Category Archives: History

Peter the Great’s Tax Policy Innovations

From p. 401 of Peter K. Massie’s 1980 biography, Peter the Great: His Life and World:

The Tsar’s demands for money were insatiable. In one attempt to uncover new sources of income, Peter in 1708 created a service of revenue officers, men whose duty it was to devise new ways of taxing the people. Called by the foreign name “fiscals,” they were commanded “to sit and make income for the Sovereign Lord.” The leader and most successful was Alexis Kurbatov, the former serf of Boris Sheremetev who had already attracted Peter’s attention with his proposal for requiring that government-stamped paper be used for all legal documents. Under Kurbatov and his ingenious, fervently hated colleagues, new taxes were levied on a wide range of human activities. There was a tax on births, on marriages, on funerals, and on the registration of wills. There was a tax on wheat and tallow. Horses were taxed, and horse hides and horse collars. There was a hat tax and a tax on the wearing of leather boots. The beard tax was systematized and enforced, and a tax on mustaches was added. Ten percent was collected from all cab fares. Houses in Moscow were taxed, and beehives throughout Russia. There was a bed tax, a bath tax, and inn tax, a tax on kitchen chimneys and on the firewood that burned in them. Nuts, melons, cucumbers were taxed. There was even a tax on drinking water.

Money also came from an increasing number of state monopolies. This arrangement, whereby the state took control of the production and sale of a commodity, setting any price it wished, was applied to alcohol, resin, tar, fish, oil, chalk, potash, rhubarb, dice, chessmen, playing cards, and the skins of Siberian foxes, ermines, and sables. The flax monopoly granted to English merchants was taken back by the Russian government. The tobacco monopoly given by Peter to Lord Carmathen in England in 1698 was abolished. The solid-oak coffins in which wealthy Moscovites elegantly spent eternity were taken over by the state and then sold at four times the original price. Of all the monopolies, however, the one most profitable to the government and most oppressive to the people was the monopoly on salt. Established by decree in 1705, it fixed the price at twice the cost to the government. Peasants who could not afford the higher price often sickened and died.

And from p. 402:

No matter how much the people struggled, Peter’s taxes and monopolies still did not bring in enough. The first Treasury balance sheet, published in 1710, showed a revenue of 3,026,128 rubles and expenses of 3,834,418 rubles, leaving a deficit of over 808,000 rubles. This money went overwhelmingly for war.

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.

Science, Openness, and Peace

From pp. 352-353 of Richard Holmes’ immensely enjoyable history of science in the early Romantic period, The Age of Wonder:

On 2 November [the British chemist and forefather of anesthesia Humphry] Davy received the Prix Napoléon (worth 6,000 livres) from the Institut de France in Paris. He knew that accepting the award might be unpopular in wartime England, but followed [British scientist and explorer Joseph] Banks’ line at the Royal Society that science should be above national conflicts. He told [tanner and essayist] Tom Poole: ‘Some people say I ought not to accept this prize; and there have been foolish paragraphs in the papers to that effect; but if the two countries or governments are at war, the men of science are not. That would, indeed, be a civil war of the worst description: we should rather, through the instrumentality of men of science, soften the asperities of national hostility.’

Montesquieu’s doux commerce thesis is that trade promotes peace and prevents war. Here, Humphry Davy, who is not as famous as he should be in the history of science, makes the same argument for science. When ideas and discoveries cross borders, it is less likely that soldiers will. This is an important point in today’s political climate of growing nationalism.

CEI Book Forum with Johan Norberg and Patrick Moore

Earlier today, CEI hosted a double book forum featuring Johan Norberg, author of Open: The Story of Human Progress, and Greenpeace co-founder Patrick Moore.

Video of the event is on YouTube here.

I also received a pleasant surprise around the 31:00 mark when Norberg, whose work I’ve long admired, quoted favorably from my recent review of Open.

Book Review: Open: The Story of Human Progress by Johan Norberg

On March 25, 2021 at noon ET, CEI is hosting a double book forum featuring Johan Norberg, the 2019 winner of CEI’s Julian L. Simon Memorial Award, and Patrick Moore, a Greenpeace cofounder and author of Fake Invisible Catastrophes and Threats of Doom. Register here, where video of the event will also be viewable afterwards.

Liberalism—in the correct sense of the word—needs fresh voices. The ideological conversation is different than it was a decade ago, and many market-liberal thinkers have not kept pace. Today’s debate is over whether society should be open or closed, not which side of the Iron Curtain was better.

This is where the Swedish economist Johan Norberg performs a valuable service. He is fighting the current battle, not the last one. His newest book, Open: The Story of Human Progress, is a superb defense of the pro-freedom side of the debate. And he defends it against the nationalists and populists who are attacking it right now.

People over a certain age on the political right tend to still use the word “socialism,” but often as a catch-all term for things they dislike. This is different from the word’s commonly understood meaning of state ownership of the means of production, belief in dialectical materialism, teleological stages of history, or any of the other things socialists actually believe in.

People under a certain age on the political left often say they favor socialism. But they, too, have given the word a new and different meaning. They typically define socialism as a more-or-less market economy with a large welfare state, as in the Nordic countries. They are also often careful to add the qualifier “democratic” as an implicit nod to what socialism’s original meaning entails.

When people give the same word different meanings, confusion reigns. When people today lob the s-bomb, they are often talking  at each other, not to each other. The real debate is elsewhere.

This tactic is great for getting people riled up, though. The heat-without-light approach has advanced the careers of people like Fox News host Tucker Carlson and former President Trump on the right, and Sen. Bernie Sanders and Rep. Alexandria Ocasio-Cortez on the left. But it makes substantive debate difficult.

Openness and liberal institutions have generated more wealth for more people than any other socioeconomic system in history. But they are also unpopular. Norberg has some ideas on why, drawing on a mix of history, economics, and psychology. He sums up his thesis on page 6:

As I will argue, the reason that the Enlightenment and the Industrial Revolution started in Western Europe was that this region of the world happened to be the most open, partly just out of luck. It has been repeated in every place that has gone through similar institutional changes. It is not the triumph of the West, it is the triumph of openness.

First, the history. The last two centuries have seen a mass enrichment unlike anything in human history. As economic historian Deirdre McCloskey has pointed out, people today are 30 times wealthier than our ancestors were in about 1800. Not 30 percent more, but 30-fold. As President Biden once said about a different issue, this is a big deal. Since the Great Enrichment began, life expectancies have doubled. Infant mortality is down by more than 90 percent. Famines today have political causes, not natural ones. Violence, both intentional and accidental, are sharply down across the board. A few years ago, the percentage of world population living in absolute poverty—$1.90 per day or less—fell below 10 percent for the first time ever. Almost every long-run trend is showing improvement.

This historical process is as important as the taming of fire or the invention of the wheel. This is what Norberg defends. And it needs defending, because the openness and liberal values that made it all possible are unpopular. Psychology helps to explain why.

People respond to threats more sharply than to good news. In lab experiments, people feel the sting of loss about twice as sharply as a gain of similar amount. Psychologists call this loss aversion. We evolved this trait because mother nature is a superb economist. People have only so much attention to give to things, so we have evolved ways to economize on it. When things are going well, we can leave them alone, and save our scarce attention for dealing with threats. We are hardwired to pay more attention to threats, because long ago there was a survival advantage in doing so.

This tendency is not unique to humans, and long predates us. In a way, the modern life we all enjoy runs counter to hundreds of millions of years of natural selection processes. No wonder liberals have an uphill battle!

In the last two centuries or so since the Great Enrichment began, threats have become progressively less menacing. People don’t have to worry nearly as much about famine, disease, or violence. But that same impulse still exists. Now it gets channeled differently. Socialists—actual ones—viewed capitalists as threats. Populists, from William Jennings Bryan to Josh Hawley, frame various elites as threats. Nationalists view immigrants and foreigners as threats.

Who and what people consider to be threats changes with the times. But that core psychological mechanism remains constant. Some kind of outside Other always poses a threat to the in-group, which must always be defended. This in-group can be a family, tribe, race, nation, political party, or just about anything else. People can also have multiple in-groups at the same time, and can shift seamlessly between them. A Republican and a Democrat who would be enemies in one setting might become fast friends at a baseball game if they like the same team, then go back to being enemies when the game is over.

The key point is that the in-group/out-group dynamic is in everybody’s DNA, and is where the urge to close society comes from. Norberg here draws on the political psychologist Karen Stenner’s 2005 book The Authoritarian Dynamic, which argues that about a third of people have an underlying authoritarian impulse in them—but it doesn’t express itself unless people feel threatened. During normal times, they are just as open and amiable as anyone else. But when they feel threatened, “they react explosively,” Norberg writes on p. 343. “They become intolerant of diversity and dissent and willing to restore unity by government control, even if it wrecks rule of law and free speech.”

Liberal institutions are powerful enough to double lifespans and increase prosperity 30-fold in a handful of generations. At the same time, they are vulnerable to attacks like this.

Prior liberal flowerings got started in societies as diverse as Ancient Greece and Song dynasty China. But none of them lasted. The general intellectual climate wasn’t open enough to openness. Plato was executed essentially for nonconformity. After Mongol invaders ended the Song dynasty, the succeeding Ming dynasty responded to the threat by destroying the world’s most advanced fleet of oceangoing ships and banning nearly all foreign contact.

That vulnerability is why the open society will always need defending, especially as its attackers change tactics every generation or two. Norberg’s defense is perfectly suited for this generation’s emerging threats. Populist and nationalist governments have come to power in recent years in countries such as Brazil, Mexico, Hungary, and elsewhere. President Trump’s trade war, immigration restrictions, race-baiting were slowing the longest economic expansion in U.S. history and causing cultural divisions even before COVID-19 hit.

Even after he cost his party the House, the Senate, and the presidency, the Republican party is continuing along a national populist trajectory. The progressive wing of the Democratic party is pushing similar policies in different packaging, on issues from international trade to technology policy. The United Kingdom’s Brexit debate, which should have been about escaping the European Union’s burdensome regulatory, agricultural, and tax policies, was instead hijacked by ugly nationalist impulses, and became divisive for all the wrong reasons. Strongman governments and nationalist political parties are springing up in places that should know better, such as Eastern Europe, which bore the brunt of both fascism and communism in the 20th century.

Norberg writes clearly and persuasively, with passion, and without anger. It is an impressive performance, and a joy to read. He has only one notable slip in 384 pages, and that is his support for a carbon tax on pages 330-331. Ironically, this comes in a section about the knowledge problem in economics. A centralized body such as Congress is unlikely to have the on-the-ground knowledge it needs to put an accurate price on carbon emissions.

Perhaps more significantly, the carbon tax suffers from public choice problems—which basically means that politicians tend to behave like politicians. A cardinal rule of politics is that policies are made and enforced by the government we have, not the government we want. Even if Congress did overcome the knowledge problem, it is unlikely that people like Nancy Pelosi and Mitch McConnell, or whoever succeeds them down the road, would craft a carbon tax on the merits. For Norberg, a carbon tax is “supposed to be an incentive, not a source of revenue.” This is surely not how a carbon tax would work under a real-world government.

That quibble aside, Open is one of the best books of its kind to come out in years. It is the right defense of the right values at the right time.

Norberg is not the only voice in favor of openness. Recent works by economists Virgil Storr and Ginni Choi, psychologist Joseph Henrich, and experimental economist Bart Wilson are other recent contributions. Matt RidleySteven Pinker, and Deirdre McCloskey have all been flying the flag for openness, tolerance, and dynamism for years. But just as Julian Simon was in his day, these voices of reason are too often drowned out by a chorus of doomsayers.

Markets are inherently dynamic and ever changing. No one is in charge of them, and no one directs the process. Markets work best when people are open, tolerant, and cooperative. People need to get along with people who look different, speak differently, and may live far away. It takes trusting strangers. That not natural to the human brain, which evolved to fit a hunter-gatherer world. But open markets have gotten us this far. If we let them, they can take us much farther. Whether we do or not will be this generation’s defining debate.

Abraham Lincoln on the Separation of Campaigning and Legislating

Abraham Lincoln, when he was a member of the House of Representatives from the Whig party, supported Zachary Taylor’s 1848 presidential candidacy. This was in part because he thought Taylor would be a weak executive. As David Herbert Donald writes on p. 127 of his 1994 biography Lincoln:

The proper Whig policy ought to be one of “making Presidential elections, and the legislation of the country, distinct matters; so that the people can elect whom they please, and afterwards, legislate just as they please, without any hindrance [from the Chief Executive], save only so much as may guard against infractions of the Constitution, undue haste, and want of consideration.”

Lincoln would change his tune when he became president himself. There is also more to successful executive restraint than this. And there is need for stricter legislative restraints, too. But on the whole, this is a healthier vision of executive power and the president’s proper role than what we have endured over the last few decades.

Book Review: Jennifer Traig – Act Natural: A Cultural History of Misadventures in Parenting

Jennifer Traig – Act Natural: A Cultural History of Misadventures in Parenting

Hilarious, and recommended by Let Grow founder and Free-Range Kids author Lenore Skenazy. Traig performs two valuable services for parents. One, she reminds them that everyone makes mistakes, and that’s ok. Do your best, use common sense, and your kids will be fine. Perfection doesn’t exist. Provided that you are loving, caring, and supportive, there is no need to stress yourself out over falling short of impossible standards.

The second service is historical. Our mistakes are nothing compared to the mistakes people used to make. Before freaking out about whatever threat to children is headlining the evening news tonight, it helps to have some context. Children today are safer, healthier, better fed, and better-parented than at any other time in history. Media freak-outs help ratings, but hurt parents and kids. Traig looks at how previous generations treated their kids, and is thankful that today’s kids have it better in almost every way. Some of our parents and grandparents’ shortcomings are hilarious; others are more tragic.

Doctors performed quack remedies that were as likely to kill as to cure. School was even more drudgerous than it is now, and physical abuse was common. Parenting “experts” clearly had no idea what they were talking about, and many advocated what today would be considered abuse. Playground equipment was hazardous. Children’s literature, such as the Brothers Grimm, was often nightmare-inducing. Crib accidents used to be multiples more common due to poor design. Once kids were out of the crib, child labor was routine until the Industrial Revolution raised adult earnings enough for them to afford to put kids in schools instead of fields or factories.

Traig makes these serious points with laugh-out-loud humor and a conversational style. This book is excellent for nervous parents, nervous parents-to-be, and anyone else worried about what the world is coming to. As long as we put a little effort into it and stop freaking out about everything, our children and grandchildren will have better childhoods and better adult lives than we did, just as our lives have been healthier and wealthier than those of the generations before us.

Book Review: Marc Levinson – The Great A&P and the Struggle for Small Business in America

Marc Levinson – The Great A&P and the Struggle for Small Business in America

This is an excellent history that is playing out again in today’s antitrust revival. A&P was the first nationwide grocery store chain. Though it barely exists today, in its prime it was the nation’s largest retailer. A&P inspired fear among its competitors and outrage among populists.

People made many of the same arguments against A&P in the popular press and in antitrust cases that people make today against Walmart, Amazon, and other big companies. The word choices, hyperbole, and breathless tone are almost identical. And yet, A&P was no match for consumer preferences, which eventually shifted elsewhere. The company chose not to adapt, and today exists on roughly the same scale as Blockbuster Video, which is down to a single store in Oregon.

Some of the very same charges, such as A&P’s selling self-branded products at lower prices than outside brands, are being revived today against Amazon. A&P-era arguments are even being repurposed to argue against Apple and Google’s app stores and search results. Not only were their business practices never anti-competitive, they clearly weren’t enough to save A&P from the competitive process. Nor will it be enough to save today’s big tech companies. Consumers are harsh sovereigns, and as soon as someone does it better, they’ll move on.

History does not repeat itself, but it often rhymes. Levinson digs up some of the lost stanzas of a poem being rebooted all over Washington today. There are lots of lessons here for people on both sides of the antitrust revival.

Book Review: Marc J. Seifer – Wizard: The Life and Times of Nikola Tesla: Biography of a Genius

Marc J. Seifer – Wizard: The Life and Times of Nikola Tesla: Biography of a Genius

Seifer more than once goes into Freudian analysis of Tesla’s personality. I’m going to go ahead and guess that he is not a particularly rigorous biographer. I probably should have chosen a different volume, but this one was on sale. Seifer’s cringy Freudianism is enough to automatically make suspect his conjectures about Tesla’s more out-there research on things such as death rays, worldwide wireless transmissions, and his theories about faster-than light transmissions and extraterrestrial life.

These are better seen as products of Tesla’s time, similar to Isaac Newton’s forgotten works on alchemy and mysticism. In Tesla’s time, Einsteinian relativity wasn’t yet universally accepted or understood in the scientific community. Nor was its implication that light is an absolute speed limit well thought out. Reputable scientists were still searching for workarounds, and there was not yet the sheer preponderance of experimental evidence for the cosmic speed limit that we take for granted today.

Tesla’s scientific, business, and personal lives are stories worth telling. So is his rivalry with Edison. Seifer gives plenty of attention to all of these aspects of Tesla. And he is a good storyteller. But his Freudianism and other quirks hard to take him very seriously.

Book Review: Erik Brynjolfsson and Andrew McAfee – The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies

Erik Brynjolfsson and Andrew McAfee – The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies (New York: W.W. Norton, 2014)

This book from two MIT professors is part big-picture history, and art techno-optimism. McAfee is also the author of the excellent 2020 book More from Less, which is better-argued from a public policy perspective.

The opening chapter sets the historical stage. Living standards were poor and stagnant for nearly all of human history, from our birth as a species until about 1750 or so. If you put human well-being on a graph, it runs almost perfectly flat for thousands and thousands of years. Then it spikes sharply upwards starting around 1750-1800, like a hockey stick on its side. This giant wealth explosion is still happening today, and the authors believe it will continue for some time to come. This is one of the biggest changes in human history.

What caused it? Brynjolfsson and McAfee think it was technology. More specifically, it was the steam engine. Even more specifically, it was James Watt’s iteration of the steam engine. Steam power existed as early as ancient Rome, but it was mostly used for amusement purposes, and not industry. That changed in Watt’s lifetime. This was the start of Bynjolfsson and McAfee’s First Machine Age.

The Second Machine Age is the computer revolution. The First Machine Age revolutionized physical power. The Second Machine Age is revolutionizing mental power. Just as Watt’s steam engine took time to influence manufacturing, technological development, government, and culture, so too is the Second Machine Age. It is far enough along where they argue its fundamental difference from the First Machine Age is clear. But it is also early enough where its impact is only beginning to be felt. The future has almost limitless potential—and some tradeoffs.

The larger arc they draw is the right shape, though I don’t know that their need for two separate Machine Ages is much more than a useful gimmick for talking about technology. I would also submit that the true cause of both revolutions goes a level deeper than just technology. Yes, steam engines and computers are necessary for the two machine ages. Necessary, but not sufficient.

They need another ingredient in the mix: culture. Larger cultural values are difficult to quantify, which is why economists and many other social scientists do not use them. They are still significant, even if they are immune to regression analysis and other quantification. Statistically significant? No. Real-world significant? Very.

Culture shifted in the centuries leading up to Watt’s generation. People were gradually becoming a little more open to change, progress, and improvement. It showed in literature, trade patterns, philosophy, and a new prestige for science and its discoverers. That is why a technology that was already around now began to be used more differently—people allowed it, approved of it, and were willing to countenance large fortunes being made from it.

After setting up their two-machine-ages framework, Brynjolfsson and McAfee go on a tour of new and emerging technologies to see where the Second Machine Age might take us. They take a ride in one of Google’s self-driving cars, among other highlights, and draw encouraging pictures of some of the things new technologies could do for people over the next few decades.

One area where they fall short is their discussion of inequality. They are so focused on the mathematical ratio of the differences between rich and poor peoples’ incomes, that they forget to ask how people at the bottom are actually doing. They also focus almost solely on wage income, which is a significant mistake. This leaves out non-wage income such as employer-sponsored insurance, tuition assistance, free meals, company cars, and other perks that do not show up in income data.

More to the point for a book about technology, Brynjolfsson and McAfee should have asked a question similar to one Don Boudreaux likes to ask: would you rather have 1970-quality medical care at 1970 prices, or today’s health care at today’s prices?

Very few people would rather have 1970’s health care, even at its lower price. That means people view themselves as better off with today’s options. Most people would similarly answer related questions about televisions, computers, cars, appliances, and many other products that both rich and poor people consume.

In fact, society today has substantial consumption equality. Most low-income households have cars that drive at the same speeds on the same roads as wealthy people. They watch the same television shows and have similar Internet connections. More tellingly, rich people are not substantially taller or longer-lived than poor people. In the olden days, one could tell nobles and peasants apart at a glance by their height. Children of nobility got enough to eat, while peasant children were often so malnourished that their growth stunted. There were also substantial differences in infant mortality and life expectancy.

While the very wealthy have orders of magnitude more wealth than ordinary people do, they don’t consume very much of it. Nor do they keep it in a Scrooge McDuck-like vault. They invest it, in an unexpected type of income redistribution. When it’s invested, borrowers use that money to buy homes, go to college, and start businesses. The wealth doesn’t just sit there, people make use of it. It is a subjective question how much of this type of wealth is the “right” amount. But this positive use of wealth is something inequality scholars need to account for, and rarely do. In fact, invested wealth is where most of the capital that funds the amazing technologies Brynjolfsson and McAfee discuss in this book comes from.

They make another lapse in quoting a professional trade association for civil engineers in calling for more infrastructure spending. Of course civil engineers want more infrastructure spending, they have a vested interest in it! This is basic public choice theory. While they briefly acknowledge this conflict of interest, they also do not acknowledge the seriousness of the point, or look at data from less self-interested sources.

Their promotion of a Universal Basic Income (UBI) is similarly idealistic. This model, essentially a straight cash grant, is an objectively better system of poverty relief than the current welfare state. A UBI is easier to administer and more flexible for the recipients. A UBI also makes it more difficult for nanny statists to tell the poor what they shall eat, what things they may and may not buy, what types of health care they may receive, or where they shall educate their kids.

The trouble is politics. Again, a little public choice theory would go a long way in this discussion. Replacing the current welfare state with a UBI would be a fantastic tradeoff, both for the poor and for taxpayers. But the way politics works in practice, this would not happen. A UBI would be negotiated in a Congress led by people like Nancy Pelosi and Mitch McConnell, or whoever succeeds them in a few years. Real-world politicians are unlikely to enact a well-functioning UBI, nor will their constituents let them. Public sector unions whose members administer the current system will block any reform they possibly can.

Tis means any politically-possible UBI would be added on top of the current system, preserving the current system’s flaws and minimizing a UBI’s advantages. Unless this problem is addressed, a UBI risks causing more harm than benefit.

Brynjolfsson and McAfee are consistently a little too idealistic. Some of the technologies they explore in this 2014 book turned out to be flops, and others are still materializing. Similarly, they assume that their political reforms will actually work as they intend them to.

They are certainly right about the larger arc of progress and prosperity. And though I take their technological hyper-optimism with a grain of salt, it is also inspiring. Books like this one and by other thinkers such as Kevin Kelly give me confidence that my daughter’s life will be richer, longer, healthier, and frankly, cooler than mine. This is a source of happiness for me, and gives me inspiration to continue my work on improving economic policy and defending liberalism against populists who would tear it down for no good reason.