Samuel Gregg reviews the new collection, edited by Ryan Bourne, on the importance of market prices.
Two slices:
Once upon a time, price theory and reasoning about prices was core to modern economics. Yet as Bryan P. Cutsinger and Alexander William Salter observe in a recent Free Market Institute paper, “the group that should be most committed to studying and appreciating (warts and all) the price system—professional economists—increasingly regards price theory as unworthy of attention.” To support this claim, they examine a range of datasets, ranging from the content of economics syllabi to the extent to which contemporary books on price theory are incorporated into graduate economics courses. Price theory, they conclude, “is, at best, a marginal part of today’s graduate curricula.”
This “Great Forgetting,” as Cutsinger and Salter call it, has consequences. One is that many young economists “focus on applied research using sophisticated statistical tools without an underlying theoretical framework to guide them.” The effects, however, go beyond formal economics. The marginalization of price theory in the academy is increasingly mirrored in the conduct of public policy—and the results are dire.
This problem constitutes the background to a new book of 28 essays, edited by the Cato Institute’s Ryan A. Bourne, entitled The War on Prices: How Popular Misconceptions about Inflation, Prices, and Value Create Bad Policy (2024). Its central theme is that deep misconceptions about the workings of prices are driving bad policy. Bourne sees these expressed in the pronouncements on inflation’s causes by Democrat and Republican politicians. This is replicated in phenomena like increasingly favorable public opinion of price controls.
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Several themes regularly resurface throughout the book. The first is that a basic hostility to free commerce drives antipathy to free prices. The moment, for example, that inflation started to take off in America in January 2021, and as it became clear that this inflation was not transitory, politicians like Senator Elizabeth Warren identified corporate greed as a central cause.
The flip side of this is the second common theme: the implicit confidence of so many policymakers—again, on the left and now some on the right—in the capacity of the state and technocrats to outguess the workings of prices. That often goes together with a moral conviction that such action is needed if vulnerable groups are going to be helped. If market prices get in the way of realizing such objectives, the logic goes, so much the worse for free prices.
Ben Zycher explains that “Biden’s EPA Can Justify His New EV Rules Only by Cooking the Books.” A slice:
It gets worse. EPA claims fuel savings of about $30 billion annually as a benefit of the regulation. This is bizarre. If there are significant fuel savings to be had, why do individuals need regulatory coercion to adopt the vehicle choices preferred by the Biden administration?
The answer is that vehicles consuming fuel must offer benefits in terms of the quality of transportation services greater in value than the cost of fuels. If fuel savings are a benefit of the regulation, then any decline in the quality of transportation services — comfort, reliability, range, safety, resilience in the face of temperature and weather fluctuations, et cetera — must be taken into account as a cost. Yet EPA ignores this, arguing instead that because of fuel savings, people will drive more, thus receiving “drive value benefits” of an additional $2 billion per year. Based on this flawed mode of analysis, we could get even greater benefits from savings on fuel if we banned all cars and went back to horse-drawn stage coaches and carts.
The new rule shows how Democrats continue to rule by executive fiat when it suits their political purposes. Mr. Biden wants to reinforce his Big Labor support this year after angering some in the railroad union by signing a labor agreement into law to prevent a strike in 2022.
All of this reduces the chances that investments in efficiency will reduce the cost of shipping. A bad policy is being willed into force by a combination of labor interests and political opportunism. Your government at work.
GMU Econ alum Dominic Pino breaks down Biden’s student-debt ‘forgiveness’ schemes.
Jason Sorens and Thomas Savidge offer sound advice about historical preservation.
NPR reporter Uri Berliner describes the descent of NPR. Three slices:
You know the stereotype of the NPR listener: an EV-driving, Wordle-playing, tote bag–carrying coastal elite. It doesn’t precisely describe me, but it’s not far off. I’m Sarah Lawrence–educated, was raised by a lesbian peace activist mother, I drive a Subaru, and Spotify says my listening habits are most similar to people in Berkeley.
I fit the NPR mold. I’ll cop to that.
So when I got a job here 25 years ago, I never looked back. As a senior editor on the business desk where news is always breaking, we’ve covered upheavals in the workplace, supermarket prices, social media, and AI.
It’s true NPR has always had a liberal bent, but during most of my tenure here, an open-minded, curious culture prevailed. We were nerdy, but not knee-jerk, activist, or scolding.
In recent years, however, that has changed. Today, those who listen to NPR or read its coverage online find something different: the distilled worldview of a very small segment of the U.S. population.
If you are conservative, you will read this and say, duh, it’s always been this way.
But it hasn’t.
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But the role and standing of affinity groups, including those outside NPR, were more than that. They became a priority for NPR’s union, SAG-AFTRA—an item in collective bargaining. The current contract, in a section on DEI, requires NPR management to “keep up to date with current language and style guidance from journalism affinity groups” and to inform employees if language differs from the diktats of those groups. In such a case, the dispute could go before the DEI Accountability Committee.
In essence, this means the NPR union, of which I am a dues-paying member, has ensured that advocacy groups are given a seat at the table in determining the terms and vocabulary of our news coverage.
Conflicts between workers and bosses, between labor and management, are common in workplaces. NPR has had its share. But what’s notable is the extent to which people at every level of NPR have comfortably coalesced around the progressive worldview.
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Even so, out of frustration, on November 6, 2022, I wrote to the captain of ship North Star—CEO John Lansing—about the lack of viewpoint diversity and asked if we could have a conversation about it. I got no response, so I followed up four days later. He said he would appreciate hearing my perspective and copied his assistant to set up a meeting. On December 15, the morning of the meeting, Lansing’s assistant wrote back to cancel our conversation because he was under the weather. She said he was looking forward to chatting and a new meeting invitation would be sent. But it never came.
John Tierney talks with Rob Montz about covid’s “chaos coordinators.”
