Fri, 10 November 2017
We discuss the economic reasoning behind some of history's strangest practices: ordeals that were used to determine innocence or guilt in medieval Europe, trials by battle that were used to settle land disputes in Norman England, wife auctions that happened during the Industrial Revolution, and the criminal prosecution of insects and rodents by ecclesiastical courts in Renaissance Italy.
Also check out Peter's previous book, The Invisible Hook, about the economics of pirates. You won't regret it!
Fri, 3 November 2017
My guest today is Jared Rubin of Chapman University. He is the author of Rulers, Religion, and Riches: Why the West Got Rich and the Middle East Did Not, which is our topic for today.
The book deals with the question of why Western Europe became wealthier than the Middle East after centuries of being poorer. The book is part game theoretic model of society, part historical narrative through the lens of that model.
The model considers two main factors: the state's power to coerce and its need for political legitimacy granted by elites. Importantly, different groups have been the ones to grant legitimacy to the state in different times and places. In the Muslim world, religious leaders primarily played this role, as they did in Europe prior to the Reformation.
After the Reformation, however, the power of the Catholic Church was much diminished in many parts of Europe. Rulers in places like England and the Dutch Republic turned to economic elites to grant them legitimacy. This gave the merchant and capitalist classes a seat at the bargaining table, setting the stage for the Industrial Revolution.
Fri, 27 October 2017
My guest today is Kevin Leyton-Brown, he is a Professor of Computer Science at the University of British Columbia.
Kevin's work involves not only computer science topics such as artificial intelligence, but also game theory, and the intersection between the two. Our topic for today is an app that Kevin co-founded called Kudu, which uses double auctions to help Ugandan farmers trade more effectively.
Kevin was interested in using his skills to help people in the developing world, so during a sabbatical seven years ago, he resolved to go to a country in sub-Saharan Africa to do just that. He settled on Uganda and, after living there for a time, noticed something peculiar about the market for agricultural goods there. In the city, you would sometimes find vendors selling goods at very high prices, and even running out. Meanwhile, in the countryside, vendors would have so much stock they would be selling at extremely low prices, even rotting before they could be sold.
Kevin, along with his partners John Quinn and Richard Ssekibuule, set out to help the locals seize these apparent arbitrage opportunities by constructing a platform to allow buyers and sellers in these markets to trade with one another at competitive prices. Most Ugandans have cell phones. Not fancy smartphones (as I wrongly guessed) but basic flip phones. So Kevin and his partners decided to set up a platform by which people could make bids and asks using a basic text-message system, and that system turned into Kudu.
The platform has facilitated $1.5 million USD worth of confirmed trades, and it has made the prices of agricultural goods much more transparent for everyone trading in these markets.
Sat, 21 October 2017
Returning to the podcast is David Henderson of Stanford University's Hoover Institution and the Naval Postgraduate School in Monterey California.
Our topic for today is the German Economic Miracle. David wrote an article on it for the Concise Encyclopedia of Economics. The article begins as follows:
"After World War II the German economy lay in shambles. The war, along with Hitler’s scorched-earth policy, had destroyed 20 percent of all housing. Food production per capita in 1947 was only 51 percent of its level in 1938, and the official food ration set by the occupying powers varied between 1,040 and 1,550 calories per day. Industrial output in 1947 was only one-third its 1938 level. Moreover, a large percentage of Germany’s working-age men were dead. At the time, observers thought that West Germany would have to be the biggest client of the U.S. welfare state; yet, twenty years later its economy was envied by most of the world. And less than ten years after the war people already were talking about the German economic miracle.
We discuss the West German economy, before and after WWII, and contrast it with the East German economy. We also discuss some of the interesting figures who played roles along the way: Ludwig Erhard, Wilhelm Röpke, Konrad Adenauer, and Walter Heller.
We wrap up by discussing the Concise Encyclopedia of Economics itself, which David created and has edited since its first publication in 1993.
Fri, 13 October 2017
My guest today is Jamie Pavlik of Texas Tech University.
Jamie has done a ton of research on corruption and development. She has examined corruption in the developing world, with multiple papers examining corruption in Brazil. She has also looked at international comparisons of corruption, and corruption in the United States specifically.
We discuss her work on corruption as well as some of the statistical issues with spatial econometrics.
Fri, 6 October 2017
My guest today is Thomas Sampson of the London School of Economics.
Our topic for today is the economic impact of Brexit. Long-time listeners will recall that I did an interview with Sam Bowman on Brexit immediately after the vote occurred. Think of this as a follow-up to that episode now that the dust has settled and we have a better idea of what Brexit is going to look like. Thomas has written multiple papers on the subject, including Brexit: The Economics of International Disintegration, which is forthcoming in the Journal of Economic Perspectives. Its abstract follows:
This paper reviews the literature on the likely economic consequences of Brexit and considers the lessons of the Brexit vote for the future of European and global integration. Brexit will make the United Kingdom poorer because it will lead to new barriers to trade and migration between the United Kingdom and the European Union. Plausible estimates put the costs to the United Kingdom at between 1 and 10 percent of income per capita. Other European Union countries will also suffer economically, but their estimated losses are much smaller. Support for Brexit came from a coalition of less-educated, older, less economically successful and more socially conservative voters. Why these voters rejected the European Union is poorly understood, but will play an important role in determining whether Brexit proves to be merely a diversion on the path to greater international integration or a sign that globalization has reached its limits.
Globalization and economic integration have been on more or less a constant rise since WWII, and Brexit is a rare reversal of this trend. Thomas argues that it is important to understand the causes of Brexit to see if this is just a temporary blip on the way to global economic integration or the start of a reversal of the post-WWII trend.
Fri, 29 September 2017
My guest today is Karl Smith, he is the director of economic research at the Niskanen center.
Our topic for today will be market power. Karl has written a series of posts on the Niskanen center blog discussing markups and market power. The debate was sparked by a paper by Loecker and Eeckhout that claimed that average markups in the American economy had risen from 18 percent in 1980 to 67 percent today.
There are many different interpretations one might have for this data. What Karl points out is that these markups have mainly risen among smaller firms. Wal-Mart has very low markups, but niche specialty firms such as the local vegan café have relatively high markups. This makes sense in the context of monopolistic competition, where consumers pay a small premium in return for greater product differentiation.
Noah Smith had this response to Karl's article:
"Robin Hanson and Karl Smith both have posts responding to De Loecker and Eeckhout’s paper and attacking the Market Power Story. Both give reasons why they think rising markups indicate monopolistic competition, rather than entry barriers. But both seem to forget that monopolistic competition causes deadweight loss. Just because it has the word 'competition' in it does NOT mean that monopolistic competition is efficient. It is not."
As Tyler Cowen points out, this is not necessarily the case. What is inefficient in a partial equilibrium model may not be inefficient in a general equilibrium model.
Fri, 8 September 2017
My guest today is Fabio Rojas. He is professor of sociology at Indiana University Bloomington.
Fabio is the author of three books, the first is From Black Power to Black Studies: How a Radical Social Movement Became an Academic Discipline, published in 2007. The second book, coauthored with Michael Heaney, is Party in the Street: The Antiwar Movement and the Democratic Party after 9/11, published in 2015. The third book, Theory for the Working Sociologist, was published just recently in 2017.
We begin the conversation by talking about the discipline of sociology in general. What should an undergraduate student know about sociology, and furthermore, what should other social scientists know about the field? We discuss the distinct methods that make sociology sociology.
Moving on, we discuss the relationship between activism and scholarship, particularly as it pertains to sociology but also as it pertains to black studies, the subject of Fabio's first book.
Evicted: Poverty and Profit in the American City by Matt Desmond
Fri, 1 September 2017
We recorded this on August 24th, 2017, the same day Peter published an op-ed in the National Post titled "Canada needs blood plasma. We should pay donors to get it." The op-ed argues in favour of allowing people who donate blood plasma in Canada to be compensated in return:
Peter and I discuss the best and most popular arguments against compensating blood plasma donors, and organ donors in general, then Peter gives counterarguments to each of these objections.
Furthermore, we discuss the United States' recent legalization of compensation for bone marrow donors. In 2012, The Institute for Justice successfully argued in front of the 9th Circuit Court of the United States that bone marrow should be exempted from the 1984 National Organ Transplant Act (NOTA), since bone marrow can be extracted from blood and does not thus count as an organ. Blood was specifically exempted from NOTA.
Fri, 25 August 2017
Samuel Hammond is returning to the podcast today to discuss the relationship between capitalism and social justice.
The controversial ad featured generic protesters and Kendall Jenner sharing a Pepsi with police. While the ad was insensitive and more than a little absurd, Sam pointed out that Pepsi has a history of promoting social justice and racial harmony through its marketing.
Back in 1940, Pepsi was a small player compared to Coca-Cola; the latter selling 25 sodas for each one Pepsi sold. In order to compete, Pepsi's CEO Walter S. Mack Jr. decided to do something the other companies weren't doing: marketing specifically to African Americans:
"In 1947, [Mack Jr.] hired Edward F. Boyd, an African-American adman who later became known as one of the fathers of niche-marketing. Boyd crafted ads for Pepsi that celebrated black cultural and professional achievements, and above all portrayed African-Americans as normal, middle-class consumers. It was this marketing push that ultimately drove Pepsi’s rise to the number two soda company in America."
In pre-civil-rights America, this was a major achievement, and it served a deeper social purpose by extending social recognition to black Americans.
We also discuss some other interesting niche marketing campaigns, like Subaru's marketing strategy targeting lesbians in the 1990s. Finally, we tie it all back to capitalism as a force promoting diversity and inclusion, with references to Becker's work on taste-based discrimination.