My review is here. https://www.econlib.org/library/Columns/y2018/Klingstorystraight.html
Category Archives: links to my essays
Unloading on Posner and Weyl
Greg Ip writes,
Messrs. Posner and Weyl argue these companies’ advertising-based businesses elevate quantity over quality. Content on Netflix Inc., which is subscription based, is a lot better than videos on YouTube, and as a result earns about 10 times as much per minute per viewer. If digital companies treated users as employees and paid them, it would improve the quality of online content while massively boosting labor income.
Ip gives favorable coverage of their book Radical Markets. David Henderson’s review is more mixed. I was sent a review copy, and I had a negative reaction, which I limited to one relatively minor criticism. Ordinarily, I try to avoid reviewing a book that I hate, but when it receives a lot of favorable coverage I become less inhibited. It’s time to unload on this one.
1. The writing is just atrocious. They make it difficult to extract the ideas from the fluff and rhetoric.
2. The title, Radical Markets, is a 180-degrees head-fake. What they actually advocate is radical despotism. That is, rather than try to improve markets by going out as entrepreneurs and doing things better, they play the role of fantasy despot. They want to back their experimental notions not with “skin-in-the-game” entrepreneurship but with state power.
3. For example, if Weyl and Posner think that social media would be better if companies paid users for data, then they should start a social media company that operates that way. If their intuition is correct, then this will be more efficient than the way that Facebook and Google operate, and the new competitor will eventually come out the winner.
4. In fact, my intuition is the opposite. I think that social media would be improved if the users paid the companies. But when I articulated that idea, I did so in an essay entitled Let’s Compete with Facebook. I explicitly rejected government intervention. In fact, the main purpose of the essay was to argue against fantasy despotism.
If I had anything nice I could say about Radical Markets, I would. But I haven’t felt so compelled to unload on a book since Phishing for Phools.
Kling on post-industrial economics
The opening paragraph of my essay on post-industrial economics.
Over the past several decades, our economy has come to be driven less by tangible inputs and outputs and more by intangible factors. As workers and consumers, we have become much more specialized than was the case 150 years ago, when the conceptual framework of modern economics was developed. Yet most mainstream economists have not properly acknowledged this transformation, remaining committed to models and concepts that served to explain an economy that no longer exists. Understanding the world we now inhabit will require letting go of many established methods, and acknowledging the complexity of an economy that responds to new, and still evolving, strategies and incentives.
Ahead (set) of my time?
even though it seems like a small matter — just a wireless headset — the device could fundamentally alter the way people interact with machines, and with one another.
He is talking about the Apple Airpods. It’s another article that to me suggests that we are asymptotically approaching a vision that I proposed in 2001, in an essay I called Headsets.
My review of Patrick Deneen
The book is Why Liberalism Failed. I wrote this:
This being 2018, Deneen also points to the electoral successes of Donald Trump and the Brexit plebiscite as signs that the liberal order has lost its appeal with the general public. But these less-than-overwhelming victories did not clearly rest on the above failures of liberalism that are Deneen’s concerns. The featured cause in the Trump and Brexit campaigns was control over immigration. The issues of government agency over-reach, economic inequality, liberal arts education, and climate change played little or no role in either.
Although the book makes many good points, overall I didn’t think that the dots were well connected.
Evan Williams on media business models
The reason quality — of content and experience — has gone down in publishing, not up, despite the power of competition and technology, is because publishers are competing for advertiser dollars, not audience dollars. Business model is gravity. Once publishers are competing for audience dollars, the product they produce will get dramatically better.
…The average thinking, reading person reads from dozens of sources per month. Even if they were very cheap, there will be subscription fatigue. Cognitively, and economically, people will be able to rationalize a handful of content subscriptions at most (in addition to their 2–3 music/TV subscriptions).
There is not much difference between what Williams is arguing for today and what I wrote in 2001. This is one of my old essays that still holds up pretty well.
Complex vs. Complicated
When I was a graduate student in economics in the late 1970s, we were trained as if the economy is complicated, but not complex. We were told that if we learned enough mathematics and statistics and applied these tools, then eventually we could predict and control economic outcomes.
In fact, economic behavior is complex. There are too many causal factors, feedback loops, non-linear effects, and unprecedented phenomena involved to enable economists to control the economy precisely and reliably.
Please read the whole essay before commenting.
Immigration laws and others not enforced
Look at what I wrote more than 15 years ago.
many laws are the legal equivalent of oxymorons – legamorons, if you will. A legamoron is any law that could not stand up under widespread enforcement. Laws against marijuana use are a prime example. Rigorous enforcement of these laws on middle-class college campuses would cause a furor.
There are many other legamorons, where we have become accustomed to low levels of enforcement.
immigration laws
laws against sexual harassment
laws against betting on sports
speed limits
software licenses
laws against music sharing
laws requiring people to pay social security taxes for household workers
A couple of things have changed. Sexual harassment is not being overlooked any more, but that change is a cultural phenomenon more than a legal one. And iTunes, Pandora, and Spotify have created legal substitutes for Napster. It still seems like illegal music sharing happens on YouTube, but I guess Google makes enough of an effort to curb it that the music labels are not going as beserk as they did about Napster. Back in 2002, the consumer market for shrink-wrapped software was still a big deal. Now, not so much, I don’t hear much complaining about people using unlicensed software.
Read the whole essay. It makes a number of interesting points.
Essays of Israel Kirzner
They have been collected in a new volume. It prompted my latest essay, but I would not call it a review. Kirzner addresses many difficult issues. For example, I write,
Those of us who wish to defend both methodological individualism and markets are faced with a paradox. When we say that the economy works well, we are claiming to speak for the entire society. But as individualists, we would say that there is no such moral entity as “society.”
The game-playing society
During the industrial era, the key word was systematic. Factories and assembly lines turned production into a system. We invented the discipline of political economy, which analyzed the capitalist system. From Leon Walras in the 19th century to the Congressional Budget Office today, economists have used systems of equations as a way of interpreting the economy.
. . .I claim that we are entering the era of games, in which the key words are scorekeeping and strategy.
The main idea in the essay is, if valid, really profound. Whole books have been written about less. Read the essay twice, and then see what happens if you look contemporary phenomena and try to view them through the “era of games” lens.