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.

 

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.”

 

Locke understood what the U.S. Supreme Court has finally made official in our country.

That is the simple fact that as free human beings living in a country that long ago codified our natural right to life, liberty and property it is simply nobody’s business if a person decides to take part of (or all of for that matter) the fruits of their labor — and gamble on sporting events.

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.