My favorite part of Tyler’s book is where he asks a very good but non-obvious question: Why did it take so long for economics as a field to develop a coherent model or framework of analysis? Much of the book discusses how three economists simultaneously developed marginal analysis, with a focus on the work of Stanley Jevons. Here I’ll briefly provide the intuition of marginal analysis and then explain why economics is both extremely easy but also quite difficult…

Tyler does a great job explaining why Jevon’s model of marginal analysis (which underlies most of modern microeconomics) is elementary on one level, but also something that wasn’t discovered until the 1860s because it was not at all obvious. Here’s how he concludes Chapter 3:

[This is TC now] By studying the slow intellectual development of economics, and contrasting it with other fields of study, we can learn the following:

1. Some insights are very hard to grasp, even if they are apparently simple once they are understood. People need to “see around corners” in the right way to understand these insights and incorporate them into their world views.

2. Economics is one of those fields, and that is why it took intuitive economic reasoning so long to evolve, marginalism included. Those of us who are educators, or who spend time talking to policymakers, should take this point very seriously.

3. Even very, very smart people are likely unaware that these “see around the corner” insights are missing – did Euclid rue that he did not have access to proper supply and demand and tax incidence theory? Probably not.

4. Economics is not the only such field that is hard to grasp, some other examples being segments of botany, geology, and evolutionary biology.

5. Scientific revolutions come about when many complementary pieces are in place, such as financial support, intellectual independence, and networks of like-minded others to talk with.

Those conditions help people to understand that “seeing around those corners” can bring both high social and professional returns.

Are there major conceptual corners that today still no one can see around? If so, how might we discover what they are? And why are we not working harder on this? Or are we?

Here is the rest of Scott’s commentary.  Here is the online book.

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A recent viral tweet, quoted by Elon Musk, points out that bartenders can be fined or even imprisoned if they serve alcohol to patrons who later kill someone while under the influence. Judges, in contrast, enjoy absolute or qualified immunity even when they repeatedly release defendants who go on to kill.

I agree that judges should face stronger incentives to make good decisions, but the obvious problem with penalizing judges who release people who later commit crimes is that judges would then have very little incentive to release anyone—and that too is a bad decision. Steven Landsburg solved this problem in his paper A Modest Proposal to Improve Judicial Incentives, published in my book Entrepreneurial Economics.

Landsburg’s solution is elegant: we must also pay judges a bounty when they release a defendant.

Whether judges would release more or fewer defendants than they do today would depend on the size of the cash bounty, which could be adjusted to reflect the wishes of the legislature. The advantage of my proposal is not its effect on the number of defendants who are granted bail but the effect on which defendants are granted bail. Whether we favor releasing 1 percent or 99 percent, we can agree that those 1 percent or 99 percent should not be chosen randomly. We want judges to focus their full attention on the potential costs of their decisions, and personal liability has a way of concentrating the mind.

One might object that a cash bounty will cost too much, but recall that the bounty is balanced by penalties when a released defendant commits a future crime. The bounties and penalties can be calibrated so that on average the program is budget-neutral. The key is to get the incentives right on the margin.

The structure of this problem is quite general. Ben Golub, for example, writes:

There should be a retrospective reputational penalty imposed on referees who vote no on a paper because the paper is too simple technically — if that paper ends up being important. It’s an almost definitional indicator of bad judgment.

Quite right, but a penalty for rejection needs to be balanced with a bonus for acceptance. Get the marginal incentive right and quality will follow!

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… is from this Facebook post by my former NYU professor Mario Rizzo:

It is too much to say that wealthy people have a moral obligation to flee high tax states. However, they do other taxpayers a favor by putting pressure of rapacious government to curtail its taxes and programs.

DBx. Yes indeed.

(The image is from this January 2020 essay by the Cato Institute’s Chris Edwards.)

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Art Carden describes “the tragedy of Paul Ehrlich.” A slice:

In the Malthus-Ehrlich view of the world, every new person is just a stomach and a pair of hands. Diminishing marginal returns means the hands can’t keep up, and disaster is inevitable. In [Julian] Simon’s view of the world, which I share with a great many economists and other commentators, each person is a stomach, a pair of hands, and a brain—a creative mind. That creative mind, according to Julian Simon, is the ultimate resource.

The New York Times called his predictions “premature.” The word they needed to use was “wrong.” His alarmist predictions informed fifty years of population and environmental policy, including China’s one-child policy and the demographic cliff we face as population growth slows and may eventually turn into decline. Ehrlich’s ideas had disastrous consequences, and the greatest tragedy of his passing is that he apparently died never having learned from a career of alarmism and sustained error. May his example and his memory serve as a warning to us all.

The Editorial Board of the Washington Post argues that the American economy is hurt, not helped, by the U.S. government’s increasing proclivity to mimic the interventionist policies of the communist government ensconced in Beijing. A slice:

The administration has already used taxpayer dollars to buy equity stakes in other critical mineral companies, such as Trilogy Metals, Lithium Americas, MP Materials, Vulcan Elements, Korea Zinc and USA Rare Earth. It’s also entered into an agreement to take a 10 percent stake in Intel, the chip manufacturer, and secured a “golden share” of U.S. Steel while negotiating the acquisition of that company by Japan’s Nippon.

There may be a case for limited government intervention to guarantee the supply of certain inputs into products crucial for national security. But a better way to ensure that happens is reducing trade barriers with allies rather than allowing bureaucrats to bet on which firms might be successful.

These deals are especially problematic when the companies have business connections with administration officials or close allies of the president. Syrah, for example, is closely tied with Elon Musk’s Tesla. But they also distort the economy by boosting projects that might not make sense economically. And taxpayers will be left holding the bag if the company fails.

China’s control of critical minerals is a serious issue, but having Uncle Sam as a minority shareholder in a foreign mining operation won’t solve it. Getting out of the way of innovators, and allowing private money to flow more freely between friendly nations, would do more.

Scott Lincicome tweets:

The Trump administration’s new biofuels bailout means higher US gas and food prices and worse environmental outcomes.

But at least farmers will get another $3-4B from the government.

Per Bylund reveals “the real lesson of the TSA walkout.”

Daniel Freeman explains what shouldn’t – but, alas, what nevertheless always does – need explaining: Rising prices are not caused by “greed” (but price ceilings, in addition to further reducing access to goods and services, are caused by greed – namely, the greed for political power).

Stephanie Slade writes that the loathsome “Nick Fuentes and his followers compete to see who can be most offensive.”

Whether you regard the current war on Iran as righteous or reckless, Coleman Hughes debunks the lazy notion that the U.S. government is a pawn of the Israeli lobby. Two slices:

The idea that the most powerful country the world has ever known is being puppeteered by a country the size of New Jersey — and by a group that collectively accounts for 0.2 percent of the world’s population — is an extraordinary claim. You would expect overwhelming evidence. In reality, there’s little to substantiate it.

Criticize America’s foreign and domestic policy as much as you want—there’s plenty to criticize. But don’t blame it on Israel or its supporters.

The centerpiece of this narrative is a historical claim: that Israel got the United States into the Iraq War. In reality, Israel’s prime minister came to the White House to caution President Bush against invading Iraq, warning that it would empower Iran, Israel’s real enemy. Bush listened politely, then ignored him and invaded anyway, because American presidents make their own choices, for good and for ill.

At the same time, the IDF chief of military intelligence said on TV in the fall of 2002 that Israel did not believe Saddam Hussein could obtain nuclear weapons, contradicting U.S. intelligence assessments. It’s hard to imagine a clearer discouragement. Again, the United States ignored this and proceeded for its own reasons.

…..

The United States maintains hundreds of military bases worldwide and spends vast sums sustaining its global presence. For example, the U.S. stations 30,000 American troops in South Korea and loses $3–4 billion every year because of its deployment there. But no one argues that an all-powerful South Korea lobby controls American foreign policy.

Glenn [Greenwald] tried to argue that the fact that we have troops deployed in South Korea makes the $4 billion a year we lose there a lesser commitment than the aid to Israel. But if the situation were reversed — if we had troops deployed in Tel Aviv and not Seoul — then he’d argue the opposite! Dave [Smith] and Glenn are always reasoning backward from their conclusion — they start from the premise that Israel controls us, and fill in the reasons afterward.

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… is from pages 78-79 of my late, great colleague Walter Williams’s 1995 volume, Do the Right Thing; specifically, it’s from Walter’s December 8th, 1994, column (for which I cannot find a link) “Leviathan Run Amok”:

Any catastrophe attracts vultures to feed off carcasses. In the case of regulations, it’s consultants, lawyers, and accountants. Businessmen know about business, but they know little about all the government mandates that can destroy their business. In come the vultures to advise and counsel them to the tune of thousands of dollars a day. Again, who pays? And again, it’s consumers and workers.

DBx: Were he still alive, Walter would today – March 31st, 2026 – celebrate his 90th birthday. Although he’s been gone now for more than five years, I still intensely miss his good humor, piercing insight, and unyielding principle.

He is pictured here on the evening in May 2017 when he was presented with the Bradley Prize.

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… is from page 180 of Thomas Sowell’s 1983 book, The Economics and Politics of Race: An International Perspective:

Unions are a major factor making labor markets noncompetitive. They have both direct and indirect effects on discrimination. Directly, they have at various times excluded various groups from membership – in the United States, the Irish, the Italians, the Chinese, and blacks perhaps most pervasively of all. Some unions have limited entry to relatives of existing members. This, in effect, excluded members of other racial and ethnic groups.

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