Tuesday, June 19, 2018

Teaching Economics in an Idiocracy


 What follows is my June 19, 2018 Op-Ed in The Orlando Sentinel
A few years ago one of my colleagues sent me the trailer to a movie called Idiocracy.  This film was set in the United States in the year 2505.  The premise of this film was that after 500 years of rapid population growth among Americans with lower levels of intelligence and low birth rates among smarter people, eventually the country was filled with idiots. This included the President (a profane former professional wrestler), his cabinet, all levels of government and the entire citizenry.

My problem with this movie is the assumption that it would take 500 years to create a nation of non-thinkers.   As I see it, in many ways, we have already arrived.

I have been an economist for just over 30 years.    When I reflect back over what life was like over that time period I clearly recall how simple my job used to be.  Granted, economics is not easy.  It is indeed one of the most challenging subjects you can study.  What was easy was the degree to which Americans could process economic theory and supporting evidence in a myriad of categories.

Take the concept of international trade for example.  Economists dating back to Adam Smith have clearly illustrated how the principle of comparative advantage leads to mutual gains from trade.   There is a reason, I tell people that we have grocery stores rather than gardens.   We all use the money we make from where we are skilled and then give that money away to farmers who possess an advantage over us in the growing of everything we want to eat.  We win when we get good food at prices we can afford and we win because we do not have to allocate long hours to learning how to coax a tomato out of the ground.

When Florida sends oranges to Minnesota we do not hear about Minnesotans massing at their border in protest over the “dumping” of oranges in their state any more than Floridians complain when corn from Minnesota arrives in our stores.  Both states win from this event.

The same is true when we buy steel from Canada.   Oops. 

We seemed to understand that trade from nation to nation makes sense – years ago.  Today, when I try to show Americans how foolish President Trump’s steel tariffs are, I get much more resistance from Trump supporters who contend that somehow he is going to magically bring back the moribund and horribly inefficient American steel industry.  Canada, I hear, is keeping America from bring back jobs in this key industry.     No matter how much I (and other economists) point out the last time we tried this more than 200,000 jobs were lost in the steel-using industries (see George W. Bush’s steel tariffs), Trump voters believe that their guy has special powers over the laws of economics.

It does not get much better when immigration comes up.  Forgetting for a moment that economists have repeatedly shown that immigrants create more jobs than they displace; engage in less crime than native-born Americans; use social welfare benefits less than Americans and play a valuable role in keeping prices down in everything from agriculture to home construction; Trump supporters in my classes and in the community want no part of it.  They don’t even want to hear about speeches by Republican legend, Ronald Reagan, calling for amnesty and promoting open doors for immigrant seeking greater liberty and opportunities.

Talking to Democrats is also an exercise in futility.

For the new wave of Bernie Sanders/Elizabeth Warren supporters it is like talking to a wall when you show them the economic policies of John F. Kennedy and Bill Clinton.

It is staggering the blank stares of incredulity that I get as I lecture on Kennedy’s massive personal and corporate income tax cuts and how the economy of the 1960’s achieved record low unemployment rates, rising incomes and a doubling of government tax revenue in the wake of his pro-growth tax cuts.

Instead, the fans of Bernie want the top 1% to be hammered with higher taxes in the name of “fairness”.  Asking them to define fairness yields more blank stares.

When people I talk to learn of Bill Clinton’s passage of NAFTA and his global drive to open foreign markets to American investment capital, they adopt the anti-trade sentiment of Bernie and Donald Trump even when they see the data on net increases in wages and jobs in the wake of his sound trade policies.

I could mention the trouble I run into explaining the stupidity of the $15 minimum wage and Bernie’s idea of providing jobs and health care to every American who wants one, but this paper limits my word count. 

If America is to avoid becoming a land of idiots, it is incumbent upon all of us who understand truth to engage our fellow citizens.  Otherwise, the profanity-using, professional wrestler President is right around the cor…….

Never mind.

 

Tuesday, June 5, 2018

Our right to gamble on sports does not come from government

What follows is my May 24, 2018 opinion piece in The Orlando Sentinel
 
On Sept. 26, 1981, I was lying on the living room floor of my parent’s home watching the University of Southern California play Oklahoma in a much-anticipated college football game. In the week leading up to the game I made several bets with friends and school mates that USC would beat OU. As a 15-year old kid living in Oklahoma, I found it easy to find people who were willing to place a bet.
 
USC won and I spent the next few days collecting my cash.
John Locke would have been quite proud of me.
Almost 200 years earlier, in his second treatise on government, John Locke — one of the philosophical architects of American politics — wrote, “A liberty to follow my own will in all things where that rule prescribes not, not to be subject to the inconstant, uncertain, unknown, arbitrary will of another man, as freedom of nature is to be under no other restraint but the law of Nature.”
 
There should have never been the need for Las Vegas casinos, offshore booking or black-market gambling sites if our government had stayed out of our business to begin with.
Sports gambling in America — even with its limited options — is a nearly $5 billion industry even with the near unanimity among state legislatures in banning this market.
 
Of course, as politicians always discover, no law that man or woman writes ever triumphs over the laws of supply and demand. From the era of Prohibition to the current war on drugs, time and time again we see that as long as profits can be earned and consumers are available, someone will find a way to enter the market and supply us with what we want.
 
Now that the Supreme Court has opened the door to legal gambling, we should all celebrate what is going to unfold.
 
First, in a recent interview, NBA owner Mark Cuban commented that legalized sports gambling will double the value of professional sports franchises.
 
Cuban is a smart guy who sees the potential for a vast new market to open up.
 
Imagine the changes that could take place in the arenas and stadiums across the country. You can expect to see gambling kiosks throughout stadium concourses. It will also make sense to retrofit stadium seats to provide touch pad technology that allows people to gamble from their seats on everything from the score at halftime to whether a player will make his next free throw. Of course it also makes sense for teams to make cellphone apps available to gamble remotely on everything people want to gamble on.
 
Politicians should be celebrating as well. First, among people who are passionate about gambling on sports, the overall demand for sports-book services is somewhat to very inelastic. This gives state governments the opportunity to impose taxes on a per-wager basis or on the winnings of gamblers and sports-booking agents. The newfound tax revenue would allow state governments to shore up their budgets and spend on initiatives they deem necessary.
 
The state of Florida already does this with our version of legalized gambling known as the lottery. If gambling tax revenue would be added to lottery money, we might hear a lot less about critical shortages of revenue for everything from heightened school security to our over-burdened infrastructure.
 
Critics, of course will charge that legalized sports gambling will promote addiction, financially decimate families and ruin people’s lives.
 
What the economic moralizers always miss is the fact that there is already a thriving black market from which addiction can form. Las Vegas — and the chance to financially ruin your life — is a flight away. Moreover — and perhaps most important — it is also a fact that we have, as free citizens, the natural right to be stupid with our money.
 
If the government has the right to decide whether we should gamble on NFL games, why doesn’t it — in the name of protecting society and families — have the right to ban foods high in sugar and fat, or ban suggestive music or magazines that degrade women?
 
In 1849, French economist Frederic Bastiat summed up this whole gambling argument this way:
 
“If the natural tendencies of mankind are so bad that it is not safe to permit people to be free, how is it that the tendencies of these organizers are always good? Do not the legislators and their appointed agents also belong to the human race? Or do they believe that they themselves are made of a finer clay than the rest of mankind?”
 
Let the gambling begin.
 
 
              

Thursday, February 22, 2018

Please stop handing Olympians our flag

 
 
 
 
What follows is my Feb. 22nd Op-Ed in the Orlando Sentinel
 
On Feb. 22, 1980, I was a 13-year old sitting in front of a black-and-white television watching the United States hockey team play the seemingly invincible juggernaut from the Soviet Union. So few people thought the U.S. had a chance that night that the game was actually tape-delayed and broadcast after it was already over.
 
Of course, everyone knows what happened next. The U.S. team, filled with nothing but college kids, shocked the planet and ended the USSR’s domination in this sport. During the game, for the first time anyone could recall, American fans broke out into an ear-splitting chant of “U…S…A.”
Several years ago, I interviewed Jack O’Callahan — a prominent member of this team — for a book I was writing. He told me that the players were stunned by this arena-shaking chant and used it to raise their game to a championship level.
 
Two days later, the same young men topped Finland to win the last gold medal our country has ever seen in men’s hockey.

After the game against Finland, U.S. goalie Jim Craig stood on the ice looking for his widowed father in the stands. While he was searching, a young woman came up and put an American flag over his shoulders. This spontaneous act was not designed to help Craig make millions in endorsements or portray himself as a special patriot. It just happened.
 
Thirty-eight years later, American competitors — and their fans — have hijacked this moment of purity and turned it into a farce.
 
Every American who finishes in 17th place in any event is met with the USA chant, as if coming in near last place merits the mimicking of the 1980 moment.
 
All Americans who win medals are immediately given flags to hoist so that the cereal and cellphone companies will have their free photographs ready to go when those athletes cash in on their “let’s turn gold into cash” moment.
 
Granted, I have nothing against using victory to chase the fruits of capitalism. If I won a gold medal in any event, I would cash the checks that would follow.
 
Yet, there is something more to this.
 
Notice what happened when American superstar Shaun White won his medal in snowboarding. He was handed the flag for his “Jim Craig moment” and then proceeded to drag it on the ground and even walk on it.
 
There it is.
 
For White — who later apologized for this incident — and the rest of the teenage and millennial Americans competing in the Winter Games, the flag probably is nothing more than a prop to most of them. The Cold War is over. Our schools rarely teach much American history anymore, and it is probably unlikely that their parents taught them to respect the flag (see the NFL protesters of the same age group).
 
Therefore, I would like to suggest the following:
 
First, all Olympians should receive basic instruction in how to hold our flag — and hoist it only if we beat Russia in something or beat everyone else for a gold medal.
 
Second, American fans should realize that the “USA” chant has been overused and perhaps should be replaced with clapping and cheering — unless we beat Russia in something.
 
Third, people should stop handing the flag to all athletes who win medals, and instead hand them boxes of cereal or posters of the cars they will be marketing after the games — unless we beat Russia in something.
 
This would be more genuine and would keep curmudgeons like me from bringing up 1980 every four years.

Tuesday, January 16, 2018

Should we want people from S---hole nations?

What follows is my January 13, 2018 Op-ed from The Orlando Sentinel
 
As our nation approaches the one-year mark in the administration of arguably the most controversial president in our history, we were all treated to the latest “you have got to be kidding me” moment when Donald Trump referred to immigrants from Africa and Haiti as people from “shithole countries” and openly questioned why we would want people to come to America from those places when it would be better to receive Norwegians instead.
 
Beyond the usual eighth-grade vulgarity of this peculiar person, and beyond the pretty obvious racial overtones of his derogatory remarks, is a very good question.
 
Why, indeed, would the United States want to see people from Africa and Haiti seeking our shores when far richer people from Norway might be available?
Mr. President, here’s why:
 
 
Second, when we look at the cost-benefit calculation used by potential immigrants, we see that there are good reasons to celebrate the arrival of Africans, Haitians and other immigrants from your so-called “shithole countries” list.
 
When people decide to move from one location to another, they first examine the likely benefits they would receive from the place they are considering. Those benefits are then compared to the direct cost of relocating and, more importantly, the opportunity cost of that move. Opportunity cost is the value of the second-best choice a person can make.
 
Every year The Heritage Foundation ranks nations based on economic freedom. That measure looks at taxes, regulations, property rights, the level of corruption, ease of starting a business, trade freedom, government spending and more.
 
African nations and Haiti do not fair well on this list. Out of 180 nations evaluated last year, North Korea ranked last. Several African countries including Chad (162nd), Sudan (164th), Zimbabwe (175th) and the Republic of Congo (177th), were, along with Haiti (159th), in terrible shape.
 
The reason these nations rank so low is because in every case, corrupt governments have destroyed the economic freedom people in those nations have a God-given right to enjoy. Corruption is rampant, property rights barely exist, and citizens of those countries know that if they pursue their self-interest to make a better life for themselves, they can lose it all to the politicians who run roughshod over these nations.
 
People from those nations who move to the United States do so in order to gain economic and political freedom — not to live off the welfare state. In fact, Americans make up a far larger portion of social-welfare payments than immigrants do. Immigrants from horridly poor nations routinely arrive in the United States, look around, and get to work. If immigrants wanted only to arrive somewhere and then do nothing, Norway would be a better choice.
Speaking of Norway, while Norwegians enjoy a higher standard of living than residents of poor African nations, they also tend to use their votes to support higher taxes, greater regulations and more welfare spending. Since you have been president, you have called for less of these things. So, if we recruit people from Norway, won’t we be receiving folks who oppose your agenda?
 
Moreover, if we want free markets and capitalism, wouldn’t it make sense to welcome people who have been longing for those ideals and who are moving in order to get away from too much government in their lives?
 
 
So, Mr. President, as you prepare to sign love-based immigration reform, it would be wise to ask the question, “Who needs America’s love more — white socialists from Norway, or black freedom-seekers from Africa and Haiti?”
 
p.s.  Ronald Reagan can help you here...

Tuesday, November 21, 2017

Baker Mayfield, Lincoln Riley and the search for men...

As a graduate of The University of Oklahoma I believe I am entitled to comment on the recent display of boorish, classless behavior of OU quarterback, Baker Mayfield.
 
In case you missed it, Mayfield - upset that Kansas players refused to shake his hand before the coin toss - decided to take his normal behavior of trash talking and wild celebrations to another level during OU's recent beating of the Jayhawks.
 
On the sidelines, where ESPN cameras were zeroed in on Mayfield, he grabbed his crotch - more than once - and yelled "F&$#@ You!" - more than once towards the Kansas sideline.
 
Lovely.
 
How nice for the millions of kids and moms and dads and other humans to get to watch this kid mimic the worst of the sports underclass by carrying on like a fool.
 
Unfortunately for all of us who enjoy sports Mayfield's antics are merely a symptom of a "look at me" disease that has swept through professional, college and even youth sports.
 
Sportsmanship is out.  Vulgar, prideful displays are in.
 
Dropping the hammer on stupid behavior is out.  Sensitivity is in. 
 
If you don't believe, watch this clip of OU coach Lincoln Riley discussing Mayfield after the Kansas game.
 
 
 
 
Let me see if I can get this clear in my mind.
 
Your quarterback embarrasses everyone connected with your university and you take the stage to cry about how important he is?
 
 
Mr. Riley, allow a 51-year old man (and coach) to assist you here.
 
How about taking the stage and announcing that Mayfield is suspended for the entire West Virginia game and that the next OU player who humiliates the program will be gone.  How about telling the sports world that while Mayfield is forgiven, it is time to END this type of garbage even if it means losing a game and losing the Heisman trophy for this talented, but immature young man?
 
 
Too often these days parents, teachers, coaches and other "adults" in authority excuse the behavior of nitwits instead of changing behavior with tough love.
 
Sitting Mayfield for a few plays will not help him get the message.
 
Lincoln Riley needs to "man up" and his player become a man.
 

Tuesday, October 31, 2017

Floridians discover that self-reliance works better than government

 What follows is my recent column in the Orlando Sentinel
It was with a mixture of amusement and aggravation that I read Sunday’s Orlando Sentinel, which featured a front-page article on the progress of debris removal after Hurricane Irma.
 
After a month of waiting for some sign that FEMA contractors would appear to pick up piles of rotting wood on the side of roads all over Central Florida, residents finally discovered what life was like before FEMA.
Some enterprising teenagers and others have begun applying the beauty of capitalism to the sloth-like pace with which government works.    They have discovered that our government has no motivation to do anything quickly or efficiently and faces no consequences for moving at around the same speed as a glacier when it comes to serving our community.  One group of enterprising teenagers had earned over $2,000 doing what our tax dollars had supposed to do. 
Others have found that it is possible to load storm debris in a personal or rented vehicle and haul it away on our own.  This staggeringly simple concept is precisely what life in America was like until we turned over personal responsibility – and neighborly duty – to those that take our money by force then fail to serve us well.  Before FEMA people woke up the day after and natural disaster, grabbed shovels, rakes and other equipment and got to work.  They also did not stand around telling their neighbors to “wait for government” when work needed to be done.
 
I should note that on September 17th I took my youngest son to Universal Studios.  I went out of my way to look for any signs that a hurricane had passed through either park.  I could not see so much as a twig lying out of place.  Apparently, without the federal government, Universal Studios figured out a way to clean up hurricane messes with speed and efficiency that would (or should) make any politician blush.  You did not see Universal Studios officials showing up in the news wearing hiking boots and L.L. Bean clothes (the apparel politicians all wear when “assessing” storm damage).  Instead, carrying out Adam Smith’s invisible hand, the parks were cleaned up so that profits could continue to roll in unabated.
 
Universal cannot force anyone to visit its parks.  Universal would have faced dire consequences if it cleaned up limbs as fast as our government.   
 
Yet, the Sentinel article also pointed out another interesting fact.
 
Apparently, there are local and federal rules and regulations concerning how and where storm debris can be disposed of.
These rules have led to bureaucratic hurdles that have slowed down the rate at which hard-working people can clear our streets and make some money to take care of their needs.
 
The irony here is self-evident.
 
First, the government charges us income taxes to pay for FEMA then fails to do its job with anything resembling urgency.   
Then, sick of waiting for our tax dollars to be put to productive uses, private citizens spend their own money and time to clean up our state –only to have the same government slow down that process as well.
As a free-market economist it would be easy to contend that our friends in Puerto Rico would be better served if FEMA was turned over to Wal-Mart, Home Depot and other profit-centered businesses. 
 
​In some ways I actually feel sorry for folks who work for government who actually care about being good public servants.  They are unfortunately attempting to be productive in a system that rarely rewards productivity.  
 
This is why the limbs are still on the side of the road.

 

Thursday, September 28, 2017

How Donald Trump became President

I wish I could say that what follows comes from my mind.  It does not.  It is from chapter 10 of F.A. Hayek's 1944 book, The Road to Serfdom.  The title of the chapter is Why the Worst Get on Top.
___________
 
"There are three main reasons why such a numerous and strong group with fairly homogeneous views is not likely to be formed by the best but rather by the worst elements of any society. By our standards the principles on which such a group would be selected will be almost entirely negative.
 
In the first instance, it is probably true that in general the higher the education and intelligence of individuals becomes, the more their views and tastes are differentiated and the less likely they are to agree on a particular hierarchy of values. It is a corollary of this that if we wish to find a high degree of uniformity and similarity of outlook, we have to descend to the regions of lower moral and intellectual standards where the more primitive and "common" instincts and tastes prevail.
 
This does not mean that the majority of people have low moral standards; it merely means that the largest group of people whose values are very similar are the people with low standards. It is, as it were, the lowest common denominator which unites the largest number of people. If a numerous group is needed, strong enough to impose their views on the values of life on all the rest, it will never be those with highly differentiated and developed tastes it will be those who form the "mass" in the derogatory sense of the term, the least original and independent, who will be able to put the weight of their numbers behind their particular ideals.
 
If, however, a potential dictator had to rely entirely on those whose uncomplicated and primitive instincts happen to be very similar, their number would scarcely give sufficient weight to their endeavors. He will have to increase their numbers by converting more to the same simple creed.
 
Here comes in the second negative principle of selection: he will be able to obtain the support of all the docile and gullible, who have no strong convictions of their own but are prepared to accept a ready-made system of values if it is only drummed into their ears sufficiently loudly and frequently. It will be those whose vague and imperfectly formed ideas are easily swayed and whose passions and emotions are readily aroused who will thus swell the ranks of the totalitarian party."