And we’re seeing it in real time in Canada. In August 2021, in an EconLog post about Canada, I wrote: Government can’t subsidize newspapers without putting its thumb on the scale. The post was titled “Canada’s Decline in Press Freedom.” In that post, I discussed the Canadian government’s system of subsidies to newspapers. I followed up with a further post in December 2021 in which I quoted a critic of the subsidies, Peter Menzies, who quoted a critic named Tom Korski who put the problem succinctly: “You only need one customer and that’s the [federal] Minister of Heritage.” To his credit, Menzies has been tracking this issue. In a post on “The Line,” a Canadian Substack that follows Canadian politics closely, Menzies quoted a Member of Parliament who is part of Prime Minister Justin Trudeau’s government. Menzies wrote: “Your paper wouldn’t be in business were it not for the subsidies that the government that you hate put in place — the same subsidies your Trump-adjacent foreign hedge fund owners gladly take to pay your salary,” he wrote. The “he” who tweeted this was Taleeb Noormohamed, the Liberal MP for Vancouver Granville. He was replying to a post on X “by Terry Newman, National Post’s new senior editor of its Comment section, promoting a column she had written outlining the incredible damage ‘a party and a minister can do to a country in nine years.'” Menzies wrote: Nothing Noormohamed said was untrue. He and I are in perfect alignment in the view that were it not for the patronage of the Justin Trudeau government, Postmedia (and likely the Toronto Star) would by now have ceased to exist. Some of its titles may have sold for parts, but most of its zombie products would have been dispatched long ago with a bankruptcy bullet to the brain, allowing new media to spring forth from decay. About that, he was not wrong, even though what he did was very inappropriate, even more so because Noormohamed is not just some schmuck MP making up the numbers in a minority Parliament. He’s Parliamentary Secretary to the Minister of Heritage, Pascal St-Onge, in whose office most of the decisions regarding the plethora of funding arrangements for Canadian news media are made. (bold added) The title of Menzies’s Substack post was on target: “The Liberals Say the Quiet Part Out Loud.” Freedom of the press in Canada is dying. And, as Noormohamed’s threatening tweet points out, silencing critics of the government is one of the main purposes of government subsidies. (0 COMMENTS)

Minnesota Governor Tim Walz, the Democratic vice presidential nominee, recently urged his supporters to not “shy away from our progressive values. One person’s socialism is another person’s neighborliness.” Socialism is sharing a cup of sugar with the family across the street, and who could object to that? Walz’s identification of socialism with neighborliness is reminiscent of Bernie Sanders’s remark that, “to me, socialism doesn’t mean state ownership of everything, by any means, it means creating a nation, and a world, in which all human beings have a decent standard of living.” Here Sanders equates socialism not with any particular set of economic institutions, but rather with the uncontroversial idea that we should create a world in which everyone has a decent standard of living.  Even socialist philosophers and writers are guilty of this kind of rhetorical sleight of hand. G.A. Cohen once argued that voluntarily sharing food and equipment with one’s friends on a camping trip is an embodiment of socialist principles. And according to George Orwell, socialism is the notion that “everyone does his fair share of the work and gets his fair share of the provisions;” he says that the merits of socialism so defined are “blatantly obvious.” I agree with Orwell—to a point. It is obvious that we should want an economic system that fairly distributes burdens and benefits. But it’s not obvious that socialism is this system. Merely identifying socialism with a fair economic system is no more of a convincing defense of socialism than merely identifying capitalism with a fair economic system is a convincing defense of capitalism. This is a bit like someone arguing that the paleo diet is the healthiest diet because they’ll simply label whatever foods turn out to be the healthiest as “paleo.” To fruitfully compare capitalism and socialism, then, we need an understanding of the specific economic institutions that characterize socialism and capitalism. At the most general level, socialist economies are those that mandate the collectivization of productive property. That is, they allow you to privately own “personal property” like your shoes, but not “productive property” like a shoe factory. Collectivization can be institutionalized in different ways. For instance, old-school socialists would favor state ownership of the shoe factory. But that style of socialist economy is less popular today given the overwhelming evidence that it is not prosperous, kind, or fair (see Venezuela for a recent example).  Contemporary socialists have therefore taken to advocating for workplace democracy: roughly, workers collectively own firms and make decisions democratically. This arrangement allows for market competition—worker-owned firms may openly compete with one another—and so avoids some of the traditional Hayekian critiques of socialism. Still, it’s not clear to me that this style of socialism is all that neighborly. Sure, some people might prefer to become worker-owners of a democratically-run firm, just as some people might prefer to work remotely rather than in an office. But others might prefer a capitalist firm—and those people are out of luck under socialism. As the philosopher Robert Nozick points out, capitalism allows socialist-minded people to pool their resources together to create democratic worker cooperatives if they so choose, but socialism does not allow capitalist-minded people to create capitalist firms. And there are plenty of good reasons why people might prefer capitalist firms. For example, as Don Lavoie notes, workers “may not want to take on the risk, expense, and responsibility involved in managing a firm.” He continues, “After all, there are potentially several advantages to workers who choose to specialize in earning wage income in order to be insulated from the vicissitudes of market competition. There is often an advantage in allowing someone else to be the boss and thereby reducing one’s concerns to the fulfillment of a wage contract, letting the management fret about the firm’s profit and loss statements.”  To illustrate the point, suppose Lance wants to start his own landscaping business and needs to hire an employee. Moe just wants stable employment and a steady wage; he doesn’t want a piece of the business and the headaches that come along with it. So Lance hires Moe to mow some customers’ lawns.  As a result of the wage contract, both Lance and Moe get what they want. Yet, as Nozick would say, this is one of many “capitalist acts between consenting adults” that must be prohibited by a socialist regime if it is to remain socialist. A socialist regime would compel Lance to give Moe a share of the business if he’s hired even though both parties would be worse off as a result. But forcing people into workplace arrangements they’d rather avoid is not kind or friendly; to the contrary, it sounds downright unneighborly.   Christopher Freiman is a Professor of General Business in the John Chambers College of Business and Economics at West Virginia University. (0 COMMENTS)

The Economist has an article discussing the ride share industry.  They pointed out that ride share companies engage in price gouging when demand for their services is high: This digital twin, one of the most sophisticated of its kind, allows Uber to adjust its operations in real time. Annoyed passengers may think that this enables the firm’s “surge pricing”, when fares suddenly spike to balance ride demand and driver supply. This is partly true. But the more immediate and more positive effect is that the digital twin allows for up-to-the-minute route optimisations through ever-changing city traffic. (Price gouging is generally defined as a situation where companies set the price above the customary level in order to prevent shortages from occurring.) The taxi industry provides a nice test of the theory that consumers don’t like price gouging.  Prior to the advent of ride sharing, the NYC taxi industry was regulated by the government, which set a standard price.  As a result, it was extremely difficult to find a taxi during peak periods, when demand exceeded supply at the regulated price. Ride share companies decided to adopt surge pricing during periods of high demand, in order to prevent shortages.  As you can see, they’ve grown to dominate the NYC taxi market: It would not surprise me if a poll showed that most Americans oppose price gouging.  But economists typically put little weight on polls; we are more interested in how people behave, that is, their revealed preference.  And at least in the NYC taxi market, it seems that consumers prefer price gouging to a stable regulated price. One possible objection is that it is not the price gouging that they like, rather it’s the quick and reliable availability of the ride share cars.  But those are merely two sides of the same coin.  Flexible pricing is both a necessary and sufficient condition for assuring that quantity supplied equals quantity demanded.  You cannot have one without the other.  Thus regardless of what consumers might say, it seems to be the case that they actually do prefer a regime with price gouging over a regime with shortages. PS.  After beginning this post, I discovered a John Cochrane post that makes some of the same points. (0 COMMENTS)

Thoughts on the U.S. Open.   Last weekend, I watched large parts of the U.S. Open women’s tennis finals on Saturday and men’s finals on Sunday. I watched some very good tennis. At various times during both matches, the camera would show Billie Jean King and an announcer would say, with a celebratory voice, that she was the one who had persuaded the organizers of the U.S. Open to give equal prizes to the male and female winners. This year the prize was a cool $3.6 million. For the last 45 years, I’ve paid attention to the call for “equal pay for equal work.” I don’t necessarily agree with it, for reasons that don’t matter in this context. But I always thought that the vast majority of the people pushing for it did believe in it. Now I wonder. Why? Because the prize in the U.S. Open is the opposite of equal pay for equal work. The men work much harder. To win, the men must win 3 sets. But the women need win only 2 sets. And this is true for the whole 2 weeks. Every match between men is the best of 5. Every match between women is the best of 3. Yet I hear no one making that point. Was the call for “equal pay for equal work” insincere? Is it bad if men get the same pay for less work but fine if women get the same pay for less work?   (0 COMMENTS)

Many people, including rationally ignorant voters, ignore the poor state of the US government’s finances. The Table below gives some numbers, extracted from the last budget of the US government. Politicians should be aware of the problem, but their self-interest is to kick the can down the future and compete for the perks of power by promising voters new programs, transfers, and tax cuts (see James Buchanan and Richard Wagner’s 1977 book Democracy in Deficit: The Political Legacy of Lord Keynes). If Congress appropriations follow the budget of March 2024, outlays (spending) for FY 2025 (October 1, 2024 to September 30, 2025) will reach $7.3 trillion compared with forecasted receipts (revenues) of $5.5 trillion. A deficit of $1.8 trillion will result. Next year, then, the federal deficit is set to equal 25% of spending and 32% of receipts (the figures in red on my Table). This level of annual deficit has become quite typical. Federal spending reached $1 trillion in 2019, peaked at $3.1 trillion in 2020 and, after the epidemic, receded to an average of $1.9 trillion from 2021 to 2024. The problem is not caused by annual emergencies or enthusiasm, nor by random “government waste.” Sixty percent of federal spending is called mandatory, for it is made of large programs mandated by standing laws and regulations and not subject to annual appropriations by Congress. The mandatory programs are essentially Social Security, Medicare, and Medicaid. The “other” category mainly comprises income security programs such as unemployment compensation, nutrition assistance programs, or Supplemental Security Income. The part of federal spending called discretionary (27% of spending) includes $900 billion for defense plus annual appropriations by Congress for all other purposes. To these two broad categories of spending must be added nearly $1 trillion (13% of spending) for interest payments on the public debt. Interest payments diminish when the rate of interest decreases, but increase with the growing level of debt. Adding to mandatory programs the outlays for defense and interest on the public debt, which are not easily or readily compressible either, we get 86% of total outlays. Thus, only 14% of federal spending is compressible or “discretionary” in this sense. Eliminating the annual deficit without increasing taxes would require the elimination of all these “discretionary” outlays plus an 11% reduction in “non-compressible” expenditures (mandatory programs, defense, and interest on the public debt). Since 1961, the OMB’s historical budget tables (see Table 7.1) show a surplus in only five years: 1969, and 1998 to 2001. The problem is obviously not a function of which political party is in power. Chronic deficits explain why the federal debt held by the public is predicted to reach $30 trillion at the end of FY 2025, more than twice the $14.2 trillion at the end of President Barack Obama’s second term. The public debt is a time bomb that will have to be defused or will explode at some point. If large increases in taxes or default on the public debt are to be avoided, a fundamental reassessment of the federal government’s functions and scope will be needed.         ****************************** The government sinking in debt (0 COMMENTS)

Orgel’s second rule states “evolution is cleverer than you are.” By this, he meant that our inability to explain how this or that feature might have evolved only demonstrates a lack of imagination or understanding on our part. It does not serve as positive evidence against the evolution of that feature. But there’s another meaning one can take from this – certain features of evolution that might seem inefficient or counterproductive may in fact actually serve as efficient adaptations to the constraints under which those features evolved.  To see an example of this in action, consider this rather amusing talk given by Douglas Adams on the mating ritual of the kakapo, a flightless parrot native to New Zealand. He goes into detail about how every aspect of the kakapo’s mating ritual seems actively counterproductive to actually producing offspring:   He describes the overall process as “incredibly long and drawn-out, fantastically complicated and almost entirely ineffective.” The first problem is “that the mating call of the male kakapo actively repels the female,” which certainly seems like a suboptimal start. He then describes how the kakapo mating call consists of deep, pulsing bass sound. This creates another complication, Adams says. He makes an analogy with a home speaker system, consisting of two smaller speakers “that give you your treble sound and you have to put them very carefully in the room, because they’re going to define the stereo image.” But you also have a subwoofer to produce bass sounds, “and you can put that anywhere in the room you like. You can put it behind the sofa if you like, because the other characteristic of bass sound – and remember, we’re talking about the mating call of the male kakapo – is that you can’t tell where it’s coming from.” Summing up the whole scenario, we are informed that for the female kakapo’s part, “supposing she’s out there, which she probably isn’t, and supposing she likes the sound of the booming, which she probably doesn’t, and supposing she can find him, which she probably can’t, she will then only consent to mate if the Pōhutukawa tree is in fruit.”  Now, one might study this mating process and think that evolution dropped the ball here. How on earth could it have been a good thing for kakapos to evolve such an inefficient mating ritual? But there is an answer.  On New Zealand, the kakapo had no natural predators, and thus faced no checks on its population. As a result, if kakapos bred like proverbial rabbits, they would quickly end up overpopulating the island on which they lived, harming their own long-term survival. The incredibly inefficient mating rituals of the kakapo actually turn out to be an efficient adaptation to keep population levels in check in the absence of predation or other outside pressures. And this convoluted mating process still resulted in an island that was teeming with kakapos – if they were able to mate any more effectively, they’d have actually harmed their own survival prospects. Just like with the institution of gift-giving among humans, what initially appears to be highly inefficient when viewed in static terms turns out to be dynamically efficient, once one has a deeper understanding. The upshot – evolved social norms, customs, and institutions that seem to “make no sense” or even seem to be socially harmful may very well turn out to be like the kakapo mating ritual – a seemingly inefficient practice that is actually an efficient adaptation.  Unfortunately, this adaptation that was once an asset is now a threat, because the circumstances the kakapo face now are very different from the circumstances under which this mating ritual evolved. Predators have been introduced to the island, and the kakapo has no instinct to flee from predators, or from people. As a result, this once abundant animal is now critically endangered yet repopulation depends on this unchanged mating ritual – which does not bode well for the prospect of recovery.  So am I just rambling, or do I have an overall point? Of course I do, which is [dear EconLog editor, please insert a point here. 😉 ] But that point aside, we should take this as an opportunity to reflect on what Hayek said about about the distinction between law and legislation, and why we cannot “altogether dispense with legislation.”  F. A. Hayek was as strong a defender of the value of evolved order as one is likely to find. But in Rules and Order, the first volume of Law, Legislation, and Liberty, Hayek also says there are times when “grown law requires correction by legislation.” One such circumstance comes about when “the spontaneous process of growth may lead to an impasse from which it cannot extricate itself by its own forces or which it will at least not correct quickly enough.” Thinking about the current situation of the kakapo made me think back to this statement by Hayek. (Yes, I did somehow draw a connection between the mating rituals of flightless parrots and Hayek’s work on social order. That’s just how my mind works – I don’t really understand it myself, but here we are.) Evolution is far too slow for the kakapo to develop a new mating ritual for its radically new environment. Similarly, cultural and institutional evolution may be too slow to adapt to changes in our social environment, leading to situations where legislation may be necessary.  However, it also seems important to keep an extremely high bar for this idea. First of all, it’s very difficult to justifiably know whether a social institution is genuinely inefficient or harmful, or if it might be efficiently inefficient in a way you can’t understand. Second, even if we do know a social institution is suboptimal, it’s often far from clear what a solution might be, and people have a strong bias to think they understand more than they do. And we need strong reasons to think the net benefits will be very large, because top-down alterations of evolved orders incur significant transaction costs. Richard Hooker put it best: When people see things suddenly discarded, annulled, and rejected that long custom had made into matters of second nature, they are bewildered, and begin to doubt whether anything is in itself naturally good or evil, rather than simply whatever men choose to call it at any given moment…Thus, whenever we change any law, in the eyes of the people it cannot help but impair and weaken the force that makes all laws effectual. Hooker then concludes,  If the newer laws are only slightly more beneficial, we should generally conclude that to endure a minor sore is better than to attempt a dangerous remedy. How often is it the case that we find ourselves circumstances where we should attempt a remedy? I’m not sure. But the answer isn’t “never.” Unfortunately, while Hayek does describe a few different circumstances where, in principle, legislation can serve as a useful corrective to grown law, I’m not aware of him citing specific, concrete examples of this in practice.  But I’d also be curious to hear from the readers. How often is it the case that top down correction of evolved institutions can be beneficial? And what’s the greater risk? The possibility that we will overestimate our ability to carry out such remedies effectively, and end up doing more harm than good by constantly trying to tinker with a system we don’t understand? Or that an overly strong reluctance to attempt such remedies will leave us in the same position as the kakapo, stuck with behaviors that were once helpful but are now harmful?  (0 COMMENTS)

British Army major and Sandhurst lecturer Andrew Fox recently spent a week with the Israel Defense Forces including a day inside Gaza. He was struck by the IDF’s control of Gazan territory and shocked by the level of physical devastation. Listen as Fox and EconTalk’s Russ Roberts discuss Fox’s analysis of Israel’s performance in the Gazan war, why Fox believes […] The post Is Israel Winning the War in Gaza? (with Andrew Fox) appeared first on Econlib.

Why is America richer than almost all other developed economies?  In a recent post I pointed to several factors, including regulatory differences.  Industries such as fracking are less heavily regulated in the US than in many other developed countries.  This also explains why human blood has become one of America’s leading export industries: Last year American blood-product exports accounted for 1.8% of the country’s total goods exports, up from just 0.5% a decade ago—and were worth $37bn. That makes blood the country’s ninth-largest goods export, ahead of coal and gold. All told, America now supplies 70% or so of the plasma used to make medicine. The French government has taken a principled stand against the European blood industry: In June the European Parliament approved new regulations that allow compensation to be offered for donations, but ban it from being mentioned in advertising and cap payments to an amount proportionate to the value of time spent donating. Whereas Americans can donate 104 times a year, many Europeans are limited to less than 30 times. . . . France lobbied against the European Union’s recent regulatory changes, arguing that they risked making the human body a commodity, as is “already a reality in the United States”. Instead, they prefer to finance the American blood industry: At the same time, the French government is the sole shareholder in a company that owns six plasma centres in America, which pay donors, with the fluid collected available for use in France. If more blood were available, many lives could be saved.  The same is true for kidneys, where even the US bans the compensation of donors.  A study by John Dooley and Emily A. Gallagher shows that blood industry is beneficial to low-income Americans.  Here is the abstract: In the United States, households donate plasma for compensation at a higher rate than they use payday, auto-title, rent-to-own, or pawn loans. Our paper is the first to explore the household financial implications of plasma donation. Plasma donors tend to be younger and less educated with lower incomes and credit scores; they are also more reliant on non-bank credit. We use dramatic growth in plasma centers between 2014 and 2021 to study the causal effect of the ability to donate plasma on non-bank credit. We find that access to a plasma donation center reduces demand (inquiries) for payday and installment loans by 6.5% and 8.1%, respectively, with larger effects (13.1% and 15.7%, respectively) on younger borrowers. Moreover, foot traffic increases by 7-10% at essential and non-essential goods establishments when a new plasma center opens nearby. Our findings suggest that plasma donation helps households smooth consumption without appealing to high-cost debt. No matter how much you think you know about the economy, it is bigger and more complex than you can imagine.  I suspect that if Americans were asked to name our 10 largest exports, very few would have put human blood on the list. The residential home building industry is far bigger than the blood industry, but even it is far too small to have a noticeable effect on the overall economy.  For instance, between January 2006 and September 2007, home building fell nearly in half, with housing starts plunging from 2.273 million to 1.183 million.  You might have expected this to cause higher unemployment.  It did not. The unemployment rate was 4.7% in January 2006, and it remained at 4.7% 20 months later.  Even housing is too small to significantly impact the overall economy. There has recently been a great deal of discussion about some large computer chip “fabs”, which are currently under construction.  These may or may not be important for the chip industry, but they are almost certainly not important for the overall US economy.  Our economy is far too big and too diverse for any single sector to have a major impact. PS.  If instead of housing starts you use housing completions, the decline would be somewhat less steep, but still quite large.  The best measure of ongoing construction is probably an average of the two series, which fell from 2.155 million to 1.270 million over that 20-month period. (0 COMMENTS)

Washington Post Global Social Security Comparison Misses the Forest for the Trees by Romina Boccia and Ivane Nachkebia, Cato at Liberty, September 5, 2024. Excerpt: The article fails to acknowledge the total replacement rate of the US retirement system, which includes both Social Security and voluntary pensions. When considering this broader perspective, the US approach replaces more than 73 percent of pre-retirement earnings for average workers, significantly higher than the OECD average of 55.3 percent. This places the United States ahead of many countries, including some with more robust government-run systems. For example, the article shows that French public pensions replace 57.6 percent of pre-retirement earnings of an average worker, compared to Social Security’s 39.1 percent replacement rate. (As mentioned, when voluntary pensions are included, the total replacement rate for the US retirement system exceeds 73 percent.) On the other hand, the French system remains at 57.6 percent due to the limited coverage of voluntary pensions, so low that the OECD does not factor them into total replacement rate calculations. OECD data also highlight that American seniors are far less dependent on government for their retirement income compared to their French counterparts. Public benefits make up 39.3 percent of American seniors’ total income, while in France, they account for 78.1 percent. DRH comment: This article is interesting in another way also. It shows a substantial degree of understanding among Americans that they can’t depend on Social Security for a large percent of their retirement income. W.H. Hutt: An Economist for the Twenty- First Century by Art Carden and Ilia Murtazashvili, SSRN.Com, September 2, 2024. Excerpt: As Thomas Hazlett wrote in a 1983 article for the Wall Street Journal, W.H. Hutt “may be the most important economist of this century.” Hutt’s University of Dallas colleague Samuel Bostaph prophesied that Hutt might be one of the most important economists of the twenty-first. Economists who know W.H. Hutt likely only know him because he popularized the phrase “consumers’ sovereignty.” This is unfortunate because he made many more substantial contributions that deserve revisiting in the 21st century. They still have much to teach us about how free societies function and flourish. Personal note: I was at 3 different weeklong seminars with Hutt. The first was the first Austrian Economics conference in South Royalton, Vermont in June 1974. The second was a Liberty Fund seminar (and the first one I ever attended) at Ohio University in Athens, Ohio in June 1975. The third was immediately after and, indeed, he, his lovely wife, and I marched through an airport together to catch a flight to attend it. It was the second Austrian Economics conference, held at Hartford College in Hartford, Connecticut. Although I was very impressed with him, I had only an inkling of an idea at the time of his importance.   Industrial Policy: A Dissent by Charles L. Schultze, The Brookings Review, Fall 1983. Excerpt: The second of these new theories-and the latest entry in the competition for the hearts and minds of political candidates-is a set of economic ideas and policy recommendations that goes by the name “industrial policy.” It has been the subject of a growing stream of books and articles; it has been endorsed as a concept by the AFL-CIO; its precepts have been incorporated in a number of bills now before the Congress; and it is receiving a sympathetic hearing from many of the candidates for the 1984 Democratic presidential nomination. The phrase “industrial policy” means somewhat different things to different people; it refers not so much to a single theory as to a loose collection of similar diagnoses and proposals. The diagnoses generally cluster around two basic propositions: DRH comment: This is an oldie but goodie. I reread it while writing my latest Substack post, “Brad Delong’s Unsatisfactory Case for an Industrial Policy,” I Blog to Differ, September 8, 2024. It’s full of good content. I read it when I was researching industry policy while I was a senior economist with President Reagan’s Council of Economic Advisers. It affected my work in two ways. First, I drew on it in writing my first article for Fortune, “The Myth of MITI,” August 8, 1983. I quote from that piece here. Second, I was one of the people at the CEA pushing hard for a chapter on industrial policy. My side won and we wrote it. I wrote the first draft and it was thrown into the trash can as being too basic. (I ultimately agreed.) But I had a lot of input on the version that finally emerged. Indeed, I made it into a talk that I gave to students at the Naval Postgraduate School in February 1984, a talk that led to my getting an offer to be on the faculty. (0 COMMENTS)

  “Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and it does it in a manner which not one man in a million is able to diagnose.” –John Maynard Keynes   I thought about this passage while reading David Henderson’s EconLog post about further declines in the quality of the $1.50 Costco Hot Dog. Episode 374 of Anthony Davies’s and James Harrigan’s podcast “Words and Numbers” talks about how much beer and hot dog prices have risen at baseball stadiums. The $1 Kahn’s hot dogs I used to buy at Riverfront Stadium in Cincinnati live on in memory only. According to polling data from Data for Progress, likely voters left, right, and center blame corporate food manufacturers and retailers “raising prices to maximize profits” for rising prices. The closest thing the poll has to any variation on “too much money chasing too few goods” is “The Policies of President Joe Biden,” which could mean just about anything President Biden has done. The Federal Reserve is conspicuously absent from the list of potential suspects. I’m not sure it would have occurred to Data for Progress to include monetary policy in the poll. The shrinkflation blame game illustrates John Maynard Keynes’s argument–and it’s not clear Lenin ever actually said anything like what Keynes attributes to him. Inflation doesn’t just make prices and money balances harder to interpret. It also engages all the visible forces of political law on the side of destruction because higher prices for gas and groceries have a lot of salience for voters, which means populist politicians have something to stamp their feet and pound the podium about during election season. Which is more likely to boil the blood and stir the soul: huffing denunciations of C-suite vultures sticking it to average Joes and Janes so they can maximize profits or the quantity theory of money? Costco, after all, chose to stop offering sauerkraut and onions to hot dog customers. Their suppliers chose to charge higher prices. Some anonymous schmuck in an office building somewhere chose to recommend price hikes to the bosses and directors of the big, faceless agribusiness corporation who are accountable only to bloated, faceless shareholders. Which is easier to do: believe that sinister forces are at work or explain all the terms in the equation M*V = P*Y, total spending–the money supply times the velocity of money, which is the frequency with which each dollar is used–is equal to the product of the price level and the amount of real output (Lawrence White explains this equation in his Concise Encyclopedia article on inflation). When there is more money and productivity isn’t growing by leaps and bounds, Costco basically has no choice but to lower quality if they want to keep the price fixed at $1.50–but if you start trying to explain how Costco and their suppliers are working in a world where too much money is chasing too few goods, and most voters will tune you out faster than you can say “velocity.”   Art Carden is Professor of Economics & Medical Properties Trust Fellow at Samford University. (0 COMMENTS)