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The Lesson From Germany and Korea

The Lesson From Germany and Korea

by | May 28, 2023 | ,

Institutions are, of course, in some sense the products of culture. But, because they formalize a set of norms, institutions are often the things that keep a culture honest, determining how far it is conducive to good behaviour rather than bad. To illustrate the point, the twentieth century ran a series of experiments, imposing quite different institutions on two sets of Germans (in West and East), two sets of Koreans (in North and South) and two sets of Chinese (inside and outside the People’s Republic). The results were very striking and the lesson crystal clear. If you take the same people, with more or less the same culture, and impose communist institutions on one group and capitalist institutions on another, almost immediately there will be a divergence in the way they behave.

 

Many historians today would agree that there were few really profound differences between the eastern and western ends of Eurasia in the 1500s. Both regions were early adopters of agriculture, market-based exchange and urban-centred state structures. But there was one crucial institutional difference. In China a monolithic empire had been consolidated, while Europe remained politically fragmented. In Guns, Germs and Steel, Jared Diamond explained why Eurasia had advanced ahead of the rest of the world. But not until his essay ‘How to Get Rich’ (1999) did he offer an answer to the question of why one end of Eurasia forged so far ahead of the other. The answer was that, in the plains of Eastern Eurasia, monolithic Oriental empires stifled innovation, while in mountainous, river-divided Western Eurasia, multiple monarchies and city-states engaged in creative competition and communication.

– Niall Ferguson, Civilization: The West and the Rest

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Occupational Licensing Increases Prices and Deprives People of Options

Occupational Licensing Increases Prices and Deprives People of Options

by | May 25, 2023 |

When you shop online, vendors usually give you a bunch of different ways to sort your options.  Take Amazon:

sort.jpg

 

One popular sorting option – especially for customers with low income – is “Price: Low to High.”  You’ve probably used it yourself many times.

This doesn’t mean, of course, that people who use this option automatically buy the very cheapest item.  Everyone knows that the cheapest tends to be low-quality.  But starting with the cheapest options is still a great rule of thumb.  If the cheapest option has stellar reviews, you can just buy the cheapest.  If the cheapest has less-than-stellar reviews, you can scroll down the page to quickly discover how much extra you have to pay to get the quality you want.

So what?  Well, imagine that the next time you click on the “Price: Low to High” option, a do-gooder pops up on your screen and starts the following dialog:

Do-Gooder: Sorry, Sorting by Price: Low to High has just been banned.  You’re going to have to sort your options some other way.

You: Banned?  Why?

Do-Gooder: People who use this option tend to buy sub-standard products.  We need to protect them.

You: You aren’t “protecting” anyone.  You’re just making it harder for people to find attractive deals.

Do-Gooder: These deals may seem attractive, but they’re not.  You buy cheap, you get cheap.

You: But everyone already knows this!  People buy the cheap stuff because they value their money more than higher quality.

Do-Gooder: Aha, so you’re one of those dogmatic market fundamentalists.  <sarcasm>Let everyone buy whatever they want, and let competition take care of them.</sarcasm>  Give me a break.

You: It’s not “dogmatic market fundamentalism.” It’s common sense.  Sometimes extra quality isn’t worth it.  And sometimes the cheap options are actually high-quality.

Do-Gooder: Yes, sometimes the cheap options are fine.  But sometimes they aren’t.  What do you propose to do about it?

You: Well, I personally won’t do anything about it.  But the market uses reputation to protect people.  Vendors who sell junk get bad reviews – and bad reviews hurt sales.

Do-Gooder: But what about people who don’t read reviews?

You: Sooner or later, they’ll get burned.  Then maybe they’ll start reading reviews before they buy.

Do-Gooder: <sarcasm>Very compassionate.</sarcasm>

You: Why should everyone have to suffer to protect a few irresponsible people?

Do-Gooder: Well, in that case, why don’t we just get rid of occupational licensing?  If reputation works so well, why license plumbers or electricians?  Or doctors for that matter?!

You: Well, we don’t want people to hire bad plumbers, electricians, or doctors.

Do-Gooder: Gee, now you sound like me.  Whatever happened to “You aren’t ‘protecting’ anyone.  You’re just making it harder for people to find attractive deals”?

You: The unlicensed deals may seem attractive, but they’re not.  You buy cheap, you get cheap.

Do-Gooder: Deja vu!  Whatever happened to, “But everyone already knows this!  People buy the cheap stuff because they value their money more than higher quality.”?

You: I see where this is going, and I don’t like it.  This conversation is over.  [Click. Browser window closes.]

HT: Inspired by Dan Klein’s excellent lecture on occupational licensing.

This article was originally featured at Econlib.org and is republished with permission.

Democratic Socialist Turns Libertarian! #PorcFest2023

Democratic Socialist Turns Libertarian! #PorcFest2023

by | May 24, 2023 |

Once you accept the principle of government, namely that there must be a judicial monopoly and the power to tax, once you accept this principle incorrectly as a just principle, then any idea or any notion of restraining or limiting government power and safeguarding individual liberty and property becomes illusory. Rather, under monopolistic auspices, the price of justice and protection will continually rise, and the quality of justice and protection will continually fall. A tax-funded protection agency is a contradiction in terms. That is, it is an expropriating property protector.

– Hans-Hermann Hoppe, Ph.D., Economy, Society, and History (2021, Mises Institute), p. 174.

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What War Hawks Would Sound Like If They Weren’t Psychopaths

What War Hawks Would Sound Like If They Weren’t Psychopaths

by | May 23, 2023 |

Modern warfare almost always leads to killing lots of innocents; if governments were held to the same standards as individuals, these killings would be manslaughter, if not murder.  This doesn’t mean that war is never justified.  But the reasonable hawkish mood is sorrow – and constant yearning for a peaceful path.  The kind of emotions that flow out of, “We are in a tragic situation.  After painstaking research on all the available options, we regretfully conclude that we have to kill many thousands of innocent civilians in order to avoid even greater evils.  This is true even after adjusting for the inaccuracy of our past predictions about foreign policy.”

I have never personally known a hawk who expresses such moods, and know of none in the public eye.  Instead, the standard hawk moods are anger and machismo.  Ted Cruz’s recent quip, “I don’t know if sand can glow in the dark, but we’re going to find out” is typical.  Indeed, the hawks I personally know don’t just ignore civilian deaths.  When I raise the issue, they cavalierly appeal to the collective guilt of their enemies.  Sometimes they laugh.  As a result, I put little weight on what hawks say.  This doesn’t mean their view is false, but it is a strong reason to think it’s false.

– Bryan Caplan, Ph.D., Voters As Mad Scientists: Essays on Political Irrationality

The Free Market Serves the Masses, Governments Commit Genocide

The Free Market Serves the Masses, Governments Commit Genocide

by | May 20, 2023 |

Amazon is simply the best store that ever existed, by far, with incredible selection and unearthly convenience.  The price: cheap.

Facebook, Twitter, and other social media let us socialize with our friends, comfortably meet new people, and explore even the most obscure interests.  The price: free.

Uber and Lyft provide high-quality, convenient transportation.  The price: really cheap.

Skype is a sci-fi quality video phone.  The price: free.

Youtube gives us endless entertainment.  The price: free.

Google gives us the totality of human knowledge!  The price: free.

– Bryan Caplan, Ph.D., Voters as Mad Scientists: Essays on Political Rationality

The Truth About Discrimination – Walter E. Williams

The Truth About Discrimination – Walter E. Williams

by | May 14, 2023 |

If people are free to discriminate in favor of, or against, a university or wine, what argument can be made against their having that same right with respect to choosing based on the race or sex characteristics of their mates, employees, tenants, or club members? If one shares the value of freedom of association, why should some associations be permitted and others denied? If a man is not permitted to bring a court action against a woman who refuses to deal with him, in form of a dating or marital relationship or for any arbitrary reason she chooses, what is the case for bringing court action for other refusals to “deal,” such as in employment, renting or selling a house, or club memberships?…

…Refusal to deal can apply to any setting, including activities like marriage, friendship, invitations to social gatherings and golf games, all of which might affect one’s “life chances.”…

…These visions of prejudice expose analysts to the pitfalls of making ambiguous statements and advancing faulty arguments. A useful operational definition of prejudice can be found by examining its Latin root- praejudicium, meaning “to judge before the facts are known.” Thus, we might define prejudicial acts as decision-making on the basis of incomplete information.

That kind of decision-making, before facts are known, is necessary and to be expected in a world of scarcity, uncertainty, complexity, costly information-and often erroneous interpretation of that information. Furthermore, different individuals might arrive at different interpretations even if confronted with the same information. Also, different people reach different decisions on just what constitutes the optimal quantity of information to gather prior to making decisions…

Information is not costless. To acquire an additional unit of it requires a sacrifice of time, effort, or other resources. People therefore seek to economize on information cost. In doing so, they tend to substitute less expensive forms of information for more expensive forms. Physical attributes are “cheap” to observe.

– Walter E. Williams, Race and Economics

 

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