My GMU Econ colleague Vincent Geloso teamed up with AIER’s Phil Magness on a new paper that corrects some crucial errors committed by Thomas Piketty and Gabriel Saez. Here’s the abstract of Vincent’s and Phil’s paper:
We present a new series for top income concentrations in the United States, using a consistent data construction methodology for the entire range of available data. This is meant to connect efforts that have separately considered pre-1960 and post-1960 inequality measures. Our series improves upon the series of Piketty and Saez (2003), correcting for data discontinuities induced by arbitrary choices that introduce distortions to their fiscal income denominator between the mid-1980s and the present. We then link our series with previous corrections to the Piketty-Saez series, creating a yearly estimate of top income concentration from 1917 to 2020. The results indicate more a more tempered rise in inequality in recent decades than the previous literature.
The historian Gabriel Kolko famously argued that the ICC was created by and for the railroads themselves, as a solution to a problem of intense competition. But more-recent research has shown that the interests of shippers were also at play, and by the early 20th century the ICC had essentially been captured by the shippers. The result for the railroads was absurdly low rates of return and an inability to raise capital. The ICC also became a bottleneck through which virtually all railroad business decisions had to pass.
Thus began the long and steady decline of the American railroad industry, which wasn’t arrested until surface freight was deregulated (and the ICC ultimately abolished) in the 1970s. Throughout its life, the ICC repeatedly stood in the way of innovation, including containerized shipping.
Radio, the high-tech industry of the 1920s, offers similar lessons. Broadcasting calls for regulation, since stations can interfere with one another if they transmit on nearby frequencies at the same time and place. But this can be dealt with by creating property rights in electromagnetic spectrum, something toward which the common law was already groping. (Such a system would eventually be put in place during the Clinton administration.) Instead, Congress created the Federal Radio Commission, which became the FCC when television arrived.
Spectrum allocation immediately became intensely politicized. The fastest route to a station license required a detour through Capitol Hill. Like the ICC, the FCC became an information bottleneck, and this favored the well-capitalized major networks. The FCC also held back innovation, including famously delaying the advent of cellular telephony for decades by refusing to grant it spectrum.
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The problems of regulation weren’t limited to the ICC and the FCC. They were structural problems of independent commissions. Mr. Graham and Ms. Warren complain that the leaders of the big-tech firms weren’t elected by voters. But they were elected by millions of consumers and shareholders voting with their dollars. Regulatory commissions are elected neither by voters nor by consumers, and they have shown themselves opaque even to Congress, whose oversight committees inevitably came to share the views and values of the regulated industries.
It is fashionable nowadays to dismiss the Great Deregulation of the late 20th century as an unfortunate if fleeting episode of “neoliberalism.” In fact, dismantling some of America’s rigid and retrogressive regulatory institutions unleashed powerful forces of innovation and consumer benefit. Before we attempt to rebuild those structures, we need to examine the lessons of history.
Stuck behind an SUV? Blame Bruce Yandle. A slice:
Back in 1977, as a senior economist on President Jimmy Carter’s Council on Wage and Price Stability, I participated in Department of Transportation (DOT) proceedings that set the first fuel economy standards for the U.S. fleet. What transpired is a great example of what can happen when federal regulations become completely entangled with a major economic sector. The forces at play help to explain why a woman happily drives a 5,000-pound SUV to transport 10 pounds of groceries.
I can assure readers that no one in those proceedings thought the Ford F-150 pickup, beginning in 1982, would top the all-vehicle bestseller list for 41 consecutive years. And we could have never guessed that truck-like SUVs would become vehicles of choice for U.S. consumers. We couldn’t have; SUVs did not exist at the time.
Alec Stamm writes about “the (egg)noble lie of regulatory paternalism.”
David Henderson wisely warns us Americans not to trade SALT for broccoli.
Of course, it’s not November 2021 anymore. Eight in ten Americans have reportedly received at least one dose of a Covid vaccine, and 70 percent of Americans have had more than one. And because newer variants of the disease are transmissible even to those who are vaccinated, the vast majority of Americans have by now encountered the virus in the wild and developed at least some immunity to it. And yet, a small but disproportionately loud contingent of Americans is not taking the latest uptick in Covid cases in stride, and the American press is eagerly catering to its paranoia.
Jay Bhattacharya quotes Kevin Bardosh:
“Covid was certainly not the virus of sensationalist science fiction books and film — far from it. But it did reveal how quickly collective madness and social breakdown can occur.”
