Today’s guest is Clifford Winston of the Brookings Institution. We discuss infrastructure, particularly roads and airports, and the incentives faced by their users. Bad incentives create congestion problems that can’t be solved by simply throwing more money into infrastructure; you need to fix the incentives! Clifford’s work on privatization shows how it could improve incentives and reduce the costs of congestion.
Clifford argues that self-driving cars will fix some of the problems created by bad policy. We also discuss the letter grades issued for infrastructure by the American Society of Civil Engineers and what they do and don’t tell us about the quality of American infrastructure.
We discuss the economic reasoning behind some of history’s strangest practices: ordeals that were used to determine innocence or guilt in medieval Europe, trials by battle that were used to settle land disputes in Norman England, wife auctions that happened during the Industrial Revolution, and the criminal prosecution of insects and rodents by ecclesiastical courts in Renaissance Italy. Continue reading The Economics of the Weird with Peter Leeson→
“After World War II the German economy lay in shambles. The war, along with Hitler’s scorched-earth policy, had destroyed 20 percent of all housing. Food production per capita in 1947 was only 51 percent of its level in 1938, and the official food ration set by the occupying powers varied between 1,040 and 1,550 calories per day. Industrial output in 1947 was only one-third its 1938 level. Moreover, a large percentage of Germany’s working-age men were dead. At the time, observers thought that West Germany would have to be the biggest client of the U.S. welfare state; yet, twenty years later its economy was envied by most of the world. And less than ten years after the war people already were talking about the German economic miracle.What caused the so-called miracle? The two main factors were currency reform and the elimination of price controls, both of which happened over a period of weeks in 1948. A further factor was the reduction of marginal tax rates later in 1948 and in 1949.”