Economist here. I guess I mostly agree with Richard in the general sense that we should all do more of a thing that has public benefits. I am less certain though if I take inventory and ask how it becomes more like other fields. At a individual level, how much of my time am I supposed to further spend on this topic? I think I do a lot of relevant research that matters, plus I try hard to be a good teacher, things I think that matter. If I try to post a correction on a NYT article, its not at all clear to me I make a dent. The internet is just so awash in misinformation, it feels futile for me to spend any more time on trying to correct it. I do have real admiration for the Don Boudreaux's who are so indefatigable on this, but for me it feels like I'm just repeating the same things the field has already known for decades to centuries.
It probably wouldn't be noticed if all of us economists individually did 5% more, so perhaps the difference in effort is perceived by high visibility associations. Perhaps it is the various professional associations commenting on climate change, public health, etc. misinofrmation that gives the perception of them "doing more" than econmomists. But culturally, economists really don't like delegating opinions to the American Economics Association. The point of the AEA should be to help me and the profession grow in our skills, not claim to speak for me on matters of public policy. The AEA did this kind of stuff at its origination, it was a terrible mistake, and I'm glad that there is no appetitie for its return. I can speak for myself, thank you very much. I have to say that seeing the other major associations take positions on what should be considered as misinformation during COVID did not exactly manage to reliably cover themselves in glory.
Seems right. But I have to say, employing correct economic arguments about the tragedy of the commons to justify not correcting economic misinformation is pretty funny.
Maybe there ought to be an organization that takes the consensus displayed in the US Economic Experts Panel as its ideological position, and advocates for that?
One of the problems is that you can make good faith rebuttals all day, but in the end someone like Paul Krugman has a massive audience and they're going to push the "all praise the bureaucratic state and the political donors" economic rhetoric that is all smoke and mirrors.
So some people will see you and recognize truth, or at least they'll recognize you trying your best to present what you believe to be truth....but the majority of people who see the viewpoints of economists are going to mostly see the ones pushing the preferred narrative of either political party's leadership.
This is a reasonable point. The better the group is at good faith rebuttals, the more gain there is to being one of the defectors who trades away the credibility of the group for political gain and attention. I'm not sure what to do about that. Staying out means that a larger share of my group's interaction with the public will be politically motivated, but it also implies I'll entice more defectors by joining in.
I have a history degree, and I focused my course load on all the classes I could take related to American foreign policy in the 20th century.
I often hesitate to jump into arguments where people are pushing factually incorrect versions of events simply because I've grown tired of being told I need to read a history book on a particular subject when I've read several books on that subject and the person condescending to me hasn't read any.
I think it's wrong to call most of Krugman's arguments "misinformation". As misguided as I think he often is, his arguments are at least — to my understanding — a good faith attempt to seek the truth.
I believe Hanania is speaking about, say, Trump and his defenders arguing on behalf of tariffs, using utterly made-up / bullshit reasoning that no economist would agree with, with full awareness that it is total fabrication. And media often both-sidesing this, like _who's to say who's right?_ That is "misinformation".
Problem is that its not even ideological stuff like "is free trade good". Its misinformation regarding basic facts.
People believe a lot of dumb shit.
Example: lefwingers believe that "billionaires dont pay any taxes". Rightwingers believe that cutting foreign aid can substantially reduce the deficit. Leftwingers believe everyone's working at minimum wage. Rightwingers believe there's massive social security fraud. Etc.
As someone with over 10 years' experience in tax, I can say that "billionaires don't pay any taxes" is not a myth. "Any" is too strong, but the US definitely has a bunch of tax loopholes that allow billionaires to pay very little in taxes.
I seriously doubt you have 10 years of experience in tax *with billionaires*. And what you say is simply not true. Super wealthy ("billionaires") pay between 50 and 60 of their income in taxes. Very large chunk of overall tax revenue comes from the super wealthy. Whatever loopholes exist, they dont change the aggregate numbers.
(Step up basis is indeed wack, it made sense when the estate tax wack substantial as a way of avoiding double taxation, but since the estate tax has been gutted it no longer does. However the extent of its impact is exaggerated and that Forbes article is just pushing the same ol' click bait myth)
Actually, I'm a tax preparer/advisor to high net worth people and I concur with ToSummarise. Hardly any pay anything like 50-60%. The max Federal rate is 37%. A lot of HNW folks have residency in places like Florida so they can avoid state taxes altogether. Most are business owners and are able to layer losses against income, and recognize windfalls under lower LT capital gains rates.
And then there is charity. You can donate appreciated property and take the deduction at FMV without ever recognizing the gain in the first place. This has the abiluty to wipe out huge amounts of income. I've seen returns where the taxpayer is making $50 million a year, but paying 3 or 4% of it in taxes.
The schmucks who pay 50% in taxes are high salary earners like NBA players and actors. Everyone else hires people like me.
What is the source for your claim that billionaires pay between 50-60% of their income in taxes? And how are you defining "income" here - taxable income or economic income? If you're just using the taxable income definition, that's circular - the whole point being argued is that the definition of "taxable income" is too narrow and doesn't include importance sources of economic income.
I agree that there are some highly publicised claims about billionaires paying no taxes that are misleading because they treat losses and all deductions as somehow "illegitimate", and they don't account for foreign tax paid on foreign income.
But that doesn't detract from the fact that there *are* a lot of loopholes in the US tax system - including the buy, borrow, die, strategy - that a billionaire could use, if they wanted, to achieve a near-0% tax rate on their economic income. How frequently these get used in practice is hard to tell because of tax secrecy laws (data on billionaires is notoriously scarce), and I'm sure some billionaires are more aggressive in their tax "planning" than others. But I seriously doubt *any* billionaire in the US regularly pays 50-60% on their *economic income* - if so, that billionaire needs to fire their tax advisors.
AGI, so youre right, 50/60% is not the share of total income. Still means that the very rich pay a substantial amount in taxes. Source is tax foundation but its easy to look it up. You can also look at share of revenue by percentile.
Regarding the "buy, borrow, die" strategy, no, a billionaire could not do it "if they wanted to". The whole thing is a bit of a myth (originating with ProPublica, spread around on reddit - note also that the Forbes article you linked references it mostly in the headline while the article itself is very thin on the details/substance. BTW, Forbes has been junk for awhile now). First for it to actually work interest rates have to be really low, otherwise the "borrow" part breaks down - you end up paying more in interest than you save on your tax bill. Second, youre taking on certain kinds of risk with the strategy, so it can come back and bite you in the ass. Which is probably good part of the reason why its not used "if they wanted to" (though youre also right that individual data is hard to get, for obvious reasons, but aggregate numbers on total revenue do suggest that its not). Having said all that let me repeat that I agree that the step up provision should be eliminated. That doesnt mean that "billionaires dont pay any taxes" though.
If so, it's worth looking at the underlying Treasury report being discussed (https://www.irs.gov/pub/irs-soi/24rpestimatingtaxburdens.pdf), because the Tax Foundation is not as "non-partisan" as they like to pretend. Table 1 of that Treasury report shows that for the top 0.001% (squarely in "billionaire" territory), AGI as a % of wealth is only 4.26%. But if you keep going higher to the top 0.00005% (people with at least tens of billions), AGI as a % of wealth is only around 1.5-3%. I'm sure their economic income is quite a lot higher than this, as it's hard to believe the wealthiest billionaires earn returns that barely match inflation.
Anyway, the data shows that the billionaires are paying high *rates* of tax as you say, around 50-60% on their AGI. But their AGI equates to annual returns of < 3% of their wealth - in the 2018-2020 dataset, it was only 1.7%. I agree that's not "nothing", but it suggests effective tax rates likely below 30%, and possibly much lower (we can't tell without knowing what their economic income is). There's also likely to be variation within these averages - some billionaires will be more aggressive with their tax planning, others less so.
Re: buy, borrow die - I agree this strategy involves a certain amount of risk and is more feasible with low interest rates (though billionaires can usually borrow at much lower rates than you or I can, and we have had low interest rates for a long time now). Since we both agree step-up on death should be eliminated, this is somewhat moot. I also don't want to suggest BBD is the *only* strategy needed - successful tax avoidance usually requires combining multiple strategies, and the ones that are suitable will depend on each's billionaire particular circumstances.
Richard called out a few polls from the Kent Clark Center / Chicago Booth.
I just want to point out that these weren't isolated polls; they've actually been regularly doing these polls of economists -- with many highly prestigious economists contributing -- since 2011. I almost never hear it cited. You can also click on the polls and see that some economists include explanatory notes regarding their answers, which can also be illuminating.
It's a really useful tool for laymen to get a quick check on where there are points of consensus, disagreement, and uncertainty regarding various political questions of the day that touch on economics.
So to me, spreading the word about that site feels like a good starting point for what Richard is talking about.
Name one economist who can explain why China and South Korea went from poorer than Ghana, to much richer than Ghana, despite Ghana being a peaceful democracy. Just one...
No, you can't.* Oh shit* it looks like economists have extreme biases that *completely* preclude them from seeing the obvious causes of major phenomena when those causes might look less internationalist/more racist or xenophobic.
I am an academic (former professor to be exact) in the field of Progress Studies, and I disagree.
I agree with the original commenter that the field of economics is relatively unhelpful in explaining why entire societies suddenly jump from millennia of grinding poverty to self-sustaining economic growth in just one generation. I think that is exactly the gap that Progress Studies should be trying to fill. Progress Studies uses economics as just one means to explain where the modern economy came from.
Economics is great at explaining how markets work and understanding tradeoff given limited resources, but it is quite poor at explaining where the modern market-based economy came from in the first place.
Here is an example of how Progress Studies can do better:
I doubt it, but, if you want progress for many nations, you have to factor in that the vast majority of people in those nations are below the average intelligence that you're used to, as well as generally being diverse in a wide variety of other psychological traits.
If you don't do this, because you don't like recognising the facts, you will constantly come up with new ideas and yet never see actual progress. In other words, you'll be choosing your own vanity over helping.
I do recognize differences in average intelligence by nation, but this tells us very little about why nations suddenly change from poverty to progress within one generation. This is obviously NOT caused by a major shift in average intelligence.
Nor does observing differences in average intelligence explain why those differences exist. Differences in average intelligence are more likely RESULTS of pre-industrial societal change rather than CAUSES of it. There is no evidence of widespread intelligence differences between hunter gatherers societies before 10,000 years ago, so the changes came later.
I don't think it is the position of economists that democracy directly equates to economic growth? That would imply Imperial Germany should have had its economic growth flatline relative to France and the UK, for example.
What do you people expect? Them to say that Ghanaians have tiny brains and this resulted in them having worse economic growth than China? Their GDP per capita grew faster from 1993-2023 (their democratic period) than South Korea's: 6.6x versus 3.7x. China did better, so I guess that means Chinese brains are bigger than Ghanaian brains which are bigger than Korean brains? Or maybe there's more to international economics than phrenology?
this is a bizarre comment if taken at face value. the importance of international differences in human capital has been solidly mainstream for many years. see e.g., lucas (1988).
Capital is the fixed products of human labor; human capital is the product of investment in human beings, such as education, health, etc. Do you think that economists don't believe that literacy and education rates differ between countries, and that these things can have substantial impacts on developmental economics? Or are you misusing that term and instead dissatisfied that they don't say Ghanaians have tiny brains?
Because if it's the latter, why are you complaining about my "deception" and "sophomoric techniques"? I'm just accurately describing your stupid beliefs.
Okay, if we both know what you meant, why are you bitching so much about the fact that I accurately described your beliefs? Does it make you feel stupid when you're reminded that it all boils down to "Ghanaians have tiny brains and this explains every difference between Ghana and South Korea?"
If by "tiny brains" you mean "low human capital" which, in this case also means, low IQ and high time preferences, that lead to workers being unreliable for turning up on time, much more petty crime and workers generally being slow to learn, then ok.
Yes, the link between political democracy and economic growth is quite weak, and the actual causality is likely going from long-term economic growth causing the evolution of democratic governance.
this is a pretty typical path for economies dependent on resource extraction. e.g. in 1905 argentina was one of the ten richest countries in the world; nowadays they're a middle income country. the extreme improvements in manufacturing productivity seen in much of east asia are not really available in gold mining.
The question of why East Asia developed faster than other regions is core to development economics. Anyone who thinks that economists don’t have any good answers here simply hasn’t begun to engage with the field. And, for the record, being a liberal democracy has almost no bearing here: SK, China, and S’pore were various types of repressive authoritarian when most of this growth was happening, and only SK transitioned to a more liberal (although still conservative) democracy.
Take a look at the economists cited in the “what economists believe” section. Oh wait, you can’t; he didn’t cite any. Probably because the “Washington Consensus” is 35 years old by now, and modern economists have already theorized a lot about the export-oriented growth model he seems to support instead (starting in the 90s. Seriously, this isn’t new).
Which development economists are you referring to? In my experience most people who call themselves "development economists" are not actually economists. They use very different methods and theories from typical economists.
Most of the development theories fit into one of four major schools of thought (which I addressed at the top of the linked article):
Economist school, who advise developing nations to establish good institutions and free markets
Foreign aid school, who urge wealthy nations to spend more on foreign aid to assist developing nations to get out of “poverty traps”.
Right school, who believes that the poor in all nations need the same political freedoms that wealthy nations enjoy. Once the people have those rights, their nations can grow their way out of their poverty.
Sustainable development school that focuses heavily on renewable energy and less resource-intensive agriculture, transportation, and manufacturing.
Paul Krugman’s work on NTT was done in the 90s, Paul Samuelson was quite active then, Dani Rodrik was quite critical of the Washington Consensus — he wrote a book called “Has Globalization Gone Too Far” in the 90s, I could go on — I have no idea what you mean by “economist school”, but professional economists have generally not been absolutist free-marketeers for the past 30 years.
Literally not one mention intelligence and time preference....despite both being obviously extremely important and clearly varued between countries in exactly the way you would expect as per development.
“The average Chinese intelligence and time preference shortened dramatically in the late empire, reaching a maximal enstupiding from the late Qing years until Dengist reforms improved Chinese brains. Meanwhile, in Japan, the originally sluggish and short-term generation was replaced by more intelligent, long-term thinkers under the Meiji emperor. The Korean people were of average intelligence and time preference for a while, until the Great Endumbening brought on by the Kim family in the north, even as Park Chung-Hee worked to give the South Korean people longer time horizons”.
Literal clown understanding of history. Please start reading any economics.
He's listing a whole bunch of things that pose an obvious challenge to your claim that group genetic differences play a major role in explaining economic growth. You've cherry picked the example of Ghana vs. China and Sth Korea to bolster your theory but basically ignored the entire history of the rest of Asia including China and Sth Korea outside the last 40 years
And not 1 of 50 African countries has been able to do what China, Japan, South Korea, Taiwan or Singapore have done? Indeed, they can't even have science developed as North Korea, which produces missiles and nukes, unless they're Apartheid.
Amusingly I've argued with educated Africans who have similar views to yours.
The short answer regarding China and South Korea is that they've had centralized bureaucratic governments with high "state capacity" for centuries. Due to an upset (WW II, Chinese Communist Revolution, Korean War) the power of the traditional landlord class was broken and a dictator with a taste for economic growth (Deng Xiaoping, Park Chung Hee) gained power. Behind that is that agriculture developed in the Orient 10,000 years ago, so the states have had a long time to develop.
Regarding e.g. west Africa, the central facts are that agriculture only developed 3,000 years ago and the combination of the Sahara and malaria kept them cut off from the civilizations diffusing out from the nearest center of early agriculture (Mesopotamia). I've seen the "Benin bronzes" in the Boston MFA, which were made circa 1800 CE. (That's when the Europeans developed quinine and used it to conquer Africa.) My judgement is that they match anything made in the European High Middle Ages circa 1200 CE. And the description of the political situation there in 1800 resembles the collection of small kingdoms that was Europe.
Now compare with west Africa in 2000 CE. My estimation is that they're about where Europe was in 1900 CE. (A lot of Europe had neither railroads nor paved roads at the time.) Certainly Africa has better cellphones, Internet, and medicine that Europe did in 1900. (Certainly better medicine if you can afford the hospital where the white people go, and probably every village healer has a big jar of penicillin pills.) So, roughly, Africa has advanced in 200 years what it took Europe 700 years to do. Which isn't surprising, catch-up development is a lot faster than advancing-the-frontier development.
So my estimate is that in the next 100 years, west Africa will become comparable to the "advanced" countries.
It's not amusing. I've been close to quite a few Africans who agree with me and the reason they agree, despite agreeing being a little painful, is that it is obviously true.
As for your comparison between Africa and 19th Century Europe, what compels you to the idiocy where you think buying an iPhone is equivalent to inventing one?
Unless you're making the subtle, sophisticated but ultimately disingenuous point that they'll never produce much of anything, but charity and mining rights will keep them advancing by buying directly from everyone else. Disingenuous because it doesn't relate to the topic, but subtle and sophisticated because it at least offers some mediated optimism. I mean little children are better at research, if you include results from chat gpt, than your average adult 100 years ago! Maybe even better at essay writing than your typical undergraduate just 2 years ago!
Well, if I type that question into Google, it replies "A leading economist who explains how countries like China and South Korea went from being poorer than Ghana to significantly wealthier is Ha-Joon Chang." Chang *does* have a Wikipedia page and seems to have acquired some significant honors and claims to explain such things.
I don't know about Ghana specifically, but for Africa more generally I've heard the geography is challenging for logistics, rivers are not very navigable, there are not many natural harbors, this makes the central government relatively weaker and reduces access to international markets. The difficult logistics also incentivizes economic activity that gives relatively high profit compared to its weight, like precious metals, which Africa is very rich in, and is also the sort of activity that is advantageous for organized crime, making the job of the already weak central government harder.
LMAO. No SS African country can build a sewer system because rivers aren't very navigable, but you're not sure which rivers or if any of this relates to Ghana?!?!?! You know the Panama and Suez Canals, and the Canals that make the Misssisipi navigable, were built many generations ago, before most of the technology that would make doing so much easier now.
Not expensive at all. Given how much entirely idle labour there is on that continent. The problem is that basic menial requires skills, like punctuality, not stealing etc and those skills are unevenly distributed around the globe. The Chinese even find it more economically efficient to import Chinese workers to do shovel work on roads.
I find it hard to believe there is much idle labor there. In developing countries subsistence is fairly labor intensive, which makes sense as capital is in shorter supply, so labor is less efficient. I don't know about the Chinese work in the area, or frankly much about Africa at all, I'm just repeating a claim I've heard, which I'm surprised you didn't seem to know about, given how sure you seem about such topics.
The claim you repeated is ridiculous. It explains nothing. It is has a tiny kernel of truth, in that some rivers are unimproved and difficult, but it is a barely relevant.
Also, while the vast majority of African countries do not collect anything like reliable statistics, South Africa still, just about, does, and their unemployment rate is 42.9%.
absolutely wrong: in fact, fro. 70s thru 90s, the dominant paradigm in development economics was "export-led growth", based on japanese post-war experience. china & s korea are exemplars of that policy.
I'm not so sure economics has the same finality and predictive power as the kind of hard sciences that do combat misinformation (biology, climatology). There is a name for this idealism as well: "Physics Envy".
Though, to your point, if there is some consensus amongst economists on some idea when polled, they could do more to publicly assert that idea with specificity and depth rather than just saying "lump of labor fallacy, kid" and moving on.
Yeah that’s similar to what I was thinking. There seems to be less coordination amongst economists to fight misinformation, and they don’t seem to have as much of a presence from strong public-facing institutions especially compared to those in health or climate science. It seems more economists tend to function as individuals with less collective effort to fight misinformation.
Also, misinformation today is often pushed in rapid, repetitive soundbites by populists, which is asymmetrical compared to economists’ tendency to reply more slowly.
Also vaccines or climate is somewhat different because those fields have visceral “hook” events and sense of moral urgency while economics lacks catastrophic moments that force consensus into view. Or at least there are too many preemptive attempts to control economics related narratives with misinformation and those tend to stick around because economists aren’t responding quick enough to get the truth out nor are they doing so in a way that’s likely to ever compete the misinformation on virality, especially since most people seem to look at narratives around data (and ones that confirm their priors) over the data itself.
A major reason economists don’t devote more effort to combatting misinformation is that they believe voters are a mix of rationally ignorant and locked into particular organized interests and privately beneficial but socially detrimental positions. It is extremely difficult to steer public beliefs, especially about economics, when that is the case.
I think the short answer is that Bernie Sanders lost. There hasn't been much economic misinformation to fight, because until now the worst of it had just been privately held beliefs among rank and file voters without influencing policy. Sanders earned far fewer votes than both Clinton and Biden, suggesting that whatever the masses believe, their passion for it isn't enough to translate into real results. The tariff insanity has changed the script, but there really hasn't been such economic illiteracy from an American president in modern history. Maybe this is some kind of free market 4D chess on the part of economists, since they have faith that, whatever ignorance might afflict the masses, in the end the adults will be in charge and things will work out relatively alright. Or, if a policy is so bad, markets will respond appropriately and we'll self-correct.
Effects on policy notwithstanding, I'm still concerned about masses of people believing untrue things, but then I'm not sure economists want that sort of target on their backs. Like you pointed out, economic misinformation historically comes from the left. The left's heuristic of "trusting experts" is very good, but speaking as someone on the left: if they make the connection that economists are experts, they're more likely to ditch experts than suddenly trust economists.
Reagan, Clinton, Bush Jr, Obama, Trump, Biden, and now Trump again were all economically illiterate.
I think Bush Sr was the last modern president who understood that maybe blowing up the deficit every year was a bad idea, and he paid the price in the 1992 election for raising taxes. Bill Clinton benefited from the dot.com bubble making his economy and deficit look better than it actually was, but he was certainly no fiscal hawk.
There's an apples-to-oranges you (really, Caplan) are making here. Excerpt:
"In the late 1970s, Kearl et al. asked economists whether “wage-price controls should be used to control inflation.” Almost three-quarters of economists generally disagreed. In contrast, the General Social Survey (henceforth, GSS) reports that solid majorities of noneconomists think it should be government’s responsibility to “keep prices under control.” Those who agree outnumber those who disagree by at least 2:1 and often 3:1."
Those 2 questions are not asking about the same thing. One could think that price and wage controls are bad, while also thinking it's the government's responsibility to keep prices under control via not-too-inflationary monetary policy. Not via price controls.
I don't care if 95% of sociologists agree that white supremacy is a fundamental principle of the universe. The whole field is disreputable.
Economics isn't much better. As soon as we are talking about "the general welfare of society" as something objectively measurable any reasonable person is already on guard.
"Another place where economists and the public diverge is on the costs of housing, one of the most important challenges facing society. A recent poll showed that only 24% of Americans believed that building more housing in their communities would reduce prices, while 44% thought it would raise them. This is plain flat earthism."
And yet it isn't, because there are cases where higher prices have followed additional housing inventory. Housing markets are complicated and trickle-down affordability doesn't always work.
Except that would require economists to understand the misinformation in their own field first. They don’t even know what they are assuming in their theory (let alone why the assumption is being made), so good luck with that…
> A recent poll showed that only 24% of Americans believed that building more housing in their communities would reduce prices, while 44% thought it would raise them. This is plain flat earthism.
I sort of feel like what society needs is a new kind of journalist: professional skeptic. Someone who would make it their job to pick apart popular narratives and expose their logical and empirical weaknesses, whether they are coming from the government or outside it. Like they could lay out what is an is not supported by evidence in a coherent way so that even low IQ people could understand it. And do outreach, don't just be a passive repository of information, but go on the Joe Rogan show and talk about the evidence *against* vaccines causing autism.
And it's worse than that: Most people don't really agree with setting prices by supply and demand. Just this morning in my local newspaper (the one in our city for the educated people) had an article about the nearby gay summer mecca. There's tight building control so the number of summer hotel rooms/rentals is strictly limited. It's becoming ever more popular so naturally the prices are rising. But the reporter didn't seem to grasp that, and seemed to be groping toward an explanation that it was some sort of monopoly behavior by an investor group that had bought five or six small hotels.
OTOH the complainers are sort-of right. They understand that the hotel owners haven't been motivated to actually produce a better product, they are just getting the benefit of a change in the market conditions. But of course, the voters *like* rent control...
>> "If antiforeign bias really exists, these are the patterns you would expect."
IMHO, you've got the argument exactly backward. The High Human Capital/economist/conventional conservative view is that the goal of people is to increase their income/consumption and that anti-foreign sentiment is a bias that interferes with that. But the reality is a lot closer to the goal of people being winning intergroup rivalries and when no rivalry is active at the moment, they turn their attention to increasing their income.
Go to a small town and examine the life of ordinary people with ordinary jobs. Do they put their passion into their jobs or into the high-school football team?
Back in the last 1970s, IIRC, when Japanese competition was starting to really cut into US manufacturing, someone did a survey to find out what sort of policy the public thought the US government should follow. The winner was "the policy should seek to maintain US economic predominance over Japan, regardless of whether it reduced incomes in Japan and/or the US".
Yes, we see these patterns and it's clear that people *prioritize* anti-foreign action.
Interesting piece. Couple thoughts. First one is, if you look at a catchy narrative, like “immigrants steal jobs,” “the Fed is printing money and destroying the dollar,” “developers cause higher rents,” it tends to spread through repetition and emotional resonance, and also simplicity. They exploit identity/ emotion (“our jobs, their threat,” “evil landlords vs. honest tenants.”) i think people engage with and share these narratives because they’re intuitively vivid and easy for people to remember and retell. They don’t care if they’re empirically backed. That’s why they persist even when data that contradicts them arises (similar to the continued influence effect), because they fulfill explanatory or moral needs.
Also, while you have the aforementioned emotionally resonant narratives spreading via memes and X posts, economists on the other hand often communicate in things like models/regression tables/conditional claims, which are persuasive to other experts or informed individuals but fail as memes because people resonate more with the narrative around them than the data. They’re not as prone to virality or moral-emotional impact of stories that cast clear villains and victims.
For example, many people believe “rent control helps tenants.” It’s easy for them to imagine a poor family saved from eviction by a simple sounding solution, but harder for them to picture unseen consequences or think longer term about things like less construction or higher rents in the future. Probably because the actual economic dynamic lacks a compelling protagonist or villain.
So I guess that leaves me with a question, which is if economists want to take on misinformation, are they going to fail so long as they simply fact-check? Might they need to craft counter-narratives that fit the simplicity model but are grounded in evidence. For example: “When you block new housing, you’re making your kids move away.” Okay, not a great example but has a more viral likelihood than “supply elasticity reduces equilibrium prices.”
One other thought is that in a solid institutional environment, professional bodies like the AMA for medicine or NAS for science act as “truth-broadcasting mechanisms.” They coordinate elites to produce unified narratives that can compete with viral stories/memes. Economics doesn’t seem to have equally strong public-facing institutions. There’s the AEA, Fed staff reports, a few think tanks but as far as I know, none with the cultural authority of the CDC during a pandemic or the IPCC for climate.
Economist here. I guess I mostly agree with Richard in the general sense that we should all do more of a thing that has public benefits. I am less certain though if I take inventory and ask how it becomes more like other fields. At a individual level, how much of my time am I supposed to further spend on this topic? I think I do a lot of relevant research that matters, plus I try hard to be a good teacher, things I think that matter. If I try to post a correction on a NYT article, its not at all clear to me I make a dent. The internet is just so awash in misinformation, it feels futile for me to spend any more time on trying to correct it. I do have real admiration for the Don Boudreaux's who are so indefatigable on this, but for me it feels like I'm just repeating the same things the field has already known for decades to centuries.
It probably wouldn't be noticed if all of us economists individually did 5% more, so perhaps the difference in effort is perceived by high visibility associations. Perhaps it is the various professional associations commenting on climate change, public health, etc. misinofrmation that gives the perception of them "doing more" than econmomists. But culturally, economists really don't like delegating opinions to the American Economics Association. The point of the AEA should be to help me and the profession grow in our skills, not claim to speak for me on matters of public policy. The AEA did this kind of stuff at its origination, it was a terrible mistake, and I'm glad that there is no appetitie for its return. I can speak for myself, thank you very much. I have to say that seeing the other major associations take positions on what should be considered as misinformation during COVID did not exactly manage to reliably cover themselves in glory.
Seems right. But I have to say, employing correct economic arguments about the tragedy of the commons to justify not correcting economic misinformation is pretty funny.
Maybe there ought to be an organization that takes the consensus displayed in the US Economic Experts Panel as its ideological position, and advocates for that?
One of the problems is that you can make good faith rebuttals all day, but in the end someone like Paul Krugman has a massive audience and they're going to push the "all praise the bureaucratic state and the political donors" economic rhetoric that is all smoke and mirrors.
So some people will see you and recognize truth, or at least they'll recognize you trying your best to present what you believe to be truth....but the majority of people who see the viewpoints of economists are going to mostly see the ones pushing the preferred narrative of either political party's leadership.
This is a reasonable point. The better the group is at good faith rebuttals, the more gain there is to being one of the defectors who trades away the credibility of the group for political gain and attention. I'm not sure what to do about that. Staying out means that a larger share of my group's interaction with the public will be politically motivated, but it also implies I'll entice more defectors by joining in.
It is a hard choice.
I have a history degree, and I focused my course load on all the classes I could take related to American foreign policy in the 20th century.
I often hesitate to jump into arguments where people are pushing factually incorrect versions of events simply because I've grown tired of being told I need to read a history book on a particular subject when I've read several books on that subject and the person condescending to me hasn't read any.
I think it's wrong to call most of Krugman's arguments "misinformation". As misguided as I think he often is, his arguments are at least — to my understanding — a good faith attempt to seek the truth.
I believe Hanania is speaking about, say, Trump and his defenders arguing on behalf of tariffs, using utterly made-up / bullshit reasoning that no economist would agree with, with full awareness that it is total fabrication. And media often both-sidesing this, like _who's to say who's right?_ That is "misinformation".
Problem is that its not even ideological stuff like "is free trade good". Its misinformation regarding basic facts.
People believe a lot of dumb shit.
Example: lefwingers believe that "billionaires dont pay any taxes". Rightwingers believe that cutting foreign aid can substantially reduce the deficit. Leftwingers believe everyone's working at minimum wage. Rightwingers believe there's massive social security fraud. Etc.
All of that is just brain dead nonsense.
As someone with over 10 years' experience in tax, I can say that "billionaires don't pay any taxes" is not a myth. "Any" is too strong, but the US definitely has a bunch of tax loopholes that allow billionaires to pay very little in taxes.
Step-up basis on death is probably the largest loophole, and the US is a real anomaly in this regard - see https://www.forbes.com/sites/davidrae/2022/07/14/how-the-rich-use-the-buy-borrow-die-strategy-to-avoid-large-tax-bills/ (Forbes is hardly a left-wing site)
I seriously doubt you have 10 years of experience in tax *with billionaires*. And what you say is simply not true. Super wealthy ("billionaires") pay between 50 and 60 of their income in taxes. Very large chunk of overall tax revenue comes from the super wealthy. Whatever loopholes exist, they dont change the aggregate numbers.
(Step up basis is indeed wack, it made sense when the estate tax wack substantial as a way of avoiding double taxation, but since the estate tax has been gutted it no longer does. However the extent of its impact is exaggerated and that Forbes article is just pushing the same ol' click bait myth)
Actually, I'm a tax preparer/advisor to high net worth people and I concur with ToSummarise. Hardly any pay anything like 50-60%. The max Federal rate is 37%. A lot of HNW folks have residency in places like Florida so they can avoid state taxes altogether. Most are business owners and are able to layer losses against income, and recognize windfalls under lower LT capital gains rates.
And then there is charity. You can donate appreciated property and take the deduction at FMV without ever recognizing the gain in the first place. This has the abiluty to wipe out huge amounts of income. I've seen returns where the taxpayer is making $50 million a year, but paying 3 or 4% of it in taxes.
The schmucks who pay 50% in taxes are high salary earners like NBA players and actors. Everyone else hires people like me.
What is the source for your claim that billionaires pay between 50-60% of their income in taxes? And how are you defining "income" here - taxable income or economic income? If you're just using the taxable income definition, that's circular - the whole point being argued is that the definition of "taxable income" is too narrow and doesn't include importance sources of economic income.
I agree that there are some highly publicised claims about billionaires paying no taxes that are misleading because they treat losses and all deductions as somehow "illegitimate", and they don't account for foreign tax paid on foreign income.
But that doesn't detract from the fact that there *are* a lot of loopholes in the US tax system - including the buy, borrow, die, strategy - that a billionaire could use, if they wanted, to achieve a near-0% tax rate on their economic income. How frequently these get used in practice is hard to tell because of tax secrecy laws (data on billionaires is notoriously scarce), and I'm sure some billionaires are more aggressive in their tax "planning" than others. But I seriously doubt *any* billionaire in the US regularly pays 50-60% on their *economic income* - if so, that billionaire needs to fire their tax advisors.
AGI, so youre right, 50/60% is not the share of total income. Still means that the very rich pay a substantial amount in taxes. Source is tax foundation but its easy to look it up. You can also look at share of revenue by percentile.
Regarding the "buy, borrow, die" strategy, no, a billionaire could not do it "if they wanted to". The whole thing is a bit of a myth (originating with ProPublica, spread around on reddit - note also that the Forbes article you linked references it mostly in the headline while the article itself is very thin on the details/substance. BTW, Forbes has been junk for awhile now). First for it to actually work interest rates have to be really low, otherwise the "borrow" part breaks down - you end up paying more in interest than you save on your tax bill. Second, youre taking on certain kinds of risk with the strategy, so it can come back and bite you in the ass. Which is probably good part of the reason why its not used "if they wanted to" (though youre also right that individual data is hard to get, for obvious reasons, but aggregate numbers on total revenue do suggest that its not). Having said all that let me repeat that I agree that the step up provision should be eliminated. That doesnt mean that "billionaires dont pay any taxes" though.
Are you referring to this Tax Foundation report? https://taxfoundation.org/blog/super-rich-pay-effective-tax-rates/
If so, it's worth looking at the underlying Treasury report being discussed (https://www.irs.gov/pub/irs-soi/24rpestimatingtaxburdens.pdf), because the Tax Foundation is not as "non-partisan" as they like to pretend. Table 1 of that Treasury report shows that for the top 0.001% (squarely in "billionaire" territory), AGI as a % of wealth is only 4.26%. But if you keep going higher to the top 0.00005% (people with at least tens of billions), AGI as a % of wealth is only around 1.5-3%. I'm sure their economic income is quite a lot higher than this, as it's hard to believe the wealthiest billionaires earn returns that barely match inflation.
Anyway, the data shows that the billionaires are paying high *rates* of tax as you say, around 50-60% on their AGI. But their AGI equates to annual returns of < 3% of their wealth - in the 2018-2020 dataset, it was only 1.7%. I agree that's not "nothing", but it suggests effective tax rates likely below 30%, and possibly much lower (we can't tell without knowing what their economic income is). There's also likely to be variation within these averages - some billionaires will be more aggressive with their tax planning, others less so.
Re: buy, borrow die - I agree this strategy involves a certain amount of risk and is more feasible with low interest rates (though billionaires can usually borrow at much lower rates than you or I can, and we have had low interest rates for a long time now). Since we both agree step-up on death should be eliminated, this is somewhat moot. I also don't want to suggest BBD is the *only* strategy needed - successful tax avoidance usually requires combining multiple strategies, and the ones that are suitable will depend on each's billionaire particular circumstances.
Richard called out a few polls from the Kent Clark Center / Chicago Booth.
I just want to point out that these weren't isolated polls; they've actually been regularly doing these polls of economists -- with many highly prestigious economists contributing -- since 2011. I almost never hear it cited. You can also click on the polls and see that some economists include explanatory notes regarding their answers, which can also be illuminating.
https://kentclarkcenter.org/us-economic-experts-panel/
It's a really useful tool for laymen to get a quick check on where there are points of consensus, disagreement, and uncertainty regarding various political questions of the day that touch on economics.
So to me, spreading the word about that site feels like a good starting point for what Richard is talking about.
Name one economist who can explain why China and South Korea went from poorer than Ghana, to much richer than Ghana, despite Ghana being a peaceful democracy. Just one...
No, you can't.* Oh shit* it looks like economists have extreme biases that *completely* preclude them from seeing the obvious causes of major phenomena when those causes might look less internationalist/more racist or xenophobic.
The only field with academics who have even hinted at the right answer is economists, with the exception of psychometricians.
Cool, so still they have extreme biases in exactly the area you said they were reliable.
I am an academic (former professor to be exact) in the field of Progress Studies, and I disagree.
I agree with the original commenter that the field of economics is relatively unhelpful in explaining why entire societies suddenly jump from millennia of grinding poverty to self-sustaining economic growth in just one generation. I think that is exactly the gap that Progress Studies should be trying to fill. Progress Studies uses economics as just one means to explain where the modern economy came from.
Economics is great at explaining how markets work and understanding tradeoff given limited resources, but it is quite poor at explaining where the modern market-based economy came from in the first place.
Here is an example of how Progress Studies can do better:
https://frompovertytoprogress.substack.com/p/understanding-the-causes-of-modern
Do you know anyone of below average intelligence?
Yes, but it I don’t see how that helps Progress Studies understand why nations shift from poverty to progress.
I doubt it, but, if you want progress for many nations, you have to factor in that the vast majority of people in those nations are below the average intelligence that you're used to, as well as generally being diverse in a wide variety of other psychological traits.
If you don't do this, because you don't like recognising the facts, you will constantly come up with new ideas and yet never see actual progress. In other words, you'll be choosing your own vanity over helping.
I do recognize differences in average intelligence by nation, but this tells us very little about why nations suddenly change from poverty to progress within one generation. This is obviously NOT caused by a major shift in average intelligence.
Nor does observing differences in average intelligence explain why those differences exist. Differences in average intelligence are more likely RESULTS of pre-industrial societal change rather than CAUSES of it. There is no evidence of widespread intelligence differences between hunter gatherers societies before 10,000 years ago, so the changes came later.
https://frompovertytoprogress.substack.com/p/why-our-deep-history-explains-global
I don't think it is the position of economists that democracy directly equates to economic growth? That would imply Imperial Germany should have had its economic growth flatline relative to France and the UK, for example.
What do you people expect? Them to say that Ghanaians have tiny brains and this resulted in them having worse economic growth than China? Their GDP per capita grew faster from 1993-2023 (their democratic period) than South Korea's: 6.6x versus 3.7x. China did better, so I guess that means Chinese brains are bigger than Ghanaian brains which are bigger than Korean brains? Or maybe there's more to international economics than phrenology?
I expect them to recognise that not all human capital is equal and that some countries are therefore low in human capital.
Or they can continue to try and deceive using sophmoric techniques like you just tried.
this is a bizarre comment if taken at face value. the importance of international differences in human capital has been solidly mainstream for many years. see e.g., lucas (1988).
But they explain it by reference to anything but the obvious
>human capital
Capital is the fixed products of human labor; human capital is the product of investment in human beings, such as education, health, etc. Do you think that economists don't believe that literacy and education rates differ between countries, and that these things can have substantial impacts on developmental economics? Or are you misusing that term and instead dissatisfied that they don't say Ghanaians have tiny brains?
Because if it's the latter, why are you complaining about my "deception" and "sophomoric techniques"? I'm just accurately describing your stupid beliefs.
Oh no, you've defeated reality by asserting definitions of words! It's all over for me!
Or how about, since we both know what I meant by "low human capital", we proceed?
Okay, if we both know what you meant, why are you bitching so much about the fact that I accurately described your beliefs? Does it make you feel stupid when you're reminded that it all boils down to "Ghanaians have tiny brains and this explains every difference between Ghana and South Korea?"
If by "tiny brains" you mean "low human capital" which, in this case also means, low IQ and high time preferences, that lead to workers being unreliable for turning up on time, much more petty crime and workers generally being slow to learn, then ok.
Yes, the link between political democracy and economic growth is quite weak, and the actual causality is likely going from long-term economic growth causing the evolution of democratic governance.
this is a pretty typical path for economies dependent on resource extraction. e.g. in 1905 argentina was one of the ten richest countries in the world; nowadays they're a middle income country. the extreme improvements in manufacturing productivity seen in much of east asia are not really available in gold mining.
Saying “ this is a pretty typical path for economies” does not explain why Europe and then East Asia got rich.
it would be easier to understand what i wrote if you read all of the words
I did read your entire comment. I am pointing out that a description of the problem does not substitute for an explanation of the causes.
Here is what I believe is a better approach:
https://frompovertytoprogress.substack.com/p/understanding-the-causes-of-modern
LMAO
The question of why East Asia developed faster than other regions is core to development economics. Anyone who thinks that economists don’t have any good answers here simply hasn’t begun to engage with the field. And, for the record, being a liberal democracy has almost no bearing here: SK, China, and S’pore were various types of repressive authoritarian when most of this growth was happening, and only SK transitioned to a more liberal (although still conservative) democracy.
I believe development economics does not have a very good track record either.
https://frompovertytoprogress.substack.com/p/why-development-economists-often
Take a look at the economists cited in the “what economists believe” section. Oh wait, you can’t; he didn’t cite any. Probably because the “Washington Consensus” is 35 years old by now, and modern economists have already theorized a lot about the export-oriented growth model he seems to support instead (starting in the 90s. Seriously, this isn’t new).
Which development economists are you referring to? In my experience most people who call themselves "development economists" are not actually economists. They use very different methods and theories from typical economists.
Most of the development theories fit into one of four major schools of thought (which I addressed at the top of the linked article):
Economist school, who advise developing nations to establish good institutions and free markets
Foreign aid school, who urge wealthy nations to spend more on foreign aid to assist developing nations to get out of “poverty traps”.
Right school, who believes that the poor in all nations need the same political freedoms that wealthy nations enjoy. Once the people have those rights, their nations can grow their way out of their poverty.
Sustainable development school that focuses heavily on renewable energy and less resource-intensive agriculture, transportation, and manufacturing.
Only a handful of them are actual economists.
Paul Krugman’s work on NTT was done in the 90s, Paul Samuelson was quite active then, Dani Rodrik was quite critical of the Washington Consensus — he wrote a book called “Has Globalization Gone Too Far” in the 90s, I could go on — I have no idea what you mean by “economist school”, but professional economists have generally not been absolutist free-marketeers for the past 30 years.
Dani Rodrick is the only one of those three who remotely qualifies as a development economist.
I never said anything about “ absolutist free-marketeers”, so I am not sure why you even brought it up.
As I said, “ Economist school, who advise developing nations to establish good institutions and free markets.”
And if you actually read the linked article, you would get a fuller explanation.
Here is the linked article again:
https://frompovertytoprogress.substack.com/p/why-development-economists-often
And the rest of the 4-part series explains the other schools of thought. Plus I have plenty more articles in what I believe are more useful theories.
Literally not one mention intelligence and time preference....despite both being obviously extremely important and clearly varued between countries in exactly the way you would expect as per development.
“The average Chinese intelligence and time preference shortened dramatically in the late empire, reaching a maximal enstupiding from the late Qing years until Dengist reforms improved Chinese brains. Meanwhile, in Japan, the originally sluggish and short-term generation was replaced by more intelligent, long-term thinkers under the Meiji emperor. The Korean people were of average intelligence and time preference for a while, until the Great Endumbening brought on by the Kim family in the north, even as Park Chung-Hee worked to give the South Korean people longer time horizons”.
Literal clown understanding of history. Please start reading any economics.
You called your random fantasy that you shared "clown understanding of history". Are you psychotic?
He's listing a whole bunch of things that pose an obvious challenge to your claim that group genetic differences play a major role in explaining economic growth. You've cherry picked the example of Ghana vs. China and Sth Korea to bolster your theory but basically ignored the entire history of the rest of Asia including China and Sth Korea outside the last 40 years
I think intelligence and time preference are more likely the result of previous societal evolution rather than the cause.
Obviously that's not true. Have you ever hung out with children?
LOL
Has nothing to do with why some nations are richer than others.
Like, any of them? Higher investment rates, export led growth, greater extent of the market, better property rights (yes, even China)
Fairly basic.
And not 1 of 50 African countries has been able to do what China, Japan, South Korea, Taiwan or Singapore have done? Indeed, they can't even have science developed as North Korea, which produces missiles and nukes, unless they're Apartheid.
Amusingly I've argued with educated Africans who have similar views to yours.
The short answer regarding China and South Korea is that they've had centralized bureaucratic governments with high "state capacity" for centuries. Due to an upset (WW II, Chinese Communist Revolution, Korean War) the power of the traditional landlord class was broken and a dictator with a taste for economic growth (Deng Xiaoping, Park Chung Hee) gained power. Behind that is that agriculture developed in the Orient 10,000 years ago, so the states have had a long time to develop.
Regarding e.g. west Africa, the central facts are that agriculture only developed 3,000 years ago and the combination of the Sahara and malaria kept them cut off from the civilizations diffusing out from the nearest center of early agriculture (Mesopotamia). I've seen the "Benin bronzes" in the Boston MFA, which were made circa 1800 CE. (That's when the Europeans developed quinine and used it to conquer Africa.) My judgement is that they match anything made in the European High Middle Ages circa 1200 CE. And the description of the political situation there in 1800 resembles the collection of small kingdoms that was Europe.
Now compare with west Africa in 2000 CE. My estimation is that they're about where Europe was in 1900 CE. (A lot of Europe had neither railroads nor paved roads at the time.) Certainly Africa has better cellphones, Internet, and medicine that Europe did in 1900. (Certainly better medicine if you can afford the hospital where the white people go, and probably every village healer has a big jar of penicillin pills.) So, roughly, Africa has advanced in 200 years what it took Europe 700 years to do. Which isn't surprising, catch-up development is a lot faster than advancing-the-frontier development.
So my estimate is that in the next 100 years, west Africa will become comparable to the "advanced" countries.
It's not amusing. I've been close to quite a few Africans who agree with me and the reason they agree, despite agreeing being a little painful, is that it is obviously true.
As for your comparison between Africa and 19th Century Europe, what compels you to the idiocy where you think buying an iPhone is equivalent to inventing one?
Unless you're making the subtle, sophisticated but ultimately disingenuous point that they'll never produce much of anything, but charity and mining rights will keep them advancing by buying directly from everyone else. Disingenuous because it doesn't relate to the topic, but subtle and sophisticated because it at least offers some mediated optimism. I mean little children are better at research, if you include results from chat gpt, than your average adult 100 years ago! Maybe even better at essay writing than your typical undergraduate just 2 years ago!
Well, if I type that question into Google, it replies "A leading economist who explains how countries like China and South Korea went from being poorer than Ghana to significantly wealthier is Ha-Joon Chang." Chang *does* have a Wikipedia page and seems to have acquired some significant honors and claims to explain such things.
And countries like Ghana, in Africa, have read such things and followed their advice and not benefited at all…
I don't know about Ghana specifically, but for Africa more generally I've heard the geography is challenging for logistics, rivers are not very navigable, there are not many natural harbors, this makes the central government relatively weaker and reduces access to international markets. The difficult logistics also incentivizes economic activity that gives relatively high profit compared to its weight, like precious metals, which Africa is very rich in, and is also the sort of activity that is advantageous for organized crime, making the job of the already weak central government harder.
LMAO. No SS African country can build a sewer system because rivers aren't very navigable, but you're not sure which rivers or if any of this relates to Ghana?!?!?! You know the Panama and Suez Canals, and the Canals that make the Misssisipi navigable, were built many generations ago, before most of the technology that would make doing so much easier now.
It is indeed not impossible to make a river navigable when the geography does not cooperate, but it is expensive.
Not expensive at all. Given how much entirely idle labour there is on that continent. The problem is that basic menial requires skills, like punctuality, not stealing etc and those skills are unevenly distributed around the globe. The Chinese even find it more economically efficient to import Chinese workers to do shovel work on roads.
I find it hard to believe there is much idle labor there. In developing countries subsistence is fairly labor intensive, which makes sense as capital is in shorter supply, so labor is less efficient. I don't know about the Chinese work in the area, or frankly much about Africa at all, I'm just repeating a claim I've heard, which I'm surprised you didn't seem to know about, given how sure you seem about such topics.
The claim you repeated is ridiculous. It explains nothing. It is has a tiny kernel of truth, in that some rivers are unimproved and difficult, but it is a barely relevant.
Also, while the vast majority of African countries do not collect anything like reliable statistics, South Africa still, just about, does, and their unemployment rate is 42.9%.
absolutely wrong: in fact, fro. 70s thru 90s, the dominant paradigm in development economics was "export-led growth", based on japanese post-war experience. china & s korea are exemplars of that policy.
re: ghana--but excellent at exporting agricultural products, especially coffee.
I'm not so sure economics has the same finality and predictive power as the kind of hard sciences that do combat misinformation (biology, climatology). There is a name for this idealism as well: "Physics Envy".
Though, to your point, if there is some consensus amongst economists on some idea when polled, they could do more to publicly assert that idea with specificity and depth rather than just saying "lump of labor fallacy, kid" and moving on.
Yeah that’s similar to what I was thinking. There seems to be less coordination amongst economists to fight misinformation, and they don’t seem to have as much of a presence from strong public-facing institutions especially compared to those in health or climate science. It seems more economists tend to function as individuals with less collective effort to fight misinformation.
Also, misinformation today is often pushed in rapid, repetitive soundbites by populists, which is asymmetrical compared to economists’ tendency to reply more slowly.
Also vaccines or climate is somewhat different because those fields have visceral “hook” events and sense of moral urgency while economics lacks catastrophic moments that force consensus into view. Or at least there are too many preemptive attempts to control economics related narratives with misinformation and those tend to stick around because economists aren’t responding quick enough to get the truth out nor are they doing so in a way that’s likely to ever compete the misinformation on virality, especially since most people seem to look at narratives around data (and ones that confirm their priors) over the data itself.
A major reason economists don’t devote more effort to combatting misinformation is that they believe voters are a mix of rationally ignorant and locked into particular organized interests and privately beneficial but socially detrimental positions. It is extremely difficult to steer public beliefs, especially about economics, when that is the case.
I think the short answer is that Bernie Sanders lost. There hasn't been much economic misinformation to fight, because until now the worst of it had just been privately held beliefs among rank and file voters without influencing policy. Sanders earned far fewer votes than both Clinton and Biden, suggesting that whatever the masses believe, their passion for it isn't enough to translate into real results. The tariff insanity has changed the script, but there really hasn't been such economic illiteracy from an American president in modern history. Maybe this is some kind of free market 4D chess on the part of economists, since they have faith that, whatever ignorance might afflict the masses, in the end the adults will be in charge and things will work out relatively alright. Or, if a policy is so bad, markets will respond appropriately and we'll self-correct.
Effects on policy notwithstanding, I'm still concerned about masses of people believing untrue things, but then I'm not sure economists want that sort of target on their backs. Like you pointed out, economic misinformation historically comes from the left. The left's heuristic of "trusting experts" is very good, but speaking as someone on the left: if they make the connection that economists are experts, they're more likely to ditch experts than suddenly trust economists.
Reagan, Clinton, Bush Jr, Obama, Trump, Biden, and now Trump again were all economically illiterate.
I think Bush Sr was the last modern president who understood that maybe blowing up the deficit every year was a bad idea, and he paid the price in the 1992 election for raising taxes. Bill Clinton benefited from the dot.com bubble making his economy and deficit look better than it actually was, but he was certainly no fiscal hawk.
There's an apples-to-oranges you (really, Caplan) are making here. Excerpt:
"In the late 1970s, Kearl et al. asked economists whether “wage-price controls should be used to control inflation.” Almost three-quarters of economists generally disagreed. In contrast, the General Social Survey (henceforth, GSS) reports that solid majorities of noneconomists think it should be government’s responsibility to “keep prices under control.” Those who agree outnumber those who disagree by at least 2:1 and often 3:1."
Those 2 questions are not asking about the same thing. One could think that price and wage controls are bad, while also thinking it's the government's responsibility to keep prices under control via not-too-inflationary monetary policy. Not via price controls.
I don’t think it matters how you ask the questions. Here’s a poll from last year showing 65% support for price controls on groceries
https://today.yougov.com/politics/articles/50369-kamala-harris-economic-platform-resonates-across-party-lines
Unlikely voters are thinking about monetary policy in a question like this.
Fair. I think the point you (and Caplan) are making is correct anyways.
Aren't you the guy who voted for Trump due to "economic" reasons?
I don't care if 95% of sociologists agree that white supremacy is a fundamental principle of the universe. The whole field is disreputable.
Economics isn't much better. As soon as we are talking about "the general welfare of society" as something objectively measurable any reasonable person is already on guard.
"Another place where economists and the public diverge is on the costs of housing, one of the most important challenges facing society. A recent poll showed that only 24% of Americans believed that building more housing in their communities would reduce prices, while 44% thought it would raise them. This is plain flat earthism."
And yet it isn't, because there are cases where higher prices have followed additional housing inventory. Housing markets are complicated and trickle-down affordability doesn't always work.
Except that would require economists to understand the misinformation in their own field first. They don’t even know what they are assuming in their theory (let alone why the assumption is being made), so good luck with that…
> A recent poll showed that only 24% of Americans believed that building more housing in their communities would reduce prices, while 44% thought it would raise them. This is plain flat earthism.
I think you just called Scott a flat-earther:
https://open.substack.com/pub/astralcodexten/p/change-my-mind-density-increases
Look at the disclaimer at the top of the article.
I sort of feel like what society needs is a new kind of journalist: professional skeptic. Someone who would make it their job to pick apart popular narratives and expose their logical and empirical weaknesses, whether they are coming from the government or outside it. Like they could lay out what is an is not supported by evidence in a coherent way so that even low IQ people could understand it. And do outreach, don't just be a passive repository of information, but go on the Joe Rogan show and talk about the evidence *against* vaccines causing autism.
And it's worse than that: Most people don't really agree with setting prices by supply and demand. Just this morning in my local newspaper (the one in our city for the educated people) had an article about the nearby gay summer mecca. There's tight building control so the number of summer hotel rooms/rentals is strictly limited. It's becoming ever more popular so naturally the prices are rising. But the reporter didn't seem to grasp that, and seemed to be groping toward an explanation that it was some sort of monopoly behavior by an investor group that had bought five or six small hotels.
OTOH the complainers are sort-of right. They understand that the hotel owners haven't been motivated to actually produce a better product, they are just getting the benefit of a change in the market conditions. But of course, the voters *like* rent control...
>> "If antiforeign bias really exists, these are the patterns you would expect."
IMHO, you've got the argument exactly backward. The High Human Capital/economist/conventional conservative view is that the goal of people is to increase their income/consumption and that anti-foreign sentiment is a bias that interferes with that. But the reality is a lot closer to the goal of people being winning intergroup rivalries and when no rivalry is active at the moment, they turn their attention to increasing their income.
Go to a small town and examine the life of ordinary people with ordinary jobs. Do they put their passion into their jobs or into the high-school football team?
Back in the last 1970s, IIRC, when Japanese competition was starting to really cut into US manufacturing, someone did a survey to find out what sort of policy the public thought the US government should follow. The winner was "the policy should seek to maintain US economic predominance over Japan, regardless of whether it reduced incomes in Japan and/or the US".
Yes, we see these patterns and it's clear that people *prioritize* anti-foreign action.
Interesting piece. Couple thoughts. First one is, if you look at a catchy narrative, like “immigrants steal jobs,” “the Fed is printing money and destroying the dollar,” “developers cause higher rents,” it tends to spread through repetition and emotional resonance, and also simplicity. They exploit identity/ emotion (“our jobs, their threat,” “evil landlords vs. honest tenants.”) i think people engage with and share these narratives because they’re intuitively vivid and easy for people to remember and retell. They don’t care if they’re empirically backed. That’s why they persist even when data that contradicts them arises (similar to the continued influence effect), because they fulfill explanatory or moral needs.
Also, while you have the aforementioned emotionally resonant narratives spreading via memes and X posts, economists on the other hand often communicate in things like models/regression tables/conditional claims, which are persuasive to other experts or informed individuals but fail as memes because people resonate more with the narrative around them than the data. They’re not as prone to virality or moral-emotional impact of stories that cast clear villains and victims.
For example, many people believe “rent control helps tenants.” It’s easy for them to imagine a poor family saved from eviction by a simple sounding solution, but harder for them to picture unseen consequences or think longer term about things like less construction or higher rents in the future. Probably because the actual economic dynamic lacks a compelling protagonist or villain.
So I guess that leaves me with a question, which is if economists want to take on misinformation, are they going to fail so long as they simply fact-check? Might they need to craft counter-narratives that fit the simplicity model but are grounded in evidence. For example: “When you block new housing, you’re making your kids move away.” Okay, not a great example but has a more viral likelihood than “supply elasticity reduces equilibrium prices.”
One other thought is that in a solid institutional environment, professional bodies like the AMA for medicine or NAS for science act as “truth-broadcasting mechanisms.” They coordinate elites to produce unified narratives that can compete with viral stories/memes. Economics doesn’t seem to have equally strong public-facing institutions. There’s the AEA, Fed staff reports, a few think tanks but as far as I know, none with the cultural authority of the CDC during a pandemic or the IPCC for climate.