March 7, 2019


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See exactly how the statement from Fed policy makers changed.

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This is the web version of the WSJ’s newsletter on the economy. You can sign up for daily delivery here. More Output, Fewer Workers U.S. factory output continued to grow in August, but the picture for employment was mixed, a possible sign of lingering uncertainty about the coronavirus pandemic among American manufacturers. A survey of […]

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Your daily news briefing

Renewables account for half of Beijing’s energy investments in 2020 but coal share also grows

GDP rises 1.1% in the fourth quarter despite December Covid-19 outbreak

Real estate stoked Covid recovery but ever-increasing prices are ‘politically not acceptable’

Severe shortage of key supplies risks becoming recurring crisis for motor industry

Alternative indicators give an early picture of how the global economy is faring in the face of headwinds from new restrictions as case counts climb

Rebound in late 2020 also fuelled industrial production, benefiting China

The risk to the EU’s credibility seems too high for the deal to be worth it

Your daily news briefing

Policy on procurement risks straining relations with key US allies

Frustration on all sides as EU and UK get ready to apply the trade deal

New deals give Brussels opportunity to make life uncomfortable for London and Beijing

An enjoyable, if unduly pessimistic, forecast on the post-pandemic economy

The share of national income paid to workers may finally rise

Start every week on the front foot with a preview of what’s on the global agenda

A friend on an email group I’m on asked my friend and co-author Charley Hooper the following question about the COVID-19 vaccines:

Are you sure that the vaccine won’t mess with our genes?

Charley allowed me to share his answer:

No, I’m not 100% sure. But I’m one minus epsilon (a very small number) sure.

Biological reason:

I’m not an expert in this area. This is from my reading…RNA is a notoriously fragile molecule. Delivering mRNA successfully to the cells inside our bodies and ensuring that enzymes within our cells do not degrade it are key challenges in vaccine development. Chemical modifications during the manufacturing process can significantly improve the stability of mRNA vaccines. Encapsulating mRNA in lipid nanoparticles is one way to ensure that a vaccine can successfully enter cells and deliver the mRNA into the cytoplasm. mRNA does not linger in our cells for long. Once it has passed its instructions to the protein-making machinery in our cells, enzymes called ribonucleases (RNases) degrade the mRNA. mRNA dies a quick death once in human cells.It is not possible for mRNA to move into the nucleus of a cell as it lacks the signals that would allow it to enter this compartment. This means that RNA cannot integrate into the DNA of the vaccinated cell. There is no risk of long-term genetic changes with mRNA vaccines.

Clinical reason:

Moderna’s Phase 3 clinical trial of its COVID-19 vaccine enrolled 30,420. We haven’t seen any genetic damage to these participants. Ditto for Pfizer and BioNTech’s trial that enrolled 43,448 participants. How have we not seen any genetic damage in over 70,000 closely monitored individuals?

Economic reason:

Why would a company market a vaccine that could mess up the genetics of its customers? I shudder to think of the lawsuits. This goes against everything I’ve learned from spending the last three decades in the pharmaceutical industry.

Genetic reason:

If the vaccines do alter human DNA, what is the result? To make us healthier, stronger, smarter, more beautiful? That would be extremely difficult to accomplish. To make us mutants? If the vaccines do alter our DNA, I think it’s virtually certain that the alterations would be harmful and perhaps fatal. Who other than an extreme environmentalist or a mass murderer would want this? However, these vaccines were developed by drug companies, not mass murderers. There’s no group of people that I know of that had both a motive for such a crime and the ability to perpetrate it.

Insider information reason:

Have we heard of large numbers of employees at Moderna, Pfizer, and BioNTech avoiding the new vaccines? No.






The TPOC Book Club continues its march through Chapter 1, “Ignorance Is Strength.” Please leave your thoughts and questions in the comments and I’ll do an omnibus reply later this week.

After the revolutionary period of the fifties and sixties, society regrouped itself, as always, into High, Middle, and Low. But the new High group, unlike all its forerunners, did not act upon instinct but knew what was needed to safeguard its position. It had long been realized that the only secure basis for oligarchy is collectivism. Wealth and privilege are most easily defended when they are possessed jointly.

Coming from a socialist like Orwell, this is a major concession.  Why, you may ask, does collective ownership defuse complaints about wealth and privilege?  Social Desirability Bias, of course.  “This is mine” sounds bad; “This is ours” sounds good.  But aren’t corporations also joint property?  Indeed.  To cash in on the psychological appeal of collective ownership, you desperately need a clear-cut “non-profit” label.  Government, organized religion, and charity all get a pass, but the wealthy pooling their resources definitely does not.

The so-called ‘abolition of private property’ which took place in the middle years of the century meant, in effect, the concentration of property in far fewer hands than before: but with this difference, that the new owners were a group instead of a mass of individuals. Individually, no member of the Party owns anything, except petty personal belongings. Collectively, the Party owns everything in Oceania, because it controls everything, and disposes of the products as it thinks fit.

Great!  I wish that economists who do international comparisons of inequality had the same insight.

In the years following the Revolution it was able to step into this commanding position almost unopposed, because the whole process was represented as an act of collectivization. It had always been assumed that if the capitalist class were expropriated, Socialism must follow: and unquestionably the capitalists had been expropriated. Factories, mines, land, houses, transport — everything had been taken away from them: and since these things were no longer private property, it followed that they must be public property. Ingsoc, which grew out of the earlier Socialist movement and inherited its phraseology, has in fact carried out the main item in the Socialist programme; with the result, foreseen and intended beforehand, that economic inequality has been made permanent.

If you read 1984 closely, it’s clear that measured economic inequality would be quite low.  What’s distinctive about Orwell’s dystopia is the immense inequality of power.

But the problems of perpetuating a hierarchical society go deeper than this. There are only four ways in which a ruling group can fall from power. Either it is conquered from without, or it governs so inefficiently that the masses are stirred to revolt, or it allows a strong and discontented Middle group to come into being, or it loses its own self-confidence and willingness to govern. These causes do not operate singly, and as a rule all four of them are present in some degree. A ruling class which could guard against all of them would remain in power permanently. Ultimately the determining factor is the mental attitude of the ruling class itself.

Indeed.  I’ve long maintained that the Soviet Union would still be around today if Gorbachev had been a self-confident Stalinist instead of a weak-kneed reformer.

After the middle of the present century, the first danger had in reality disappeared. Each of the three powers which now divide the world is in fact unconquerable, and could only become conquerable through slow demographic changes which a government with wide powers can easily avert.

All-out nuclear war could probably do the trick.  Orwell elsewhere posits that a major nuclear war leads to a common realization of the necessity of avoiding further use of nuclear weapons.  But once countries start mutually nuking each other, it’s easy to see how things could spiral out of control.

The second danger, also, is only a theoretical one. The masses never revolt of their own accord, and they never revolt merely because they are oppressed. Indeed, so long as they are not permitted to have standards of comparison, they never even become aware that they are oppressed.

The recurrent economic crises of past times were totally unnecessary and are not now permitted to happen, but other and equally large dislocations can and do happen without having political results, because there is no way in which discontent can become articulate.

Well-said.  Remember: The Soviet Union collapsed in the 1980s when conditions were, by Soviet standards, excellent.  During the 30s, millions of Soviet citizens starved, but the regime was never in danger of internal revolt.

As for the problem of overproduction, which has been latent in our society since the development of machine technique, it is solved by the device of continuous warfare (see Chapter III), which is also useful in keying up public morale to the necessary pitch.

Actually, this problem of “overproduction” was never anything more than a problem of sticky wages and bad monetary policy.  If you can’t profitably employ all of the resources that exist, you simply need to cut input prices.  If that’s off the table, you can just print more money.  This isn’t idle theory.  Since Orwell’s time, many First World countries have had low unemployment even though production continues to rise.  And some of them – like Japan – have virtually no military to speak of.  And look what happened to the U.S. when the Cold War ended.  Military spending as a share of GDP crashed – and the economy boomed.

From the point of view of our present rulers, therefore, the only genuine dangers are the splitting-off of a new group of able, under-employed, power-hungry people, and the growth of liberalism and scepticism in their own ranks. The problem, that is to say, is educational. It is a problem of continuously moulding the consciousness both of the directing group and of the larger executive group that lies immediately below it. The consciousness of the masses needs only to be influenced in a negative way.


Given this background, one could infer, if one did not know it already, the general structure of Oceanic society. At the apex of the pyramid comes Big Brother. Big Brother is infallible and all-powerful… His function is to act as a focusing point for love, fear, and reverence, emotions which are more easily felt towards an individual than towards an organization.

I’ve said it before and I’ll say it again: Politics is the religion of modernity.

Below Big Brother comes the Inner Party, its numbers limited to six millions, or something less than 2 per cent of the population of Oceania. Below the Inner Party comes the Outer Party, which, if the Inner Party is described as the brain of the State, may be justly likened to the hands. Below that come the dumb masses whom we habitually refer to as ‘the proles’, numbering perhaps 85 per cent of the population.

Orwell neglects the possibility of a power struggle within the Inner Party.  If Oceania existed, this alone would create the instability necessary for regime change.

In principle, membership of these three groups is not hereditary. The child of Inner Party parents is in theory not born into the Inner Party. Admission to either branch of the Party is by examination, taken at the age of sixteen. Nor is there any racial discrimination, or any marked domination of one province by another. Jews, Negroes, South Americans of pure Indian blood are to be found in the highest ranks of the Party, and the administrators of any area are always drawn from the inhabitants of that area.

This is one of the least plausible features of Orwell’s dystopia.  There is always demographic imbalance of power, and these imbalances are easy for power-hungry politicians to demagogue.  The kind of cultural homogeneity Orwell pictures would take centuries for even the most totalitarian regime to engineer.  Witness the breakup of the Soviet Union after seen decades of “We’re all Soviet citizens” propaganda.

 It is true that our society is stratified, and very rigidly stratified, on what at first sight appear to be hereditary lines. There is far less to-and-fro movement between the different groups than happened under capitalism or even in the pre-industrial age. Between the two branches of the Party there is a certain amount of interchange, but only so much as will ensure that weaklings are excluded from the Inner Party and that ambitious members of the Outer Party are made harmless by allowing them to rise.

Very consistent with Clark’s The Son Also Rises.  Though strikingly, Orwell suggests no role for politically-powerful families to grow rich by corruption.  For Orwell, kin relations are strangely fragile; the government’s effort to turn children against their parents is almost totally successful.  In contrast, the Party continuously persecutes romance because it recognizes the power of the pair-bonding instinct.  In the real world, however, kin relations seem much more resilient than romantic bonds – and a much firmer basis for organized graft.

Proletarians, in practice, are not allowed to graduate into the Party. The most gifted among them, who might possibly become nuclei of discontent, are simply marked down by the Thought Police and eliminated. But this state of affairs is not necessarily permanent, nor is it a matter of principle.

A strange situation.  You’d expect the Party to constantly recruit from the proles, and eliminate only the talented proles who resist recruitment.

In the crucial years, the fact that the Party was not a hereditary body did a great deal to neutralize opposition. The older kind of Socialist, who had been trained to fight against something called ‘class privilege’ assumed that what is not hereditary cannot be permanent. He did not see that the continuity of an oligarchy need not be physical, nor did he pause to reflect that hereditary aristocracies have always been shortlived, whereas adoptive organizations such as the Catholic Church have sometimes lasted for hundreds or thousands of years.

Again, brilliant.

All the beliefs, habits, tastes, emotions, mental attitudes that characterize our time are really designed to sustain the mystique of the Party and prevent the true nature of present-day society from being perceived. Physical rebellion, or any preliminary move towards rebellion, is at present not possible. From the proletarians nothing is to be feared. Left to themselves, they will continue from generation to generation and from century to century, working, breeding, and dying, not only without any impulse to rebel, but without the power of grasping that the world could be other than it is.

This bleak picture is close to literally true.  Consider: Haiti appears to be the sole durably successful slave revolt in history.  Contra Orwell, slaves often feel the desire to rebel.  But that impulse rarely leads to a blueprint for social reform.  And even if it did, the coordination problem is crushing.

They could only become dangerous if the advance of industrial technique made it necessary to educate them more highly; but, since military and commercial rivalry are no longer important, the level of popular education is actually declining.

Orwell seems to assume absurdly high Transfer of Learning.  Once a prole learns how to program a computer, he’ll soon figure out how to reform society.  In practice, however, learning is highly compartmentalized.  So Orwell’s dystopia is even more stable than it looks.  Even if the proles were trained for high-tech jobs, few would spontaneously grasp that the social order “could be other than it is.”

What opinions the masses hold, or do not hold, is looked on as a matter of indifference. They can be granted intellectual liberty because they have no intellect. In a Party member, on the other hand, not even the smallest deviation of opinion on the most unimportant subject can be tolerated.

If you’re getting a sense of deja vu, ask yourself: “How afraid are minimum wage workers of being ‘cancelled’ for their social media posts?”

A Party member lives from birth to death under the eye of the Thought Police. Even when he is alone he can never be sure that he is alone. Wherever he may be, asleep or awake, working or resting, in his bath or in bed, he can be inspected without warning and without knowing that he is being inspected. Nothing that he does is indifferent… A Party member is required to have not only the right opinions, but the right instincts.

Many of the beliefs and attitudes demanded of him are never plainly stated, and could not be stated without laying bare the contradictions inherent in Ingsoc. If he is a person naturally orthodox (in Newspeak a goodthinker), he will in all circumstances know, without taking thought, what is the true belief or the desirable emotion.


But in any case an elaborate mental training, undergone in childhood and grouping itself round the Newspeak words crimestopblackwhite, and doublethink, makes him unwilling and unable to think too deeply on any subject whatever.

A Party member is expected to have no private emotions and no respites from enthusiasm. He is supposed to live in a continuous frenzy of hatred of foreign enemies and internal traitors, triumph over victories, and self-abasement before the power and wisdom of the Party. The discontents produced by his bare, unsatisfying life are deliberately turned outwards and dissipated by such devices as the Two Minutes Hate, and the speculations which might possibly induce a sceptical or rebellious attitude are killed in advance by his early acquired inner discipline. The first and simplest stage in the discipline, which can be taught even to young children, is called, in Newspeak, crimestopCrimestop means the faculty of stopping short, as though by instinct, at the threshold of any dangerous thought. It includes the power of not grasping analogies, of failing to perceive logical errors, of misunderstanding the simplest arguments if they are inimical to Ingsoc, and of being bored or repelled by any train of thought which is capable of leading in a heretical direction. Crimestop, in short, means protective stupidity. But stupidity is not enough. On the contrary, orthodoxy in the full sense demands a control over one’s own mental processes as complete as that of a contortionist over his body. Oceanic society rests ultimately on the belief that Big Brother is omnipotent and that the Party is infallible. But since in reality Big Brother is not omnipotent and the party is not infallible, there is need for an unwearying, moment-to-moment flexibility in the treatment of facts… This demands a continuous alteration of the past, made possible by the system of thought which really embraces all the rest, and which is known in Newspeak as doublethink.

These words seem more relevant than ever, as I’ve been saying lately.  The big difference, of course, is that contemporary Western Thought Police are soft and disorganized.  A few crazies aside, what I call the “uniformity and exclusion movement” advocates no punishment harsher than blacklist from high-skilled employment and ostracism from high-status society.  Scary, but a far cry from jail, slave labor, or death.  And most of their wrath focuses on emotionally-charged incidents.  There’s no master plan, just a kaleidoscope of rage.



How-to-Think-Like-Shakespeare-195x300.jpg Author Scott Newstok of Rhodes College talks about his book, How to Think Like Shakespeare, with EconTalk host Russ Roberts. Newstok draws on Shakespeare and other great writers and thinkers to explore the nature of education and the life well-lived.


The mittens that Bernie Sanders wore at the inauguration of the new president have been a big hit in the media and in cyberspace. And we now know where the famous mittens came from, although most people miss the economic lessons of the story. The mittens were sown from recycled materials by a Vermont teacher called Jen Ellis, who moonlights in this artisanal hobby (Travis M. Andrews, “The Handwarming Story of How Bernie Sanders Got his Inauguration Mittens,” Washington Post, January 21, 2021).

Remember Adam Smith’s pin factory. In the second part of the 18th century, the division of labor allowed 10 men working together to each make the equivalent of 4,800 pins a day, while a single man working alone could only make 20 at most and perhaps not more than one pin (The Wealth of Nations, 1776). Now, apply that to mitten production.

Ms. Ellis reportedly spent an hour making Mr. Sanders’s mittens. If she had spent that hour working in a clothing factory instead, she would have produced several pairs of mittens, perhaps dozens or hundreds of pairs. As Adam Smith saw for pins, the division of labor dramatically increases productivity—and even more dramatically with modern machines that did not yet exist in the early years of the Industrial Revolution. The numerous pairs of mittens produced by Ms. Ellis’s work in an hour could have been sold to Walmart or Dollar stores, keeping warm the hands of many poor. She chose instead to produce one pair for a wealthy Vermonter. (The 2016 purchase by Mr. Sanders and his wife of a house in a wealthy Lake Champlain neighborhood, documented by a local Vermont newspaper, has not been contradicted by Snopes.)

Note that, except for the economic lessons, none of that is our business. Assume that Mr. Sanders’s income from taxpayers represents what has been necessary to incentivize him to give up private employment opportunities and be as productive or more productive for voters (and detrimental to none). Individual preferences (which guide individual actions) are subjective, and Ms. Ellis obviously preferred the recognition and gratefulness of Mr. Sanders to the contentment of several poor individuals.  She is, or should be, free to produce what she wants with the technology she prefers and sell or give her products to whom she wants. She is not, or should not be, obliged to bake a cake for the poor. On his side, Mr. Sanders is, or should be, free to wear the mittens he wants, however eccentric or ostentatious, just as people who want deodorant should be free to buy the sorts they want, despite what Bernie himself thinks; or just as people who want dolls for their daughters should be free to purchase them from Chinese producers or anywhere they find what they consider a good bargain, despite what Sanders’ fellow politician Donald Trump proposed.

What Mr. Sanders and Ms. Ellis have enjoyed is called economic freedom. It is the regime that, in general, best and most equally allows individuals to satisfy their preferences.


It’s generally recognized that our (American) response to the Covid-19 pandemic was disastrous. But I think far fewer appreciate the full scale of the disaster, or the most significant causal levers by which the worst effects could have been avoided. (Yes, Trump was bad.  But his public health disinformation and politicization of masking—while obviously bad—may prove relatively trivial compared to the mammoth failings of our public health institutions and medical establishment.) Much of the pandemic’s harm could have been mitigated had our institutions been properly guided by the most basic norms of cost-benefit analysis.

This is the opening paragraph of Richard Yetter Chappell, “Lessons from the Pandemic,DailyNous, January 19, 2021.

The whole thing is excellent. Chappell is a philosopher but the piece reads like a well-written analysis by a policy economist.

Another excerpt:

In ordinary circumstances, the status quo is relatively safe and so untested medical innovations present asymmetric risks. That is, until they are proven safe and effective, it may be reasonable to assume that the potential risks of an untested product outweigh its potential benefits, and so block public access to such products until they pass stringent testing requirements. (There are arguments to be made that FDA regulations are excessively onerous even in ordinary circumstances, but I remain neutral on that question here. I take it that there is at least a reasonable case to be made in the FDA’s defense ordinarily. No such case for the FDA’s stringency seems possible in a pandemic.)

A pandemic reverses the asymmetry of risk. Now it is the status quo that is immensely dangerous, and a typical sort of medical intervention (an experimental drug or vaccine, say) is comparatively less so. The potential benefits of innovation likely outweigh the potential risks for many individuals, and vastly so on a societal scale, where the value of information is immense. So the FDA’s usual regulations should have been streamlined or suspended for potential pandemic solutions (in the same way that any ethics barriers beyond the minimum baseline of informed consent should have been suspended for pandemic research). This should be the first thing the government does in the face of a new pandemic. By blocking access to experimental vaccines at the start of the pandemicthe FDA should be regarded as causally responsible for every Covid death that is occurring now (and many that occurred previously).

This last sentence is almost correct and similar to what Charley Hooper and I argued last month in “The FDA’s Deadly Caution,” AIER, December 16, 2020. Surely there are some deaths that would be occurring now, even without FDA intervention, due to people not taking the vaccine or due to the vaccines’ not being 100% effective

Yet another excerpt:

Closely related to the above mistake is the implicit assumption that it’s somehow better to do (or allow) nothing than to do (or allow) something imperfect. Letting the perfect be the enemy of the good in a pandemic is disastrous. Blocking quick Covid tests for having lower accuracy than slow ones is an obvious example of this form of stupidity. Deciding in advance that a vaccine must prove at least 50% effective in trials to receive FDA approval is another. (Obviously a 40% effective vaccine would be better than nothing!  Fortunately it didn’t come to that in the end, but this policy introduced extra risk of disastrous outcomes for no gain whatsoever.)

Compare Dr. Ladapo’s argument in the WSJ that “Doctors should follow the evidence for promising therapies. Instead they demand certainty.” (Steve Kirsch expands on the complaint.) Again, this is a very basic form of irrationality that we’re seeing from the medical establishment.

Misguided perfectionism has also damaged the vaccine rollout due to prioritizing complex allocation schemes over ensuring that as many people are vaccinated as quickly as possible. (Some are letting doses spoil rather than “risk” vaccinating anyone “out of turn”!)

More examples are discussed here.

Do read the whole thing.

HT2 Daniel Shapiro.





In recent years, the reporting at The Economist has moved somewhat to the left. Here’s a recent example:

But the assumption of rational self-interest constrains the welfare state significantly. Generous benefits, and the high taxes needed to fund them, will put rationally minded people off work, undermining economic growth and the government’s capacity to help people in need.

In practice, though, Mr Saez explained, the world works differently. . . .

Employment rates for prime-age men are remarkably similar across rich countries, Mr Saez pointed out, despite big differences in tax and welfare systems. Average tax rates in France are roughly 20 percentage points higher than those in America across the income distribution, yet about 80% of middle-aged men work in each country. (Americans do work more hours, but, as Mr Saez noted, this too reflects social choices, such as the shorter working week specified in French law.) There is strong social pressure for healthy men not to be seen as “freeloaders”, which pushes against the incentives created by higher taxes or bigger welfare cheques. Where social pressures to work are more ambiguous—as for the young or old or, in many places, women—generous benefits tend to have larger effects on employment decisions, Mr Saez noted. But this reinforces rather than undercuts the idea that social factors have important effects on economic decisions.

This isn’t exactly wrong, but it seems a bit misleading.  The tone of the article is sort of dismissive of conservative arguments that the welfare state discourages work, but the actual empirical evidence suggests that it discourages work among the young, the old, women, and among men it leads to shorter work hours.  This is one reason why per capita GDP (PPP) is far lower in Europe than in America. It’s not true that “the world works differently”; it works exactly the way that classical economic theory predicts.  The European welfare state makes Europe a much poorer place.  That may be fine (perhaps people prefer the extra leisure time), but it’s foolish to minimize the effect.

And to head off criticism, note that while some European welfare states have incomes well above the European average, so do some American states.  Lots of things affect income, not just welfare and taxes.

Over the past quarter century, the center left has shifted a bit left on public policy issues:

1990s-style neoliberalism                                2021 post-liberalism

1. Singapore style forced saving                  Expanded social insurance programs

2. Private infrastructure projects.              Public infrastructure projects

3. Progressive consumption taxes              Progressive income/wealth taxes

4. Fiscal responsibility                                   Deficits don’t matter

5. Monetary stabilization policy                 Fiscal stabilization policy

6. Low wage subsidies                                   Higher minimum wages

7.  Privatization                                                More aggressive antitrust

In 1996, Clinton ran for re-election on ideas such as “the era of big government is over” and “ending welfare as we know it.”  Fiscal stabilization policy was a complete non-starter.  We were moving toward budget surpluses, with an eye on the demographic time bomb created by lower birth rates and longer life expectancy.

Why the recent move toward a slightly more socialist approach to policy?  (Yes, it’s far from outright socialism, but for the most part the list above is not a move toward the Nordic model, at least the post-1990 Nordic model.)

Some might quote Keynes’s famous remark about how to respond to new information, but I’m not convinced that this can explain the shift.  I’m only an expert on one of the 7 areas above (stabilization policy), but in that one area I’ve seen a lots of bad arguments for the move toward fiscal policy, arguments that reflect a misunderstanding of macro theory and an ignorance of macroeconomic history.  So I have little confidence that the other 6 examples are any better justified.  Especially when I see dubious claims that a less effective policy (minimum wages) can be justified on the basis of being more politically acceptable than a more effective policy (low wage subsidies).  We have an EITC program!  And we have a new government where the Democrats have an easier time with new spending programs (requiring 50 senators) than regulatory changes (requiring 60 senators).

So what explains the shift?  I suspect it’s a mix of various factors.  Monetary policy failures like the Great Depression and the Great Recession are almost always misdiagnosed as a failure of capitalism.  The move toward an information economy has made income less equal.  The zero lower bound makes monetary policy seem less effective than it is.

More speculatively, the center right might feel increasingly comfortable viewing the center left as their “tribe”.  The days of P.J. O’Rourke’s “Republican Party Reptile” is long gone.  It’s no longer cool to be associated with an ideology that has become increasingly nationalistic and anti-intellectual.  Meanwhile, the demise of communism has removed some of the taint from the left.  Media outlets such as The Economist and the Financial Times, and think tanks like the Niskanen Center, seem increasingly at home in the center left.

PS.  I used the term “post-liberal”, as its relationship to liberalism is analogous to the relationship of post-Keynesian to Keynesianism. Similarly, modernism was followed by postmodernism.  In any case, neoliberalism is already taken, and neo-neoliberalism just sounds stupid.



If we want to combat violence in the world, what’s the best way to go about it? Perhaps thinking of people like Pablo Escobar, Joseph Kony, and Osama Bin Laden as criminals is insufficient. What if we were to think of them instead as entrepreneurs? What if we assessed their actions and organization as a venture capitalist, rather than a politician or soldier?

These questions are at the heart of the work of Gary Shiffman, who EconTalk host Russ Roberts welcomed to talk about his book, The Economics of Violence, in this episode. Shiffman became an economist after a career in the military to understand conflict, violence, and coercion in the world. We’d like to hear what you took away from this week’s conversation. We’d love for you to share your thoughts- with us here or offline with others. Together we can keep the conversation going.




1- What’s wrong with thinking about terrorism as a religious issue, according to Shiffman?


2- What are “fictive kinships,” and how does this concept add to Shiffman’s entrepreneurship framework?


3- Consider Shiffman’s three “case studies” as entrepreneurs. Roberts reminds us all three died violent deaths at a young age. As Roberts asks, how is this rational??? To what extent are cases such as these really comparable to famous legitimate CEOs?


4- What does Roberts mean when he said, “The idea that you could make something illegal and therefore solve it is really important.” Consider the case of Escobar. Which government- the American or Colombian- had stronger incentives for the drug trade to be illegal?


5-Shiffman argues that understanding the incentives, institutions, norms, values that folks have can not only help us understand violence, but also fight it. To what extent has Shiffman convinced you?





On December 2, just hours after teaching his last class at George Mason University, economist Walter Williams died. He was eighty-four. That same day, I wrote a short appreciation of Walter that led to something unprecedented in my twelve years of blogging: comments by dozens of people, almost none of whom I knew, all complimentary. Our blog, EconLog, is one of the best at weeding out nasty, abusive comments. This time, though, there was nothing to weed out.

It’s easy to see why because Walter was an attractive person in so many ways. He had an inquisitive mind, a powerful work ethic, incredible courage, a great sense of humor, a strong sense of justice, and an ability not just to teach economic understanding but also to sell economic freedom. He did so in hundreds of syndicated columns written over four decades. If you want to understand what was so compelling about the man, you could do no better than read his 2010 autobiography, Up from the Projects. But Walter would have been the first person to remind you that your time is your most valuable resource. So if you’re in a time crunch, read my article instead.

These are the opening two paragraphs of David R. Henderson, “Appreciating Walter Williams,” Defining Ideas, January 22, 2021.

Another excerpt about Walter’s mischievous but also courageous streak:

Walter showed courage and creativity, along with a mischievous streak a mile wide, as a young man dealing with racism. Some of the most impressive and humorous parts of his book are his stories of his time as an Army draftee, from 1959 to 1961, in Georgia and South Korea. At Fort Stewart in Georgia, Walter quickly learned that although the Army was formally desegregated, the best jobs went to white men. When he was assigned to an Army motor pool, he had to wash trucks and jeeps rather than working as a mechanic or mechanic’s helper. A sergeant who caught him reading on the job ordered him to paint a truck. Although Walter knew that the sergeant meant for him to paint the flat bed, he saw his opportunity. “The whole thing?” he asked. The sergeant answered “yes,” but regretted it. After Walter started painting the window and the tires, a lieutenant asked him what the [expletive deleted] he was doing. Walter writes, “I responded, in my best Southern Stepin Fetchit accent, ‘Boss, de sergeant told me to paint de whole truck; Ah’s just doin’ what he say.’ ”

Also, a note about Walter following the logic to wherever it leads:

Walter also followed economic analysis to sometimes surprising conclusions. My favorite example is a 1997 column titled “Extortion or Voluntary Exchange.” In it, he tells of a young woman, Autumn Jackson, who asked Bill Cosby for $40 million “in exchange for her silence about being his illegitimate daughter.” Jackson was convicted of extortion. But Walter points out that she simply offered an exchange that Cosby was free to reject. Walter notes that we should worry about extortion when people threaten violence. If we did, he argues, we would put our attention not on Ms. Jackson, but on the US Congress, which, with legislation, regularly threatens us with violence. He gives the example of Social Security and Medicare. If you don’t pay those taxes, he writes, they will threaten to take our property and/or put us in jail. If we resist, they will authorize their agents to use violence. If Autumn Jackson had offered Cosby such a deal, writes Walter, he would say, “Jail her for life!”

Read the whole thing.



David Beckworth directed me to this Nick Rowe post:

Let’s start with land, and assume we are not living in the Netherlands. The supply of land is fixed and hence the price is 100% demand determined. If consumer preferences do not shift, then the affordability does not change at all. But the concept of “price” is tricky, as it may be a composite variable that involves both the size of a required down payment (a function of the price of land) and the annual cost of a loan to buy land.

Now assume the interest rate falls in half for reasons unrelated to the land industry (to avoid reasoning from a price change.) If the price of land were to double, then land would be less affordable for the reasons suggested by Nick. But if consumer preferences did not change, then this cannot be the equilibrium outcome. Instead, price will rise by less than 100%, and the added negative of higher down payments will exactly offset the added benefit of lower monthly loan payments (due to lower interest rates.) The price of land will rise, but the composite cost of owning land (down payment plus interest) doesn’t change.

Now let’s think about how lower interest rates affect the price of mobile homes. Assume these homes are manufactured in industries where the long run supply curve is perfectly elastic. (That’s actually a reasonable assumption.) In that case, cutting the interest rate in half has no long run effect on mobile home prices. But it reduces the total cost of owning a mobile home and thus demand shifts right, which in the long run means higher quantity sold at the same price per unit.

Now think about “housing” as a house/land hybrid. The land is fixed in supply, and the house can be produced in the long run at constant cost. Now when interest rates fall in half there is some net decline in the total cost of housing (down payment plus interest) and some net rise in house prices and house output. In Texas, the effect of lower interest rates mostly shows up as higher quantity. In California, the main impact of lower rates is to increase house (i.e. mostly land) prices.

PS.  This is not an academic exercise.  Lower interest rates are the new normal.

PPS.  Yes, it matters why rates fall.  In this example, assume the fall in rates is caused by some combination of more saving and fewer opportunities for business investment.


In the Financial Times John Kay reviews the new book by Mariana Mazzucato. The book is called Mission Economy. A Moonshot Guide to Change Capitalism.

Mazzucato, like she did before, argues for governments “creating market” and “steering” capitalism in one direction or another. Ambitious goals should fuel mission-oriented capitalism, with government at the helm.

Kay has many excellent points but I particularly commend these:

But Apollo was a success because the objective was specific and limited; the basic science was well understood, even if many subsidiary technological developments were needed to make the mission feasible; and the political commitment to the project was sufficiently strong to make budget overruns almost irrelevant. Centrally directed missions have sometimes succeeded when these conditions are in place; Apollo was a response to the Soviet Union’s pioneering launch of a human into space, and the greatest achievement of the USSR was the mobilisation of resources to defeat Nazi Germany. Nixon’s war on cancer, explicitly modelled on the Apollo programme, was a failure because cancer is not a single illness and too little was then — or now — understood about the science of cell mutation. Mao’s Great Leap Forward, a vain bid to create an industrial society within five years, proved to be one of the greatest economic and humanitarian disasters in human history. At least 30m people died. The ‘new frontier’ of the late 1960s turned out to be, not space, but IT — characterised by a striking absence of centralised vision and direction Democratic societies have more checks and balances to protect them from visionary leaders driven by missions and enthused by moonshots, but the characteristics which made the Great Leap Forward a catastrophe are nevertheless still evident in attenuated version. With political direction of innovation we regularly encounter grandiosity of ambition and scale; the belief that strength of commitment overcomes practical problems; an absence of honest feedback; the suppression of sceptical comment and marginalisation of sceptical commentators.

Read the whole thing.


Johnson & Johnson vaccine may be game-changer after clumsy missteps by AstraZeneca

Some 633,600 taxpayers got bad news from the Revenue last week

Apartment costs underscore problem at heart of Ireland’s housing crisis

Me & My Money: Ray Cuddihy, aka Múinteoir Ray, from RTÉ’s Home School Hub

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