John Stuart Mill on the Limits of Economics

We must never forget that the truths of political economy are truths only in the rough: they have the certainty, but not the precision, of exact science.

-John Stuart Mill, Principles of Political Economy, Book 2, chapter XVI.4, p. 422.

John Stuart Mill on Lawyers

The exorbitantly-paid profession of lawyers, so far as their work is not created by defects in the law, of their own contriving, are required and supported principally by the dishonesty of mankind.

-John Stuart Mill, Principles of Political Economy, Book 1, chapter VII.5, p. 110.

This Week in Ridiculous Regulations

The 2021 Federal Register surpassed 50,000 pages in a short Labor Day week. Fresh off a trillion-dollar infrastructure bill, Congress began work on a $3.5 trillion reconciliation bill, which will in turn be followed by a roughly $6 trillion budget bill. Meanwhile, agencies issued new rules ranging from floating cabins to shipping human blood.

On to the data:

  • Agencies issued 59 final regulations last week, after 72 the previous week.
  • That’s the equivalent of a new regulation every two hours and 51 minutes.
  • With 2,250 final regulations so far in 2021, agencies are on pace to issue 3,251 final regulations this year. 2020’s total was 3,218 final regulations.
  • Agencies issued 29 proposed regulations in the Federal Register last week, after 39 the previous week.
  • With 1,466 proposed regulations so far in 2021, agencies are on pace to issue 2,118 proposed regulations this year. 2020’s total was 2,021 proposed regulations.
  • Agencies published 354 notices last week, after 467 notices the previous week.
  • With 15,203 notices so far in 2021, agencies are on pace to issue 21,970 notices this year. 2020’s total was 22,480.
  • Last week, 931 new pages were added to the Federal Register, after 1,604 pages the previous week.
  • The average Federal Register issue this year contains 294 pages.
  • With 50,833 pages so far, the 2021 Federal Register is on pace for 73,461 pages in 2021. The 2020 total was 87,352 pages. The all-time record adjusted page count (subtracting skips, jumps, and blank pages) is 96,994, set in 2016.
  • Rules are called “economically significant” if they have costs of $100 million or more in a given year. There are nine such rules so far in 2021, none from the last week. Agencies published five economically significant rules in 2020, and four in 2019.
  • The running cost tally for 2021’s economically significant rules ranges from $1.42 billion to $4.81 billion. The 2020 figure ranges from net savings of between $2.04 billion and $5.69 billion, mostly from estimated savings on federal spending. The exact numbers depend on discount rates and other assumptions.
  • Agencies have published 293 final rules meeting the broader definition of “significant” in 2021, with two in the last week. This is on pace for 423 significant rules in 2021. 2020’s total was 79 significant final rules.
  • In 2021, 622 new rules affect small businesses. 78 are classified as significant. 2020’s totals were 668 rules affecting small businesses, 26 of them significant.

Highlights from last week’s new regulations:

For more data, see Ten Thousand Commandments and follow @10KC and @RegoftheDay on Twitter.

Court Rules Apple App Store Rules Do Not Violate Antitrust Laws

This press release was originally posted on cei.org.

A federal district court today ruled that Apple’s rules regarding payments on its App Store do not violate antitrust laws. The case, brought by video game maker Epic Games, alleged Apple violated antitrust laws by requiring purchases be made on its own system.

Director of CEI’s Center for Technology and Innovation Jessica Melugin said:

“With a court finding it is not a monopoly, the decision is largely a victory for Apple. The company will mostly continue to operate their private property, the Apple App Store, by the rules it wishes. Apple will not be forced to allow outside payment systems from developers and the App Store can remain the exclusive app download method on iPhones and iPads. The finding that Apple is in violation of California state law under the software giant’s prohibition on developers telling users there are alternative and cheaper payment options is along the lines of concessions it has already started to make with internal policy changes and legal settlement offers. Consumers will continue to benefit from Apple’s intact security, convenience and reliability at the App Store.”    

Senior Fellow Ryan Young said:

“The wisdom of Apple’s business practices is constantly being put to the test by consumers. Their size does not protect them from flops like the Newton tablet, its failed Ping social network, or its forgotten Pippin gaming console. Same goes for the App Store’s payment and commission policies.

“The separate question of whether Apple’s App Store is a monopoly is less debatable. Making that case requires defining Apple’s market so narrowly that real-world consumers can escape its boundaries with a dozen keystrokes or less. Before Apple booted Epic’s Fortnite game from its App Store in August 2020, roughly 90 percent of Fortnite downloads came through non-App Store vendors. Epic tried to define Apple’s market this way; the court disagreed.

“Any market is a monopoly if you define it narrowly enough. But those types of language games don’t always hold up in court. Real-world considerations keep getting in the way.” 

Latest Producer Price Index Indicates Inflation Too High

This press release was originally posted on cei.org.

The government’s latest numbers on average changes in prices, as measured by the Producer Price Index (PPI), are up at an annualized rate of 8.3 percent – higher than the Consumer Price Index’s latest reading of 5.4 percent.

CEI Senior Fellow Ryan Young says the discouraging numbers indicate Congress should change course.

“The PPI is often seen as a leading indicator of what is to come, and today’s high reading indicates inflation is much higher than the Fed’s longtime target inflation rate of about 2 percent. High inflation is bad news for the near future. While a return to 1970s-era stagflation remains unlikely because the only damper on an otherwise-sound economy is the pandemic, today’s inflation is still cause for concern because policymakers may not learn the right lessons.

“The main causes of today’s inflation are heavy deficit spending and a loose Federal Reserve policy. The Federal Reserve indicated it will dial things back a bit on its end starting next year, but since there is a midterm election coming up, it will likely face political pressure to keep interests low. On spending, both parties are proving hopeless.

“Today’s inflation is preventable. People are opening up to the extent they feel safe doing so. Congress’ ongoing spending binge will have little or no effect on people’s safety decisions. Policymakers should instead encourage prudence in dealing with COVID risks without risking backlash by being too heavy-handed about it. The most useful actions policymakers could take would be passing non-spending stimulus measures such as loosening regulations on occupational licensing, trade restrictions, and excessive permit and paperwork burdens.”

Jobless Claims Are Down, but Tensions Remain in COVID Recovery

Jobless claims are at their lowest levels since the start of the pandemic; 310,000 people filed first-time claims last week, down roughly 95 percent from a peak of 6.1 million when the COVID shutdowns were at their worst.

The economic recovery is caught in a tug-of-war. On one side, COVID’s delta variant is slowing the recovery, as is the transformation of vaccines and masks into culture war issues. On the other side, economic fundamentals are in mostly good shape, aside from inflation. People are able to find work when they feel it is safe to, as shown in the all-time record 10.9 million job openings available right now. This back-and-forth tension will likely continue for as long as the delta variant or similarly harmful future COVID variants are widespread.

This week’s jobless claims were a swing to the good. The new school year has begun, and in most places, schools are back to in-person classes. This is freeing up a lot of parents who wanted to work, and felt safe doing so, but needed to stay home during last school year’s experiment in remote schooling.

Over the next several weeks, jobless claims may also decline as unemployment benefit extensions expire, prompting more people to reenter the workforce. Economists disagree over how large this effect will be, but no one seriously argues that unemployment benefit extensions have zero effect on people’s incentives to work or not. Whether this incentive effect will be strong enough to overcome delta variant fears remains to be seen.

As Congress follows up its trillion-dollar infrastructure plan with a $3.5 reconciliation bill and then a roughly $6 trillion budget, growth and employment could slow in the medium to long term as more resources get diverted to politicized spending projects, regulatory compliance, and paying off record levels of government debt.

This Week in Ridiculous Regulations

The United States officially ended its military occupation of Afghanistan. Hurricane Ida killed at least 40 people in the Northeastern U.S., while in the New Orleans area it caused six deaths and massive flooding and knocked out power to more than a million people. Meanwhile, agencies issued new rules ranging from regional haze to dairy donations.

On to the data:

  • Agencies issued 72 final regulations last week, after 52 the previous week.
  • That’s the equivalent of a new regulation every two hours and 20 minutes.
  • With 2,190 final regulations so far in 2021, agencies are on pace to issue 3,241 final regulations this year. 2020’s total was 3,218 final regulations.
  • Agencies issued 39 proposed regulations in the Federal Register last week, after 52 the previous week.
  • With 1,437 proposed regulations so far in 2021, agencies are on pace to issue 2,127 proposed regulations this year. 2020’s total was 2,021 proposed regulations.
  • Agencies published 467 notices last week, after 495 notices the previous week.
  • With 14,849 notices so far in 2021, agencies are on pace to issue 21,966 notices this year. 2020’s total was 22,480.
  • Last week, 1,604 new pages were added to the Federal Register, after 1,342 pages the previous week.
  • The average Federal Register issue this year contains 295 pages.
  • With 49,902 pages so far, the 2021 Federal Register is on pace for 78,399 pages in 2021. The 2020 total was 87,352 pages. The all-time record adjusted page count (subtracting skips, jumps, and blank pages) is 96,994, set in 2016.
  • Rules are called “economically significant” if they have costs of $100 million or more in a given year. There are nine such rules so far in 2021, none from the last week. Agencies published five economically significant rules in 2020, and four in 2019.
  • The running cost tally for 2021’s economically significant rules ranges from$1.42 billion to $4.81 billion. The 2020 figure ranges from net savings of between $2.04 billion and $5.69 billion, mostly from estimated savings on federal spending. The exact numbers depend on discount rates and other assumptions.
  • Agencies have published 291 final rules meeting the broader definition of “significant” in 2021, with seven in the last week. This is on pace for 430 significant rules in 2021. 2020’s total was 79 significant final rules.
  • In 2021, 592 new rules affect small businesses. 78 are classified as significant. 2020’s totals were 668 rules affecting small businesses, 26 of them significant.

Highlights from last week’s new regulations:

For more data, see Ten Thousand Commandments and follow @10KC and @RegoftheDay on Twitter.

Disappointing August Job Gains Tied to Covid Restrictions, Politics

This press release was originally posted at cei.org.

Competitive Enterprise Institute experts commented on today’s disappointing news about August job gains, urging policy makers to reject restrictions and politics and look for ways to lift barriers to economic recovery.

Sean Higgins, CEI research fellow:

“Friday’s Labor Department report https://www.bls.gov/news.release/pdf/empsit.pdf that the nation gained only 235,000 jobs in August was well below the gains of the previous months and proof that re-instituting Covid-related restrictions has created a serious drag on the recovery. Prior to August, the economy had been growing by more than a half million jobs a month. The department’s report is a reminder that there is a stark cost to restrictions and officials must be mindful of broader consequences. The economy has been resilient so far, but that was partly because the end appeared to be in sight. New uncertainty is undermining that.

“The number of people who reported being unable to work for pandemic-related reasons was 5.6 million, an abrupt rise of 400,000 in a single month. The leisure and hospitality industry, usually the first to feel the effects of covid-related policies reported no gains in August due to a loss of 42,000 jobs in restaurants and bars wiping out all other gains. That’s a serious blow to people who have already endured a year and a half of difficult times.

Ryan Young, CEI senior fellow:

“Covid’s delta variant is showing up in economic statistics now, not just health statistics. Payrolls are still growing, on net, and will likely to continue to grow for the rest of the year. But that growth will be slower than it otherwise would be, in part because some people simply insist on turning vaccines and masks into political issues. Today’s tendency to turn everything into a culture war bears a lot of the blame for low vaccination rates. This in turn makes people more reluctant to travel, dine out, and attend events, which is where a lot of vulnerable jobs are being lost.

“There isn’t much policymakers can do about cultural attitudes, since mandates tend to backfire; but there is plenty they can do to roll back regulatory, licensing, and financial regulations that are blocking businesses from opening, staying afloat, or even expanding. Policymakers can also restore confidence by walking back unnecessary multi-trillion dollar spending projects that have more to do with politics than economic recovery.”

Fighting Bias and Misinformation, from Pierre Bayle’s 17th Century to the Social Media Age

Many people insist that media bias and misinformation are getting worse in the social media age, and we need to do something about it. Depending on whether one leans Democratic or Republican, tech companies are either not doing enough to stop right-wing misinformation from spreading, or are censoring legitimate conservative content. Some conservatives feel so aggrieved they are even pushing to revive the fairness doctrine, which they used to oppose.

Bias and misinformation are impossible to measure, which puts a rather obvious damper on peoples’ certainty about them. Ironically, this is at least partially because of the human brain’s built-in biases, such as recency bias, availability bias, and pessimistic bias. In fact, media bias and misinformation are nothing new, and have likely gotten neither better nor worse over time.

These problems have been around so long that the 17th century philosopher Pierre Bayle wrote in an issue of his 1680s periodical Nouvelles de la République des Lettres (News from the Republic of Letters):

“History is dished up very much like meat. Each nation and religion takes the same raw facts and dresses them in a sauce of its own taste, and each reader finds them true or false according to whether they agree or disagree with his prejudices.”

More than 300 years later, this holds up well. And it’s not just with history. People also put their own tastes on current events. Different people take identical facts and prepare them differently, usually in line with whatever their ideological priors are.

Just being aware that everyone does this can go a long way toward minimizing the harmful effects of bias and misinformation. Beyond awareness, there are also many simple, low-effort actions one can take, some of which Bayle might endorse if he were alive today:

  • Avoid cable news channels. They do not inform people, so much as get them riled up. People who feel outraged click on more articles, keep the TV on, and generate more ad revenue. Outlets encourage this by framing news stories as us-vs.-them struggles first, and only secondarily by presenting information. These are two very different things! Learn to tell them apart. If you find yourself getting outraged over something a personality figure from the other political party said, or about the culture war story of the day, that’s usually a good sign that you’re getting riled up rather than informed. There are better uses for your time, and for your blood pressure.
  • Purge low-quality sources from your social media feeds (or abstain entirely). Use those mute and block buttons on people who post low-quality content that does not add value to your feed. That’s your space, and you can curate it however you want. If someone’s posts are mostly outrage stories, your social media feed will likely be both more enjoyable and more informative if they are not part of it. Spend some real-life time with that person instead, which will likely elicit better social etiquette. People are more considerate of others when they are face to face rather than venting their spleen, alone, into a keyboard.
  • Put a little effort into statistical literacy, and be skeptical of too-good-to-be-true stories that appeal to your ideological priors. Arming yourself with the right tools is as easy as picking up a layman-friendly book or two. Financial Times columnist and BBC presenter (and friend of CEI) Tim Harford’s latest book, The Data Detective, is an excellent guide that is also a delight to read. I also recommend Hans Rosling’s Factfulness, which I reviewed earlier on this blog. Jonathan Rauch’s new book The Constitution of Knowledge has a lot wisdom, which he also shared earlier this year at a CEI online event. My colleague Iain Murray strongly recommends his old boss’ book, David Murray, Joel Schwartz, and S. Robert Lichter’s It Ain’t Necessarily So: How the Media Remake Our Picture of Reality. Reading a chapter a day from any of these books is a far better use of 30 minutes than getting outraged over Tucker Carlson or Rachel Maddow’s latest rant.
  • Keep an eye on the longer arcs of history, not just today’s ephemeraElizabeth Nolan Brown’s recent Reason article “40 Ways Things Are Getting Better” is one example of journalism that gets this. There are plenty of reasons for short-term pessimism; that keep groups like CEI busy. But there is also a strong case for long-run optimism. Both can simultaneously be true, as CEI founder Fred Smith captured in his “Despairing Optimist” letters. Matt Ridley’s The Rational Optimist and his new book How Innovation Works, for which he also did a CEI event, are immensely helpful for seeing the big picture.

Notice that none of these strategies involve government regulating political speech. They are all ideas that you and I can implement right now; change begins at home. Ultimately, individuals hold power over bias and misinformation, not the other way around. We should learn to use that power wisely, and not delegate it away to Washington, where it will get politicized and misused. It takes some effort, which is why many people don’t bother. But the payoff is worth it.

Pierre Bayle had a good sense of this dynamic. He was an important bridge figure between the Scientific Revolution and the Enlightenment—which means he helped to inspire modernity as we know it. He emphasized the virtues of tolerance and skepticism by individuals, in part because he was forced into exile from his native France over his religious beliefs. He settled in the more tolerant Netherlands, where he produced works in astronomy, philosophy, religion, literature, and even produced the Dictionnaire Historique et Critique (Historical and Critical Dictionary), an early encyclopedia that predated Denis Diderot’s more famous 1751 Encyclopédie by 60 years. France’s outrage-induced loss was the Netherlands’ gain, and ours.

We live in better times. But the lessons Bayle took from his day’s outrage culture are still useful in dealing with today’s excesses. Times change, but people are people, wherever you go. That is mostly to the good—though as we see in the news and on social media, not entirely. There is always reason for optimism, if we know how to look for and act on it.

Pierre Bayle on Media Bias

Bias is nothing new, and it likely has gotten neither better nor worse over time. People tend to think that media bias and misinformation are getting worse in the social media age, ironically because the human brain is prone to recency bias, availability bias, and pessimistic bias. But as Pierre Bayle wrote in the 1680s in his Nouvelles de la République des Lettres back in the 1680s:

“History is dished up very much like meat. Each nation and religion takes the same raw facts and dresses them in a sauce of its own taste, and each reader finds them true or false according to whether they agree or disagree with his prejudices.”

A little bit of awareness of this tendency can go a long way towards minimizing the problem of bias and misinformation. In today’s time, that means avoiding the cable news channels, purging low-quality sources from one’s social media feeds (or abstaining entirely), putting a little effort into statistical literacy, and employing a little bit of skepticism, especially towards too-good-to-be-true stories that appeal to one’s ideological priors. Keeping an eye on the longer arcs of history, and not just today’s ephemera, is also useful. I often find myself simultaneously a short-term pessimist and a long-run optimist; it turns out that both can be true.

Bayle’s emphasis on tolerance towards people with different beliefs, apparently still as radical in our time as it was in his, is also helpful, both here and in many other parts of life.