Free Market Institute Blog

When I made the decision to return to Wisconsin, my first mundane challenge was to buy a “preowned” (okay, used…) car. In mid 2022, I knew that, for a variety of reasons, used car prices had nearly doubled in about a year, so I figured, broadly speaking, I had two choices:

1: Buy a nice, dependable $12,000 Japanese sedan, or

2: Buy an ugly duckling, non-Japanese, $3000 clunker with some body damage. 

I chose the clunker. Since trends tend to “revert to the mean,” I reasoned that the Covid-related rise in prices for used cars was a bit like a flying unicorn or a negative oil price. If I were to sell my car in a few years, its price would likely revert to the mean. Let’s assume that in a few years, used car prices will drop a third from the Covid era. Would I rather lose $4,000, or $1,000?

I chose the latter.

Why do most intellectuals oppose school choice?

 

I’ve wondered this for years. I understand why unionized public school employees working for tax-funded districts would disapprove of school choice systems that offer state dollars to parents, as some parents will use those funds to apply to the school of their choice. After all, very few businesses actually relish competition. We value security.

But why would professors, editorial writers, and public policy analysts oppose a choice system? I think the most commonly given reasons don’t make sense, and their opposition likely comes down to a rather different factor.

 

This is the most commonly stated reason that choice opponents suggest. After all, supposedly there are less dollars for public schools, and top students might exit to private schools. Imagine half of all students exiting public schools. This would be painful, and would involve traumatic cuts in staffing, selling buildings and equipment, and the like.

 

But in this situation, schools could cut less qualified teachers, and they’d sell unused buildings to new private schools; per pupil spending would remain largely unchanged. Competition in general helps businesses improve. Is education that different? A meta analysis of 52 studies of private school choice programs found that 90% of the programs actually generated overall fiscal savings for taxpayers. Other studies have shown that choice programs’ competition actually improves public schools. Students who remain in public schools would likely be better off, or certainly not worse off.

Of course, we also should consider those who exit: those parents and students are desperate to leave the state system, for whatever reason. The reasons are multitudinous, because parents value different things: they’d like more (or less) rigor; more (or less) vocational training; more (or less) of the latest educational trends. By voluntarily leaving the system, their choices indicate that they are better off indeed.

 

But what if parents make bad choices?

With a new academic year, perhaps it is time for a test? Of course, your grade won’t matter, so you can relax.

My Big Question is a simple one: How much do you understand and value individual freedom?

Let’s start by examining Americans’ views on several topics involving freedom:

Hopefully the remaining 6% didn’t say yes to both questions.

4. Should speech be free?

That simple question is more complicated; 91% of us believe that “free speech is an important part of American democracy,” but a smaller number—77%—say that “having different points of view, including those that are ‘bad’ or offensive to some, promotes healthy debate in society.” And, more than half of Americans think that the First Amendment goes “too far” in protecting the rights it guarantees. Most Americans (55%) now think the Federal government should restrict “false” information.

5.  Should the minimum wage increase?

In our final assessment of American opinions, 74% of Americans supported a $20 minimum wage, which puts just a bit of sadness in the heart of every free market economics teacher (assuming economists actually have hearts).

The above questions are both normative and positive: each one obviously assesses people’s subjective beliefs; but those “normative” (or “opinion”) answers often emerge from “positive”—or objective—understandings, and misunderstandings, of reality. 

One example: If you think (as one prospective senator from California suggested) that we need a $50/hour minimum wage, that subjective opinion is setting on a shaky foundation of factual, empirical, and logical untruths.

So, how well do you understand the foundations of a free society? The following quiz covers all sorts of foundational ideas, including the Judeo-Christian ethic, rights, constitutions, natural law, the invisible hand, and a motley assortment of other topics that are taught to students at Brookfield Academy. 

Unlike the above questions, these questions have objective answers (with #10 being a possible exception). The correct answers just might make you look at the world a bit like an economist who understands enough history and political theory to be well rounded.

Go ahead and take it; it’s intended to start off easy.

Will you pass?

I have a new idea for a Hallmark movie. A handsome young(ish) man is traveling for work during the Christmas season, stressed, overworked, and distracted as a freak snowstorm in southern California upends his plans. He meets an attractive woman, and they connect—with normal workaday life shut down—and each recognize a budding chemistry blooming in the soon-to-be melting (artificial) snow.

 

The movie ends when the snow melts, he drops the woman, and returns to his own city, and his job.

 

And he is happy as a lark.

 

That unusual, less-than-romantic ending likely won’t rescue the plot line, but according to author and entrepreneur David Bahnsen, work is the meaning of life. In his recent book, Full-Time, he argues that the data is clear: we have an epidemic of laziness and apathy, not a crisis of workaholism. The author George Orwell termed this the “strange empty dream of idleness.” Currently, about 3 out of 5 of American adults hold jobs; that number dropped nearly 12% during the Covid epidemic, and has recovered only a bit since then. That means over 100 million adults are not working, which hurts businesses, the marketplace, and, of course, Social Security and other government budgets.

If the definition of a “religion” is a set of beliefs, oriented around a faith, involving some sacrifice, taught to people with the goal to change their behavior, what is one ascendent religion today that nearly everyone agrees with?

It’s recycling.

It’s hard to find anyone who admits to being against it. Their recycling habits might occasionally lapse (like their prayer life), but they usually admit their error, with a little shame. Those blue recycling bins are omnipresent, it’s taught in schools, and we’re reminded to do it religiously by just about everyone.

So, is it a false religion? Should we recycle?

Is there “systemic racism” in the United States?

Of course.

Of course not.

Which one of these is true very much depends on definitions; I often tell students that many disagreements are both amplified and obfuscated over differing definitions. We should try to avoid trigger words in general. In this case, it’s mostly over the understanding of the word “systemic.” 

What does systemic mean? What sort of systems are we talking about?

It’s easy to despair when you tune in to 2024’s accounts of the state of our union, but I’d like to suggest that the end is not near.

One of my favorite public intellectuals is the Swedish former anti-industrial activist Johan Norberg, who suggests three “I”s–intolerance, interventionism, and impatience–have led people of all nationalities astray during the past two decades or so. The transition from 11/9 (when, in 1989, Germans started tearing down the Berlin Wall) to 9/11 (when, in 2001, terrorists attacked the US)  spawned illiberal authoritarian movements in the world, which the 2008 Global Financial Crisis and Covid accelerated.

“Don’t know much about history,” crooned Paul Simon in 2012, but everyone seems to know about Adolf Hitler. I’ve found that Hitler is the “go to” example people bring up when they are citing examples of tyranny. And I hasten to add that Simon's song disparaged other subjects like French, science, and biology as well, and he only sang that song (apparently trumpeter Herb Alpert and songwriter Sam Cooke had a hand in writing it). But when you ask for egregious examples of tyrannical behavior, Adolf is often the first person to pop up in one’s mind. That’s some history we all know!

Hitler’s condemnation is justified and nearly universal, but what does it have to do with Walmart in Vermont?

When you encounter the word “fusion,” you might be thinking something like Japanese/Mexican cuisine or even electrical generation; the cuisine version seems to be more successful than the alternative to fission. I had a nuclear scientist friend who told me 40 years ago that fusion was a mere 20 years from reality, and I still hear that today.

But if you’re thinking of political and economic philosophies, fusion can mean something that was close to the vision of the founders–both Brookfield Academy’s founders, and the Founders of the US. It’s an answer to a fundamental question: What sort of society best produces human flourishing?

The late UC Berkeley philosopher Wallace Matson once suggested a thought experiment: person A grows up on a deserted island, living a thoroughly miserable existence—he’s alone, often cold, always vermin-ridden, with only overripe zucchini for food. He can only wish for some deliverance from his suffering. 

 

Nearby, unbeknownst to A, lives person B: on his own island nearby, also solitary, but sipping Pina coladas, cooking coconut garlic jumbo shrimp, working on his suntan, and relaxing in his new, homemade hammock.

 

Both A and B live in very different circumstances, and A’s life is as unfortunate as B’s is fortunate, but is their situation unjust?

“Dad,” I asked, when I was about 10, “how much do you earn?”

My dad told me it was none of my business, though since he worked for the Post Office, I suppose I could have looked up that information. I confess that I have always been a bit preoccupied with money, partly because I have always loved numbers—the real ones like GDP statistics, demographic percentages, average snowfalls. I could never correctly imagine imaginary numbers.

My childhood hobby of collecting postage stamps (philately, anyone? ANYONE?) introduced me to history. Apparently people are still obsessed with money, will tolerate history, but have pretty much forgotten what postage stamps are.

In our fast-paced and confusing world, it’s good to get some perspective, and it’s certainly tempting to look for wisdom from smart people. 

Sometimes, though, that doesn’t work, when smart people give dumb advice, or shallow suggestions, particularly about economics. 

Don’t get me wrong. Unqualified people also say all sorts of nonsense. Part of the modern age (let’s say, after 1900), is the rise of the mass man. As described by Spanish philosopher Jose Ortega de Gassett in 1932, this “mass” person prides himself on his ability to opine despite his lack of any real effort or genuine expertise. We no longer defer to what Gassett called “minorities” in our hyper democracy. Why? After all, we have the internet. Cervantes once wrote that “the road is better than the inn,” but many people are content with Motel 6. Many of us, Gassett claimed, are “mere buoys floating on the waves” who think they have “the right to impose and give force of law to notions born in the cafe.” 

Perhaps he anticipated Starbucks?

What do college tuition, health care, and housing have in common? 

For decades, their prices have risen faster—much faster—than the general price level. Why?

Because each of them is too cheap.

One of my first post high school jobs was the midnight to 8 am shift at the Grand Rapids, MI, YMCA, which had over 100 residents. We rented small, clean rooms with a single bed, desk, sink, weekly housekeeping, and communal baths–all for about $9 a night. I checked in men who were having marital problems, the occasional misfit, and some single men who were merely frugal and in between housing choices.

That sort of Spartan housing option has faded away over the past few decades; meanwhile, home prices have skyrocketed and homelessness has exploded.

Today, nearly 20% of millennials assume they will never be able to afford a home. Between higher home prices and mortgage rates rising from under 3% to over 7%, the average monthly home mortgage in the USA is now over $2300, and nearly $4000 in places like California.

What went wrong? Is this the market’s fault?

A 2004 study showed that for every inch taller a person is, they gain about $800 (specifically, $789) in income, per year. And that adds up: a six footer earns a cool $224,000 more than a person who is 5’5” in a 40 year career…and that was nearly 20 years ago. It is likely more now, with the 60% increase in prices since then. 

Why is this? Do a few hundred project runway models and basketball stars skew income that much? No. Height may have helped give people advantages in distant history—assuming tall people could run a bit faster, reach a bit further for an apple or a jaw in a fist fight. But I doubt that is relevant today. We don’t quite know the real reason, but we can make some educated guesses.

And it’s okay. Sort of.

Admit it: you and I are ignorant about all sorts of stuff. I don’t know about the mating habits of Tse Tse flies, and I don’t want to know. I could, of course. That’s what the internet is for. But my time is valuable, and hence costly, so I cheerfully live my life without knowing that, or…

Each May, as temperatures rose and attentions flagged, I gave my economics students laminated cards with ten financial tips, and several of those concern debt, with rules like these:

and my favorite,

The last rule helps fatten your wallet and thin your belly.

“A recession,” President Reagan once famously said, “is when your neighbor loses his job; a depression is when you lose your job.”

Certainly no one “wants” a depression; who would want a recession? 

I might, at least in the sense that I might embrace a sneezing fit after breathing in a roomful of dust.

Classically defined as something like a half year of declining GDP (or incomes…same difference), recessions are typically connected with rising unemployment, declining production, and, well, misery.