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Don’t underestimate the best companies
Plus, PayPal in talks with Pinterest on takeover and Jack Ma spotted in Spain
Emboldened by labour shortages and rising living costs, more staff are confronting employers over pay
Metals fund manager laments ‘zero interest in our strategy’ while bitcoin hits new record
Choice of central bank head will send early signal on balance of power between three parties
Periods of commodity price pressure will reoccur as broad-based demand meets inadequate infrastructure
Vera Daves de Sousa says oil-dependent economy will rebound from double hit of low oil prices and pandemic
Survey adds to evidence that labour shortages are fuelling widespread wage growth
Accord could ‘pave the way’ to joining trans-Pacific bloc but is unlikely to boost GDP
Company earnings reports highlight effect of rising input costs
Agreement to buy as much as 5m tonnes a year will more than double Chinese imports of the fuel from America
More evidence of how strong demand for consumer durables is right now.
Head of Germany’s central bank was a vocal and often lonely critic of the ECB’s ultra-loose monetary policy
Dutch group Akzo Nobel forecasts situation could last until the middle of 2022
Prices on US ecommerce websites are rising while holiday discounts dwindle, Adobe report says
When I play Sid Meier’s Civilization, as I have thousands of times, I have an eccentric strategy.
When other civilizations demand tribute – or just attack me with without provocation – I give them what they want.
I sue for peace.
And then, I propose an alliance.
The AI almost always accepts the offer – and the subsequent alliance is almost always fruitful. It’s almost as if the programmers never imagined that anyone would try my self-abasing approach. Sure, humans will grovel in the face of superior firepower. But extend the hand of friendship? Have you no pride at all?
Civilization is admittedly only a game. Yet I can’t help but think that I’m on to something. Contrary to what you’ve heard, appeasement works. And under the right circumstances, actively befriending your current enemies might work even better. Especially if these enemies are short on friends. If you’re used to being hated, a surprising hand of friendship is hard to refuse.
The rising witch-hunt against social media companies provides a nice test case. Even though social media companies clearly lean left, left-wing activists and politicians are still gunning for top social media companies.* And so far, jarringly, left-wing critics have been joined by non-left activists and politicians looking for payback.
If my Civilization strategy has merit, this is a grave mistake for the non-left. Now is precisely the time to make new friends. To say, “Though we’ve had our differences in the past, these demagogues are treating you awfully. While you vote for the same party, left-wing activists and politicians are clearly not your friends. So guess what? We’ve decided to stand up for you. I understand if you don’t believe us, but just watch.”
This is admittedly less emotionally appealing than Ted Cruz’s break-up letter with the whole of corporate America:
For too long, woke CEOs have been fair-weather friends to the Republican Party: They like us until the left’s digital pitchforks come out. Then they run away. Or they mouth off on legislation they don’t understand—and hurt the reputations of patriotic leaders protecting our elections and expanding the right to vote.
Enough is enough. Corporations that flagrantly misrepresent efforts to protect our elections need to be called out, singled out and cut off. In my nine years in the Senate, I’ve received $2.6 million in contributions from corporate political-action committees. Starting today, I no longer accept money from any corporate PAC. I urge my GOP colleagues at all levels to do the same.
But other than keeping corporate media in an unhappy alliance with the left, what is this break-up letter even supposed to accomplish? You can insist, “They made their bed; let them lie in it,” but that’s awfully unconstructive. Say instead, “The abused friend of my enemy is my friend.”
Naive? It is height of sophistication compared to joining forces with the left to demand stricter social media regulation. Which Ted Cruz also seems to favor:
In order to be protected by Section 230, companies like Facebook should be “neutral public forums.” On the flip side, they should be considered to be a “publisher or speaker” of user content if they pick and choose what gets published or spoken.
As I expressed to Mark Zuckerberg, as a private business Facebook has a clear First Amendment right to publish whatever it wants on its website within the bounds of the law. The company can support political causes and oppose ones it disagrees with, just like a private citizen can speak his or her mind or agitate against opposing views.
But if Facebook is busy censoring legal, protected speech for political reasons, the company should be held accountable for the posts it lets through. And it should not enjoy any special congressional immunity from liability for its actions.
Social media companies are already changing their behavior to forestall regulation. They’ve added content warnings. They added “fact-checking.” And virtually all of these forestalling efforts have ended up nudging users in a left-wing direction. (Yes, making a big deal out of Covid is decidedly left-wing). A few suggestive polls:
What fraction of social media content warnings and fact-checking you experience try to nudge you in a right-wing direction?
— Bryan Caplan (@bryan_caplan) October 11, 2021
Social media was better before providers started “moderating content.”
— Bryan Caplan (@bryan_caplan) October 7, 2021
While I too have found social media companies annoying on occasion, activism makes them more annoying – and successful activism will be worse yet.
In any case, any regulation that happens will almost certainty be administered by normal left-wing bureaucrats. Right-wing administrations may restrain them; left-wing administrations will unleash them. Either way, the least-bad outcome for the non-left is not only to avoid regulation, but kill the threat of regulation.
What’s the alternative? Unring the bell. Instead of telling social media companies, “You made your bed; now lie in it,” show up with a sincere smile and say, “You look like you could use a friend.” Then take a principled stand not only against new regulation, but in favor of removing whatever regulations are already on the books.
* Just as my Simplistic Theory of Left and Right predicts, by the way. If you make your fortune on the free market, the left will resent you regardless of your politics.(5 COMMENTS)
The FT points out that US businesses wish to cooperate with China while the politicians in both parties want to compete:
America’s public and private elites are no longer as one on China, if they ever were. In Washington, vigilance to Beijing is the nearest thing there is to a bipartisan verity. Democrats, no less than Republicans, brood over Chinese gains in artificial intelligence and hypersonic missiles. Successive governments have tried to knit a web of Asian and Australasian friends by way of counterweight. Trump’s tariffs remain largely in place.
In Wall Street and beyond, though, commercial imperatives are reasserting themselves. There is no outright contradiction here: it is not as if the government barred or even discouraged all business with China. There is no lack of logic, either. If US firms don’t seize the openings, ones from Europe or elsewhere will.
Among some people on the left, the term ‘cooperation’ has a much more positive vibe than ‘competition’. They see the business world as ultra-competitive, and that often pushes their interests toward public policy. But what if they have it backwards? What if the business world is cooperative and the political world us ultra-competitive? After all, businesses are trying to do deals with people in China–mutually beneficial trades. That cooperation. Politicians in American want to hurt the Chinese economy, to prevent China from threatening the US position as being number one in the world. They do so with high tariffs on Chinese goods, and sanctions aimed at destroying Chinese tech firms such as Huawei.
Businesses are much less likely than politicians to engage in zero sum thinking. If China booms, there’s more opportunity for all US businesses to make profits in that growing market. On the other hand, there can be only one country that has the most powerful military on Earth.
This difference between business and politics shows up in many forms. While a growing economy helps all firms, the size of Congress is fixed at 535 senators and representatives. One more for the Democrats means one fewer from the Republicans. Politics is zero sum, a dog eat dog world.
Many people inappropriately apply sports analogies to business “competition”. When the Milwaukee Bucks played the Brooklyn Nets last night, the Bucks players stood in front of Nets players, trying to physically impede their progress. This type of “competition” is pretty rare in the world of business. You rarely see UPS organize blockades outside FedEx warehouses, trying to impede their trucks from delivering goods.
Most business advertising is aimed at making the firm’s products seem more desirable, to encourage cooperation with consumers and suppliers. A large share of political advertising is aimed at destroying the reputation of the other candidate—attack ads. US government sanctions against China are aimed at preventing Chinese firms from doing business, not at making the American “political product” look more desirable.
While the Bucks and Nets compete on the basketball court, they do very little competing in the business world. Indeed the two firms must cooperate at least to some extent; otherwise the league would not even be able to agree on a schedule of games. To the extent that the Nets compete with anyone (very indirectly), it is by trying to be attractive enough to Brooklyn residents that they will chose Nets games over other Brooklyn activities. They aren’t really even trying to lure Milwaukee fans away from the Bucks. That’s a very mild form of ‘competition’, if you insist on using that sports term. In a business sense, Nets star Kevin Durant “competes” only by trying to make his game look more appealing to fans at the nearby hockey game. (From a business vantage point, the GOAT debate would be whether Michael Jordon or LeBron James was more effective at luring other sports fans to the NBA.) In a business sense, Nets and Bucks players cooperate to produce “entertainment”.
At the end of the article, the FT issues a warning:
If what beckons is less a cold war than a lukewarm one, with contact maintained through economics, so much the better. But the US has not had to wrestle with such ambiguities before. It has never been so tied to an existential rival. As a doctrinally communist state, not a titular one, Soviet Russia wasn’t waving in foreign wealth-managers by the Audi-load. America was a relatively closed economy when it was up against wartime Germany, Imperial Japan and the Spanish empire.
If anything, there is something of turn-of-the-20th-century Europe about the US and China: the same economic integration and political froideur, the same sense of countries at once entwined and not. There is no reason the contradictions should unravel with similar force, but nor can they can be denied or glossed over.
I can’t know for certain who is right on the China issue, although my sympathies lie with the business perspective. But we do now know with almost 100% certainty who was right in the early 1900s. The Europeans businesses that favored globalization were right and the nationalists politicians were wrong. Not just the German nationalists, pretty much all the European leaders were wrong.
PS. BTW, when considering last night’s game keep in mind that the Bucks had a number of key injuries and the Nets shot a ridiculous 53% from three, in . . . oh wait . . in losing to the Bucks by 23 points. 🙂(6 COMMENTS)
Co: Why did they pick you? Because you like to fight?
Rambo: I’m expendable.
Co: What mean expendable?
Rambo: It’s like someone invites you to a party and you don’t show up. It doesn’t really matter.
—Rambo: First Blood, Part II
“Leave no man behind.” This slogan is the peak of military romanticism. No matter how much you suffer for the cause, you are never alone. You belong to an unbreakable brotherhood of blood.
“I’m expendable.” This admission is the peak of military realism. You’re not part of a loving “family”; you’re part of a callous system. If you die, you’ll be replaced by someone else. Before long, the men who sent you to your doom won’t even remember your name.
You could protest, “The truth is somewhere in between.” Indeed, but position on this continuum matters. And the position of actual militaries is at least 90% of the way to pure military realism. Probably more like 98%. Militaries want to win, and winners don’t let the human costs of winning distract them.
Sure, we can disaggregate. Romanticism dominates military rhetoric. On boot camp graduation day, your officers preach camaraderie with tears in their eyes. Realism, however, dominates military action. When officers decide how to deploy you, you’re just a number.
Still feeling a hint of romance? Then reflect on the adage that actions speak louder than words. And reflect further that the “expendable” lesson goes far beyond the military. Words say, “I want nothing more than to come to your birthday party.” Actions, however, say, “I’ve got something better to do.” Words say, “I’d do anything for you.” Actions, however, say, “Unless it’s inconvenient.” Words say, “I put God first.” Actions say, “Unless there’s a football game on.”
General lesson: The adage, “Actions speak louder than words” is as bitter as it is illuminating. Once you take the adage to heart, you see human nature clearly. But many will wish they hadn’t.
Some people, admittedly, have no trouble just accepting human weakness. Others find comfort in self-deception. But the only escape route that resonates with me is to divorce this society and build a beautiful Bubble.(7 COMMENTS)
It’s important to address two criticisms of our work. The first is that we exaggerated the FDA’s warning on ivermectin. The second is that Merck’s stance on ivermectin proved that even the company that developed ivermectin thought that it doesn’t work for Covid-19.
First, we didn’t exaggerate the FDA’s warning on ivermectin. Instead, the agency changed its website after our article was published, probably to reflect the points we made. Second, Merck had two incentives to downplay ivermectin’s usefulness against the novel coronavirus. We’ll explain both points more fully.
This is from Charles L. Hooper and David R. Henderson, “The FDA’s War Against the Truth on Ivermectin,” American Institute for Economic Research, October 28, 2021.
Read the whole thing.(11 COMMENTS)
My Ph.D. Micro teacher, David Card, won the Nobel Prize last week. My best-known piece on Card examines the tension between his research on the minimum wage and his research on immigration. My most extensive discussion of his work and intellectual influence, however, appears in Chapter 3 of The Case Against Education. Here’s the excerpt. Enjoy!
Labor Economists Versus Ability Bias
Labor economists aren’t merely attuned to the possibility of ability bias. They’ve long felt a professional responsibility to measure it. But over the last quarter-century, labor economists have surprisingly moved to the view that there’s not much bias to measure. A famous review of the evidence by eminent economist David Card concludes ability bias is small, non-existent, or even negative.[i] I call this verdict the Card Consensus. Many, perhaps most, elite labor economists not only embrace it, but rely on it for practical guidance. We see the Card Consensus in top scholarly venues like the Journal of Economic Literature.
[T]he return to an additional year of education obtained for reasons like compulsory schooling or school-building projects is more likely to be greater, than lower, than the conventionally estimated return to schooling.[ii]
We see the Card Consensus in top policy initiatives like the Brookings Institution’s Hamilton Project:
[I]t’s possible (and even likely) that individual college graduates have different aptitudes and ambitions, and might even have access to different levels of family resources. All of these factors can impact earnings. However, the evidence suggests that these factors don’t drive the impressive return to college; instead the increased earning power of college graduates appears to be caused by their educational investments.[iii]
Even analysts who don’t cite the Card Consensus enjoy its protection. Well-publicized calculations of the “value of college” typically ignore ability bias altogether.[iv] The Card Consensus neuters criticism of this omission. How can you attack a tacit “0% ability bias” assumption as a fatal flaw when plenty of experts stand ready to defend it as a harmless simplification?
This is a disorienting intellectual situation. Statistically naïve laymen blithely infer causation from correlation: Since college grads earn 73% more than high school grads, college causes a 73% raise. Economists who don’t specialize in labor smirk at the laymen’s naiveté; they take sizable ability bias for granted. But economists who do specialize in labor now largely stand with laymen. While ability bias is intuitively plausible, the Card Consensus tells us, “Move along, nothing to see here.”
What about abundant research from last section that detects hefty ability bias? The Card Consensus barely acknowledges it.[v] Why not? Labor economists’ most common rationale is that no one can measure all the abilities that cause both academic and career success. True enough; but that just means ability bias is worse than it looks. Supporters of the Card Consensus also occasionally muse that high-ability students might leave school sooner:
[S]ome people cut their schooling short so as to pursue more immediately lucrative activities. Sir Mick Jagger abandoned his pursuit of a degree at the London School of Economics in 1963 to play with an outfit known as the Rolling Stones… No less impressive, Swedish épée fencer Johan Harmenberg left MIT after 2 years of study in 1979, winning a gold medal in the 1980 Moscow Olympics, instead of earning an MIT diploma. Harmenberg went on to become a biotech executive and successful researcher. These examples illustrate how people with high ability – musical, athletic, entrepreneurial, or otherwise – may be economically successful without the benefit of an education. This suggests that… ability bias, can be negative as easily as positive.[vi]
Straightforward rebuttal: Name any ability the well-educated tend to lack. Outliers have ye always. But the well-educated are, on average, abler across the board. No one hears about a kid quitting high school or college and says, “Wow, he must be talented.”
At best, then, the Card Consensus casually throws away a large body of contrary evidence to get off the ground. But it’s worse than that. The Card Consensus casually throws away the best evidence. Worried you’re improperly giving school credit for pre-existing ability? There’s a clear statistical cure: Measure pre-existing ability to allow an apples-to-apples comparison of people with equal ability but unequal schooling. The cures the Card Consensus prizes, in contrast, are anything but clear. Instead of sending researchers in search of better ability measures, it sends them in search of “quasi-experiments” – naturally-occurring situations that mimic experiments.
As a result, labor economists have collected a zoo of alleged educational quasi-experiments. Some study twins. As long as identical twins have equal ability but unequal educations, education’s true payoff equals their earnings gap divided by their education gap.[vii] Other scholars study the effect of season of birth, on the theory that kids who are young for their grade are less legally eligible to drop out of high school.[viii] Since 2000, researchers have been most transfixed by changes in compulsory attendance laws. If government forces students who would have dropped out to stay in school, what happens to their income after graduation?[ix] While technically impressive, all these papers raise more questions than they answer. To treat changes in compulsory attendance laws as a quasi-experiment, for example, we must assume states change these laws at random – or at least for reasons unrelated to the labor market.
Once a quasi-experimental approach picks up steam, moreover, critics usually uncover deep flaws. Identical twins with different educations don’t have identical ability; the more educated twin is usually the smarter twin.[x] Season of birth is not random; it correlates with health, region, and possibly income.[xi] On closer look, the supposed fruits of U.S. compulsory attendance laws mask unrelated regional trends, especially in the South.[xii] None of this means quasi-experimental studies of the education premium are worthless, or their critics invariably on target.[xiii] But compared to directly measuring pre-existing ability, such studies are speculative and unconvincing. Since the cleanest approach reveals hefty ability bias, and the messy alternatives yield mixed results, we should reject the Card Consensus in favor of the common-sense view that ability bias is all too real.
[i] For a summary, see Card 1999, p.1855. Card’s article currently has over 3,500 citations. See also Card 2001. For approachable reviews, see Angrist and Pischke 2015, pp.209-239, and Oreopoulos and Petronijevic 2013.
[ii] Lindahl and Krueger 2001, p.1106. Alan Krueger and David Card have repeatedly collaborated, but most of their education research is not co-authored.
[iii] Greenstone and Looney 2011, p.5.
[iv] Perhaps most notably, Georgetown’s Center on Education and the Workforce has published a series of policy analyses implicitly setting ability bias at 0%; see especially Carne and Rose 2011 and Carne et al. 2011. The United States Census does the same; see e.g. Julian and Kominski 2011, 2012.
[v] Card’s 1999, p.1834 otherwise exhaustive literature review explicitly makes this choice: “One strand of literature that I do not consider are studies of the return to schooling that attempt to control for ability using observed test scores.”
[vi] Angrist and Pischke 2015, p.213.
[vii] See Card 1999, pp.1846-1852, and Angrist and Pischke 2015, pp.219-222.
[viii] See Card 1999, pp.1837-1838, and Angrist and Pischke 2015, pp.228-234.
[ix] See Angrist and Pischke 2015, pp.223-227, and Oreopoulos and Salvanes 2011.
[x] Sandewall et al. 2014, Bound and Solon 1999, and Neumark 1999.
[xi] Bound, Jaeger, and Baker 1995, pp.446-447.
[xii] Stephens and Yang 2014, esp. pp.1784-1788. On p.1789, the authors note that quasi-experimental studies of compulsory attendance laws outside the United States detect little or no payoff.
[xiii] Ashenfelter et al. 1999 also discovers signs that quasi-experimental studies reporting larger benefits of education are more likely to be published.
The Biden administration intends to nominate for Comptroller of the Currency a candidate who makes Senator Bernie Sanders looks like former Senator Barry Goldwater. The nominee’s name is Saule Omarova, a professor at the Cornell University Law School. Apart from wanting to regulate banks out of existence, Ms. Omarova tweets stuff like this:Until I came to the US, I couldn’t imagine that things like gender pay gap still existed in today’s world. Say what you will about old USSR, there was no gender pay gap there. Market doesn’t always ‘know best’.
This quotation is neither a joke nor taken out of context. The Wall Street Journal explains:She graduated from Moscow State University in 1989 on the Lenin Personal Academic Scholarship. Thirty years later, she still believes the Soviet economic system was superior, and that U.S. banking should be remade in the Gosbank’s image.
After she got criticized on twitter for her comments, she doubled down with this retort:I never claimed women and men were treated absolutely equally in every facet of Soviet life. But people’s salaries were set (by the state) in a gender-blind manner. And all women got very generous maternity benefits. Both things are still a pipe dream in our society!
I shouldn’t be surprised that many people still believe insanity like this. After all, in 2017 the New York Times produced a series of articles to mark the centenary of the 1917 Russian Revolution with articles that included statements like this one by the University of Pennsylvania’s Kristen Ghodsee:
When Americans think of Communism in Eastern Europe, they imagine travel restrictions, bleak landscapes of gray concrete, miserable men and women languishing in long lines to shop in empty markets and security services snooping on the private lives of citizens. While much of this was true, our collective stereotype of Communist life does not tell the whole story.
Some might remember that Eastern bloc women enjoyed many rights and privileges unknown in liberal democracies at the time, including major state investments in their education and training, their full incorporation into the labor force, generous maternity leave allowances and guaranteed free child care. But there’s one advantage that has received little attention: Women under Communism enjoyed more sexual pleasure.
What’s some tens of millions of deaths compared to that?!?!?
I don’t know much about Ms. Omarova’s position on banking (apart from the fact that it seems destructive). However, I know that her statements on the so-called gender gap and on paid leave are utterly uninformed.
Let’s look first at paid leave.
I wrote earlier on this site about problems with some of the federal paid-leave plans. And over at the Acton Institute I explained the fallacy of leaping from the talking point that U.S. doesn’t have a federal paid-leave system means to the conclusion that most American workers have no paid leave:
[…] according to the Bureau of Labor Statistics, 17% of workers have access to a paid leave program, an increase from 13% two years ago. However, this number is highly misleading, since it severely underestimates the actual number of workers who benefit from paid leave. The BLS’s peculiar survey methods require paid leave to exist separately from “sick leave, vacation, personal leave or short-term disability leave that is available to the employee.” Proper accounting, which uses several government surveys about workers’ benefits, reveals that a majority of workers have access to paid family leave benefits, and three out of four who take leave in a given year get full or partial pay.
In other words, we may be the only country without a federal paid leave program, but we are also the only country with a vast and expanding network of companies that provide benefits like paid leave programs that are flexible, accommodating, and often more generous than the plan the Democrats have in mind.
On paid leave, I recommend the excellent works by the Heritage Foundation’s Rachel Greszler and former Cato Institute Vanessa Brown Calder. These two ladies are leading the fight against nonsense on paid leave coming from both the right and the left.
As for the gender gap, here Ms. Omarova displays even greater ignorance. There is now a bipartisan recognition that when measured properly, the pay gap in the United States is minuscule. It certainly isn’t the 21 cents per dollar often advertised by the left. The fact that she doesn’t know this fact is telling about her poor understanding of economics.
Further, the work of Harvard economist Claudia Goldin (who is no raging libertarian, and who also wrote the entry on the gender gap linked above) demonstrates that this gap has almost nothing to do with discrimination. If you don’t want to read Professor Goldin’s academic articles, then at least listen to (or read the transcript of) this Freakanomics podcast. I also wrote about Professor Goldin’s work over at Creators:
Instead, it has to do with what Goldin calls the need for “temporal flexibility.” That is, women choose to work in positions that allow them the flexibility to take care of their children. What little there is in the way of a pay gap reflects women’s choices and not employers’ discrimination. This “earning” rather than “wage” pay gap is driven by women choosing to be moms, and it exists in every country, including Scandinavian ones.
In fact, economic studies show that this gap is as big or larger in European countries with huge amounts of social spending. For instance, a well-cited paper by Henrik Kleven, Jakob Sogaard and Camille Landais explains that although the United States and Sweden or Denmark “feature different public policies and labor markets, they are no longer very different in terms of overall gender inequality.” Other studies show that to the extent the gap is slightly smaller in Nordic countries than other big welfare states, it has more to do with these countries’ wage structures than with pro-family benefits.
The bottom line is that until more firms find ways to allow for flexible hours, the remainder of the pay gap will persist. The alternative is to find a way for men to get pregnant and produce babies – somewhat more of a challenge.
Now, let’s talk about her statement about the USSR.
Seriously, though. Bryan Caplan has written more eloquently and effectively about the U.S.S.R. regime than I can. So has, among others, the Cato Institute’s Marian Tupy. However, I have a few things to add. According to some estimates, some 20 million to 61 million people died unnatural deaths in the USSR, many of whom were women. But let’s ignore this tragic fact (since we are often told that indulging in such ignorance is what we have to do to appreciate the advantages of these regimes).
The argument we hear, and that Omarova apparently believes, is that the U.S.S.R. had higher female labor-force participation–including in high-skilled jobs such as doctors and cosmonauts–than did the did the U.S. and other capitalist countries. Isn’t a fact such as this one evidence that communist regimes are better for women? The answer depends on whether or not you believe that the most important good for women is a woman in the workplace—no matter the circumstances. Revisionist accounts usually omit the fact that communist regimes – with the U.S.S.R. being no exception – engaged in extreme social engineering, which included the practice of working their people to the bone in service to the state.
Sure, statutes expressly emancipated women and mandated equal pay for equal work. Yet large gender wage gaps and labor segregation persisted. Many scholars have documented how all communist countries were run by men; female leaders would have been unconceivable. Soviet women were not only expected to clean, shop for food, cook dinner, and raise the children, but also to perform the vast majority of physical labor such as street cleaning and highway construction.
So if they weren’t getting equal pay for equal work, were they getting something else that their capitalist sisters weren’t?It wasn’t a longer life. In the 1980’s, American women on average lived around 5 years longer than Soviet women. It wasn’t economic prosperity. The GDP per capita in the United States was around 6 to 7 times higher than that of the Soviet Union.
Finally, I don’t need to explain to readers of EconLog what’s wrong with the statement that “markets don’t know best.” While markets aren’t perfect, they are a far superior to central planning and bureaucratic interventions at gather and using relevant knowledge.
The bottom line is that while this candidate would certainly bring a different perspective to the position of Comptroller of the Currency, in part because of her background, her affinity for making statements praising the USSR and her economic ignorance are pretty worrisome.(3 COMMENTS)
This tweet made me shake my head in disbelief:
NATO is arguably the most successful peacekeeping alliance in all of world history. Because NATO as a whole has far more military power than the rest of the world combined, any country would be crazy to invade a NATO member. It has kept its members safe for more than 70 years.
Some people suggest that NATO has nothing to do with this success, that post-WWII era aggressors have no interest in attacking European countries. But that’s clearly false, as we’ve seen Serbia attack Bosnia and Russia attack Ukraine (both non-members). Last time I looked, they were just as “European” as Latvia or Estonia. I wish NATO were even bigger.
But if Ukraine were admitted to NATO right now then we’d have two options, both highly undesirable:
1. Go to war with Russia.
2. Acquiesce to Russian troops occupying part of a NATO member.
In the latter case, NATO would lose its reputation of never allowing a member to be invaded. Without credibility, the alliance would be much less effective. Doubt would be created as to whether the US would defend Estonia from a Russian attack. And uncertainty is one of the leading causes of war. Saddam Hussein invaded Kuwait precisely because it was unclear if the US would defend Kuwait. Hussein guessed wrong, but US ambiguity turned out to be very costly to everyone involved.
I find it maddening when the press discusses US policy on Taiwan. The policy is described as “strategic ambiguity”, the idea that we keep China guessing as to how we would respond. That’s a recipe for WWIII. I have no idea what policy the US should have in the event of a Chinese invasion of Taiwan, but one thing I know for sure is that whatever that policy is, it should be made crystal clear to the Chinese. (Obviously I don’t mean specific tactics; rather whether we are willing to use our military to defend Taiwan.)
The most likely cause of a nuclear war between the US and Russia is an accidental missile launch. But the second most likely cause is a small proxy war spinning out of control because one side miscalculated what the other would do.
PS. In the past we could take some consolation from the fact that the US president is not mentally unstable. I have no confidence in that claim regarding future presidents. American voters no longer insist on “gravitas”.
PPS. The military spending levels of NATO countries is a phony issue. It doesn’t matter at all whether a NATO member spends slightly above or below 2% of GDP. NATO already spends several times as much as required to defend itself.(18 COMMENTS)
1. Tomorrow, October 19, I’m virtually visiting Hungary to debate immigration with Balázs Orbán and András Kováts. Airing live at 11 AM ET, 5 PM Hungarian time. Here’s Orbán’s (not that Orbán, but they do work together) take on Facebook:
2. October 28, I’m physically visiting the University Chicago to discuss education with Agnes Callard – who also turns out to be… Hungarian! From this biographical interview:
I was born in Budapest, Hungary and left there with my parents (illegally) at the age of 5 by way of a “vacation” to Vienna. From there we continued to Rome, where we spent a year before coming to the US under the auspices of a Jewish organization that focused on bringing Russian Jews to the USA. In Rome, my parents report visiting the Italian kindergarten class they sent me to and seeing me teach the other children how to say “circle” in Hungarian. They also report that all the Russians in the hotel/hostel we stayed in for that year hated our family because I got the chicken pox and infected all their children. “Dirty Hungarians!” In the US we lived in various locations in NYC until I was a teenager, when we moved to a suburb. All of my extended family still lives in Hungary.
The same website also interviews Mike Huemer, by the way.
P.S. Tomorrow evening I’ll also be physically visiting the University of Richmond to speak for the Jepson Leadership Forum. Open to the public.(0 COMMENTS)
Journalist and author Rowan Jacobsen talks about his book Truffle Hound with EconTalk host Russ Roberts. This conversation has nothing to do with chocolate. It’s about the strange world of underground fungi, found in the forest by specially trained dogs and used by chefs and home cooks around the world. You will learn about truffle oil, cooking with truffles, truffle hounds, and the economics of all of the above.(2 COMMENTS)
An interesting essay in Saturday’s Wall Street Journal suggests, if we go farther than the author, that “the simplicity of our system of government,” although a worthy ideal, has become a mere historical memory if not a propaganda tool for the democratic Leviathan. The story is about Andrew Jackson who, before his death, refused to be buried in a marble sarcophagus believed to have once contained the remains of a Roman emperor. The idea had been advanced by U.S. Navy commodore Jesse D. Elliot. (See Mary Beard, “A Tomb Not Fit for a President,” WSJ, October 16, 2021.) Jackson’s reaction, Beard writes, stood
as a symbol of the down-to-earth essence of American republicanism and its distaste for the vulgar bric-a-brac of monarchy or autocracy. …
Jackson was 77 years old and in failing health; he would die a few months later. But his reply to the letter from Elliott outlining this offer was famously robust: “I cannot consent that my mortal body shall be laid in a repository prepared for an Emperor or King—my republican feelings and principles forbid it—the simplicity of our system of government forbids it. Every monument erected to perpetuate the memory of our heroes and statesmen ought to bear evidence of the economy and simplicity of our republican institutions and the plainness of our republican citizens … I cannot permit my remains to be the first in these United States to be deposited in a Sarcophagus made for an Emperoror King.”
Jackson was in a difficult position. As president, he had been accused of behaving like a Caesar, in a style of autocratic populism that a few of his successors have copied. This may have added to the intensity of his refusal: He was certainly not going to risk an imperial burial.
If the United States or any other Western country once illustrated “the simplicity of our system of government,” these days are long past. After Jackson, imperial presidents included Abraham Lincoln and Franklin D. Roosevelt. (For a revisionist history of the Civil War, see Jeff Hummel’s Emancipating Slaves, Enslaving Free Men.) The haughtiness of the presidents’ motorcades and omnipresent security theatre may be compared with Agathocles, a Syracuse ruler between 317 and 289 BC, who “prided himself on not using a bodyguard and cultivated an unassuming attitude in public.” As I argued in my post “Praetorian Guards from Ancient Greece to Palm Beach or the Hamptons” (January 14, 2019), technological, social, and political conditions were different, but it is still worth reflecting on why democratic leaders are so much hated by part of the citizenry that they must be under the constant protection of praetorians (even after departing office). And that was true long before Islamic terrorism and 9/11.
The two world wars of the 20th century as well as the Red Scare (while our own governments were getting very pink) accelerated the trend. Yet, until a few decades ago, one could still get a taste of “the simplicity of our system of government.” If you will pardon a personal anecdote, one of my memories of another epoch dates from the early 1990s: going to meet a senior minister in the French government, a friend and I entered by a backdoor of the government building, walked around an unmanned security checkpoint, and joined the minister in his dining room (or perhaps his office first) without seeing a single cop or any other soul.
The rise of Islamist terrorism and 9/11 gave our Leviathans another great opportunity to buttress the surveillance state and the garrison state. Another dimension of government anti-simplicity is observable in the nearly constant annual deficit and the increase of the public debt since the 1960s.
For anybody who has known better in these United States or in a few other Western countries, it is difficult to believe that much is left of the “simplicity of our system of government.” The political and economic implications are becoming more visible.(13 COMMENTS)
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