 Let's start up. Good afternoon, everybody. I'm Daniel Klein. Welcome to this event on economists on the welfare state and the regulatory state. There are two handouts that might be useful if you don't have those. Does anyone have the two handouts? Who needs one of the two handouts? Maybe, yeah, that's great, Bethany, if you can help with that. So I'm an econ prof and the gym chair at the Mercatus Center at GMU. And I'm delighted to have this opportunity, the partnership of Mercatus for today, of Claire Morgan in particular. I thank them for their ongoing support and friendship. In particular, they co-sponsored the symposium on this title, published an econ journal watch of which I am the editor. And of course, they've been doing this for us today. And thank you to you for coming out today. I'm glad you're here. Mercatus, for those of you who don't know, is a university-based research center. It advances knowledge about how markets work to improve people's lives by training graduate students, some of whom are here, conducting research and applying economics to offer solutions to society's most pressing problems. So I have a PowerPoint, and one of the handouts has all the slides for your convenience. Why don't any argue in favor of one and against the other? That's the essential question of the symposium and of the event today. Let's start with a thought experiment. Suppose you see an economist get up on TV or in a classroom, economist you're not familiar with, and let's say favor increases in Medicare, or increases in public school funding. My guess is that you would, in the back of your mind, if only in the back of your mind, guess that that economist also is friendly to market interventions, the regulatory state, such as it exists. I think you would expect that pattern. And likewise, if you just heard this economist you're seeing for the first time oppose the welfare state, I think you would expect that that economist probably also leans against the regulatory state. I just think that's actually built into our interpretation of the culture. Now, these positions on the welfare state and the regulatory state, I want you to think of that in terms of directions from the status quo. We normalize the status quo to be the 50-yard line on the football field, as it were. And what we're talking about are people leading this way towards a greater governmentalization of social affairs or this way toward less governmentalization of social affairs. The issue I'm talking about today, the evidence for today, is about these directions. It's not claims about people's ideal destinations. It's not about the end zone of the football field. It's about which way they want to go from the status quo. And our thought experiment, I think, conforms to what we might think of as customary camps of prominent economists. These are mostly Americans except for Hayek, 20th century economists who have passed away. Hayek, Friedman, Buchanan, Becker, all certainly favorable towards liberalizing regulations, reducing interventions. And I would say from the status quo, certainly not leaning in favor of more welfare state and tending even to favor reductions in the welfare state. Then Samuelson, Galbraith, Robert Heilbroner, Robert LeCochman, they go in the other direction on both dimensions, in both dimensions. And if you take prominent economists who are vocal today, here's some names that I put together rather haphazardly. Again, I think they sort themselves into these two basic camps, the liberal camp. And I use that term in the original political sense of the term. And a more left-leaning camp, liberal and left. And so it's really quite all around us. Now, we can conceptualize this a little further if we actually think spatially. So on the welfare state along the horizontal, you can think of well, being generally pro, neutral, or anti. And then there's the regulatory state to mention, pro, neutral, and anti. And you might sort of, if someone from Mars who didn't know anything about our culture might figure that economists populate this whole field, and you find economists in all those cells. But as we've already discussed, in fact, we think of them as generally actually tending towards the diagonal, or even the corners. The most extreme kind of configuration would be if they were only in those shaded areas. But I think really we find them also sometimes neutral, or just silent on many issues. So I'm certainly not denying that. In fact, I'm not denying that they're neutral on some while positive or anti on the other dimension. So we're going to look at data, and actually it looks kind of like that. But still, there's a question here. There's a big question here. Why don't we find folks in those two, pro-anti, anti-pro corners? Okay, now before I elaborate that, I just want to talk about some data. We have surveys of economics professors. This is one that I was involved in. And here's one of your handouts with the 17 policy questions might be of interest. We ask these 17 policy questions all in the format of positing a regulation, such as higher minimum wages, where it's about increases in the regulation or governmentalization, and then five options from strongly support to strongly oppose. And that was the format for all 17. Now of these, first of all, I want to drop out the military question, the last one entirely. I want to use the three at the end then to form a welfare state variable. That's the questions, more redistribution, more funding of the public school system, more benefits and coverage by Medicaid. Now if you take those and compare that to the other 13 that are here, and call those restriction, because those would be all different kinds of restriction, you see that the data looks like this. This is actually the scatter plot of the respondents of the survey. So this here is Bill, right? And this was his welfare state score, and this was his score on this 13 part restriction variable. And as you can see, it kind of fits what we're saying. We have this upward sloping regression line. We have a lot of concentration down here with strong support for the welfare state with some neutral or support for the regulatory state, and then it goes up to the other corner, the more liberal corner of opposing both. We see most importantly the two empty areas. We do not find people opposing one and favoring the other. This is 299 economics professors surveyed at random. And I just want to show you another picture where on the vertical axis, I dropped out prostitution, gambling, immigration, abortion, and hard drugs, leaving eight more business regulation type questions. Minimum wages, import restrictions, permitting of new pharmaceuticals, restrictions on discrimination by private parties, restrictions and buying and selling organs, human organs, tighter workplace safety, tighter air quality and water quality regulation, and occupational licensing. So these are regulations of recognized legitimate businesses as opposed to say things like the drug prohibition, which you might not think of as really the regulatory state. And here we have an even higher upward slope. We have a somewhat tighter fit. So this may be best shows. What it is I feel cries out for explanation. Let me elaborate why I think so. Oh, no, I want to tell you about two more studies that actually also is one of the problems with not having presenters view for the file. I don't exactly know what slides coming next, but so this one, in the most recent EJW, we have two papers and Ryan Daza is the co-author of one of them. We have two papers that look at the top 200 econ blogs. On these two issues, which have received a great deal of attention, they've been hot in the news in the last two years. The first because it's charter expired and there's been wrangling and battling over whether to renew it. And the second because Uber and Lyft are revolutionizing transit and wreaking havoc, really. On the traditional taxi cartels and monopolies. And so these are very hot topics that bloggers have talked about, at least some bloggers. For example, Donald Boudreau, who's blogged about these a lot. These investigations looked at the top 200 econ blogs as listed by a 2013 listing. And quite remarkably, Lyft bloggers expressed almost no favor for liberalization on these two issues. They were like silent, more or less. Sometimes even negative towards, say, Uber or towards ending the XM Bank. So that's further evidence of actually this pattern that we're trying to explain. Now, why is a call out for explanation? Let's take the welfare state dimension. Let's say you're pro welfare state, okay? You believe that a dollar means more to a poor person than it does to a rich person. A very reasonable belief, I think we all feel. Furthermore, you see that a lot of people in society feel the same way. So they like to see dollars going from richer people to poorer people. Because a dollar means more to a poor person than to a rich person. But on the other hand, if one person voluntarily gives dollars to poorer people, that benefits not only the recipient, but actually the other people who care about this issue. So there's like a positive externality in voluntary redistribution and a free rider problem. We all would like to see more redistribution, but if it's left to voluntary means there's a free rider problem in each of us like doing it, paying our part. And so that's an argument for having the state require it. So that's a logic, okay? It makes some sense. But what is it about those arguments, the pillars of those arguments that so much carry over to the regulatory state issues? The pillars of that welfare state argument were dollar means more to a poor person than a rich person. And this free rider problem in this particular sort of public goods of redistribution. So why is it then that you can't believe that and favor the welfare state, but then also be against, say, occupational licensing or antitrust law or agricultural intervention or energy policy or transportation policy. Those aren't the same arguments. Those aren't the same logic. Are they? Or maybe they are, but I don't quite see what it is that's common to both. So it calls out for explanation. Let's now start with someone taking an anti-position on welfare state. Suppose you're not favorable to the welfare state. Suppose you say, yes, a dollar means more to a poor person than to a rich person, but the welfare state creates disincentives both for the taxpayer and for the recipient. These create less growth, less wealth, dead weight losses, a smaller pie. Okay, those are good arguments. Those are meaningful arguments. You might also say that the welfare state creates dependencies. And that's another reason you're against it. I'd say those are the familiar arguments, the common arguments. But again, are those arguments so germane to the regulatory state dimension? It's not at all clear that they are. Again, consumer protection interventions, environmental interventions, antitrust interventions and so on. I don't see that it's the same logic in the two dimensions. So if it's not the same logic, why couldn't we more expect someone to mix and match so as to populate those two other cells? We're in fact, we find nobody. So I think there's psychology in this. And so I want to turn to Jonathan Haidt. Let me just say that why do we think it goes to psychology? Questions of political psychology. Like even if one economist says, I have a theory which explains why I'm pro-pro or anti as the case may be. You still would want to ask that economist, so how come your colleagues in the economics profession don't also see this logic? And that would seem to be then a psychological question. So one way or the other, I think we get to psychology and I think it's perfectly reasonable to ask these questions of psychologizing economists. So Jonathan Haidt has this metaphor of the elephant and the rider, perhaps you're acquainted with it. The mind is divided like a rider on an elephant and the rider's job is to serve the elephant. The rider is our conscious reasoning, the stream of words and images of which we are fully aware. The elephant is the other 99% of mental processes, the ones that occur outside of awareness but that actually govern most of our behavior. So he makes a kind of extreme case with 99% subterranean while the rider thinks, likes to think of itself as in control and Haidt says that what people really do is they have their elephant moving around in whatever directions and the rider kind of rationalizing those movements so as to feel in control and feel that it has an articulation, a theory of why it does what it does, why it takes the positions that it takes. And so we can imagine our two sorts of economists each saying this and each saying this about the other. I can articulate the reasons that justify my positions in both realms but those other economists, they're ideologues. They have let their elephant run away with them. They're rationalizing what their elephant does and it doesn't make sense and it's irresponsible. So that's what I'm after here. That's what the symposium was all about, to ask economists these questions. So on the two dimensions, why do so few economists argue in favor of one and against the other? And can you think of counter examples, economists who would fit those empty boxes? What are your own views in the two areas? And if your judgment tends to be parallel across them, how would you account for that? Like what is the theory, the basis for being pro-pro or anti-anti? What's like the common theory that gives you both of those answers? And then if your judgment tends to be parallel in that fashion, how would you explain why many economists do not share your views? Why don't they see as you see? So I'm asking psychology questions as well as sort of background theory questions. And in the symposium, in the published symposium, we had a number of contributors. Today, we have Donald Boudreau, Scott Sumner and Jeremy Rabkin. So we'll go in the order that they're seated here. Don, you're first and please proceed.