Michael Heller

Michael Heller joins the podcast to discuss his new book, Mine! How the Hidden Rules of Ownership Control Our Lives. This book explores the implicit social rules governing ownership. In brief, these rules are as follows:  Attachment ("it's mine because it's connected to something of mine") Possession ("it's mine because I physically control it") First-in-time ("it's mine because I was here first") Labour ("it's mine because I worked for it") Self-ownership ("it's mine because it came from my body") Family ("it's mine because my grandfather left it to me")  We discuss these six rules with reference to many examples of how they play out in the modern world, from conflicts over airline seats to the rise and fall of Soviet communism.

Michael Heller joins the podcast to discuss his new book, <a href="https://amzn.to/3v6aSAn" rel="nofollow" target="_blank">Mine! How the Hidden Rules of Ownership Control Our Lives</a>. This book explores the implicit social rules governing ownership. In brief, these rules are as follows: <ol> <li>Attachment ("it's mine because it's connected to something of mine")</li> <li>Possession ("it's mine because I physically control it")</li> <li>First-in-time ("it's mine because I was here first")</li> <li>Labour ("it's mine because I worked for it")</li> <li>Self-ownership ("it's mine because it came from my body")</li> <li>Family ("it's mine because my grandfather left it to me")</li> </ol> We discuss these six rules with reference to many examples of how they play out in the modern world, from conflicts over airline seats to the rise and fall of Soviet communism.

The Hidden Rules of Ownership with Michael Heller

Sarah Skwire

On today's episode, I discuss Adam Smith's Wealth of Nations with Sarah Skwire. Sarah is part of the team tweeting through the book @AdamSmithWorks. We discuss the project and talk through the first few chapters of the Wealth of Nations.

On today's episode, I discuss Adam Smith's Wealth of Nations with Sarah Skwire. Sarah is part of the team tweeting through the book <a href="https://twitter.com/adamsmithworks" rel="noopener nofollow" target="_blank">@AdamSmithWorks</a>. We discuss the project and talk through the first few chapters of the Wealth of Nations.

The Wealth of Nations with Sarah Skwire

Today's guest is Michael McCullough of the University of California, San Diego. We are discussing his book The Kindness of Strangers: How a Selfish Ape Invented a New Moral Code. How did humans, a species of self-centered apes, come to care about others? Since Darwin, scientists have tried to answer this question using evolutionary theory. In The Kindness of Strangers, psychologist Michael E. McCullough shows why they have failed and offers a new explanation instead. From the moment nomadic humans first settled down until the aftermath of the Second World War, our species has confronted repeated crises that we could only survive by changing our behavior. As McCullough argues, these choices weren’t enabled by an evolved moral sense, but with moral invention — driven not by evolution’s dictates but by reason.  Today's challenges — climate change, mass migration, nationalism — are some of humanity’s greatest yet. In revealing how past crises shaped the foundations of human concern, The Kindness of Strangers offers clues for how we can adapt our moral thinking to survive these challenges as well.

Today's guest is Michael McCullough of the University of California, San Diego. We are discussing his book <a href="https://amzn.to/3dpUWQY" rel="noopener nofollow" target="_blank">The Kindness of Strangers: How a Selfish Ape Invented a New Moral Code</a>. How did humans, a species of self-centered apes, come to care about others? Since Darwin, scientists have tried to answer this question using evolutionary theory. In The Kindness of Strangers, psychologist Michael E. McCullough shows why they have failed and offers a new explanation instead. From the moment nomadic humans first settled down until the aftermath of the Second World War, our species has confronted repeated crises that we could only survive by changing our behavior. As McCullough argues, these choices weren’t enabled by an evolved moral sense, but with moral invention — driven not by evolution’s dictates but by reason. Today's challenges — climate change, mass migration, nationalism — are some of humanity’s greatest yet. In revealing how past crises shaped the foundations of human concern, The Kindness of Strangers offers clues for how we can adapt our moral thinking to survive these challenges as well.

The Kindness of Strangers with Michael McCullough

Nina Roussille

Today's guest is Nina Roussille of UC Berkeley and we discuss her working paper, The central role of the ask gap in gender pay inequality. The gender ask gap measures the extent to which women ask for lower salaries than comparable men. This paper studies the role of the ask gap in generating wage inequality using novel data from Hired.com, a leading online recruitment platform for full time engineering jobs in the United States. To use the platform, job candidates must post an ask salary, stating how much they want to make in their next job. Firms then apply to candidates by offering a bid salary they are willing to pay the candidate. If the candidate is hired, final salary is recorded. After adjusting for resume characteristics, the ask gap is 3.3%, the bid gap is 2.4% and the gap in final offers is 1.8%. Remarkably, further controlling for the ask salary explains all of the gender gaps in bid and final salary on the platform. To estimate the market-level effects of an increase in women’s ask salary, I exploit a sudden change in how candidates were prompted to provide their ask salary. For a subset of candidates, in mid-2018, the answer box used to solicit the ask salary went from an empty field to a pre-filled entry with the median salary on the platform for a similar candidate. Comparing candidates creating a profile before and after the feature change, I find that this change drove the ask gap and the bid gap to zero. In addition, women received the same number of bids before and after the change, suggesting they face little penalty for demanding wages comparable to men.  Related links: During the conversation, Nina mentions Sheryl Sandberg's Lean In: Women, Work, and the Will to Lead. Among other things, encourages women to negotiate higher salaries, a strategy Nina's research would support.

Today's guest is <a href="https://ninaroussille.github.io/" rel="noopener nofollow" target="_blank">Nina Roussille</a> of UC Berkeley and we discuss her working paper, <a href="https://ninaroussille.github.io/files/Roussille_askgap.pdf" rel="nofollow" target="_blank">The central role of the ask gap in gender pay inequality</a>. The gender ask gap measures the extent to which women ask for lower salaries than comparable men. This paper studies the role of the ask gap in generating wage inequality using novel data from <a href="http://Hired.com" rel="nofollow" target="_blank">Hired.com</a>, a leading online recruitment platform for full time engineering jobs in the United States. To use the platform, job candidates must post an ask salary, stating how much they want to make in their next job. Firms then apply to candidates by offering a bid salary they are willing to pay the candidate. If the candidate is hired, final salary is recorded. After adjusting for resume characteristics, the ask gap is 3.3%, the bid gap is 2.4% and the gap in final offers is 1.8%. Remarkably, further controlling for the ask salary explains all of the gender gaps in bid and final salary on the platform. To estimate the market-level effects of an increase in women’s ask salary, I exploit a sudden change in how candidates were prompted to provide their ask salary. For a subset of candidates, in mid-2018, the answer box used to solicit the ask salary went from an empty field to a pre-filled entry with the median salary on the platform for a similar candidate. Comparing candidates creating a profile before and after the feature change, I find that this change drove the ask gap and the bid gap to zero. In addition, women received the same number of bids before and after the change, suggesting they face little penalty for demanding wages comparable to men. Related links: During the conversation, Nina mentions Sheryl Sandberg's <a href="https://amzn.to/3cqIZde" rel="nofollow" target="_blank">Lean In: Women, Work, and the Will to Lead</a>. Among other things, encourages women to negotiate higher salaries, a strategy Nina's research would support.

The Gender Salary Ask Gap with Nina Roussille

Anton Howes

Anton Howes returns to the podcast to discuss his new book, Arts and Minds: How the Royal Society of Arts Changed a Nation. From its beginnings in a coffee house in the mid-eighteenth century, the Royal Society for the Encouragement of Arts, Manufactures and Commerce has tried to improve British life in every way imaginable. It has sought to influence how Britons work, how they are educated, the music they listen to, the food they eat, the items in their homes, and even how they remember their own history. Arts and Minds is the remarkable story of an institution unlike any other—a society for the improvement of everything and anything.  Drawing on exclusive access to a wealth of rare papers and artefacts from the Society’s own archives, Anton Howes shows how this vibrant and singularly ambitious organisation has evolved and adapted, constantly having to reinvent itself to keep in step with changing times. The Society has served as a platform for Victorian utilitarian reformers, purchased and restored an entire village, encouraged the planting of more than sixty million trees, and sought technological alternatives to child labour. But this is more than just a story about unusual public initiatives. It is an engaging and authoritative history of almost three centuries of social reform and competing visions of a better world—the Society’s members have been drawn from across the political spectrum, including Adam Smith, Edmund Burke, and Karl Marx.  Informative and entertaining, Arts and Minds reveals how a society of public-spirited individuals tried to make their country a better place, and draws vital lessons from their triumphs and failures for all would-be reformers today.

Anton Howes returns to the podcast to discuss his new book, <a href="https://amzn.to/2YSiuHU" rel="nofollow" target="_blank">Arts and Minds: How the Royal Society of Arts Changed a Nation</a>. From its beginnings in a coffee house in the mid-eighteenth century, the Royal Society for the Encouragement of Arts, Manufactures and Commerce has tried to improve British life in every way imaginable. It has sought to influence how Britons work, how they are educated, the music they listen to, the food they eat, the items in their homes, and even how they remember their own history. Arts and Minds is the remarkable story of an institution unlike any other—a society for the improvement of everything and anything. Drawing on exclusive access to a wealth of rare papers and artefacts from the Society’s own archives, Anton Howes shows how this vibrant and singularly ambitious organisation has evolved and adapted, constantly having to reinvent itself to keep in step with changing times. The Society has served as a platform for Victorian utilitarian reformers, purchased and restored an entire village, encouraged the planting of more than sixty million trees, and sought technological alternatives to child labour. But this is more than just a story about unusual public initiatives. It is an engaging and authoritative history of almost three centuries of social reform and competing visions of a better world—the Society’s members have been drawn from across the political spectrum, including Adam Smith, Edmund Burke, and Karl Marx. Informative and entertaining, Arts and Minds reveals how a society of public-spirited individuals tried to make their country a better place, and draws vital lessons from their triumphs and failures for all would-be reformers today.

Arts and Minds with Anton Howes

Today's guest is Stuart Ritchie, psychologist and author of Science Fictions: How Fraud, Bias, Negligence, and Hype Undermine the Search for Truth. Science is how we understand the world. Yet failures in peer review and mistakes in statistics have rendered a shocking number of scientific studies useless – or, worse, badly misleading. Such errors have distorted our knowledge in fields as wide-ranging as medicine, physics, nutrition, education, genetics, economics, and the search for extraterrestrial life. As Science Fictions makes clear, the current system of research funding and publication not only fails to safeguard us from blunders but actively encourages bad science – with sometimes deadly consequences.  Stuart Ritchie’s own work challenging an infamous psychology experiment helped spark what is now widely known as the “replication crisis,” the realization that supposed scientific truths are often just plain wrong. Now, he reveals the very human biases, misunderstandings, and deceptions that undermine the scientific endeavor: from contamination in science labs to the secret vaults of failed studies that nobody gets to see; from outright cheating with fake data to the more common, but still ruinous, temptation to exaggerate mediocre results for a shot at scientific fame.  Yet Science Fictions is far from a counsel of despair. Rather, it’s a defense of the scientific method against the pressures and perverse incentives that lead scientists to bend the rules. By illustrating the many ways that scientists go wrong, Ritchie gives us the knowledge we need to spot dubious research and points the way to reforms that could make science trustworthy once again.

Today's guest is <a href="https://twitter.com/StuartJRitchie" rel="noopener nofollow" target="_blank">Stuart Ritchie</a>, psychologist and author of <a href="https://amzn.to/2FgHn9h" rel="nofollow" target="_blank">Science Fictions: How Fraud, Bias, Negligence, and Hype Undermine the Search for Truth</a>. Science is how we understand the world. Yet failures in peer review and mistakes in statistics have rendered a shocking number of scientific studies useless – or, worse, badly misleading. Such errors have distorted our knowledge in fields as wide-ranging as medicine, physics, nutrition, education, genetics, economics, and the search for extraterrestrial life. As Science Fictions makes clear, the current system of research funding and publication not only fails to safeguard us from blunders but actively encourages bad science – with sometimes deadly consequences. Stuart Ritchie’s own work challenging an infamous psychology experiment helped spark what is now widely known as the “replication crisis,” the realization that supposed scientific truths are often just plain wrong. Now, he reveals the very human biases, misunderstandings, and deceptions that undermine the scientific endeavor: from contamination in science labs to the secret vaults of failed studies that nobody gets to see; from outright cheating with fake data to the more common, but still ruinous, temptation to exaggerate mediocre results for a shot at scientific fame. Yet Science Fictions is far from a counsel of despair. Rather, it’s a defense of the scientific method against the pressures and perverse incentives that lead scientists to bend the rules. By illustrating the many ways that scientists go wrong, Ritchie gives us the knowledge we need to spot dubious research and points the way to reforms that could make science trustworthy once again.

Science Fictions with Stuart Ritchie

Sylvain Catherine

Natasha Sarin

Today's guests are Sylvain Catherine and Natasha Sarin of the University of Pennsylvania. They discuss their research on wealth inequality, specifically with respect to social security's impact on calculated wealth inequality. When you account for the value of all future payroll taxes into Social Security and all future benefit payments from Social Security, the present value of that stream of payments accounts for a large fraction of the wealth held by the bottom 90% of households. Recent influential work finds large increases in inequality in the U.S., based on measures of wealth concentration that notably exclude the value of social insurance programs. This paper revisits this conclusion by incorporating Social Security retirement benefits into measures of wealth inequality. Wealth inequality has not increased in the last three decades when Social Security is accounted for. When discounted at the risk-free rate, real Social Security wealth increased substantially from $5.6 trillion in 1989 to just over $42.0 trillion in 2016. When we adjust for systematic risk coming from the covariance of Social Security returns with the market portfolio, this increase remains sizable, growing from over $4.6 trillion in 1989 to $34.0 trillion in 2016. Consequently, by 2016, Social Security wealth represented 58% of the wealth of the bottom 90% of the wealth distribution. Redistribution through programs like Social Security increases the progressivity of the economy, and it is important that our estimates of wealth concentration reflect this.

Today's guests are Sylvain Catherine and Natasha Sarin of the University of Pennsylvania. They discuss their research on wealth inequality, specifically with respect to social security's impact on calculated wealth inequality. When you account for the value of all future payroll taxes into Social Security and all future benefit payments from Social Security, the present value of that stream of payments accounts for a large fraction of the wealth held by the bottom 90% of households. Recent influential work finds large increases in inequality in the U.S., based on measures of wealth concentration that notably exclude the value of social insurance programs. This paper revisits this conclusion by incorporating Social Security retirement benefits into measures of wealth inequality. Wealth inequality has not increased in the last three decades when Social Security is accounted for. When discounted at the risk-free rate, real Social Security wealth increased substantially from $5.6 trillion in 1989 to just over $42.0 trillion in 2016. When we adjust for systematic risk coming from the covariance of Social Security returns with the market portfolio, this increase remains sizable, growing from over $4.6 trillion in 1989 to $34.0 trillion in 2016. Consequently, by 2016, Social Security wealth represented 58% of the wealth of the bottom 90% of the wealth distribution. Redistribution through programs like Social Security increases the progressivity of the economy, and it is important that our estimates of wealth concentration reflect this.

Social Security and Wealth Inequality with Sylvain Catherine and Natasha Sarin

This bonus episode features an interview from  The Passion Economy, created by Adam Davidson of NPR's Planet Money. The clip features an interview with Coss Marte, an enterprising entrepreneur in an unorthodox business. The economy is bananas, even scary. But some people are thriving, and we're going to figure out how. Adam Davidson, "New Yorker" writer, longtime contributor to This American Life, and the creator of NPR’s "Planet Money," unearths stories from regular people. People who have cracked the code to success in our new economic reality.

This bonus episode features an interview from <a href="https://podcasts.apple.com/us/podcast/the-passion-economy/id1459910839" rel="nofollow" target="_blank"> The Passion Economy</a>, created by Adam Davidson of NPR's Planet Money. The clip features an interview with Coss Marte, an enterprising entrepreneur in an unorthodox business. The economy is bananas, even scary. But some people are thriving, and we're going to figure out how. Adam Davidson, "New Yorker" writer, longtime contributor to This American Life, and the creator of NPR’s "Planet Money," unearths stories from regular people. People who have cracked the code to success in our new economic reality.

BONUS: The Passion Economy

Mark Blyth

Today's episode features my conversation with Mark Blyth, co-author (with Eric Lonergan) of Angrynomics. Why are measures of stress and anxiety on the rise when economists and politicians tell us we have never had it so good? While statistics tell us that the vast majority of people are getting steadily richer, the world most of us experience day in and day out feels increasingly uncertain, unfair, and ever more expensive. In Angrynomics, Mark Blyth and Eric Lonergan explore the rising tide of anger, sometimes righteous and useful, sometimes destructive and ill-targeted, and propose radical new solutions for an increasingly polarized and confusing world. Angrynomics is for anyone wondering, where the hell do we go from here? In the course of our conversation, Mark mentioned a talk he gave called The Mustang and the Volvo describing the different economies of America and Europe.

Today's episode features my conversation with <a href="https://twitter.com/MkBlyth?s=20" rel="noopener nofollow" target="_blank">Mark Blyth</a>, co-author (with Eric Lonergan) of <a href="https://amzn.to/2VtQbOq" rel="noopener nofollow" target="_blank">Angrynomics</a>. Why are measures of stress and anxiety on the rise when economists and politicians tell us we have never had it so good? While statistics tell us that the vast majority of people are getting steadily richer, the world most of us experience day in and day out feels increasingly uncertain, unfair, and ever more expensive. In Angrynomics, Mark Blyth and Eric Lonergan explore the rising tide of anger, sometimes righteous and useful, sometimes destructive and ill-targeted, and propose radical new solutions for an increasingly polarized and confusing world. Angrynomics is for anyone wondering, where the hell do we go from here? In the course of our conversation, Mark mentioned a talk he gave called <a href="https://www.youtube.com/watch?v=3rgANzx8hXs" rel="noopener nofollow" target="_blank">The Mustang and the Volvo</a> describing the different economies of America and Europe.

Angrynomics with Mark Blyth

Ilya Somin

Ilya Somin of George Mason University joins the podcast to discuss his book Free to Move: Foot Voting, Migration, and Political Freedom. Ballot box voting is often considered the essence of political freedom. But, it has two major shortcomings: individual voters have little chance of making a difference, and they also face strong incentives to remain ignorant about the issues at stake. "Voting with your feet," however, avoids both of these pitfalls and offers a wider range of choices. In Free to Move, Ilya Somin explains how broadening opportunities for foot voting can greatly enhance political liberty for millions of people around the world.  People can vote with their feet by making decisions about whether to immigrate, where to live within a federal system, and what to purchase or support in the private sector. These three areas are rarely considered together, but Somin explains how they have major common virtues and can be mutually reinforcing. He contends that all forms of foot voting should be expanded and shows how both domestic constitutions and international law can be structured to increase opportunities for foot voting while mitigating possible downsides.  Somin addresses a variety of common objections to expanded migration rights, including claims that the "self-determination" of natives requires giving them the power to exclude migrants, and arguments that migration is likely to have harmful side effects, such as undermining political institutions, overburdening the welfare state, increasing crime and terrorism, and spreading undesirable cultural values. While these objections are usually directed at international migration, Somin shows how a consistent commitment to such theories would also justify severe restrictions on domestic freedom of movement. That implication is an additional reason to be skeptical of these rationales for exclusion. By making a systematic case for a more open world, Free to Move challenges conventional wisdom on both the left and the right.

Ilya Somin of George Mason University joins the podcast to discuss his book <a href="https://amzn.to/3eVjJvt" rel="noopener nofollow" target="_blank">Free to Move: Foot Voting, Migration, and Political Freedom</a>. Ballot box voting is often considered the essence of political freedom. But, it has two major shortcomings: individual voters have little chance of making a difference, and they also face strong incentives to remain ignorant about the issues at stake. "Voting with your feet," however, avoids both of these pitfalls and offers a wider range of choices. In Free to Move, Ilya Somin explains how broadening opportunities for foot voting can greatly enhance political liberty for millions of people around the world. People can vote with their feet by making decisions about whether to immigrate, where to live within a federal system, and what to purchase or support in the private sector. These three areas are rarely considered together, but Somin explains how they have major common virtues and can be mutually reinforcing. He contends that all forms of foot voting should be expanded and shows how both domestic constitutions and international law can be structured to increase opportunities for foot voting while mitigating possible downsides. Somin addresses a variety of common objections to expanded migration rights, including claims that the "self-determination" of natives requires giving them the power to exclude migrants, and arguments that migration is likely to have harmful side effects, such as undermining political institutions, overburdening the welfare state, increasing crime and terrorism, and spreading undesirable cultural values. While these objections are usually directed at international migration, Somin shows how a consistent commitment to such theories would also justify severe restrictions on domestic freedom of movement. That implication is an additional reason to be skeptical of these rationales for exclusion. By making a systematic case for a more open world, Free to Move challenges conventional wisdom on both the left and the right.

Free to Move with Ilya Somin

Economics Detective Radio is a podcast about markets, ideas, institutions, and all things related to the field of economics. Episodes consist of long-form interviews and are generally released on Fridays. Topics include economic theory, economic history, the history of thought, money, banking, finance, macroeconomics, public choice, business cycles, health care, education, international trade, and anything else of interest to economists, students, and serious amateurs interested in the science of human action. For additional content and links related to each episode, visit economicsdetective.com.

Love this podcast, really enjoy the in depth conversations.

Excellent

Love listening to well thought out interviews.

Well put together.

Economics Detective Radio is a podcast about markets, ideas, institutions, and all things related to the field of economics. Episodes consist of long-form interviews and are generally released on Fridays. Topics include economic theory, economic history, the history of thought, money, banking, finance, macroeconomics, public choice, business cycles, health care, education, international trade, and anything else of interest to economists, students, and serious amateurs interested in the science of human action. For additional content and links related to each episode, visit <a href="http://economicsdetective.com" rel="nofollow" target="_blank">economicsdetective.com</a>.

Economics Detective Radio

Kevin Erdmann

Kevin Erdmann of the Mercatus Center returns to the podcast to discuss his new book, Shut Out: How a Housing Shortage Caused the Great Recession and Crippled Our Economy. From the publisher's website: The United States suffers from a shortage of well-placed homes. This was true even at the peak of the housing boom in 2005. Using a broad array of evidence on housing inflation, income, migration, homeownership trends, and international comparisons, Shut Out demonstrates that high home prices have been largely caused by the constrained housing supply in a handful of magnet cities leading the new economy.  The same phenomenon is occurring in leading countries across the globe. Gentrifying cities have become exclusionary bastions in the new postindustrial economy. The US housing bubble that peaked in 2005 is more accurately described as a refugee crisis than a credit bubble. Surging demand for limited urban housing triggered a spike of migration away from the magnet cities among households with moderate and lower incomes who could no longer afford to remain, causing a brief contagion of high prices in the cities where the migrants moved.  Links: My previous interview with Kevin, from 2017 Kevin's policy brief for Mercatus, arguing that housing was undersupplied during the so-called "housing bubble" Kevin's blog, Idiosyncratic Whisk

<a href="https://www.mercatus.org/people/kevin-erdmann" rel="noopener nofollow" target="_blank">Kevin Erdmann</a> of the Mercatus Center returns to the podcast to discuss his new book, <a href="https://amzn.to/2OaoZzx" rel="noopener nofollow" target="_blank">Shut Out: How a Housing Shortage Caused the Great Recession and Crippled Our Economy</a>. From the <a href="https://rowman.com/ISBN/9781538122143/Shut-Out-How-a-Housing-Shortage-Caused-the-Great-Recession-and-Crippled-Our-Economy" rel="noopener nofollow" target="_blank">publisher's website</a>: The United States suffers from a shortage of well-placed homes. This was true even at the peak of the housing boom in 2005. Using a broad array of evidence on housing inflation, income, migration, homeownership trends, and international comparisons, Shut Out demonstrates that high home prices have been largely caused by the constrained housing supply in a handful of magnet cities leading the new economy. The same phenomenon is occurring in leading countries across the globe. Gentrifying cities have become exclusionary bastions in the new postindustrial economy. The US housing bubble that peaked in 2005 is more accurately described as a refugee crisis than a credit bubble. Surging demand for limited urban housing triggered a spike of migration away from the magnet cities among households with moderate and lower incomes who could no longer afford to remain, causing a brief contagion of high prices in the cities where the migrants moved. Links: <a href="https://economicsdetective.com/2017/07/housing-liquidity-closed-access-cities-kevin-erdmann/" rel="noopener nofollow" target="_blank">My previous interview with Kevin, from 2017</a> Kevin's <a href="https://www.mercatus.org/publications/monetary-policy/housing-was-undersupplied-during-great-housing-bubble" rel="noopener nofollow" target="_blank">policy brief for Mercatus</a>, arguing that housing was undersupplied during the so-called "housing bubble" <a href="https://www.idiosyncraticwhisk.com/" rel="noopener nofollow" target="_blank">Kevin's blog, Idiosyncratic Whisk</a>

Re-thinking the so-called Housing Bubble with Kevin Erdmann

Lawrence Reed

Marc Hyden

Ancient Rome went from a thriving civilization to a dystopia before its eventual collapse. My guests today explain how that happened. Lawrence Reed and Marc Hyden co-authored "The Slow-Motion Financial Suicide of the Roman Empire." Lawrence is the President of the Foundation for Economic Education, and Marc is a political activist and amateur Roman historian. Many accounts of the fall of Rome focus on military problems and the barbarian invasions. However, the Empire was in decline long before the barbarians showed up to finish it off. The barbarians didn't kill the Roman Empire; the Roman Empire committed suicide. There were six important factors in the Empire's decline: 1. Political violence became normalized. The populist reformer Tiberius Gracchus redistributed public farmland to Roman citizens. His reforms angered the Senate, and his political enemies clubbed him to death in 133 BCE. This was the first open political assassination in Rome in nearly four centuries, but it wouldn't be the last. Suddenly, it became acceptable for powerful Romans to kill their political enemies, and this would spell doom for Rome's republican government. 2. The Roman state gave ever-increasing amounts of free food and entertainment to the masses. Despite having killed Tiberius Gracchus, the senate did not repeal his reforms in an effort to assuage the masses. Tiberius' brother Gaius Gracchus would take his brother's position and further his reforms, also introducing a system of subsidized grain for the masses. When Gaius also succumbed to political violence, most of his reforms died with him, but not the grain dole. The dole was retained and expanded, proving a huge burden on the Roman state. Successive generations of Roman leaders would buy political popularity with panem et circenses (bread and circuses). The Roman people came to value the dole over all other values. When the emperor Caligula was assassinated, there was a brief opportunity to restore the Republic, but the people preferred the rule of strong men who could provide them with ever more panem et circenses. 3. Roman armies became personally loyal to their generals rather than being loyal to the Roman state or the people. In the early Roman Republic, the two elected consuls would raise forces from the eligible land-holding citizenry in times of crisis. These soldiers would return to their ordinary lives upon the completion of the war. This would change with the reforms implemented by Gaius Marius in 107 BCE. Marius expanded military eligibility to the landless masses and granted farmland to his veterans. He also set a precedent for much longer military campaigns (consulships had been ordinarily limited to one year). These changes made the soldiers personally loyal to their generals rather than to the Senate and People of Rome, and the generals would use their military strength to intimidate the Senate. Eventually they supplanted the Senate altogether, turning Rome into an empire with a series of strong men leading it as emperors. However, the soldiers' loyalty only lasted as long as the wealth and land kept coming in increasing amounts, as future emperors would discover while wrestling with the Empire's deteriorating finances. 4. They debased the currency. The silver denarius was introduced by Augustus with a silver content of about 95 per cent. However, successive emperors, facing ever-increasing demands on the treasury, both from the people who demanded panem et circenses and from the military who demanded ever-more land and money for their loyalty, needed whatever revenue they could get. When taxes would not suffice, emperors would melt down old coins and mint new ones with reduced silver content. During Trajan's rule, the denarius was about 85 per cent silver. By Marcus Aurelius' reign, that was down to about 75 per cent. Septimius Severus dropped it to 60 per cent, and his son Caracalla reduced it further to only 50 per cent. Eventually this would spiral out of control into hyperinflation; emperors couldn't debase the currency fast enough to keep up with skyrocketing prices. By 268 CE, the denarius was just a bronze coin with a bit of silver brushed on its surface; the silver content was less than one per cent. Nor did they understand the connection between rising prices and currency debasements, which led to… 5. They instituted Draconian price controls. Rather than halting the debasement of the denarius, the Romans instituted (predictably) disastrous price controls. Dicoletian issued his Edict on Maximum Prices in 301 CE. Diocletian set one price for the whole of the empire, from modern-day Iraq in the east to Britain in the west. In regions where the costs of goods were significantly higher than the legal limit, markets dried up, riots broke out, and many people were put to death for selling at too high a price. The law was so disastrous that it was eventually dropped. 6. They instituted onerous taxes. Monetary reforms under Diocletian and Constantine switched the empire largely to a gold standard, which was an improvement over the hyperinflationary denarius. However, the benefits of this gold currency were not felt by those outside of the military and the bureaucracy; most people had to scramble to get enough gold to pay their taxes. People who couldn't pay were sold into slavery. When the barbarian invasions came in the fifth century, the people welcomed them as liberators, freeing them from the yoke of the Roman tax collectors.   [Note: A phone rings in the background of the recording at 10:20. Don't be alarmed! Your phone isn't ringing.]

Ancient Rome went from a thriving civilization to a dystopia before its eventual collapse. My guests today explain how that happened. Lawrence Reed and Marc Hyden co-authored <a href="http://fee.org/articles/the-slow-motion-financial-suicide-of-the-roman-empire/" rel="nofollow" target="_blank">"The Slow-Motion Financial Suicide of the Roman Empire."</a> Lawrence is the President of the <a href="http://fee.org" rel="nofollow" target="_blank">Foundation for Economic Education</a>, and Marc is a political activist and amateur Roman historian. Many accounts of the fall of Rome focus on military problems and the barbarian invasions. However, the Empire was in decline long before the barbarians showed up to finish it off. The barbarians didn't kill the Roman Empire; the Roman Empire committed suicide. There were six important factors in the Empire's decline: 1. Political violence became normalized. The populist reformer Tiberius Gracchus redistributed public farmland to Roman citizens. His reforms angered the Senate, and his political enemies clubbed him to death in 133 BCE. This was the first open political assassination in Rome in nearly four centuries, but it wouldn't be the last. Suddenly, it became acceptable for powerful Romans to kill their political enemies, and this would spell doom for Rome's republican government. 2. The Roman state gave ever-increasing amounts of free food and entertainment to the masses. Despite having killed Tiberius Gracchus, the senate did not repeal his reforms in an effort to assuage the masses. Tiberius' brother Gaius Gracchus would take his brother's position and further his reforms, also introducing a system of subsidized grain for the masses. When Gaius also succumbed to political violence, most of his reforms died with him, but not the grain dole. The dole was retained and expanded, proving a huge burden on the Roman state. Successive generations of Roman leaders would buy political popularity with panem et circenses (bread and circuses). The Roman people came to value the dole over all other values. When the emperor Caligula was assassinated, there was a brief opportunity to restore the Republic, but the people preferred the rule of strong men who could provide them with ever more panem et circenses. 3. Roman armies became personally loyal to their generals rather than being loyal to the Roman state or the people. In the early Roman Republic, the two elected consuls would raise forces from the eligible land-holding citizenry in times of crisis. These soldiers would return to their ordinary lives upon the completion of the war. This would change with the <a href="https://en.wikipedia.org/wiki/Marian_reforms" rel="nofollow" target="_blank">reforms implemented by Gaius Marius in 107 BCE</a>. Marius expanded military eligibility to the landless masses and granted farmland to his veterans. He also set a precedent for much longer military campaigns (consulships had been ordinarily limited to one year). These changes made the soldiers personally loyal to their generals rather than to the Senate and People of Rome, and the generals would use their military strength to intimidate the Senate. Eventually they supplanted the Senate altogether, turning Rome into an empire with a series of strong men leading it as emperors. However, the soldiers' loyalty only lasted as long as the wealth and land kept coming in increasing amounts, as future emperors would discover while wrestling with the Empire's deteriorating finances. 4. They debased the currency. The silver denarius was introduced by Augustus with a silver content of about 95 per cent. However, successive emperors, facing ever-increasing demands on the treasury, both from the people who demanded panem et circenses and from the military who demanded ever-more land and money for their loyalty, needed whatever revenue they could get. When taxes would not suffice, emperors would melt down old coins and <a href="https://mises.org/library/inflation-and-fall-roman-empire" rel="nofollow" target="_blank">mint new ones with reduced silver content.</a> During Trajan's rule, the denarius was about 85 per cent silver. By Marcus Aurelius' reign, that was down to about 75 per cent. Septimius Severus dropped it to 60 per cent, and his son Caracalla reduced it further to only 50 per cent. Eventually this would spiral out of control into hyperinflation; emperors couldn't debase the currency fast enough to keep up with skyrocketing prices. By 268 CE, the denarius was just a bronze coin with a bit of silver brushed on its surface; the silver content was less than one per cent. Nor did they understand the connection between rising prices and currency debasements, which led to… 5. They instituted Draconian price controls. Rather than halting the debasement of the denarius, the Romans instituted (predictably) disastrous price controls. Dicoletian issued his <a href="https://en.wikipedia.org/wiki/Edict_on_Maximum_Prices" rel="nofollow" target="_blank">Edict on Maximum Prices</a> in 301 CE. Diocletian set one price for the whole of the empire, from modern-day Iraq in the east to Britain in the west. In regions where the costs of goods were significantly higher than the legal limit, markets dried up, riots broke out, and many people were put to death for selling at too high a price. The law was so disastrous that it was eventually dropped. 6. They instituted onerous taxes. Monetary reforms under Diocletian and Constantine switched the empire largely to a gold standard, which was an improvement over the hyperinflationary denarius. However, the benefits of this gold currency were not felt by those outside of the military and the bureaucracy; most people had to scramble to get enough gold to pay their taxes. People who couldn't pay were sold into slavery. When the barbarian invasions came in the fifth century, the people welcomed them as liberators, freeing them from the yoke of the Roman tax collectors. [Note: A phone rings in the background of the recording at 10:20. Don't be alarmed! Your phone isn't ringing.]

Rome's Economic Suicide with Lawrence Reed and Marc Hyden

Garett Jones

Garett Jones is Associate Professor of Economics and BB&amp;T Professor for the Study of Capitalism at the Mercatus Center, George Mason University. His book, Hive Mind: How Your Nation's IQ Matters so Much More than Your Own is the subject of this episode. The book deals with an empirical puzzle: IQ is a weak predictor for earnings. We all know high-IQ people who live paycheque to paycheque, and lower IQ people who succeed brilliantly. And yet, when we look at the relationship between nations' average IQ scores and their incomes, the relationship is strong. Nations with the highest average IQ scores are eight times wealthier than nations with the lowest IQ scores. How can we resolve this apparent contradiction? Garett documents five main channels for the spillover effects of IQ: 1. Smarter people are more patient, they save more and build up more capital. When economists test people's patience, high-IQ people tend to be more willing to wait for a larger amount of money in the future rather than taking a smaller sum now. This is important at the national level because savings tend to stay within a country* and fund investments within that country. That means living in a higher IQ nation generally means having more capital available to compliment your labour. 2. Smarter groups are more cooperative. Economists use the iterated prisoner's dilemma as an idealized scenario where cooperation is at odds with people's individual, short-term incentives. Jones looked at the many times economists have studied this in experiments and correlated the cooperation rate in these experiments with the SAT scores of the schools the study participants were drawn from. He found that higher SAT schools produced more cooperation in the iterated prisoner's dilemma. In later research, Al-Ubaydli, Jones, and Weel (2014) found that higher IQ groups were more cooperative, but higher IQ individuals were not. A high-IQ person in a low-IQ group would not foolishly cooperate when everyone else was defecting, but high-IQ groups could coordinate on a cooperative solution despite not knowing that they were in a high-IQ group. 3. Smarter people are more informed voters and are more likely to support market-oriented policies. Caplan and Miller (2010) document the tendency for high-IQ people to think like economists. 4. Smarter groups make more productive team members. Jones uses "O-ring" technologies (drawing on an idea from Kremer (1993)), in reference to the fatal part that cause the Challenger disaster, to show how high-IQ workers can be indispensable in many sectors of a modern economy. While many economic models assume substitutability between high- and low-skilled labour (e.g. three low-skilled workers can do the work of one high-skilled worker), O-ring sectors don't have this feature. When one mistake can completely destroy a project, low-skilled workers can have effectively negative marginal products. 5. Peer effects cause those with high-IQ peers take on the behaviours of high-IQ people, implying that low-IQ people in high-IQ countries will be more patient, cooperative, informed, and productive than low-IQ people in low-IQ countries. It's well documented in the social science literature that people take on the behaviours of their peers. This effectively multiplies the positive effects of the first four channels by making low-IQ people behave like high-IQ people. Jones sees a virtuous cycle between IQ and development. Higher IQs lead to better economic outcomes, and better economic outcomes lead to better health outcomes and higher IQs. But despite the great importance of this subject, people have been extremely reluctant to research differences in IQ between groups for fear of finding an unpalatable result. One of Jones' aims in writing this book is to make it more acceptable for people to do research in this area. We also discuss Jones' recent debate with Bryan Caplan on the subject of open borders. Jones' work on IQ spillover effects give us reason to use caution in supporting open borders.   *This is actually another economic "paradox" that economists don't fully understand. One would expect savings to be invested where they face the highest returns, regardless of national boundaries, but that seems not to be the case.REFRENCESAl-Ubaydli, O., Jones, G., &amp; Weel, J. (2014). Average player traits as predictors of cooperation in a repeated prisoner's dilemma. Caplan, B., &amp; Miller, S. C. (2010). Intelligence makes people think like economists: Evidence from the General Social Survey. Intelligence, 38(6), 636-647. Jones, G. (2008). Are smarter groups more cooperative? Evidence from prisoner's dilemma experiments, 1959–2003. Journal of Economic Behavior &amp; Organization, 68(3), 489-497. Kremer, M. (1993). The O-ring theory of economic development. The Quarterly Journal of Economics, 551-575.

Garett Jones is Associate Professor of Economics and BB&amp;T Professor for the Study of Capitalism at the Mercatus Center, George Mason University. His book, <a href="http://www.amazon.com/gp/product/0804785961/ref=as_li_tl?ie=UTF8&amp;camp=1789&amp;creative=390957&amp;creativeASIN=0804785961&amp;linkCode=as2&amp;tag=economdetect-20&amp;linkId=DQOKRZCHMDHHZ3TE" rel="nofollow" target="_blank">Hive Mind: How Your Nation's IQ Matters so Much More than Your Own</a> is the subject of this episode. The book deals with an empirical puzzle: IQ is a weak predictor for earnings. We all know high-IQ people who live paycheque to paycheque, and lower IQ people who succeed brilliantly. And yet, when we look at the relationship between nations' average IQ scores and their incomes, the relationship is strong. Nations with the highest average IQ scores are eight times wealthier than nations with the lowest IQ scores. How can we resolve this apparent contradiction? Garett documents five main channels for the spillover effects of IQ: 1. Smarter people are more patient, they save more and build up more capital. When economists test people's patience, high-IQ people tend to be more willing to wait for a larger amount of money in the future rather than taking a smaller sum now. This is important at the national level because savings tend to stay within a country* and fund investments within that country. That means living in a higher IQ nation generally means having more capital available to compliment your labour. 2. Smarter groups are more cooperative. Economists use the iterated prisoner's dilemma as an idealized scenario where cooperation is at odds with people's individual, short-term incentives. Jones looked at the many times economists have studied this in experiments and correlated the cooperation rate in these experiments with the SAT scores of the schools the study participants were drawn from. He found that higher SAT schools produced more cooperation in the iterated prisoner's dilemma. In later research, Al-Ubaydli, Jones, and Weel (2014) found that higher IQ groups were more cooperative, but higher IQ individuals were not. A high-IQ person in a low-IQ group would not foolishly cooperate when everyone else was defecting, but high-IQ groups could coordinate on a cooperative solution despite not knowing that they were in a high-IQ group. 3. Smarter people are more informed voters and are more likely to support market-oriented policies. Caplan and Miller (2010) document the tendency for high-IQ people to think like economists. 4. Smarter groups make more productive team members. Jones uses "O-ring" technologies (drawing on an idea from Kremer (1993)), in reference to the fatal part that cause the Challenger disaster, to show how high-IQ workers can be indispensable in many sectors of a modern economy. While many economic models assume substitutability between high- and low-skilled labour (e.g. three low-skilled workers can do the work of one high-skilled worker), O-ring sectors don't have this feature. When one mistake can completely destroy a project, low-skilled workers can have effectively negative marginal products. 5. Peer effects cause those with high-IQ peers take on the behaviours of high-IQ people, implying that low-IQ people in high-IQ countries will be more patient, cooperative, informed, and productive than low-IQ people in low-IQ countries. It's well documented in the social science literature that people take on the behaviours of their peers. This effectively multiplies the positive effects of the first four channels by making low-IQ people behave like high-IQ people. Jones sees a virtuous cycle between IQ and development. Higher IQs lead to better economic outcomes, and better economic outcomes lead to better health outcomes and higher IQs. But despite the great importance of this subject, people have been extremely reluctant to research differences in IQ between groups for fear of finding an unpalatable result. One of Jones' aims in writing this book is to make it more acceptable for people to do research in this area. We also discuss <a href="https://mediasite.northwood.edu/Mediasite/Play/da4e536f404d4037a2859c815d3d226b1d" rel="nofollow" target="_blank">Jones' recent debate with Bryan Caplan</a> on the subject of open borders. Jones' work on IQ spillover effects give us reason to use caution in supporting open borders. *This is actually another economic "paradox" that economists don't fully understand. One would expect savings to be invested where they face the highest returns, regardless of national boundaries, but that seems not to be the case.REFRENCES Al-Ubaydli, O., Jones, G., &amp; Weel, J. (2014). Average player traits as predictors of cooperation in a repeated prisoner's dilemma. Caplan, B., &amp; Miller, S. C. (2010). Intelligence makes people think like economists: Evidence from the General Social Survey. Intelligence, 38(6), 636-647. Jones, G. (2008). Are smarter groups more cooperative? Evidence from prisoner's dilemma experiments, 1959–2003. Journal of Economic Behavior &amp; Organization, 68(3), 489-497. Kremer, M. (1993). The O-ring theory of economic development. The Quarterly Journal of Economics, 551-575.

Hive Mind, IQ, and the Wealth of Nations with Garett Jones

Ekaterina Jardim

My guest for this is Ekaterina Jardim of the University of Washington. Ekaterina is one of the authors of the new minimum wage study that has been making headlines recently, "Minimum Wage Increases, Wages, and Low-Wage Employment: Evidence from Seattle." One reason this study is so interesting is that it was funded by the City of Seattle, which is something that governments aren’t obligated or expected to do when they enact major policy changes like these minimum wage hikes. There was a broad theoretical and empirical consensus in the 1980s that higher minimum wages have disemployment effects on the low skilled, and then Card and Krueger (1994) started a new empirical literature that found no evidence of disemployment effects. A major problem with Card and Krueger (1994) and with many of the other studies conducted over the past quarter century was their use of proxy measures for low-skilled workers. Instead of looking at workers who actually earned less than the new minimum wage, these studies looked at groups that they knew to contain many minimum-wage workers: generally teenagers or restaurant workers. This new study does not face this limitation because Washington State requires firms to report both the hours worked and the wages of all workers. One criticism I’m seeing a lot in response to the media coverage of this study is the fact that they had to drop multi-location firms from the sample. The reason for this is that the data only shows what firms people work for, not their location. So if a firm has locations both inside and outside Seattle, you don't know whether a given worker in that firm belongs in the treatment or the control. Still, despite this limitation, the study's sample included over 60 percent of workers in Seattle. Furthermore, the study authors surveyed employers and found that the multi-site firms that were excluded from the sample actually reported more reductions in work hours than did the firms that remained in the sample. So if anything, this omission understates rather than overstates the effect of the minimum wage increase. One big concern people have is just how much this study's results deviate from the established literature. The authors address this by repeating their analysis using employment in the restaurant industry as a proxy for low-skilled labour. They find that using this proxy for low-skilled labour reduces the measured impact of the minimum wage to near zero, consistent with past studies that have looked only at the restaurant industry. It seems that this apparently robust finding, replicated in study after study over the past few decades, was actually a quirk of studying the restaurant industry, which tends to substitute high-skilled labour for low-skilled labour rather than cutting total labour hours as a short-run response to minimum wage hikes. Related Links Kevin Grier explains the synthetic control method, which the minimum wage study uses to construct a control group.

My guest for this is Ekaterina Jardim of the University of Washington. Ekaterina is one of the authors of the new minimum wage study that has been making headlines recently, <a href="http://www.nber.org/papers/w23532" rel="nofollow" target="_blank">"Minimum Wage Increases, Wages, and Low-Wage Employment: Evidence from Seattle."</a> One reason this study is so interesting is that it was funded by the City of Seattle, which is something that governments aren’t obligated or expected to do when they enact major policy changes like these minimum wage hikes. There was a broad theoretical and empirical consensus in the 1980s that higher minimum wages have disemployment effects on the low skilled, and then <a href="http://davidcard.berkeley.edu/papers/njmin-aer.pdf" rel="nofollow" target="_blank">Card and Krueger (1994)</a> started a new empirical literature that found no evidence of disemployment effects. A major problem with Card and Krueger (1994) and with many of the other studies conducted over the past quarter century was their use of proxy measures for low-skilled workers. Instead of looking at workers who actually earned less than the new minimum wage, these studies looked at groups that they knew to contain many minimum-wage workers: generally teenagers or restaurant workers. This new study does not face this limitation because Washington State requires firms to report both the hours worked and the wages of all workers. One criticism I’m seeing a lot in response to the media coverage of this study is the fact that they had to drop multi-location firms from the sample. The reason for this is that the data only shows what firms people work for, not their location. So if a firm has locations both inside and outside Seattle, you don't know whether a given worker in that firm belongs in the treatment or the control. Still, despite this limitation, the study's sample included over 60 percent of workers in Seattle. Furthermore, the study authors surveyed employers and found that the multi-site firms that were excluded from the sample actually reported more reductions in work hours than did the firms that remained in the sample. So if anything, this omission understates rather than overstates the effect of the minimum wage increase. One big concern people have is just how much this study's results deviate from the established literature. The authors address this by repeating their analysis using employment in the restaurant industry as a proxy for low-skilled labour. They find that using this proxy for low-skilled labour reduces the measured impact of the minimum wage to near zero, consistent with past studies that have looked only at the restaurant industry. It seems that this apparently robust finding, replicated in study after study over the past few decades, was actually a quirk of studying the restaurant industry, which tends to substitute high-skilled labour for low-skilled labour rather than cutting total labour hours as a short-run response to minimum wage hikes. Related Links <a href="http://economicsdetective.com/2017/06/synthetic-control-impact-hugo-chavez-kevin-b-grier/" rel="nofollow" target="_blank">Kevin Grier explains the synthetic control method</a>, which the minimum wage study uses to construct a control group.

The Seattle Minimum Wage Study with Ekaterina Jardim

Jane Jacobs

Pierre Desrochers

This episode of Economics Detective Radio features Pierre Desrochers discussing the life and work of Jane Jacobs. Jacobs, born Jane Butzner, was a thinker and activist who wrote about cities. She spent her early career as a business journalist. When she started writing about urban renewal, she recognized the policy for the disaster it was. Jacobs became a voice for the general dissatisfaction with a policy that would bulldoze whole neighbourhoods, relocating the inhabitants into new buildings preferred by urban planning reformers and political elites. The editors of Fortune Magazine invited Jacobs to write a piece about downtowns. Her piece, “Downtowns are for People” became the magazine’s most-discussed article. She developed the ideas in that article into her first and most famous book, The Death and Life of Great American Cities. The book launched her as a minor celebrity.  In New York City, she successfully opposed initiatives to “renew” Greenwich Village. She also opposed a plan that would have cut a highway through SoHo, Chinatown, and Little Italy. Eventually she found herself opposing the Vietnam War, and, fearing that one of her sons would be drafted, moved to Toronto. Jacobs’ most important contributions to economics came in her second book, The Economy of Cities. Jacobs is essentially a spontaneous order theorist, though she never used that term. Her concept of entrepreneurship is particularly rich and dynamic. Unlike most economists (even Austrians) she has no urge to talk about how entrepreneurship leads us closer to equilibrium.  Her largest influence on the mainstream economics literature is the so-called “Jacobs externality.” Jacobs suggested that innovation would often come from outsiders to a given industry, so having many diverse industries clustered in a small geographic area would lead to innovation. The alternative thesis, associated with Alfred Marshall and later Paul Romer, holds that when a region specializes in a particular industry it allows knowledge spillovers to occur between similar firms. There has been significant empirical research to try to resolve these two opposing views, with Jacobs often coming out the winner. Pierre can be found online at his academic website.

This episode of Economics Detective Radio features <a href="http://geog.utm.utoronto.ca/desrochers/" rel="nofollow" target="_blank">Pierre Desrochers</a> discussing the life and work of Jane Jacobs. Jacobs, born Jane Butzner, was a thinker and activist who wrote about cities. She spent her early career as a business journalist. When she started writing about urban renewal, she recognized the policy for the disaster it was. Jacobs became a voice for the general dissatisfaction with a policy that would bulldoze whole neighbourhoods, relocating the inhabitants into new buildings preferred by urban planning reformers and political elites. The editors of Fortune Magazine invited Jacobs to write a piece about downtowns. Her piece, “Downtowns are for People” became the magazine’s most-discussed article. She developed the ideas in that article into her first and most famous book, <a href="http://www.amazon.com/gp/product/067974195X/ref=as_li_tl?ie=UTF8&amp;camp=1789&amp;creative=9325&amp;creativeASIN=067974195X&amp;linkCode=as2&amp;tag=economdetect-20&amp;linkId=J6YJE6WTIQMDTLK7" rel="nofollow" target="_blank">The Death and Life of Great American Cities</a>. The book launched her as a minor celebrity. <a href="http://www.amazon.com/gp/product/067974195X/ref=as_li_tl?ie=UTF8&amp;camp=1789&amp;creative=9325&amp;creativeASIN=067974195X&amp;linkCode=as2&amp;tag=economdetect-20&amp;linkId=TLLJSBWDTYEWF4UO" rel="nofollow" target="_blank"></a> In New York City, she successfully opposed initiatives to “renew” Greenwich Village. She also opposed a plan that would have cut a highway through SoHo, Chinatown, and Little Italy. Eventually she found herself opposing the Vietnam War, and, fearing that one of her sons would be drafted, moved to Toronto. Jacobs’ most important contributions to economics came in her second book, <a href="http://www.amazon.com/gp/product/039470584X/ref=as_li_tl?ie=UTF8&amp;camp=1789&amp;creative=9325&amp;creativeASIN=039470584X&amp;linkCode=as2&amp;tag=economdetect-20&amp;linkId=CBHOHPVDZXN3ZDP2" rel="nofollow" target="_blank">The Economy of Cities</a>. Jacobs is essentially a spontaneous order theorist, though she never used that term. Her concept of entrepreneurship is particularly rich and dynamic. Unlike most economists (even Austrians) she has no urge to talk about how entrepreneurship leads us closer to equilibrium. <a href="http://www.amazon.com/gp/product/039470584X/ref=as_li_tl?ie=UTF8&amp;camp=1789&amp;creative=9325&amp;creativeASIN=039470584X&amp;linkCode=as2&amp;tag=economdetect-20&amp;linkId=CIWYD2KF7DAGZ4MY" rel="nofollow" target="_blank"></a> Her largest influence on the mainstream economics literature is the so-called “Jacobs externality.” Jacobs suggested that innovation would often come from outsiders to a given industry, so having many diverse industries clustered in a small geographic area would lead to innovation. The alternative thesis, associated with Alfred Marshall and later Paul Romer, holds that when a region specializes in a particular industry it allows knowledge spillovers to occur between similar firms. There has been significant empirical research to try to resolve these two opposing views, with Jacobs often coming out the winner. Pierre can be found online at <a href="http://geog.utm.utoronto.ca/desrochers/" rel="nofollow" target="_blank">his academic website</a>.

Jane Jacobs as Spontaneous Order Theorist with Pierre Desrochers

Don Boudreaux

Don Boudreaux is a professor of economics at George Mason University. He blogs at Café Hayek. I invited him to discuss civil asset forfeiture on the podcast because of a conversation we had about it at a recent Mercatus Center colloquium. Civil asset forfeiture is the practice of the state taking someone’s property on suspicion that the property has been used for wrongdoing, without having to charge the owner with a crime. Civil asset forfeiture had its origins in British maritime law. The British had difficulties with pirates along the Barbary Coast. When the pirates were apprehended and their ships brought back to London, British courts had difficulty deciding what to do with these ships. The ships’ owners were outside the jurisdiction of British law, so the courts couldn’t try and convict them, but they couldn’t send the ships back to them either only to have them return to the seas with a fresh pirate crew! Parliament thus passed a law allowing the courts to charge the property itself with the crime if and only if the property’s owner was outside the jurisdiction of British law. Civil asset forfeiture, in this very limited form, was part of American law from the beginning. In the late 19th century, when alcohol was prohibited in some states, law enforcers started using civil asset forfeiture to confiscate the property of those suspected of producing, trafficking, and selling alcohol. This allowed them to circumvent due process, as American law only guarantees due process rights (such as the right to a trial by jury, the right to an attorney, the presumption of innocence, etc.) to human beings, and an alcohol still is not a human. The US Supreme Court ruled on civil asset forfeiture in the case of Bennis v. Michigan (which Don wrote about in a 1996 article coauthored with A. C. Pritchard). John Bennis was caught with a prostitute in the 1977 Dodge Dart he co-owned with his wife, Tina Bennis. As a result, the state confiscated the car. Tina Bennis, however, had no knowledge of her husband’s wrongdoing, and argued that she should at least be entitled to her half of the proceeds from the sale of the car. The case went all the way to the US Supreme Court, where then-Chief Justice Rehnquist wrote the majority opinion in favour of the State of Michigan. Rehnquist argued that civil asset forfeiture was constitutional since it had been a part of British law when the Constitution was adopted. Rehnquist neglected the fact that the civil asset forfeiture law at that time had only applied when the property owner was outside the legal jurisdiction of the court. John and Tina Bennis were both within the legal jurisdiction of Wayne County, Michigan where the car was seized. Police usually seize the assets of those groups in American society that have little political clout. A young black man driving in an expensive car and carrying a lot of cash can be pulled over and have his car and cash seized on suspicion that he might be a drug dealer. White, middle-class Americans rarely face the blatant, unjust seizure of their assets. However, in a recent case, the City of Philadelphia seized the white, middle-class Sourovelis family’s home after their son sold $40 of heroin on the front lawn. The Sourovelis family is now suing the City of Brotherly Love in a class-action suit with others whose property the city has seized (see Sourovelis v. City of Philadelphia). This case has drawn more public attention to the injustice of civil asset forfeiture, though still less attention than the issue deserves. For more information on civil asset forfeiture, you can learn about it from the Institute for Justice, a DC-based public-interest law firm that works against civil asset forfeiture.

<a href="http://www.amazon.com/gp/product/0983968705/ref=as_li_tl?ie=UTF8&amp;camp=1789&amp;creative=390957&amp;creativeASIN=0983968705&amp;linkCode=as2&amp;tag=economdetect-20&amp;linkId=VYD6NCIK7CFUBQZ4" rel="nofollow" target="_blank"></a><a href="http:/www.donaldjboudreaux.com/" rel="nofollow" target="_blank">Don Boudreaux</a> is a professor of economics at George Mason University. He blogs at <a href="http:/cafehayek.com" rel="nofollow" target="_blank">Café Hayek</a>. I invited him to discuss civil asset forfeiture on the podcast because of a conversation we had about it at a recent Mercatus Center colloquium. Civil asset forfeiture is the practice of the state taking someone’s property on suspicion that the property has been used for wrongdoing, without having to charge the owner with a crime. Civil asset forfeiture had its origins in British maritime law. The British had difficulties with pirates along the Barbary Coast. When the pirates were apprehended and their ships brought back to London, British courts had difficulty deciding what to do with these ships. The ships’ owners were outside the jurisdiction of British law, so the courts couldn’t try and convict them, but they couldn’t send the ships back to them either only to have them return to the seas with a fresh pirate crew! Parliament thus passed a law allowing the courts to charge the property itself with the crime if and only if the property’s owner was outside the jurisdiction of British law. Civil asset forfeiture, in this very limited form, was part of American law from the beginning. In the late 19th century, when alcohol was prohibited in some states, law enforcers started using civil asset forfeiture to confiscate the property of those suspected of producing, trafficking, and selling alcohol. This allowed them to circumvent due process, as American law only guarantees due process rights (such as the right to a trial by jury, the right to an attorney, the presumption of innocence, etc.) to human beings, and an alcohol still is not a human. The US Supreme Court ruled on civil asset forfeiture in the case of Bennis v. Michigan (which Don wrote about in <a href="http:/scholarship.law.missouri.edu/cgi/viewcontent.cgi?article=3279&amp;context=mlr" rel="nofollow" target="_blank">a 1996 article</a> coauthored with A. C. Pritchard). John Bennis was caught with a prostitute in the 1977 Dodge Dart he co-owned with his wife, Tina Bennis. As a result, the state confiscated the car. Tina Bennis, however, had no knowledge of her husband’s wrongdoing, and argued that she should at least be entitled to her half of the proceeds from the sale of the car. The case went all the way to the US Supreme Court, where then-Chief Justice Rehnquist wrote the majority opinion in favour of the State of Michigan. Rehnquist argued that civil asset forfeiture was constitutional since it had been a part of British law when the Constitution was adopted. Rehnquist neglected the fact that the civil asset forfeiture law at that time had only applied when the property owner was outside the legal jurisdiction of the court. John and Tina Bennis were both within the legal jurisdiction of Wayne County, Michigan where the car was seized. Police usually seize the assets of those groups in American society that have little political clout. A young black man driving in an expensive car and carrying a lot of cash can be pulled over and have his car and cash seized on suspicion that he might be a drug dealer. White, middle-class Americans rarely face the blatant, unjust seizure of their assets. However, in a recent case, the City of Philadelphia seized the white, middle-class Sourovelis family’s home after their son sold $40 of heroin on the front lawn. The Sourovelis family is now suing the City of Brotherly Love in a class-action suit with others whose property the city has seized (see <a href="https:/www.ij.org/philadelphia-forfeiture" rel="nofollow" target="_blank">Sourovelis v. City of Philadelphia</a>). This case has drawn more public attention to the injustice of civil asset forfeiture, though still less attention than the issue deserves. For more information on civil asset forfeiture, you can learn about it from the <a href="https:/www.ij.org" rel="nofollow" target="_blank">Institute for Justice</a>, a DC-based public-interest law firm that works against civil asset forfeiture.

Civil Asset Forfeiture with Don Boudreaux

George Bragues

This episode of Economics Detective Radio features George Bragues, professor of business at the University of Guelph-Humber, discussing his work developing a distinctly Austrian theory of finance. While there have been forays into finance by Austrians such as Mark Skousen and Peter Boettke, Austrians have not yet fully developed a complete and distinctly Austrian theory of finance. George names five pillars of modern finance theory: (1) The capital asset pricing model (CAPM), (2) the Black-Scholes option pricing model, (3) the efficient markets hypothesis (EMH), (4) behavioural finance, and (5) the Modigliani-Miller theorem. CAPM is a model that derives the value of assets based on the risk-free rate and market risk, that is, risk that cannot be diversified away. The Austrian response to this model is that there is no such thing as a risk-free asset, as risk is inherent to human action. An Austrian alternative to CAPM would incorporate the Austrian theory of a natural interest rate derived from time preference. Black-Scholes, a model for pricing options—opportunities to buy or sell at a given price at some point in the future—assumes that price movements are normally distributed. Nassim Taleb has been forceful in his critique of this assumption; in his book, The Black Swan, he argues that returns are subject to so-called Black Swan events. Statistically, this implies a fat lower tail in the distribution of returns. George holds that, given Austrians’ skepticism about mathematics, there is little hope for an Austrian option pricing model. However, pricing assets was never the role of theorists, but of entrepreneurs. The efficient markets hypothesis, developed by Eugene Fama, holds that the market price reflects all available information. This view holds economic equilibrium to be a normal state of affairs. The Austrian view is that equilibrium is an abnormal state of affairs; the market is always tending towards equilibrium, but it rarely reaches equilibrium. Austrian theory holds that identifying misequilibriums and arbitraging them away is the role of entrepreneurs. Identifying such opportunities isn’t easy; it requires prudence, or what Mises called “understanding.” If you believe the EMH, then Warren Buffet is not an example of someone with great insight and prudence; rather, he is someone who has repeatedly won a stock-market lottery. Behavioural finance, developed by Robert Schiller, is a theory that argues that, contra the EMH, market prices reflect psychological factors rather than the real underlying values of the assets being traded. Behavioural finance has identified so many biases that it is essentially irrefutable. For instance, the gambler’s fallacy and the clustering illusion, yield opposite predictions. If a stock price has risen repeatedly, the gambler’s fallacy would hold that it is “due” for a correction downwards, while the clustering illusion would hold that the trend must continue upwards. Behavioural economists could thus explain a movement in either direction according to their theory, making the theory untestable in principle. Austrian theory avoids such psychological theorizing. Austrians hold that you can derive sound theory from the axiom that humans act, that they use means to achieve ends. Austrians have no particular qualm with bringing psychological factors into the analysis of economic history, but they don’t see them as part of economic theory. Modigliani-Miller is a theory of corporate finance that says that the way a firm is financed, with more debt or equity, is irrelevant to its value. M&amp;M holds that the value of the firm is uniquely determined by its discounted stream of revenues. Austrians might contend, in contrast, that firms financed through debt are exposed to greater risk in the case that they make entrepreneurial errors. George is working towards an “Austrian markets hypothesis,” which would hold that markets are constantly endeavoring to achieve equilibrium, but never actually succeeding. Austrians can bring a greater appreciation of understanding, prudence, practical experience, and local knowledge to finance theory. These ideas have been wrongly impugned by modern quantitative finance, which has elevated theoreticians above entrepreneurs.

This episode of Economics Detective Radio features <a href="http://www.udesa.edu.ar/files/UAAdministracion/SEMINARIOS/2011/CV_Bragues.pdf" rel="nofollow" target="_blank">George Bragues</a>, professor of business at the University of Guelph-Humber, discussing his work developing a distinctly Austrian theory of finance. While there have been forays into finance by Austrians such as <a href="http://www.amazon.com/Mark-Skousen/e/B000APY8HQ/?_encoding=UTF8&amp;camp=1789&amp;creative=9325&amp;linkCode=ur2&amp;tag=economdetect-20&amp;linkId=LH5P6DTFJLYFBEWQ" rel="nofollow" target="_blank">Mark Skousen</a> and <a href="http://www.amazon.com/Peter-J.-Boettke/e/B001IQWMUQ/?_encoding=UTF8&amp;camp=1789&amp;creative=9325&amp;linkCode=ur2&amp;tag=economdetect-20&amp;linkId=5Q3RHSIYGCQRHLJ5" rel="nofollow" target="_blank">Peter Boettke</a>, Austrians have not yet fully developed a complete and distinctly Austrian theory of finance. George names five pillars of modern finance theory: (1) The capital asset pricing model (CAPM), (2) the Black-Scholes option pricing model, (3) the efficient markets hypothesis (EMH), (4) behavioural finance, and (5) the Modigliani-Miller theorem. CAPM is a model that derives the value of assets based on the risk-free rate and market risk, that is, risk that cannot be diversified away. The Austrian response to this model is that there is no such thing as a risk-free asset, as risk is inherent to human action. An Austrian alternative to CAPM would incorporate the Austrian theory of a natural interest rate derived from time preference. Black-Scholes, a model for pricing options—opportunities to buy or sell at a given price at some point in the future—assumes that price movements are normally distributed. Nassim Taleb has been forceful in his critique of this assumption; in his book, <a href="http://www.amazon.com/gp/product/081297381X/ref=as_li_tl?ie=UTF8&amp;camp=1789&amp;creative=9325&amp;creativeASIN=081297381X&amp;linkCode=as2&amp;tag=economdetect-20&amp;linkId=RXOYW2LCXU7IAXZQ%22%3eThe%20Black%20Swan:%20Second%20Edition:%20The%20Impact%20of%20the%20Highly%20Improbable:%20With%20a%20new%20section:%20%22On%20Robustness%20and%20Fragility%22%20(Incerto)%3c/a%3e%3cimg%20src=%22http://ir-na.amazon-adsystem.com/e/ir?t=economdetect-20&amp;l=as2&amp;o=1&amp;a=081297381X" rel="nofollow" target="_blank">The Black Swan</a>, he argues that returns are subject to so-called Black Swan events. Statistically, this implies a fat lower tail in the distribution of returns. George holds that, given Austrians’ skepticism about mathematics, there is little hope for an Austrian option pricing model. However, pricing assets was never the role of theorists, but of entrepreneurs. The efficient markets hypothesis, developed by <a href="http://www.amazon.com/Eugene-F.-Fama/e/B001H6GVKY/?_encoding=UTF8&amp;camp=1789&amp;creative=9325&amp;linkCode=ur2&amp;qid=1419624967&amp;tag=economdetect-20&amp;linkId=JJDRKQB7FZLF2XIS" rel="nofollow" target="_blank">Eugene Fama</a>, holds that the market price reflects all available information. This view holds economic equilibrium to be a normal state of affairs. The Austrian view is that equilibrium is an abnormal state of affairs; the market is always tending towards equilibrium, but it rarely reaches equilibrium. Austrian theory holds that identifying misequilibriums and arbitraging them away is the role of entrepreneurs. Identifying such opportunities isn’t easy; it requires prudence, or what Mises called “understanding.” If you believe the EMH, then Warren Buffet is not an example of someone with great insight and prudence; rather, he is someone who has repeatedly won a stock-market lottery. Behavioural finance, developed by <a href="http://www.amazon.com/Robert-J.-Shiller/e/B001IO9TKE/?_encoding=UTF8&amp;camp=1789&amp;creative=9325&amp;linkCode=ur2&amp;qid=1419625190&amp;tag=economdetect-20&amp;linkId=XP7JZ67UYTL333L7" rel="nofollow" target="_blank">Robert Schiller</a>, is a theory that argues that, contra the EMH, market prices reflect psychological factors rather than the real underlying values of the assets being traded. Behavioural finance has identified so many biases that it is essentially irrefutable. For instance, the gambler’s fallacy and the clustering illusion, yield opposite predictions. If a stock price has risen repeatedly, the gambler’s fallacy would hold that it is “due” for a correction downwards, while the clustering illusion would hold that the trend must continue upwards. Behavioural economists could thus explain a movement in either direction according to their theory, making the theory untestable in principle. Austrian theory avoids such psychological theorizing. Austrians hold that you can derive sound theory from the axiom that humans act, that they use means to achieve ends. Austrians have no particular qualm with bringing psychological factors into the analysis of economic history, but they don’t see them as part of economic theory. Modigliani-Miller is a theory of corporate finance that says that the way a firm is financed, with more debt or equity, is irrelevant to its value. M&amp;M holds that the value of the firm is uniquely determined by its discounted stream of revenues. Austrians might contend, in contrast, that firms financed through debt are exposed to greater risk in the case that they make entrepreneurial errors. George is working towards an “Austrian markets hypothesis,” which would hold that markets are constantly endeavoring to achieve equilibrium, but never actually succeeding. Austrians can bring a greater appreciation of understanding, prudence, practical experience, and local knowledge to finance theory. These ideas have been wrongly impugned by modern quantitative finance, which has elevated theoreticians above entrepreneurs.

Finance and the Austrian School with George Bragues

Robin Hanson

Robin Hanson returns to the podcast to discuss his new book, The Elephant in the Brain: Hidden Motives in Everyday Life, co-authored with Kevin Simler. As the subtitle suggests, the book looks at humans' hidden motives. Robin argues that these hidden motives are much more prevalent than our conscious minds assume. We are not conscious of the vast majority of the functions of our brains. This extends beyond the most basic things our brains do (such as commanding our hearts to beat every second or so) to many things we think of as higher-level cognitive tasks. Hanson and Simler argue that, if the brain were a corporation, the conscious mind wouldn't be the CEO but the press secretary. Most of the reasons our conscious brains give for our actions are actually ex-post rationalizations for decisions that have been made unconsciously and for reasons that aren't immediately obvious to us. As a press secretary, the conscious mind is better off not knowing if we are doing things for selfish reasons since that would make it more difficult to justify our actions to others. Some very compelling evidence for this thesis comes from studies of people with split brains. People with severe epilepsy have sometimes been treated by severing the connections between the two halves of their brains. Researchers noticed that when one side of the brain was fed information that led to a particular action (e.g. an instruction from the researcher to "stand up") the other side would construct a reason for the action (e.g. "I was thirsty and I got up to get a drink"). If the brain were truthfully answering these questions, it would say "I don't know." However, the split-brain patients confidently gave false answers apparently without realizing they were false. Hanson argues that neurotypical minds are doing the same thing: constructing justifications for our actions even if we aren't really aware of our true underlying motives. From the book's online description, "The aim of this book is to confront our hidden motives directly---to track down the darker, unexamined corners of our psyches and blast them with floodlights. Then, once our minds are more clearly visible, we can work to better understand human nature: Why do people laugh? Why are artists sexy? Why do we brag about travel? Why do we prefer to speak rather than listen?" We discuss this theory of the brain and how it applies to many areas of everyday life from medicine to body language. The Amazon links on this page are affiliate links. If this podcast convinced you to buy a copy of The Elephant in the Brain, doing so through one of these links will provide revenue to the podcast at no additional cost to yourself.

Robin Hanson returns to the podcast to discuss his new book, <a href="http://amzn.to/2C9iwBX" rel="noopener nofollow" target="_blank">The Elephant in the Brain: Hidden Motives in Everyday Life</a>, co-authored with Kevin Simler. As the subtitle suggests, the book looks at humans' hidden motives. Robin argues that these hidden motives are much more prevalent than our conscious minds assume. We are not conscious of the vast majority of the functions of our brains. This extends beyond the most basic things our brains do (such as commanding our hearts to beat every second or so) to many things we think of as higher-level cognitive tasks. Hanson and Simler argue that, if the brain were a corporation, the conscious mind wouldn't be the CEO but the press secretary. Most of the reasons our conscious brains give for our actions are actually ex-post rationalizations for decisions that have been made unconsciously and for reasons that aren't immediately obvious to us. As a press secretary, the conscious mind is better off not knowing if we are doing things for selfish reasons since that would make it more difficult to justify our actions to others. Some very compelling evidence for this thesis comes from studies of people with <a href="https://www.psychologytoday.com/blog/the-superhuman-mind/201211/split-brains" rel="noopener nofollow" target="_blank">split brains</a>. People with severe epilepsy have sometimes been treated by severing the connections between the two halves of their brains. Researchers noticed that when one side of the brain was fed information that led to a particular action (e.g. an instruction from the researcher to "stand up") the other side would construct a reason for the action (e.g. "I was thirsty and I got up to get a drink"). If the brain were truthfully answering these questions, it would say "I don't know." However, the split-brain patients confidently gave false answers apparently without realizing they were false. Hanson argues that neurotypical minds are doing the same thing: constructing justifications for our actions even if we aren't really aware of our true underlying motives. From the book's <a href="http://elephantinthebrain.com/" rel="noopener nofollow" target="_blank">online description</a>, "The aim of this book is to confront our hidden motives directly---to track down the darker, unexamined corners of our psyches and blast them with floodlights. Then, once our minds are more clearly visible, we can work to better understand human nature: Why do people laugh? Why are artists sexy? Why do we brag about travel? Why do we prefer to speak rather than listen?" We discuss this theory of the brain and how it applies to many areas of everyday life from medicine to body language. The Amazon links on this page are affiliate links. If this podcast convinced you to buy a copy of <a href="http://amzn.to/2C9iwBX" rel="noopener nofollow" target="_blank">The Elephant in the Brain</a>, doing so through one of these links will provide revenue to the podcast at no additional cost to yourself.

The Elephant in the Brain, Hidden Motives, and Self-Deception with Robin Hanson

Phil Magness

This week's episode of Economics Detective Radio deals with the economic thought and continuing popularity of Marx. No, not Groucho! The other Marx! My guest on the podcast is Phil Magness, a historian who teaches at George Mason University. Phil recently wrote a piece entitled, "Commie Chic and Quantifying Marx on the Syllabus." Recently, the Open Syllabus Project released a data set including thousands of college syllabi. To many people's surprise, Marx and Engels' Communist Manifesto enjoys massive popularity! Phil took a closer look at the numbers and reached some startling conclusions: 1. Accounting for different versions of its title, Marx’s Communist Manifesto appears on a total of 3856 syllabi in the Open Syllabus Project database. That makes it the second most used text in academia after the popular writing style manual by Strunk and White (3934 syllabi) – a book that’s usually assigned to help college students with their composition habits for writing term papers. 2. Of those 3856 Communist Manifesto hits, only 103 – or 2.67% – are on syllabi in Marx’s own primary academic discipline, economics. The rest are in fields that venture far astray from economics, with the highest concentrations coming from the humanities. 3. Marx’s Communist Manifesto far exceeds the syllabus frequency of virtually *any* other author or work in all of human history with the possible exception of Plato. Here are the rankings for Marx and the most cited work of several major philosophical figures on the list (note: I intentionally excluded works that are textbooks or primarily literary and paired down the tail end of the list to give a rough sample): Marx (Communist Manifesto) – 3856 Plato (Republic) – 3573 Aristotle (Ethics) – 2709 Hobbes (Leviathan) – 2671 Machiavelli (The Prince) – 2652 King (Letter from the Birmingham Jail) – 1985 Mill (On Liberty) – 1969 Foucault (Power) – 1774 Darwin (Origin of Species) – 1701 Augustine (Confessions) – 1694 Tocqueville (Democracy in America) – 1650 Smith (Wealth of Nations) – 1587 Rousseau (Social Contract) – 1427 Rawls (Theory of Justice) – 1248 Sartre (Existentialism) – 1224 Paine (Common Sense) – 1128 Locke (Second Treatise) – 1045 What could account for the popularity of The Communist Manifesto? Phil identifies two hypotheses: First, it could be the case that Marx simply is the most important thinker who has ever lived, beating out all but Plato by a wide margin. Second, Marx could be enjoying outsized popularity because university faculty outside of economics are overly enamoured with his thought. The latter seems like the truth. While Marxian thought does dominate some corners of philosophy, history, literary criticism, and many other subfields, we would expect classes in those areas not to focus on The Communist Manifesto but on Marx's other works. Das Kapital is in 1447 syllabi, right around Rousseau's Social Contract. The Communist Manifesto is a political leaflet, not a work of deep scholarship. The fact that it dominates not only the works of other thinkers but also Marx's other works indicates that it is assigned primarily for its political conclusions. How has Marx Avoided the Dustbin of History? Marx' economic thought was rejected by economists even within his own lifetime. All of his economic analysis shared a fatal flaw: the labour theory of value. Marx observed that capitalists earn profits above the wages paid to workers. In his framework, this would only be possible if the capitalists exploited the workers. This was met with an empirical challenge: If profits are the result of exploitation, how come profit rates aren't highest in capital-intensive industries? Instead they are relatively consistent across the entire economy. Engels claimed that Marx would resolve this issue in the later volumes of Kapital. He even held a Prize Essay Competition to see if anyone could anticipate Marx' solution to this seemingly intractable problem. But the later volumes didn't offer a satisfactory solution. Austrian economist Eugen von Böhm-Bawerk wrote the definitive critique of Marx, Karl Marx and the Close of His System. The marginal revolution of the 1870s, which laid the groundwork for all of modern economics, offered a simple solution to the problem that has stood the test of time: interest. As Böhm-Bawerk points out, workers are paid when the work is performed. But capitalists only earn revenue once the final product is sold. So if production takes time, we must account for interest. A unit of currency today (gold, silver, dollars, pounds, etc.) is not worth the same as that same unit tomorrow or next year. Leaving aside inflation, people subjectively value money today over money in the future. When you adjust future revenues accordingly, profits are actually very close to zero throughout the economy. This is the explanation that any modern economist will give you. So when a modern economist assigns Marx, it's to teach about his role in the history of economic thought, not to teach his ideas on their own merits. That's why so few economists are assigning Marx at all! Marx the scientist may have fallen out of favour, but Marx the political theorist survived and thrived. Marx inspired the political left, and through a twist of fate his adherents came to power in Russia and spread his influence around the world. Other links: Venezuela, El Caracazo, and Chavism with Francisco Toro Colonization After Emancipation, Phil's book on slavery

This week's episode of Economics Detective Radio deals with the economic thought and continuing popularity of Marx. No, not Groucho! The other Marx! My guest on the podcast is Phil Magness, a historian who teaches at George Mason University. Phil recently wrote a piece entitled, <a href="http://philmagness.com/?p=1804" rel="nofollow" target="_blank">"Commie Chic and Quantifying Marx on the Syllabus."</a> Recently, the <a href="http://opensyllabusproject.org/" rel="nofollow" target="_blank">Open Syllabus Project</a> released a data set including thousands of college syllabi. To many people's surprise, Marx and Engels' Communist Manifesto enjoys massive popularity! Phil took a closer look at the numbers and reached some startling conclusions: 1. Accounting for different versions of its title, Marx’s Communist Manifesto appears on a total of 3856 syllabi in the Open Syllabus Project database. That makes it the second most used text in academia after the popular writing style manual by Strunk and White (3934 syllabi) – a book that’s usually assigned to help college students with their composition habits for writing term papers. 2. Of those 3856 Communist Manifesto hits, only 103 – or 2.67% – are on syllabi in Marx’s own primary academic discipline, economics. The rest are in fields that venture far astray from economics, with the highest concentrations coming from the humanities. 3. Marx’s Communist Manifesto far exceeds the syllabus frequency of virtually *any* other author or work in all of human history with the possible exception of Plato. Here are the rankings for Marx and the most cited work of several major philosophical figures on the list (note: I intentionally excluded works that are textbooks or primarily literary and paired down the tail end of the list to give a rough sample): Marx (Communist Manifesto) – 3856 Plato (Republic) – 3573 Aristotle (Ethics) – 2709 Hobbes (Leviathan) – 2671 Machiavelli (The Prince) – 2652 King (Letter from the Birmingham Jail) – 1985 Mill (On Liberty) – 1969 Foucault (Power) – 1774 Darwin (Origin of Species) – 1701 Augustine (Confessions) – 1694 Tocqueville (Democracy in America) – 1650 Smith (Wealth of Nations) – 1587 Rousseau (Social Contract) – 1427 Rawls (Theory of Justice) – 1248 Sartre (Existentialism) – 1224 Paine (Common Sense) – 1128 Locke (Second Treatise) – 1045 What could account for the popularity of The Communist Manifesto? Phil identifies two hypotheses: First, it could be the case that Marx simply is the most important thinker who has ever lived, beating out all but Plato by a wide margin. Second, Marx could be enjoying outsized popularity because university faculty outside of economics are overly enamoured with his thought. The latter seems like the truth. While Marxian thought does dominate some corners of philosophy, history, literary criticism, and many other subfields, we would expect classes in those areas not to focus on The Communist Manifesto but on Marx's other works. Das Kapital is in 1447 syllabi, right around Rousseau's Social Contract. The Communist Manifesto is a political leaflet, not a work of deep scholarship. The fact that it dominates not only the works of other thinkers but also Marx's other works indicates that it is assigned primarily for its political conclusions. How has Marx Avoided the Dustbin of History? Marx' economic thought was rejected by economists even within his own lifetime. All of his economic analysis shared a fatal flaw: the labour theory of value. Marx observed that capitalists earn profits above the wages paid to workers. In his framework, this would only be possible if the capitalists exploited the workers. This was met with an empirical challenge: If profits are the result of exploitation, how come profit rates aren't highest in capital-intensive industries? Instead they are relatively consistent across the entire economy. Engels claimed that Marx would resolve this issue in the later volumes of Kapital. He even held a <a href="http://hope.dukejournals.org/content/19/4/571.citation" rel="nofollow" target="_blank">Prize Essay Competition</a> to see if anyone could anticipate Marx' solution to this seemingly intractable problem. But the later volumes didn't offer a satisfactory solution. Austrian economist Eugen von Böhm-Bawerk wrote the definitive critique of Marx, <a href="https://mises.org/library/karl-marx-and-close-his-system" rel="nofollow" target="_blank">Karl Marx and the Close of His System</a>. The marginal revolution of the 1870s, which laid the groundwork for all of modern economics, offered a simple solution to the problem that has stood the test of time: interest. As Böhm-Bawerk points out, workers are paid when the work is performed. But capitalists only earn revenue once the final product is sold. So if production takes time, we must account for interest. A unit of currency today (gold, silver, dollars, pounds, etc.) is not worth the same as that same unit tomorrow or next year. Leaving aside inflation, people subjectively value money today over money in the future. When you adjust future revenues accordingly, profits are actually very close to zero throughout the economy. This is the explanation that any modern economist will give you. So when a modern economist assigns Marx, it's to teach about his role in the history of economic thought, not to teach his ideas on their own merits. That's why so few economists are assigning Marx at all! Marx the scientist may have fallen out of favour, but Marx the political theorist survived and thrived. Marx inspired the political left, and through a twist of fate his adherents came to power in Russia and spread his influence around the world. Other links: <a href="http://economicsdetective.com/2016/08/venezuela-el-caracazo-chavism-francisco-toro/" rel="nofollow" target="_blank">Venezuela, El Caracazo, and Chavism with Francisco Toro</a> <a href="http://amzn.to/2cjwYtb" rel="nofollow" target="_blank">Colonization After Emancipation</a><a>, Phil's book on slavery</a>

Marx, his Errors, and his Continuing Influence with Phil Magness

George Tridimas

Here on Economics Detective Radio, we've had many discussions about the early modern period, and the circumstances that gave rise to the modern levels of sustained economic growth that were heretofore unheard of in human history. One important question is, what was it about England and the Low Countries in the early modern period that made them the first to transition to modern-style economies? A related, and equally important question is why other times and places throughout history failed to produce an industrial revolution. My guest today, George Tridimas, has done interesting work exploring the question of why the Greek golden age of 500-300 BCE didn't produce sustained economic growth. He gives a number of explanations, ranging from cultural and political factors to Greece's acute lack of the energy sources necessary to produce enough heat to smelt steel.

Here on Economics Detective Radio, we've had many discussions about the early modern period, and the circumstances that gave rise to the modern levels of sustained economic growth that were heretofore unheard of in human history. One important question is, what was it about England and the Low Countries in the early modern period that made them the first to transition to modern-style economies? A related, and equally important question is why other times and places throughout history failed to produce an industrial revolution. My guest today, <a href="https://www.ulster.ac.uk/staff/g-tridimas" rel="noopener nofollow" target="_blank">George Tridimas</a>, has done interesting work exploring the question of why the Greek golden age of 500-300 BCE didn't produce sustained economic growth. He gives a number of explanations, ranging from cultural and political factors to Greece's acute lack of the energy sources necessary to produce enough heat to smelt steel.

Why No Ancient Greek Industrial Revolution? A Conversation with George Tridimas

Pete Boettke

Today's guest is Peter Boettke of George Mason University and we're discussing his recent book in the Great Thinkers in Economics series: F. A. Hayek: Economics, Political Economy and Social Philosophy. This book explores the life and work of Austrian-British economist, political economist, and social philosopher, Friedrich Hayek. Set within a context of the recent financial crisis, alongside the renewed interest in Hayek and the Hayek-Keynes debate, the book introduces the main themes of Hayek’s thought. These include the division of knowledge, the importance of rules, the problems with planning and economic management, and the role of constitutional constraints in enabling the emergence of unplanned order in the market by limiting the perverse incentives and distortions in information often associated with political discretion. Key to understanding Hayek's development as a thinker is his emphasis on the knowledge problem that economic decision makers face and how alternative institutional arrangements either hinder or assist them in overcoming that epistemic dilemma. Hayek saw order emerging from individual action and responsibility under the appropriate institutional order that itself emerges from actors discovering new and better ways to coordinate their behavior. This book will be of interest to all those keen to gain a deeper understanding of this great 20th century thinker in economics.  Note for those interested in buying the book: IF you are at a university and your university library has the Springer subscription (which most do), you can order a print-on-demand version---MyCopy---for $25, so that makes it somewhat more reasonable than the library prices. You can also get a discount flyer here.

Today's guest is <a href="https://www.peter-boettke.com/" rel="noopener nofollow" target="_blank">Peter Boettke</a> of George Mason University and we're discussing his recent book in the Great Thinkers in Economics series: <a href="https://www.palgrave.com/in/book/9781137411594" rel="noopener nofollow" target="_blank">F. A. Hayek: Economics, Political Economy and Social Philosophy</a>. This book explores the life and work of Austrian-British economist, political economist, and social philosopher, Friedrich Hayek. Set within a context of the recent financial crisis, alongside the renewed interest in Hayek and the Hayek-Keynes debate, the book introduces the main themes of Hayek’s thought. These include the division of knowledge, the importance of rules, the problems with planning and economic management, and the role of constitutional constraints in enabling the emergence of unplanned order in the market by limiting the perverse incentives and distortions in information often associated with political discretion. Key to understanding Hayek's development as a thinker is his emphasis on the knowledge problem that economic decision makers face and how alternative institutional arrangements either hinder or assist them in overcoming that epistemic dilemma. Hayek saw order emerging from individual action and responsibility under the appropriate institutional order that itself emerges from actors discovering new and better ways to coordinate their behavior. This book will be of interest to all those keen to gain a deeper understanding of this great 20th century thinker in economics. Note for those interested in buying the book: IF you are at a university and your university library has the Springer subscription (which most do), you can order a print-on-demand version---MyCopy---for $25, so that makes it somewhat more reasonable than the library prices. You can also get a discount flyer <a href="http://www.coordinationproblem.org/2018/08/coming-to-a-library-near-you.html" rel="noopener nofollow" target="_blank">here</a>.

Why Hayek Matters with Pete Boettke

Noel Johnson

My guest for this episode is Noel Johnson of George Mason University, and if that name sounds familiar, it's because he was the coauthor on the paper I discussed with Mark Koyama last month. Noel recently released a working paper titled "The Effects of Land Redistribution: Evidence from the French Revolution." It is coauthored with Theresa Finley and Raphael Franck. The paper examines the consequences of the land auctions held by the Revolutionary government in France. The abstract reads as follows: This study exploits the confiscation and auctioning off of Church property that occurred during the French Revolution to assess the role played by transaction costs in delaying the reallocation of property rights in the aftermath of fundamental institutional reform. French districts with a greater proportion of land redistributed during the Revolution experienced higher levels of agricultural productivity in 1841 and 1852 as well as more investment in irrigation and more efficient land use. We trace these increases in productivity to an increase in land inequality associated with the Revolutionary auction process. We also show how the benefits associated with the head-start given to districts with more Church land initially, and thus greater land redistribution by auction during the Revolution, dissipated over the course of the nineteenth century as other districts gradually overcame the transaction costs associated with reallocating the property rights associated with the feudal system. What's so interesting about this particular instance of land redistribution is the fact that it was all sold to the highest bidder rather than being given to the poor. This breaks with the pattern of most attempts at land reform throughout history. People have been trying to take land away from the rich and give it to the poor since at least Tiberius Gracchus in the second century BCE. But the Revolutionary government needed money and they needed it fast. So they concocted a plan to seize and auction off all French lands owned by the Catholic Church, which comprised about 6.5 percent of the country. Land auctions take time though, and the government desperately needed funds in the short term, so they issued a monetary instrument known as the assignat that could be used in these land auctions. The land was eventually auctioned off and then traded in secondary markets, where much of it was consolidated into large estates that could employ capital-intensive agricultural practices on a large scale. The evidence suggests that these land auctions added to the productivity of the regions where they occurred. Noel argues that this occurred because the reduction in transaction costs allowed for a more efficient allocation of property rights. One could argue, however, that the Church might have simply owned more productive land to begin with, and the paper uses a series of identification strategies to show that this is not the main driver of their results. Related Links: McCloskey (1998) on the Coase theorem. Galor and Moav (2004) on the relationship between inequality and productivity in economies dependent on physical capital vs human capital. Gallica, the website where you can download a ton of digitized French archives. Acemoglu, Johnson, and Robinson (2005) on Atlantic trade. Rachel Laudan discusses the history of potatoes and other foods on EconTalk. Photo credit: Early French banknote issue during the French Revolution (Assignat) for 400 livres, (1792), from the National Numismatic Collection at the Smithsonian Institution.

My guest for this episode is <a href="http://noeldjohnson.net/noeldjohnson.net/Home.html" rel="nofollow" target="_blank">Noel Johnson of George Mason University</a>, and if that name sounds familiar, it's because he was the coauthor on the paper <a href="http://economicsdetective.com/2017/06/state-capacity-rise-modern-nation-state-mark-koyama/" rel="nofollow" target="_blank">I discussed with Mark Koyama last month</a>. Noel recently released a working paper titled <a href="http://noeldjohnson.net/noeldjohnson.net/Research_files/Revolutionary%20Redistribution%207-13-17.pdf" rel="nofollow" target="_blank">"The Effects of Land Redistribution: Evidence from the French Revolution."</a> It is coauthored with Theresa Finley and Raphael Franck. The paper examines the consequences of the land auctions held by the Revolutionary government in France. The abstract reads as follows: This study exploits the confiscation and auctioning off of Church property that occurred during the French Revolution to assess the role played by transaction costs in delaying the reallocation of property rights in the aftermath of fundamental institutional reform. French districts with a greater proportion of land redistributed during the Revolution experienced higher levels of agricultural productivity in 1841 and 1852 as well as more investment in irrigation and more efficient land use. We trace these increases in productivity to an increase in land inequality associated with the Revolutionary auction process. We also show how the benefits associated with the head-start given to districts with more Church land initially, and thus greater land redistribution by auction during the Revolution, dissipated over the course of the nineteenth century as other districts gradually overcame the transaction costs associated with reallocating the property rights associated with the feudal system. What's so interesting about this particular instance of land redistribution is the fact that it was all sold to the highest bidder rather than being given to the poor. This breaks with the pattern of most attempts at land reform throughout history. People have been trying to take land away from the rich and give it to the poor since at least <a href="https://en.wikipedia.org/wiki/Tiberius_Gracchus" rel="nofollow" target="_blank">Tiberius Gracchus</a> in the second century BCE. But the Revolutionary government needed money and they needed it fast. So they concocted a plan to seize and auction off all French lands owned by the Catholic Church, which comprised about 6.5 percent of the country. Land auctions take time though, and the government desperately needed funds in the short term, so they issued a monetary instrument known as the <a href="https://en.wikipedia.org/wiki/Assignat" rel="nofollow" target="_blank">assignat</a> that could be used in these land auctions. The land was eventually auctioned off and then traded in secondary markets, where much of it was consolidated into large estates that could employ capital-intensive agricultural practices on a large scale. The evidence suggests that these land auctions added to the productivity of the regions where they occurred. Noel argues that this occurred because the reduction in transaction costs allowed for a more efficient allocation of property rights. One could argue, however, that the Church might have simply owned more productive land to begin with, and the paper uses a series of identification strategies to show that this is not the main driver of their results. Related Links: <a href="http://www.deirdremccloskey.com/docs/pdf/Article_306.pdf" rel="nofollow" target="_blank">McCloskey (1998) on the Coase theorem</a>. <a href="http://piketty.pse.ens.fr/files/GalorMoavRES2004.pdf" rel="nofollow" target="_blank">Galor and Moav (2004) on the relationship between inequality and productivity in economies dependent on physical capital vs human capital</a>. <a href="http://gallica.bnf.fr" rel="nofollow" target="_blank">Gallica, the website where you can download a ton of digitized French archives</a>. <a href="https://economics.mit.edu/files/4466" rel="nofollow" target="_blank">Acemoglu, Johnson, and Robinson (2005) on Atlantic trade</a>. Rachel Laudan discusses <a href="http://www.econtalk.org/archives/2015/08/rachel_laudan_o.html" rel="nofollow" target="_blank">the history of potatoes and other foods</a> on EconTalk. Photo credit: Early French banknote issue during the French Revolution (Assignat) for 400 livres, (1792), from the National Numismatic Collection at the Smithsonian Institution.

The French Revolution, Property Rights, and the Coase Theorem with Noel Johnson

Mark Thornton

Mark Thornton returns to the podcast to discuss his new book The Skyscraper Curse (available digitally for free). The book discusses the connection between record-setting skyscrapers and economic recessions. Here's an excerpt from the book's introduction: The Skyscraper Index expresses the strange relationship between the building of the world’s tallest skyscraper and the onset of a major economic crisis. This relationship only came to light in 1999 when research analyst Andrew Lawrence published a report noting the odd connection between record-height buildings and noteworthy economic crises — that is, the skyscraper curse, a relationship that dated back nearly a century. Without a theory to support it, journalists largely dismissed Lawrence’s report as the fun story of the day. Mark relates these skyscrapers to the Austrian Business Cycle Theory (ABCT). He shows how record-setting skyscrapers and recessions can be caused by a common factor: excessively cheap credit. We discuss this theory in the interview.

Mark Thornton returns to the podcast to discuss his new book <a href="https://amzn.to/2DvSKWD" rel="noopener nofollow" target="_blank">The Skyscraper Curse</a> (available digitally <a href="https://mises.org/library/skyscraper-curse/html" rel="noopener nofollow" target="_blank">for free</a>). The book discusses the connection between record-setting skyscrapers and economic recessions. Here's an excerpt from the book's introduction: The Skyscraper Index expresses the strange relationship between the building of the world’s tallest skyscraper and the onset of a major economic crisis. This relationship only came to light in 1999 when research analyst Andrew Lawrence published a report noting the odd connection between record-height buildings and noteworthy economic crises — that is, the skyscraper curse, a relationship that dated back nearly a century. Without a theory to support it, journalists largely dismissed Lawrence’s report as the fun story of the day. Mark relates these skyscrapers to the Austrian Business Cycle Theory (ABCT). He shows how record-setting skyscrapers and recessions can be caused by a common factor: excessively cheap credit. We discuss this theory in the interview.

The Skyscraper Curse and Business Cycles with Mark Thornton

Russ Roberts

Today's guest is Russ Roberts, host of the quintessential economics podcast EconTalk. (If you haven't heard EconTalk, go subscribe to it right now, because it is excellent!) We discuss EconTalk's role in the economics profession, the things Russ has learned in the course of making it, the importance of intellectual honesty, and the enduring insights of Adam Smith. Here's the EconTalk interview with Bryan Caplan that I mentioned in the episode. Stay tuned for my own interview with Bryan! "The first principle is that you must not fool yourself---and you are the easiest person to fool." - Richard Feynman

Today's guest is Russ Roberts, host of the quintessential economics podcast <a rel="noopener">EconTalk</a>. (If you haven't heard EconTalk, go subscribe to it right now, because it is excellent!) We discuss EconTalk's role in the economics profession, the things Russ has learned in the course of making it, the importance of intellectual honesty, and the enduring insights of Adam Smith. Here's <a href="http://www.econtalk.org/archives/2018/02/bryan_caplan_on_1.html" rel="noopener nofollow" target="_blank">the EconTalk interview with Bryan Caplan</a> that I mentioned in the episode. Stay tuned for my own interview with Bryan! "The first principle is that you must not fool yourself---and you are the easiest person to fool." - <a href="https://en.wikiquote.org/wiki/Richard_Feynman" rel="noopener nofollow" target="_blank">Richard Feynman</a>

EconTalk, Intellectual Honesty, and Adam Smith with Russ Roberts

Bryan Caplan

My guest for this episode is Bryan Caplan of George Mason University. We discuss his latest book, The Case Against Education: Why the Education System Is a Waste of Time and Money, in which he argues that the social value of education is negative. This may seem paradoxical, given that more educated individuals tend to earn more than less educated individuals. This can be explained in two ways: First, people who get more education were likely more skilled in the first place; in other words, there is a selection effect. Second, people who are already skilled can use education to demonstrate their skill to employers; economists call this signalling. Signalling plays an important role in Bryan's understanding of the education system. He sees the causal effect of education on income as being 80 percent signalling and 20 percent learning. Most signalling models view signalling as negative sum: signals are costly, and to the extent that they help educated workers by pushing their resumes to the top of the pile, they harm uneducated workers by relegating their resumes to the trash bin. If everyone gets educated, then no one has a better chance of finding a job, but they bear the costs of many years and thousands of dollars of education. Bryan draws on evidence from many different research areas to support his case, from economic research on the Sheepskin effect and comparisons between individual and national effects of education, to educational psychology research on "learning how to learn." We had an excellent conversation and I hope you will enjoy listening to it.

My guest for this episode is Bryan Caplan of George Mason University. We discuss his latest book, <a href="http://amzn.to/2FhxS8q" rel="noopener nofollow" target="_blank">The Case Against Education: Why the Education System Is a Waste of Time and Money</a>, in which he argues that the social value of education is negative. This may seem paradoxical, given that more educated individuals tend to earn more than less educated individuals. This can be explained in two ways: First, people who get more education were likely more skilled in the first place; in other words, there is a selection effect. Second, people who are already skilled can use education to demonstrate their skill to employers; economists call this signalling. Signalling plays an important role in Bryan's understanding of the education system. He sees the causal effect of education on income as being 80 percent signalling and 20 percent learning. Most signalling models view signalling as negative sum: signals are costly, and to the extent that they help educated workers by pushing their resumes to the top of the pile, they harm uneducated workers by relegating their resumes to the trash bin. If everyone gets educated, then no one has a better chance of finding a job, but they bear the costs of many years and thousands of dollars of education. Bryan draws on evidence from many different research areas to support his case, from economic research on the Sheepskin effect and comparisons between individual and national effects of education, to educational psychology research on "learning how to learn." We had an excellent conversation and I hope you will enjoy listening to it.

The Case Against Education with Bryan Caplan

My guest today is Jared Rubin of Chapman University. He is the author of Rulers, Religion, and Riches: Why the West Got Rich and the Middle East Did Not, which is our topic for today. The book deals with the question of why Western Europe became wealthier than the Middle East after centuries of being poorer. The book is part game theoretic model of society, part historical narrative through the lens of that model. The model considers two main factors: the state's power to coerce and its need for political legitimacy granted by elites. Importantly, different groups have been the ones to grant legitimacy to the state in different times and places. In the Muslim world, religious leaders primarily played this role, as they did in Europe prior to the Reformation. After the Reformation, however, the power of the Catholic Church was much diminished in many parts of Europe. Rulers in places like England and the Dutch Republic turned to economic elites to grant them legitimacy. This gave the merchant and capitalist classes a seat at the bargaining table, setting the stage for the Industrial Revolution.

My guest today is <a href="http://www.jaredcrubin.com/home" rel="noopener nofollow" target="_blank">Jared Rubin</a> of Chapman University. He is the author of <a href="http://amzn.to/2xM3Pyr" rel="noopener nofollow" target="_blank">Rulers, Religion, and Riches: Why the West Got Rich and the Middle East Did Not</a>, which is our topic for today. The book deals with the question of why Western Europe became wealthier than the Middle East after centuries of being poorer. The book is part game theoretic model of society, part historical narrative through the lens of that model. The model considers two main factors: the state's power to coerce and its need for political legitimacy granted by elites. Importantly, different groups have been the ones to grant legitimacy to the state in different times and places. In the Muslim world, religious leaders primarily played this role, as they did in Europe prior to the Reformation. After the Reformation, however, the power of the Catholic Church was much diminished in many parts of Europe. Rulers in places like England and the Dutch Republic turned to economic elites to grant them legitimacy. This gave the merchant and capitalist classes a seat at the bargaining table, setting the stage for the Industrial Revolution.

Religion, Political Power, and Economic Growth with Jared Rubin

Thomas Sampson

My guest today is Thomas Sampson of the London School of Economics. Our topic for today is the economic impact of Brexit. Long-time listeners will recall that I did an interview with Sam Bowman on Brexit immediately after the vote occurred. Think of this as a follow-up to that episode now that the dust has settled and we have a better idea of what Brexit is going to look like. Thomas has written multiple papers on the subject, including Brexit: The Economics of International Disintegration, which is forthcoming in the Journal of Economic Perspectives. Its abstract follows: This paper reviews the literature on the likely economic consequences of Brexit and considers the lessons of the Brexit vote for the future of European and global integration. Brexit will make the United Kingdom poorer because it will lead to new barriers to trade and migration between the United Kingdom and the European Union. Plausible estimates put the costs to the United Kingdom at between 1 and 10 percent of income per capita. Other European Union countries will also suffer economically, but their estimated losses are much smaller. Support for Brexit came from a coalition of less-educated, older, less economically successful and more socially conservative voters. Why these voters rejected the European Union is poorly understood, but will play an important role in determining whether Brexit proves to be merely a diversion on the path to greater international integration or a sign that globalization has reached its limits. Globalization and economic integration have been on more or less a constant rise since WWII, and Brexit is a rare reversal of this trend. Thomas argues that it is important to understand the causes of Brexit to see if this is just a temporary blip on the way to global economic integration or the start of a reversal of the post-WWII trend.

My guest today is <a href="http://personal.lse.ac.uk/sampsont/" rel="noopener nofollow" target="_blank">Thomas Sampson</a> of the London School of Economics. Our topic for today is the economic impact of Brexit. Long-time listeners will recall that I did <a href="http://economicsdetective.com/2016/06/brexit-european-union-european-economic-area-sam-bowman/" rel="noopener nofollow" target="_blank">an interview with Sam Bowman on Brexit</a> immediately after the vote occurred. Think of this as a follow-up to that episode now that the dust has settled and we have a better idea of what Brexit is going to look like. Thomas has written multiple papers on the subject, including <a href="http://personal.lse.ac.uk/sampsont/BrexitDisintegration.pdf" rel="noopener nofollow" target="_blank">Brexit: The Economics of International Disintegration</a>, which is forthcoming in the Journal of Economic Perspectives. Its abstract follows: This paper reviews the literature on the likely economic consequences of Brexit and considers the lessons of the Brexit vote for the future of European and global integration. Brexit will make the United Kingdom poorer because it will lead to new barriers to trade and migration between the United Kingdom and the European Union. Plausible estimates put the costs to the United Kingdom at between 1 and 10 percent of income per capita. Other European Union countries will also suffer economically, but their estimated losses are much smaller. Support for Brexit came from a coalition of less-educated, older, less economically successful and more socially conservative voters. Why these voters rejected the European Union is poorly understood, but will play an important role in determining whether Brexit proves to be merely a diversion on the path to greater international integration or a sign that globalization has reached its limits. Globalization and economic integration have been on more or less a constant rise since WWII, and Brexit is a rare reversal of this trend. Thomas argues that it is important to understand the causes of Brexit to see if this is just a temporary blip on the way to global economic integration or the start of a reversal of the post-WWII trend.

Brexit, Its Economic Impact, and International Disintegration with Thomas Sampson

Steve Horwitz

Today's guest is Steve Horwitz, he is the Charles A. Dana Professor and Chair of the economics department at St. Lawrence University. Steve recently wrote an article titled, "Make Babies, and Don't Let the Greens Guilt Trip You about It." This was a response to an argument made by the bioethicist Travis Rieder, who was recently profiled by NPR. Rieder argues that it is immoral to have children because of the burden additional humans place on the Earth, in particular because of the risk of catastrophic climate change. Here's how that NPR piece put his argument: "Back at James Madison University, Travis Rieder explains a PowerPoint graph that seems to offer hope. Bringing down global fertility by just half a child per woman 'could be the thing that saves us,' he says. He cites a study from 2010 that looked at the impact of demographic change on global carbon emissions. It found that slowing population growth could eliminate one-fifth to one-quarter of all the carbon emissions that need to be cut by midcentury to avoid that potentially catastrophic tipping point." The problem with this sort of reasoning is that it views human beings as consumers and not as producers and innovators. Humans are able to contribute to the division of labour and to come up with ideas. That division of labour allows everyone to become more productive. Rieder's ideas echo those of Thomas Robert Malthus, and he is wrong for much the same reasons. Malthus anticipated a world where the diminishing returns in agriculture and exponential population growth would lead humanity to subsistence in a few generations. As Malthus predicted, populations did skyrocket, but contra Malthus, people got significantly richer too. What happened? Innovation happened. Along with that innovation, and contributing to it, was a finer division of labour created by population growth. As Adam Smith wrote, "the division of labour is limited by the extent of the market."  Humans create resources, not by violating thermodynamics, but by discovering better ways to satisfy our needs with the physical matter that exists. Resources are subjective. To a farmer 500 years ago, striking oil was a nuisance. It would ruin his crops and destroy the value of his land. Yet today, the very same oil is a valuable resource because we've discovered how to make it useful. Julian Simon challenged the idea that we're running out of resources, declaring human innovation to be "the ultimate resource." Rieder and other environmentalists are different from Malthus in that they worry not about more people eating too much food but about them releasing too much carbon. A lot of this comes down to our estimate of the social cost of carbon. Rieder sees this cost as being so high, it outstrips all other concerns. He expects apocalyptic changes in the Earth's climate within twenty years. Economists are not climate scientists, we aren't trained to be able to perform our own studies on the relationship between carbon emissions and global climate. But what we can do is look at the bulk of the published research. The two things we could say about this to someone like Rieder are, first, that he seems to have based his arguments on the absolute highest estimates of the climate impact of carbon, where a reasonable person might have looked at the median estimates. And second, people who have performed meta-analyses of this literature have found evidence of publication bias towards finding a larger impact, meaning the best estimate would be somewhat below the median estimate once we correct for publication bias. If the kind of climate change Rieder sees coming in twenty years is really more like two hundred years away, it changes the argument a lot. With the costs of climate change so far out in the future, and the costs of abatement concentrated on the present, our cost-benefit analysis needs to account for the discount factors in such long time spans. The projects that have to be sacrificed today to abate climate change over the next couple centuries have their own benefits that need to be weighed against the costs of releasing greenhouse gasses into the atmosphere. It all comes down to opportunity cost. Other links: Progress Does Not Depend on Geniuses Against Fossil Fuel Divestment with Pierre Desrochers

Today's guest is Steve Horwitz, he is the Charles A. Dana Professor and Chair of the economics department at St. Lawrence University. Steve recently wrote an article titled, <a href="https://fee.org/articles/make-babies-and-don-t-let-the-greens-guilt-trip-you-about-it/" rel="nofollow" target="_blank">"Make Babies, and Don't Let the Greens Guilt Trip You about It."</a> This was a response to an argument made by the bioethicist Travis Rieder, who was recently <a href="http://www.npr.org/2016/08/18/479349760/should-we-be-having-kids-in-the-age-of-climate-change" rel="nofollow" target="_blank">profiled by NPR</a>. Rieder argues that it is immoral to have children because of the burden additional humans place on the Earth, in particular because of the risk of catastrophic climate change. Here's how that NPR piece put his argument: "Back at James Madison University, Travis Rieder explains a PowerPoint graph that seems to offer hope. Bringing down global fertility by just half a child per woman 'could be the thing that saves us,' he says. He cites <a href="http://www.pnas.org/content/107/41/17521.full" rel="nofollow" target="_blank">a study from 2010</a> that looked at the impact of demographic change on global carbon emissions. It found that slowing population growth could eliminate one-fifth to one-quarter of all the carbon emissions that need to be cut by midcentury to avoid that potentially catastrophic tipping point." The problem with this sort of reasoning is that it views human beings as consumers and not as producers and innovators. Humans are able to contribute to the division of labour and to come up with ideas. That division of labour allows everyone to become more productive. Rieder's ideas echo those of <a href="http://www.econlib.org/library/Enc/bios/Malthus.html" rel="nofollow" target="_blank">Thomas Robert Malthus</a>, and he is wrong for much the same reasons. Malthus anticipated a world where the diminishing returns in agriculture and exponential population growth would lead humanity to subsistence in a few generations. As Malthus predicted, populations did skyrocket, but contra Malthus, people got significantly richer too. What happened? Innovation happened. Along with that innovation, and contributing to it, was a finer division of labour created by population growth. As <a href="http://www.econlib.org/library/Smith/smWN1.html" rel="nofollow" target="_blank">Adam Smith wrote</a>, "the division of labour is limited by the extent of the market." <a href="https://www.amazon.com/Ultimate-Resource-Julian-Lincoln-Simon/dp/0691003815/ref=as_li_ss_il?ie=UTF8&amp;qid=1473958034&amp;sr=8-2&amp;keywords=the+ultimate+resource&amp;linkCode=li2&amp;tag=economicsdete-20&amp;linkId=1228128d85146e402c7f4295d4b2a331" rel="nofollow" target="_blank"></a> Humans create resources, not by violating thermodynamics, but by discovering better ways to satisfy our needs with the physical matter that exists. Resources are subjective. To a farmer 500 years ago, striking oil was a nuisance. It would ruin his crops and destroy the value of his land. Yet today, the very same oil is a valuable resource because we've discovered how to make it useful. <a href="http://amzn.to/2cMfoNk" rel="nofollow" target="_blank">Julian Simon</a> challenged the idea that we're running out of resources, declaring human innovation to be "the ultimate resource." Rieder and other environmentalists are different from Malthus in that they worry not about more people eating too much food but about them releasing too much carbon. A lot of this comes down to our estimate of the social cost of carbon. Rieder sees this cost as being so high, it outstrips all other concerns. He expects apocalyptic changes in the Earth's climate within twenty years. Economists are not climate scientists, we aren't trained to be able to perform our own studies on the relationship between carbon emissions and global climate. But what we can do is look at the bulk of the published research. The two things we could say about this to someone like Rieder are, first, that he seems to have based his arguments on the absolute highest estimates of the climate impact of carbon, where a reasonable person might have looked at the median estimates. And second, people who have performed <a href="http://eae.sagepub.com/content/26/5/853.abstract" rel="nofollow" target="_blank">meta-analyses of this literature</a> have found evidence of publication bias towards finding a larger impact, meaning the best estimate would be somewhat below the median estimate once we correct for publication bias. If the kind of climate change Rieder sees coming in twenty years is really more like two hundred years away, it changes the argument a lot. With the costs of climate change so far out in the future, and the costs of abatement concentrated on the present, our cost-benefit analysis needs to account for the discount factors in such long time spans. The projects that have to be sacrificed today to abate climate change over the next couple centuries have their own benefits that need to be weighed against the costs of releasing greenhouse gasses into the atmosphere. It all comes down to opportunity cost. Other links: <a href="https://fee.org/articles/progress-does-not-depend-on-geniuses/" rel="nofollow" target="_blank">Progress Does Not Depend on Geniuses</a> <a href="http://economicsdetective.com/2016/08/fossil-fuel-divestment-pierre-desrochers/" rel="nofollow" target="_blank">Against Fossil Fuel Divestment with Pierre Desrochers</a>

Population Growth, the Ethics of Having Children, and Climate Change with Steve Horwitz

Garett Jones returns to the podcast to discuss the issue of ethnic diversity. There is a wide body of research showing that ethnic diversity can reduce the productivity of teams, firms, and even whole countries. Williams and O'Reilly (1996) review dozens of studies showing that ethnic diversity has a negative impact on group performance. In the two decades since, more research has reinforced that result. Alesina and La Ferrara (2005) find that increasing ethnic diversity from 0 (only one ethnic group) to 1 (each individual is a different ethnicity) would reduce a country's annual growth by 2 percent. Multiple studies (La Porta et al., 1999; Alesina et al., 2003; Habyarimana et al., 2007) have shown that ethnic diversity negatively affects public good provision. Stazyk et al. (2012) find that ethnic diversity reduces job satisfaction among government workers. Parrotta et al. (2014a) find that ethnic diversity is significantly and negatively correlated with firm productivity. This may seem strange to you. If you're like me, you probably enjoy diversity. You probably don't observe the problems of low morale and high marginal costs that researchers have found in ethnically diverse workplaces. If that's the case then you, like me, live in a bubble. An apparent exception to the rule that ethnic diversity lowers productivity comes in high-human-capital groups. I say "apparent" because there hasn't been much in the way of direct study of this particular issue. However, some results are suggestive. For instance, the same researchers who found that ethnic diversity reduces firm productivity in general found that it increases firms' level of innovation as measured by patents (Parrotta et al., 2014b). Most of the people I know fall into this category of highly skilled, highly educated individuals, so it shouldn't be surprising that my experience (and maybe yours) is not the norm. Given that diversity is so costly for organizations, there is a huge industry dedicated to diversity training to mitigate these effects. However, a recent issue of the Harvard Business Review argues that diversity training seems to be a general failure. To the extent that diversity is a plus for firm profitability, firms will tend to seize this opportunity without the need for legal intervention. And indeed, there are some types of diversity that seem to have positive impacts on firm profit. For instance, a recent study by Alesina, Harnoss, and Rapoport (2016) indicates that birthplace diversity improves productivity. This is different from (and in this sample, uncorrelated with) ethnic diversity. People might all share the same ethnicity, but the evidence indicates that if they come from different places they tend to have complimentary skills that make them better at working together. As Garett points out, this is roughly the plot of every movie and TV show ever made by Joss Whedon. The causes of all these effects have been studied by experimental economists. (For an overview of the history of experimental economics, listen to my interview with Erik Kimbrough.) One way to test this is to look at how ethnically diverse groups play various games. In a study looking at the different ethnicities in Israel, Fershtman and Gneezy (2001) found that people did not discriminate against Sephardic Jews in the dictator game but they did discriminate in the trust game, indicating that discrimination was driven by a (mistaken) lack of trust in the minority ethnicity. Surprisingly, even members of the minority tended to discriminate in this way. Glaeser et al. (2000) found that pairs are less trustworthy when they have different ethnicities or nationalities. The really shocking thing about this is that this study was performed on Harvard undergraduates, who we might think of as the people least likely to discriminate in this way. Easterly, Ritzen, and Woolcock (2006) show that ethnolinguistic fractionalization has a negative impact on the rule of law:  The basic story that Easterly, Ritzen, and Woolcock tell is that ethnic conflict makes it difficult to achieve a consensus on how the government should be run, thus leading to worse government. Works Cited Alesina, A., Devleeschauwer, A., Easterly, W., Kurlat, S., &amp; Wacziarg, R. (2003). Fractionalization. Journal of Economic growth, 8(2), 155-194. Alesina, A., &amp; Ferrara, E. L. (2005). Ethnic diversity and economic performance. Journal of economic literature, 43(3), 762-800. Alesina, A., Harnoss, J., &amp; Rapoport, H. (2016). Birthplace diversity and economic prosperity. Journal of Economic Growth, 21(2), 101-138. Easterly, W., Ritzen, J., &amp; Woolcock, M. (2006). Social cohesion, institutions, and growth. Economics &amp; Politics, 18(2), 103-120. Fershtman, C., &amp; Gneezy, U. (2001). Discrimination in a segmented society: An experimental approach. Quarterly Journal of Economics, 351-377. Glaeser, E. L., Laibson, D. I., Scheinkman, J. A., &amp; Soutter, C. L. (2000). Measuring trust. Quarterly Journal of Economics, 811-846. Habyarimana, J., Humphreys, M., Posner, D. N., &amp; Weinstein, J. M. (2007). Why does ethnic diversity undermine public goods provision?. American Political Science Review, 101(04), 709-725. La Porta, R., Lopez-de-Silanes, F., Shleifer, A., &amp; Vishny, R. (1999). The quality of government. Journal of Law, Economics, and organization, 15(1), 222-279. Parrotta, P., Pozzoli, D., &amp; Pytlikova, M. (2014a). Labor diversity and firm productivity. European Economic Review, 66, 144-179. Parrotta, P., Pozzoli, D., &amp; Pytlikova, M. (2014b). The nexus between labor diversity and firm’s innovation. Journal of Population Economics, 27(2), 303-364. Stazyk, E. C., Davis, R., &amp; Liang, J. (2012). Examining the Links between Workforce Diversity, Organizational Goal Clarity, and Job Satisfaction. In APSA 2012 Annual Meeting Paper. Williams, K. Y., &amp; O’Reilly III, C. A. (1998). A review of 40 years of research. Res Organ Behav, 20, 77-140. Other Links: Pseudoerasmus on Hive Mind. Sam Bowman on Brexit. Tyler Cowen on backlash against immigration. Slate on the original "welfare queen." A smart solution to the diversity dilemma.

Garett Jones returns to the podcast to discuss the issue of ethnic diversity. There is a wide body of research showing that ethnic diversity can reduce the productivity of teams, firms, and even whole countries. <a href="https://www.researchgate.net/profile/Charles_OReilly/publication/234022034_Demography_and_Diversity_in_Organizations_A_Review_of_40_Years_of_Research/links/55b0f45d08aec0e5f430e49f.pdf" rel="nofollow" target="_blank">Williams and O'Reilly (1996)</a> review dozens of studies showing that ethnic diversity has a negative impact on group performance. In the two decades since, more research has reinforced that result. <a href="https://dash.harvard.edu/bitstream/handle/1/4553005/alesinassrn_ethnicdiversity.pdf?sequence=2" rel="nofollow" target="_blank">Alesina and La Ferrara (2005)</a> find that increasing ethnic diversity from 0 (only one ethnic group) to 1 (each individual is a different ethnicity) would reduce a country's annual growth by 2 percent. Multiple studies (<a href="http://scholar.harvard.edu/files/shleifer/files/qualilty_govt_jleo.pdf" rel="nofollow" target="_blank">La Porta et al., 1999</a>; <a href="http://dash.harvard.edu/bitstream/handle/1/4553003/alesinassrn_fractionalization.pdf?sequence=2" rel="nofollow" target="_blank">Alesina et al., 2003</a>; <a href="https://escholarship.org/uc/item/2km4r4dn.pdf" rel="nofollow" target="_blank">Habyarimana et al., 2007</a>) have shown that ethnic diversity negatively affects public good provision. <a href="https://www.bostoncollege.org/content/dam/files/centers/cwf/individuals/pdf/DiversityClarityandSatisfaction.pdf" rel="nofollow" target="_blank">Stazyk et al. (2012)</a> find that ethnic diversity reduces job satisfaction among government workers. <a href="http://ftp.iza.org/dp6973_final.pdf" rel="nofollow" target="_blank">Parrotta et al. (2014a)</a> find that ethnic diversity is significantly and negatively correlated with firm productivity. This may seem strange to you. If you're like me, you probably enjoy diversity. You probably don't observe the problems of low morale and high marginal costs that researchers have found in ethnically diverse workplaces. If that's the case then you, like me, live in a bubble. An apparent exception to the rule that ethnic diversity lowers productivity comes in high-human-capital groups. I say "apparent" because there hasn't been much in the way of direct study of this particular issue. However, some results are suggestive. For instance, the same researchers who found that ethnic diversity reduces firm productivity in general found that it increases firms' level of innovation as measured by patents (<a href="http://link.springer.com/article/10.1007/s00148-013-0491-7" rel="nofollow" target="_blank">Parrotta et al., 2014b</a>). Most of the people I know fall into this category of highly skilled, highly educated individuals, so it shouldn't be surprising that my experience (and maybe yours) is not the norm. Given that diversity is so costly for organizations, there is a huge industry dedicated to diversity training to mitigate these effects. However, <a href="https://hbr.org/2016/07/why-diversity-programs-fail" rel="nofollow" target="_blank">a recent issue of the Harvard Business Review</a> argues that diversity training seems to be a general failure. To the extent that diversity is a plus for firm profitability, firms will tend to seize this opportunity without the need for legal intervention. And indeed, there are some types of diversity that seem to have positive impacts on firm profit. For instance, a recent study by <a href="http://link.springer.com/article/10.1007/s10887-016-9127-6" rel="nofollow" target="_blank">Alesina, Harnoss, and Rapoport (2016)</a> indicates that birthplace diversity improves productivity. This is different from (and in this sample, uncorrelated with) ethnic diversity. People might all share the same ethnicity, but the evidence indicates that if they come from different places they tend to have complimentary skills that make them better at working together. As Garett points out, this is roughly the plot of every movie and TV show ever made by Joss Whedon. The causes of all these effects have been studied by experimental economists. (For an overview of the history of experimental economics, listen to <a href="http://economicsdetective.com/2015/02/experimental-economics-norms-and-prosocial-behaviour-with-erik-kimbrough-mp3/" rel="nofollow" target="_blank">my interview with Erik Kimbrough</a>.) One way to test this is to look at how ethnically diverse groups play various games. In a study looking at the different ethnicities in Israel, <a href="http://qje.oxfordjournals.org/content/116/1/351.abstract" rel="nofollow" target="_blank">Fershtman and Gneezy (2001)</a> found that people did not discriminate against Sephardic Jews in the dictator game but they did discriminate in the trust game, indicating that discrimination was driven by a (mistaken) lack of trust in the minority ethnicity. Surprisingly, even members of the minority tended to discriminate in this way. <a href="http://www.jstor.org/stable/2586897?seq=1#page_scan_tab_contents" rel="nofollow" target="_blank">Glaeser et al. (2000)</a> found that pairs are less trustworthy when they have different ethnicities or nationalities. The really shocking thing about this is that this study was performed on Harvard undergraduates, who we might think of as the people least likely to discriminate in this way. <a href="http://onlinelibrary.wiley.com/doi/10.1111/j.1468-0343.2006.00165.x/abstract?userIsAuthenticated=false&amp;deniedAccessCustomisedMessage=" rel="nofollow" target="_blank">Easterly, Ritzen, and Woolcock (2006)</a> show that ethnolinguistic fractionalization has a negative impact on the rule of law: The basic story that Easterly, Ritzen, and Woolcock tell is that ethnic conflict makes it difficult to achieve a consensus on how the government should be run, thus leading to worse government. Works Cited Alesina, A., Devleeschauwer, A., Easterly, W., Kurlat, S., &amp; Wacziarg, R. (2003). Fractionalization. Journal of Economic growth, 8(2), 155-194. Alesina, A., &amp; Ferrara, E. L. (2005). Ethnic diversity and economic performance. Journal of economic literature, 43(3), 762-800. Alesina, A., Harnoss, J., &amp; Rapoport, H. (2016). Birthplace diversity and economic prosperity. Journal of Economic Growth, 21(2), 101-138. Easterly, W., Ritzen, J., &amp; Woolcock, M. (2006). Social cohesion, institutions, and growth. Economics &amp; Politics, 18(2), 103-120. Fershtman, C., &amp; Gneezy, U. (2001). Discrimination in a segmented society: An experimental approach. Quarterly Journal of Economics, 351-377. Glaeser, E. L., Laibson, D. I., Scheinkman, J. A., &amp; Soutter, C. L. (2000). Measuring trust. Quarterly Journal of Economics, 811-846. Habyarimana, J., Humphreys, M., Posner, D. N., &amp; Weinstein, J. M. (2007). Why does ethnic diversity undermine public goods provision?. American Political Science Review, 101(04), 709-725. La Porta, R., Lopez-de-Silanes, F., Shleifer, A., &amp; Vishny, R. (1999). The quality of government. Journal of Law, Economics, and organization, 15(1), 222-279. Parrotta, P., Pozzoli, D., &amp; Pytlikova, M. (2014a). Labor diversity and firm productivity. European Economic Review, 66, 144-179. Parrotta, P., Pozzoli, D., &amp; Pytlikova, M. (2014b). The nexus between labor diversity and firm’s innovation. Journal of Population Economics, 27(2), 303-364. Stazyk, E. C., Davis, R., &amp; Liang, J. (2012). Examining the Links between Workforce Diversity, Organizational Goal Clarity, and Job Satisfaction. In APSA 2012 Annual Meeting Paper. Williams, K. Y., &amp; O’Reilly III, C. A. (1998). A review of 40 years of research. Res Organ Behav, 20, 77-140. Other Links: <a href="https://pseudoerasmus.com/2015/10/04/ce/" rel="nofollow" target="_blank">Pseudoerasmus on Hive Mind.</a> <a href="http://economicsdetective.com/brexit" rel="nofollow" target="_blank">Sam Bowman on Brexit.</a> <a href="http://marginalrevolution.com/marginalrevolution/2016/07/is-backlash-a-symptom-of-insufficient-immigration.html" rel="nofollow" target="_blank">Tyler Cowen on backlash against immigration.</a> <a href="http://www.slate.com/articles/news_and_politics/history/2013/12/linda_taylor_welfare_queen_ronald_reagan_made_her_a_notorious_american_villain.html" rel="nofollow" target="_blank">Slate on the original "welfare queen."</a> <a href="https://www.aei.org/publication/a-smart-solution-to-the-diversity-dilemma/" rel="nofollow" target="_blank">A smart solution to the diversity dilemma.</a>

The Costs of Ethnic Diversity with Garett Jones

Scott Cunningham

My guest for this episode is Scott Cunningham of Baylor University. We discuss his work on the decriminalization of indoor sex work and on the impact of Craigslist's erotic services page on violence against women. The working paper on Craigslist generated a lot of media attention, with articles at Huffington Post and ThinkProgress. The most quoted statistic is that "Craigslist erotic services reduced the female homicide rate by 17.4 percent." We discuss this statistic, its possible causes, and whether or not it is implausibly large. Here's Lynn Arditi's article on the accidental decriminalization of prostitution in Rhode Island. Scott mentions John Snow, the scientist who first discovered that cholera was spread by contaminated water sources. Here's the first video in a series on him.

My guest for this episode is <a href="http://scunning.com/" rel="noopener nofollow" target="_blank">Scott Cunningham of Baylor</a> University. We discuss <a href="https://academic.oup.com/restud/advance-article/doi/10.1093/restud/rdx065/4756165" rel="noopener nofollow" target="_blank">his work on the decriminalization of indoor sex work</a> and <a href="http://scunning.com/craigslist70.pdf" rel="noopener nofollow" target="_blank">on the impact of Craigslist's erotic services page on violence against women</a>. The working paper on Craigslist generated a lot of media attention, with articles at <a href="https://www.huffingtonpost.com/entry/craigslists-erotic-services-site-appears-to-have-reduced_us_59df8778e4b0cee7b9549e66" rel="noopener nofollow" target="_blank">Huffington Post</a> and <a href="https://thinkprogress.org/craigslist-erotic-services-platform-3eab46092717/" rel="noopener nofollow" target="_blank">ThinkProgress</a>. The most quoted statistic is that "Craigslist erotic services reduced the female homicide rate by 17.4 percent." We discuss this statistic, its possible causes, and whether or not it is implausibly large. Here's <a href="https://web.archive.org/web/20090605171620/http://www.projo.com/news/content/PROSTITUTION_LAW31_05-31-09_NVEHGBH_v161.3e90048.html" rel="noopener nofollow" target="_blank">Lynn Arditi's article on the accidental decriminalization of prostitution in Rhode Island</a>. Scott mentions John Snow, the scientist who first discovered that cholera was spread by contaminated water sources. Here's <a href="https://www.youtube.com/watch?v=TLpzHHbFrHY" rel="noopener nofollow" target="_blank">the first video in a series on him</a>.

Sex Work, Craigslist, and Decriminalization with Scott Cunningham

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The best podcast episodes about true crime. For any thrill seeking podcast listeners who just can't get enough of the captivating stories of murderers and criminals. This topic has all the best episodes from many different true crime podcasts.  Add episodes you're interested into your queue below!