Well good morning, and welcome
to our February
Acton Lecture Series at the
Acton Institute here.
My name is Dan Churchwell.
I'm the associate director of
program outreach,
and it's utter delight to see
you on a cold day.
Last night I returned from Palm
Beach
and it was 80 degrees, so
I didn't send a lot of
pictures back home.
They were a little bitter. But
it is good to be back in the
great state of Michigan
to introduce this fun event
for
Valentine's Day.
I do want to first thank our
benefactors
who make this event possible.
We do these Acton Lecture
Series almost every month,
and then we have a
foundational conference called
Acton
university every June.
And we we exist to serve
those ideas that our
benefactors
lay out, and it's just a great
opportunity to be here.
So thank you for showing up.
We do have wonderful
opportunities
to interact with our speakers,
and so after Dr.
Estelle is done today, you will
have an opportunity for Q and
A.
Because these events are
recorded, we do ask that you
wait for the microphone.
There will be people on our
live stream
that will want to hear your
questions,
so please wait for the
microphone.
You can ask your question.
We will have runners and we can
go from there.
As well, we have four wonderful
books
in back that highlight some of
Dr.
Sarah Estelle's expertise.
Several books by F.A.
Hayek, The Fatal Conceit, and
his classic
The Road to Serfdom.
And then one of our affiliate
scholars Victor Claar's
book Economics in Christian
Perspective
as well as Dylan Pahman's— one
of our researchers
— his book on Foundations of a
Free
and Virtuous Society.
So, great books back there for
you to see.
Now, without further ado, let
me introduce Dr.
Sara Estelle.
She is the associate professor
of economics at Hope College,
right down the road in Holland
Michigan.
She is also the founding
director of Hope's Market
and Morality student
organization,
which explores economic issues
throughout Christian—through
the Christian lens, and brings
speakers
and film screenings to campus
to enrich
the Hope community
understanding of markets.
And I just want to talk briefly
about that.
I've had the opportunity to work
with Sarah on several events
with her students, and the
English language
is quite interesting on the
word love; almost every
language has multiple words or
usages for the word love.
And she's going to be speaking
on the economics
of love today on Valentine's
Day.
But I just want to say love is
always others
directed, others focused.
True love—caritas, or or agap
e love—is others directed.
And I have had the opportunity
to see Sarah,
not only the love of the
discipline
of economics, but her love for
her students understanding
the discipline of economics.
And she really exerts a lot of
love out
of this student group on
markets and morality. And
it's just been a pleasure to
work with her in several environments
while my time here at Acton.
Sarah earned her PH.D.
in economics at the University
of Virginia,
and is conducting applied
micro
economic research on topics
including
parent- parenting investments,
higher education,
welfare policy, as well as
criminal justice reform.
So she is a broad thinker and
we're really
glad she's here for our
February Acton Lecture Series.
Please welcome Dr.
Sarah Estelle.
Thank you all so much! Thanks
for coming out today
for this lecture on
the economic ways of loving.
You might have initially thought,
what does economics have to do with
love? I think the most obvious
thing is,
who doesn't love economics,
right? I mean, isn't
this just a natural thought? I'm surprised
we don't see more couples here today.
This is the most romantic topic
I can come up with, right? Is
economics, it's beautiful.
But in all honesty we should
feel the love for economics if
we're here at the Acton Institute;
they do such a wonderful job
imparting sound economic
wisdom to various
communities and
constituencies.
So I'm just really grateful for
this opportunity.
If you're still looking for a
reason that economics
is readily applicable to love,
let me suggest
maybe to the men in the room
—this is typically where
you're at right now—have you bought
your Valentines? Have you bought
it? Have you bought a card? If
not, Google
"economics Valentines", and
you can find
a variety of things, including
this romantic
gesture that I made to my
husband this morning.
He's here with us today.
The marginal returns of spending
time with you will never diminish.
It really just don't get any better
than that, right? My satisfaction,
or my utility is a linear
function
of our time together.
Isn't it beautiful? Now, we can
joke about this, right,
because we know that love
is so much more than our own
warm
fuzzy feelings, right? We know
that it goes further than that.
And Dan already has exposed us
to some
various notions of love.
Before we get into applying the
basic economic
way of thinking and some
insights from Friedrich Hayek
to the topic of love, let's talk
a little bit about what we mean here.
Right? If we don't mean by love
those warm
fuzzy feelings; if we're not
limiting ourselves to something
like romantic love;
if we don't even mean something
like, if you're happy I'm
happy, right? Which is actually
pretty close to how economists
typically
model love in our empirical
work.
We use what's known as
"interrelated utility functions."
Again, romantic isn't it?
Right,
your satisfaction as it
increases, mine increases.
that's the definition of love
in some economic perspectives.
And that's very helpful, I'll
have to say, in a
lot of mainstream economic
research, and I consider myself
a mainstream economist.
But from a theological
perspective,
maybe even for a more humane
perspective—I
know that's not everything,
right—you know within your various
loving relationships—perhaps
you have a child,
right? Parents and children
love each other in a different way
than this, right? Parents don't want
kids to be happy; you want
their good, you want them to
develop, you want the family
to provide that sort of
opportunity, right? Spouses
likewise.
even professors and students.
I have a student here today,
which I'm really excited about to,
right? When I love my students, it
doesn't look like happy a lot of the time.
I teach intro econ class at
8:30,
Monday Wednesday Friday
morning.
Friday morning at eight thirty when
they're taking a test, I'm not sure
many of them are happy, right?
But I think it's good
for them, and I think it is a
loving gesture
on the part of a professor to
think about what's good
for her students, right?
Love is also not something
done in the abstract.
We might think we love mankind,
right, but philosophers would
tell us that's not
possible, to love and that
sort of abstract.
There has to be particular
person,
right, and particular action,
and a particularity to the
love.
So we can't love in the
abstract.
So what is a good operational
definition of love? I don't
know if I've heard one
better than this, from St.
Thomas Aquinas in the Summa
Theologica,
right; Also reflected in the
Catechism
of the Catholic Church: "Love
is to will
the good of the other."
And we could easily spend an
hour,
a week, a year unpacking just
this, right? It's so concise,
but it's so dense with
meaning.
Right?
I want to get to the economics,
so let me just offer
you a few thoughts on two of
the key words here: "will"
and "good", right? To will
doesn't
mean to kind of wish half
heartedly, to kind of throw a
hope out into
the universe, or something
like that.
It is a desire, but it's a
desire that chooses.
It's the idea of surveying
and considering the available
options,
and actually choosing toward
the good.
It's an orientation, right?
It's so much more than just a feeling.
And when we think about the
good, If we think
of this in Christian
perspective, we
might immediately think—I hope
we do—that
God is good, that all good
things
come from God, that the good
that
exists in human persons is
because
we image our God.
Further if we think of human
good, right,
even if we think back to the
ancient philosophers, right?
We
know Aristotle influenced
Aquinas
a great deal, to say the
least.
The notion of good in that
sense has,
kind of, the end of the person
in mind, right?
What is their purpose? What
have they been created
for? What are they intended
for? Right?
tell us, Right.
We think of these
multi-dimensional notions like
eudaimonia, or what we refer to
these days as human
flourishing.
So, too will the good of the
other means
to choose, to act, to be
oriented toward
their flourishing, towards
their fulfilling of their purpose.
OK? So what does economics have
to say about this?
I think there are so many
applications, and
I hope in our time of
questions and answers,
we can get to some of those
concrete applications.
But what I'd like to do today
is kind of outline
a theoretical delineation of
sorts,
where we think about the ways
of loving, and how
we might want to love
differently
in different relationships, in
different situations,
and not just based on who
the subject of our love is.
That's certainly important.
But what is our relationship
with them, and in particular,
what do we know about them? In
order to will the good, we
need to know the other.
So first let's think about
economics more broadly.
One of the tasks I was charged
with today,
and this is one of my favorite
things to do as an economist,
is simply survey some of the
basic perspectives
of economics, right? There are
a number of books in
back that do a fantastic job
of this as well.
I think it's always important
to start with
a kind of first principles
lecture of economics
just defining what economics
is,right.
Many people think economics is
about money,
right, or it's about finances,
or investment or budgeting,
or maybe it's broader than
that.
Maybe it's people's decisions
about work, right.
But it's financial; it's
associated with
quote unquote the economy,
right.
But actually economics is so
much more than that.
That's certainly part of it.
But economics is more powerful
than that.
It has so much more to say.
I think a good starting
definition, or understanding
of economics, is simply that
it's a study of human
behavior.
It's really as broad as that.
Now many of our social sciences
would claim
the same, right? Not just
economists, but other social
scientists as well would see
the scope of
their discipline as human
behavior.
So it's, it's not that
economics is one and the same
with every other social
science; we have our own
particular perspective or even
methodology
to how we approach similar
human
sorts of questions.
I think one unique aspect of
economics
is that we're particularly
careful about understanding
cause and effect
relationships.
So where this kind of matches
up with love and how this
applies here
is that we want to think about
the factors that lead
to particular behaviors.
We want to understand what are
the causes of human action.
But we also want to get a
better understanding of the effects
of human action or policy,
right, various interventions.
And I think this is crucial if
we're to understand love
as effectively moving towards
the good of
the other, right.
We can't just think about our
intentions,
and then hope that it works
out for the best.
We actually have to orient
ourselves toward the good,
and therefore we have to think
about consequences.
And I think this is one of the
major contributions
of the Acton Institute in
the lessons that it spreads
to these various constituencies,
is understanding
that intentions are not the
same as
beneficial consequences; that
so often
there are unintended
consequences
to our actions.
And in particular, I think,
policy approaches.
Some more about the
perspective
of economics that I think is
important.
If we're going to understand human behavior
we want to study it in the context
that it actually exists with
in.
I don't think economists are
known for being optimists,
although I tend to think we are,
especially Christian economists
should be, if we know that man
is made
in the image of a creative God,
there's all sorts of opportunity
for creativity, and ingenuity,
and really wonderful things
happening.
But I think a good economist
does have to also be a realist, right.
What, what are the realistic
characterizations
of human nature and the
created
order?
So economics I think has to
start with an understanding
of the universal state of
scarcity.
OK? it sounds kind of like a
downer, right?
It sounds like we're saying
there's not enough.
And in some sense there isn't
enough.
But what we mean is that
there's not enough to do
everything we could possibly
imagine.
Right-we don't have enough
resources, hey we
don't even have enough time in
the day, right.
Each one of us has twenty four
hours in
our day, and we simply don't
have
enough resources to do
everything we could imagine.
Now this doesn't mean we're
not immensely blessed.
And again, that doesn't mean we
don't have hope, especially
Christians.
We have a great source of hope
in our Redeemer, right?
But scarcity still
characterises the world
that we operate in today,
right— and
I think therefore should
influence the way we think
about loving, right? So if we
have scarcity
everywhere—rich or poor,
selfish or selfless
—we have limited resources; we
have to make choices, right.
You had to choose to be here
today.
You couldn't do everything
simultaneously that
you could do between noon and
1 o'clock.
You had to choose, and
therefore you
incurred a cost.
Many of you have paid an
explicit cost for
the delicious lunch you're
enjoying, but even
beyond that you gave something
up, right? You could have
had a more leisurely lunch,
perhaps with a loved
one, or gotten an extra hour
of work,
or run off to the gym, or
clean something up around
the house, right? So many
different options for this hour
of time, even beyond
purchasing your lunch today,
right, even beyond whatever
gas you might have expended
getting here.
There's a larger cost that
economists would refer to
as the opportunity cost.
We want to keep this in mind
when we're thinking about loving
others, right? Imagine
a church community ministering
to those
in financial need within the
church.
You could think of a number of
ways of approaching
that experience together,
but you can't choose all of
them.
And if you put more effort
towards after
school mentoring for children
in low income
families, perhaps that means
taking
time away from accompanying
the elderly poor to the grocery
store, right. You have to choose.
There are costs, and it would
be problematic
to ignore the cost simply
because they're inconvenient.
It's part of our reality, and
if we're going to love, we want to
be kind of eyes wide open
about
the constraints that we face.
One particular constraint I
want to point out,
that's really just a more
specific
sort of scarcity, will
allow us to get some traction
with the work of
Nobel laureate Friedrich Hayek
on this question of love.
He doesn't really talk about
love, but I think this is
a really important touchpoint
for understanding what economics
has to say about the ways that we love.
And this is the idea that even
information is scarce;
or better yet knowledge,
right—information
that can be applied, that's
understood, that has
implications and is
appropriate for application
—knowledge is limited.
It's even local. Hayek
says in a masterful
article—The Use of Knowledge
in Society—that
it is particular to time and
place.
So much of what he wrote
throughout his life
is rooted in this idea of
local knowledge, and I think it
has big implications for love
as well.
Let me first, just to
illustrate how important this
is in the ways that Hayek
initially
used this observation of his,
the example he used in the
article was a partially
filled shipping container,
right.
He said the knowledge of that
opportunity, right, is is
local
to time and place.
Now he is writing this article
in the 1940s; we
might push back and say, well,
we know about these things, right?
We wouldn't have a partially filled shipping
container that someone wouldn't know.
But to be in a position to act on
that, to see that as an
opportunity, to be able in
a timely fashion to take
advantage of that opportunity
is necessary, not just with
shipping containers, but with
every other entrepreneurial
opportunity
out there in order to have a
well
functioning economy, right? In
order to have a flourishing
world.
And primarily he used this,
especially early on
in his career, to argue
against central planning.
Right? It's just not possible
to convey
information to an individual
or group of individuals in a
way that they can make sound
economic decisions.
When all of this valuable
knowledge is dispersed,
he says, it's essentially
dispersed.
Right? There's no one doing
that.
So this has huge implications
for
how our macro cosmos, as he
refers to
it, right, the larger order,
how it operates best.
Right? It plays a big role in
the development
of civilization.
But it also has implications
for
the micro cosmos, right.
The smaller order.
Families, local communities,
or what Hayek would say we can
rightly refer to as societies.
He's very skeptical about
referring to
anything related to the macro
cosmos
as a society, because he says
society is really about
knowing one another.
Right? So only the smaller more
intimate groupings
can rightly be referred to as
societies, OK?
So this is the chief
delineation that I want to draw,
that local knowledge puts us
in a different position,
even with the same loving
attitude, and a different
position depending on what sort of
relationship we're talking about.
OK so let's deal with the larger,
the macro cosmos, to begin with.
I'm going to argue that while
markets may not
strictly speaking be about
love,
right, to will the good of the
other—that's a tall order
—they're love-like.
They can aim toward
the good, right.
In situations where I really
don't know enough
to love explicitly and
particularly, right,
when I don't know the
individual well enough, maybe
markets are a love-like
attitude.
Some points to my argument here
and then I'd love to develop
any of these that you're
interested in in Q and A.
Statistics show that something
like 70 percent
of Americans think that
poverty is getting worse,
that poverty rates are going up.
In actuality, in the last 30
years over
a billion people around the
world have been raised
out of extreme poverty.
What caused that?
You might think, OK, health
care, technology—yeah,
a lot of lot of particular
sorts of things.
I think a lot of this follows
from institutional changes,
and in particular
if we think over the last 30
years, not
new institutions in the sense
that, you know, some in the western
world, we hadn't figured this
out some hundreds of years ago.
But the spread of those
institutions, right?
More pervasive rule of law,
right? more protection for
property rights.
Governments having a monopoly
on
coercion, and using that in a
limited fashion.
And therefore the ability of
individual people—right, again:
made in the image of God
with these creative capacities
and unique
abilities—to have access to
global markets.
I think that's the kind of big
picture story
behind the decreasing poverty
rates around the world.
And this follows pretty
logically, again, from some basic
economics and understanding of
trade.
Where trade occurs in
a voluntary fashion, it
generates wealth.
OK, so when I think love, I
think baking.
So Valentine's Day is a tough
day for me, because I just want to
bake all day and maybe give a
few econ lectures.
And so I like to bake banana
bread.
And my student Cameron here,
she likes to knit scarves.
OK? So we could think of a
really simple example
where I bake banana bread and
she knits scarves.
And if we come together,that's
a market.
That's really what the market
is just coming together.
And if we can sort out terms of
trade
such that I walk away with
some of her scarves and she walks
away with some banana bread,
by definition
that means I'm happier in
making that trade than
in keeping my banana bread,
and vice versa.
She's happy with the banana
bread.
And that's real wealth, right?
Economics is not
a study of money.
It's about real resources and
real
goods and services we can
create with them.
That's where wealth comes from.
Now you might say, that's a
really simple scenario—two
people engaged in trade. But
that is the basic premise
to what Hayek refers to as
"the extended order":
we seek out these mutually
beneficial
trades, and that animates
this expansion of this web
of—kind of—service,
right? And all sorts of,
again, I think Web is, is the
best term here.
Right? That we just have these
exp- this expanded relationship.
Again, not quite love, right;
we can't know everyone,
especially in our global
economy, that we trade with,
but I think love-like, in that
it creates
wealth that is valued by
people around the world.
Now you might wonder, how does
this extend
to something like social
benefits, or socially sound
use of of resources?
Hayek in that article, The Use
of Knowledge in Society,
argues that the way he wants
to pick an
economic system or, you know,
the reason he's a proponent
for markets in particular is
he wants to see a system that
makes the best use
of that dispersed knowledge?
How is it that markets do that?
Through the price mechanism.
And I know, prices
might not seem the most,
again, romantic topic
for Valentine's Day, but
they're really beautiful.
Prices are really magnificent
things,
right? Back to baking.
I was trying to think of a
really timely example
of a price change that some of
you may have noticed.
Are there any other bakers?
Anyone run
out of vanilla recently? It's
the sort
of thing I have up in my spice cabinet,
and I pull down every so often.
I don't think about it until I
need a teaspoon, and
I only have a quarter
teaspoon.
And then you run to the store.
Do you know that in recent
years the price of
vanilla beans has surpassed,
by weight,
the price of silver?
why did that happen?
I'll be honest. It's true.
You can Google it.
It's true.
I'll be honest I had no idea
why that happened
when I was at the store buying
a 20 dollar bottle of vanilla.
But I immediately thought, OK,
what do I need
to use vanilla for, and where
can I maybe shave off
a little bit, right? So my
grandma's recipe of
banana bread, got to have
vanilla.
That boxed cake mix? All right,
I'll skip
that, right? Maybe imitation
vanilla or something else.
I already, without knowing what
changed the price,
started to steward, if I can,
right—
steward that resource
differently.
And isn't that what we would
want if
there was in fact a tsunami in
Indonesia?
If in fact there was a
political uprising, or
an increase in the price of
labor in
these regions that produce
vanilla beans?
I found out this week, they
actually hand pollinate
the orchids that grow these
vanilla beans within
a three hour period on one day
of the year.
OK, so there's a lot going on
there that I can't possibly
understand when I just want to
buy some vanilla.
But the information conveyed in
prices
allows me to act as if I know
all those things, right.
And so when something becomes
more limited in supply,
and the price goes up, I
naturally buy less of it.
So I have the information
boiled down into that price.
And I also have the incentive
because that's the price
I'm paying when I get to the
cash register.
I want to be careful with how I
use that resource. OK.
This isn't just true for
vanilla.
This is true for all goods and
services that are exchanged
in markets, where prices are
really meaningful, where they're
allowed to adjust.
And this is the marvel of
markets that Hayek
refers to, and is really
the argument against central
planning that he devoted much
of his his working career,
which was most of his life, to
arguing
against, right, central
planning.
And I want to be clear: when I say
central planning, I certainly do mean
socialism and communism, but
we lose the marvel
of the markets when we have
any variety
of, certainly, socialism,
cronyism;
I would say regulation, price
supports,
price caps.
Anything that skews the
incentive structures
that people face in their
interactions
is going to impede the real
beauty of the price mechanism,
and I think therefore has a really
detrimental impact on the
potential for human flourishing.
So these are some of the
highlights from economic
perspective towards the macro
cosmos if
we're thinking about human
flourishing.
You might wonder, so did Hayek
just think markets were the solution
to everything? Absolutely not.
He warns us in his final book,
which is available
in the back—The Fatal Conceit
—that we
wouldn't want market thinking to
find its ways into all of our
dealings.
He say, if we were always to
apply the rules
of the extended order—right,
the macro cosmos,
the big—to our more intimate
groupings,
we would crush them.
So we must learn to live in two
sorts
of world at once.
Again, there is the delineation
I want to make.
We need to operate differently
in
these two sorts of world at
once.
So how about the family, and
our more intimate
groupings?
If I can get my slide to
advance here...
I'll tell you about what's
similar between
families and the more intimate
—I'm
sorry, and the larger entities
as,
as well, as we still want to
be aware.
Right? We have limited
knowledge.
In our families, we don't get
perfect reason,
right, and we're certainly not
perfect in our goodness,
right? I don't want to suggest
that in our families,
things are simple.
We're still swayed by what I
could
refer to as an animalistic
instinct towards altruism.
We still might give a little
bit too much credit
to our reasoning ability, OK.
But there are some big
differences, which is that we
have
actionable local knowledge
about people
that we're in close
relationship with: people
in our families, people in our
church.
I hope the people on our block,
right? And most likely we
share purpose,
and hopefully we have aligned
incentives,
such that we can operate in
different ways
in the micro cosmos compared
to the
macro cosmos.
And so if authority is aligned,
right, decision
making power is aligned where
knowledge and the incentives
exist together, then we can
operate
through a so-called central
plan. But
within the family! This is not
unusual, right?
We can kind of think, oh,
economics supports us doing families
the way we naturally do
families. Yeah.
Right.
Parents do a lot of central
planning: Who does
what chore, right; who's
cleaning up the dishes?
How do we divide up our time,
even among spouses, in the
workplace versus in home
production, and the like.
That can happen without
negotiating
mutually beneficial exchange
rates, right, and having a
price mechanism at play? And
we can even effectively use
altruism,
because of those aligned
incentives
and the specific knowledge
that we have.
So what does this all mean in
practice.
I think there are applications
we can make to
a variety of kind of minis-
ministry areas, kind
of thinking about poverty in
general.
But let me leave you with three
takeaways, and then maybe we can
unpack this a bit during the
question and answers.
First, I think Aquinas'
definition
of love is really helpful in
guiding
us to focus on flourishing,
right.
Love isn't about making people
happy.
It's not about wealth in the
sense of riches.
It's something so much more
multidimensional than that.
We want to focus on flourishing
when we love.
When the relationship in
question is
distant, right, when we think
about loving
our brothers and sisters
around the world, we're going to do
that differently than we love
our actual brother
or sister, right, our actual
neighbor next door.
And I think it's OK to
recognize the differences,
and act in a way that is love
-like right?
Willing their good,
considering what
might be in, oriented toward
their good.
And for me that means
supporting property rights,
the rule of law, and happily
and freely trading goods and
services internationally.
Finally, when we think about
our local
and close relationships, we
can love
as we're accustomed.
We can be altruistic, right,
within
a family or a close community.
And when you feel the desire,
that animal
instinct that Hayek refers to
in The Fatal
Conciet, to really operate
based on altruism,
let me suggest you turn to
your actual neighbor;
start with your colleague at
work; look
at the parishioner down the
pew from you, and love locally.
All right; I look forward to
your questions.
I know there are a couple
microphones coming around.
We are just- we have just under
30 minutes for Q and A.
If you raise your hand we'll
bring a mic you.
I appreciate
your optimism and the upbeat
attitude you have.
I was, it just
it's- I just read in The Wall
Street
Journal, they were talking
about how a billion people
are out of poverty,
age expectancy is growing
larger,
everything, and they received
nothing but an outpouring of
letters to the editor talking
how off base and crazy they were.
And I'm reading a book called
Rational Optimism
where they're talking about, there
seems to be an obsessive
need to be negative and
pessimistic to
get published, to get tenure,
and, why do you think
negativity and socialism and
central planning
have such an allure when all
the results
would seem to be coming from
the love
of the market, and the love of
free enterprise?
So I can tell you-
I'll give you a sense of what
I think Hayek would say,
because he said it before,
in a related way,
in his book The Road to Serfdom,
which is also available in the back.
He says that a lot of our
looking
towards government and
socialism is the result of our
lives just getting so easy.
We don't want to be bothered
with inconveniences;
we think whenever there is a
problem we're entitled
to a fix and someone needs to
fix it.
So he argues in The Road to
Serfdom that we
have lost our understanding
of our heritage that has
brought
about these great liberties,
and the self-reliance,
and the innovation
and the hard work and all
those things that follow, that we've lost
track of our heritage and
those ideas,
and now we just want someone
to fix our problems.
I can't—right? My life's too
hard,
even though historically
speaking, our lives are easy.
Now this isn't to ignore the
fact
that there are certainly
communities that
are left behind by global
trade
for a time, sometimes for long
periods of time.
And that's why I think local
community really needs to step
up.
Some of those situations, the
cause is various...
what,
oh, I've lost a word here but,
various interventions that
have,
have put a hamper on the price
mechanism that
can actually, right,
adjusting—I'm thinking of coal
mining, for example,
right? Where you just see this
large scale
problem, and it's why haven't
markets adjusted? Why haven't
people moved,
for example, why haven't
people moved into new work?
There are a number of reasons,
and I don't think government
is
often the answer there.
They have plenty of answers, I
don't think there, that it's
often the right answer. So
I don't want to understate how
difficult advances in our
global economy can be for some
communities.
But I do think the answer is in
the local community,
and, or in people coming into
those local
communities that really want
to get to know
the people—that don't see it
as a problem but see them as people.
Thank you; very great
presentation.
I'm wondering, of...
I don't think it's love if I
force
my neighbor to put solar
panels on his house.
That being said, how do you
look
at maybe the next 10, 20, 30
years as far as, well, just
call it green
energy? How do you see that as
fitting in with
all of this?
Great great question.
So when I think about
environmental goods,
I think if they are in fact
goods,
defined as having value for
people,
that generally speaking,
people invest in goods that
they enjoy
the more resources they have
to invest in them.
And I think there is empirical
evidence to suggest the same,
that environmental goods are
more abundant where we've
met, kind of the
level of food and housing
et cetera requirements for
survival.
Where people are more than kind
of thriving
in various ways in their
communities, and they
can say, OK, I can afford to
care about
clean air and cleaning up this
river.
I think that's an important
insight,
both in terms of the natural
ability of markets
to provide environmental
amenities.
Now there are tough questions
there, and if you want to get into
particular markets, one of my
favorite
resources related to markets
and environmentalism
is the Property and
Environmental Research Center
in Bozeman, Montana.
I'm not an environmental economist,
so when I have a question about
the environment I go to perc
dot org.
And so there are a lot of
specific ways
of dealing with particular
environmental amenities.
So I think markets are involved
in
and can be harnessed in a way
that can produce
environmental goods.
I think restrictions on markets
in an attempt to achieve
environmental
good can oftentimes fall on
the shoulders
of the last people we would
want that to fall
upon, right? When you think
about
who's burning fossil fuels
to heat their homes?
Proportionally
that happens more in poorer
countries.
We have all sorts of options
today in the United States
of, of cleaner energy. And
I use that term carefully, because
I think sometimes we just assign
that label without really thinking
carefully about all the costs associated
with power generation.
But, that there is a
disparity in the costs
of governmental and
inter, really international
attempts at
providing environmental goods.
The last example that I heard
from
Jonathan Adler who's at Case
Western University.
Again, environmental sort
of law professor.
He gave the example of the 1960
Cleveland River fire.
Kind of famous for, oh my
goodness the river is on
fire! He said, you know what
made that so
newsworthy? That the river
hadn't caught on fire in so long.
Because, 20 years earlier
people would've looked at
a river on fire and said, yes!
Industry
is booming! Right? We're
moving in the right direction,
that we have become so rich
—and this isn't to say this isn't good.
It is absolutely good that
we're shocked when a river catches
on fire. But
that when that happens, right, we,
we see that is unusual means
that we've come
a great distance in terms of
our ability to provide
for our communities and our
families in
a way that also allows us to
have clean rivers.
It's great.
And I remember the word I lost
earlier: rigidities.
I think, you know, to the
extent that government kind
of makes more rigid wage
adjustments in
people's occupations through
licensing
and that sort of thing, that's,
that's what I was going for.
So thanks for letting me
clarify that.
I have a question.
Lot of media reports that 50 to
60
percent of the population
doesn't have three
or four hundred dollars for a
car repair.
How did how do we teach
that love for your family
or even for yourself is to
make
these kind of choices you
mentioned earlier about
scarcity and spending and,
what
are my true resources?
How can we—because
it's just,
the population just wants to
comfort
and support and help
everybody; we seem
to be reluctant to challenge
that
individuality you mentioned
earlier,
to, to watch over yourself and
plan
for car repairs and things
like that.
Let me respond to the, the
individuality piece a bit first.
I think those of us who are
fans of freedom and lovers
of liberty have a role to
play in terms of saying, just
because we have freedom
to do all sorts of things,
where the more freedom we have to
do all sorts of things doesn't mean that
all those things are good.
I want to be clear when I,
when I talk about liberty,
that it's liberty to do
what we ought, and as a
Christian
economist, I think that we
need to be guided
by the, you know, how has God
created things?
the order that we operate, and
we don't want to fight that
order.
We're only truly free if we
accept
the constraints that that
provides.
And I think to trust that that
is for
our good, right, the ultimate
model of love,
that God has designed these
things for, for our good.
So I want to be clear, that
even as
we look to expand the scope
of freedom, that those of us
in local communities
that have experience in
delayed
gratification, and
self-reliance,
and valuing responsibility,
that we share those values
with others.
There's nothing about freedom
that precludes us from
persuading others to our
viewpoint.
I think a lot of where that
happens though is, it can
be within churches, I think,
although I think
churches can oftentimes use
some financial literacy,
and there, there are
opportunities for people to
step in at a church and help
with that.
But I think oftentimes it
starts with the family.
And I think the economist
Jennifer Roback Morse has a number
of books that reflect upon
this: how important
strong families are to
imbuing these values that are
necessary
for the flourishing of
children as
they enter adulthood.
And ultimately too, the flourishing
of the extended order, right?
Even Hayek; he doesn't talk a
lot about love. He
doesn't even really talk that
much about families.
But he does say that families
play an important role
in teaching these lessons that
are necessary
for us to operate within this
free exchange of the extended
order.
Hope that answers your
question.
Yes I have a que...
The new green resolution has
been in the news lately.
And do you think it's a good
idea to put out
a new green resolution and the
aspiration—and I would call it
an aspirational
new green resolution, just
because
of the, for its aspirational
value,
or do you think we should
first do a
thorough cost
of unintended consequences
evaluation before we put something
out there for public debate?
That's a great question.
It gives me an opportunity to
say ideas have consequences.
So even if it's aspirational,
and frankly this is what troubles
me so much about the current
political moment, and for
years in the
past, the
ideas that people tweet, ideas
that people post
online, they influence
people's understanding of
reality and what they think is possible.
I think we have to be cognizant
of the constraints we face,
and the real consequences as
you suggested—a thorough
assessment of the
consequences.
I don't know that we need to
take the New Green Deal and kind
of break it down line by line
and do an assessment.
I think we already have a
pretty good sense of why
these things won't work.
I think a book has just come out
of the Cato Institute for example
about why railways
don't make sense in the United
States the way they do elsewhere.
I haven't read the book, but I
think if
if I wanted to know something about it,
that might be one place that I would start.
I'm a big fan of train travel
when I'm in Europe.
But you know, when you think
about how
expansive the United States is
and the various places we go
by car and by plane,
I just I don't think it makes
sense to think
so top down.
So I don't know that we need to
do a real thorough analysis.
We need to drill down to the
basic ideas
that are wrong in in the new
Green Deal.
And maybe we start with the New
Deal, and think about
what didn't go so well there,
and how it
extrapolates on that.
It seems to me just kind of
trying to improve
environmental outcomes and
provide
everyone with a job, and if we
say
it's that will be it will be
because we've intended it.
It's not going to work.
So, I think in
terms of my calling, it's educating
in the basic principles.
And so I'm concerned about
anything that's aspirational
in a utopian sort of way.
I'm not a big fan of John
Lennon, right,
imagine? I think that's
problematic because people
can be convinced of such
things.
It's a good question
You mentioned free trade
and freedom.
And while you're talking about
that, there seems
to be some discussion
currently between tariffs
that are being imposed visa
vis
totally free trade.
Can you unpack that a bit for
us, and
why might we be seeing
the direction that the current
administration is going in?
Yeah; I think the reason
we see what we do is again,
people putting intentions
first, and thinking if the
problem is
people are losing jobs, they
say because
of international trade, then
what we need to do is
is reduce international trade.
However, I think there is good
evidence
to the fact that a lot of the
shift
in the structure of our labor
markets is due to automation.
And so I think we need to kind
of change,
kind of our target in terms of
thinking about what's causing this and
then think about the trade.
So does that mean we no longer
want to have
anything automated? I think
the main cause of of this
political tendency,
right, because we don't hear
-well,
I was going to say we don't hear
many people talking about free trade,
but it's an
interesting thing
to hear Democrats talk about
free trade in light of
Trump moving in the other
direction.
Kind of interesting; in the
scope of my whole life
I wouldn't have expected that.
But it's really because people
think I can identify the
problem and
simply make it right.
Fix it by undoing the culprit.
In reality what happens, and
there's a good survey article
by Scott Lincecum, who
I met here at Acton for the
first time a couple
of years ago; he gave a great
lecture.
He did a, has a survey article
out.
I wish I could tell you when it
was published.
But it's, it surveys the
immense
empirical literature on
trade protectionism, and the
actual effect
it had on various industries,
and whether it could save
jobs.
And across those studies and
across industries
the answer is no.
What's causing the shift in,
various
shifts in the labor market
cannot be fixed
by tariffs; cannot be fixed by
reducing trade.
Furthermore, the effects of
tariffs
oftentimes are borne by,
again, low income people,
right? When
we look at importing goods and
services,
what does that do that allows
American citizens
to have lower priced good,
goods and services because
we've expanded the market to
where there's more competition
across the world instead of
just within our country.
And so what happens when we
reduce the market size?
I mean people aren't fans of
monopoly right? But when we move
more in the direction of market
power in terms of, you know, buy
American, you're doing the
same thing.
You're allowing prices to stay
at a higher
rate than they would be
otherwise.
And who does that really affect
in terms of the day in and day
out, are our low income
neighbors.
So I think those ideas don't
change.
But I think in our political
moment,
that it's politically
advantageous to
know a problem which really
exists, which is structural
changes in our labor markets,
and try to find a fix that
seems
immediate and obvious.
Unfortunately it's neither.
I worked with
people in Eastern Europe for a
number of years, and
in the former communist world,
and a number of, a few of those
people who ended up coming to
this country and actually
settling here, I saw in them
a feeling that you were describing
earlier: feeling overwhelmed
by all the responsibility and
the choices
that they didn't used to have.
And they, I have
a friend who said "in
communism
we pretended to work and they
pretended to pay us", you know.
And that was kind of the
philosophy.
There was a lot of pretending.
But what I'm thinking is
it seems to me that among
American
millennials, that there's a
similar
feeling of being overwhelmed
and tired about all the
responsibility, and that
combined with
the the
escalating college costs and
debt and that sort of thing,
you know, there,
that, there's that there's a
reason why there was such a big
following among millennials with
the Bernie Sanders campaign
and that sort of thing.
As someone who is working with
the, this generation
at Hope College, do you see much
affinity or interest in that,
in the free economy and all of
that goes,
it goes with us among this
within this generation?
It's challenging.
It's, it's challenging to
identify students and attract
them to
thinking more and advocating
for
a free market, for a number of
reasons.
Not least of which is the
culture we have
within higher education
against those things.
They don't hear about markets,
certainly outside of, usually
outside
of an economics, maybe a
political science course.
If they do hear about them not
in a positive light. So
it's challenging.
But I think one
maybe touchpoint we can have,
although I think it emanates
from a difficulty is, we
have a particular
desire in our culture today
for freedom
in various social expressions,
right? When you think about
gender and sexuality
et cetera, right, I get to
decide.
Right? And I wonder if we can't
re-orient that towards an
understanding of what liberty
is for.
It's not that people have lost
their desire to
somehow be or accomplish
what they're meant to
accomplish.
It's just, yeah,
just pointed I think in the
wrong direction.
I'm currently reading a book by
Lukianov
and Haidt, "The Coddling of
the American Mind."
I sound like I'm a book sales
person up here today.
I hope that's a good thing;
again I think part of
my calling, even with my students,
I'm constantly saying oh,
you should read this!
But I'm finding it really
helpful because it talks
about some of the reasons,
they would say, that
young people, and we're even
past millennials
now, Right? The millennials
are could be our bosses.
Young people today are,
because of good intentions of
parents but
really bad ideas, are being
coddled now.
They're not pointing at the
young people
as somehow flawed themselves,
but we've been using some bad ideas.
And one of the chief bad ideas
they point to,
is forgetting that
young people are antifragile.
And antifragile doesn't just
mean grit,
like they have an ability to
deal.
I don't know if you know this.
Sometimes young people
say like, "oh, I can't deal!"
Right? This is a thing now, I
just can't deal. No.
it's not just that they have grit
and they can deal that they can
handle different situations
and confront
challenges; antifragile means
they must.
It's the idea that the human
person really
is, needs to face challenges
and overcome them, in order to
be developed.
And so I find that a really
attractive
theory towards what we're
confronting
in higher education with our
students, and
kind of just gives me
a greater appreciation for
what a
professor and community
members, I mean you can do
this with young folks in your
churches and in your families too.
What it looks like to encourage
students to see
their potential and face
challenges because
of their potential, not to
skirt those challenges.
I think we have to learn that
we can overcome challenges
before we can deal.
Thank you.
In the macro sense of
actionable knowledge is one of
the limiting factors to how we
can sort of engage
at the macro level, how do you
see technology
and just, and access to
information.
That we have algorithms that
can give us info in real time.
How does that how is that affecting
some of those limitations at a macro level?
That's great.
That's a great question.
Yeah, I think another way of
even stating that question
is, does big data make Hayek
obsolete,
right?
Not to say that your question wasn't, it was
certainly more nuanced than that.
But I think just to put a label
on it, because that's a real
live question.
My current thinking on this is no,
it doesn't make Hayek
obsolete.
If we understand the
distinction he
draws, and I'm sorry I
couldn't develop this more
during the talk, between
information
and knowledge, between data
and knowledge.
So knowledge is really
actionable.
That's a word I put on it.
I don't think he uses that
. But,
right, it's able to be
understood, interpreted,
right? Responded to.
And so even where there is big data,
it's really information that still
needs to be unpacked and acted upon.
When he says that knowledge is
essentially dispersed.
I had a philosopher once say,
oh I'm sold, right? He used
the word essential; I'm
convinced! I don't know if we
should be that, that easily
convinced but, but he does
really mean like, this is in
the essence of knowledge.
There's nothing that's going to
undo this
dispersed knowledge, kind of
constraint.
You know that's that's one
point in that direction.
Another is I learned, and this
could be changing
very quickly, but I think a
couple of years ago, I saw that
Google actually physically
ships data sometimes.
can anyone nod to, has anyone
heard this?
That large amounts of data still
cannot be quickly conveyed
over fiber optics,
and so sometimes people will
purchase, right,
they'll put some mainframes or
something on the back of a
semi truck and ship it across
the country, because it's quicker.
That would have never occurred to me,
because I don't understand technology
to that extent.
And so I think we think about
artificial intelligence,
we think about big data, and
we have this very wide
eye sometimes idea, that wow,
it's all out
there, and we're so close to
shedding one of these major
constraints! In reality
there's still a semi truck stopping,
you know, after it's mandatory,
like, 16 hour rest right off
at the rest
stop waiting to get to its
destination.
So we're not quite there yet.
And I think because of just how
the human mind works,
we're never going to get to the
point that a machine can replace
that interpretive
portion of taking data and
making it really knowledge.
It's a good question though and
I think it motivates,
hopefully will motivate a lot of us
to think more about what Hayek
means by local knowledge, so
we can confront that question.
