You are here

OpenMarket: Business and Government

  • Betting on the Future: 25 Years Later

    September 29, 2015 12:48 PM

    Today is the 25th anniversary of the famous bet between economist Julian Simon and biologist Paul Ehrlich over the price of five metals: chromium, copper, nickel, tin, and tungsten. The bet has become legendary over the last quarter century because it stands as a proxy for two very different views: one that is optimistic about the future of the world and the ability of human beings to make life better, and one that is profoundly pessimistic and holds that human beings are consigned to a future of material poverty and misery. Julian Simon embraced the former view and Paul Ehrlich, to this day, emphatically represents the latter.

    Simon and Ehrlich were both public intellectuals with influence well outside of university economics and biology departments, although Ehrlich was far better known at the time—he had appeared on The Tonight Show with Johnny Carson six times by the time he and Simon agreed on the bet. I’ll let Prof. Pierre Desrochers of the University of Toronto describe the wager itself:

    In 1980, economist Julian L Simon challenged Paul R Ehrlich, the biologist and author of the best-selling Population Bomb, to put his money where his catastrophist mouth was by staking $10,000 on his belief that ‘the cost of non-government-controlled raw materials… will not rise in the long run’, with the minimum period of time over which the bet could take place being one year. If, as Ehrlich believed, the store of valuable resources was absolutely finite and subject to ever-increasing demand, the resources’ price would rise. Simon, however, argued that in a market economy characterised by freely determined prices and secured property rights, a rise in the price of a valuable resource could only be temporary as it would provide incentives for people to look for more of it, to produce and use it more efficiently, and to develop substitutes. In the long run, even non-renewable resources would become ever-less scarce as they are ultimately created by the always renewable and ever-expanding human intellect.

    The short version of story, of course, is that Simon won the bet when, 10 years later, all five of the commodities had declined in price. Ehrlich paid up, but never conceded the underlying point, continuing to write and proselytize about the impending global disaster that overpopulation and resource depletion were supposedly going to create. He has continued to be cited and featured as an éminence grise among environmentalists, appearing in such charming projects as the 2002 documentary Thank You for Not Breeding.

  • Free Enterprise: Sometimes We Forget

    September 28, 2015 11:58 AM

    When we find ourselves debating specific issues having to do with economics and business, we often forget how overwhelming the evidence is for the superiority free markets in general. Whether it’s our friends at a place liked AEI—“Take a bow, capitalism — nearly 1 billion people have been taken out of extreme poverty in 20 years”—or celebrities like U2 front-man Bono—“Capitalism takes more people out of poverty than aid”—it’s very clear that a free, productive economy brings the prosperity that alternate systems have consistently failed to deliver.

    Because this big picture is often lost amid the details of politics, it’s especially refreshing when we see someone highlighting this fact with a clear message. Researchers and academics often talk about the real causes behind prosperity and poverty, but those discussions rarely break through into the popular media. As we’ve long argued at CEI, market advocates need access to a broad-based communications outlet that reaches the majority of the American public—like TV advertising.

  • World Bank Increases Number of Poor

    September 25, 2015 11:22 AM

    The World Bank is considering changing its definition of what constitutes extreme poverty, raising the level below which someone is treated as extremely poor from $1.25 a day to $1.90 a day. This comes after a long trend of people moving out of the category, leading some to point out that the Bank may have an interest in maintaining high numbers of people defined as poor.

  • A First Look at Markets without Limits

    September 10, 2015 1:30 PM

    Georgetown University Associate Professor of Strategy, Economics, Ethics, and Public Policy Jason Brennan (left) celebrates the publication of his most recent book with co-author Peter M. Jaworski.Georgetown University professors Jason Brennan and Pete Jaworski (left) have a new book out with a fascinating premise: anything that it is morally permissible to do in the absence of money should be permissible to do for a monetary exchange. Or, as they put it themselves, “if you may do it for free, you may do it for money.”

    There are plenty of examples that come immediately to mind that challenge this premise—disapproval of prostitution (you’re free to have sex with another consenting adult—just not for money!) and the ban on compensating individuals who donate their organs, for example. The authors take on objections like these while also considering less common scenarios, such as whether one should be able to sell one’s vote in an election or conduct betting pools on terrorist attacks and natural disasters.

    The book is fresh off the presses, so a full review is still forthcoming, but it has garnered advance praise from economists like Pete Boettke and Tyler Cowen of George Mason University and Michael Munger of Duke. While you wait for your own copy to arrive from your online retailer of choice, treat yourself to a bite-sized version of Jason and Pete’s argument on the Foundation for Economic Education’s Anything Peaceful blog:

  • Feds Double Down on Failed Affordable Housing Mandates

    August 21, 2015 12:44 PM

    Federal affordable housing mandates do little to increase homeownership rates, but they did help cause a devastating financial crisis in 2008 by encouraging risky lending.

    Yet the Federal Housing Finance Agency is doubling down on failure by ratcheting up those mandates. Its head, Mel Watt, was appointed by the President in 2013, even though the policies he promoted in Congress helped cause the financial crisis.

  • The FTC Targets Apple Music: Part III

    August 21, 2015 11:08 AM

    This is the third in a series of essays on the FTC’s investigation of Apple Music. In Part II of this series, we demonstrated that, even if Apple were to ban rival music services from offering iOS apps, competition in the smartphone market would significantly mitigate any threat to competition in the music streaming market. This section will ignore this effect and look instead at how Apple’s actual actions, unhindered by consumers’ ability to switch phones, would affect competition in the music streaming market.

    Recall from Part I that although Apple imposes several restrictions on rival music streaming services, these restrictions are largely illusory because they apply only to sales made through these services’ iOS apps. Any consumer can bypass them by simply purchasing their subscription through a service’s web site—or, for that matter, any channel other than its iOS app.

    As a result, these restrictions should affect only a small subset of music streamers—those who (1) discovered music streaming through a service’s iOS app, (2) rely exclusively on iOS for streaming, and (3) haven’t learned that they can bypass Apple’s restrictions through some other means. In other words, the only consumers who would pay a higher price or be “unfairly” pushed towards Apple Music are those whose sole exposure to music streaming has come through Apple devices. The question, then, is whether Apple should have an advantage among consumers whose sole exposure to music streaming has come through the ecosystem it developed.

  • The Government Makes a Terrible Boyfriend

    August 14, 2015 8:51 AM

    He’s from the government, and he’s here to help. That’s the comic premise of this summer’s best YouTube video series, “Love Gov,” from the Independent Institute. In this case, though, the protagonist is the government, personified. The story begins when Scott “Gov” Govinsky meets sweet college student Alexis, and quickly takes an interest…in every aspect of her life.




    The series has already racked up over 1.5 million views, with positive reviews from fine folks like San Francisco Chronicle columnist Debra Saunders and the Hayek Institute’s Barbara Kolm, who declared the videos “brilliant.”

    Episode 1 of the five-part series sees Gov giving Alexis some questionable advice about her rapidly accumulating student loan debt. Her best friend Libby tries to steer her back to the sensible path, but Gov’s pushy know-it-all attitude threatens to nudge Alexis in a foolish direction.

    Gov goes on to dig his fingers into Alexis’ small business, butt into her healthcare decisions, mishandle her home-buying plans, and spy on her phone calls and emails. Where will it all end? You’ll have to watch the full series to find out. 

  • Mount Vernon Cheers: A Song to Commemorate "I, Whiskey"

    August 13, 2015 1:15 PM

    Our Indiegogo campaign for CEI’s new documentary “I Whiskey” is closing soon. So far, we have raised almost $75,000, but it’s not over yet. Please donate now if you haven’t, and if you have, you can always do so again.

    You can get some great souvenir t-shirts from this rewards-based crowdfunding campaign. And CEI is also fighting to legalize equity crowdfunding , so that future entrepreneurs can legally offer profit-sharing from their projects, as well as souvenirs like t-shirts, if they choose to do so. So, this crowdfunding campaign is not just about whiskey, but the future of crowdfunding itself, as well as the future of freedom.

    Subtitled “The Spirit of the Market,” “I, Whiskey” will show the creative process involved in distilling whiskey and tell the stories of American entrepreneurs and risk-takers in the whiskey biz. And one of those entrepreneurs is none other than the father of our country, George Washington.

    After Washington left office as first president in the 1790s, he commissioned James Anderson, an immigrant from Scotland, to build a whiskey distillery on the grounds of Washington’s Mount Vernon estate. It soon became one of the largest distilleries in the country. I have written previously about Washington’s whiskey making and his other entrepreneurial feats that are often overlooked. The great news is that Mount Vernon Estate and Gardens, with support from the Distilled Spirits Council of the United States, recently rebuilt the whiskey distillery on its original foundation for visitors to see and is even marketing a new whiskey based on Washington’s recipe

  • William Faulkner Said it Best: "Civilization Begins with Distillation"

    August 10, 2015 11:43 AM

    A jaunt down Route 151 in Virginia’s Rockfish Valley breathes life into Faulkner’s observation. For decades it was known simply as the valley’s “Main Street”—a stretch of pavement skirting the base of the Blue Ridge winding through small towns named Greenfield or Nellysford. Then things changed. What started with a single vineyard has transformed the Rockfish Valley Highway from a sleepy thoroughfare into what locals now call “Alcohol Alley,” reflecting the presence of wineries, breweries, distilleries, and even a cidery. With fermentation came opportunity, prosperity, and an improved community. Today, visitors from all walks of life flock to the region to enjoy what nature has to offer (including nature’s other offerings of hiking, fishing and skiing).

    Making whiskey is but one piece of the Great Story of Spirits. The Big Picture is the story of incremental progress, of continual innovation by degrees and accidents. It’s the story of how something of value is perfected by many without being planned, organized, or controlled. 

    It’s a story focused on tradition. The essential distilling process has gone largely unchanged over centuries. I've seen it up close throughout Speyside and Islay and other Scottish regions, and of course along the Kentucky Bourbon Trail.

    It is also a story of globalization and exchange. Distilling technology has traveled as peoples have migrated and settled in new places. At times, government intervention forced distilleries out of one region, only for them to spring up elsewhere to meet demand. James Anderson, driven from England by Parliament’s Scottish Whisky ban, immigrated to America, where he assisted George Washington in creating the renowned—and recently revived—Mount Vernon Distillery.

  • Why Thieves Hate Free Markets

    August 4, 2015 9:47 AM

    Don Boudreaux over at Café Hayek has just given a 2015 boost to a smart 2012 video from Learn Liberty on social cooperation in a free society. It’s worth spending another 3 minutes with, even if you’re one of the 1,394,608 people who have already seen it.

    In this video, Prof. Aeon Skoble of Bridgewater State University highlights one of my favorite themes: a market economy involves not only economic competition, but also an impressive degree of voluntary cooperation, even between entities one would assume to be direct rivals.

    For more great videos, check out the Learn Liberty channel on YouTube, and discover why Prof. Skoble can be heard admitting “to be perfectly honest, I’m not as sexy as Hugh Jackman.” 


Subscribe to OpenMarket: Business and Government