1. Bryan Caplan - Labor Econ Vs the World

Bryan Caplan talks minimum wage, educational signaling, bias in scientific research, and more.

Episode transcript

Hello and welcome to ideas, having sex with chris Kaufman.

I'm Chris Kaufman and today I'm talking to George Mason University economist bryan Caplan about his new book, Labor E converses the world brian and I talk about the causes of unemployment, we talk about the minimum wage and other labor market regulations, about the effect of education on labor market productivity and about harmful biases and social scientific research, among other topics.

It was an awesome conversation and a pleasure to talk to brian and I hope you enjoyed the interview brian welcome to the show.

Fantastic to be here.

Chris can you tell us a little bit about who you are and what you do and why it's important.

I am bryan Caplan, I'm a professor of economics at George Mason University and I'm a new york times bestselling author of the book Open Borders.

I've written a bunch of other books, the method, rational voters, selfish reasons have more kids, the case against education.

And today we're talking about my new book which is called Labor Econ versus the World, Essays on the World's Greatest market now as to why it's important.

Well that I guess I will leave to your listeners to decide afterwards whether it's important.

I found it to be quite counterproductive to tell people how important you are.

But I will say that I've managed to find myself into a dream job for life where I get paid to go and work on whatever I want to work on and talk about the ideas I care about this book is also a pretty good lead into a lot of your other books just going through it.

Obviously it seems to me that your other books probably started as ideas and conversations and blog posts and blossomed into full fledged academic books.

You get to kind of see a lot of the background of some of your books, reading this one in a more digestible form and kind of sampling the different subjects you take on more comprehensively in your books.

Is that is that about right?

Yeah, there's, there's a lot to that.

I mean really what happened is I've been blogging for for 17 years and I've had some friends who were successful authors who said, hey, let's try, I'm gonna try self publishing experiment in amazon.

And they told me it worked great.

So I said, yeah, why don't I try something?

And I said, well I got 17 years worth of blog posts, why don't I go and find the very best ones and then reorganize them by topic?

So the people who are interested in one particular area of what I write about can just get a whole set of essays about that.

And this is the first in a series of eight such books.

That was gonna be my next question.

So you are planning on doing this with different broad topics.

Can you give us a teaser on what one or two of the other in one.

So the next one, which will probably be coming out in a month or two is called how evil our politicians essays on demagoguery.

So this is one where I've written just a bunch of essays on bad things that politicians do and in particular the intellectually bad way that politicians act were just what they say.

Even if you agree with inclusions, it's just so unreasonable, so unfair.

So contrary to all basic logic and regard for evidence.

So I have a book on that.

I've got another one called voters as mad scientists.

Essays on voter on I believe it's essays on political rationality.

I've got one called self help is like a vaccine.

Um, and then let's see the titles of the others.

Let's see what are some of the others.

I've got one called, um, let's see, Pro market and Pro Business.

I've got one with.

Yeah, so maybe maybe my favorite title is You have No Right to Your culture essay is a good one condition.

And actually, so there's one book which will have a totally new lead essay.

So that book is called don't be a feminist essays on genuine justice.

So that's one where I take a lot of the writings that I've done about what I call the social injustice movement.

And then there's an essay just been wanting to write for a while, which was going to be called Don't be a feminist a letter to my daughter and I had the idea of one and I go and make that the lead essay in this book.

And so this is one where my daughter is actually too young to read it, but I wanted it to be there the day she's ready.

Well, are you planning on publishing them all in pretty short succession?

Like you said, the next one's coming out in a month.

So can we expect all of these to come out over the course of the next year or two?

Yeah, so there's eight books.

So my plan is basically 2-3 months between each book.

There's been a learning curves.

The first one took six months to really get to get through.

But I now have a formula.

And the editor of the first book, Jeff, Jeffrey corn, he's you know, like, like he and I worked out exactly what we wanted to be and then I've got someone else that's helping me the next book.

So yeah, I think that once we're gonna hit stride pretty soon and then we'll just chuck the books out every two or three months until all later done.

Do you have any plans to do any of these um on audio book?

Let's see.

So that would be a much bigger investment.

So these are all going to be self published.

So, all my Young, which is again an experiment for me, but to do that would then require quite a bit more so unless someone comes along and does the legwork for me.

Probably not sure that makes sense.

Yeah.

The self publishing really probably makes this a lot more attractive.

You've already done the bulk of the work.

It's just a matter of putting it all together.

So you already said the title Labor Econ versus the World essays on the World's Greatest Market.

So what is labor economics exactly?

Labor economics is the application of economics to human labor, the allocation or more generally of human time.

So of course, it starts off in really the 18th century a little bit before where you just start thinking about, well, we understand what it's like to go and have a market in grain.

We understand what it's like to have a market in sheep.

How about a market and labor?

Of course it's already going on.

But economists start saying, well can we go and think about labor as being a good, just like grain or like sheep?

The there's of course the question of who owns it.

So in free labor markets it is the worker owns himself, but still the basic principle um there's a supply based upon who wants to work and how much any given wage.

And then there's also demand, how many people do you want to employ and how many hours of their time do you want to employ that wage?

And that gives us the ideas of labor supply and labor demand.

And then once you've got that there's just a long list of conclusions that flow very quickly, which goes so strongly against people's emotions.

And then the question is, are we gonna buy these conclusions even though they are unappealing to so many people, right?

Um and then, you know, the more you work on it, the more you realize, alright, well maybe the emotions are telling us something, but maybe if we think more there, it is actually more complicated than just being like the market for grain.

So a lot of what I do in the book is actually try to start with that supply and demand framework, but then go through and sad.

There's something really complicated going on here.

And then I should add, you'll notice that actually quite a book on the relationship market economics of marriage and someone in the book and that actually got added on to labor economics, starting basically in the 19 sixties where people realize, well, let's see, we're thinking about the way that people allocate their time here.

So if you look within the family, often there's an allocation of sometime people sell outside of the home, other time that they reserve to use within the home.

And similarly, those ideas about how the people search for jobs and then you realize, well, now that we understand how people search for jobs, we can think about how they search for a relationship partner in terms of empirical research online dating has done wonders for this field because finally, we've got real numbers about what's going on previously was so informal.

There's barely any statistics on what's happening.

But now there's lots of great papers where people just analyzed the hell is going on with online dating from an economic point of view.

So besides the human interest that might be, you know, peaked with with labor and like human time, why why is it need like a separate sub field within Ikan?

Why is labor economics fundamentally different than the economics of grain or land or capital?

Great question.

So I would say it would get its own sub field even it wasn't different just because it's such a huge market.

So when you go and look at all the income that people on Earth earned something like 60 or 70% of it comes from labor.

So that by itself, I would say would get its his own field.

Even if the whole field just said yes, this is exactly like every other field.

There's nothing special about it.

But there are of course a long list of things that are special about labor.

One of the big ones is just that it's very hard to know exactly what labor is until you've employed it.

And even then you may still wonder, okay, I've seen this person can do this and that, but can they do another thing.

Whereas if it were say grade triple A steel, there wouldn't be any real mystery about what the product is capable of doing when you go and interview for a job and say, I'm gonna hire this person.

This is a great deal of uncertainty about what's gonna happen.

So that's one big difference.

Another big difference is actually just the human emotions matter so much on the job.

Nobody cares what the steel feels about the situation.

And indeed even for a farm, people don't care very much well what does the horse think about all this?

But if you were employing someone, it actually really does matter.

Like is this person content with his job?

Well, that determines whether or not it's gonna be worth training this person because if they aren't happy, they're probably gonna leave and then I'll waste the training.

So should I train this person, what should I train them in?

Will their feelings be hurt if I tell them, gee, sorry, you're not gonna be promoted because you're not actually good enough.

So that's another thing that we get out of it.

Um, and then, you know, obviously there's also big changes in what labor can do over time.

So the classic learning curve, One of the main things that I do in my work and that you get a taste of this book is I try to argue against the popular view that the main way that labor improves is through education.

I say that most of the way labor improves is through learning on the job.

So in this way, when you hire a person, a lot of what's happening is that you are teaching them how to do.

The very thing you're paying them for a slogan that I like is people like to think about education as job training.

And I say education is more of a passport to the real training, which happens on the job.

Of course, people do learn some useful skills in school, but I say a lot less than So you're saying that learning on the job is the main way that labor becomes more productive as opposed to maybe the view that going to college or formal education increases the productivity of labor.

But what about isn't a more common view that labor becomes more productive just through increased and better machinery?

Yes.

Well, that's also of course true.

But that isn't very relevant for an individual worker.

It's very relevant over the course of a century.

So, yeah, why one worker can do so much more than 100 years ago.

Yeah, Well, the machinery is really important or why?

Why workers so much better this year than last year?

Usually, that's because the worker changed, not because the technology they're working with has improved so much, Especially, of course, in the early stage of your career, when you show up on the job, really not knowing anything often or having a bunch of counterproductive attitudes and that you may have picked up in college, such as not working very hard and then after a year or two, then you get molded into a new shape and you acquire new skills and more fruitful perspective and are just more tolerant of the negative aspects of work that maybe seems unbearable as a teenager, right?

Well also also important remember how horrible school is too.

So yes, I mean it was striking.

So when you're a professor you around a lot of people who are very aware of the bad aspects of having a regular job but are oblivious to how unpleasant school is for most people because professors are people who are usually great students and got pat patted on the head the whole time.

But when you look around the classroom and just see the sheer boredom, right?

Of course this would never happen to me because I'm such a fascinating professor of course.

Well, I've seen some of your reviews.

I believe that that's true.

Yeah, it's like if if a bunch of industrial sociology was all conducted by, you know, industrialists and people who have devoted their life to that kind of thing, you might get a different perspective on what it's really like.

And I don't know that's kind of the situation with probably research in general.

I mean, how much research is biased because researchers as a class share certain biases and certain perspectives they all love, especially for social science and humanities where you really are part of what you were studying.

I don't think that there's much of a bias in physics for example.

But yeah, but in anything in social sciences, anything humanities, you are getting a generally quite specific perspective on the world and you can learn a lot by trying to actually talk to people and read people with a different point of view and of course the people's voices are basically silent or those who just don't write anything, just most people, it's unusual for someone to write a disquisition on why school is a waste of time.

Right?

So the kind of person that just doesn't like school, doesn't write a disquisition, they just get out of school as soon as possible and live their lives and put it behind them.

Yeah, the closest thing to that is probably someone like joe Rogan or stand up comedians or ordinary people that are kind of talking the way lay people talk.

Yeah, I mean I'm a huge fan of stand up comedy and I do think that if I could just listen to a random social scientist or random comedian to learn about the world, I'd rather listen to the comedian.

So another thing you, you talk a lot about in the book is especially in the first part wage rigidity.

Is that something that's also unique to like to labor economics as a field.

And does that phenomenon apply very much to other types of prices in other markets, not unique, but its most severe in the labor market almost certainly.

So here's the thing when we see the period of unemployment, there's an obvious question which is, well, if we hadn't produced more grain than we were able to sell, we would just cut the price until all the grain sold problem solved.

But when there's unemployment, we don't generally see the wages come crashing down to solve the unemployment problem in a day, a week or a month off and it takes years of elevated employment before the problem resolves itself.

So I talk about two things that are going on.

So one is that governments generally do try to prevent wages from following minimum wage is a really obvious one.

But there's a lot of other regulations where government is at least pressuring employers to not cut wages and to encourage wages to be pushed ever higher.

But another part of it is that even without the government regulation, we see that people's feelings get hurt when wages come down and especially when it's the official money amount you get paid.

So people seem to be much less hurt when inflation erodes their wages than when you actually say, hey, sorry, we're cutting your pay from 38,000 to 30 to $37,500 this year because of weak demand, right?

That seems to actually bother a lot of people.

There's a great book called why wages don't fall by Truman bully where he actually went and interviewed hundreds of businesses and asked them, so why don't you cut wages when there's high unemployment?

And you know, the main answer is people really resent it and I have to work with these people, right?

Like here's here's the real puzzle when you see that you've got a when you've got bad business conditions, why is it that you keep paying the same wage normally and then lay some workers off rather than saying I'm just gonna cut wages and tell the number of workers that I don't want quit.

So why I understand the point you made about government making it difficult for wages to fall sometimes.

But if there was if this were a different market, if this were like garbage collection and there was this persistent problem where garbage men just didn't pick up garbage that had, you know, diapers in it, soiled diapers or something like that.

And you could interview a bunch of garbage men about how unpleasant it is.

Why wouldn't the market just, you know, reflect that in the price by rewarding managers who are uniquely good at that kind of thing or just didn't care or whatever.

Why is why is this such an unsolvable problem?

Apart from like government issues, right, For the garbage man, we probably just pay them more, which seems to be something that comes much easier markets is paying people extra or raising wages when labor markets are weak, labor markets are tight.

But I mean, here's the here's the story that most employers will give you.

And so, and I've also I've also tried this, just talking to people who do this and do this myself.

So I'm not just not just relying upon researchers, I want to try to actually talk to people, make decisions, but they say is, look, if I go and cut workers wages, what I wind up getting is a bunch of resentful workers whose productivity is so much lower than I actually wind up losing money as a result of this.

And again, you might say, well, why not cut wages again?

Well, it just gets the resentment worse and worse and worse.

Whereas they say if I lay a few workers off, then worker productivity actually goes up.

The workers remain are scared nervous about losing their jobs and they work harder right now, I do think that part of this resentment is actually based upon a political philosophy saying workers or rather employers are evil and they're trying to rip us off.

So, I think that that in a country like France where there is a greater ideological resentment of employers, this is probably more severe, and, you know, almost all countries, there is of course, a philosophy of anger and resentment against employers.

Um and I say that this is a very, quite a counterproductive of philosophy, because it means that you have more cigarette employment problems and unemployment problems are just harder to solve them harder to solve, but at the same time, I will also say that seems like this is not just ideological, it also is a deep part of human psychology that normal human beings think in terms of nominal wages and when you cut it, at least a lot of people get quite resentful a story, I don't think it's in the book, but it's one that stuck with me.

So I was an undergraduate UC Berkeley and I heard tell that I was actually there one year when the when the university did cut nominal salaries, something I heard that there were some prominent economic theorists who were very angry about it and we're complaining quite loudly in the coffee room and my inside source said a few years earlier when inflation was super high and their and their actual true real wage had fallen a lot more, They were not nearly as angry as this year where their nominal pay was cut.

So even people who are professional economic theorists who officially don't even believe that there are these psychological influences when you listen to them, it's like, huh, you seem human, seem human intuitively, that sounds very right to me and my experience as an employee also as a supervisor and how unpleasant it is to I mean, reprimand people or chastise people at all, but you know, if you have to, if you have to, you know, tell someone they've done a bad job or take something good away from them at work, even if it's not lowering their wages, then you you yeah you are stuck with them all of a sudden being a grumpy employee and they can get back at you in in ways there, you know, there's all kinds of little vendettas that go on in the workplace that can't be tracked easily or so that that that makes sense to me for sure, right?

And especially if you were to go and have an overall pay cut, then you have great mystery.

Well who's actually the one that's reducing productivity?

There's no i in team.

And so when you see that your team's productivity has fallen, this doesn't instantly tell you who did it.

So it's another thing for employers to keep in mind when wage cuts seem like a good idea.

No.

And a lot of, I mean the most common thing that I can recall just for instance, I worked a long time in the in the service sector and and I never saw people have their wages cut, but people would have their shifts cut, you might find that you're no longer assigned to the busy saturday night shifts or you know, you're treated like a little kid and if you know, if someone wants you to cover a nice shift, the manager's gonna say no, no, you got to get someone else there.

So it's more targeted.

Like you're saying it's not like a general cut of everybody.

What can the Simpsons teach us about labor economics.

Yeah, I have a particular short essay in there?

This is the Simpsons episode where there's a circus horse that gets abandoned and the police say that yeah, I think the police asking does anyone want to adopt his horse?

And then nobody does.

Okay, well we're taking to the glue factory and then the Simpsons kids like, no, that's terrible.

Don't do that to the poor horse.

And then I believe Officer Rhythm says, you know, look, I just want this horse either of a good home or or actually dog food factory, not glue factory.

Yeah, I don't know.

I just want this horse.

You either have a good home or be food, right?

So basically either he has to have this really great great outcome or the the worst possible outcome.

I say a lot of labor market regulation really has the same attitude was like, look, I either want someone to have a really great job or be unemployed because um so just just to back up in one of the most popular labor market regulations in the world is the minimum wage, right?

And it basically just says, look, everyone should be to receive at least a wage that we consider to be suitable, acceptable, right?

So maybe it's $15 an hour, whatever it is, right?

And then there's the obvious question, and then like anyone who opposes this natural reactions, you hate workers, you're terrible.

There's a question, Well gee, so if I hate workers because I'm against the $15 minimum wage.

Well, how about a $20 minimum wage?

How about a $30?

How about 100?

How about a million?

And then there's a point normally where common sense kicks in.

It's like, well, it was like $100 an hour, then probably this would lead people to hire fewer people, right?

It's like, yeah, that makes sense.

So maybe the person who really cares about workers isn't the person who favors $100 minimum, $100 an hour minimum wage.

Maybe it's not 90.

Maybe the person who opposes the $15 an hour minimum wage is also not an enemy the worker, maybe he's rather someone who is aware of this dis employment effect.

Which what do you think about It is almost impossible to deny.

It was I don't know if it was you or somebody else who pointed out that when you're applying for a job and they ask you how much money you want, every person intuitively understands how it's shooting yourself in the foot to write something too high because it's going to have a disappointment disappointment effect on you.

Yeah, that was me.

Actually.

I believe on the original, the real the the person who came up with this point.

Yeah.

It's very common on a job application have salary requirements and people don't put $1 million dollars a year because they realize if they ask for too much, that hurts their prospects.

So sometimes people have said, well, look, the reason why people are probably labor economics is it's so counterintuitive and I say no, no, it's not counterintuitive.

It's emotionally unappealing, which is different.

It's super intuitive, but it's bitter.

It's bitter, right?

And a lot of what I try to do in the book is to teach it with humor.

So, to take the sting out of it and say, look, all right, look, we know we'd all like to be told that were worth a million dollars a year, but it's just not true.

And if we pretend that people are worth a lot more in the market than they really are, it isn't gonna mean that they get a great life.

It is going to mean that they're probably gonna have trouble getting a job.

Um So, but anyway, so this is true of them in ways, but the same basically goes for a whole lot of other labor market regulations, like, everyone has to get health insurance.

Well, it doesn't really mean that everybody gets it.

It means that either you get a job with health insurance or you don't have a job at all right, or everybody has to get family leave.

That doesn't mean everybody gets a job with family leave, it means that either you get the good job or you don't have a job at all.

Um Now, one thing that, you know that a lot of council says, alright, well, there's a trade off here.

Um True, but I'm a lot more influenced by psychology than most economists.

So over psychology, one of the standard results is that people's happiness depends very much on just having a useful job and not actually that much on their income.

So I say that when people say well on the one hand, we help workers by raising their wages.

On the other hand, there's some small dis employment effect, big deal.

I say no, it is a big deal because dis employing people creates immense misery.

And and you know, the end, like, over in psychology, when the people do study human happiness, they find this is this large harm to human happiness purely from unemployment irrespective of pay.

So someone could have all their pay made up to them and yet they still just feel useless and this meaninglessness of it all because they don't have a job.

I'll say that during Covid I actually got a strong dose of this, I'm still actually paid at my full wage, but when I have no place to go, I don't see my co workers anymore, I don't see students anymore than to me, it basically felt like unemployment unemployment without any cut in pay.

But still, it's like, well what do I do now?

I'm just alone by myself working on a computer.

This doesn't seem like much of a life to me anymore.

It just seems like I'm just superfluous to the world now and it seems like, especially on the, on the low end that in addition to unhappiness and, you know, the psychological effects you're talking about, does it push people into, you know, less savory, you know, lifestyles, you know, to get a wise people or push especially, you know, young teen males into uh, illegal alternatives very plausibly.

So in my book, I talk quite a bit more about the apprenticeship or vocational education side of this, but, you know, the general point makes a lot of sense too.

But you know, so right now you've got a lot of teams that are in compulsory education, high school.

They hate it.

They really just can't stand being in school, especially young males.

And, and so what ends, you know, they're really being trained for no particular job.

If you're just showing up and not doing the work, you're really not acquiring much in the way of skills.

So saying it would be much more, much more fruitful to go and take guys like this.

And there's just a lot of them, not just guys, but guys especially and just prepare them for a job and say, look, you don't like listening to some windbag, talk to you about poetry.

Fine, let's go and teach you how to go and repair cars or teach you to be a carpenter or teach you something to teach you how to be a waiter or what have you.

So then why are unpaid internships illegal except for rich kids?

Yes.

Right.

I mean, it's a fair point, because so, I mean, here's something that was like, so, me, as a university professor, there are many people in universities who have a giant chip on their shoulder about unpaid internships and it's like, oh, this is so exploitative.

I mean like, like you just yeah, maybe you get some job training, but you're not paid anything that's terrible.

See, look at what we do here, here, we we pay people a negative amount to give them some job training, supposedly.

Right?

It's not even free.

They'll here we charge them.

So, who are we to look down on employers who in exchange for working for free, gives people useful job training connections.

It seems crazy.

Double standard there.

So, does that attitude, does that attitude extend to, you know, the higher end jobs where it is allowed as well?

Oh, yes.

So it's very common actually for academics to think that it's terrible that students have to do these unpaid internships and that there should be the minimum wage should be applied there too.

Right.

So, yes, uh in the in the book I talk about, well, you know, rather than trying to to crack down on unpaid internships unpaid internships, why don't we just say the truth, which is that it is a very good deal to get some job training in exchange for working for free, right?

This is this is this is something that is actually people who hunger for, they hunt for it.

It is an overall a better deal than school because at least you don't have to pay the employer to train you, right?

You make you make some actual valuable contacts in the process.

And then again, as you were saying, the main issue is that right now, essentially you need to be it needs to be a college type job either for someone who's in college who just got out of college, Whereas the Mcdonald's tried to have unpaid internships, then the government would definitely crack down on them and say no the minimum wage applies.

But yeah, there is this bizarre thing.

So you can chart, you can pay someone zero, you can pay the minimum wage, you can't pay them half the minimum wage.

Why?

Like what's what's going on there when it seems it seems like it would be uniquely cruel to people who don't come from privileged backgrounds and don't have the right uh you know, look going into it because that's all they have to bargain with potentially is, you know, their willingness to go in and work for free to learn on the job or something.

If you're, you know, if you're the son of ivy league parents or the daughter of, you know, ivy league parents and you have you know, all kinds of volunteer experience at the model U.

N.

Or whatever, then you're gonna probably have a better chance of getting your foot in the door than if you're a kid from are not quite as fortunate background.

Yeah, that makes perfect sense.

And something else that I've talked about, I will confess to being a big fan of child labor, not putting kids to clean chimneys or anything, but just to get kids working a few hours a week.

And again, the main issue here is not the kids would be exploited, but rather that most kids are not productive enough to be worthwhile to employ, but especially at the existing minimum wage than, you know, like who wants to hire a 12 year old for minimum wage.

That would seem like a crazy choice.

But this does provide useful training, not just in whatever job it is, but just acclimation to the world of work.

And again, like a lot of the way that we justify education say, oh well maybe it's not fun for the kids, maybe it's boring, but it's preparation for life.

And I look upon work as being the same thing where, you know, maybe the kid doesn't especially delighted to be working at Mcdonald's, but it's useful training and for later in life.

And as to why we're willing to go and make these excuses for kids who are bored out of their mind in a poetry class but not who are working in a donut shop.

I do not know, can't we just hire child laborers to, you know work as amateur poets and scribes and doing the kind of things they're already doing in school, but at least getting a paycheck for it.

Well, you could try it.

I think it's just a lack of demand and lack of demand.

Yeah, very little demand for the child poets.

It's sort of sort of like most performing arts who's in the audience, the families, they're the only ones that want to see it.

The carve out for you.

No more upper crust educated type jobs for unpaid internships reminds me of the a similar an analogous carve out for college students being allowed to rent dormitory style housing.

That's illegal for anyone else.

Why?

You know, I don't know if this takes us a little bit far field from from your book.

But the two things were just, it's very relevant actually to the book that I'm working on right now, which is build baby, build the science and ethics housing.

So yeah, actually, so I have some sense those laws on the books, but I hadn't thought about them that much.

So, thanks for pointing that out.

Of course, I yeah, I think just running in running in your circles on twitter these kinds of things.

Get pointed out like, why is it why is it okay for rich college kids to rent dormitory style housing, but it's not good enough for ordinary working families or whatever.

I mean, of course, if you look at the prices for college dorms you might say, I don't see the appeal.

Where's the cost savings.

But sure, I believe that it's going to be done on the regular market.

You would see quite better deals if it wasn't, if it wasn't coupled with all the educational amenities, um is it is there are there any good going back to the minimum wage?

Are there any good reasons to think of?

Minimum wages is substantially different than any other kind of price controls?

Hmm.

Let's see.

So any.

So there's definitely a bunch of abstruse arguments for saying that they're quite different in terms of whether there's any really good reason.

Or let me let me rephrase it behind closed doors.

Do economists really favorite?

For the straightforward reason that proponents favorite or is it all politicking because it's very popular and it sounds good too gesture, you know, are even the economists who say good things about it, do they know behind closed doors that it doesn't accomplish anything except for symbolism, possibly write great question.

So, my colleague dan Klein, actually, some years ago I saw there was a petition of economists who favored raised them in wage and he emailed them all and just said why, why?

Right?

And, you know, he was actually a formal structured interview and then he published the published the responses.

So I think like most of them, I think that's probably the most common answer is Alright, fine.

It does cause unemployment, but not that much as long as we don't get out of control with it, right?

So that was probably the most popular answer.

But another popular one was the symbolic one of we just need to make a statement here that our society does not tolerate this and you know like why?

Like what is such a why is that such a great statement to say that we're gonna dis employ you?

You know like there's some of the idea was if you can't make enough money then you just be on welfare instead, again oblivious to the other roles of work in human life of just giving people meaning and something to do and some structure.

Let's see now there is a technical argument that some economists do like, which is called the monopoly argument where basically it's it's i we would really need to have a whole white board to go and explain it.

But it comes down to it is logically possible within a certain range that if you were to go and impose minimum wage, that would actually be harmless or even increase employment.

But it's such a my view, such an impossible argument that I don't put too much time into it.

And that's the that's I don't claim to understand it in detail, but that's essentially the famous card and Krueger study, right?

So not exactly the card and Krueger study.

So I actually, I was a student of Day of David Card and I actually not too long before he died, I had a conversation with Alan Krueger.

So I mean like they're very empirical.

So really their work just comes down to, we just we just don't see much effect.

Right?

And that could be because it just is a small effect too small for us to detect it could be a monopoly.

They actually do in like in the famous paper on New Jersey and pennsylvania.

They try to go through a number of different theoretical explanations and if I recall, they find each one doesn't, none of them work actually like, well, these are results.

No model explains it the end.

Right?

So that's what the paper in fact says.

So, you know, they say the monopoly model doesn't doesn't work because if it was true, then the restaurant should have cut prices after you impose them on wage and they did not in fact, they raise prices.

So not that's not the right story, right?

I mean, I think the right story really is just that the world is noisy and it's just hard to go and pick up the the exact effect of a of a particular increase in wage.

You need to look at very bigger changes.

But I would also say that there are a number of reasons why it, you would expect it to be harder to detect most.

Obviously that a lot of the way that people save labor is by replacing labor with machinery over the longer run.

And yet almost all the research just looks at short run effects.

So like the card Krueger study leo I think it's basically over the course of nine months or a year and they say, well we're not seeing this, this, if they're not seeing this effect, it's like, well maybe it takes more than a year for fast food restaurants to go and bring in self, self dispensing drinks and sells herself dispensers for drinks and other ways of saving labor.

Using more machinery, you can definitely go to poor countries and see that in poor countries they use labor for things that we would not use labor for here.

Right?

So, and of course the wages are lower.

So it does make sense for them to use humans around the machines.

So this is something where it would just take more years.

And I think if you were to go and talk to kind of work on this, like, well if we wait for a 10 year effect, then it's just gonna be so hard to really say for sure and we want to get a paper out of it now, but that is the reasonable thing is like you should expect them in wage the damage to happen over a longer term period.

Generally, another argument has been made by my friend Jonathan meer, is that normally employers actually know them in, which is when wages coming.

So it would make sense for them to just start allowing workers to have attrition and not replace them as the deadline kicks in.

And then an argument that I've made is that it's quite suspicious when you look at minimum wage legislation that it almost always includes a phase in its basically unheard of for minimum wage to say effective today.

The minimum wage is now $3 higher.

Instead.

It will usually say starting March 31st of next year, we raised by 65 cents and then nine months later by another 80 cents and then a year after that by another dollar.

And this is where you're like, why did you write it that way?

Exactly.

It seems like if you just believe them in a way that no dis employment effect, you would want it to kick in instantly.

And yet it's almost never written that way, which I think actually is a sign of a guilty conscience on the part of people writing it.

And I think they actually, Yeah, but and first of all, you know, like, you know, it's like, well it won't happen as long as we phase it in.

It's like why wouldn't it do and why wouldn't people just respond all the more so since they have plenty of time to plan around it.

I think a better story is they deliberately want to fuss the effect they want to blur things so that you don't have a smoking gun anymore and they consider and saying, I don't see any proof, I don't see any proof that it did anything, anything that could be anything who knows, I don't know if there's any good works on it.

But isn't it the case that it was pretty nakedly that when minimum wages were first becoming popular, it was they were pretty nakedly sold as a way to, you know, protect higher skilled workers from lower skilled competition.

That it was, you know, especially pricing out skilled labor, especially protecting adult male workers from female and child competition.

That probably that was that was that was pretty upfront.

And then there were there were also various scientific Racists of their era, so called saying, well, this is a way that we can preserve the living standard of the white race, that kind of thing.

So, and doesn't mean I don't want to put those words in his mouth, but doesn't Ron Nunes make analogous argument about immigration today.

Ron Ron is a very smart guy.

Um I debated him on immigration, which is another part of labor to converse in the world.

And here's the striking thing, he had a piece saying, here's what we ought to do, we ought to raise the minimum wage by a lot here in California.

And when we do this, this will selectively dis employ lower skilled workers who are very likely to be illegal workers, right?

And he was Now, here is one where he, instead of the normal thing of denying the disappointment effect.

He affirmed it and said yes with this employee unemployment will be borne by the people we want to be unemployed and when they were unemployed, they'll stop coming here and we'll stay in Mexico where they belong.

So I mean, I had to give it to him.

It was a intellectually solid argument.

And actually when I was writing about it, I said if you wanted to be even more diabolical, he would have said this.

Any illegal immigrant to rats on his employer for paying him less than wage gets instant citizenship.

Yes.

And it's like, well, this means that employers will be super careful to avoid ever hiring anyone illegally because that is such an incentive for them to write on them.

Right.

And as a result, you basically would hardly have to give the free citizenship to anybody.

And instead it would cause people to not hire illegal immigrants.

And then there'd be no point of coming this is a good transition here.

But before I get to the next question, I heard a rumor that your a lunatic who supports open borders.

Is that true?

I'll say I'm a same person who supports open borders.

Yes, I do.

So my last book was called Open Borders, The Science and Ethics of Immigration.

And yes, so it is very common to accuse others publicly of supporting open borders.

Hillary clinton supports open borders or Obama supports open borders.

And yet if you actually look at what they say and do, you'll see this is total slander and libel.

And there's no sign that they favor anything remotely like that.

Uh, I do favor open borders.

Uh, so I have to get a whole book on it.

But then in labor conference in the world, I have a bunch of essays looking at different aspects of open borders and, you know, and a lot of like sort of think pieces about different aspects of it.

But the the slogan is, let anyone take a job anywhere.

Like if there is a willing employer and a willing worker, why should government get in the way and say on your papers, please?

Or else you can't have the job?

So that's the heart of the position.

It's it's also common not just to publicly accuse people of supporting open borders, even when they don't, it seems really common to accuse our legal system of currently being an open borders regime.

What do you think about that?

Yeah.

So that's absurd.

And whether whether you think open borders is a good idea or bad idea.

So, and here's how we know you can just look at the amount of money that people pay human smugglers to get them into the US right?

If we had open borders, there would be no market for human smuggling and they wouldn't be able to make any money uh, in practice.

However, it is standard just from Mexico the closest country where people want to come from to pay several years worth of labor for a world farm worker to get in Right?

And anyone who's coming from further to Mexico pays a lot more than that.

So so like from Pakistan estimates or something like $75,000 to get to get it illegally.

So people do not pay a year's worth of income for stuff that's free.

And so say that's crazy how much Puerto Ricans pay to get here.

Ah Of course Puerto Ricans are can legally come here.

And so yeah for them it's just the price of a plane ticket right?

They don't pay human smugglers to get to get to get into the content of the U.

S.

They just get a plane ticket and they come for a couple 100 bucks and they're here.

Problem solved.

But no but they'll be, people from elsewhere in the world cannot do that.

And again you can just see by how much they pay to get here that the borders and the enforcement is actually quite draconian.

Um You know the main issue people have as well if it's so draconian, how can there be so many people here illegally?

And there I have a piece called.

I believe some unpleasant immigration arithmetic.

I say look, the question is how many would come if you come for the price of a bus ticket.

Right?

And then it's like oh yeah probably maybe like hundreds of millions.

So yeah.

So then when we go and see we have 11 million here, compared to hundreds of millions that would come if we're actually free.

And you realize, wow, we actually have extremely close borders.

And the enforcement is actually very strict and harsh.

It's probably hard if you're already an opponent of immigration or quote, illegal immigration, it's probably hard to, you know, think of something that you oppose as having draconian enforcement.

If you were talking to conservatives and talking about, I don't know, gun control or something like that, they might be able to call whatever enforcement there is draconian.

But I'm sure someone on the left would not use such a term.

So, I don't know, it might just be a psycho a psychological block.

No, no amount of enforcement is going to be considered draconian when you're just stopping people from illegally invading the country.

From their perspective.

Yeah.

So what I what I say is, look, you can think about this as a continuum, you could say that the law, the law actually makes no difference.

And we have just as much immigration as we have, if there was no law at all.

And then at the other end we could have actually zero happening.

And I say, just place us on this continuum, right?

And I say, look, if you just have any reasonable answer to the question, how many would be here if we didn't have anyone could come legally, then I think it's clear that we have and you know.

And so maybe like most 5% of the people that want to be here wonderful common are already here.

So like by that measure where borders are 95% closed and probably more like 98 or 99% closes the reality.

Yeah.

And it's totally it's totally compatible to say that the enforcement is severe and we have very far from closed borders and at the same time, governments are incompetent at most everything they do.

So there is similarly draconian, you know, restrictions against drug use and they're far from the government is far from successful at stamping out the use of drugs or the sale of drugs.

I've never quite understood that.

But I like the way you talk about it and the way the way you approach it by looking at smuggling prices an indication.

Yeah.

I mean, so I mean, like you can definitely do the same thing for drugs and say all right, So what's the free market price?

What's the current price?

All right.

And, you know, some economists of that, you know?

So, like economists steve Levitt and I believe Jeff Myron have actually argued.

So what would the price of these drugs be in a free market if anyone could just produce it for anyone who wanted it.

And Yeah, I think you'll see that prohibition is probably multiplying prices many fold.

I would say like like if you're saying like his government good at doing what it's doing so well they have a lot of resources so it might be that they're very bad per dollar and yet they throw so much money at it that they actually do make a huge difference.

So definitely for immigration and for drugs, I think they actually do very successfully greatly change the price compared to what it would be without enforcement.

I mean I just think that the laws are bad, but that's different from saying that the laws don't work in the sense they don't change anything.

Yeah, or that that you know, they change a lot but it's a it's when you're trying to change human nature and stop millions of people from doing something they want to do.

Obviously you're not gonna be 100% successful unless you're a tiny island who gives the death penalty to drug dealers, right?

I mean like there's an old saying it's much easier to destroy than to create.

And I think this really does destroy government governments have been very good at destroying a lot of stuff.

So it looks like you've got a picture of san Francisco behind you.

The government of san Francisco has been great at preventing the peninsula from being covered with skyscrapers.

You can say you say they have effectively destroyed like hundreds of skyscrapers or just really just strangled them in the cradle before they can actually even get off the ground.

Yeah, it seems given those prices that if people could just legally build what they wanted on their own land, you would be, you would look like Manhattan or actually maybe even more dense than Manhattan.

You might look, you know, it would be like, you know, I think Hong Kong is denser than Manhattan and not 100% on that.

So you know like just go just being able to to stop people and and destroy things.

It's just much easier.

So even the government of India, which is notoriously incompetent and yet they do have very strict rules on building tall buildings and they successfully enforce them.

Can we jump over to part?

You have a whole section in your book called Education without Romance.

I really like that title before you talk about your perspective, what is the romantic view of education and what do you have against romance?

Random view of education says that people go in, you know ignorant but curious and they emerge knowledgeable and satisfied.

So that's a pretty good description of it and along the way.

And so they're having a great time, like just savoring the sweet flavor of ideas and enlightenment.

Right?

So I say that's the and on top of all that when you emerge, you have been trained to do whatever your life's ambition is to combine all the good things.

So you're enlightened, you're productive, you're well trained, you had a great time along the way and you owe it all to your arm.

That is education with romance and it's probably a glorious institution and practice that you can never have too much of.

Oh yes, yes.

The more the merrier essentially, Education with romance is the propaganda that you get over your pa system from your principal.

I don't know if you had one, but we had in my high school we had dr philadanco who Yes, these truly bizarre Orwellian statements, you know, I am sure that we are all delighted to be back here again on monday.

You're looking in the room like people look miserable.

What are you talking about?

Like?

Like surely she cannot so deluded as to actually think the students are jumping out of their skins to be there.

So it's more like she's just saying deliberate falsehoods and just trying to run and trying to ram them down our throats with this implicit threat of don't you dare even say the truth or else you're gonna get in trouble?

Everyone must live the lie.

I have told you.

So what's the cold hard, what are the cold hard facts?

The unromantic version, wow!

Where do I start?

Um So as an economist, I find it most helpful just to begin by saying, look, the main reason why education pays isn't that?

You're learning a lot of useful skills.

The main reason it pays is that you get a stamp on your forehead you get certified economists call the signaling, I have an entire book on this called the case against education where I try to argue people with all my might and means to say look, it just, it is just crazy to say that the reason why education improves your career prospects is primarily that you learn useful stuff because most of what you learn in school is just not useful on the job.

Just no freaking way could that be on average?

Of course there are exceptions.

So that's one big part.

So it says that it is not actually this way of transforming unproductive youth into productive adults rather it is basically an obstacle course that people are have to run through and some do well and they get the prizes in life and others don't do so well and their prizes are unlikely to be given to them as a result, but individually of course you might.

Sorry, fine, I'm still on the obstacle course, they still have to do my best.

But from a social point of view, this means that trying to just make the amount like to make the obstacle course bigger and add more and more obstacles and then give people even bigger rewards run over more obstacles is just a crazy approach because it's one like, like our goal should be to get people ranked early and then get them into the job market rather than prolonging this trial period right?

And also this is just to see like could we figure out a way of combining work with this trial period to get something that at least is not just so totally wasteful.

So wasteful levels of spending aside.

You do think it is helpful service to, you know, help people signal via education, right?

But the main caveat is that we could have a lot less on average.

We could finish much earlier and still could have done it by middle school.

Yes.

Yeah.

Which, which is what we actually used to have.

So after World War II, only about 25% of American adults would have had a high school diploma in those days.

High school diploma was impressive.

You could go and take it and say I should be able to be a manager.

I'm qualified.

I finished high school now people would think that was crazy.

So that's one big part of the romance that must be rejected to say.

Like it's not really primarily about preparing you for your future.

It is about getting you the right stamps on your forehead and the more stamps people have, the more stamps you need to compete.

So there's that.

Um another part of credential inflation.

Exactly right.

Which we really can see in the data seems to have if you just look at what kind of education you needed to get a job in the old days.

If you go and compare jobs that have barely changed.

Still, we can see that the amount of education need to be considered employable has gone up a lot something like three years on a typical job since World War Two.

So yeah, like at the end of World War Two, high school degrees plenty for a secretary now, new secretaries would generally have a college degree in something or other.

Right?

So like why is it so great to go and just keep prolonging this period of dependency rather than try to get people just to cut cut to the chase and learn where they're really going to learn which is on the job.

You know, like I said, we think of education as being job training, but really it's passport to the real training which happens on the job.

Now a lot of people have probably the most popular critics criticism of my work here is to say, yeah, well brian is a knuckle dragging Neanderthal economist who thinks only in terms of money and jobs and is blind to the wonderful soul enhancing enlightening aspects of education.

That was my next comment.

Yeah, right.

And into these critics, a lot of these critics that say brian never even mentions this and I say, look, I've got a whole chapter on it, I might be wrong, but don't say I didn't talk about it.

Like I can understand giving a book a negative review without reading it.

We all do that but without reading the table of contents, I've heard people make that criticism of you.

And and it baffles me too because you you you don't just address it.

You spend a long time addressing.

Well, it's towards the end of the book, you can't expect someone to finish a book.

Right?

That's true, That's a good books.

That's for, that's for nerds.

Um Anyway, so what I actually do in the book is I say, let's look at the facts.

It's not enough to say that we are trying to cause enlightenment, trying to inspire.

Therefore we do.

You gotta look and see our people in fact enlighten our people in fact inspired.

So what I do in the book is I get as many different measures of these things I can and to say, look, there's almost no sign this is happening.

Most people are super bored in school.

It does not inspire a love of any of the intellectual or cultural topics that you were trying to inspire.

So you go to the list.

So like a lot of schools push classical music almost no one likes classical music and I said, look, I do, I do I'm someone who really enjoys it.

But to say that we have successfully fostered a love of classical music and school is absurd because people don't love it.

I think you do a really good job addressing that argument, but you are really up against.

It's a it's a Sisyphean task because the people who the people who are most likely to make that objection seem like the least likely to be moved by a data driven case for whether or not enlightenment and you know, higher culture is is taking place like you make these points about, you know, Shakespeare and someone's going to come back with, well, you know, higher culture isn't just about Shakespeare brian.

And obviously your point is not that it's all about Shakespeare or Mozart or whatever, but if you, you know, some of the burden of proof should be on the people claiming that this is indeed happening and they've seems like they've failed it utterly.

Yeah, so in particular, what I say is, look, I'm not saying that the current canon of the ideas and culture that we try to force feed the students is perfect, what I'm saying is the stuff that we try to force feed the most.

We still don't see much sign that it works, which it just shows that force feeding probably is just not a very good way of spreading this dis appreciation.

Also, I make the argument that, you know, when I was a kid, a lot of people say, look like, you know, if we if we have kids don't learn about Shakespeare and classical music in school that only the rich will ever be able to get an appreciation of it this way, it's for everybody.

And then what we've seen is we've got the internet and the internet makes the appreciation and the exploration of ideas and culture free for all who have a computer or a phone or whatever.

And yet we go and just look at the actual viewership.

We can now see aha, the problem was not supply, it was demand.

The problem was not that we weren't giving people enough access to Shakespeare or philosophy or classical music.

The problem is that when it's totally free, people want to listen to Nicki Nicki Minaj and they don't want to listen to Wagner and of course that's exaggerated.

There are some people listen to Wagner so I love Faulkner, but still it is so ineffective to try to go and make people appreciate high culture via school because it just doesn't stick people disappear.

Like basically they're conscripts, they do the bare minimum to get through and then they give it up because they never wanted to do it and you didn't persuade them.

There's always this hope the teacher has.

Sure you don't like it at first, but once you spend some time with it, then the greatness of it will infuse your soul and then you'll thank me afterwards.

And that that approach to me makes sense.

On a personal level.

I mean, if you've ever had a close friend that you were just dying to show a you know, a beautiful movie to you've got to see Citizen Kane and you hope it's going to open their eyes to a new world and they see it and maybe they like it.

But if they don't, You don't keep going and keep showing them this, this, you know, the music that you want them to like, you know, you give up after a respectable number of tries, not 12 years.

Yeah, I mean, I mean, so like what I say is I am all in favor of giving kids a smorgasbord of options just to explore to expose them to the possibilities.

But that is not what school does school pretends to do that.

But what school actually does is pick a short list of topics that almost no one is interested in and then ram them down your throats for at least 13 years.

So like almost no one likes poetry.

We know this to be true.

Almost everybody finds it boring and and would not spend their own time on voluntarily.

And yet we spend 13 years trying to make kids like it right?

And say look like like so like expose them to it and like give them a few hours and not for you.

All right, let's move on to something else.

Totally reasonable to say fine.

We'll come back and give you a few more hours and a couple more years.

I've done that with my kids.

Like, Oh, so you don't like this movie right now.

All right.

All right, fine, fine.

We're done a couple of years later.

You won't even remember.

I'll show it to you again, Maybe you'll be older, maybe you'll like it then.

And so that's that, that is fine.

And again, if schools actually were to go and just expose people to a wide range of things, I would say, wow, that's, that sounds pretty cool.

And yeah, I mean they say like if one out of 100 works out great.

So yeah, that makes sense.

If you spend an hour on each of those 100 things, it doesn't make sense if you spend hundreds of hours on one thing and we know that almost no one will like it.

So you talk about your, I think your estimate is that education currently is maybe 80% signaling and 20% teaching useful skills, some of that is maybe inherent to the educational process.

But no doubt, I think you'd probably say that a lot of that is also due to just how bad and dysfunctional schools are, How how would that balance maybe shift if schools were, you know, run in a sensible way and weren't massively subsidized to be stupid.

So this is one where it's uncomfortable for me because when I look at existing private schools, I have to say they're not that different public schools in terms of their curriculum.

Are you talking about higher ed or?

Yeah.

Okay.

Okay.

Okay.

12, which is the one people are more focused on.

So, you know, so, you know, private private K 12, it does not look that different to me than public public K 12.

Um So you know, I think I think a lot of what's going on in private schools is they are responding to what parents want kids to have, which is something similar.

Now I think it would be fair to say that a lot of the reason why there's such uniformity of the curriculum is because everyone's trying to get ready for college.

So that might be part of that might be also be part of the story.

Um Yeah I mean definitely I think that you could go and make it much more human capital intensive.

So I during Covid I homeschooled all four of my kids and before covid I was homeschooling my older sons and now they're actually in college, but my younger son, I'm still homeschooling right?

And so like a lot of what I say there's look there's some things that I'm gonna make you do even if you don't want to because they're super useful again math first and foremost we're always doing math even if you don't like it.

So like you're a kid, you know, you don't like if you don't learn it now you probably never learn it and then you will be unable to do a wide range of jobs that you might be interested in.

But then for other things I try to actually find something something I want to do.

So I was like well let's have you read things you want to read, like why not?

You know?

So like why should you have to read something?

You're not interested in me, I'll try to give them some guidance, but if my guidance doesn't work for them and well you don't like the same things that I like, that, I've never understood that reading is such a useful skill.

That's one of, you know, maybe one of this, it's one of the skills that you acknowledge as being okay.

Here's a useful thing that people actually do largely learnt in school.

Um Why force kids to read things they don't want to read if you can get them reading trash.

That's so much better than so many people who read nothing, you know?

Um Okay, I'm aware that I'm keeping you a little over time.

So I'm gonna, I just want to get 11 question in about the success sequence.

I found this really interesting.

So what's the success sequence and why?

Why does it matter?

Right.

So there's a number of researchers who worked on this.

Um, but, and so like I'm only a messenger, but I will say that this immediately resonated with me.

So there's no use saying, is it possible that there's a pretty simple formula for avoiding poverty in America and that the formula is basically the same one that almost all parents, teachers and society tells you to do, which comes down to step one finished high school, step one finish high school step to get a full to get a full time job and step and step three get married before you have kids, right?

And so anyway it seems like when you when you intuitively it's like first of all it seems like if you do those things probably would avoid poverty in the United States and second of all it doesn't sound that hard actually.

And third of all people are telling you to do it.

So it's not like the combination to a locker where it's like oh now I know the combination now I can do it.

I wish I'd known that before.

So anyway um the researchers have worked on this have indeed found that this is highly effective.

And if I remember the number from the book basically by the time you're in your late twenties, if you will follow the success sequence or you're on track on track, would basically mean that if you if you aren't married yet you don't have kids yet.

Uh Then that late twenties you, sorry, does that include having kids or is it you don't actually have to have kids to follow the success, don't have kids before you get married, get married before having kids, if any.

So put all that, put all that together and then your odds of being being below the poverty line in the US something like 2%.

Right?

So and again now, so like what I do is I say like people working, working on it in a way I think you're too modest and they say all right well look obviously like this all happens in a social context and we can't just expect people to lift themselves up by their bootstraps when I heard it like kind of sounds like that would be the right implication is look if your success sequence was graduate first in your class go to M.

I.

T.

And then mary an actress if that was your your your formula for for for getting out of poverty then a reasonable reaction would be well that's almost impossible for a normal person to do.

So that's not helpful.

The success sequence is persuasive precisely because when you hear it you realize you don't have to be smart to do it.

You don't have to be special or super.

You don't need to be a star.

It just requires basic horse sense to go and follow this stuff and you know and anything like especially as as I as I already said like you know finishing high school in the US is quite easy just basically show up, put in a basic effort and you will finish um except during severe recessions Getting a job in the U.

S.

Is again very easy.

Not just according to some Egghead economists but when you go and survey the poor themselves.

Normally we ask them.

So is it hard to get a job?

Normally it's not hard to get a job.

The main issue that the poor seem to have in America is keeping jobs not getting jobs.

So it's not that they can't find a job, it's that like they just feel disgruntled or they argue with the boss or their meeting customers and then they wind up getting fired.

And again, these are things where like older people say, well to stop doing that stuff, grow up, grow up, look, this is a job, it's not about you, you're being paid money in order to be part of a team and you just need to swallow your pride and get with the program and accept that the way that you advance is by becoming valuable.

That is your, that is your ticket to a better life is becoming a valuable member of the team, not being a defiant squeaky wheel, right?

And then finally, of course this last step of don't have kids until you're married when you hear it, it's super obvious.

Uh the main critics of the success sequence have said uh no, no, no, that's not the real issue, basically working full time is the only thing that matters.

Look, here's the obvious fact, if you are, if you have kids and you're not married, it's really hard to work full time.

Really hard, right?

Especially when the kids are young.

So just to say that work is the only thing that matters is just bizarre.

It's like saying, look, it doesn't matter whether you like your house on fire.

What matters is whether the house doesn't burn.

It's like, well, it's a very close connection between these two things.

So like why are you acting like there's some, some big distinction.

And then I would also say that in the latest work on the success of sequence, they actually do confirm that each of these three steps is independently important.

They can probably working full time is the biggest one.

But again, that is closely connected to these other steps.

So you, you opened up with this caveat that you were just the messenger, uh, indicating that this, there's something controversial about this now.

Uh, it sounds super obvious and mundane.

Why why would this not be a popular talking point?

Yes.

So I do have an essay in labor, the converse of the world where I tracked down all the main people who are angry about the the success sequence and have criticized it.

And I quote their main criticisms.

Uh, think about like six or seven critics basically.

They got nothing.

All right.

They've got, they've got, you know, they got a poker handful of nothing.

And so they're making a lot of us walking about, uh, you know, so basically things like, oh, well this ignores the role of society.

It's like it wasn't a role or ignore the role of society is just saying, look, these are some things that you can do and if you do them, you almost certainly won't be poor and it would be you would be well advised to do them.

Yeah.

I thought about what it's maybe not a popular point is related to what you said earlier.

Like if if the success sequence was being first in your class and M.

I.

T.

And marrying Cindy Crawford and all that, okay.

You you you know shrug your shoulders and say I guess no one gets to be successful.

Um but because it's so easy it forces you into a position intuitively to I have to say well tough luck or you know to have a little bit of a harsh attitude.

Um The attitude you might have towards someone you know real in your life who was screwing up by not doing really obvious things that might help them and people don't want to have that attitude or it's a mean sounding attitude.

Yeah.

So you know philosophically the of course there's a lot of people, you know not just democrats, a lot of republicans to also feel uncomfortable with this attitude.

You know the saying the same way there's many republicans saying yeah saying look it's trade with china that went and caused the opioid epidemic in America is like did the chinese importers go to the go to their towns and inject them in their sleep like what are you talking about?

Like so there's so like there's like like you lose your job in a factory and then you should go and become a heroin addict.

What do you like that?

That's absurd.

And and and if you and if you had a close relative who gave you this reasoning unquote, you would just for your brow and just say that makes that is a ridiculous thing to say, like, I don't even know where to start with, like, like, like, no, stop, just stop trying to blame people in another country and broad economic conditions for irresponsible behavior, straighten up and fly.

Right?

Right.

And maybe the first time will give you some help.

But yeah, if you keep doing this stuff then no, like, I'm not gonna keep helping you.

Um One thing that's very striking to me is that if you give people individual hypotheticals, like suppose you have a no good brother who constantly drinks and lose his jobs and he beats his girlfriend and every time that he's got no place to go, he shows up at your doorstep and says to help me out, I'm really in trouble.

Right?

So, what do you think about someone who finally got sick of it and just said no, I'm done cleaning up the messes that they're setting healthy boundaries.

Yes.

And what I found is almost, you know, like, you consider the person who says no to be evil or cruel and almost no one will, almost everyone when you put it that way will say, all right, I see the point and all right, maybe this no good brother is gonna be homeless on the streets, but I don't see why the well behaved brother should have to be cleaning up these messes for the rest of his life.

Right?

And you might say he's if he's a saint, maybe he'll keep taking him in, but you're not going to condemn him as a villain when he says I've had enough.

And that's for your own brother.

So if someone says look politically, we can't just say that when someone is poor through responsible behavior, that we're not going to go and help them.

It's like, well mm I mean this is a total stranger.

It seems like like if you're if you're not going to condemn someone for failing to help a close relative, then why would you condemn them for not wanting to help a total stranger?

Right.

And again, I think this is just a disconnect that people have between their normal moral sense that they that they actually practice in daily life with a high level philosophy of everyone is their brother's keepers.

And we must practice unlimited infinite forgiveness.

And like I just have like like some of the other books are more philosophical, but I have the view that that ordinary moral sense is a lot more reliable than grand theory.

So the ordinary moral sense of look like like you screwed up too many times and I'm closing my door on you and tough luck, you know?

And and and like I'm not a bad guy for saying that I don't want to clean up your messes anymore and that is a much more reasonable view then the infinite forgiveness view that a lot of people suddenly start pushing in politics.

So by my count, you have upwards of 10 upcoming books you're working on right now.

Um I I know you're working on build, baby build, I know you're working on poverty, who to blame?

You mentioned seven or 8 More, seven More Books of My Best Blog Post.

And then I wanted to ask specifically about a maybe book that you're working on or you, you dropped a little teaser on your blog about a generic defense of laissez faire and I know you were, you were fishing for some titles is can you say anything about that or is that, is it's still too soon to tell you, I'd be happy to talk about it.

So the first title came to my Mind is a steel man, Steel man, which usually is a phrase people use for making other people's arguments better, but I wanted to use it to say, look, I think I've got a really strong argument here, that's that I very carefully put the pieces of the armor together.

So it's gonna be really hard to actually get through this argument.

Give a subtitle in mind.

Um see, so I think I had a few, but you know, like, but like it really is going to be my defense of free markets, you know, this book has of course been written many times.

But Um, I feel like we've actually learned a lot in the, in the last 40 or 50 years since Milton Friedman wrote capitalism freedom and free to choose.

And I just want to go and put a lot of that, you know, that we understand between two covers in a way that's accessible.

I think you're the person to do it.

Yeah.

So you know, like a lot of what I want to say here is, let's see.

So part of it is just talking about the the very neglected benefits of markets that don't sound good.

Alright.

Which is something that, that is around.

But I, but I've been thinking a lot more about the psychological concept of social desirability bias.

The idea there are many things that are obviously true, but people are people lie because it doesn't sound good.

Like am I fat?

There's only one socially acceptable answer to that, you know?

So, and we can see this in a, in a lot of other political rhetoric.

You know, nothing is more important than education.

Like what about food isn't food more important than education, right?

Or like, you know, we should take any step to prevent covid deaths.

Like, well we don't take any steps to prevent people from dying in car crashes.

So like what are you talking about?

Right?

So anyway, part of what I want to say is there's a lot of things that are great about markets that don't sound good, and I just want to come and say these are good things.

So for example, it is really good that markets get people to avoid wasting valuable resources by charging a price for them.

People love the idea of just giving things away for free.

Isn't it great when medicine is free?

It's like, um, well, when it's free, then the people use some very expensive treatments that they don't actually appreciate very much.

So.

No, it is not great for medicine to be free.

There's actually is a value in charging people things.

It is a way to avoid the waste of valuable resources.

So that's one.

Uh Then I also want to talk a lot about the many of the textbook complaints that economists have about markets and the extent to which those are overstated.

Making one big one is only if you go to any e context book.

They talk a lot about monopoly.

The evils monopoly.

And one thing that, you know that I'll say, well, let's think about a few monopolies you did business with today?

Like amazon.

Alright, amazon?

Yeah.

What's the next best thing to amazon if amazon shut down, What would you do instead?

And I gotta say, I don't know like people say walmart like walmart in amazon, it's not even close to amazon, like amazon is so much better and yet the reason why amazon has this special position is because amazon is awesome, right?

It just has an endless selection.

Super cheap, super convenient.

This is not what the textbook story monopolists monopoly says.

Uh so what's going on?

Well, a lot of the reason why a firm can compel monopolies because it doesn't act like one, it acts like it's got competitors breathing down its neck, even though it doesn't right as to what's going on there.

I think it's interesting to explore.

But anyway, so a lot of these complaints, when you really look at the world are actually simple minded complaints which don't fit a lot of the facts.

And then I want to turn to regulation and say, look, there's a few people have what regulation does, and then we look at the real world and see it's totally different from that.

So people talk about regulation protecting consumers.

I say like, you know, the most important kind of domestic regulation we have is all the regulation that prevents the building of housing.

And yeah, what does that do to protect, what does that do to protect consumers?

It protects them from getting affordable housing is what it does go and look at the parts of the country where it's reasonably easy to build housing, like a lot of texas and regular people can then afford a nice home in texas and then you go to san Francisco where they're protecting the hell out of you and you see that almost no one who isn't super rich can even afford to live there.

But that view yeah that view enjoyed by a few rich people.

It's like look if a lot of people don't get to enjoy it, what good is it?

So I say like you and I say like housing regulation is actually a much more typical expression of what government really does.

A lot of high minded propaganda combined with actual just sheer folly.

I mean some of it is just as people say it's just rich people going and protecting what they got and excluding other people say like that would actually be better than what we really have a lot of what we really have is just pure waste of just making bonfires resources and just saying nobody gets them.

That's actually more typical because like if you take a look at people that own a two or three story house in san Francisco, it does not actually benefit them, that you cannot replace that with a skyscraper if you own it, You could sell that land for an arm and a leg and then you could move a bit outside of the city and you could have something else that you like a lot better.

And then meanwhile it gets replaced with a skyscraper that allows 10,000 people to have to enjoy the stuff that previously was only enjoyed by one family living in a two story house.

So certainly the first people to sell would I mean if all of a sudden land development became very, very allowed the first sellers would do just great.

I mean as everyone else just protecting their own long term interests because they want to maintain the option to sell high indefinitely into the future.

Yeah.

Yeah.

I mean I think that's pretty crazy.

I think the real story is what I call myopic paranoia.

People just like the sky will fall if we allow people to build a skyscraper here.

Like sky will not fall, money will rain down on you.

Yeah things will change.

But guess what change because you can easily be really good.

We've had all kinds of other changes that we are happy with, that you're gonna be happy with this change too.

As it happens, it's just your own sheer stubbornness.

And combined of course with the fact that government, government makes the decision for you.

So it's easy for you to not face the reality of.

Well on the one hand I could sell out and make a lot of money.

On the other hand, I could keep living here.

So you know one big theme of my work is actions speak louder than words and many people who say, oh I could never live anywhere with san Francisco.

If the price were right, they would change their tune.

As a person who lives near san Francisco.

Uh The exodus is real.

Yes.

Well imagine the exodus.

If people could make, could could get paid 10 times the current value of their home to sell to a skyscraper developer.

I know that would be really shocking.

And I think it would get a lot of them out of the doldrums.

I think.

So.

Your book is Labor econ versus the World, essays on the world's greatest market.

Can you recommend any horribly exploitative monopolies where people can buy your book?

Gee Yeah, amazon is the only place you can get it actually.

It is an amazon exclusive amazon among its many other great things has created this opportunity for authors to try out experimental publishing projects.

And I availed myself of this.

They give me a way better deal per book than any other publisher in the world has ever given me.

So I'm hoping that it sells a lot of copies and then maybe I'll just say goodbye to regular publishers.

I'm sure you're being exploited somehow.

Yeah.

So anyway.

Yeah.

So thank you.

Thank you amazon.

I'm sure they're not listening.

And if they did they might not even want to be associated with what I'm saying.

I don't want to associate with someone saying that we're not terrible.

People hate us for supporting someone who says they're not terrible.

But yes amazon you've done great things and I appreciate what you're doing.

Even if you don't appreciate it yourself, where can people find you if they want to see what you're doing what you're up to?

Yes.

So, um, my website is B Kaplan dot com, that's B C A P L A N and I would just say, actually to name another monopoly google, if you just google my last name, I'm still the number one hit.

So obviously google bought me off with this.

So number one hit for Kaplan with a C.

So that's probably the easiest way to go.

Alright, thanks brian, thank you so much for talking to us.

It's been a pleasure.

Right?

This is fantastic chris, I think you've got a great future in podcasting.

You've got a great style.

Great questions.

Thanks a lot.

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