Category Archives: Elections

Putting a Price on Conspiracy Theories, Revisited

Conspiracy theories are back in the news, so it’s a good time to revisit my recent Fortune article about putting prices on conspiracy theories. My argument is that irrationality is the same as any consumer good, such as cars or televisions. When the price of something is low, people consume a lot of it. If the price goes up, they consume less. If you want fewer conspiracy theories, then put a price on them in line with the harm they cause. So far, this theory is holding up well.

Two recent news items show why. First is a development regarding “Release the Kraken” lawyer Sidney Powell. She claimed that the 2020 election was stolen, and that Dominion voting machines used in the 2020 election had design input from former Venezuelan dictator Hugo Chavez, who died in 2013. Her claims were dismissed from several election-related court cases for lack of evidence.

In December, Dominion Voting Systems put a price on Powell’s irrationality when it filed a $1.3 billion defamation lawsuit against her. Powell’s behavior immediately changed. This week, her attorneys said in a court filing in the case that “No reasonable person would conclude that the statements were truly statements of fact.”

That is remarkable, and likely means the end of Powell’s legal career, even if the case is dismissed.

Second, Fox News is now seeing a price increase for its conspiracy-spreading. This week, Dominion sued Fox News for $1.6 billion for defamation. Smartmatic, another voting machine maker, in February sued Fox News, three of its anchors, Powell, and Rudy Giuliani for $2.7 billion. Lou Dobbs, one of the Fox anchors named in that suit, had his show canceled in February, and is no longer making false election claims on air.

These are all normal responses to an increase in price. While media coverage will likely always remain sensationalistic and threat-based for reasons I’ll explore another time, this is one case where a little bit of ECON 101-style price theory can make the news more trustworthy. Or more to the point, make it less harmful.

My original Fortune article is here.

Economics Can Help Explain Conspiracy Theorists

There is a lot of conspiracy theory garbage floating around. On January 6, it took a violent turn. Five people died in a coup attempt at the U.S. Capitol, over obviously false claims of a stolen election. It is important to understand what causes this behavior in order to prevent future violence, and to prevent a future breakdown of liberal institutions. Over at Fortune, I explain that a little bit of basic price theory can improve our understanding:

If you think of irrationality as a consumer good, much like a car or a television, you can better understand why people sometimes say and do crazy things. Think of it like this: People buy more cars and televisions when they are cheap, and fewer when they are expensive. 

This logic applies to conspiracy theories.

Read the whole thing here. For readers interested in further exploring the economics and evolutionary psychology of conspiracy theories, I recommend Bryan Caplan’s book Myth of the Rational Voter and Michael Shermer’s book The Believing Brain.

The 2020 Election Actually Had Some Free-Market Victories

Neither presidential candidate has much interest in limited government. But over at National Review, I look at some neglected down-ballot victories from the 2020 election. A divided Congress will prevent one party from running everything, regardless of who wins the White House. There were also several state-level victories across the country. 

California voters partially undid the AB5 gig-worker law that made unemployment even worse during the pandemic. They also voted against an expansion of rent control, which is one reason California’s housing prices are so high.

Not that legislators will listen, but Illinois voters sent them a message to address the state’s pension crisis by cutting spending rather than raising taxes:

The Illinois legislature had already passed a separate tax hike bill, conditional on voters approving the amendment. Voters disapproved by a 55-45 margin, and taxes will remain as they are.

Voters in Oregon and several other states also continued to deescalate the drug war:

In order for people to respect the law, they have to be able to respect it. That was a major cultural cost of alcohol prohibition in the 1920s, and of the drug war today. Drug legalization allows law enforcement to focus on real crimes and ease an avoidable source of antagonism between police officers and the communities they serve—especially in minority areas where drug laws are disproportionately enforced.

Washington state voters registered disapproval of a plastic bag tax. This is a victory for my colleague Angela Logomasini, who has written about the issue here and here.

A lot went wrong in the 2020 election, as is true every year. But some things also went right. Now let’s build on those victories and create some new ones.

Read the whole thing here. Ideas for the next free-market victories are at neverneeded.cei.org.

James Madison on Why Politics Ruins Everything

Politics has a way of ruining everything. Even kind and intelligent people go through an instant metamorphosis when the conversation changes to politics. Their body language tenses up. Their word choices include more intensifiers. They say horrible things about strangers they would never say in a different context. Their mental processes change to in-group-vs.-out-group mode, as though we were hunter-gatherers again.

And this sudden intensity can turn on and off almost instantly, like a light switch, as the conversation veers from topic to topic. It’s certainly unpleasant, and possibly unhealthy.

This very human foible may be what inspired James Madison to write in Federalist No. 55, “Had every Athenian citizen been a Socrates, every Athenian assembly would still have been a mob.”

The median voter is not a wise person, at least about politics. But even if he was, the effects partisan politics has on the brain can shut down rational thought in even the best and brightest.

Happy Election Day, everyone.

Book Review: A.J. Liebling – The Earl of Louisiana

Review of A.J. Liebling, The Earl of Louisiana (Baton Rouge: Louisiana State University Press, 1961)

A colorful book by a colorful author. I read this as preparation for a work event in New Orleans, which I had not previously visited. Liebling was a journalist for The New Yorker who was assigned to write about Earl Long’s 1959 campaign for governor of Louisiana. Liebling’s enthusiasm for food and drink were legendary, and his accounts of his and his interviewees’ restaurant meals are almost unbelievable. Earl Long, the younger brother of the legendary Huey Long, had a mental breakdown during the campaign and was forcibly institutionalized in Texas for a time before returning to the campaign trail.

Liebling gives a vivid portrait of Long. But he paints an even more vivid portrait of Louisianan politics and culture. As CEI founder and Louisiana native Fred Smith likes to say, people in Louisiana don’t expect their politicians to be corrupt; they insist upon it. The people Liebling meets, whether high-ranking officials or ordinary man-in-the-street types, speak to this truth, often hilariously so. Liebling draws frequent parallels between Louisiana’s political system and Middle Eastern oil dictatorships. There are obvious differences, but also enough parallels to give one pause.

Anonymous – A Warning

Anonymous – A Warning

I read this during the impeachment hearings. The book is clearly a rush job, and it doesn’t break a whole lot of new ground. This book’s effect instead is more cumulative. Its impact comes from painting a consistent picture of President Trump’s personality, his management style, and how it affects policymaking and personnel. Many of the shared inside stories and anecdotes I hadn’t previously heard line up well with Trump’s already known tendencies, and are consistent with what other inside reports from the White House reveal.

Anonymous believes Trump is unfit for office, but opposes both impeachment and any 25th Amendment actions. He (she?) would like Trump to be defeated in the election, whether in a primary or, the committed Republican grudgingly says, by a Democrat. Despite fears that Trump might not respect the results of a close election, Anonymous believes those risks are far less than they would be than with impeachment, or especially a 25th Amendment action.

Anonymous, however, also worries that Democrats are too caught up in Trump’s us-vs.-them style for their own good. They are at risk of choosing a candidate—Anonymous ventures no names—who pairs a Trumpian temperament with far-left policy views. Rather than flattering their opponent through imitation, it would be better for Democrats to choose a moderate. Such a candidate—Anonymous again names no possibilities—would be more electable. They would also do less damage on the policy front, from Anonymous’ conservative perspective. Time in the wilderness could also do the Republicans some good as they think over what they have done. This reviewer almost certainly has a different notion of “good” than Anonymous, but his/her larger point has merit. The GOP needs to cool its overheated emotions.

Anonymous has also rethought the thesis of their New York Times op-ed. The grown-ups in the room are simply not capable of reining all of Trump’s rash decisions. The “steady state” contingent, as Anonymous calls it, has also been shrinking. Good people and/or solid conservatives are leaving the administration in frustration, or are being fired for telling the President things he does not want to hear. Their replacements tend to much more accommodating to the President. As this natural selection process continues, the quality of the administration’s work will continue to deteriorate.

Anonymous argues that a second term would remove the pressure Trump feels to maintain his base’s approval, and move him in a more authoritarian direction. I disagree with this for two reasons. First, his base’s approval means much more to him than just job security. His ego needs it. He genuinely wants and needs popular approbation, hence all the campaign-style rallies and red meat tweets. That said, apparently his staff has long been encouraging him to do as many rallies as possible. Theoretically, when Trump is preoccupied with the rallies, he is less likely to scuttle his own policy initiatives through a tweet or an impulsive, and often temporary, flip-flop.

Second, Trump’s base support has not yet been hurt by anything ranging from his proposing stricter gun control to his obvious non-evangelicalism to his growing spending and deficits, to his trade war’s disproportionate harm to red states. As long as Republicans remain personality-driven rather than policy-driven, Trump has little to worry about from alienating his base.

This is not a book of great depth, but it doesn’t need to be to get its point across. If there is a cause for pessimism, it is that Trump came along during a political realignment, as historian Stephen Davies has argued. In the new nationalism-vs.-cosmopolitan debate, Trump has rapidly pulled the Republicans to the nationalist pole. The Democrats, who currently lack a single figure to rally around, have yet chosen to occupy the same pole or moving to the opposite, cosmopolitan pole. Their primary field contains strong candidates on each side.

Ultimately, the problem isn’t Trump. Nor is it his party. It is a public ideology that is shifting in a nationalist direction. In the short term, America’s more-or-less liberal institutions will pass Trump’s stress test. The more important battle is long-term. Both parties need to discover some semblance of liberal values. Republicans will continue to reject them for as long as Trump is president. From there, who knows. Frankly, a more important short-term objective is getting Democrats to be an effective opposition. If one party is going nationalist and populist, the other should take up the opposite pole. That means resisting the temptation to copy Trump’s amygdala-driven populism.

Anonymous – A Warning

Anonymous – A Warning

I read this during the impeachment hearings. The book is clearly a rush job, and it doesn’t break a whole lot of new ground. This book’s effect instead is more cumulative. Its impact comes from painting a consistent picture of President Trump’s personality, his management style, and how it affects policymaking and personnel. Many of the shared inside stories and anecdotes I hadn’t previously heard line up well with Trump’s already known tendencies, and are consistent with what other inside reports from the White House reveal.

Anonymous believes Trump is unfit for office, but opposes both impeachment and any 25th Amendment actions. He (she?) would like Trump to be defeated in the election, whether in a primary or, the committed Republican grudgingly says, by a Democrat. Despite fears that Trump might not respect the results of a close election, Anonymous believes those risks are far less than they would be than with impeachment, or especially a 25th Amendment action. Yes, Trump is apparently that unstable and short-sighted.

Anonymous, however, also worries that Democrats are too caught up in Trump’s us-vs.-them style for their own good. They are at risk of choosing a candidate—Anonymous ventures no names—who pairs a Trumpian temperament with far-left policy views. Rather than flattering their opponent through imitation, it would be better for Democrats to choose a moderate. Such a candidate—Anonymous again names no possibilities—would be more electable. They would also do less damage on the policy front, from Anonymous’ conservative perspective. Time in the wilderness could also do the Republicans some good as they think over what they have done. This reviewer almost certainly has a different notion of “good” than Anonymous, but his/her larger point has merit. The GOP needs to cool its overheated emotions.

Anonymous has also rethought the thesis of their New York Times op-ed. The grown-ups in the room are simply not capable of reining all of Trump’s rash decisions. The “steady state” contingent, as Anonymous calls it, has also been shrinking. Good people and/or solid conservatives are leaving the administration in frustration, or are being fired for telling the President things he does not want to hear. Their replacements tend to much more accommodating to the President. As this natural selection process continues, the quality of the administration’s work will continue to deteriorate.

Anonymous argues that a second term would remove the pressure Trump feels to maintain his base’s approval, and move him in a more authoritarian direction. I disagree with this for two reasons. First, his base’s approval means much more to him than just job security. His ego needs it. He genuinely wants and needs popular approbation, hence all the campaign-style rallies and red meat tweets. That said, apparently his staff has long been encouraging him to do as many rallies as possible. Theoretically, when Trump is preoccupied with the rallies, he is less likely to scuttle his own policy initiatives through a tweet or an impulsive, and often temporary, flip-flop.

Second, Trump’s base support has not yet been hurt by anything ranging from his proposing stricter gun control to his obvious non-evangelicalism to his growing spending and deficits, to his trade war’s disproportionate harm to red states. As long as Republicans remain personality-driven rather than policy-driven, Trump has little to worry about from alienating his base.

This is not a book of great depth, but it doesn’t need to be to get its point across. If there is a cause for pessimism, it is that Trump came along during a political realignment, as historian Stephen Davies has argued. In the new nationalism-vs.-cosmopolitan debate, Trump has rapidly pulled the Republicans to the nationalist pole. The Democrats, who currently lack a single figure to rally around, have yet chosen to occupy the same pole or moving to the opposite, cosmopolitan pole. Their primary field contains strong candidates on each side.

Trump is a bad president. But ultimately, the problem isn’t him. Nor is it his party. It is a public ideology that is shifting in a nationalist direction. In the short term, America’s more-or-less liberal institutions will pass Trump’s stress test. The more important battle is long-term. Both parties need to discover some semblance of liberal values. Republicans will continue to reject them for as long as Trump is president. From there, who knows. Frankly, a more important short-term objective is getting Democrats to be an effective opposition. If one party is going nationalist and populist, the other should take up the opposite pole. That means resisting the temptation to copy Trump’s amygdala-driven populism. I am not optimistic.

Tim Alberta – American Carnage: On the Front Lines of the Republican Civil War and the Rise of President Trump

Tim Alberta – American Carnage: On the Front Lines of the Republican Civil War and the Rise of President Trump

Note: I wrote this review about a month ago, before Congress began an impeachment investigation against President Trump. I have left it unedited.

Alberta is a political correspondent for Politico. I read his book with Stephen Davies’ political realignment thesis in mind. According to Davies, people tend to align around two opposite poles in politics–but those poles tend to move around every few generations. For a lengthy period starting around the end of World War II, those two poles were capitalism and socialism. Now, with the Soviet Union almost 30 years gone, those poles have lost their relevance. Worldwide, political parties are realigning around new poles. This time around, it’s a nationalism-vs.-globalism axis.

This is apparent in the UK’s Brexit debate, and the election of populist leaders in Brazil, Italy, Mexico, and elsewhere. The process usually takes a couple of election cycles, and happens faster in some countries than in others. As Alberta’s book unintentionally shows, realignment is happening right now in America. It is also fairly far along, but not yet complete.

The GOP’s civil war is a referendum about President Trump on the surface. But the deeper philosophical split is one of nationalism against a more cosmopolitan worldview. The same fight is happening in the Democratic party, though without its own Trump-like figure to rally around or against, the struggle on the left side of the aisle is quieter. Alberta focuses almost exclusively on the GOP; a similar treatment of the Democratic Party’s realignment process would be a welcome addition to the literature.

The main fault with this book is that it is far longer than it needs to be. This is especially true of its 2016 campaign coverage, which feels as endless as the original campaign did. 2016 takes up about a third of a book that covers an entire decade. A fair amount of the campaign season slog in the book is essentially an ESPN-style highlight show of debate highlights, gaffes, and flash-in-the-pan candidates and personalities who were relevant for a few news cycles, but not particularly important for Alberta’s larger story arc.

Alberta convincingly shows, though again in more detail than necessary, that once Republicans choose a leader, they’ll follow him no matter what. This was apparent during George W. Bush’s presidency, when Republicans went along with Bush’s massive spending and entitlement increases and needless wars, and even the Keynesian bailout on which he collaborated with President Obama, who is otherwise mostly a two-minutes hate figure in the GOP.

Republicans’ pre-existing meekness has greatly amplified under Trump, almost to the point of becoming the party’s defining characteristic. He is strongly disliked inside his own party, but nobody in a position to is willing to put up meaningful opposition, whether to Trump’s spending and deficits, or his trade and immigration policies. They are just as meek about Trump’s intentionally divisive rhetoric, cozying up to dictators, and at times, outright racism.

Paul Ryan’s tragic career arc is the most prominent example, and Alberta tells it masterfully. Ryan’s choice of party over policy backfired, and ultimately led him to retire–though he was also put in an impossible situation. He became House Speaker with his party in mid-realignment. He also had a President foisted on him who is not temperamentally fit for the job, and has no philosophical commitment for or against Ryan’s policies, making him neither friend nor foe, despite their shared party membership.

Ryan’s story is is just one of many sad commentaries on party politics. Alberta shares savage assessments about Trump from some of Trump’s closest allies—many without the cover of anonymity. It is almost worse that Republicans are going along with Trump’s policies with their eyes open. They know better, and yet they continue to support Trump’s policies, values, and rhetoric. They have chosen to be this way.

Alberta’s story of weak Republican knees extends to the human weakness for a good us-vs.them narrative. People are eager to affirm their identity as part of a group, and are quick to vilify people outside it. This is why hard partisans are so eager to believe odd conspiracy theories, such as Barack Obama being born in Kenya, or Hillary Clinton running a prostitution ring from a pizza parlor—stories which Alberta tells in comic, yet tragic fashion. It also explains why President Trump’s base and party stick by him despite almost widespread misgivings about his character and his policies.

Adding Davies’ political realignment thesis on top of Alberta’s storytelling adds another level. The GOP’s reluctance to pursue limited government policies under Bush has become an active hostility to its Reagan-Goldwater tradition. People with an economist’s views on trade, immigration, and spending restraint used to be merely ignored. Now, they are actively sought as the enemy, to the point of Trump economic adviser Peter Navarro bizarrely comparing the Wall Street Journal to the communist China Daily. The GOP is still running on an us-vs.-them narrative, but the definition of “them” has changed. “Them” used to be socialists or people who prefer big government. Now “them” is seen in national, cultural, or racial terms.

The question is what will happen post-Trump. Both parties have strong populist elements. But in a two-party system there is likely only room for one strong populist party. Will that party be the Republicans or the Democrats? It’s too early to tell. The GOP base has eagerly embraced national populism, but most of the party establishment is playing along reluctantly. That support is also largely personality-based, and that personality will be gone from politics in either 2021 or 2025. The Democratic party is also divided, though the base-establishment split isn’t nearly as clean. They also lack a personality-cult figure to rally around. Much as I dislike horserace politics, how this one plays out over the next few cycles will be interesting to watch. About all we know for at this point is that there are very few good guys in this story, and they will all likely lose.

Unintended Consequences of Voting

From p. 92 of Randall Holcombe’s 2018 book Political Capitalism: How Political Influence Is Made and Maintained:

Voting is the best way, from the elite’s standpoint, for the masses to participate, because each individual vote has essentially no impact on the outcome of an election, so voters are provided with the illusion that their participation determines the election outcome, which reinforces the perceived legitimacy of government.

Voting has practically no impact on policy outcomes. Even small local elections rarely have one-vote margins where a given person’s vote would be decisive. It’s so rare that it makes the news when it does happen. Voting’s instrumental value requires many decimal places to accurately express. But voting does have significant expressive value.

People genuinely feel good about participating in democracy, and get value from signaling their participation to others. Some people also get value from shaming people who do not vote. There is nothing wrong with most of that. But most people would benefit from a more accurate understanding of how much a person’s vote impacts election and policy outcomes. As Holcombe points out, this would make people less easily mollified by reform agendas that end at lip service.

What Do the Midterms Mean for Trade?

Trade was a highly contentious issue during President Trump’s first two years. He has doubled tariffs, other countries have enacted equivalent retaliatory tariffs, and tensions are unlikely to ease anytime soon. This unease will not change under a newly divided Congress. The midterm elections will have significant implications for trade policy in the short, medium, and long runs.

The biggest short-term question will be what happens to the renegotiated NAFTA, called the United States-Mexico-Canada (USMC) Agreement. Congress is currently in the middle of a 90-day window to vote on the revised agreement, but Republicans are lukewarm on it. Many Republicans share economists’ skepticism of President Trump’s trade protectionism. At the same time, they are reluctant to buck a Republican president—some Republicans have even gone one further and reversed their stances on trade and other issues in deference to the president. Lame duck Republicans will likely punt to the next Congress in an attempt to avoid cognitive dissonance.

That’s where the new Democratic House majority comes in. The new NAFTA/USMCA changes very little in terms of actual trade policy. But it has significant symbolic value as a political victory for President Trump. Democrats would love to deny Trump this victory. But they will also be reluctant to cause further tensions with Canada and Mexico’s governments, staunch allies which endured many slights during the negotiating process, both domestically and from President Trump. They would like to have something to show for their indignities, even if it’s just getting President Trump out of their hair for a bit. This could push foreign policy-minded Democrats in favor of passing NAFTA/USMCA. At this point, it is hard to predict which impulse is stronger.

This is also partially because Democrats are just as divided as Republicans on trade issues. Traditional Democrats often favor a more-or-less open approach to trade, not terribly different from the average pre-Trump Republican. The original NAFTA and the creation of the World Trade Organization happened under Bill Clinton, and President Obama signed about half a dozen trade agreements that liberalized trade on net. Going further back, President Kennedy signed a major trade bill in 1962 that led to a successful round of international negotiations bearing his name that sharply reduced tariffs around the world. Franklin D. Roosevelt’s Secretary of State, Cordell Hull, presciently argued that if goods do not cross borders, soldiers will.

Democrats have slowly become more protectionist in recent years, with Sen. Charles Schumer (D-NY) even arguing for a 27.5 blanket tariff against Chinese goods in the mid-2000s. This makes him roughly 2.5 percentage points different from President Trump, which sounds about right. But Trump’s vocal advocacy of government-managed trade has pushed many Democrats somewhat back towards the free trade side.

At the same time, the party’s labor and environmental wings tend to oppose free trade. Labor interests often see protectionism as a rent-seeking opportunity to kneecap competitors. Many environmental activists reflexively oppose policies that create wealth and development. The party’s ideological left flank also tends towards protectionism; Sen. Bernie Sanders (I-VT) is uncomfortably similar to President Trump on trade.

In the medium term, between now and the 2020 election, President Trump hopes to pursue trade agreements with the United Kingdom, European Union, and Japan. As with NAFTA/USMCA, House Democrats will be eager to deny President Trump a political victory. The question is whether Democrats can overcome their own protectionist elements enough to be an effective opposition party.

The biggest long-term policy that could come out of the new congressional alignment is similar to the biggest possible upside to regulatory reform: a renewed separation of powers. Under the Constitution, only Congress has the power to tax. But Congress delegated away much of its tariff-setting authority to the president during the 1960s and 1970s. That is how President Trump was able to enact so many tariffs without congressional input. Democrats should rein in a too-powerful executive branch and reclaim Congress’ intended constitutional taxing authority.

Trade will be a busy issue for at least the next two years. Unlike their Republican colleagues, the new Democratic House majority can be an effective check against President Trump’s government-managed trade policies. But they have to keep their own populist impulses in check in order to do so effectively. Perhaps Iain Murray’s and my “Traders of the Lost Ark” can serve as a guide, as well as excellent primers by Don Boudreaux and Pierre Lemieux.