help overcome incomplete transportation networks. Even Winston, the intoxicated Royal Air Corps pilot wishing to relive his glory days of the Great War, brings in specialized flight skills as Ardeth, Rick, and Jonathan race after the kidnapped Evelyn. Izzy, the dirigible pilot who repurposed a Royal Air Corps base into “Magic Carpet Airways” in The Mummy Returns, similarly fills an important gap in transportation markets.  As Adam Smith wrote in Book I, Chapter I of The Wealth of Nations,  The division of labour, however, so far as it can be introduced, occasions, in every art, a proportionable increase of the productive powers of labour. The separation of different trades and employments from one another, seems to have taken place in consequence of this advantage. This separation, too, is generally carried furthest in those countries which enjoy the highest degree of industry and improvement; what is the work of one man, in a rude state of society, being generally that of several in an improved one […] This great increase in the quantity of work, which, in consequence of the division of labour, the same number of people are capable of performing, is owing to three different circumstances; first, to the increase of dexterity in every particular workman; secondly, to the saving of the time which is commonly lost in passing from one species of work to another; and, lastly, to the invention of a great number of machines which facilitate and abridge labour, and enable one man to do the work of many. In this way, we also see how the gains from specialization and trade expand in the story as people expand their networks. When the Medjai Ardeth Bay arrives to save the day with specialized knowledge about how to defeat the mummy Imhotep, the new team is able to fight Imhotep’s troops with a success none of the characters would have experienced alone. Issues in Labor Markets Initiation into the Bembridge scholars served as an academic status, a sort of right to title oneself with the distinction and the rights that come with it. This coveted, yet optional credential fails under scrutiny in The Mummy and its sequel. In both films, Evelyn discovers evidence that previous scholars had missed or even dismissed. She also corrects an important mistranslation in the first film, despite repeatedly not being admitted to the guild of Bembridge Scholars. The film thus demonstrates that credentialism is perhaps not the mark of quality it is often treated as. Whether she is barred from the Scholars because of gender-based discrimination – as evidenced by the Egyptologist – or anti-competitive exclusionary guild behavior, Evelyn’s expertise is what wins the day – not her credentials, or even her alleged lack of field experience. When she is finally a member in the second film, Hafez, who is the curator of the British Museum, also turns out to be working for the side of evil by resurrecting Imhotep once again. Perhaps The Mummy Returns posits that exclusionary guilds can breed corruption, especially as he faced a competitive threat. After all, the Bembridge Scholars had been “begging” Evelyn to run the British Museum at the start of The Mummy Returns. Presumably, saving the world from immortal monsters determined to end the world is better evidence of quality than a credential. We can also explore the problem of asymmetric information in labor markets. In The Mummy, the Egyptian diggers working for the American team under the direction of the Egyptologist have little information about the dangers facing them at Hamunaptra, and the same could be said of the diggers in the sequel working under the direction of Hafez. In The Mummy, the Egyptologist warns the Americans against opening the base of the statue of Anubis themselves, in case of an ancient booby trap – but he gives no such warning to the diggers. Without clear recourse to courts or other legal protections, we may see how asymmetric information leads to moral hazard problems. In both films, the diggers are not told everything they need to know to perform their job safely. This provides an example of asymmetric information atypical to most economics textbooks that still illuminates an important economic concept. Negative Externalities Against the backdrop of these everyday institutional questions, the mummy Imhotep presents some scary economic ideas on his own. In particular, the Hom-Dai curse that the pharaoh’s soldiers place on him presents the classic problem of concentrated benefits and dispersed costs. Suffering the Hom-Dai over millennia is terrible, to be sure, but the benefits of the curse are concentrated to the pharaoh’s soldiers (and perhaps his daughter) who execute the curse in the name of justice. However, the dispersed costs of the Hom-Dai are enormous, first in imposing lifetime costs on three millennia of Medjai who must guard Hamunaptra, and later on the residents of Cairo – and theoretically the whole world. Setting curses must therefore have significant negative externalities, in which the social cost dwarfs the private cost, and the Hom-Dai in particular suggests inefficient intertemporal resource allocation by first stage players. The economic damage from the Hom-Dai would have even long-run effects, as rebuilding Cairo and compensating victims would drain further resources. Perhaps the Medjai set aside an insurance or compensation fund for damages over the millennia, or perhaps there is a hidden tax buried in the tax code. In the real world, most contracts and insurance plans include clauses for deux ex machina to limit liability and to permit breach of contract in catastrophic unforeseen circumstances, as during the early weeks of the COVID-19 pandemic or severe weather events.  We are left wondering just how the residents of Cairo rebuilt their city. Perhaps Evelyn used some of the treasure to fund repairs, since she was the one to re-awaken Imhotep. Donating some of the proceeds from the sale of the salvaged treasure could help rebuild Cairo Museum, damaged by the plague of raining fire in the movie. Whether this happened is questionable, however, as Rick and Evelyn have relocated to London by The Mummy Returns and much of the second movie refer to Evelyn’s status with the British Museum of Antiquities. That said, Evelyn’s actions throughout the first film bears all the hallmarks of unintended consequences. From knocking over every bookshelf in the library of the Cairo Museum to raising the dead through curious reading from the Book of the Dead, Evelyn reminds the us that unintended consequences can be frequent and costly, even from people with good intentions. And as economists know, intentions are not outcomes. With good institutions, perhaps, Evelyn would invest in a personal liability insurance plan to cover the costs from her catastrophes.   Darwyyn Deyo is an Associate Professor of Economics at San José State University. Alicia Plemmons is an Assistant Professor and Director of the Center for Free Enterprise at West Virginia University. (0 COMMENTS)

Bloomberg has an article on electric cars, which illustrates some of the advantages of carbon taxes over regulation: New Breed of EV Promises 700 Miles per Charge (Just Add Gas) It runs on batteries 95% of the time, but a gasoline engine can recharge them for longer hauls, easing range anxiety. EV sales growth has slowed in recent months, partly due to consumers having anxiety about being unable to find a place to recharge their cars.  This new type of EV would greatly reduce that problem.  At the moment, these cars are available in China, but not the US: It’s unlikely US car buyers will see anything like that on American roads anytime soon because President Joe Biden is seeking 100% tariffs on Chinese cars and former President Donald Trump is threatening even tougher protectionist measures to keep Chinese-made EVs out. So if American consumers are to gain access to technology that might provide a transition to the electric future, it will be up to the automakers in the US—and their regulators—to pave the way. What about producing this sort of car within the US?  Here’s one issue: Because a gas-fueled engine is used to extend the driving range of an EREV, it’s considered a hybrid, which the Sierra Club has said it no longer considers green technology. “EREVs could be a harmful distraction that could stall momentum in the crucial transition to zero-emission vehicles,” says Katherine Garcia, the Sierra Club’s director of clean transportation. It’s unclear how US regulators will classify EREVs, but it seems unlikely they’ll be lumped with pure EVs, which, if made in North America, qualify for government incentives aimed at stimulating sales, such as a tax credit of as much as $7,500. The “big decision for us as an industry and for regulators: ‘Is that an EV or isn’t it?’” Farley said of EREVs at the Bernstein Strategic Decisions Conference in New York in late May. “Customers are voting; they like these in-between solutions. We still have a lot of work to do with regulators because they’re not there.” What is better for the environment, selling a few cars that are 100% emission free, or selling a lot of cars that are 95% emission free? Governments are generally not very good at making this sort of calculation; hence “command and control” regulations often end up being relatively inefficient.  In contrast, a carbon tax encourages consumers to make the decision that is best for the economy, including the external costs of emissions.  If done right, carbon taxes can also make the overall tax system more efficient, by reducing other more distortionary taxes.  Cynics will correctly note that it’s unlikely that other taxes will be reduced by an equal amount.  But unless we slash government spending, we’ll need sharp increases in other taxes, and a carbon tax would allow those increases to be smaller.  So the point still holds. This reminds me of the debate about safer versions of cigarettes.  Recall when regulators were reluctant to approve a cigarette substitute that was far safer than ordinary cigarettes, because it was not 100% safe.  There’s an old saying: Never let the perfect be the enemy of the good. (0 COMMENTS)