Thomas Sowell on Economic Facts and Fallacies
Feb 25 2008

Thomas Sowell of Stanford University's Hoover Institution talks with EconTalk host Russ Roberts about the ideas in his new book, Economic Facts and Fallacies. He discusses the misleading nature of measured income inequality, CEO pay, why nations grow or stay poor, the role of intellectuals and experts in designing public policy, and immigration.

Alison Wolf on Women, Inequality and the XX Factor
Alison Wolf author of The XX Factor, talks with EconTalk host Russ Roberts about the changing roles of women in the family and the workplace. Wolf argues that highly educated women are increasingly similar to highly educated men in their...
Bryan Caplan on Immigration
Bryan Caplan of George Mason University and EconLog blogger talks with EconTalk host Russ Roberts about immigration. Caplan takes on the common arguments against open borders and argues that they are either exaggerated or can be overcome while still allowing...
Explore audio transcript, further reading that will help you delve deeper into this week’s episode, and vigorous conversations in the form of our comments section below.


Chris Meisenzahl
Feb 25 2008 at 8:30am

Thank you!!!! Dr. Sowell is wonderful, I finished the book a couple of weeks ago!


S P Suresh
Feb 25 2008 at 9:08am

Prof. Roberts, there might be some problem with today’s podcast. It is talking inordinately long for my iTunes to download it. The download button doesn’t work, as the link starts with `hhttp’. Could you please take a look?

Great series. I have been listening to your podcasts for about three months now, just as my interest in economics has started to pick up. (I am a theoretical computer scientist / logician by trade.) All the best and keep it up!


Lauren (Econlib Editor)
Feb 25 2008 at 9:22am

Hi, Suresh.

Thanks for letting us know about the Download button. I’ve fixed the double “h”. Just refresh the page and it will work. Sorry about that.

I’m not sure why you had trouble in iTunes. It’s definitely not related to the double-h on this page or the EconTalk home page. I downloaded the podcast this morning via iTunes and had no problem. Perhaps there were just a press of downloads at the moment you tried it.

Feb 25 2008 at 12:40pm

Dear Prof. Roberts,

I am an avid listener to your podcast from Germany. I regularly listen to them when I go jogging on the weekend.
My personal favorite was your talk with Iannacone on religion. It really provided me with a new perspective. I got so interested that I read a number of his papers and also bought the book by Robert B. Ekelund et al. I would also buy a book by Iannacone on the subject if there were one.

I also enjoyed your talks with Easterly, Collier and Brook and I am considering to buy their books as well.

I am sure you are not running out of topics and interviewees. However, if I may make modest suggestions, I would be curious to hear David Landes (Wealth and Poverty of Nations or Dynasties) or Scott Ruddiman on Climate Change. Also a talk on mechanism design would be very interesting.

I think you are doing a great job!
Sincerely yours,

PS: As I have left the academic world a number of years ago it was actually your podcast and econlib that made me realize what a great and distinguished economics faculty GMU has. Before your site I knew of GMU only because of the Nobel Laureate Prof. Buchanan.

Feb 25 2008 at 2:37pm

Dr. Sowell is discussing this topic this week on National Review as well:

Feb 25 2008 at 3:10pm

Prof. Roberts,

After the very sloppy final 3 minutes where you discuss immigration and international law with Dr. Sowell, I think you owe your listeners a fresh podcast from an economist who can better discuss these topics.

Feb 25 2008 at 8:16pm

I don’t understand why Dr. Sowell who is so concerned with the accuracy of his language in economic issues is so sloppy in political issues. Right after saying there is no “society,” “society doesn’t do anything” he starts talking about “the left.” Dr. Sowell there is no left. “The left” doesn’t do anything. A group of individuals decide separately to make voting decisions, support certain candidates and interact politically in certain ways.

The reason this matters is that economists like Sowell who speak intelligently about economic matters sound silly about political matters. The obvious being trying to answer questions like, why has there been a mild backlash against free trade? Economists like Sowell think that individuals who do sophisticated things like pay each other their marginal productivity, turn into some sort of amorphous “left” and fall for all sorts of stuff.

The truth is, things are changing that are driving individuals to reevaluate their decisions. In economics langauge, we’ve had “shocks.” The two main ones to this question is that we’ve had immense skill based technological change and an increase in globalization (more precisely the cost of international trade has gone down). These two shocks can hurt lots of INDIVIDUALS, but are good for SOCIETY. Both of these can work to lower the wages of lots of workers. If you are a worker, especially a low skilled worker, you are now competeing with a lot of additional foreign workers. If you happen to have a lot of capital, you get a big benefit of getting to employ your capital more productively all around the world. If you compete with computers and automated processes, because of the nature of job, when computers get cheaper it can hurt you. If you have lots of skills that are complimented by technology (like me in graduate school), you are a big winner from cheap computers that make you a lot more productive.

The political economy of this is much better explained by arguments like:

1. The number of voters that are losers from unrestricted trade is increasing, thus the voting movement is increasing.

2. The benefits of trade are diverse, the losses are borne by an increasingly smaller group. Organizing smaller groups is cheaper.

3. People have preferences over growth and also their neighbors growth. If growth is not shared widely across people, expect people try to redistribute the growth, even if it costs “society” growth.

I might read this book, if I can get it from the library just because it sounds like it has a lot of data. But so far, everytime Sowell disagrees with more prestigious albeit left-leaning economist bloggers like Krugman, Delong, Rodrik…etc. He is almost always making some error. Whether it is talking about mean, when people care about median and spread or talking about “the left” and “growth,” when people really want to know the complicated stories amidst individuals. Now when he agress with left-leaning economists and is attacking stupid people in the media and other fields that can’t do basic math, he gets it right. But I can’t help, but wonder if he adds more noise than clarity to the debate. The underlying story is what people care about, and it makes there look like there is much more controversy in the field about what is actually happening than there really is.

If Sowell got in a room with those economists, I think that it might take a couple hours, but they could generally come to an agreement about what is happening now. They might disagree on a few datasets here or there or some ways of parsing the data, but mostly they would agree on the recent past. I’d say 5% of their disagreement would be on what is and has happened, 15% would be about the general and specific outcomes of certain polices that could be implemented, and 80% of their disagreement would be over whether those outcomes are good or bad. That is, almost all of their disagreement would be philosophical and not economic.

I am interested if other people in the field disagree with that assessment.

Russ, you have lots more experience than I in these matters, what do you think?

Feb 25 2008 at 10:58pm

I seem to be hearing Dr. Sowell differently than Charlie. When Sowell says there is no society I take it to mean that there is no organized group called ‘society’ that is making economic decisions on behalf of people. In the example in the podcast, there is no body called ‘society’ determining the distribution of income. Makes sense to me.

As for referring to ‘the left’ (and the same would apply to ‘the right,’ I believe), these terms do in fact refer to groups of people who actively try to exert influence on…well, on society. People on the left share many fundamental beliefs and often work together in pursuit of their goals, including lobbying, publishing, organizing. Do you really think it is inappropriate to make a statement such as, ‘the left prefers more redistributive policies?’ Or, ‘the right prefers smaller government?’ It doesn’t mean every single person on the left or right agrees but aren’t such beliefs what define people politically?

Feb 26 2008 at 4:54am

“People on the left share many fundamental beliefs and often work together in pursuit of their goals”

Is it not equally accurate to say, “People in America share many fundamental beliefs and often work together in pursuit of their goals”

“I take it to mean that there is no organized group called ‘society’ that is making economic decisions on behalf of people. In the example in the podcast, there is no body called ‘society’ determining the distribution of income.”

But there is an organized group called ‘society’ or ‘America’ making economic decisions on behalf of people and determining the distribution of income. Do we really think raising or lowering the minimum wage has no effect on the distribution income or wealth? Do we think capital taxes have no effect on incomes? Do we think eliminating farm subsidies or cutting military spending in half has no effect? What about marginal tax rates?

Is there some reason ‘America’ or ‘society’ can’t wake up tomorrow and with enough support throw out the constitution and start from scratch? What outside force is stopping that? Now, we certainly can’t have any outcome we want in the feasible set. We can’t have an equal wealth distribution and robust economic growth, but as a society, we have a lot of control over economic outcomes.

For the record, I think it is often a waste of time to get all persnickety about treating Society as a group. It is often useful in economics to aggregate heterogenous groups into a whole we can make predictions about. I’m reading a paper right now Berry, Levinsohn and Pakes (1995) about the auto market that aggregates peoples tastes over things like vehicle size, horse power, and gas mileage into aggregate demand estimates that can answer interesting questions about the auto market. The goal is to take a car’s characteristics and be able to predict the share of the market it gets. Is it really so different to say society has preferences over growth, freedom,and income distribution and consider the share of the vote different policies will get?

Feb 26 2008 at 8:23am

I just have to make a comment on the last point that was made in the podcast about the “danger” that “international law is somehow better” than American law. International law only stands, and is only claimed to stand, where countries have signed on to treaties creating it. Now I’ll point you to what Article VI of the constitution has to say on the matter:

“This Constitution, and the Laws of the United States which shall be made in Pursuance thereof; and all Treaties made, or which shall be made, under the Authority of the United States, shall be the supreme Law of the Land”

So UNDER THE CONSTITUTION, INTERNAIONAL LAW IS EQUAL TO ANYTHING PASSED BY OUR LEGISLATURE!!! I really don’t see why this is so hard for people to understand that we actually have treaty OBLIGATIONS; that international law has the same standing as domestic law on any sane reading of the constitution. And it’s all because of those dastardly founding fathers who wanted to sell us out to the foreigners.

Russ Roberts
Feb 26 2008 at 8:35am


When I was making a reference to international law, I was thinking of the citing of foreign legal decisions in US legal rulings.

Feb 26 2008 at 3:03pm


What are the chances that you could get Stephen Marglin to join you for a podcast on his new book? While I disagree with him on many, to not say all, things, I can appreciate how great of a podcast it would be; contentious, lively, and informative. I think it’d be great.

Keith Bibby
Feb 26 2008 at 5:29pm

Excellent Podcast I too will have to reread ‘the use of knowlege in society’, (thank you for the link) It remindes of a comment made to me many years ago

“You will understand the course when you finish the one it is a prerequisite for (and no you can’t take the final then)” Prof Herbert A. Herchenreder to his Calculus II section.

I was startled by the approach to immigration, after talking about how only market forces lead to good outcomes and suddenly the platonic guardians of society are qualified to decide who should be part of our economy? Should not market forces be trusted, after providing appropriate disincentives for the crimial and destructive?
Prof. Roberts, I really like your point about trusting the constitution. I do.

– Keith Bibby

Patrick R. Sullivan
Feb 26 2008 at 5:33pm

Charlie, you might want to read Sowell’s Knowledge and Decisions before further criticizing him.

I happen to be the person who pointed out to Prof Roberts (in a comment on his blog) that the article Sowell wrote a few months ago on illegal immigration was quite surprising coming from the author of that book. The analysis in that article is decidedly at odds with the analytical framework of Knowledge and Decisions.

Feb 26 2008 at 6:38pm


What would you say are some fundamental beliefs shared by people in America? Next question: what would you say are some fundamental beliefs shared by people on the left? On the right? By Catholics? By Jews? Is it not easier to identify common beliefs in smaller ‘self-selecting’ groups than in the whole?

Not to make a mountain out of a molehill, but you criticized Sowell for his use of language. I think my example above shows he was reflecting a practical reality.

Your claim that “there is an organized group called ‘society’ making economic decisions on behalf of people,” though, is misguided. Is that your experience? What decisions has ‘society’ made on behalf of you?

Sowell’s point is exactly the opposite. Society is not an organized group, at least not in the sense of making centralized decisions. Society is the result of infinite decentralized decisions.

Feb 26 2008 at 7:05pm

Sowell has put the arguments to the extreme. I cannot believe he said imperialism is a propaganda. I am so disappointed that you do not offer fair and balanced view.

Feb 26 2008 at 11:35pm

“there is an organized group called ‘society’ making economic decisions on behalf of people,” though, is misguided. Is that your experience? What decisions has ‘society’ made on behalf of you?

1. Society affects my decision about what job to do and how long to work by changing my take home pay. The obvious mechanism is tax rates but there are many others.

2. Society has decided that I cannot buy cocaine. Society decided I could not work when I was 14 at many jobs.

3. I am a grad student in economics. Society helped push me in that direction by giving me big fat subsidies in the form of below market loans, teaching assistantships, but also, grants to my university and money for infrastructure.

4. When I leave school, my take home pay will further be influenced by the fact that the Federal Government hires many economists. Society has decided that we should have only one currency and that a group of economists should be used to govern that currency.

I could keep going. Every law, regulation, tax affects the decisions people make. Also, the absense of laws influence the decisions we make. Society has decided that we shouldn’t have a set of laws similar to Cuba for instance.

What Sowell was talking about in his statement was the distribution of income. Is it hard to think of things we do as a society that affect the distribution of income? (Minimum wage, capital taxes, increasing marginal income tax rates).

“Society is not an organized group, at least not in the sense of making centralized decisions. Society is the result of infinite decentralized decisions.”

But ‘the left’ is an organized group making central decision…? ‘Catholics’ are a centralized group making decisions…?

Think about all the individual decisions that go into the amorphous blog that becomes ‘the left.’ These are all groups and they are all individuals, sometimes it is better to talk about them as homogenous groups and sometimes as heterogeneous individuals. Part of deciding how to treat them is what makes economics so interesting. It is so important to pick the group for the question you are trying to answer. Think about the ways Sowell uses the term ‘the left’ and decide if it is appropriate to the questions he is trying answer.

For instance, Sowell argues that CEO pay is much maligned compared to athelets, because CEOs are the ones standing in the way of how ‘the left’ would like to run society.

Really? Is that really a convincing argument? It isn’t because people can actually observe athelets and movie stars earning their pay in a much different way than athelets? It isn’t because of recent corporate scandals that saw executives get rich while stockholders and workers got canned.? It isn’t because a CEO can cash out even though his tenure was a failure? It isn’t because CEOs can have tremendous influence over their boards and compensation comittees? Warren Buffet has criticized CEO pay for a while now, is it because he is part of the intellectual elite left that wants to switch to a centrally planned society?

It seems quite likely to me that the kinds of fuzzy thinking that sometimes cause people to think about economics badly is closely related to the type of fuzzy thinking that makes Sowell do political economy so badly.

Go through the podcast and tell me where you think Sowell does political economy well. Find me an example of where the best explanation available of public sentiment or public action is the ideology of the elite, intellectual left. I’m not trying to be a jerk. I’m seriously curious where you find him convincing.

Keith Bibby
Feb 26 2008 at 11:40pm

Fellow Student: you are quite correct, he does take a keen point of view but as we learn and practice being good critical listeners, I feel it is our job to provide the balance. Is not it up to us to decide if a writer has gone beyond the data and the logic. I find his argument compelling, provided his data is sound. If you believe him to be incorrect, go to the sources and see what you find. If you simply want to hear from the other side the danger is I am afraid it is difficult to avoid ‘opinion shopping;. I for one have a much harder time critically considering work I find my self in general agreement with. I do applaud your willingness to listen through a viewpoint you disagree with! Keith

Feb 26 2008 at 11:51pm

“Over about 30 years, average household income rose only by 6%, but over that same period, per capita income rose by 51%.”

I believe the time period was 1969 to 1996 in Sowell’s book. But where did this percentage figure come from? Examining the US Census Bureau data on mean household incomes, it looks like incomes rose from $45,361 to $60,299 (2006 dollars), an increase of 33%.

Maybe Sowell was referring to median income. But over the same period, median household incomes rose from $36,873 to $43,967 (in 2005 dollars), which makes for a 19% increase.

Am I going wrong somewhere, or is your optimism underdeveloped?

keith bibby
Feb 26 2008 at 11:53pm

Great point Charlie about Warren Buffet, he makes the point that he employes some 40 CEO’s and is probably the most capable person in america to make such decision — you can read his take here- page 19
However, it is not that he feels that CEO’s should not be well paid just that their compensation should be linked directly to results.

Feb 27 2008 at 2:49pm

I think Sowell is outstanding at political economy, in the podcast and throughout his works. All the issues he raises have public policy implications, and his great value is pointing out the practical implications of political decisions.

Sowell is not talking about society ‘affecting’ the distribution of income. He is talking about society determining the distribution of income. That’s very different.

Charlie is obviously correct that, through laws and taxation, society affects us all economically. While I know Sowell has thoughts about the efficacy and appropriateness of our laws and tax code, I believe he is thinking more broadly. Does society determine what a CEO is paid? I thought it was the Board of Directors. For those who think CEO’s are overpaid, how do they propose the system should work? How would you do it, Charlie?

Russ Roberts
Feb 27 2008 at 4:02pm


I probably agree with your unease over Sowell’s use of the term “the left.” (I say probably because I haven’t gone back to the podcast to identify exactly how he used the term.) In general, I think it’s counterproductive to lump people into a group like that. There are a lot of people, for example, who are hostile to markets. Some of them don’t like market outcomes and want to tinker with them. Some of them want socialism. Some of them like markets for a bunch of things but not others. To say “the left is hostile to markets” obscures important differences. Many people I know on “the left” are my friends, I learn things from them and we agree on lots of things. It also turns people off to be categorized.

But the point Sowell was making about “society” is a very important point. You say that society has decided that you can’t buy cocaine. But there is no entity called “society” that made a conscious decision. Yes, cocaine is illegal due to a series of political decisions made by legislators. But many Americans want cocaine to be legal. Some on constitutional grounds, some on personal grounds because they want to buy it, some because they think that making it illegal is a costly decision with few benefits in practice. So in what sense did society decide?

When we use the word “decide” in that context, it’s shorthand for all of the complexity of the political process. One argument is that that shorthand is an efficient way to convey all those ideas. Another is that that shorthand masks and confuses. Using that shorthand makes the listener think that something deliberative and purposive occurred when in fact that may not be the case at all. It could have been a political outcome structured and enfored in a way that no one legislator (or any individual constituent) wanted.

Similarly, “we” don’t pass the minimum wage to achieve some particular distribution of income. The minimum wage has been shown to benefit union workers by raising the cost of lower-skilled substitutes for union labor. Did “we” intend that when the legislation passed? Did “we” or “society” intend the unemployment that the minimum wage might cause?

And as an aside, much of the legislation purporting to affect the distribution of income (progressive taxes, for example) gets offset by uncoordinated market forces that no one plans or intends. For example, an increase in taxes on some groups probably raises their pre-tax income offsetting some or all of the “intention” of the tax.

I used to think this whole distinction was just semantic. But being careful about language has helped me understand the political economy. It has helped clarify my thinking.

Arnold Kling said it well here.

Feb 27 2008 at 4:52pm

I do not think when Sowell says ‘the left’ he thinks of people that want a centrally planned economy. I think he is thinking of people that want to tweak the economy towards outcomes they like. He seems to think that ‘the left’ secretly wants to go to a centrally planned economy, and ascribes their motivations as such and as I have argued that is where he sounds really silly.

For the record, I’m not at all concerned about CEO pay. For one, I don’t own any capital (student and all), so I have no need to worry about it for my personal decisions. Also, when I get capital, I will probably invest it quite broadly in indexes unless I somehow acquire quite a bit of it. At which point, I like, Warren Buffet, will be hurt by the fact that bad corporate governance is honing in on my return.

I could worry about it from a societal prospective, because there have obviously been some bad cases of corporate governance. But I know that relative to the size of business activity the errors are small. Being a CEO is obviously a competitive market, and while it is sometimes gross when they coopt their boards. I know it isn’t a big problem, because if it were a stock would plummet everytime a company signed a bad CEO contract.

Is it odd coming from someone who just attacked Sowell? I basically agree that we should do nothing. No, it’s not odd, because I disagree with the way Sowell looked around and saw an empirical fact -people are upset about CEOs- and then gave analysis, it must be because ‘the left’ want a centrally planned economy and the CEOs are in their way.

Do you see the difference? I look around and know that isn’t why people get riled up about CEO pay. It isn’t just “leftist elite intellectuals” that get upset about CEO pay, and even the incredibly small group that happens to be “leftist elite intellectuals” AND “people that want a centrally planned economy” aren’t principally upset because CEOs the ones stopping them from winning their revolution. They are upset because their corporate overlords are oppressing their commrades. I don’t think they really think, but for CEO pay the revolution would be on its way. (Actually as my roommate just pointed out, the activated working class revolutionaries actually think that high CEO pay is a good thing, because it will make workers realize their natural class interest is with the revolution. Now, that is astute political commentary).

But rather than belabor this further, let me ask you, I gave five observations that I think all offer much more in the way of explanation about why people are upset with CEO pay than Sowell’s theory (3rd paragraph from bottom). Where would you rank Sowell’s among them?

Feb 27 2008 at 5:46pm

For clarity, my previous comments were in response to gator80, but Russ’s post appeared before I had finished.


I love the podcasts. I’ve listened to them all. I wish you had some more left wing economists on though. There is so much that all economists agree on, a basic way to think about problems, that it’d be great to see you poke them along and reveal what sort of underlying assumptions and priorities makes economists differ on policy, when they agree on so much.

I mostly agree with your comments. I used all of the examples I chose, because Sowell was talking about income redistribution, and said something like “that is advocating a fundamentally different system than we have now.” Now I made an implicit assumption that he was talking about ‘the left’ that is actually in the public debate, for instance, as pundits or presidential candidates. And I was trying to point out that the changes ‘they’ have been proposing are not “fundamentally different” than the system now. That is, you can’t say we have a system where society doesn’t decide, but ‘they’ want a system where society does decide. Surely, all of Europe doesn’t even meet the definition of fundamentally different as Sowell means it. Europe does much more income redistribution, but would it be correct to say that society “decides” how much people should get paid.

Certainly, the choice of when to agglomerate and when to disentangle is a matter of art. Just like in our economic models, we make simplifying assumptions in our speech to clearly illustrate our arguments. But if our simplifying assumptions are such that our arguments become bad, then we have a problem. You can’t understand farm subsidies without disentangling society into different groups. And you give other good examples.

But here is an example where I think it is ok to agglomerate, “and something I think about sometimes.” What if you were a sort of deity looking down on society, and you wanted to maximize the happiness (or utility) of the people in it. None are particularly special to you all about the same. The society though is full of individual agents and the only control you have is over the rules of the game. If I were the deity, I’d think people have preferences over growth and income distribution. I will take a brief moment to defend the latter. Many a war has been fought over income distribution, many a movement has started because of it, and many a political donation made due to it. So I think it is something people care about. If that is not convincing, consider some experimental data, if you ask people to choose between societies like this [100 100 100,000] or this [95 95 95] they quite often choose the latter.

Obviously the point of the thought experiment is to realize that there is a choice between growth and income redistribution. And what should that trade off be. How shoud I compare growth in the distant future to poverty now? There of course are many more interesting questions, what policies are the best ways to meet our goals. How big are the costs?

I always found it striking that Milton Friedman never argued that income distribution didn’t matter. Rather, he always argued that the poorest people did best in free societies. I think he genuinely believed and recognized that there were these public interests that most people shared. He just had different ideas about how to achieve them.

Russ Roberts
Feb 27 2008 at 11:06pm


Lots of good points.

The only point I would quibble with in a serious way is the point about the tradeoff between growth and equality. It implies that policy makers can choose the distribution of income. I don’t think anyone can. The levers aren’t well understood. Yes, political decisions affect it. A lousy school system hampers people from climbing upward. A particular tax policy affects outcomes. But much of it is under no one’s control, and as I said earlier, attempts to control it are often offset by market forces. It’s certainly impossible to choose a mix of outcomes as the social planner (or Deity) perspective suggests.

BTW, I try very hard to get people on the show who disagree with me. Most economists who are sympathetic to my general outlook almost always say yes to my request to be on the show, but those who see the world differently will turn me down fairly often. I believe that if the show continues to grow in popularity, it will be easier to get a more diverse guest list. So keep spreading the word out there, please. Meanwhile, I’ll keep inviting them. (Student, who commented above–a podcast with Stephen Marglin should be out in two Mondays. I think you’ll enjoy it).

Feb 28 2008 at 12:24am

It seems to me that when Sowell mentions “the left”, he is referring to “intellectuals on the left”, not necessarily the common person (or economist) that votes Democrats. Being himself a public intellectual, taking sides in an ongoing debate with people who still idealize examples of “poor-nography” such as Cuba, he forgets to switch off that mode when talking to a larger, less politicized, audience. It goes without saying that many of the economic fallacies he points out afflict common people on both sides of the spectrum.

Sowell’s position on immigration is indeed puzzling, since “getting the right kind of immigrants” is not an objective that “society” has any way of engineering. The problem with Europe is not so much the nature of the immigrants, but rather the stifling and anti-growth policies that have forced many Europeans to emigrate or (if they stayed) lead unsatisfactory lives. The immigrants come in after the fact to fill the void and governments are unable or unwilling to show the same ruthlessness towards the new arrivals (no taxes, no regulations, not even the same laws apply to them). This generates jealousy and melancholy for the missed opportunities over the past fifty years. All this is my own very personal opinion, i.e., I have no data.

Feb 28 2008 at 8:01am


Sorry to hear that it is hard to get left leaning guests. There are many people with positions on the left I disagree with that our intelligent, prestigious, and extremely good at economics and I would much like to see someone really draw out their positions. Harvard Labor economist, Richard Freeman, said in an interview that he supported an increase in the minimum wage. I would very much like to know more about his position.

But I will quibble a bit with your quibble. I don’t think implying there is a trade off between redistributing income and growth implies that we can perfectly ‘decide’ what the income distribution will look like. For instance, I think it is quite possible two economists could look at the policies of much of Europe compared to the U.S., completely agree with the effects of those policies, and choose different outcomes in my thought experiment.

I also think it is quite obvious that the electorate to a large part does ‘intend’ to do things. I don’t, for instance, think the public choice school is best at explaining welfare. I don’t think that there is an intense economic interest being frantically lobbied for by poor people. I think, rather, there was an intention of much of the electorate to alleviate poverty.

As economists, I think it is our duty to take that intention and propose the best alternative for dealing with it. For instance, I think we made great strides when the welfare system was much replaced by negative income taxes. I think a big proponent of these was Milton Friedman (though by the time they got through the sausage factory, I don’t think he lent his support). I know Milton Friedman thought redistributing income was a bad idea, but he didn’t say ‘people that want to redistribute income only want it because they wish they were central planners.’ He said, we could do this better. Would it really have been useful for him to think, well the welfare system is an interaction of millions of independent decision makers acting rationally as economic agents and voters, and if they haven’t realized there is a better way to meet this objective, it probably isn’t politically feasible.

Isn’t it ironic that two of the biggest influences he had on government policy were giving money away to poor people and collecting taxes for the government (he was a principle actor behind withholding).

Philip Segal
Feb 28 2008 at 11:42am

Professor Sowell’s thoughts on immigration are surprising. When he says that “We don’t choose–they choose”, I wonder who the “we” is? Over the course of American History there were long periods when immigration was unregulated and vast numbers of immigrants came for a better life, opportunity, etc. Many succeeded, some failed. That’s the way liberty works. At some times the country, through government, passed different laws to restrict immigration, often by limiting where people came from, how many people could enter, and even who could qualify for citizenship. Asian immigrants were severely restricted in the early 20th Century, prevented from even applying for citizenship, etc. This was our loss as much as their’s.

My guess is that we are richer for the open immigration policies we have followed in the past and poorer for the restricted immigration policies we have followed. Think of all the immigrants or their first and second generation decendants who came here in the late 1800s and early 1900s from eastern Europe and who won Nobel Prizes in science and medicine. How many of the top scientists in engineering, pharmaceuticals, and computers are first or second generation decendants of immigrants?

When Professor Sowell says “we don’t choose” is he saying “he” doesn’t choose. Is government “choice” in this area somehow better than government choice/mandate in other areas of the economy? What standards would Sowell suggest for the decision making? Financial capital (let the rich in), intellectual capital (let the most educated in), physical labor ability (let the fruti and vegetable pickers in)? Who can decide which of these will make the best contribution, and does that matter if they are self sufficient regardless of their contribution? Who can know which will be parents to the next big contributors?

For example, regardless of your political viewpoint, we should recognize that one of the major Presidential contenders is the son of an African immigrant (albeit temporary). Another former Presidential candidate is the son of a Mexican native.

In many ways the “immigration” issue seems much like the “trade” issue or the “globalization” issue. Opponents of immigration are afraid they’ll have to compete with new immigrants much as they are afraid they’ll have to compete with labor in other countries. They can try to gloss this over by saying that it’s “illegal” immigration they oppose, buy what’s legal or illegal is determined by our representatives. Illegal in 1925 might be legal today. Legal in 1905 might be illegal today. The rules are not carved in stone.

We are already beginning to see shortages of qualified labor in certain industries under current rules. For example, there are not enough temporary visas for seasonal immigrants for travelling circuses. (Admittedly not the most important industry for most of us, but I’d like to think that young kids can still go to the circus at least once in their lives). High tech companies would gladly bring in more engineers, programmers, etc, if the number of available visas were increased. Farmers in much of the country rely on immigrants at harvest time. Rising demand in health care over the next couple of decades is unlikely to be met without more immigration of physicians, nurses, and other workers in hospitals, nursing homes, assisted living facilities, etc.We still can’t seem to find enough native born workers in many of these areas.

My experience has been that many immigrants also have an entrpreneurial spirit. They create businesses that support themselves and their families, provide goods and services to their neighbors, and create more jobs. All of which adds to the wealth of the nation.

I’d like to hear interviews with others on this issue, both pro and con.

Feb 28 2008 at 12:54pm

please explain what hayek meant by the use of knowledge in society. Thanks

Feb 28 2008 at 10:28pm

“I know Milton Friedman thought redistributing income was a bad idea, but he didn’t say ‘people that want to redistribute income only want it because they wish they were central planners.’ He said, we could do this better. Would it really have been useful for him to think, well the welfare system is an interaction of millions of independent decision makers acting rationally as economic agents and voters, and if they haven’t realized there is a better way to meet this objective, it probably isn’t politically feasible.” – Charlie

This is a good point (even though it’s exactly because Milton Friedman was considering the interactions of millions of independent decision makers that he came to his policy suggestions).

The question, however, stands. What if government became more and more aware of its bad habits (and started attending Statist Anonymous meetings), what if politicians became agnostic about the actual policy results and waited to take credit until the results were out. Would we still call this paternalism? Would it still be statism? I don’t know how to answer this question. My feeling is that it’s ill-posed. A little bit like starting a problem with the sentence “Assume that 1 is less than 0,…..”

Feb 29 2008 at 2:34am

Thank you for providing these great podcasts.

Others have commented on the Dr Sowell’s comments on CEO pay with respect to the pay of athletes and entertainers.

However I thought Dr. Sowell’s reasoning became even more tenuous when he linked the higher pay of a CEO from private equity company to that from a public company. You pressed him a bit with the point on compensation committees but it would have been nice see what his response would have been if you continued.

I have no evidence to back up this assertion but I sincerely doubt that the private equity CEO would walk away with a large payday if he or she were forced out, at least not until the special dividend was paid.

Feb 29 2008 at 9:09am

I think there are a number of problems with what Sowell says.

Sowell says society does not have a say on what CEOs are paid because there is no such thing as a society. There is no person named “society.” The CEO is just paid by the person who hires him. Then when Sowell talks about immigration he talks about what is “best for us.” When he says “us” he means “society.” Society doesn’t hire the CEO. Likewise, under a pure Libertarian immigration system society does not hire immigrants. Rather, employers employ them. It is inconsistent for Sowell to criticize the immigrant who works yet praise the CEO.

One moment Sowell says he is against central planning, saying that knowledge is dispersed and that the elites don’t know what is best for all. Then when he talks about immigration he talks about how “we” should select “good” citizens? In other words, he wants immigration to be centrally planned. Instead of letting employers and immigrants get together voluntarily for free exchange, he wants the Federal Government to centrally decide who comes in based on a imaginary notion of a “society” or a fantasy idea of “citizenship.”

Sowell does a good job arguing against central planning and socialism, yet when the issue is immigration, he turns socialist himself.

Feb 29 2008 at 9:20am

Sowell seems to be very comfortable with US companies going to poor countries to take advantage of lower wages and child labor. I do agree that Nike going to poor countries helps the poor workers. The worker is better off working for Nike for low pay rather than starving on the street, which is a likely alternative.

I would like to know what would Sowell think about sex tourism, that is, rich men and women going to poor countries to buy sexual services from children?

Mar 1 2008 at 1:42pm

I have been in touch with you by email before, voicing my appreciation of the show, but also sharing Charlie’s wish for opposing views – such dialogue is when it really gets interesting. So I’m glad so read here that the efforts continue and will keep listening to the podcasts.

On a note related perhaps more to the discussion with Sowell, I offer here a link to an article written 10 years ago by the philosopher Robert Nozick about why intellectuals, especiallly of the wordsmith kind, may tend toward “the Left”:


Chris Corliss
Mar 3 2008 at 7:14pm


Loved the podcast.

I know it’s been said a couple times above, but there seems to be a contradiction between Prof. Sowell’s thoughts on economic freedom and geographic freedom. I was especially shocked by this line:

“Illegality means that we don’t choose who’s gonna come here. People themselves decide whether they want to come here, and we have nothing to say about it.”

Who’s we? Not the intellectuals, I hope!

I think that Prof. Sowell needs to very clearly explain why individuals make such poor choices about where to live and work, even while making excellent choices in other aspects of their life.

Mar 3 2008 at 9:43pm

Interesting that you both yuk yuk about how poor Canada would be sans US investment, but then celebrate Cuba’s obviously self-caused failure. No chance American trade policy has had any effect on the Cuban economy?

Your argument is that American investment is essential to prosperity in North America, and more broadly that rich-country investment is essential to the success of poorer countries.

It’s fine to be anti-communist/anti-Cuba. But it’s also pretty obvious that American policy has affected Cuban development; attriuting the failure of Cuban communism to Cuba alone and the prosperity of Canada to American economic involvement is inconsistent.

Mar 3 2008 at 9:44pm

Interesting that you both yuk yuk about how poor Canada would be sans US investment, but then celebrate Cuba’s obviously self-caused failure. No chance American trade policy has had any effect on the Cuban economy?

Your argument is that American investment is essential to prosperity in North America, and more broadly that rich-country investment is essential to the success of poorer countries.

It’s fine to be anti-communist/anti-Cuba. But it’s also pretty obvious that American policy has affected Cuban development; attriuting the failure of Cuban communism to Cuba alone and the prosperity of Canada to American economic involvement is inconsistent.

Mar 3 2008 at 11:12pm

Excellent episode, very enjoyable.

While the phrase “the left” was probably not the most precise phrase, in context, I don’t think it was a major inaccuracy. For example, while I am often lumped in “the right,” I’m not supportive of mass deportation of illegals. However, even being considered on “the right’ and disagreeing with that policy, I wouldn’t object to a “liberal” commentator saying that “the right” advocates deporting illegals, insomuch as it is generally true. A bit of a hasty generalization, but not a gross generalization. Likewise, the leaders of this esoteric “left” generally perceived to be leading Democrats and politicians, are strongly supportive of redistribution policies and sharply critical of CEO overpay.

Now, an area of disagreement with Dr. Sowell that have been pointed out here is immigration. While we do have, technically, the “right” to decide who comes here, if Dr. Sowell is so vehemently opposed to economic central planning, why does he support central planning of who should immigrate? To say we need x number of workers with y skill is very “elitist” mindset.

There was a good article in the Georgetown Immmigration Law Journal’s Winter 2007 edition discussing the economic demand for low-skilled labor. It happened to go directly against a good amount of the anti-low-skill workers ideas.

Granted, there are concerns with the welfare state, but this wasn’t referenced by Dr. Sowell.

Norak- I would say there is a fundamental difference between sex tourism and labor. It would be the equivalent of asserting that if someone believes a sixteen year old has the ability to work at Wal-Mart they should also be allowed to join the military, on the basis that they are both restrictions based on age.

Mr. Econotarian
Mar 4 2008 at 1:28am

I think Sowell is great when he talks about the dangers and stupidity of central planning of economies.

Somehow, he doesn’t understand that central planning of immigration by government is no better.

Mar 4 2008 at 10:27am

“CEOs appear to be the ones who stand in the way of people who think that they ought to be the ones who decide what society is doing, but movie stars and athletes don’t stand in that pathway. Zero-sum fallacy: anybody getting ahead must be at someone’s expense. CEO pay is fallaciously viewed at coming at someone’s expense. But no one says that about an aircraft pilot’s salary. No threat to vision that there are intellectual elites.”

The guest glided over the fact that movie stars don’t have the power deprive people of their livelihoods and plunge families into anxiety. Nor do they get bonuses for it.

Mar 5 2008 at 12:21am

The guest glided [sec] over the fact that movie stars don’t have the power [to] deprive people of their livelihoods and plunge families into anxiety. Nor do they get bonuses for it.

Neither do CEO’s.

Mar 6 2008 at 9:43am

Oliver, did you have an argument that you were trying to make?

Mar 6 2008 at 5:27pm

I hate to sound like a broken record, but…

I really enjoyed the podcast. Yet Dr. Sowell’s perspective on immigration bothered me so much that I feel obliged to make this discomfort known–even at the risk of repeating things that have been said above (which I have only enough time to skim).

And I do want to clarify that my venting is not simply a result of disagreement. I love conflict, and controversy. But I fail to see how “immigrants” who come to the US in pursuit of their own “self-interest” are a detriment to the nation as a whole. I will admit that I am not familiar with Dr. Sowell’s work, but this point seems to stand in particular contrast to the remaining content of the podcast.

As for their “obligations” to also be good citizens…I’m not sure what this means. Suddenly there are objectives for a society and its components, who must behave in accord with such objectives… But I will not dwell on this point, since others seem to have taken it up. I would simply like to say that I do believe Dr. Sowell is just plain wrong on this one. (Nonetheless, it sounds like he is batting at an incredible average!)

However, I was pleased to hear Dr. Roberts’ skepticism. I love that there can be open disagreement among guest and host. This makes the podcast all the more valuable.

Paul Lemle
Mar 13 2008 at 3:51pm

I’m surprised a little bit by the backhanded and misinformed comment from Professor Roberts regarding public schools which “teach our children so well” during the brief mention of child labor laws. (I am assuming the comment was sarcastic in nature, and if I’m wrong, I’m happy to withdraw!)

In a discussion about facts and fallacies, where it’s important to note there is no monolithic “we” or “society,” I’d just like to add this caveat: there isn’t one homogeneous thing called “public schools.” If you live in Fairfax, Loudoun, or Howard in Maryland, one of the reasons you moved there is the school system. And if you used to live in Baltimore or DC, but now don’t, it’s suspect to argue that road building alone took you out to the suburbs.

In any event, studies very frequently show public schools outperforming their private counterparts, especially if apples and apples are compared. Use household income, family composition, race, whatever you want; I’ve added a link to just one of many examples.

Many public school systems are staffed by well-educated professionals who make more money, have attained a higher educational level, and are more likely to be certified than their private school peers.

The truth is–I’m a veteran of Louisiana, Seattle, and Columbia, MD’s public schools–there are some very, very difficult people to teach. Whether the family is broken by drugs, crime, poverty, illiteracy, or just bad luck, it doesn’t matter. Public school teachers face every situation our society offers, and most do a darn fine job every day.

I love the podcasts, learn a great deal from them, and you’d be welcome to visit Wilde Lake High any time if you want to see a school with a challenging population make a real difference.

Mar 13 2008 at 10:20pm

One small point: Nike actually does not have any of their own factories that I am aware of. All their production is done by Taiwanese/Korean/other foreign companies that do the actual shoe making. Its a small point but I think important as people might assume Nike actually directly controls the environment its shoes are made in.

Secondly, on immigration, I am pretty much pro-immigration, but I do understand two worries:

a. cultural worries. Imagine if we could at one stroke move 50% of China into the USA. Do you think we’d remain the same country?
b. political worries. Same scenario. How would our political culture change? Would our voters decide more state control to be a good idea or that freedom of religion was not a good idea, etc?

Due to the geographic closeness of Mexico, the absurd ideas above are happening to some small extent. Is it a problem? I doubt it, but I would suggest one way to counter-balance the cultural worries would be to increase immigration from other geographical areas.

Mar 13 2008 at 11:38pm

Alex Rodriguez can do things that I can’t do … if you guys spent a day in the corporate world you would know that the corporate CEO’s have no talent … jesus … there’s a reason why you guys are in academia … stealing our tax money via “student loans” and … give me a break!

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Podcast Episode Highlights
0:36Intro. Economic Facts and Fallacies: Income distribution. True or false: U.S. standard of living is about the same now as 30 years ago. False. Consumption has risen substantially over that period. Reasons why people claim it has not gone up: use statistics on household income. But households have been declining in size over time, and also differ across income brackets. Individual income always means one person's income. Over about 30 years, average household income rose only by 6%, but over that same period, per capita income rose by 51%. More meaningful figure. Failure to compare apples to apples in many statistical analyses. Today, not only fewer children per household but also more divorces. Top 20% of the household distribution has twice as many people as the bottom 20%, seems impossible. 39 million people in bottom 20% of households vs. 64 million in the top 20% of households, so household size is very different. Quintiles don't contain the same number of people. Role of prices, deflating nominal income variables. If you inaccurately measure inflation you will not get reasonable results. List of commodities that are tracked in price over time misses the effect of new commodities. But new commodities start off expensive and over time see a price reduction. If you include those commodities only after their prices come down, you don't measure the price decline. Video Cassette Recorders (VCRs) are classic example.
5:26Critics: Well, sure, incomes are higher but they struggle to get by; the problem is that our incomes just aren't high enough to meet our needs. I need a digital Hasselblad and my income is insufficient. Should taxpayer be forced by buy me a digital Hasselblad? Where are the ends supposed to meet? Historically even children had to work to pay for things. Nothing more than a personal choice. Universities say they have to raise tuition because costs have risen, but what it really means is that they have chosen to spend more money on things like dorms, etc. Another argument: True we have more stuff, but we just have more debt. But eventually you have to pay for it. We always want more than we have. Our desires are always greater than what we can afford by human nature. At our current level of productivity we could work 2/3 less than we used to, but people don't choose to do that.
8:28"Distribution of income" as a phrase is misleading. Most income isn't distributed. The phrase allows people to act as if society is in the act of distributing income and if you don't like it, you should just have society distribute it differently. First, there is nobody named "society." The person for whom you perform a service or supply a product is best able to decide how much it's worth. Fallacy: The "system" is designed or tinkered with by policy-makers, so we just have to re-tinker with it. Acting as if there is a set of central decisions, but we don't have that. Would be a change to a radically different system. If you want that kind of system, should talk about that kind of system vs. the decentralized kind we have got, rather than talking as if we have a centralized system that should be tweaked.
11:38High levels of CEO pay gets a lot of political attention. "I've never paid a CEO, so I have no way of knowing." Inconsistent argument. Average CEO of a Standard and Poor 500 level company is a little over 8 million dollars a year, 1/3 of what Alex Rodriguez gets for playing for the Yankees, about 1/80th of what Oprah Winfrey, Why no uproar about Rodriguez or Winfrey? The people who know what a CEO is worth is the people who own the company. Is it their money, say if it's a Board of Directors? Hertz or Avis. No point to being penny-wise and pound foolish. Why do we idolize the Oprah Winfreys and great athletes, movie stars--their high pay even adds to the excitement--but CEOs are accused of being greedy. CEOs appear to be the ones who stand in the way of people who think that they ought to be the ones who decide what society is doing, but movie stars and athletes don't stand in that pathway. Zero-sum fallacy: anybody getting ahead must be at someone's expense. CEO pay is fallaciously viewed at coming at someone's expense. But no one says that about an aircraft pilot's salary. No threat to vision that there are intellectual elites.
16:48Inequality, race, sex inequality. What reason was there to expect these groups to be the same in the first place? Age differences: income varies enormously by age, people who are 40 years old often have 20 years of experience. Look at cultures: cultures are all very different, even across racial lines. White southerners and white northerners had historical differences in literacy, violence, rates of illegitimacy--all the things that are now cited as differences between white northerners and black southerners. But blacks were part of the culture of the south. No reason why all cultures should be the same. Education--measured very crudely, years of education. Male and female earnings, differences of experience, women of a given age tend to have fewer years of experience than men of the same age because of childbirth. Newton wasn't the first man who saw an apple fall. He was just the first to understand the implications of it. Gaps between male and female salaries are very small across comparable variables--education not just in years but in what levels, years of consecutive employment, choice of fields. Matters if you are in an occupation where you can stay out a few years and then resume versus one where the field is changing rapidly because of technology or laws so that you first have to catch up when you come back to work. Rational for women to pick a different mix of occupations than men pick. Russ's wife, math teacher--fads in how math is taught but not in the basic ideas. Looks like occupational segregation, but it is just choice. Hours matter as well. Law examples, may not be able to take time off in certain fields if there is an urgent matter, may have to stay on the job to keep a client from getting executed. Five years between books for Sowell.
25:18Discrimination, one of a number of factors which can explain differences, but analysis has to be for that particular case. Can't just assume it's discrimination behind a difference. Black/white/hispanic comparisons often leave out Asians even when there are data, but including Asians makes discrimination argument collapse like a pack of cards. Blacks more often have to resort to sub-prime loans than whites; blacks are more often to be laid off during a downturn than whites. Sounds persuasive till you look at Asians. Whites get turned down for conventional loans and have to resort to sub-prime loans more often than Asian-Americans. Whites get laid off during a downturn more often than Asian-Americans. If you take racial disparity to be explained only by discrimination you get result that whites are discriminated against. Anti-discrimination laws. Most people are unaware that women in the first decades of the 20th century were doing much better than men in salary in the middle of the 20th century. Age of marriage came down, women had more children in the middle of the 20th century. Many studies start in the 1960s, though. 1950s, 1970s. Very little correlation with affirmative action. Age of marriage usually ties in with the age at which women start having children. Civil Rights Act, anti-discrimination law. Number of black elected officials skyrocketed afterwards, but not other things. Percentage of blacks in poverty declined from 87% in 1940 to 47% in 1960, and that was before the Civil Rights laws of any consequence. Long term trend of blacks in poverty was down. 1970 not accelerated. All groups had falling poverty rates if you hold family structure constant throughout 1970s, '80s, '90s; but proportion of women with single kids exploded over that period. Poverty rate for black married couples has been in single digits. People don't change their race when they get married. But huge in ghetto. Why is idea of equality so appealing to human beings? Measured outcomes are judged by equality. Artificial: intellectuals have been preoccupied by this and influence others through education and the media, but general public may not be nearly as concerned. R. H. Tawney in the 1930s. Why are intellectuals so preoccupied by this? Ties in with their notion that they should be the ones making the decisions about society and things they don't understand shouldn't be allowed to remain. Hayek's explanation of why intellectuals are more like likely to be socialists than capitalists: It seems like the people with the high IQ seems to be the communists, socialists, social democrats; Hayek said well of course, they'd be the ones in power.
35:37Global issues, European colonialism is often blamed for leaving people poor as a cause of world poverty. Triumph of ideology over facts. Factual assessment makes this argument collapse like a house of cards. Poorest places are the ones the West has paid almost no attention to. Lenin, Imperialism: the argument was that the West industrialized countries maintained by exploiting the poorer countries. Meretricious diagram, entire Western hemisphere, height of British empire. U.S. is still the country in which most countries invest their money, but by grouping together the entire Western hemisphere, it looks like the investments are in smaller South American countries. More than just an intellectual problem, poor places like Hong Kong, Singapore, South Korea did it by opening up investment to the West. Sub-Saharan Africa, Canada. United Fruit Company portrayed as just thieves. Can't say that any more, so today, the argument is made of Nike shoes, that they are exploitative, low wages, poor working conditions. People in these countries in fact often pay a month's salary to someone to get one of these jobs because they are so attractive compared to the alternatives. What are the alternatives? Child labor laws--we have kids selling dope in the street who would be able to have jobs in the free market because for the child labor laws. Essence of economics is asking "And then what?" What alternatives are people forced into. Partly stems from lack of understanding market forces, part is just more pleasant not to think of the consequences. John Dewey, philosopher, talks about how under capitalism there is this "artificial scarcity," but never asks where in the real world do you find institutions that have greater abundance than in capitalist countries? Socialism was what he had in mind. Cuba, not much of a paradise. Never judge these things by their factual outcome. Growing pains of a new society. Pinochet, Chile was not characterized that way. Anne Applebaum, Gulag: A History: It's not polite to walk around wearing Nazi regalia, but you are allowed to wear communist memorabilia, Che Guevara t-shirts--a murderer. Motive washes away a lot of sins for people. Intellectuals' virtuosity in using words is a fatal talent, can always find some clever way to wish the reality away.
45:56Over-population, overcrowding, cities, poverty worldwide. Not supported by the facts. People don't even look at the facts. Malthusian population theory wasn't even true in his time and Malthus was forced into all kinds of redefinitions in order to maintain the semblance of its being correct. Name me a country whose prosperity was greater when their population was half of what it is today. No countries. Role of natural resources, colonialism story, the West stripped them of their wealth. Venezuela, Uruguay, natural resources per capita is higher than Japan or Switzerland. Saudi Arabia, per capita income is roughly half of that in Singapore, which is so lacking in natural resources that they have to import their drinking water. Saudi Arabia is small country, unequal income distribution, but low per capita income. Israel. Number 1 oil producer in world is Saudi Arabia, number 2 is U.S. (could be 3). Former U.S.S.R. produced more than Saudi Arabia. Having natural resources isn't just neutral but bad for you. Nigeria. Big prize may attract bad government competing over the prize. A natural resource depends on what people know how to use: uranium, water falls were a hazard before they became a natural resource. Boudreaux: crude oil is just a sticky substance till you know how to use it, reduced land value historically.
51:17Quotes from book. "What is called planning in political rhetoric is the government's suppression of other people's plans...." Urban planning. "Perhaps the most fallacious assumption of all is that third parties with neither experience nor expertise can make better decisions...." Knowledge and Decisions: One fallacy of intellectuals is that they have more knowledge than other people. True of one specialized kind of knowledge, but that is not the only kind of consequential knowledge. Location, A&P, Wal-mart, but that's not the kind of knowledge intellectuals specialize in. Friedrich Hayek, Milton Friedman's graduate course in price theory, "The Use of Knowledge of Society." Forced to think back on it later, thinking about the Soviet economy. Trying to run an economy by people who did not have as much knowledge as the people whose knowledge they were superseding. Vernon Smith podcast. McCloskey assignment. Deceptively simple and deep idea. Important to teach things that students find relevant. Who has influenced your thinking? George Stigler. Went to Columbia to study under him but he'd gone to Chicago, so went there the next year. Third party planners, A Conflict of Visions, danger of making things worse when trying to make things better. If you think of knowledge as scattered among hundreds of millions of people, you see you can err if you transfer decision-making to a few in centralized position. No such thing as a free lunch, politicians, health care. Economic explanations are unsatisfying: FDR blamed Great Depression on "economic royalists"--more emotionally satisfying than tariffs, economic explanations because it promises a rescue from evil people. That's the kind of stuff that sells politically.
59:58Immigration. Sowell fans sometimes disagree on issue of immigration. Is it the illegality or the impact of the immigrants that disturbs you? Both. No such thing as an immigrant "in general." Some who came after the second world war who undoubtedly saved the lives of thousands of Americans. Immigrants are not homogeneous. We don't choose--they choose. Gate crashers versus invited guests. Immigrants who work are invited guests by those who employ them. A country not only has to have workers--it has to have citizens. Immigrants may be hostile to the culture of the country, Europe guest workers. But U.S. has absorbed people for over 150 years, cultural mix. Is part of your concern the worry that the Constitution has been sufficiently watered down that large influxes of people with different attitudes could be disruptive? Views of intellectuals: no thought that you have to protect the culture that exists here, all cultures are equal. Versus view of melding, mix, and stew. Grove, Brenner. Too many forces pushing it off in the wrong direction. When someone commits a crime in American law that is not a crime where they come from should we accommodate that? Is international law somehow better?