Category Archives: Podcast

Drugs, Prohibition, and the Suburban Overdose Crisis with Mark Thornton

Mark Thornton is a Senior Fellow at the Mises Institute. He is the author of many books, including The Economics of Prohibition (which you can access for free here), which is also the topic of this episode.

1. Does drug prohibition help stop poverty and homelessness?

The conventional wisdom on drugs is simple: you see drugs and drug abuse mixed with poverty and homelessness and it makes intuitive sense that drugs play a role in causing poverty. It seems to follow that by criminalizing drugs, you can take them out of the equation and help solve the other problems.

Mark disputes this conventional wisdom. First, the causation doesn’t necessarily go from drugs to poverty. Poverty can cause people to abuse drugs and mental illness can cause both self-medication and poverty. Second, if you legalize drugs, they won’t be sold on the street. Instead, they’ll be sold by legitimate businesses with a particular interest in maintaining their reputation and not harming their customers. Prohibition is what creates the black market, which in turn generates violence, crime, and more potent and dangerous drugs, all of which exacerbate poverty. You can’t clean up the social problems related to drugs by criminalizing them when criminalizing them is what caused many of those problems.

2. The Suburban Heroin Epidemic

Mark recently authored an article called The Legalization Cure for the Heroin Epidemic. In the article, he calls attention to the rising number of overdose deaths in the United States:

The number of drug overdoses in the US is approaching 50,000 per year. Of that number nearly 20,000 are attributed to legal pain killers, such as Oxycontin. More than 10,000 die of heroin overdoses. I believe these figures vastly underestimate the number of deaths that are related to prescription drug use.

Continue reading Drugs, Prohibition, and the Suburban Overdose Crisis with Mark Thornton

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Rome’s Economic Suicide with Lawrence Reed and Marc Hyden

Ancient Rome went from a thriving civilization to a dystopia before its eventual collapse. My guests today explain how that happened. Lawrence Reed and Marc Hyden co-authored “The Slow-Motion Financial Suicide of the Roman Empire.” Lawrence is the President of the Foundation for Economic Education, and Marc is a political activist and amateur Roman historian.

Many accounts of the fall of Rome focus on military problems and the barbarian invasions. However, the Empire was in decline long before the barbarians showed up to finish it off. The barbarians didn’t kill the Roman Empire; the Roman Empire committed suicide. There were six important factors in the Empire’s decline:

1. Political violence became normalized.

The populist reformer Tiberius Gracchus redistributed public farmland to Roman citizens. His reforms angered the Senate, and his political enemies clubbed him to death in 133 BCE. This was the first open political assassination in Rome in nearly four centuries, but it wouldn’t be the last. Suddenly, it became acceptable for powerful Romans to kill their political enemies, and this would spell doom for Rome’s republican government.

2. The Roman state gave ever-increasing amounts of free food and entertainment to the masses.

Despite having killed Tiberius Gracchus, the senate did not repeal his reforms in an effort to assuage the masses. Tiberius’ brother Gaius Gracchus would take his brother’s position and further his reforms, also introducing a system of subsidized grain for the masses. When Gaius also succumbed to political violence, most of his reforms died with him, but not the grain dole. The dole was retained and expanded, proving a huge burden on the Roman state. Successive generations of Roman leaders would buy political popularity with panem et circenses (bread and circuses). The Roman people came to value the dole over all other values. When the emperor Caligula was assassinated, there was a brief opportunity to restore the Republic, but the people preferred the rule of strong men who could provide them with ever more panem et circenses.

3. Roman armies became personally loyal to their generals rather than being loyal to the Roman state or the people. Continue reading Rome’s Economic Suicide with Lawrence Reed and Marc Hyden

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Hive Mind, IQ, and the Wealth of Nations with Garett Jones

Garett Jones is Associate Professor of Economics and BB&T Professor for the Study of Capitalism at the Mercatus Center, George Mason University. His book, Hive Mind: How Your Nation’s IQ Matters so Much More than Your Own is the subject of this episode.

Hive Mind CoverThe book deals with an empirical puzzle: IQ is a weak predictor for earnings. We all know high-IQ people who live paycheque to paycheque, and lower IQ people who succeed brilliantly. And yet, when we look at the relationship between nations’ average IQ scores and their incomes, the relationship is strong. Nations with the highest average IQ scores are eight times wealthier than nations with the lowest IQ scores. How can we resolve this apparent contradiction?

Garett documents five main channels for the spillover effects of IQ:

1. Smarter people are more patient, they save more and build up more capital.

When economists test people’s patience, high-IQ people tend to be more willing to wait for a larger amount of money in the future rather than taking a smaller sum now. This is important at the national level because savings tend to stay within a country* and fund investments within that country. That means living in a higher IQ nation generally means having more capital available to compliment your labour. Continue reading Hive Mind, IQ, and the Wealth of Nations with Garett Jones

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Icelandic Sovereign Money with Ash Navabi

Ash Navabi returns to the podcast to discuss his essay, “Will Iceland’s Sovereign Money Proposal End Economic Crises?”

In April of 2015, Frosti Sigurjonsson, Member of the Parliament of Iceland and Chairman of the Committee for Economic Affairs and Trade, made a bold proposal to end fractional reserve banking and replace it with a system he calls “sovereign money.”

Fractional reserve banking is the system under which banks create money by lending out a portion of depositors’ money, keeping only a fraction to pay out on demand. One problem with fractional reserve banking is that the mismatch between banks’ assets and liabilities leaves them exposed to bank runs and financial panics. To solve this problem, the central banks of the world function as “lenders of last resort” to save insolvent banks from going under. However, the more insidious problem with fractional reserves is that the injection of new money directly into credit markets artificially lowers interest rates and incentivizes entrepreneurs to take on longer term projects than the real savings available in the economy can sustain. Having central banks intervene to keep the cheap credit flowing does nothing to address this problem, and in fact makes it worse. Continue reading Icelandic Sovereign Money with Ash Navabi

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Afterthoughts: Violence, Lynchings, Civil War, and Witch Trials with Cornelius Christian

Afterthoughts LogoThere’s another Afterthoughts episode of Economics Detective Radio. It’s exclusive bonus content for those who support me on Patreon. In this episode, I discuss my recent conversation with Cornelius Christian.

To hear it, you have to become a patron through Patreon. That entails signing up to give a small donation (at least $1) for each full episode I release.

Violence, Lynchings, Civil War, and Witch Trials with Cornelius Christian

Cornelius Christian is an Assistant Professor of Economics at St. Francis Xavier University. His research concerns development economics, economic history, and the economics of conflict and violence, which is the topic of this episode of Economics Detective Radio.

Cornelius’ paper “Lynchings, Labour, and Cotton in the US South” deals with violence against black people in the post-reconstruction South. Historians have hypothesized that there was an economic motive to lynchings, noting that more of them occurred when cotton prices were low. Black and white workers competed with one another in the agricultural labour market. Cornelius’ findings indicate that lynchings were used by white labourers to scare black workers out of the labour market, thus raising their own wages. He finds that lynchings happen in the wake of economic shocks when agricultural wages are low. He also finds that, when lynchings occur in a given area, black people tend to migrate out of the area and agricultural wages rise for the remaining white workers. Continue reading Violence, Lynchings, Civil War, and Witch Trials with Cornelius Christian

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Income and Wealth Inequality with David R. Henderson

…or How I Learned to Stop Worrying and Love Inequality.

David R. Henderson is a research fellow at Stanford University’s Hoover Institution, and a professor of economics at the Graduate School of Business and Public Policy, Naval Postgraduate School, in Monterey, California.

Thomas Piketty’s Capital in the 21st Century managed to do something unprecedented among equation-dense economic tomes, it became the #1 selling book on Amazon.com. The book tapped in to a hot topic among politicians and the general public: the high (and possibly rising) wealth and income shares of the top 1%. However, David points out that although the book was a best-seller, it wasn’t actually a best-reader. Amazon logs the sentences people highlight, and the top five most-highlighted sentences in Capital all appear in the first 26 pages. It seems that, at least among kindle readers, most people didn’t make it past the introduction. It appears that people buy the book to back up the views they already hold. Continue reading Income and Wealth Inequality with David R. Henderson

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Afterthoughts: Civil Asset Forfeiture with Don Boudreaux

Afterthoughts LogoI just released the first Afterthoughts episode of Economics Detective Radio. It’s fifteen minutes of bonus content for those who support me through Patreon. In this episode, I discuss my recent conversation with Don Boudreaux. I touch on the following topics:

  • The media and its incentives
  • History and legal precedent
  • The British common law

To hear it, you have to become a patron through Patreon. That entails signing up to give a small donation (at least $1) for each full episode I release. I plan on releasing an Afterthoughts episode with each full interview I do on the main podcast.

Civil Asset Forfeiture with Don Boudreaux

Don Boudreaux is a professor of economics at George Mason University. He blogs at Café Hayek. I invited him to discuss civil asset forfeiture on the podcast because of a conversation we had about it at a recent Mercatus Center colloquium.

Civil asset forfeiture is the practice of the state taking someone’s property on suspicion that the property has been used for wrongdoing, without having to charge the owner with a crime.

Civil asset forfeiture had its origins in British maritime law. The British had difficulties with pirates along the Barbary Coast. When the pirates were apprehended and their ships brought back to London, British courts had difficulty deciding what to do with these ships. The ships’ owners were outside the jurisdiction of British law, so the courts couldn’t try and convict them, but they couldn’t send the ships back to them either only to have them return to the seas with a fresh pirate crew! Parliament thus passed a law allowing the courts to charge the property itself with the crime if and only if the property’s owner was outside the jurisdiction of British law. Continue reading Civil Asset Forfeiture with Don Boudreaux

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Experimental Economics, Norms, and Prosocial Behaviour with Erik Kimbrough

Erik Kimbrough, assistant professor of economics at Simon Fraser University, is an experimental economist. In this episode, we discuss his paper, “Norms Make Preferences Social” which he coauthored with Alexander Vostroknutov.

Experimental economics began with Vernon Smith’s double auction experiments in the 1950s. Smith wanted to test whether market participants could converge to the equilibrium prices and quantities predicted under neoclassical theory. He found that, indeed, the students in the lab did converge to the optimal prices and quantities, and experimental economics was born.

In the late 1970s and 1980s, the practice of testing game theory models in the lab caught on and became mainstream. One of these games, the ultimatum game, features two players dividing up a sum of money. The first play offers the second one an amount, and the second player can accept or reject. Rejection means neither player gets anything, so a (naive) game theorist would predict that player one will offer the smallest amount, a penny, and the second player will accept it. In reality, people often offer a 50-50 split, or 60-40. And when the person offering gets too greedy, say offering an 90-10 split, people routinely reject such offers. Continue reading Experimental Economics, Norms, and Prosocial Behaviour with Erik Kimbrough

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