Economics Detective Radio

Michael Heller joins the podcast to discuss his new book, Mine! How the Hidden Rules of Ownership Control Our Lives. This book explores the implicit social rules governing ownership. In brief, these rules are as follows: Attachment ("it's mine because it's connected to something of mine") Possession ("it's mine because I physically control it") First-in-time ("it's mine because I was here first") Labour ("it's mine because I worked for it") Self-ownership ("it's mine because it came from my body") Family ("it's mine because my grandfather left it to me") We discuss these six rules with reference to many examples of how they play out in the modern world, from conflicts over airline seats to the rise and fall of Soviet communism.

Today's guest is Michael McCullough of the University of California, San Diego. We are discussing his book The Kindness of Strangers: How a Selfish Ape Invented a New Moral Code. How did humans, a species of self-centered apes, come to care about others? Since Darwin, scientists have tried to answer this question using evolutionary theory. In The Kindness of Strangers, psychologist Michael E. McCullough shows why they have failed and offers a new explanation instead. From the moment nomadic humans first settled down until the aftermath of the Second World War, our species has confronted repeated crises that we could only survive by changing our behavior. As McCullough argues, these choices weren't enabled by an evolved moral sense, but with moral invention — driven not by evolution's dictates but by reason. Today's challenges — climate change, mass migration, nationalism — are some of humanity's greatest yet. In revealing how past crises shaped the foundations of human concern, The Kindness of Strangers offers clues for how we can adapt our moral thinking to survive these challenges as well.

Anton Howes returns to the podcast to discuss his new book, Arts and Minds: How the Royal Society of Arts Changed a Nation. From its beginnings in a coffee house in the mid-eighteenth century, the Royal Society for the Encouragement of Arts, Manufactures and Commerce has tried to improve British life in every way imaginable. It has sought to influence how Britons work, how they are educated, the music they listen to, the food they eat, the items in their homes, and even how they remember their own history. Arts and Minds is the remarkable story of an institution unlike any other—a society for the improvement of everything and anything. Drawing on exclusive access to a wealth of rare papers and artefacts from the Society's own archives, Anton Howes shows how this vibrant and singularly ambitious organisation has evolved and adapted, constantly having to reinvent itself to keep in step with changing times. The Society has served as a platform for Victorian utilitarian reformers, purchased and restored an entire village, encouraged the planting of more than sixty million trees, and sought technological alternatives to child labour. But this is more than just a story about unusual public initiatives. It is an engaging and authoritative history of almost three centuries of social reform and competing visions of a better world—the Society's members have been drawn from across the political spectrum, including Adam Smith, Edmund Burke, and Karl Marx. Informative and entertaining, Arts and Minds reveals how a society of public-spirited individuals tried to make their country a better place, and draws vital lessons from their triumphs and failures for all would-be reformers today.

Today's guests are Sylvain Catherine and Natasha Sarin of the University of Pennsylvania. They discuss their research on wealth inequality, specifically with respect to social security's impact on calculated wealth inequality. When you account for the value of all future payroll taxes into Social Security and all future benefit payments from Social Security, the present value of that stream of payments accounts for a large fraction of the wealth held by the bottom 90% of households. Recent influential work finds large increases in inequality in the U.S., based on measures of wealth concentration that notably exclude the value of social insurance programs. This paper revisits this conclusion by incorporating Social Security retirement benefits into measures of wealth inequality. Wealth inequality has not increased in the last three decades when Social Security is accounted for. When discounted at the risk-free rate, real Social Security wealth increased substantially from $5.6 trillion in 1989 to just over $42.0 trillion in 2016. When we adjust for systematic risk coming from the covariance of Social Security returns with the market portfolio, this increase remains sizable, growing from over $4.6 trillion in 1989 to $34.0 trillion in 2016. Consequently, by 2016, Social Security wealth represented 58% of the wealth of the bottom 90% of the wealth distribution. Redistribution through programs like Social Security increases the progressivity of the economy, and it is important that our estimates of wealth concentration reflect this.

Today's episode features my conversation with Mark Blyth, co-author (with Eric Lonergan) of Angrynomics. Why are measures of stress and anxiety on the rise when economists and politicians tell us we have never had it so good? While statistics tell us that the vast majority of people are getting steadily richer, the world most of us experience day in and day out feels increasingly uncertain, unfair, and ever more expensive. In Angrynomics, Mark Blyth and Eric Lonergan explore the rising tide of anger, sometimes righteous and useful, sometimes destructive and ill-targeted, and propose radical new solutions for an increasingly polarized and confusing world. Angrynomics is for anyone wondering, where the hell do we go from here? In the course of our conversation, Mark mentioned a talk he gave called The Mustang and the Volvo describing the different economies of America and Europe.

Historian Kyle Harper joins the show to discuss his book The Fate of Rome: Climate, Disease, and the End of an Empire. We discuss the fall of the Roman empire and the new scientific discoveries that have shed more light on its nature and causes. Kyle's work looks at the epidemics and climatic changes that hit the empire, contributing to its disintegration. Interweaving a grand historical narrative with cutting-edge climate science and genetic discoveries, Kyle Harper traces how the fate of Rome was decided not just by emperors, soldiers, and barbarians but also by volcanic eruptions, solar cycles, climate instability, and devastating viruses and bacteria. He takes readers from Rome's pinnacle in the second century, when the empire seemed an invincible superpower, to its unraveling by the seventh century, when Rome was politically fragmented and materially depleted. Harper describes how the Romans were resilient in the face of enormous environmental stress, until the besieged empire could no longer withstand the combined challenges of a "little ice age" and recurrent outbreaks of bubonic plague.

Today's guest is Robert H. Frank of Cornell University. Our topic is his latest book, Under the Influence: Putting Peer Pressure to Work. Psychologists have long understood that social environments profoundly shape our behavior, sometimes for the better, often for the worse. But social influence is a two-way street—our environments are themselves products of our behavior. Under the Influence explains how to unlock the latent power of social context. It reveals how our environments encourage smoking, bullying, tax cheating, sexual predation, problem drinking, and wasteful energy use. We are building bigger houses, driving heavier cars, and engaging in a host of other activities that threaten the planet—mainly because that's what friends and neighbors do. In the wake of the hottest years on record, only robust measures to curb greenhouse gases promise relief from more frequent and intense storms, droughts, flooding, wildfires, and famines. Robert Frank describes how the strongest predictor of our willingness to support climate-friendly policies, install solar panels, or buy an electric car is the number of people we know who have already done so. In the face of stakes that could not be higher, the book explains how we could redirect trillions of dollars annually in support of carbon-free energy sources, all without requiring painful sacrifices from anyone. Most of us would agree that we need to take responsibility for our own choices, but with more supportive social environments, each of us is more likely to make choices that benefit everyone. Under the Influence shows how.

Today's guest is Simon Bowmaker. The topic is his book, When the President Calls: Conversations with Economic Policymakers. The book features 35 interviews with economists who worked for the President of the United States. What is it like to sit in the Oval Office and discuss policy with the president? To know that the decisions made will affect hundreds of millions of people? To know that the wrong advice could be calamitous? When the President Calls presents interviews with thirty-five economic policymakers who served presidents from Nixon to Trump. These officials worked in the executive branch in a variety of capacities—the Council of Economic Advisers, the Office of Management and Budget, the Department of the Treasury, and the National Economic Council—but all had direct access to the policymaking process and can offer insights about the difficult tradeoffs made on economic policy. The interviews shed new light, for example, on the thinking behind the Reagan tax cuts, the economic factors that cost George H. W. Bush a second term, the constraints facing policymakers during the financial crisis of 2008, the differences in work styles between Bill Clinton and Barack Obama, and the Trump administration's early budget process. When the President Calls offers a unique, behind-the-scenes perspective on US economic policymaking, with specific and personal detail—the turmoil, the personality clashes, the enormous pressure of trying to do the right thing while the clock is ticking.

Today's episode features Gilles Duranton and Diego Puga on their new working paper, "Urban Growth and its Aggregate Implications." This paper builds a detailed theoretical model that includes urbanization, agglomeration economies, inter-city migration, congestion externalities, and land-use restrictions. We develop an urban growth model where human capital spillovers foster entrepreneurship and learning in heterogeneous cities. Incumbent residents limit city expansion through planning regulations so that commuting and housing costs do not outweigh productivity gains. The model builds on strong microfoundations, matches key regularities at the city and economy-wide levels, and generates novel predictions for which we provide evidence. It can be quantified relying on few parameters, provides a basis to estimate the main ones, and remains transparent regarding its mechanisms. We examine various counterfactuals to assess quantitatively the effect of cities on economic growth and aggregate income.

Today on Economics Detective Radio, I discuss health economics with Hannes Schwandt of Northwestern University. Hannes is the co-author, along with Diane Alexander, of "The Impact of Car Pollution on Infant and Child Health: Evidence from Emissions Cheating." Car exhaust is a major source of air pollution, but little is known about its impacts on population health. We exploit the dispersion of emissions-cheating diesel cars which secretly polluted up to 150 times as much as gasoline cars across the United States from 2008-2015 as a natural experiment to measure the health impact of car pollution. Using the universe of vehicle registrations, we demonstrate that a 10 percent cheating-induced increase in car exhaust increases rates of low birth weight and acute asthma attacks among children by 1.9 and 8.0 percent, respectively. These health impacts occur at all pollution levels and across the entire socioeconomic spectrum. We also discuss his work on the health impacts of the 9/11 dust cloud.

Today's guest is Jeffrey Rogers Hummel of San Jose State University. He is the author of Emancipating Slaves, Enslaving Free Men: A History of the American Civil War. This book combines a sweeping narrative of the Civil War with a bold new look at the war's significance for American society. Professor Hummel sees the Civil War as America's turning point: simultaneously the culmination and repudiation of the American revolution. Links: The Curious Task from the Institute for Liberal Studies; mentioned in the outro.

Phil Magness returns to the show to discuss his work on slavery and capitalism, particularly as it relates to the New History of Capitalism (NHC) and the New York Times' 1619 project. Phil recently wrote an article entitled, "How the 1619 Project Rehabilitates the 'King Cotton' Thesis." In it, he argues that the NHC has unwittingly adopted the same untenable economic arguments made by slaveowners in the antebellum South: that slave-picked cotton was "king" in the sense of being absolutely indispensable for the global economy during the industrial revolution. [T]he economic reasoning behind King Cotton has undergone a surprising — perhaps unwitting — rehabilitation through a modern genre of scholarly works known as the new history of capitalism (NHC). While NHC historians reject the pro-slavery thrust of Wigfall and Hammond's bluster, they recast slave-produced cotton as "not just as an integral part of American capitalism, but . . . its very essence," to quote Harvard's Sven Beckert. Cornell historian Ed Baptist goes even further, describing slavery as the indispensable causal driver behind America's wealth today. Cotton production, he contends, was "absolutely necessary" for the Western world to break the "10,000-year Malthusian cycle of agriculture." And this same NHC literature provides the scholarly foundation of the ballyhooed New York Times' 1619 Project — specifically, its foray into the economics of slavery. Guided by this rehabilitated version of King Cotton, Princeton sociologist Matthew Desmond enlists the horrors of the plantation system to launch a blistering attack on modern American capitalism. Desmond projects slavery's legacy onto a litany of tropes about rising inequality, the decline of labor-union power, environmental destruction, and the 2008 financial crisis. The intended message is clear: Modern capitalism carries with it the stain of slavery, and its putative excesses are proof of its continued brutality. It follows that only by abandoning the free market and embracing political redistribution will we ever atone for this tainted inheritance.

Today's guest is Robert Wright, author of The Poverty of Slavery. The New York Times' 1619 Project has prompted renewed discussions on slavery and the New History of Capitalism literature. This episode is the first in a series addressing these topics. We discuss the prevalence of slavery in the developing world today, the arguments for and against reparations, and the rent-seeking behaviour of slaveowners in the Antebellum South. This ground-breaking book adds an economic angle to a traditionally moral argument, demonstrating that slavery has never promoted economic growth or development, neither today nor in the past. While unfree labor may be lucrative for slaveholders, its negative effects on a country's economy, much like pollution, drag down all members of society. Tracing the history of slavery around the world, from prehistory through the US Antebellum South to the present day, Wright illustrates how slaveholders burden communities and governments with the task of maintaining the system while preventing productive individuals from participating in the economy. Historians, economists, policymakers, and anti-slavery activists need no longer apologize for opposing the dubious benefits of unfree labor. Wright provides a valuable resource for exposing the hidden price tag of slaving to help them pitch antislavery policies as matters of both human rights and economic well-being.