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Murphy Triple Play

Summary:
==> My article on Bitcoin’s 11th birthday. ==> My IER post on Sweden’s carbon tax. (I have some graphs in here that might surprise you.) ==> Another in my Austria vs. Law & Econ series. This time, I critique Armen Alchian’s arguments about air pollution. An excerpt (and note that I’m not changing the formatting, but the below is a quote from my article): —— The Manne seminars featured big guns, including Paul Samuelson (so they weren’t all right-wingers) but also those skeptical of typical business regulation, such as Milton Friedman, Harold Demsetz, Martin Feldstein, and Armen Alchian. For our purposes in the present article, I want to focus on this portion of the Vox interview: Dylan MatthewsYou had some really eye-popping examples in the paper

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==> My article on Bitcoin’s 11th birthday.

==> My IER post on Sweden’s carbon tax. (I have some graphs in here that might surprise you.)

==> Another in my Austria vs. Law & Econ series. This time, I critique Armen Alchian’s arguments about air pollution. An excerpt (and note that I’m not changing the formatting, but the below is a quote from my article):

——

The Manne seminars featured big guns, including Paul Samuelson (so they weren’t all right-wingers) but also those skeptical of typical business regulation, such as Milton Friedman, Harold Demsetz, Martin Feldstein, and Armen Alchian. For our purposes in the present article, I want to focus on this portion of the Vox interview:

Dylan Matthews

You had some really eye-popping examples in the paper about pollution.

Suresh Naidu

Yeah, and it kind of reveals…sometimes when you take economics too literally, it leads you into kind of very sociopathic ways of thinking about things.

We have quotes from Armen Alchian, who said, “Give me a capsule that will magically clean all the air in Los Angeles….Beg me to crush it….I won’t crush the capsule. Because if I do, poor blacks will have to pay $20 a month more for land rental….The black in Watts, already used to living with bad air, loses his discount for doing that.”

And that’s just this idea that if you clean up the pollution, more people will want to live there and that will drive up the housing prices, making the people that are already used to pollution worse off.

I think that’s the kind of reasoning you’ll find in a lot of what the Manne teachers were teaching, as well as, “Here’s why a lot of regulation by the EPA [Environmental Protection Agency] might not be the most efficient way of reducing environmental damages…and maybe people don’t value environmental damage that much anyway.”

The above Alchian anecdote is a perfect illustration of what I meant in my earlier article when I said that the Law & Econ scholars sometimes make deliberately “shocking” arguments. They no doubt do this in order to capture the attention of students (or readers in the case of written material), but the strategy backfires if they offend the non-economist while getting the economics wrong. In that case, the shocking (and erroneous) argument only serves to confirm the average Joe’s suspicion that these right-wingers aren’t really principled, but instead are just mouthpieces for big business.

In other words, it’s ironic when the Law & Econ scholar deliberately picks an example where the average person will think, “That can’t be right!” when the average person is correct—in this case, Alchian’s argument isn’t right.

Robert Murphy
Christian, Austrian economist, and libertarian theorist. Research Prof at Texas Tech and author of *Choice*. Paul Krugman's worst nightmare.

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