Current academic research – into the impact of new technologies, the economics of innovation, and the quality of management, for example – may be providing ever more pieces of the puzzle. But many crucial questions about economic progress remain unanswered, and others have not yet even been properly posed.
All life forms have three requirements – glue (proteins), a memory chip (DNA), and a concentrated energy source (mitochondria). Modern human economic life also has three essential elements. One is ethical, one is elegant, and one is metaphysical. The ethics of trading value for value is rooted in trust. As economist Walter Williams explains, “Honesty and trust are not simply matters of character and morality; they’re crucial for efficient human interaction and a smoothly working economy.” Trust is the glue.
The elegance is a dynamic system of finance rooted in sound money. As economist Carl Menger tells us, “Money came to be money quite naturally, as the result of economic relationships that were independent of the power of the state.” Money is an emergent phenomena, and because of its nature, it becomes readily accepted as a medium of exchange and a reliable store of value. Finance is the memory chip, money is the electrons that flow through it.
Metaphysics deals with substance, identity, cause, time and space. Energy is derived from substances whose nature allows us to produce, cook, build, travel, communicate and live lives of meaning that is unprecedented in human history. According to author Alex Epstein, it is an unassailable fact that the exploitation of concentrated forms of energy “has enabled billions of people to live longer and more fulfilling lives.” Manufacturing, cooking, construction, travel and communication are no longer dependent on human or animal muscle powered by mitochondria fueled by fat. Hydrocarbons are the fat that fuels modern machinery.
John D. Rockefeller is the Poetic Justice Warrior who perfected the complex system for the refinement and mass distribution of hydrocarbons that benefits all of human life. Regarding food production alone, hydrocarbons are essential for the harvesting of the macronutrients (fat, protein and carbohydrates) that fuel everyone’s muscles and central nervous systems.
Rockefeller was a principled and frugal man. He was the oldest of eight children in a strong family that frequently experienced financial hardship. By the time he was 16 years old he knew the virtues of self-reliance and the fundamentals of free enterprise better than anyone twice his age.
As he wrote to a business partner in 1885, “Let the good work go on. We must ever remember we are refining oil for the poor man and he must have it cheap and good.” This is the mission of the entrepreneur – anticipate the needs and desires of customers and deliver more, better and cheaper. With the conclusion of the Civil War, Rockefeller became intrigued with the fledgling oil refining business and utterly repelled by the waste and pollution of the government subsidized oil extraction business. He built the most efficient refineries by hiring his own plumbers and cut the cost of labor, pipes and plumbing materials by half. He bought his own timber, kilns, horses and wagons to manufacture his own barrels and cut their cost by 60%.
Profits were reinvested in more and better equipment, and chemists. Waste was anathema to Rockefeller, and he developed over 300 byproducts from each barrel of oil besides kerosene. At the time, they included gasoline, lubricants, paints, tar and anesthetics, or as Rockefeller puts it,
We had vision. We saw the vast possibilities of the oil industry, stood at the center of it, and brought our knowledge and imagination and business experience to bear in a dozen, in twenty, in thirty directions.
And it was kerosene that Rockefeller wanted to perfect. Standard Oil became the gold standard for a consistently pure and cleaner fuel for illumination, and it eventually served 90% of the vastly increased market. During the 1870s, the price dropped from 26 cents per gallon to 8 cents. According to history professor Burton Folsom,
Before 1870, only the rich could afford whale oil and candles. With the drop in the price of kerosene, working-class people all over the nation could afford the one cent an hour that it cost to light their homes at night. Working and reading became after-dark activities new to most Americans.
The benefits to everyone for more learning and more productive activity are nearly impossible to comprehend, and eventually proven in Julian Simon‘s The Ultimate Resource.
Of course no good deed goes unpunished in the world of government bureaucrats and social justice warriors whose wealthy parents sold their refineries to Standard Oil. Rockefeller has since been vilified as a greedy monopolist and a cut throat capitalist. In 1911 the US Supreme Court ruled Standard Oil of Indiana in violation of the Sherman Antitrust Act and fined it $29 million for taking railroad fee rebates offered by railroad haulers to its best customers, an amount over seven times the value of the entire property in question.
But what is Antitrust anyway? As described by Poetic Justice Warrior Ayn Rand, it is very simple. If government regulators think your prices are too high, you are guilty of price gouging. If they think your prices are too low, you are guilty of predatory pricing. And if they think your prices are competitive, you are guilty of collusion. In Rockefeller’s case, he was accused of selling oil below cost in order to drive competitors out of business or buy them out. This is a lie. He sold oil below their cost of production, not his. Rockefeller and his senior managers were talented price discoverers in the complex business of a horizontally integrated energy company. This benefits everyone, everywhere, all of the time. When buying a competitor, Rockefeller would not pay up for outmoded equipment, but he would pay a premium for talented people and a company’s goodwill. This is Poetic Justice.
According to historian and economist Lawrence Read, there are two kinds of monopoly – coercive and efficiency. A coercive monopoly results from the government granting exclusive privileges, subsidies, immunities or costs on others. Think of the US Postal Service, or government itself. An efficiency monopoly emerges when a company merely does the best job, and here is how Rockefeller did it,
Rockefeller was a managerial genius—a master organizer of men as well as of materials. He had a gift for bringing devoted, brilliant, and hard-working young men into his organization.
It is impossible to consider Standard Oil a coercive monopoly. It is impossible for them to underprice their costs for any extended period of time or grow to dominate their industry without already being the best. Regardless, new ideas, technology and changing consumer demand are the final arbiter in a world of political and economic freedom. For Rockefeller, electric lights eventually replaced kerosene lamps and massive oil fields were found in the southwest.
John D. Rockefeller’s accumulation of wealth was rooted in core principles that are identical to those for his distribution of wealth. As Folsom puts it,
Rockefeller attacked social and medical problems with efficiency and innovation. Schools, cities, or scientists who weren’t anxious to produce or improve didn’t get Rockefeller money. Those who did and showed results got more.
As Poetic Justice would have it, Rockefeller trusted and rewarded his officers and employees and his customers trusted Standard Oil. He financed his acquisitions with money earned by creating extraordinary value – the ultimate Carbon Dividend Plan, not the fraudulent one. And he fueled his innovations with the macronutrients essential for life on earth – carbohydrates for individual minds and hydrocarbons for humanity. While Carl Menger created the economic system of value and price theory, Rockefeller created the industrial system that practiced it to perfection, and he did it with meticulous serenity.
Hayek famously penned the essay “Why I Am Not a Conservative.” I have often argued that folks need to read that essay in conjunction with his “Errors of Constructivism” to get a good sense of his position on why as true radical liberals we must be willing to question all existing political and social values, and submit them to critical evaluation, but also why epistemologically we cannot do so while assuming any “Archimedean point” from which to commence our evaluation.
We must always question within specific contexts, and criticize on the margin while holding other values as given at that moment if we are to avoid serious errors in our reasoning about society. Root-and-branch constructivism is merely an illusion of the revolutionary, and a dangerous illusion at that. But that doesn’t mean we are trapped in the status quo either.
Hayek is giving us a framework for engaging in social criticism from a radical liberal perspective that is within our epistemological boundaries of the humanly possible. Think about that. Now think long and hard about this passage from “Why I Am Not a Conservative.”
But the main point about liberalism is that it wants to go elsewhere, not to stand still. Though today the contrary impression may sometimes be caused by the fact that there was a time when liberalism was more widely accepted and some of its objectives closer to being achieved, it has never been a backward-looking doctrine. There has never been a time when liberal ideas were fully realized and liberalism did not look forward to further improvement of institutions. Liberalism is not averse to evolution and change; and where spontaneous change has been smothered by government control, it wants a great deal of change of policy. So far as much of current governmental action is concerned, there is in the present world very little reason for the liberal to wish to preserve things as they are. It would seem to the liberal, indeed, that what is most urgently needed in most parts of the world is a thorough sweeping-away of the obstacles to free growth. (The Constitution of Liberty, 1960)
This sense of excitement about the voyage into the unknown future, and the embrace of the possibility of discovery and creativity that the liberal society makes possible, is one reason among many I am excited to get my hands on Deirdre McCloskey’s forthcoming book, Why Liberalism Works.
Liberalism is a social philosophy that is grounded in the recognition of its constant need for renewal and reconstruction. It is never a fixed doctrine standing still and telling the context of history — STOP. It is, instead, a welcoming of the new and novel, of the fulfillment of its ideals, and the greater recognition that we are one another’s dignified equals.
Liberalism says YES, and the cosmopolitan liberal order turns strangers into friends and enemies into partners. It is an emancipation doctrine — from dogma of the altar, from repression by the crown, from violence by the sword, and from exploitation by the privileged mercantilist class.
It is an ongoing project, and will always fall short of complete fulfillment of its vision of peaceful social cooperation; change is ceaseless, and the effort to improve institutions is constant. Hayek’s great intellectual gift isn’t a completed system, but an intellectual framework which can aid future generations in their unique effort to reconstruct the principles of justice and political economy.
As Hayek told his readers in the first paragraph of The Constitution of Liberty:
If old truths are to retain their hold on men’s minds, they must be restated in the language and concepts of successive generations. What at one time are their most effective expressions gradually become so worn with use that they cease to carry a definite meaning. The underlying ideas may be as valid as ever, but the words, even when they refer to problems that are still with us, no longer convey the same conviction; the arguments do not move in a context familiar to us; and they rarely give us direct answers to the questions we are asking. This may be inevitable because no statement of an ideal that is likely to sway men’s minds can be complete: it must be adapted to a given climate of opinion, presuppose much that is accepted by all men of the time, and illustrate general principles in terms of issues with which they are concerned.
It had been a long time, Hayek continued, since the ideals of liberalism had been effectively restated. He made that judgment close to 60 years ago. He himself took several stabs at providing that restatement — The Road to Serfdom, The Constitution of Liberty, and Law, Legislation and Liberty — each with great strengths and some glaring weaknesses. Our times, I would say, do not need naysayers, but the articulation of a vision of the rights and dignity of all individuals, and invitation (in fact a welcoming hand) to all who seek to escape the oppression of dogma, of violence, of crushing poverty.
As Hayek wrote in the concluding paragraphs of his essay “The Intellectuals and Socialism” (1949):
We must make the building of a free society once more an intellectual adventure, a deed of courage. What we lack is a liberal Utopia, a program which seems neither a mere defense of things as they are nor a diluted kind of socialism, but a truly liberal radicalism which does not spare the susceptibilities of the mighty (including the trade unions), which is not too severely practical, and which does not confine itself to what appears today as politically possible. We need intellectual leaders who are willing to work for an ideal, however small may be the prospects of its early realization. They must be men who are willing to stick to principles and to fight for their full realization, however remote. The practical compromises they must leave to the politicians. Free trade and freedom of opportunity are ideals which still may arouse the imaginations of large numbers, but a mere “reasonable freedom of trade” or a mere “relaxation of controls” is neither intellectually respectable nor likely to inspire any enthusiasm.
The main lesson which the true liberal must learn from the success of the socialists is that it was their courage to be Utopian which gained them the support of the intellectuals and therefore an influence on public opinion which is daily making possible what only recently seemed utterly remote. Those who have concerned themselves exclusively with what seemed practicable in the existing state of opinion have constantly found that even this had rapidly become politically impossible as the result of changes in a public opinion which they have done nothing to guide. Unless we can make the philosophic foundations of a free society once more a living intellectual issue, and its implementation a task which challenges the ingenuity and imagination of our liveliest minds, the prospects of freedom are indeed dark. But if we can regain that belief in the power of ideas which was the mark of liberalism at its best, the battle is not lost.
Worry over America’s recent economic stagnation, however justified, shouldn’t obscure the fact that the American economy remains Number One in the world. The United States holds 4.5 percent of the world’s population but produces a staggering 22 percent of the world’s output—a fraction that has remained fairly stable for two decades, despite growing competition from emerging countries. Not only is the American economy the biggest in absolute terms, with a GDP twice the size of China’s; it’s also near the top in per-capita income, currently a bit over $48,000 per year. Only a few small countries blessed with abundant natural resources or a concentration of financial services, such as Norway and Luxembourg, can claim higher averages.
America’s predominance isn’t new; indeed, it has existed since the early nineteenth century. But where did it come from? And is it in danger of disappearing?
By the 1830s, the late British economist Angus Maddison showed, American per-capita income was already the highest in the world. One might suppose that the nation could thank its geographical size and abundance of natural resources for its remarkable wealth. Yet other countries in the nineteenth century—Brazil is a good example—had profuse resources and vast territories but failed to turn them to comparable economic advantage.
A major reason that they failed to compete was their lack of strong intellectual property rights. The U.S. Constitution, by contrast, was the first in history to protect intellectual property rights: it empowered Congress “to promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.” As Thomas Jefferson, who became the first commissioner of the patent office, observed, the absence of accumulated wealth in the new nation meant that its most important economic resource was innovation—and America’s laws encouraged that innovation from the outset. Over two centuries later, the United States has more patents in force—1.8 million—than any other nation (Japan, with 1.2 million, holds second place). America is also the leader in “triadic patents” (that is, those filed in the United States, Europe, and Asia) registered every year—with 13,715 in 2009, the most recent year for which statistics are available, ahead of Japan’s 13,322 and Germany’s 5,764.
Another reason for early American prosperity was that the scarcity of population in a vast territory had pushed labor costs up from the very beginning of the colonial era. By the early nineteenth century, American wages were significantly higher than those in Europe. This meant that landowners, to make a profit, needed high levels of productivity—and that, in turn, meant the mechanization of agriculture, which got under way in America before it did overseas.
The replacement of labor with capital investment helped usher in the American industrial revolution, as the first industrial entrepreneurs took advantage of engineering advances developed in the fields. The southern states made a great economic as well as moral error in deciding to keep exploiting slaves instead of hiring well-paid workers and embracing new engineering technologies. The South started to catch up with the rest of the nation economically only after turning fully to advanced engineering in the 1960s as a response to rising labor costs.
The enormous American territory and the freedom that people had to move and work across it—guilds were nonexistent in the new country—also encouraged an advanced division of labor, which is essential to high productivity, as Adam Smith argued in The Wealth of Nations. And Americans’ mobility had a second benefit: by allowing entrepreneurs and workers to shift from location to location and find the best uses of their talents, it reduced prices, following David Ricardo’s law of comparative advantage. Today, globalization has the same effect, making prices drop by assigning the production of goods to countries that are relatively efficient at making them. But in nineteenth-century America, the effect was concentrated within a single large nation. Both the extended division of labor and the law of comparative advantage reduced prices to a level lower than any seen before, despite America’s high wages.
Democracy, too, encouraged ever-cheaper products. In Europe, an entrepreneur could thrive by serving a limited number of wealthy aristocrats—or even just one, provided that he was a king or a prince. Not so in the democratic United States, where entrepreneurs had to satisfy the needs of a large number of clients who compared prices among various vendors. America’s leading entrepreneurs haven’t always been the greatest innovators, but they have been the greatest cheapeners and tinkerers. Henry Ford didn’t invent the automobile, but he figured out how to make it less expensive—a mass product for a democratic market, at first American and then global.
The ultimate American economic invention was standardization, which further reduced production costs. Standardization evolved in America because consumers there tended to share a taste for the same products and services. Companies consequently began providing similarly priced goods and services of the same general quality to citizens constantly on the move across the American expanse. Not only did Coca-Cola, Hilton hotels, and McDonald’s become successful companies; they became forces for stability in a remarkably mobile society.
Immigration has been another component of American economic dynamism, for evident quantitative reasons: national GDP grows when total population and productivity increase simultaneously. But this effect has worked particularly well in the United States because its immigrants have tended to be young, energetic, and open to American values. Immigration is a self-selecting process: those who find the courage to leave behind their roots, traditions, and family often have an entrepreneurial spirit. (Indeed, prior to the emergence of the modern welfare state, it was tough to survive in America without such a spirit.) The newcomers, from Irish workingmen in the nineteenth century to Russian scientists in the twentieth, have continually reenergized the economy with their skills and knowledge.
They have also added a wild variety to American life, which helps explain why American culture—highbrow or lowbrow, sophisticated or pop—has dominated the world. In the cultural arena, at least, the globalization of the modern world is actually its Americanization. Roughly 80 percent of the movies seen in the world every year, for instance, are produced in the United States. This surely has something to do with the fact that, from the first days of the film industry, Hollywood’s producers and directors hailed from all parts of the globe, intuitively knowing what kind of movies would appeal not just to Americans but to people across the planet.
The entrenched rule of law, the absence of guilds, the unfettered competition, the democratic mass market, the immigration effect— Europeans took little notice of these striking American developments or of the expansion of the American economy generally. Not until the St. Louis World’s Fair in 1904, which brought European business delegations to the United States for the first time, did Europeans understand how far American entrepreneurs had leaped ahead of them. According to Nobel laureate Douglass North, the fair marked a turning point; from then on, the American economy was widely recognized as the global leader in per-capita income and overall output.
The American drive for innovation intensified with the growing cooperation of venture capital, business, and academia in the twentieth century. The defining moment occurred in the 1950s, when Frederick Terman, a dean of engineering at Stanford University, launched the first “industrial park”—a low-rent space where start-up firms could cluster and grow. Built on Stanford’s campus, it remains in existence; many consider it the origin of Silicon Valley. The collaborative “Stanford model” has been a trademark of what New York University economist Paul Romer calls the New Growth, in which the association of capital, labor, and ideas produces economic development. New York City, hoping to spur New Growth, has just awarded Cornell University the right to open an applied-science campus on Roosevelt Island in the East River.
In America, the three-sided nature of modern capitalism—capital, labor, ideas—has given the economy a sharp competitive edge. Other countries have tried to replicate the Stanford model, but they have little to show for it so far, partly because the best American universities have unique advantages in funding and in top research faculty and students. The failure to reproduce the model elsewhere has encouraged widespread infringement of American intellectual property, especially by China (see “Patently American,” Autumn 2011). But piracy, a short-term fix at best, doesn’t foster innovation.
Another ingredient in America’s recent prosperity is the Federal Reserve’s success at maintaining a stable, predictable currency. Thanks to its relative independence from the government, the Fed—except during its brief Keynesian periods, such as the late seventies and the current stimulus era—has been able to protect the dollar from politically expedient inflationary pressure. That has encouraged Americans to invest in production. In parts of Europe, by contrast, a long history of inflation taught residents to grab short-term returns by speculating in money markets. Indeed, private investment is always lower in inflationary countries than in noninflationary ones; think of struggling pre-euro Italy versus booming pre-euro Germany.
The American economy has also been spared the aggressions that anti-capitalist ideologues, both fascist and Marxist, unleashed in Europe. True, Washington has diverged from free-market principles at times, usually by imposing high tariffs on goods at the request of industrial lobbies. But the normal, publicly accepted form of American production has always been free-market capitalism. American investors and entrepreneurs, unlike their European counterparts, have never lived with the fear that the state would nationalize their investments or factories.
The overall level of taxation has remained lower in the United States than in Europe, and this has benefited growth as well. Americans and Europeans spend approximately the same percentage of their incomes on personal consumption, housing, education, health, and retirement. In European countries, though, these expenditures are often funded through taxes; in the United States, they’re more frequently paid for by consumers making free choices. The European redistributionist model leads to a more egalitarian society, while the American model is based on the individual’s assumed capacity to make decisions that are right for him. The proper balance between equality and freedom remains the subject of debate between liberals and free-market conservatives. But free choice does appear to be more economically efficient: as economists like Nobel laureate Gary Becker have shown, individual investments tend to be made more rationally than collective, government-directed investments. And when public expenditure grows, it may reduce the share of private investment and diminish what another Nobel economist, Columbia University’s Edmund Phelps, calls the dynamism of an economy.
Does this claim apply even to long-term investments traditionally made by the government, such as infrastructure? Was the Eisenhower administration’s decision to fund an interstate highway network a more rational investment than the creation of such a network through private funding would have been? No one can know for sure. In statist France, it’s worth noting, the freeway system is privately run, funded by tolls, and in better condition than its American counterpart. In any case, to argue that more public spending would accelerate American economic growth is to ignore the fact that all major European nations have higher levels of public spending than the United States does—and that all are poorer.
A final reason for American prosperity involves what Joseph Schumpeter called “creative destruction.” As he explained the concept in his 1942 book Capitalism, Socialism and Democracy, for economic progress to occur, obsolete activities and technologies must disappear (the destruction), and capital must shift from old uses to more productive ones (the creation). Government efforts to save or bail out companies that stick with outmoded products, services, or management methods protect the existing order at the expense of innovation, growth, and future jobs. European governments resist creative destruction by means of extensive labor regulations, which economists blame for the fact that over the long term, unemployment has been higher in Europe than in the United States. Slower growth rates don’t account for this difference: in fact, the European economy has at times grown faster than the American one. Of course, endorsing creative destruction doesn’t mean abandoning workers displaced by this harsh process—and the American safety net, while much criticized in Europe and far from perfect, has provided extended unemployment insurance for millions seeking work.
Fixing an ailing economy can be difficult in a democracy. Politicians running for office, pundits, and incumbent administrations will always be tempted to promote quick fixes, which aren’t really fixes at all. Indeed, as history shows, many popular responses to economic crises—closing borders to immigration and free trade, hiking taxes, or printing money excessively and driving up inflation—can do incredible damage to long-term growth.
In the current sluggish economic environment, the remarkable history of American dynamism is thus more instructive than ever. America’s economic might is rooted in an entrepreneurial culture and a passion for innovation and risk-taking, traits nourished by the nation’s commitment to the rule of law, property rights, and a predictable set of tax and regulatory policies. Policymakers have lost sight of these fundamental principles in recent years. The next era of American prosperity will be hastened when they return to them.
While the moniker “fake news” is typically reserved for cable news and some of the more prominent newspapers in America, the term could also be applied to presidential polls. How many pollsters predicted Hillary Clinton would win the 2016 election by a landslide up to and including the day of the actual election?
The “paper of record,” the New York Times, told readers on election day, Nov. 8, 2016, that Hillary Clinton had an 85 percent chance of winning the election. Their prediction was updated on 10:20 PM ET, oblivious to the evening smiles on cable news shows that were curdling into frowns and outright hysteria.
Screenshot from the New York Times web site on Nov. 8, 2016 // Fair Use
Not only were they wrong, but they were also in abject denial over events unfolding before them in real time. The NY Times was in good company as most pollsters got it wrong in 2016, with Rasmussen arguably the most accurate of the bunch.
Have pollsters learned from their mistakes? Or are they about to step in it again in 2020? Judging by some recent polling news, it appears that history may be repeating itself. As the old proverb says, “Those who do not learn from history are doomed to repeat it.”
Several days ago, this headline ran, much to the delight of CNN and MSNBC anchors, “Fox News poll shows Trump losing to Biden, Warren, Sanders and Harris.” That’s it, then, the race is over. The message to Trump supporters is to give up in despair and leave those MAGA hats in the closet.
The fact that this is a Fox News poll should throw cold water on the narrative of Fox being in the tank for President Trump. Fox News didn’t conduct the poll, however, but instead outsourced it to Braun Research Inc as noted in the poll’s methodology.
Opinion polls are only as good as their samples. The Fox News poll surveyed registered voters, unlike Rasmussen, which surveys likely voters. Why is that important? CNN reported that only 55 percent of eligible voters actually voted in 2016. An opinion poll that queries the half of the population that doesn’t even bother to vote will be far less accurate than one surveying those most likely to vote.
The other aspect of sampling is the political proclivities of those being surveyed. For example, if a survey asking about President Trump’s job performance was carried out in a liberal enclave such as Boulder, Berkeley, or Ithaca, his approval numbers would be in single digits at best.
The Fox News poll oversampled Democrats by 8 points, 48 percent of those surveyed identified as Democrats while only 40 percent as Republican. I’m sure the pollsters have a rationale for skewing the sample to the left, perhaps scientific, or else perhaps, to get a result they want.
Most of those polls predicting a Hillary Clinton landslide in 2016 also oversampled Democrats and the results speak for themselves. As a result, many Republicans are distrustful of surveys and either refuse to answer pollster phone calls or else give false answers to skew the results.
What do other polls say? Do they support the Fox News poll or cast doubt on its validity?
Rasmussen’s Daily Presidential Tracking poll, on August 16, showed President Trump 3 percentage points higher than President Obama at the exact same point in his presidency, 46 versus 43 percent total approval. Obama was easily reelected to a second term.
Gallup shows Trump with a 41 percent approval rating, exactly the same as Obama in the third year of his presidency. Interestingly, Ronald Reagan was only at 43 percent approval in the third year of his presidency and won a 49-state landslide reelection. In contrast, George H.W. Bush sat at 71 percent approval in his third year and lost reelection.
This means that opinion polls have limited predictive value. Other metrics, such as the state of the economy, may be more important than random phone calls to registered voters. Record low unemployment, particularly for women, blacks, and Hispanics and a booming economy may be a better predictor for Trump’s reelection prospects.
Despite the media’s pivot from Russian collusion to white supremacy and racism as the latest attack leveled against the President, “50 percent of Latinos support the job Trump is doing” according to a recent Marist poll.
Black support, according to Rasmussen, is hovering around 30 percent. In 2016, Trump only received 8 percent of the black vote. If he doubled or tripled his support within this core Democrat constituency, traditional electoral predictions all fly out the window.
Another Democrat core group is joining the Trump train: “The Log Cabin Republicans, the nation’s largest collective of LGBTQ conservatives, has officially endorsed the re-election of President Donald Trump — after its board of directors voted against endorsing him in 2016.”
Predictit, the “stock market for politics,” reflects not opinion surveys, but the decisions of financial traders putting their money on the line. When asked: “Who will win the 2020 U.S. presidential election?” Predictit investors have Trump at 44 cents compared to the next closest Democrat Elizabeth Warren at 22 cents, Joe Biden at 18 cents, and Bernie Sanders at 9 cents.
Screenshot showing partial results from Predictit as of August 2019 // Fair Use
Liberal governance is losing popularity elsewhere in the world, too. Trump’s twin in looks and policy, Boris Johnson, is the new U.K. Prime Minister. Italy, Brazil, and Hungary have Trump-style leaders. Even our progressive neighbor to the north, Canada, is now trending conservative, falling out of love with their woke, virtue-signaling Prime Minister Justin Trudeau.
Lastly, look at crowd sizes, not a metric typically used in gauging political support. Trump draws crowds in an order of magnitude larger than any of the Democrat candidates, as demonstrated last week in New Hampshire.
This is the landscape before the 2020 presidential campaign has even started. Wait until Trump focuses on the eventual Democrat nominee, using his effective nicknames and branding of his opposition.
This time Trump is the incumbent, with four years of political experience under his belt. Last time he was a businessman with no political background, only his energy, enthusiasm, and charisma. Imagine how much more formidable he will be this time around.
If political polls continue to shape rather than to reflect political opinion, they are as likely to be as wildly incorrect in 2020 as they were in 2016.
Brian C Joondeph, MD, via americanthinker.com
Behind every successful entrepreneur is a cause or passion that pushes them to persevere even though the toughest situations. For Richard Branson, his desire to create a more reliable and affordable air travel experience for consumers helped him navigate the exhaustive regulatory hurdles that stood in the way of creating Virgin Airlines. For Dr. Devi Shetty, his desire to make heart surgery more accessible to the masses fueled him as he used economies of scale to create surgical centers that now bring life-saving procedures to more people than ever before.
But for Senegalese-born Magatte Wade, her passion for business is driven by her desire to demonstrate firsthand the role entrepreneurship plays in creating prosperity.
In addition to bringing high-end, organically made skincare products to consumers via her company Skin Is Skin, which will soon be sold in select Whole Foods locations, Wade, as she explained in a popular Ted Talk, wanted to bring something else to the world: the antidote to poverty.
Wade was born in Senegal in a small fishing village south of Dakar in 1976. Her parents moved to Europe for work shortly after she was born, so Wade was raised primarily by her grandmother for the first several years of her life.
After leaving Senegal as a girl to live with her parents in France, Wade was immediately struck by the differences between her new home and her home country. She was puzzled as to why one region of the world was so prosperous, while another was struggling with extreme poverty.
In the documentary Made in Mékhé, produced by the Foundation for Economic Education (FEE), Wade commented:
Why is it that a couple decades ago, China, for example, was at the same level as many African countries. And yet today … countries like Singapore made it, countries like Hong Kong made it. Even a place like Dubai, bare land of sand—desert sand—and then all of the sudden within 12 or 15 years Dubai is one of the financial centers of the world. What happened?
The question took root and would eventually shape her career.
The difference, Wade came to believe, boiled down to a single word: entrepreneurship. She noticed that in wealthier nations, commerce and trade are allowed to occur and even encouraged. In places like Hong Kong and Dubai, she saw, it was much easier for individuals to start and operate a business than it was in her own country. And more business means more economic opportunities for the entire country.
Each year, the Fraser Institute, as well as other organizations like the World Bank, releases a report that ranks each country by their degree of economic freedom. According to the 2018 annual report, Senegal ranked 125 out of 162 countries. Hong Kong, on the other hand, leads the world in economic freedom, besting America by five spots.
Starting a business might not seem inextricably linked to economic prosperity at first glance, but it is through the formation of new companies that new jobs are created. And with more employment opportunities comes the ability for more people to improve their circumstances and rise out of poverty.
In many African countries, and especially Senegal, excessive regulations prevent many would-be entrepreneurs from starting businesses and not only bettering their own lives but also the lives of those for whom they are creating new employment opportunities. And without a robust job market, many are forced to take on dangerous trades.
In Wade’s hometown, there are few jobs available for those wanting to break the cycle of poverty. As a result, many young men eager to provide for themselves are left with no other option than to take positions as fishermen, leaving their homes and families for shoddy vessels. Many never return.
“Some of my most entrepreneurial people … are right now serving as fish food at the bottom of the ocean,” Wade tearfully told an audience recently.
I grew up with stories of people dying at sea. Why? Because they had to leave their country because there are not enough jobs, and why are there not enough jobs? Because the business climate sucks.
Wade came to believe the only way to change the situation at home would be to take on the challenge herself and bring the manufacturing of her products to Senegal.
Of her company, Skin Is Skin, Wade often says that it was born in Austin, Texas, and made in Mékhé, as Wade splits her time between those two places. Recognizing full well how regulation was inhibiting her country’s economic well-being, she decided to brave the bureaucratic storm and navigate through a sea of red tape to bring the production of her skincare products to Mékhé. Since she only uses the best available ingredients for her products, she imports many that she can’t find within her country from elsewhere, which means everything she purchases is subject to a 45 percent tariff. That alone causes huge financial strains, but Wade has persisted nevertheless.
Skincare products might not seem revolutionary, but workers employed by Skin Is Skin say it has been life-changing.
Production manager Ibrahima N’Dour lived in a small one-bedroom house with his wife and their five children before he was hired. At night while they slept, three people would crawl into bed while the rest lay next to each other on the floor, he says. After being hired by Wade, whom he considers family, N’Dour was able to move his family into a bigger home where his children have space to play and beds to sleep in at night. N’Dour is not the only one who has bettered his circumstances thanks to Wade’s entrepreneurship. In addition to economic prosperity, employment gives individuals a sense of dignity and self-sufficiency that helps them lead more fulfilling lives.
Traditionally, in Mékhé, the women stay home while the men go off to fish or farm. This is just the way it has always been. Adji Maria had never held a job before meeting Wade. Now employed at Skin Is Skin, she has been able to provide not only for herself but also for her entire family. Her work has helped her gain a sense of independence she would not have had otherwise.
In addition to economic prosperity, employment gives individuals a sense of dignity and self-sufficiency that helps them lead more fulfilling lives. Mame Mareme Cisse, another female employee at Skin Is Skin, explains, “This work has changed a lot in my life. Now I can provide everything I need for myself without having to ask anyone for it.”
The jobs created by Wade’s company are not limited strictly to the manufacturing of the actual skincare products, however. She is also helping other local businesses survive the harsh economic climate of Senegal. Each Skin Is Skin product comes in a hand-sewn leather bag made by CAWAAN, a family-run Senegalese company that has been making handmade leather goods for five generations.
CAWAAN, like Wade, has struggled to obtain the goods they need to offer quality consumer goods because of high tariffs. Understanding these difficulties firsthand, Wade has continued to use CAWAAN. The company has said that Wade’s commitment to their businesses has “encouraged us to work hard and optimize everything.”
Through one small business, Wade has been able to transform the lives of many living in Mékhé and encourage more commerce to occur.
Above all, Wade holds that in order to break the cycle of poverty you must strike at the heart of the problem. She believes the real problem is unemployment caused by barriers to entrepreneurship in Africa. And when it comes to doing what she can to remedy the problem, she is not content to merely stop at Skin Is Skin.
Wade recently created a new school curriculum in Senegal to promote entrepreneurial skills to young people.
Wade has been working closely with the mayor of Mékhé—whose name is coincidentally also Magatte Wade—to provide and support more opportunities for farming, energy, training, and educational ventures. She recently created a new school curriculum in Senegal to promote entrepreneurial skills to young people by teaching children the power of business and entrepreneurship.
“I never woke up one day and said, ‘Ohh, I am going to become an entrepreneur,’” said Wade, who was recently named director of the new Center for African Prosperity. “I think what happened for me is what happened to a lot of entrepreneurs and businesspeople. I think a lot of founders, the way they get into starting a business is they see something that sucks or they get inspired by something that’s awesome.”
In response to recent volatility in the stock market, rising prices (and declining yields) for U.S. Treasury bonds, and difficulties in the trade relationship between the United States and China, some pundits and politicians are forecasting a recession in the U.S., timed to coincide with the 2020 presidential election. The increasing volume of these forecasts is driven partly by partisan hopes that an economic slowdown gives Democrats the best opportunity to defeat President Trump next year. But hopes of this kind do not make for sound economic forecasts.
None of the major institutional forecasters is looking ahead to a recession in 2019 or 2020. The Conference Board, while recognizing risks to the economy, is still forecasting real GDP growth of 2.3 percent in 2019 and 2 percent in 2020. The International Monetary Fund, in a July report, forecasts global growth to expand to 3.5 percent in 2020, with the U.S. economy expected to expand at 1.9 percent. The most recent forecast of the Federal Open Market Committee calls for 2 percent growth in real GDP in 2020, compared with 2.1 percent in 2019. This is the conventional wisdom, to be sure, and such wisdom has often missed the mark, as we saw in 2007 and 2008. Nevertheless, these projections come from current economic indicators, none of which is signaling a recession in the months ahead.
The current economic environment—low and declining interest rates, stable prices, modest quarter-to-quarter economic growth, the absence of wars abroad—does not suggest a recession-oriented climate. In addition, the Federal Reserve Board has adopted a policy of stabilizing or lowering interest rates, another factor likely to reduce the odds of recession. Recessions typically occur in settings of rapid economic growth and rising interest rates, combined with overly bullish forecasts for stocks and business profits. That’s not the situation today.
America’s economy has been expanding at modest annual rates since the last recession ended in mid-2009—but the U.S. has not achieved an annual growth rate of 3 percent over the course of the current recovery. In 2016, real GDP expanded by just 1.6 percent, a frequently overlooked factor in the outcome of that year’s presidential election. Under the Trump administration, GDP expanded to 2.4 percent in 2017 and 2.9 percent in 2018. Over two quarters in 2019, GDP expanded at a 2.6 percent annual rate.
At ten years and counting, the current recovery is now the longest on record—but also one of the weakest, with real GDP expanding by just 25 percent over the course of the decade, compared with 43 percent during the ten-year expansion from 1991 to 2001 and 52 percent over the eight-year expansion from 1961 to 1969. In the mid-sixties, U.S. GDP grew by 6 percent per year, and in the mid-1990s by 4 percent per year, compared with the 2 percent to 3 percent growth rates over the past decade. There is little doubt, as many have pointed out, that the American economy is operating well below capacity, and below benchmarks established in past recoveries. But a somewhat weaker recovery may have greater durability, as it is less prone to disruption by inflation or the Federal Reserve’s interest-rate policy.
The modest nature of the ten-year recovery has been camouflaged to some extent by a strong labor market, which has created 2 million-plus jobs per year since 2010, brought the unemployment rate down to a postwar low of 3.6 percent, and continues to show a positive trend. The Federal Reserve appears to have targeted the unemployment rate (rather than inflation or GDP growth) when it decided to raise interest rates in 2018, an oversight that it has now corrected.
Against this background, the odds of a recession in the United States over the next year don’t appear very high, though the economy could be subject to external shocks—international events, such as terrorist attacks, oil embargoes, and oil-price increases, for example, have provoked recessions in the past. A sustained trade and tariff war between the U.S. and China, the world’s two largest economies, would surely damage the prospects for continued economic growth, for both countries. Since everyone is aware of the costs of such a conflict, good reasons exist to believe that it will be forestalled.
Current forecasts for a recession among pundits are not based on facts or real conditions but on a belief in self-fulfilling prophecies—that by predicting a recession they can create one, and thus set the stage for Democratic victory in 2020. This is a good sign that they have an exaggerated opinion of their own influence and have lost touch with the canons of their profession.
President Trump’s obloquy—calling a number of countries “shitholes” and asking why we are expected to accept their immigrants—is offensive for all the reasons you’ve probably heard: it’s insulting, racially divisive, callous, and so on. The United States has welcomed immigrants from various “shithole” countries for much of its history. Those schleppers worked, sweated, and saved, started businesses, paid taxes, and asked God to bless America.
If only that was all there was to it. As is so often case in this president’s administration, noxious wording is distracting from a serious public-policy debate. The truth is that an “hourglass,” low-mobility, big-government economy presents a new set of questions about immigration policy. Today’s immigrants face a different economic reality from their predecessors.
During the mass migration that took place in the period between 1850 and 1930, more than 12 million immigrants arrived in the United States. Many were uneducated and unskilled people from countries that were largely shitholes. Immigrants from nineteenth-century Ireland, Italy, Poland, Russia, Austro-Hungarian, Greece, even the now-flush Scandinavian countries, were escaping poor, stagnant places where the future promised more of the same.
Poverty and lack of skills didn’t stop newcomers from finding work because there was plenty of it—on the piers of New York and Philadelphia, the meatpacking plants of the Midwest, and in the factories that were spreading to cities all over the country. In 1914, over 70 percent of the factory workers at Ford Motor Company were foreign-born. Immigrants and their children were over half of all of American manufacturing workers in 1920. New technologies and a swelling population also meant more jobs for construction and transportation workers. The pre–World War II industrial economy, sociologists Roger Waldinger and Joel Perlman have written, offered a “range of blue collar opportunities” for immigrants and their children.
Today’s unskilled immigrants are not so lucky. Automation and offshoring to Third World countries have seriously eroded the number of blue-collar jobs. Manufacturing positions plummeted from 19.4 million in 1979 to 11.5 million in 2010, even as immigrants were adding millions to the population of job seekers. In 1970, blue-collar jobs were 31.2 percent of total nonfarm employment. By 2016, their share had fallen to 13.6 percent of total employment. Today’s immigrants are more likely to be hotel workers, agricultural hands, bussers, janitors, and hospital orderlies. They may be earning more than they could have in their home countries, but their wages—assuming they work full-time—are enough only to keep them a notch or two above the poverty line in the United States. Adding to their troubles is frequently a lack of benefits, unreliable hours, and little chance for moving up the income ladder.
Which takes us to the other crucial shift in immigrant America. In the Ellis Island era, the country took in “the tired and poor,” but it did not—it could not, in those hard-knock times—offer them more than a chance to manage on their own. Private charitable organizations, mostly religious, sometimes kept greenhorns from starving or living on the streets, but there was no Department of Health and Human Services, no state and city welfare offices, no food stamps, Medicaid, housing subsidies, no Department of Education with Title I funds to augment local school budgets, no ESL classes or special education for immigrant children. According to a 2016 National Academies report, immigrant-headed families with children are 15 percentage points more likely to rely on food assistance, and 12 points more likely to rely on Medicaid, than native-born families with children.
Immigration absolutists respond to concerns like these by pointing out that the United States needs low-skilled workers to fill positions “Americans won’t do;” someone has to pick the grapes and empty the bedpans. They also might say twenty-first-century Americans will not and should not accept the sort of deprivation pre-safety net immigrants had to endure. True enough. But Americans are also dreamers. Immigration was part of the nation’s identity not because Americans loved living next to foreigners—few human beings do—or because immigration is a foundational principle of the nation, but because the rapidly growing American economy had a need for unskilled workers, and offered them an opportunity for advancement.
And there’s the rub. Postindustrial economies create a far more challenging path to upward mobility than the manufacturing economy. Unlike during the later industrial era, when even high school dropouts could get decent employment, education is now the most likely route to middle-class comfort and relative stability. Though as a group the number of foreign-born kids graduating college has grown faster than native-born, the children of low-skilled immigrants, particularly Latinos, are struggling. Instead of climbing the income ladder, they are slipping down. Between the second and third generation, Hispanic high school dropout rates go up and college attendance declines. Canada, Australia, and several other countries have introduced a points system giving preference to skilled immigrants precisely to avoid this scenario.
The U.S. may want to welcome low-skilled workers to do the jobs “Americans won’t do” and to help them in the early years of assimilation. But the prospect of a multi-generational proletariat class, hovering near the poverty line and dependent on government help, is probably not what most Americans had in mind.
Of all the various creations of the human mind, great art is the most difficult to understand because it is the most personal. To value art you must first know your explicitly defined values. To love a work of great art is to see or hear the concretization of these values in paintings, sculpture, music, novels, poetry, plays, movies or architecture. Great artists have perfected their ability to integrate abstract concepts into a philosophical theme and present it in concrete form for present and future generations. The finished work represents the artist’s sense of life. It is an emotional generalization of some of the artist’s highest values. It is selfish, not social; they do it without regard for the opinions of lesser minds.
Great novelists, poets and playwrights are able to express profound human emotion in very few words. The poet Shakespeare is famous for “brevity is the soul of wit.” In her novel The Fountainhead, Ayn Rand explained the artist’s attitude through her fictional architect Howard Roark, “I don’t build in order to have clients. I have clients in order to build.” For the first great artist in the Poetic Justice Warrior Series, it is important to recognize someone who was supremely independent, an innovator, overcame great obstacles, believed in the sanctity of human life, and whose work is spiritually accessible to mass audiences. Someone whose sense of life was marvelously conveyed in their art, and forever improved the human condition. This man, who loathed but tolerated the noble classes of his day wrote to his most powerful and wealthy patron and said,
Prince, what you are, you are through chance and birth; what I am, I am through my own labour. There are many princes and there will continue to be thousands more, but there is only one Beethoven.
In the late 18th and early 19th centuries, court musicians were considered to be of the same social class as any other servant – even the great Mozart dined with the cooks. Beethoven insisted on sitting at the head table with the royalty, and did so in street clothes. His talent was so magnetic and his improvisations so emotional that court etiquette was rendered optional.
The early 19th Century was a time of great political, social and technological upheaval. While Gutenberg‘s press was changing the world, printed music was difficult to create but becoming common. Also, mass produced pianos were taking hold and Beethoven saw the possibilities for being the first software publisher for this new hardware. For music lovers, if you wanted to hear Bach or Mozart you had to go to a concert in Germany. To hear a Beethoven piano sonata, he foresaw that you could buy sheet music and find someone local with a piano who could play it. His business model gradually changed from nobility and church patronage to publishing royalties, or as Beethoven explained in an 1801 letter to friend Franz Wegeler,
For every composition I can count on six or seven publishers, if I want them; people no longer come to an arrangement with me, I state my price and they pay. For instance, I see a friend in need and the state of my purse does not allow me to help immediately; I have only to sit down and compose and in a short time I can come to his aid.
Here, Beethoven stumbles across an abstract concept that had not yet been named: capitalism (producing something of value creates markets, profits, and unprecedented mass prosperity and benevolence). Two years later, the French classical economist Jean-Baptiste Say invented the word entrepreneur, described this phenomenon with his Treatise on Political Economy, and announced Say’s Law (the law of markets – humans must produce before they can consume).
Born in 1770 to a family of Flemish court musicians, young Ludwig was forced to take piano lessons from his physically abusive father and to endure sleep deprivation. But he persevered, his chosen passion being excellence in music. In 1800 he began noticing ringing in his ears, gradual hearing loss, and by the 1820s, total deafness and bouts of depression. This did not get in the way of his lifelong pursuit of excellence.
Also in 1800, a Prussian piano virtuoso, Daniel Steibelt, arrived in Vienna and challenged Beethoven to an improvisational piano contest with Vienna’s aristocracy in the audience. As the challenger, Steibelt would go first and the playing would go back and forth until a winner was declared. Steibelt finished and rose to great applause while a bored Beethoven took his turn at the piano. He played the first four notes of Steibelt’s piece, varied them, improvised on them, embellished them, unpicked Steibelt’s flourishes, parodied and mocked them. Steibelt stormed out never to return to Vienna and no one challenged Beethoven again.
Those first four notes became the foundation of Beethoven’s Symphony No. 3, known as Eroica, and one of his most celebrated works. It stretched the boundaries of classical composition in length, harmony, and content. Eroica is considered the landmark bridge to the Romantic era of great Western art that glorified man’s existence. But perhaps Beethoven’s finest achievement in the face of daunting obstacles is the spiritual Ninth Symphony. As early as 1793 he considered putting a musical setting to Friedrich Schiller‘s poem Ode to Freedom. But it wasn’t until 1815 that there is evidence of a sketch for the symphony’s theme, and it wasn’t finished until 1824 after living in utter deafness, mostly isolation, and being mistaken for a vagrant when out. He hadn’t performed publicly in years.
According to music critic Irving Kolodin,
The Ninth owes to the Missa Solemnis the philosophical framework, the ideological atmosphere, the psychological climate in which it breathes and has its existence. Unlike the Missa however, it is a celebration of life, of man’s earthly possibilities rather than his heavenly speculations.
Missa had dominated Beethoven’s composing energy in the four years prior to finishing the Ninth. As philosopher Stephen Hicks says about Missa “He remained utterly faithful to his own experience. It is for this reason that his affirmative utterances, as in the Credo of the Mass in D [Missa], have such unexampled weight.” Musical historian Philip Downs tells us,
Music was not merely sounds to Beethoven. Music was an expression of the deepest human emotions, the greatest of human potentialities. To analyze Beethoven’s art for anything other than his comment on the human condition is to disregard the intent of one of the greatest composers in the history of mankind.
But it is in the fourth movement (commonly known as Ode to Joy) of the Ninth Symphony that his innovative skills were maximized. Beethoven used human voices, thereby creating the choral symphony, and deployed the largest orchestra ever. It was performed in Vienna in 1824 and it received a wildly ecstatic ovation (except from aristocrats, they weren’t invited) – one he could only see . While Beethoven’s previous work is considered to represent a malevolent universe and philosophically determinist sense of life, the Ninth was a celebration of human flourishing. It was a major philosophical breakthrough for a man who was always a rational egoist.
Ludwig van Beethoven died in 1827 at the age of 56 after enduring family, political, class, love, software piracy and debilitating health issues that would have rendered anyone else an anonymous character in history. Yet as a warrior of the Poetic Justice variety, he used these circumstances to transform his own sense of life and become the maestro for his ethics of self-creation, the political economics of capitalism, and the aesthetics of romanticism that became the symphony for the greatest century in human history.
In 2008 I was invited to a conference called Australia Recycles! in Fremantle. I flew coach for 30 hours (we had to divert, at one point, to Auckland instead of Sydney because huge headwinds used up more fuel than expected) and landed in Perth and then was driven to Freo by one of the conference organizers. (If you are keeping score at home, that’s 2.78 metric tons of carbon for the flight from Raleigh-Durham to Perth and back.)
It became clear that I was the “tethered goat,” brought in for entertainment and to spice things up a bit.
I had a day before my plenary address, and walked around the conference hall. Everyone there, everyone, represented either a municipal or provincial government, or a nonprofit recycling advocacy group, or a company that manufactured and sold complicated and expensive recycling equipment.
And what a wealth of machinery and equipment it was. Recycling requires substantial infrastructure for pickup, transportation, sorting, cleaning, and processing. I have sometimes suggested a test for whether something is garbage or a valuable commodity. Hold it in your hand, or hold a cup of it, or tank, or however you can handle it. Consider: Will someone pay me for this? If the answer is yes, it’s a commodity, a valuable resource. If the answer is no, meaning you have to pay them to take it, then it’s garbage.
It’s useful to pause for a moment and consider some definitions.
The problem with recycling is that people can’t decide which of two things is really going on.
These arguments are often muddled and mixed together, by both proponents and critics. And “recycling” is, after all, not just one homogeneous activity, but a whole collection of possible streams of waste or resources, each of which has to be evaluated separately. Should we recycle aluminum cans? Probably, because the price of recycling aluminum compares very favorably to using virgin materials, the mining and smelting of which are expensive in terms of energy and harmful to the environment.
Should we recycle toilet paper? We could, at some price. But it’s likely not worth it, because it can be composted, it would be awfully hard to clean and sort, and in any case paper products are actually a renewable resource, rather like wheat. You rarely hear someone saying, “Save the wheat! Give up bread!” But that kind of argument is often made for paper, even though the trees grown to produce pulp are simply a fast-growing crop grown on farms expressly for that purpose.
For recycling to be a socially commendable activity, it has to pass one of two tests: the profit test, or the net environmental-savings test. If something passes the profit test, it’s likely already being done. People are already recycling gold or other commodities from the waste stream, if the costs of doing so are less than the amount for which the resource can be sold.
Voluntary “recycling” like scrap iron or aluminum businesses will take care of that on their own. The real question arises with mandatory recycling programs — people recycle because they will be fined if they don’t, not because they expect to make money—or “voluntary” recycling programs such as those at universities or other communities where failure to recycle earns you public shaming.
For coercive or social-pressure recycling to make sense, three things have to be true.
Why isn’t this done at the recycling facility? Because the government realizes (correctly) it is too expensive, and the costs would swamp the tiny savings, if there are any, in doing recycling in the first place. But if the costs of cleaning and sorting are too great at scale, with commercial resources, why isn’t the sum of the individual costs of cleaning and sorting, in each household, even greater?
If you add up the time being wasted on recycling rituals, it’s even more expensive to ask each household to do it. The difference is that this is an implicit tax, a donation required of citizens, and doesn’t cost money from the public budget. But time is the least renewable of all resources; demanding that it be donated to a pointless or even harmful ritual such as recycling glass is government malpractice.
Ground “recycled” glass, or “cullet,” is less useful than the virgin silica sand from which glass is made. Cullet has impurities and chemical colorings that make it difficult to use for glass without further processing. To be clear, then: landfilling glass does no environmental harm, and the glass is more expensive than the virgin material it is supposed to replace. Further, glass is heavy, and carting it to distant processing centers, in any but the most urban areas, pollutes the air.
So, is recycling useful? As I said at the outset, for some things it is. Aluminum cans and corrugated cardboard, if they can be collected clean and at scale, are highly recyclable. I myself, on finding an aluminum can in the garbage, will generally take it out and try to find a recycle bin. It seems dumb to waste the aluminum, even though the value of the aluminum in one can is less than 2 cents.
But for most other things, recycling harms the environment. I’m not (just) saying it’s costly. I’m saying recycling is harmful. If you care about the environment, you should put your bottles and other glass in the regular garbage, every time.
This is now truer than ever. But it was also true back in 2008, when I visited Australia. And that was the case I tried to make. Let me go back and tell the rest of that story.
Remember, this was a conference for recycling advocates and manufacturers of recycling equipment, from around the Pacific Rim.
I was going to argue that there were economic reasons, technical but clear, why glass recycling was not only prohibitively expensive but also harmful to the environment. It made me wonder why I had been invited, but I surmised that they wanted to have at least one tethered goat for target practice, to keep sharp in being able to advocate their position.
I gave the talk, and… Nothing. Some polite applause, a few desultory questions. And then people just drifted off. I tried to strike up a conversation with some people who were still in the hall, and I asked them why there was no controversy.
One fellow was perfectly forthcoming: “Oh, we all know it makes no sense to recycle glass. The economic case is easy. But people should still recycle, because it’s simply the right thing to do. It’s not about the actual environment. It’s about enlisting people to care about the symbol of the environment. Overall, recycling is still worth doing, regardless of its effects.”
A young woman piped up: “It’s okay to say that sort of thing here, because we are insiders. But it’s better not to talk about the economics of things to the general public. We need to help train them to care about the environment, and recycling is one of the best ways to do that.”
I had heard something like this before, as I discussed in the 2007 article that likely got me the conference invite in the first place. An earnest young woman, the public spokesperson for the waste and recycling agency of a medium-sized town in the northeastern U.S. had told me breezily, “Oh, you have to understand: recycling is always cheaper, no matter how much it costs.” Oh, my.
The message I had worried about, and expected to be controversial, was old hat to the industry folks. But it was beside the point, because recycling was for them a moral imperative. Once you begin to think of recycling as a symbol of religious devotion rather than a pragmatic solution to environmental problems, the whole thing makes more sense.
As in any religious ceremony, the whole point is sacrifice: Abraham was ready to slay Isaac; Catholics give up meat during Lent; Muslims fast all day during Ramadan. And a young woman in Chile with two two-liter bottles sits in her car in line, knowing she is publicly visible and that her green moral virtue is apparent to everyone.
But lately the cost of the symbolic act of recycling, particularly for glass, has simply gotten too large. Cities and other local units were willing for a long time to sell their “customers” the chance to feel good about themselves, as long as the costs were reasonable. Recently however there has been a general decline in recycled commodity prices, and glass recycling in particular has crashed.
The recycling-industrial complex has been reduced to arguing that recycling “creates jobs,” though of course that’s only useful if the jobs produce something useful for consumers or improve the environment.
The real problem, as I see it, is that the recycling industry is selling indulgences, giving people the moral license to pollute because “Hey, I recycle!” To the extent that a lot of recycling is harmful to the environment, this is a double whammy: recycling is largely fake, but it enables people to feel okay about doing other things that pollute.
That young woman, in Chile? She was waiting in that line at the wheel of a large SUV.
Michael Munger is Professor of Economics at Duke University and Senior Fellow of the American Institute for Economic Research.
Photo by Javier Huedo on Unsplash
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Do we know how economies develop? Obviously not, it seems, or otherwise every country would be doing better than it currently is in these low-growth times. In fact, cases of sustained rapid growth, like Japan beginning in the 1960s, or other Southeast Asian countries a decade later, are so rare that they are often described as “economic miracles.”
Yet when Patrick Collison of software infrastructure company Stripe and Tyler Cowen of George Mason University recently wrote an article in The Atlantic calling for a bold new interdisciplinary “science of progress,” they stirred up a flurry of righteous indignation among academics.
Many pointed to the vast amount of academic and applied research that already addresses what Collison and Cowen propose to include in a new discipline of “Progress Studies.” Today, armies of economists are researching issues such as what explains the location of technology clusters like Silicon Valley, why the Industrial Revolution happened when it did, or why some organizations are much more productive and innovative than others. As the University of Oxford’s Gina Neff recently remarked on Twitter, the Industrial Revolution even gave birth to sociology, or what she called “Progress Studies 1.0.”
This is all true, and yet Collison and Cowen are on to something. Academic researchers clearly find it hard to work together across disciplinary boundaries, despite repeated calls for them to do so more often. This is largely the result of incentives that encourage academics to specialize in ever-narrower areas, so that they can produce the publications that will lead to promotion and professional esteem. The world has problems, as the old saying puts it, but universities have departments. Interdisciplinary research institutes like mine and Neff’s therefore have to consider carefully how best to advance the careers of younger colleagues. The same silo problem arises in government, which is likewise organized by departments.
Moreover, fashions in research can lead to hugely disproportionate intellectual efforts in specific areas. To take one example, the ethics of artificial intelligence is clearly an important subject, but is it really the dominant research challenge today, even in the fields of AI or ethics? The financial incentives embedded in technology companies’ business models seem to me at least as important as morality in explaining these firms’ behavior.
At the same time, some important economic questions are curiously underexplored. For example, in his recent book The Technology Trap, Carl Frey expands on his gloomy view of what automation will mean for the jobs of the future, pointing to the adverse effects that the original Industrial Revolution had on the typical worker. Yet Frey also notes that a later period of automation, the era of mass production in the mid-twentieth century, was one of high employment and increasingly broad-based prosperity. What explains the great difference between those two eras?
Today, the role of research in changing behavior – whether that of government officials or of businesses and citizens – is part of the broader crisis of legitimacy in Western democracies. By the early 2000s, technocrats – and economists in particular – ruled the roost, and governments delegated large swaths of policy to independent expert bodies such as central banks and utility regulators. But then came the 2008 global financial crisis. With real incomes stagnating for many, and “deaths of despair” increasing, it is not surprising that expertise has lost its luster for much of the public.
This leads to a final point about the need for a science of progress: what do we actually mean by “progress”? How should it be measured and monitored, and who experiences it? For many reasons, the standard indicator of real GDP growth, which leaves out much of what people value, will no longer do.
The debate about progress therefore raises profound political and philosophical questions about the kind of societies we want. If the global economy falls into recession, as now seems likely, then social divisions and political polarization will intensify further. And the clear message since the turn of the millennium is that if most people do not experience progress, then society isn’t really progressing at all.
Current academic research – into the impact of new technologies, the economics of innovation, and the quality of management, for example – may be providing ever more pieces of the puzzle. But many crucial questions about economic progress remain unanswered, and others have not yet even been properly posed.