Category Archives: links to my essays

Tyler Cowen Talks with Joseph Henrich

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Self-recommending. A couple of excerpts from Henrich.

Humans really don’t think as individuals. We don’t innovate as individuals. We innovate as groups. Groups that, for whatever reason, are able to create more social interconnections produce fancier tools and technology, and they’re able to maintain larger bodies of know-how.

and

Much of behavioral economics, at least at the time, was based on running experiments on undergrads. It’s actually mostly American undergrads that are studied.

The point is that these studies may not replicate, because they are limited to people who are Western, Educated, Industrialized, Rich, and Democratic–WEIRD.

Recall that I based a lot of my essay on cultural intelligence on Henrich’s book.

The interview with Cowen is lively and interesting throughout.

Principles-Based Regulation

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Philip K. Howard writes,

Hundreds of federal safety specifications for factory equipment could be encompassed within one general principle: “Tools and equipment shall be reasonably suited for the use intended, in accordance with industry standards.” Is there room for disagreement? Yes, but only at the margins. Instead of wasting regulatory resources on foot faults that don’t matter, the safety agency could redeploy its resources to finding workplaces that are actually unsafe.

I think that principles-based regulation would have a few problems but many advantages. One problem is that there would be a zone of uncertainty about what constitutes compliance.

One advantage is that Congress could spell out the principles, because principles-based regulation would not require technocratic expertise. That would restore better Constitutional balance. Another advantage is that it would force whoever writes the regulations to think in broad terms about the aims of regulation. You would not be mindlessly piling on regulations with high costs and low benefits.

However, the main advantage is as Howard describes it. Most people want to do the right thing, especially if you respect their autonomy. If you spell out in broad terms what the “right thing” means, people will use their creativity to achieve that. Instead if you spell out do’s and don’ts in detail, they will use their creativity to achieve compliance with the letter but not with the spirit of the regulation.

Recall my essay on principles-based regulation.

Russ Roberts interviews Thomas Leonard

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Self-recommending. I could choose almost any paragraph to excerpt. Here is one:

Darwinism, with its kind of material explanation for evolution, for human evolution, seems to imply that the idea of having inalienable natural rights invested in you by a Creator–the language that you find in the Declaration of Independence–Darwin seems to suggest that’s just kind of a nice fiction.

He is trying to explain how the progressives in general, and economists in particular, came to downplay individual rights.

I put Leonard’s book at number 2 on my books of the year for 2016. I wrote an essay about it earlier this year.

Who Needs the FCC?

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The WaPo reports,

Many of the FCC’s existing functions could be farmed out, Jamison wrote in the blog post. Subsidies for phone and Internet service could be handled by state governments, while the Federal Trade Commission could handle consumer complaints and take action against abuses by companies. There are some details that were not addressed in the blog post due to time constraints, Jamison said Tuesday, such as the possible need for new state-level powers to address broadband monopolies.

The story refers to Mark Jamison, an adviser to President-elect Trump.

I think it would be a great idea to reconstitute the FCC for the 21st century. Recall my essay, Sidestep the FCC and the FDA. There, I argue for replacing the FCC’s spectrum licensing system (which Jamison would retain) with an arbitration board to deal with disputes among spectrum users.

Unlike the FCC, the arbitration board would presume that any spectrum could be used for any purpose. The board would set ground rules for users to deal with one another to resolve potential conflicts. These ground rules might specify which user has priority until an agreement can be reached. The ground rules might set expectations for how negotiations ought to be conducted and resolved. If parties are unable to resolve disputes, then the board would rule on that specific dispute.

My thinking reflects a view of spectrum that I encountered over 15 years ago, which says that there really is no such thing as “interference” if you have the right hardware, software, and protocols in place.

Books of the Year, 2016

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1. Sebastian Mallaby, The Man Who Knew. A very readable biography of Alan Greenspan. It corrects many misconceptions. It offers useful lessons on the history of economic policy, on the role of economists in Washington, and above all on the effect of politicians on economists. I have a review essay forthcoming.

2. Thomas Leonard, Illiberal Reformers. A highly original and devastating account of how American economics was “born bad,” so to speak. The founders and early stars of the American Economic Association were filled with hubris and racism, quite the opposite of Adam Smith and the English liberals. Here is my review essay.

3. Yuval Levin, The Fractured Republic. There is at least implicit in Levin’s book the claim that libertarianism has unwittingly served the cause of statism by helping the left in its project of undermining intermediating institutions such as the family and organized religion. I wrote a review essay and, in addition, I decided to read and review Robert Nisbet’s 1953 work, The Quest for Community, which is a major influence on Levin.

4. Erwin Dekker, The Viennese Students of Civilization. This book offers some novel and provocative analysis of early 20th century Austrian economics. It is marred by Dekker’s lack of facility with the English language, a problem which Cambridge University Press does not seem to have bothered to address. Here is my review essay.

5. Joel Mokyr, A Culture of Growth. Mokyr takes the view that leading Enlightment thinkers helped to pave the way for industrialization by putting forth notions of progress aided by the combination of science and commercial innovation. It is marred by Mokyr’s heavily academic writing style, with citations and asides constantly interrupting the flow. I can barely imagine even specialists plowing through the entire book, much less general readers. My review essay is forthcoming.

In addition, I would like to mention two other books. One is my own Specialization and Trade, which I was happy with and has actually grown on me since it appeared this summer. The other is Martin Gurri’s The Revolt of the Public, which appeared in 2014 but only came to my attention this year. As I argued in my review essay, Gurri is one of the few analysts who can legitimately claim to have anticipated something like the Trump phenomenon.

Peter Turchin on Surplus Elites

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Bloomberg view decided that this was a good time to recycle this column, first published in 2013.

Past waves of political instability, such as the civil wars of the late Roman Republic, the French Wars of Religion and the American Civil War, had many interlinking causes and circumstances unique to their age. But a common thread in the eras we studied was elite overproduction. The other two important elements were stagnating and declining living standards of the general population and increasing indebtedness of the state.

He argues that the surplus of law school graduates indicates elite overproduction. The other elements seem to be here as well. On the stagnation issue, Tyler Cowen cites research into cohorts that sounds more convincing than the usual analysis of means and medians.

Recall that I wrote about Turchin a couple of months ago.

My Thoughts on Inequality

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I have an essay, mostly inspired by Cosmides and Tooby at a Cato panel a while back. I begin by saying that

my goal is to make each side’s arguments intelligible to the other. I want Ayn Rand’s partisans to understand Karl Marx’s partisans, and vice-versa.

I conclude [link fixed],

I think that it is beyond debate that capitalism is imperfect. However, the more interesting question concerns how to try to improve it. There, a lot hinges on how one interprets the frequent failures of socialism as well as the failures of less-drastic forms of government intervention. To opponents of capitalism, these failures suggest a need to try harder to implement reform correctly. To proponents of capitalism, these failures suggest a need for reformers to back off. In that regard, I admit to being on the side of the proponents.

Read the whole essay before commenting.

My Review of Erwin Dekker

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is now available. I write,

he identifies a number of tensions in their thought: the economist as detached observer versus the economist as political participant; progress versus decline; liberty versus restraint; individualism versus culture; modernity versus tradition; and what Jacob T. Levy would call rationalist versus pluralist.

The book, The Viennese Students of Civilization, is published by Cambridge University Press, about which I have several complaints.

1. After several tries, I still have not found it on their web site. Here it is on Amazon.

2. The price is terribly high, particularly for the Kindle version.

3. To add insult to injury, it appears to me that CUP did not spend a dime (or should I say a pence?) on editorial assistance. The book is filled with errors of English usage.

It is an important book, and shame on CUP for making it hard to afford and difficult to read.

What’s Wrong with Keynesian Economic Theory?

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That is the title of a new book, edited by Steven Kates. It is published by Edward Elgar ($$$). I am one of the contributing authors.

My essay argues that Keynesians use two very different approaches in marketing their ideas. First, they use a simplistic approach (“spending creates jobs and jobs create spending”) to talk to politicians and the general public. Second, because among trained economists it is indefensible to ignore prices and instead talk about quantities depending on quantities, Keynesians talk in academic circles in an entirely different fashion.

I say that that fatal flaw in both approaches is aggregation–treating the economy as a GDP factory. This makes it impossible for Keynesians (or for macroeconomists in general) to think about the issue of patterns of sustainable specialization and trade. The PSST story is that some patterns of trade become unsustainable as tastes and technology change, and addressing this requires a trial-and-error process to evolve new sustainable patterns.

In terms of policy, the Keynesian assumption that all work is done in the same GDP factory suggests that government can fix a recession without knowing any specifics about the characteristics of unemployed workers. In reality, worker skills are heterogeneous, and there is no guarantee that a fiscal stimulus will be relevant to the workers who are having difficulty adjusting to new circumstances.

I reprise some of these points in Specialization and Trade, which is priced so that an entity other than a library might wish to purchase it.