Category Archives: Economics

Book Review: Walter Williams – All It Takes Is Guts: A Minority View

Walter Williams – All It Takes Is Guts: A Minority View (Washington: Regnery, 1987)

A collection of Williams’ syndicated columns. He covers a variety of issues including race and gender, regulation, economic policy, and more. While much of the numbers and political personalities are dated at this point, the core debates are very much alive.

Many of the best columns come from William’s overlooked research on apartheid-era South Africa. He went on a research and speaking tour there in 1980. He found that apartheid, as most racism does, had a sharp anti-capitalist underpinning. This directly contradicts many Western activists’ views. If socialism means significant state ownership of the means of production, then South Africa had a socialist economy. Williams argued that “if socialists would convert to Christianity, they would find themselves quite comfortable in South Africa.”

State intervention was necessary to enforce apartheid because discrimination is bad for business. It denies shuts out large numbers of people from the economy for no good reason. A lot of South Africans would not follow apartheid-style rules voluntarily, including many people who were genuinely racist. The South African government overruled markets’ anti-racism with state-owned media, oil, and other industries.

Labor regulations such as minimum wages were enforced for openly racist reasons. Blacks generally were paid less than whites, so minimum wages essentially either shut Black workers out, or gave white workers first crack at any job. Minimum wage regulations in America were passed during the Progressive Era for the same reason. They continue to have similar effects on minority employment, even though this is no longer intended.

Williams also argued that well-meaning American efforts to disinvest from South Africa would backfire for two reasons. One, American investment in South Africa was a small share of total foreign investment there, and an even smaller share of total investment. Few people would notice. Two, the areas where Americans did invest tended to disproportionately involve Black workers, such as mining. American disinvestment would hurt Black workers there, while doing nothing to end apartheid. Fortunately, this became a moot point before too long. Racism remains a severe problem in South African culture, though, and likely will for generations to come.

From a historical perspective, it is interesting to see how far ahead of the curve Williams was during apartheid. He opposed racism the same as everyone else with a conscience. But he took the time to actually research the situation, travel to South Africa, learn about the situation on the ground, and then propose policies—economic and political liberalization and cultural engagement—that would actually do good, rather than just signal good intentions.

More Interconnected than Most People Think

From page 70 of Johan Norberg’s 2020 book, Open: The Story of Human Progress:

What we now think of as Western civilization is a combination of a philosophical heritage from the Greeks, religions from the Middle East, creatively interpreted by Romans in what is now Turkey, and scientific ideas borrowed from the Arabs and the Chinese. We got our alphabets from the Phoenicians, and our numbers are called ‘Arabic numerals’ because we learned them from mathematicians in Baghdad, who got them from the Indians.

Third Antitrust Suit against Google since October Based on Flawed Argument

This press release was originally posted on cei.org.

A coalition of more than 30 states and territories today filed an antitrust lawsuit against Google, alleging the search engine has abused its power in markets ranging from voice assistants to digital advertising in an attempt to maintain a monopoly over internet searches. The antitrust lawsuit is the third filed against Google since October.

CEI Senior Fellow Ryan Young said:

“Today’s antitrust lawsuit, the third against Google since October, has a major flaw: the dozen keystrokes argument. It is not difficult to type bing.com or duckduckgo.com into your browser. Google pays Apple as much as $12 billion per year to Apple to have Google be its default search engine. This is apparently not enough to prevent Apple from reportedly building up its own search engine.

“Nor was Microsoft’s similar default status for its Internet Explorer browser enough to stave off competition from Firefox, Google Chrome, Apple Safari, and other browsers. Just as Microsoft never actually controlled the browser market, Google does not control the search market. Consumers do.”

Read more:

Recent Media Appearances

In early November, I was invited on Bob Zadek’s show for a thoughtful hour-long conversation on antitrust law. Audio and an AI-generated transcript are here.

In late October, I was on Jim Blasingame’s Small Business Advocates radio show, also to talk about antitrust.

Earlier this week, I spoke to One News Now’s Chris Woodward about regulations.

Texas Antitrust Case Against Google would Harm Consumers and Small Businesses

This is a press statement originally posted at cei.org.

The State of Texas announced today it is filing an antitrust lawsuit against Google, alleging the company’s online advertising platform harms competition and allows Google to fix prices for advertising.

CEI senior fellow Ryan Young said:

“A company has monopoly power if it can raise prices, restrict supply, and still keep its dominance. Despite Google’s growth, digital ad prices have fallen by half over the last decade. At the same time, print ad prices have been increasing. Some newspapers have doubled their rates. Google and Facebook, which hold similar market shares, have made the ad market more competitive. Their innovation and price-cutting has made advertising more affordable than ever for small businesses who are struggling to find customers at a difficult time. Attorney General Paxton’s lawsuit would harm consumers and small businesses—precisely the opposite of what antitrust regulation is intended to do.”

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

“It’s hard to take seriously Attorney General Paxton’s claim that Google has, ‘harmed every person in America.’ Consumers have benefited from Google’s products, services and innovations, often for free. This suit is costly solution in search of a problem.”

Read more:

New EU Tech Rules will Chill Innovation and Harm Consumers

This is a press statement originally posted at cei.org.

The European Union today announced new rules it claims will change the way technology companies operate. The EU says the Digital Services Act and the Digital Markets Act “will create a safer digital space for users” and “level the playing field so that digital businesses can grow.”

Vice President for Strategy Iain Murray said:

“The European Union’s proposed new powers allow it to treat American tech firms as cash cows, to be fined whenever it finds them guilty of providing too much discretion to consumers or allowing too much speech. Its proposed veto on acquisitions will also chill innovation in the European tech sector as it will make the prospect of significant rewards for an acquisition-based business strategy less likely. Europe will act as an anchor on tech innovation, slowing progress and reducing consumer welfare worldwide. The incoming Biden administration should avoid making the same mistakes.”

Senior Fellow Ryan Young said:

“The European Union’s two proposed tech regulation bills have two fatal flaws. One is that, on purpose or not, they are trade protectionism under another name. Many of their provisions are aimed at the large U.S. tech companies. Taking them down a notch would give an opening to EU-based tech companies, the thinking goes. As with President Trump’s trade wars, this will harm consumers without actually helping the industry. The two bills also leave in place the EU’s stifling regulatory culture that is the root cause of Europe’s lack of tech sector innovation.

“The second fatal flaw is that the EU’s proposals would actually lock in the existing American firms’ dominance. They are the only companies that can afford the massive content moderation costs the EU is demanding, or the large fines. Startups that might one day dethrone today’s giants cannot afford these costs, and may not even bother trying to compete.”

Read more:

A Big-Picture View of the Antitrust Debate

In this month’s issue of Reason magazine, I have a feature-length article on the bipartisan push to revive antitrust enforcement. If you don’t have the print edition, it is now online. Here is the introduction:

Mark Zuckerberg was having one of 2020’s worst Zoom meetings. It was July 29, and one of the most influential men in the world was sitting, pale and perspiring, in a sparse white room getting attacked by members of Congress from both parties. Rep. Matt Gaetz, a Florida Republican and close ally of President Donald Trump, was scolding the Facebook CEO about the “content moderators that you employ [who] are out there disadvantaging conservative content.”

But before Zuckerberg could offer much in the way of a response, he was attacked from the left, as Rhode Island Democrat Rep. David Cicilline castigated Zuckerberg for not taking down the same content. For Cicilline, “the problem is Facebook is profiting off and amplifying disinformation that harms others because it’s profitable.”

For good measure, Rep. Jim Sensenbrenner, a Wisconsin Republican, asked Zuckerberg why Facebook temporarily took down Donald Trump Jr.’s account over a post promoting hydroxychloroquine as a COVID-19 treatment. Zuckerberg pointed out that the incident happened on Twitter.

After discussing how conservatives’ and progressives’ ideological priors are warping the antitrust debate, I point to a better way: abolish antitrust regulation outright. Or at the very least, require proof of consumer harm before unleashing it.

Read the whole thing here. See also CEI’s dedicated antitrust site, antitrust.cei.org.

Walter Williams, 1936-2020

Walter Williams passed away this week at age 84. He was the rare economist to succeed as both an academic and a popular communicator. His success came both despite and because of his growing up poor in Philadelphia. He and his sister were raised by a single mother. They lived in a housing project for much of his childhood, and they were on and off welfare for much of that time. But she set high standards for her children, and saw that they met them. In the introduction to Williams’s 1987 book All it Takes Is Guts: A Minority View, he thanked his mother, “who taught me to be independent, suspicious of the status quo, and ambitious.”

After a single semester of college in Los Angeles, he worked as a cab driver for a bit back in Philadelphia, then served in the Army. He was stationed in the Jim Crow south, and the experience was eye-opening. He committed several inspired acts of disobedience aimed at fighting the pervasive racism around him, which led to a failed attempt by one of his commanding officers to court-martial him, and a transfer to Korea. He also wrote a letter to President John F. Kennedy about racism in the military, and received a response from a higher-up in the Defense Department. This would not be the last of his writings to draw a response.

After the army, he worked as a probation officer, finished college, and earned his Ph.D. from UCLA at a time when its department was one of the country’s best. Williams spent his days in the company of world-class price theorists such as Armen Alchian, with whom he would remain friends until Alchian’s death in 2013. He also befriended James Buchanan, who would go on to win the economics Nobel for his role in founding public choice theory, and was briefly a UCLA faculty member during this period. He also met Thomas Sowell, who shares Williams’s gifts for clear reasoning and clear writing.

After bouncing around a few different academic positions, including Temple University and a year at the Hoover Institution at Stanford University, he found his home in 1980 at George Mason University, where he would teach for the rest of his life.

Mason had been granted its independence from the University of Virginia less than a decade before, and had no reputation to speak of. The whole school, not just the economics department, was essentially still under construction. Williams played a major role in building up their economics department, which has produced two Nobel Prize winners—Buchanan in 1986 and Vernon Smith in 2002, who also won CEI’s Julian Simon Award in 2015. Many of today’s top economists either attended or teach at Mason.

Williams would not only become the department’s longtime chairman, he would continue to teach the first-year microeconomics course required of all Ph.D students. Most professors who achieve Williams’s level of fame drop their teaching responsibilities like a hot potato. Williams embraced it. His course became something of a rite of passage, and he had a way of pairing a no-nonsense demeanor with a sense of encouragement. He wanted his students to do well, but they had to earn it.

But there is that whole fame part. Like many academics, he had top-notch mentors and colleagues, such as Alchian, Buchanan, and Sowell. But his emphasis on classroom work also sharpened his ability to explain ideas in ways that people can understand them. This is what would give him a national reputation—along with the fact that he was unapologetic about where his reasoning led him, even when it was unpopular. And on issues from minimum wages to labor regulations to fighting racial discrimination, he often was unpopular.

Williams published roughly 150 scholarly articles in his career, which is more than most academics achieve. But this was only a fraction of his output. Of his 13 books, four are collections of his newspaper columns, which he continued to write until the end of his life. Few economists have had more readers than Walter Williams. He had a gift for communication, and he was not shy about using it.

Williams’s first famous book was 1982’s The State Against Blacks, which argued that many well-intended government policies actually made racial discrimination worse. Minimum wages, for example, not only lop off the bottom rungs of the economic ladder, as I’ve also argued, they actually make it easier for racist employers to discriminate. When the price of labor goes up, more people vie for fewer job openings. Employers have an easier time using non-price reasons for choosing whom to hire, such as hiring only people of their own race, or intentionally excluding Blacks or women.

Rent controls reduce the incentive to build new housing or to maintain existing housing. Minorities are worst affected by this, for similar reasons. With fewer housing spots available compared to demand, racist landlords can indulge their bigotry far more easily than they can in a free market.

Ball State University economist Steve Horwitz, who earned his Ph.D at George Mason and was CEI’s 2020 Julian Simon Award winner, said in a Facebook post, “*The State Against Blacks* was formative in my thinking about how markets and race interacted, and what a progressive libertarianism might look like. *South Africa’s War Against Capitalism* helped too.”

That book argued that Apartheid was the opposite of free-market policy. Markets punish discrimination, or at least make it more expensive. Apartheid was government regulation that forced even non-racists to discriminate, on pain of fines or worse. Markets bring people together so they can exchange for mutual benefit. It takes government policies such as Jim Crow and Apartheid to keep people apart—hence the very term “Apartheid.”

Horwitz’s point is an important one for the future of the free-market movement. Williams is an excellent role model here. Most free-market advocates have too narrow a view of things. Economic freedom is only one kind of freedom that markets can help preserve. Markets are also moral playgrounds, as George Mason economists Virgil Storr and Ginni Choi argue. In markets, people learn to trust and to be trustworthy. They learn that openness to strangers is an opportunity, not a threat. Everyone has something to offer, if you let them. Markets teach people that not only is discrimination is bad for business, it is also immoral.

Sound economic reasoning, such as Williams spent a career practicing, shows why the conventional policies people turn to in fighting discrimination are largely counterproductive. It also shows why markets are far more effective for achieving progressivism’s nobler goals than their usual policies. That dialogue needs to be more open; nothing was ever accomplished with silence.

If more classical liberals take the time to show how free markets, and not top-down policy making, can empower women, minorities, and the developing world, they can help reduce poverty, create opportunities for innovation, and reduce racism. Above all, markets create opportunities. For people who lack them, this is incredibly meaningful.

These are not always popular things to say, inside the liberty movement or out of it. But Williams didn’t mind. His reasoning is correct, as was his moral sense. So, he spoke up in print, on radio, and on television. While the fit does not seem natural, he was a frequent guest host for Rush Limbaugh’s talk radio program. Williams’s appearance in Milton Friedman’s 1980 Free to Choosetelevision series on PBS led to his own three-part PBS series in 1982, Good Intentions, based on The State Against Blacks. In his autumn years, Williams was the subject of the documentary “Suffer No Fools,” and wrote his autobiography, “Up from the Projects.” And he continued writing until almost the day he died.

Walter Williams set quite the example in his life and in his work. Now it is up to us to live up to it.

Book Review: Ben Wilson – Metropolis: A History of the City, Humankind’s Greatest Invention

Ben Wilson – Metropolis: A History of the City, Humankind’s Greatest Invention (New York: Doubleday, 2020).

A wide-ranging world history told through the lens of cities. Wilson bounces around between Asia, Europe, and America, and concludes in Lagos, Nigeria, which is well on its way to becoming one of the world’s major urban centers. Wilson feels at home discussing subjects as diverse as the Epic of Gilgamesh and its relationship to Uruk, the first big city; coffeehouse culture in 18th century London, with its undercurrents of political dissent and rebellion against social norms; the bombing of Hiroshima and Nagasaki, and their fast but difficult recovery; and the birth of skyscrapers in jazz age New York and the dashed grand plans for remaking social orders in glass and steel. For a Brit, he is also surprisingly well-versed in the early history of hip-hop.

Wilson is a cheerful tour guide and has a conversational prose style that reads quickly. Metropolis would go well with any number of books, ranging from James C. Scott’s Against the Grain about the close relationship between early agriculture, the first cities, and the first governments; Monica Smith’s very similar Cities: The First 6,000 Years; and The Death and Life of Great American Cities by Jane Jacobs, the influential urban economist who took on Robert Moses’ machine politics in New York City in the mid-twentieth century.

Book Review: Casey Mulligan – You’re Hired!: Untold Successes and Failures of a Populist President

Casey Mulligan – You’re Hired!: Untold Successes and Failures of a Populist President (Alexandria, VA: Republic Book Publishers, 2020).

Mulligan was the Chief Economist of President Trump’s Council of Economic Advisers. He is much kinder to Trump than most economists are. While Mulligan pulls a lot of his punches and has some of the unconvincing persecution complex that many Republicans have, he offers credible insights into how Trump and his White House worked. Despite its restraint, You’re Hired has lessons for policy advisers of any political persuasion. Personality matters in politics. Advisers who do not account for that will not get sound policies enacted.

While President Trump is not knowledgeable about policy, he is also not as dumb as many of his critics allege. For example, when he would tweet out good economic news, he would often exaggerate it on purpose, knowing that media reports would instantly go about correcting him—and unintentionally spreading good news they might otherwise have ignored.

Mulligan also praises Trump’s tendency during meetings to intuit many mostly correct economic conclusions even when it is clear he is approaching a given issue for the first time. Mulligan is likely either selective or exaggerating, though, considering Trump’s long pre-presidency track record on issues such as trade, immigration, and industrial policy.

On the negative side, Mulligan’s treatment of opiate policy is at best incomplete. This was one of his primary issues during his CEA tenure; for the most part, Mulligan’s book focuses on issues he personally worked on. On one hand, Mulligan is correct that subsidizing opiates has had negative unintended consequences, and he offers sound policy fixes. On the other hand, Mulligan dismisses ending the criminalization of recreational users or prescribing doctors.

Mulligan is also ok with Washington interfering in doctor-patient relationships involving chronic pain patients—one of whom was my late grandfather, who suffered a great deal of unnecessary pain because of federal policies such as Mulligan endorses.

He also does not address the larger criminal justice problems created by federal drug policy. Mulligan is so narrowly focused on price controls, that while his analysis is correct as far as it goes, he dismisses larger—and politically possible—fixes that lie outside of formal price theory.

While Mulligan writes well, his consistent capitalization is “Federal” is an off-putting stylistic decision. Government documents use the same device. Mulligan’s use of the same honorific does not help his desire to appear independent, even though this is an example of style, not substance.

His lengthy tangent on the lack of collusion in President Trump’s Russia scandal feels out of place, both in they way it copies Trump’s terminology, and because Mulligan had nothing to do with the scandal; “collusion” was not a legal term at issue in the case.

You’re Hired is a useful counter to Trump Derangement Syndrome, which can be almost as harmful as Trumpism. But Mulligan is too sanguine about the administration’s illiberalism. The administration’s policy successes on regulation, education, environmental policy, and assorted other issues do not excuse its deficit spending, its expansive view of executive power, its immigration policies, its poor COVID response, its embarrassing personality cult, embrace of fringe figures and conspiracy theories, its ill-timed stress-testing of liberal political institutions, and its divisive impact on American culture. The administration was neither wholly good nor wholly bad. It had elements of both. Neither should be overlooked.

Mulligan offers pointed criticisms and telling stories of trade adviser Peter Navarro, with whom he crossed paths several times. Since Mulligan also writes at length about immigration policy in the book, he should have done the same to immigration adviser Stephen Miller, who pushed the Trump administration’s family separation policies, casually uses slang terms drawn from white nationalism, frequently cites its literature, and has several personal and online connections to that world. History will not look kindly on Miller; neither should Mulligan.

Mulligan is credible, unlike trashy reality-tv personalities who have surrounded Trump, such as Omarosa Manigault and Michael Cohen. He is also not sycophantic like Sen. Lindsey Graham, Rep. Matt Gaetz, or large swathes of conservative media are. He is also a skilled economist and an unusually clear writer for an academic economist. But Mulligan’s omissions and kid-glove treatments give the impression that he’s holding a lot back.

As fear of a Trump tweet-storm recedes, hopefully Mulligan will be more forthcoming in the future. Future administrations’ policy teams would benefit from this, especially if Trump’s personality and populism remain part of the GOP going forward.

See also a CEI book forum featuring Mulligan. Reading this review over, it is a bit harsh for a book I have a positive opinion of. The book forum balances that out a bit while still asking some pointed questions.