Economics Detective Radio

What follows is an edited transcript of my interview with Alex Salter about the economics of space. The first half deals primarily with the issue of space debris, while the second half deals with the possibility of private governance in space. There's something in this episode for everyone to enjoy, so I hope you'll listen, read, and share it with your friends. Petersen: My guest today is Alex Salter of Texas Tech University. Alex, welcome to Economics Detective Radio. Salter: Thanks very much for having me. Petersen: Our topic today is the economics of space. Alex has written two papers on the subject. The first is entitled, "Space Debris: A Law and Economics Analysis of the Orbital Commons." The second is, "Ordering the Cosmos: Private Law and Celestial Property Rights." So Alex, let's start by talking about space debris. What is it and why does it matter? Salter: So space debris is basically junk in space that no longer serves any useful purpose. So as you can imagine, since the first piece of space debri

What follows is an edited transcript of my conversation with Vincent Geloso. Petersen: My guest today is Vincent Geloso of the Free Market Institute at Texas Tech University. Vincent, welcome to Economics Detective Radio. Geloso: It's a pleasure to be here. Petersen: So the paper we'll be discussing today is titled "A U-curve of Inequality? Measuring Inequality in the Interwar Period" which Vincent has co-authored with John Moore and Phillips Schlosser. The paper casts doubt on the claim from, most notably, Thomas Piketty and others that inequality fell from the 1920s to the 1960s and rose thereafter. So, Vincent let's start by discussing the inequality literature prior to this paper. What is this U-curve and where did it come from? Geloso: The U-curve is probably the most important stylized fact we have now in the debate over inequality and the idea is that, if you look at the twentieth century, there's a high point of inequality in the 1910s, 1920s and then from the 1930s onwards up to 1970s, it falls dram

What follows is an edited transcript of my conversation with Emily Hamilton about land use regulations' effects on affordable housing. Petersen: My guest today is Emily Hamilton. She is a researcher at the Mercatus Center at George Mason University. Emily, thanks for being on Economics Detective Radio. Hamilton: Thanks a lot for having me. Petersen: So, Emily recently wrote a paper titled "How Land Use Regulation Undermines Affordable Housing" along with her co-author Sanford Ikeda. The paper is a review of many studies looking at land use restrictions and it identifies four of the most common types of land use restrictions. Those are: minimum lots sizes, minimum parking requirements, inclusionary zoning, and urban growth boundaries. So Emily, could you tell us what each of those restrictions entail? Hamilton: Sure. So, starting off with the first, minimum lots sizes. This is probably what people most commonly associate with zoning. It's the type of Euclidian zoning that separates residential areas from busi

In this episode, I discuss the process of writing and being successful with Mike Munger. What follows is an edited transcript of our conversation. Petersen: My guest today is Mike Munger of Duke University. Mike, welcome to Economics Detective Radio! Munger: It's a pleasure to be on your show! Petersen: So first I stole EconTalk's format and now I have stolen Mike Munger as well, so if Russ Roberts sends me a cease and desist letter, I'll completely understand why. Munger: Russ and I have an open relationship. We both date other people. Petersen: Oh good, good. I have many jokes I could make about that, but I won't! Munger: Thank you for not. Petersen: So, our topic today is going to be writing and thinking. Let's say that because, as we'll go through, the two are intimately related. So Mike wrote a piece titled "Ten Tips on How to Write Less Badly." Now you may be thinking to yourself, "Hey I thought this was an economics podcast! What does writing have to do with economics?" Well, writing is what economist

Today's guest is Stephen Smith, he is an analyst for a New York real estate firm. Stephen did some research showing that at least 40 percent of the buildings in Manhattan could not be built under today's zoning regulations. In fact, the number is probably significantly higher. Classic landmarks like the Empire State Building, with its floor-area ratio of 30, wouldn't fly today. Watch this time-lapse of the New York City skyline, and pay close attention to the kind of changes that happen in the earlier part of the video compared to the later part: Before the twentieth century, the pace of change is very gradual. Two storey buildings are replaced with three storey buildings. Waves of development sweep through the city, replacing wood buildings with brick and stone and concrete. In the twentieth century, we see a different kind of development. Pay attention to any particular small building and you'll notice one of two things happening: Either the building stays exactly as it is, or it is replaced by a massive s

My guest today is Jason Brennan of the McDonough School of Business at Georgetown University. He is the author of Against Democracy, which is our topic for this episode. The first chapter is available on the publisher's website. John Stuart Mill believed that getting more people involved in politics would make them smarter, more concerned for the common good, better educated, and nobler. In the intervening century and a half, we've gathered much more data on Mill's hypothesis, and the results don't look good: The test results are now in. They are, I will hold, largely negative. I think Mill would agree. Most common forms of political engagement not only fail to educate or ennoble us but also tend to stultify and corrupt us." (p. 2) Diana Mutz performed a study that found that people's belief that their political adversaries were evil and stupid predicted high political engagement. Many studies show similar results, where politics seems to exacerbate our biases along with our meanness and contempt for the oth

Today's guest on Economics Detective Radio is Chuck Marohn, founder and president of Strong Towns. Strong Towns is a non-profit that seeks to reform America from the ground up, starting with its towns and cities. It aims to promote healthy local economies by improving local governance. The Growth Ponzi Scheme Chuck began recognizing the problems in America's towns and cities when he was working as a civil engineer. He recounts a story of working in a little city in central Minnesota in the late 1990s. The city had a 300-foot pipe that had cracked, allowing ground water to leak in and overflow their treatment facility. Chuck proposed a $300,000 solution to fix the pipe. However, this was a tiny town with an annual budget of $85,000. So Chuck went to higher levels of government (the federal government, the USDA, etc.) to find someone to fund the project. They all said, "This feels like maintenance. We don't have money for maintenance, so you need to pay for this yourself." Since the feds would only fund expansi

Today's guest is Steve Horwitz, he is the Charles A. Dana Professor and Chair of the economics department at St. Lawrence University. Steve recently wrote an article titled, "Make Babies, and Don't Let the Greens Guilt Trip You about It." This was a response to an argument made by the bioethicist Travis Rieder, who was recently profiled by NPR. Rieder argues that it is immoral to have children because of the burden additional humans place on the Earth, in particular because of the risk of catastrophic climate change. Here's how that NPR piece put his argument: "Back at James Madison University, Travis Rieder explains a PowerPoint graph that seems to offer hope. Bringing down global fertility by just half a child per woman 'could be the thing that saves us,' he says. He cites a study from 2010 that looked at the impact of demographic change on global carbon emissions. It found that slowing population growth could eliminate one-fifth to one-quarter of all the carbon emissions that need to be cut by midcentury t

This week's episode of Economics Detective Radio deals with the economic thought and continuing popularity of Marx. No, not Groucho! The other Marx! My guest on the podcast is Phil Magness, a historian who teaches at George Mason University. Phil recently wrote a piece entitled, "Commie Chic and Quantifying Marx on the Syllabus." Recently, the Open Syllabus Project released a data set including thousands of college syllabi. To many people's surprise, Marx and Engels' Communist Manifesto enjoys massive popularity! Phil took a closer look at the numbers and reached some startling conclusions: 1. Accounting for different versions of its title, Marx’s Communist Manifesto appears on a total of 3856 syllabi in the Open Syllabus Project database. That makes it the second most used text in academia after the popular writing style manual by Strunk and White (3934 syllabi) – a book that’s usually assigned to help college students with their composition habits for writing term papers. 2. Of those 3856 Communist Manifes

Today's guest on Economics Detective Radio is Nolan Gray. Nolan is a writer for Market Urbanism and the host of the recently launched Market Urbanism Podcast. Market urbanism is the synthesis of classical liberal economics and an appreciation for urban life. Market urbanists are interested in economic issues specific to cities, such as housing affordability and urban transportation. Nolan wrote an article titled "Reclaiming 'Redneck' Urbanism: What Urban Planners Can Learn From Trailer Parks." As Nolan points out, trailer parks are remarkable in that they achieve very high densities with just one- and two-story construction. They do so while providing remarkably low rents of between $300 and $500, or $700 to $1,100 per month to live in brand new manufactured homes. They are also interesting in that the park managers provide a form of private governance to their tenants. A century ago, there were many kinds of low-income housing available to people of lesser means. Low-quality apartments, denser housing, and b

Today's guest is Francisco Toro, he is the blog editor at The Caracas Chronicles, a group blog about Venezuela. Venezuela has all the markings of a paradise. It has a lush, tropical climate and access to vast oil reserves. And yet, the Venezuelan government has run the country into the ground. As of now, all but the wealthiest Venezuelans struggle to eat. What went wrong? It might surprise you, given Venezuela's current state, that the country was for many years a model Latin American country. Before 1989, Venezuela had a stable, two-party democracy. Its economy functioned when the price of oil was high, and it was free of much of the violence that plagued other Latin American nations. That changed in 1989 with an event known as El Caracazo. El Caracazo refers to a series of riots that occurred in February and March of 1989, and their brutal repression by the Venezuelan army. The details surrounding El Caracazo remain deeply controversial among Venezuelans. Before 1989, the Venezuelan economy was characterize

Pierre Desrochers returns to the podcast to discuss the fossil fuel divestment movement in higher education. He recently co-authored a paper titled "Blowing Hot Air on the Wrong Target? A Critique of the Fossil Fuel Divestment Movement in Higher Education" with Hiroko Shimizu. The fossil fuel divestment movement seeks to combat the environmental damage done by the fossil fuel industry by preventing university endowments from investing in fossil fuel stocks. More than 1,000 universities have divested themselves of fossil fuel stocks because of this movement's influence. There are a number of problems with this approach: 1. University endowments can't budge stock prices unilaterally. University endowments are small potatoes in the world economy. Even if they could affect the stock prices of oil companies, they would just create an arbitrage opportunity for other investors to buy those stocks at discounted prices. This more than anything makes divestment an exercise in futility. Camerer (1998) tried to influence

Garett Jones returns to the podcast to discuss the issue of ethnic diversity. There is a wide body of research showing that ethnic diversity can reduce the productivity of teams, firms, and even whole countries. Williams and O'Reilly (1996) review dozens of studies showing that ethnic diversity has a negative impact on group performance. In the two decades since, more research has reinforced that result. Alesina and La Ferrara (2005) find that increasing ethnic diversity from 0 (only one ethnic group) to 1 (each individual is a different ethnicity) would reduce a country's annual growth by 2 percent. Multiple studies (La Porta et al., 1999; Alesina et al., 2003; Habyarimana et al., 2007) have shown that ethnic diversity negatively affects public good provision. Stazyk et al. (2012) find that ethnic diversity reduces job satisfaction among government workers. Parrotta et al. (2014a) find that ethnic diversity is significantly and negatively correlated with firm productivity. This may seem strange to you. If y

Two days ago, Britain voted to leave the European Union (EU). The "leave" option won with 52 percent of the vote, leaving elites and the media frustrated with voters for choosing what they perceive to be the "wrong" option. My guest today to discuss Brexit is Sam Bowman, Executive Director of the Adam Smith Institute. The EU can be thought of as three things: A trade union known as the European Economic Area (or EEA), a currency union (the Euro) which Britain was never a part of, and a central regulatory body. The EU has been around in one form or another since the 1950s. Although its primary function was always to facilitate trade among European states, its ultimate goal was to prevent Europe from falling back into the brutal wars that had consumed it during the first half of the twentieth century. The Union brought freedom of movement for goods and services and for people across member states. This freedom of migration only became controversial after the fall of the Berlin Wall. Many poorer states in Easter

When I think of emulation, I think of retro gaming. My Android phone can easily emulate a Super Nintendo, a gaming console from the 1990s, and it can do that because the phone is much more powerful than the Super Nintendo and because we know exactly how a Super Nintendo works. My guest for this episode, Robin Hanson, argues that we may one day be able to emulate human brains. His book, The Age of Em, provides a detailed analysis of what a society made largely of emulated humans would be like. Whole brain emulation is unlike my emulated Super Nintendo in many ways. With the brain, we're trying to emulate something that we couldn’t build ourselves. The challenge is in developing a sufficiently accurate model of each part of the brain that is necessary for it to function. If we knew how each node in the brain worked, if we could model it such that our node would take the same inputs, produce the same change in its internal state, and send the same outputs as biological brain cells, then all that would remain wo

Mark Thornton is a Senior Fellow at the Mises Institute. He is the author of many books, including The Economics of Prohibition (which you can access for free here), which is also the topic of this episode. 1. Does drug prohibition help stop poverty and homelessness? The conventional wisdom on drugs is simple: you see drugs and drug abuse mixed with poverty and homelessness and it makes intuitive sense that drugs play a role in causing poverty. It seems to follow that by criminalizing drugs, you can take them out of the equation and help solve the other problems. Mark disputes this conventional wisdom. First, the causation doesn't necessarily go from drugs to poverty. Poverty can cause people to abuse drugs and mental illness can cause both self-medication and poverty. Second, if you legalize drugs, they won't be sold on the street. Instead, they'll be sold by legitimate businesses with a particular interest in maintaining their reputation and not harming their customers. Prohibition is what creates the black

Ancient Rome went from a thriving civilization to a dystopia before its eventual collapse. My guests today explain how that happened. Lawrence Reed and Marc Hyden co-authored "The Slow-Motion Financial Suicide of the Roman Empire." Lawrence is the President of the Foundation for Economic Education, and Marc is a political activist and amateur Roman historian. Many accounts of the fall of Rome focus on military problems and the barbarian invasions. However, the Empire was in decline long before the barbarians showed up to finish it off. The barbarians didn't kill the Roman Empire; the Roman Empire committed suicide. There were six important factors in the Empire's decline: 1. Political violence became normalized. The populist reformer Tiberius Gracchus redistributed public farmland to Roman citizens. His reforms angered the Senate, and his political enemies clubbed him to death in 133 BCE. This was the first open political assassination in Rome in nearly four centuries, but it wouldn't be the last. Suddenly, i

Garett Jones is Associate Professor of Economics and BB&T Professor for the Study of Capitalism at the Mercatus Center, George Mason University. His book, Hive Mind: How Your Nation's IQ Matters so Much More than Your Own is the subject of this episode. The book deals with an empirical puzzle: IQ is a weak predictor for earnings. We all know high-IQ people who live paycheque to paycheque, and lower IQ people who succeed brilliantly. And yet, when we look at the relationship between nations' average IQ scores and their incomes, the relationship is strong. Nations with the highest average IQ scores are eight times wealthier than nations with the lowest IQ scores. How can we resolve this apparent contradiction? Garett documents five main channels for the spillover effects of IQ: 1. Smarter people are more patient, they save more and build up more capital. When economists test people's patience, high-IQ people tend to be more willing to wait for a larger amount of money in the future rather than taking a sma

Ash Navabi returns to the podcast to discuss his essay, "Will Iceland's Sovereign Money Proposal End Economic Crises?" In April of 2015, Frosti Sigurjonsson, Member of the Parliament of Iceland and Chairman of the Committee for Economic Affairs and Trade, made a bold proposal to end fractional reserve banking and replace it with a system he calls "sovereign money." Fractional reserve banking is the system under which banks create money by lending out a portion of depositors' money, keeping only a fraction to pay out on demand. One problem with fractional reserve banking is that the mismatch between banks' assets and liabilities leaves them exposed to bank runs and financial panics. To solve this problem, the central banks of the world function as "lenders of last resort" to save insolvent banks from going under. However, the more insidious problem with fractional reserves is that the injection of new money directly into credit markets artificially lowers interest rates and incentivizes entrepreneurs to take o

Cornelius Christian is an Assistant Professor of Economics at St. Francis Xavier University. His research concerns development economics, economic history, and the economics of conflict and violence, which is the topic of this episode of Economics Detective Radio. Cornelius' paper "Lynchings, Labour, and Cotton in the US South" deals with violence against black people in the post-reconstruction South. Historians have hypothesized that there was an economic motive to lynchings, noting that more of them occurred when cotton prices were low. Black and white workers competed with one another in the agricultural labour market. Cornelius' findings indicate that lynchings were used by white labourers to scare black workers out of the labour market, thus raising their own wages. He finds that lynchings happen in the wake of economic shocks when agricultural wages are low. He also finds that, when lynchings occur in a given area, black people tend to migrate out of the area and agricultural wages rise for the remainin