Bravehearts and canny widows

Whichever way the Scots vote on Thursday – and at the moment it’s too close to call – the old Union is dead. Even if the Noes win, a constitutional settlement that is supported by only 51% of the people of one of the component countries of the United Kingdom is only surviving on life support.

Cameron, Miliband and Clegg, in a last-ditch attempt to save the Union, have jointly offered a major constitutional change with more devolution. Tinkering with a constitution is like removing one strut from the Eiffel Tower, you can’t stop with one piece. Why should Scottish Westminster MPs vote on English income tax? Before you know it, you are revising the entire structure.

That in fact is my eccentric reason for hoping for a No vote. It would force a proper constitutional house-cleaning in the United Kingdom. There would be a good chance of getting rid of the mumbo-jumbo about Crown privilege behind which unaccountable agencies like GCHG can shelter. The museum-piece House of Lords could be replaced by a Council of Nations like the German Bundesrat, with blocking powers on matters affecting the autonomous sphere of Scotland, Wales and Northern Ireland. The catalogue of human rights in the Human Rights Act could be raised, as everywhere else in the civilised world, to its proper level as a constitutional, not merely legislative, guarantee.

George Monbiot, the always interesting and often infuriating Guardian pundit, argues the other way. He thinks that Westminster is so corrupt and plutocratic that the Scots need independence to have a chance of clean democracy. Besides, he hopes that the shock and example would trigger an English movement for real constitutional reform.

Whatever, the impact on England has approximately zero weight in the decision of the Scots. The nationalists have, it is now clear, not done their homework on the economic impacts, especially the currency question. That’s being charitable. See Mark Carney, Paul Krugman, and Simon Wren-Lewis on this. The No campaign, led by the former Chancellor of the Exchequer Alistair Darling, has concentrated on the large economic risks. True enough, but by abandoning the terrain of emotional identification to the Yes side, they have defined the choice as one between the reckless courage of Wallace and the dour calculation of the Duke of Queensberry in 1707. Not surprisingly, men favour Yes and women No.

But what flag-waving appeal could have worked? Part of the deal for the Scots in 1707, after the failure of their own colonial venture in Darien, was to join in England’s imperial and commercial expansion, for glory and profit. They were not cheated on this. Scots played a quite disproportionate part in the British Empire, from its trading-houses to its battlefields. Glasgow became the shipbuilder to Empire. Hong Kong was created by Scots. But that’s gone now. Cameron can still offer occasional battles to the shrunken Scottish regiments; his oath of vengeance on ISIS was not just theatre. But generally, Britain is now just another peaceful European welfare state, cultivating its gardens like Candide. There is no wider vision or ambition to stir Unionist blood, not even building Europe, an unpopular project. So why can’t Scotland be its own cosy welfare state like Denmark or Slovenia? Catalans and Basques are asking the same question, with potentially graver consequences for Spain.

Not invented here

I was just informed, on a public affairs listserv, of this project, aimed at making didactic material in this extremely important field available to students at something like marginal cost.  Hooray for them: the textbook market needs loosening up in many ways. You have to sign up to look inside, but it’s free.  I checked out the second chapter and had a kind of ambivalent reaction. On the one hand, it took what looks to me like a good approach to the material, making the law of demand shed light on a question students could be expected to find considerable on its own terms (why is the West so much richer than everywhere else?).  On the other hand, having asked that question and presenting some different theories about the answer, the chapter does not discuss, nor mention in the “further readings” section, Jared Diamond’s Guns, Germs and Steel,  just books by economists. This is really mystifying to me; I really thought almost every literate person knew this book, certainly anyone who is going to set hand to keyboard about differential national prosperity.
I have been here before, and more than once.  Every discipline has its blind spots, but there seems to be something about economists as a group, even though I have nothing but love and affection for my economist friends and colleagues, and gratitude for all the good stuff I have learned from them.  I can’t count the times, for example, that I’ve asked a young economist, who just presented a paper with a cool regression from actual data showing that government agencies don’t do nearly enough of A to accomplish B, “that’s really interesting! Why do the people in these agencies say they don’t do A?” and triggered a complete deer-in-the-headlights freeze. “You mean, like, ask them?”  How could that poor student’s thesis advisor not have ever told him, “part of being a responsible scholar in our business is to pick up the phone and talk to the people who do what you are studying: lucky you, the entomologists can’t do that!”  A few years ago I gave a talk to a large hall full of cultural and arts economists, and had to do some fast course adjustment when I discovered that no more than two or three were aware of Lawrence Lessig’s work on copyright and digital media. I’m sorry, but in that field, that is like not knowing how to read. The problem, I realized (and yes, I did ask them afterwards) is that Lessig is a law professor, not an economist. (Diamond is an ornithologist and physiologist).

As Yogi Berra said, “a fella can see a lot by just looking.” As he meant, “…and miss a lot by not looking.” When your data and standard methodology doesn’t give you p<.10 confidence that something is a certain way, what do you do…jump out the window? send society to an astrologer for an answer?  You need to get out more, folks. Be like Tom Schelling and Bob Frank: knowing all kinds of different stuff doesn’t seem to have dumbed them down any. And by the way, the most-cited paper ever published in Econometrica was by a pair of psychologists.

 

Annals of Commerce: seatbacks and clueless executives

I think we are now up to three flights diverted because of tiffs between passengers over reclining seats.  Discussion, in the air and in print, has mostly been in assertive mode: “I paid for this seat and you have no right to recline into it!/I paid for this seat including the  space above your knees; the button is on my armrest!” It goes downhill from there. Ronald Coase is famous for demonstrating that when parties claiming the same resource can negotiate, there’s no efficiency loss by unambiguously assigning the resource to one or the other. What matters for GDP is that either the farmer or the cowboy has the rights, and that they both know which.

He’s not as famous, but should be, for showing that there are a lot more cases where the parties can’t make deals, and government needs to consider, at least in addition to tradition, political power, and the like, ‘who will best use the resource?’.  Government here is the airline company, within some FAA constraints (like ‘no seats that recline into an exit row’), and it seems to me the rules are pretty clear: the ‘seat’ we are renting you is a trapezoidal solid that goes under the one in front and above the one behind you.  United, at least, says it forbids the use of the anti-recline device that has triggered the latest dustups. But it’s not clear that they have the managerial capacity to motivate underpaid, overworked flight attendants supervising a coach section full of angry, surly passengers to implement the policy, and it’s crystal clear that they don’t understand that when passengers start duking it out with each other because the airline has put them in an impossible position, it don’t do the stockholders no good.  It’s very expensive to divert a flight, and probably expensive to deliver a load of furious passengers who had a scary, miserable trip.

The rules worked reasonably well until the seats got so close together that some other stuff that used to be part of the deal disappeared, like the ability to use a laptop on the tray table, or travel with actual knees, when the seat in front came down (did you say “cross your legs?” What are you, some kind of nut?). The big problem here is not an angels-on-a-pinhead pilpul exercise in moral philosophy, it’s that airline company management is a dysfunctional culture mismatched to a competitive environment and to the predictable, known capacities of the customers it sells to, possibly crippled by a general IQ deficiency. Continue Reading…

The Golden Gate Suicide Barrier Makes Economic as Well as Moral Sense

Because September is Suicide Prevention Month, I have written a piece for Washington Post’s Wonkblog describing the evidence supporting the likely benefits of the $76 million suicide prevention nets that will be installed on the Golden Gate Bridge. This was a compassionate policy decision by the Bridge District Board, who were responding to the agony of many grieving families. At the same time, it was economically defensible by any reasonable standard.

Willingness to pay analysis of lifesaving policies strikes many people, including me, as a bit cold around the heart. But it is also informative for weighing public policy choices because we will never have enough money to pay for every conceivable life-saving option. Was the suicide barrier a good investment from that viewpoint?

Austin Frakt has helpfully flagged a a new review in Health Economics of willingness to pay studies supports $98,879 as a reasonable estimate of how much people will pay for an added year of life. Keeping to round numbers for simplicity, let’s call that 100k and also make the reasonable (indeed conservative) round number assumption that, because suicide is most common among the late middle aged population, the average person who takes their own life would otherwise live another 20 years. That gives a back of the envelope assessment that it’s reasonable to pay at least $2 million to avert the typical suicide.

Based on research in this area, the nets on the Golden Gate Bridge can be expected to prevent (i.e., not just shift to another location) a suicide a month, which works out to a $24 million dollar return per year. Note that this estimate is even more conservative than it seems because the Bridge attracts more young adult suicides than do other means of suicide (i.e., they will live more than 20 more years), and, because there is clearly added value in averting the emotional suffering by the loved ones of people who jump from the Bridge.

Again rounding to keep the math simple, this means the investment in the suicide barrier pays for itself in a little over three years and then yields a massive return on investment forever after (If one assumed a million dollars of maintenance a year on the suicide prevention nets after they were installed, their annual economic return would be 2400%). That’s a spectacular return on investment relative to most investments we make in the mental health field.

Another way to appreciate the value of installing the nets, highlighted by Liza Gross, is to compare them to other decisions made regarding the bridge. From that vantage point, the virtue of the decision to install nets is even more obvious:

[The Bridge district] approved toll funds for a $26.5 million median to separate opposing lanes of traffic to prevent head-on collisions. Since 1970, 16 people have died when cars veered into oncoming traffic. Over the same period, more than 70 times as many — at least 1,129 people — have leapt to their deaths.

Ending the Euro: An Impermissible Discussion?

The Eurozone remains an economic basket case, creating neither jobs nor economic growth. The Eurocracy is now abuzz with more policy proposals that will allegedly save the common currency. To this outside observer, the most remarkable aspect of each subsequent round of Europanic is how few policy insiders are willing to revisit the fundamental premise that Europe needs this floundering banknote at all.

Economists have noted that from its conception the Euro was deeply flawed. Giancarlo Corsetti argues that the Eurozone does not actually protect against the “original sin” of borrowing in a foreign currency while ability to pay is in a domestic currency. NYT columnist Paul Krugman puts it more sardonically:

the euro was best understood as a plot by Italian technocrats to get themselves German central bankers.

This was not, it turns out, a good idea.

I am not an economist, but my own discipline of psychology would support another fundamental critique of the Eurozone: it falsely assumes that re-arranging the consequences of and responsibilities for financial decisions would not affect subsequent financial decisions by participants (be they individuals, businesses, elected officials or bankers).

Not incidentally, European economies can prosper without the Euro. Eurozone non-members Sweden, The Czech Republic and The United Kingdom currently have employment and growth levels that put the Eurozone to shame.

But if you talk to many Europeans policy elites and chattering class members, to even broach the possibility of ending the Euro is apostasy. Part of this reaction stems from the usual culprits when a big government program is not working: Sunk costs, inertia and insiders not wanting to lose power and face. But if you dig not far below that, you often find intense emotion that comes from the memory of Europe’s traumatic 20th century.

If I put my Euro-devoted friends’ concerns into a few sentences it would go something like this: “Never again must Europe be divided. History teaches us that ever-greater European unity is all that stands between us and the rise of right-wing populist movements and war.” The more candid ones would add “Restraining Germany’s desire to control Europe is critical for peace”.

We should learn from history, including its horrors, but this argument doesn’t hold together. First, far-right populist political parties are doing well across the Eurozone, and the Euro’s economic squeeze is part of the fuel that feeds them. Second, abandoning the Euro would still leave intact the European Union, which ties together its member states in many profound ways that increase interchange, understanding and the prospects of enduring piece. Third, Europe attained over a half century of peace before the Euro was created. Last, in terms of fear of German domination, could anyone in Italy or Spain or Greece give a speech with a straight face arguing that the Euro is lessening German influence in those countries?

I have neither sufficient knowledge nor expertise to be certain that the Euro should be abandoned. But I am quite sure that reflexive, strident refusal to even allow that option to be seriously discussed is a disservice to the continent’s interests.

Ruling Against the NCAA

A federal judge ruled against the NCAA in the so-called Ed O’Bannon case, opening the way for players to share in licensing revenue (the use of their image and likeness on TV, etc) above the cost of attending college (what can be covered by a scholarship). The most consequential points:

In a 99-page opinion, U.S. District Judge Claudia Wilken issued an injunction that will prevent the NCAA “from enforcing any rules or bylaws that would prohibit its member schools and conferences from offering their FBS football or Division I basketball recruits a limited share of the revenues generated from the use of their names, images and likenesses in addition to a full grant-in-aid.” Wilken said the injunction will not prevent the NCAA from implementing rules capping the amount of money that may be paid to college athletes while they are enrolled in school, but the NCAA will not be allowed to set the cap below the cost of attendance. (my emphasis)

And

The injunction will also prohibit the NCAA from “enforcing any rules to prevent its member schools and conferences from offering to deposit a limited share of licensing revenue in trust for their FBS football and Division I basketball recruits, payable when they leave school or their eligibility expires,” Wilken wrote. Her injunction will allow the NCAA to set a cap on the trust fund at less than $5,000 in 2014 dollars for every year an athlete remains academically eligible to compete. The money would be payable to athletes upon expiration of their athletic eligibility or graduation, whichever comes first. She ruled schools could offer lower amounts of compensation if they want, but they can’t “unlawfully conspire with each other in setting these amounts.”

Continue Reading…

Lead, evil, and corporate free speech

Kevin Drum, who’s been doing Pulitzer-quality science and policy reporting on the behavioral effects of environmental lead, has yet another item today, once again reporting a new paper by Jessica Wolpaw Reyes of Amherst, who’s been doing the fancy number-crunching on the topic. No real surprise: in addition to greatly increasing rates of criminal behavior, lead exposure also increase the risk of other consequences of poor self-command, such as early pregnancy. Kevin draws one of the right morals of the story: that biology matters, while liberals and conservatives tend to unite in blaming everything on society, economics, and culture:

It’s a funny thing. For years conservatives bemoaned the problem of risky and violent behavior among children and teens of the post-60s era, mostly blaming it on the breakdown of the family and a general decline in discipline. Liberals tended to take this less seriously, and in any case mostly blamed it on societal problems. In the end, though, it turned out that conservatives were right. It wasn’t just a bunch of oldsters complaining about the kids these days. Crime was up, drug use was up, and teen pregnancy was up. It was a genuine phenomenon and a genuine problem.

But liberals were right that it wasn’t related to the disintegration of the family or lower rates of churchgoing or any of that. After all, families didn’t suddenly start getting back together in the 90s and churchgoing didn’t suddenly rise. But teenage crime, drug use, and pregnancy rates all went down. And down. And down. Most likely, there was a real problem, but it was a problem no one had a clue about. We were poisoning our children with a well-known neurotoxin, and this toxin lowered their IQs, made them into fidgety kids, wrecked their educations, and then turned them into juvenile delinquents, teen mothers, and violent criminals. When we got rid of the toxin, all of these problems magically started to decline. This doesn’t mean that lead was 100 percent of the problem. There probably were other things going on too, and we can continue to argue about them. But the volume of the argument really ought to be lowered a lot. Maybe poverty makes a difference, maybe single parenting makes a difference, and maybe evolving societal attitudes toward child-rearing make a difference. But they probably don’t make nearly as much difference as we all thought. In the end, we’ve learned a valuable lesson: don’t poison your kids. That makes more difference than all the other stuff put together.

But there’s another moral to be drawn.  The toxicity of lead has been known for at least a century. The introduction of tetraethyl lead into gasoline in the 1920s sparked a controversy, which the automobile industry, the petroleum industry, and Ethyl Corporation (a GM/Esso joint venture) won, using the usual mix of dirty tricks including lying and threatening scientists with lawsuits. A similar battle was fought over lead paint in the 197os, with the lead-paint vendors in the bad-guy role, and over lead emissions from smelters, with the American Iron and Steel institute trying to destroy Herb Needleman’s scientific career.
Then, mostly by the accident that leaded pain fouled catalytic converters, the battle was rejoined over lead in gasoline, with the old pro-toxin coalition fighting a drawn-out rearguard action to delay regulation as much as possible.
As far as I know, not a single executive, lobbyist, or scientist working for any of the companies that were making money by poisoning children and causing a crime wave spoke out in favor of public health and safety. Why should they? After all, they were just doing their jobs and paying their mortgages, and Milton Friedman had proclaimed that the only social responsibility of business was to make money (and that anyone who believed otherwise was a closet socialist): a morally insane proposition still widely repeated.
All of which makes me think of C.S. Lewis’s preface to The Screwtape Letters, explaining his image of Hell as the realm of the Organization Man:
I live in the Managerial Age, in a world of “Admin.” The greatest evil is not now done in … sordid “dens of crime.” … It is conceived and ordered (moved, seconded, carried, and minuted) in clean, carpeted, warmed and well-lighted offices, by quiet men with white collars and cut fingernails and smooth-shaven cheeks who do not need to raise their voices.

The plutocrat majority on the Supreme Court has ruled that, whatever the facts, as a matter of law using money to influence the outcome of elections does not constitute “corruption,” because “there is no such thing as too much speech.”  Soon it will probably rule that the companies can cut the comedy and make contributions directly from corporate coffers to campaign accounts, but by now the rules are so leaky that it hardly matters anymore. As a result, quiet men (and women) in pleasant offices, who have not only neatly-trimmed fingernails but utterly clear consciences – men and women most of whom would be psychologically incapable of injuring a child with their own hands - will continue to poison other people’s children (with environmental toxins, unhealthy foods, alcohol, tobacco, and, shortly, cannabis), call anyone who tries to interfere a socialist, and use everything short of explicit bribery to get their way.

And that, my friends, is what’s at stake this year, and in 2016, and – unless we’re very lucky – in every election for the rest of my lifetime.

Creeping conservatism: the guaranteed minimum income

What’s supposedly progressive Dylan Matthews at the supposedly progressive Vox doing pushing an idea favored by Hayek, Milton Friedman, and Richard Nixon?

Of course, the devil is in the details. It matters a lot how minimal the income really is, how fast it phases out, and (crucially) how much of the rest of the income-maintenance and social-services structure it replaces. It’s an idea with the defects of its virtues: Insofar as it displaces direct services, it saves overhead expense and avoids subjecting recipients to bureaucratic meddling in their lives. That’s good or bad depending on how great the expense is, how much fraud results, and how much meddling turns out to be useful. It gives recipients maximum flexibility in how and when to spend their money, which is good or bad depending on the recipients’ capacities for foresight and self-command. At the level of political economy, the question is whether the superior performance of the system would give redistributive policies a political edge sufficient to compensate for the loss of support from provider interests.

For those – including progressives – who think the virtues obviously trump the defects, here’s the thought-experiment: Would you replace public education with unrestricted cash payments to families with school-aged children?

But if you think, as I do, that most of what’s wrong with poor people is that they don’t have enough money, and that many of what look from the outside like behavioral pathologies are actually the predictable consequences of scarcity and insecurity, and despair, as I do, of the prospects for changing the distribution of market incomes enough to manage rising inequality, then the guaranteed-income idea looks very, very attractive. The problem then is to get as large a base and as gentle a phase-down as possible, and – this is the hard part – to discern what specific services need to be delivered alongside the cash. Seems pretty clear to me that housing, home heating, and food mostly shouldn’t get specific subsidies or direct provision, while education and health care should. But there’s lots of crucial detail to be worked out: even with a relatively generous income guarantee, I suspect there would be a need for direct housing provision to people who otherwise would be homeless victims of severe mental illness or substance use disorder. (Day care is an interesting liminal case; so is disability insurance, which could be replaced by a cash income not conditional on disability – likely to lead to substantially improved health outcomes – plus direct services or subsidies to help people deal with the consequences of disability other than difficulty in earning a living.)

The other key progressive goal should be keeping the income-support system national, to protect the poor people of, e.g., Mississippi from the hostility of state governments doing the bidding of bigoted majorities and exploitative employers whose business model is based on employees with no alternative to poorly-paid work but starvation or theft. That would have the side-effect of reducing one perverse impact of the current system, which ties poor people to high-cost-of-living areas where the social safety net tends to be less frayed. A family barely scraping by in Section 8 housing in the Bronx could live rather comfortably in Arkansas if it could cash out the value of that housing subsidy as part of a national income guarantee.

I have no idea whether Matthews is right that a guaranteed income is poised to become a mainstream political issue. But it’s a nice possibility to think about.

Does socialism cause dishonesty?

Here’s an interesting natural experiment.

For external, historical reasons, workers in one half of a culturally and linguistically unified but politically divided country had the right to organize unions to defend their interests against employers, while in the other half of that country workers’ organizations were state-controlled in the interests of management, and genuine union activity was punished by firing if not worse.  After that country was reunified, randomly chosen people from the union half and the non-union half were subjected to a standard psychological test measuring the propensity to cheat.  Those who had grown up under conditions were ordinary people could defend themselves openly from oppression by their bosses turned out to be more honest than their peers from the non-union part of the country.

Conclusion: Unionization makes people behave well, while union-busting makes them behave badly.

Of course, it’s not an entirely clean experiment. The non-union side (East Germany) was under foreign control, with a secret-police network that recruited as much as one-third of the population as informants. So possibly dishonesty is caused by living in a world of fear and distrust, rather than by the absence of workers’ rights alone.

Worse than that, the non-union half was systematically looted by the occupying power, while the union half was treated much better by its conquerors and became rich. So maybe it’s scarcity, rather than or in addition to denial of workers’ rights, that makes people dishonest.

Still and all, the result is what it is: a strong labor movement is associated with improved morality.

Only somehow that’s not the conclusion the authors of the study (including Dan Ariely, a perominent behavioral economist and the author of a good semi-popular book on the subject, Predictably Irrational) decided to draw. Instead, they focused on the fact that West Germany had, alongside wealth, the rule of law, personal freedom, and a strong trade-union movement, a primarily market-based economy, while East Germany was under the Soviet system – what Orwell accurately labeled “oligarchic collectivism” – with arbitrary government, no rule of law, and no respect for human rights; residents could be and were shot for trying to emigrate, and many tried to leave just the same.

Using a definition favored only by Bolsheviki and fans of plutocracy, Ariely et al. elect to call the East German tyranny “socialism,” and pretend that their study shows that living under “socialism” worsens the morals of a population.

Having reached an extreme conclusion from a single poorly-defined case study, Ariely and his colleagues then stop, without trying to test their conclusion out of sample. Sweden, for example, has great personal liberty, honest government, and the rule of law, but much more state ownership of enterprise, more tightly regulated markets, and a far more redistributive tax-and-transfer system than Germany.  Swedes are also (if we restrict our attention to mostly-Lutheran Northern Germany) culturally similar to Germans.

Would Ariely and his co-authors be willing to bet that Swedes are less honest than Germans (or Norwegians, living under a regime closer to German mixed capitalism than to Swedish social democracy)?  If so, I’m happy to take the other end of the bet.

The same applies if we were to compare Israelis raised in explicitly socialist kibbutzim to other Israelis, or  Englishpeople raised before the Thatcher era with those raised after, or Canadians with Americans. (After all, the same people who use the word “socialist” to describe Stalinist tyranny also use it to describe national health insurance.)

Of course in all of those cases one could name other factors that might influence the outcomes. But that’s precisely the point: the same is true of the German case. Yet Ariely and his co-authors seem to think they’ve proven something, and the Economist and Alex Tabarrok (who certainly knows better) at Marginal Revolution and Mark J. Perry at AEI (who may not know better) swallow it whole, without raising a single methodological red flag. “When it comes to ethics, a capitalist upbringing appears to trump a socialist one,” trumpets the Economist, hoping that its readers will vote to help the rich get richer and the poor get poorer while “reforming” union power out of the labor markets.

To call this a “mistake” would, it seems to me, be far too generous. A blunder that extreme only happens when the people making it want to fool themselves and others. It’s an example of what Dan Kahan calls “motivated cognition.”

Do the thought experiment for yourself.   Imagine that the results had come out the other way: say, showing that Chileans became less honest while Pinochet’s minions were gouging out their opponents’ eyeballs and Milton Friedman was gushing about the “miracle of Chile”? How do you think the paper would read, and what do you think the Economist, Marginal Revolution, and AEI would have had to say about its methods? 

I know that some of my libertarian friends consider my views of their movement uncharitable, but honest to God, the combination of high IQ and good formal economics training with great willingness to believe and repeat obvious nonsense that characterizes that group is really hard to take.  Of course con-cons and professional lefties also believe some truly stupid sh*t,  but neither group is as good as the glibertarians at pretending to be Serious Social Scientists.

Here’s a Pro Tip: If you never reach and publish a conclusion that doesn’t support  your prejudices, no one has any reason to take any of your results seriously.

Anti-intellectualism in libertarian policy?

Though most people aren’t aware of it, Friedrich Hayek in a 1949 article (“The Intellectuals and Socialism” [JSTOR: academic paywall; ungated version from the Mises Institute, with a crucial omission described below]) wondered aloud whether the existence of independent intellectuals, who could make a living due to copyright, was on balance a good thing. In the text (p. 420 of the law review version, 374 of the Mises Institute’s reprint) he wrote:

In the sense in which we are using the term, the intellectuals are in fact a fairly new phenomenon of history. Though nobody will regret that education has ceased to be a privilege of the propertied classes, the fact that the propertied classes are no longer the best educated and the fact that the large number of people who owe their position solely to the their general education do not possess that experience of the working of the economic system which the administration of property gives, are important for understanding the role of the intellectual. Professor Schumpeter, who has devoted an illuminating chapter of his Capitalism, Socialism, and Democracy to some aspects of our problem, has not unfairly stressed that it is the absence of direct responsibility for practical affairs and the consequent absence of first hand knowledge of them which distinguishes the typical intellectual from other people who also wield the power of the spoken and written word. It would lead too far, however, to examine here further the development of this class and the curious claim which has recently been advanced by one of its theorists that it was the only one whose views were not decidedly influenced by its own economic interests. One of the important points that would have to be examined in such a discussion would be how far the growth of this class has been artificially stimulated by the law of copyright (bold emphases added).

The law-review version contains at this point—though the reprint omits—the following rather striking footnote:

It would be interesting to discover how far a seriously critical view of the benefits to society of the law of copyright or the expression of doubts about the public interest in the existence of a class which makes its living from the writing of books would have a chance of being publicly stated in a society in which the channels of expression are so largely controlled by people who have a vested interest in the existing situation (bold emphasis added).

Hayek, often praised by his enemies for his consistency, was consistent here as well. Given his deep and abiding hatred of generalist intellectuals, who make their living by their pens and fix the general tenor of society’s ideas, Hayek mused about cutting the knot: abolishing intellectuals by abolishing the law that alone lets them support themselves. His whole purpose was to bring about what might seem the reductio result: that the only writers would be professionals—mostly academics—who drew a salary to convey their expertise; people with independent incomes who wrote on the side; and writers as servants, employed by wealthy patrons and willing to toe their line. Hayek lamented that an honest policy debate on this was impossible because those pesky intellectuals, knowing their living was at stake, wouldn’t allow it.

Well, it turns out we didn’t need an honest policy debate in order to approach Hayek’s preferred outcome.

Continue Reading…