Brazil gained prestige in landing the World Cup and Olympics, but sometimes hosting a major global event isn’t as glamorous as it seems. For a start, it’s difficult to justify massive spending — Brazil plans to spend $31 billion between the two — for such a temporary payoff. . Many venues created for these events, including those erected for the Olympic Games in Athens and Beijing, have fallen into disrepair after the celebrations ended. Many workers die on these massive construction projects — hundreds, already, for Qatar’s 2022 World Cup. Government often evicts lots of people from their homes, as Beijing did to over 1.5 million people in anticipation of the 2008 Summer Olympics. So why are cities and countries so eager to host? Often for the international prestige. However, support can sour quickly, as it has in Brazil, when the real costs became more apparent. Economist Matt Ryan from Duquesne University asks you to consider those costs now – a country that wins the bid may lose big overall.
How much does the average person know about economics? How about trade and immigration? Economists claim to know a great deal about these topics, and study them in depth. And while they often disagree with each other, most economists agree a lot more with each other than they do with the public. So why do democratic citizens tend to reject what economists say? Are there certain biases that make democracies choose bad economic policies? Follow this series of videos to find out.
Some people say technology is the driver of innovation, but society often takes great steps in prosperity by trading. Like technological shifts over history, trade is a powerful way of creating wealth for all parties. In one example, Professor of Economics Bryan Caplan imagines a machine that turned agricultural products directly into cars: it would disrupt the way we do business, but the US would be wealthier for it.
If, however, that machine was nothing but a freighter that exchanges corn for cars with another nation, many people think this is unfair. Whether in dislike for foreign trade or worry about immigration, Prof. Caplan calls this “anti-foreign bias,” and points out that most economists don’t share these concerns. Professional economists think trade and immigration benefit all parties involved – just like innovative technology. As we said before: trade is made of win!
Thousands of people die in the US every year because there’s a shortage of willing kidney donors. Some people are saved by the generosity of friends and family, but many more suffer because no willing & compatible donors come forward. As in most countries, it is illegal to compensate donors in the US for donating a kidney. Prof. Caplan argues that we should allow a market: if donors could be paid to donate a kidney through a reputable hospital, they could earn money and save a life in the process. Such a system would encourage many more donors, and save many more lives. But most people are uncomfortable with the idea that individuals or companies would make money by solving that kind of problem. They equate making a profit with selfish intentions, and bad results. Economics professor Bryan Caplan calls this “anti-market bias.” He argues that most people (and voters) are prone to this bias, leading to harmful policies. Another example Caplan gives is air pollution. While most economists think that markets could help curb pollution, most regular people reject the idea. Perhaps this is partly because for many problems we face, it is difficult to imagine how markets and profit could help us find a solution. Caplan argues that this makes allowing markets even more important: they incentivize people to find new & creative ways of solving problems, many of which we never could have predicted in advance.
People tend to think the world is much worse off than it actually is. Bad news gets a lot more attention than good news. Professor Bryan Caplan calls this “Pessimistic Bias,” and argues that it affects the policies people vote for. Despite the amazing economic gains of the past 100 years and even the past decade, most people are under the impression that things are just getting worse. But Prof. Caplan argues that even with all the tough problems in the world, there is reason for optimism; contrary to most people’s expectations, he contends that the best is yet to come.
The United States has laws in place to limit the number of immigrants granted entry. How many immigrants should be allowed to call America home? Bryan Caplan, professor of economics at George Mason University, argues that the United States should have open borders. Jan Ting, professor of law at Temple University, argues that there need to be limits on the number of immigrants.
In this clip from the debate, Prof. Ting argues that the risks of trying an open border policy are too great. He points out that the U.S. population is estimated to grow at a fast rate in the next 50 years and through the end of the century if we do nothing. He is concerned that allowing free immigration will overwhelm U.S. infrastructure and cause too much environmental damage.
Prof. Caplan responds by arguing that the market will ration immigration just as it rations anything else. Indeed, the idea of immigration without quotas is overwhelming if we do not consider how market forces will play a role. He argues that we can have open borders without fear because of the power of the market.
The rule of law, Hayek wrote, is “a rule concerning what the law ought to be”: It ought to be general and abstract; equally applied, with legal privileges for none; certain, not subject to arbitrary changes; and just. In this Learn Liberty Academy, Andrew Morriss sets sail to show how the law of the Cayman Islands conforms with Hayek’s ideals, how it got that way through astute political entrepreneurship, and how the world at large benefits from its legal wisdom. The benefits of Caymanian rule of law are so diffuse and far-reaching that we can even attribute the American poor’s high consumption of healthcare to it. Embark on Morriss’s expedition — read, watch lectures, and discuss!
Have you ever thought much about property rights? Many believe ownership protections primarily favor the wealthy, but it turns out that the wealthy and politically connected actually benefit more when ownership is vulnerable. Without strong property rights, those with the power are able to take property from those who lack such political connections. In places like Zimbabwe—where the government is able to confiscate profits, merchandise, and even businesses with ease—the lack of property protections has been one cause of the country’s decline. Today, Zimbabwe is the poorest country in the world, and eroded property rights are at least partially to blame. Prof. Dan Russell argues that “doing less to protect ownership turns out to be a really effective way to create poverty.” Perhaps property rights deserve protecting. Except, maybe, among Finnish race car drivers.
Have you heard the news? The number of people living in abject poverty—defined as living on less than $1.25 per day—has been halved since 1990. How did that happen? Prof. Stephen Davies explains that extreme poverty has been on the decline in part because two of the world’s most populous countries, China and India, have embarked on a path of economic liberalization and development over the past two to three decades. As more countries have embraced free trade and market-friendly policies, we have seen encouraging news of poverty reductions and greater access to clean drinking water. If such policies continue, Prof. Davies says, it’s not out of the question for extreme poverty to be eradicated in the foreseeable future. These gains are likely to be lost, however, if we make poor economic decisions that take us back toward protectionism and economic controls. With good economic policies and free markets, we can help many of the poorest people in the world.
Economic freedom is about the freedom to buy and sell things, says Professor Antony Davies, but it’s also about the freedom to interact with people, to converse with others, to travel, and to say what we want to say. Evidence shows that economic freedom is associated with many positive things in society. This holds true among states in the United States and across the countries of the world.
Countries that have more economic freedom also tend to have higher GDP per capita. They tend to take better care of the environment. They also tend to have less child labor and more gender equality. Prof. Davies examines the data on these factors and several of the arguments people have raised about the data to show the many benefits of economic freedom. Economic freedom is about being free to make your own choices. It allows us to:
– Do what we love
– Create wealth
– Protect the environment
– Improve equality
– End child poverty
We often hear that the rich are getting richer and the poor are getting poorer. While a surface-level examination of U.S. households by quintile from 1967 to 2009 would seem to support this claim, Professor Sean Mulholland uses other data to show that this measure overlooks two vital pieces of information that should concern those who care about the welfare of the poor.
First, the share of total income does not tell us anything about whether income increased or decreased when adjusted for inflation. From 1967 to 2009, the real mean household income of the top quintile increased by 71 percent, meaning the rich became much richer. Over the same period, the real mean household income in the bottom quintile increased by 25 percent. This means the poor became richer as well. This measure shows that Americans in the lowest quintile could afford more goods and services in 2009 than in 1967.
Second, these measures do not tell us what happened to particular households. Household income can change from year to year, but these measures do not track that. If we look at the households in the bottom quintile in 1987 and follow those households until 1996, we find that about 45 percent of them have moved up to a higher quintile. If we look at the next 10-year period, we find that 40 percent of households move up. Professor Mulholland also discusses income mobility from the top quintile down and across generations. He argues that these facts suggest that more improvements have been made for the poor in the past 40 years than many people believe. “To continue these improvements,” he says, “we should seek ways to expand opportunities for income growth and, with it, greater absolute mobility for those across the income distribution.”
1. Data on household income shares by quintile come from here: http://www.census.gov/hhes/www/income/data/historical/household/. U.S. Census Bureau, Current Population Survey, Annual Social and Economic Supplements, Table H-2. Share of Aggregate Income Received by Each Fifth and Top 5 Percent of Households, All Races: 1967 to 2009
2. Data on mean household income levels by quintile come from U.S. Census Bureau, Current Population Survey, Annual Social and Economic Supplements, Table H-3. Mean Household Income Received by Each Fifth and Top 5 Percent, All Races: 1967 to 2009. These data can be found here: http://www.census.gov/hhes/www/income/data/historical/household/.
After the housing bubble burst, both the Bush and Obama administrations turned to stimulus spending in an effort to improve U.S. economic growth. Stimulus spending is often justified by the thought that it is the government’s role to provide jobs in the economy. Yet the idea that the government can create jobs only looks at half the picture, and as Professor Antony Davies explains, there is no compelling evidence that stimulus spending leads to economic growth.
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